Fix Your Risk

Turkey Shoot-From the Workers Comp Insider

William Wehnke, 51, claims to have spotted a wild turkey in his field in rural Annsville, New York (population 3,000). He took aim and fired at the turkey and managed to hit Matthew Brady, a workers comp investigator, who happened to be crouching in the field, dressed in camouflage. Brady was apparently performing surveillance on Wehnke, who is collecting workers comp benefits for an unspecified injury. Whatever his disability, Wehnke is obviously capable of operating a shotgun.

Local authorities are not buying Wehnke’s story about the turkey. He’s been arraigned on a three-count grand jury indictment that includes felony second-degree assault and unlawful manner of taking. He is even charged with using inappropriate ammunition for hunting turkeys. Wehnke is in a lot of trouble for his little turkey shoot.

Investigator Brady was hit in the side, back and legs. He underwent surgery and presumably filed his own workers comp claim for what is surely a work-related – if highly unusual – disability.

In incidents like this, nobody wins.  If Wehnke was truthful about his worker’s comp injury in the first place, odds are that his employer and their insurance carrier wouldn’t have cried foul on his claim.  Meanwhile, Brady probably thought he had caught someone in the middle of a fraud, which would be the highlight of his week, as a fraud investigator.  But instead of just catching Wehnke in the act, he caught a lot of buckshot in his back and legs, bringing back imagery of a certain former Vice President.    Extreme irony if I ever saw it.

By now you probably know a handful or more people who have been afflicted with H1N1/swine flu.  Vaccinations have been in short supply nationwide, and healthy men who are physically active (construction workers) are not anywhere near the top of the list.  So then what happens when a big portion of your laborers gets sick?  You are spending all your time bidding work, just so you can get your laborers out in the field, doing what they do best.  And now that you have bid the job, you have no one to complete it, because all of your “guys” are out with a contagious illness.

Sure, you could go to the union halls, but you’re a non-union contractor. Or you could drive by Home Depot in the morning, and see if anyone there understands how to safely perform a job in your trade.  There are also plenty of out of work contractors on Craigslist who are looking for any kind of day labor they can get.  So you’re thinking to yourself, “we’re gonna be ok, we have the manpower to do the job”.  Then people start getting hurt, people who were being paid under the table so you could get the job done in the time that your bond stated you would.  And now these workers, who supposedly were trained in your trade, are making errors and delaying the project more so than if your regular workforce was performing the job after it being on hold for a few days while everyone fought the cold.  These workers are getting injured, and are not on your payroll, so the whole worker’s comp thing gets very complicated and can jack up your insurance costs over the next 3 years.  We all know how important it is to keep those experience mods under 1 right now, so you can keep your ability to bid any job that you have the ability to effectively complete, and preventable accidents are not going to keep you, or get you back “into the black”  So if you run into an issue where a lot of your key folks are getting sick, give them a few days to get better because the whole project will end up in better shape because of it.  If you or your employees have any further questions on symptoms and treatments, send them to http://www.flu.gov/know.html.  And construction company owners, if you need any help with this type of risk management or any other construction specific inquiries, head on over to www.constructionriskadvisors.com

Isn’t the only way to defraud the worker’s comp system.  The state of California District Attorney has assigned a task force to battle the rise in fraud since the economy took a downturn.  So if  you’re not faking an injury, how would one go about defrauding a worker’s comp carrier?  An employer can start paying his or her employees partially in cash.  Since cash payments can conveniently be left off of a payroll sheet, they won’t add to the overall payroll, which in turn drives the insurance premium down.  Works pretty well as long as the IRS doesn’t find out too.  Another way is to fudge the classification of your employees.  A worker who spends most of his time on the roof of residential structures will pay a heck of a lot more money in worker’s comp premium than a worker who spends his time working from ground level.  This post is by no means meant to be a tutorial on how to save money by defrauding insurance companies, but these are several of the ways that the CA task force have been successful in finding frauds and punishing them.

Hypothetically, let’s say that you as the unscrupulous employer, is successful at fleecing the insurance carrier you have your worker’s compensation insurance written with.  You have several employees that spend the majority of their day working in trenches.  On your insurance policy, they are classified as yard NOC.  Meaning they are supposed to be spending their days in your supply yard, not in 7 foot deep holes in the ground.  One day, since you are already proficient in cutting corners, you send your guys out into the field to do some excavation work but don’t bother setting up a trench box. Less time in the hole, more time to make money right? Wrong.  The trench collapses, and luckily no workers were killed, but several of your “yard workers” are severely injured.  You call your agent or broker to put the claim through.  They submit it to the carrier.  The carrier looks at it and wants to know why several yard workers were in a trench box installing a water line.  Claim denied.  OSHA fines you for not putting a trench box up.  The insurance fraud task force fines you $10,000 and you are still responsible for paying for your injured workers.  Out of pocket.  This is a pretty broad generalization of what could happen if everything went wrong.  Do a truthful job of classifying your employees and paying them over the table.  Do you really want to have to close up shop because an intentionally misclassified employee is injured on the job?  Just so you could save money on your insurance premium?  Might not be worth it.  For more info on the San Bernardino Fraud Task Force, click this LINK.

And in case you didn’t read the article, it also mentions that the task force shows up unannounced, the fine is a mandatory 10K, and you as the employer could face a year in jail on top of the fine.  That would be a pretty lousy ROI on a few thousand dollars savings on your insurance premiums.