Category: Workers’ Compensation

MA program on employer insurance fraud

Immigrant workers are often exposed to predatory employer practices which violate labor laws. One place to start enforcement is in workers compensation and, in particular, workers comp insurance. Here is good example of state initiative.
Massachusetts’ Department of Industrial Accidents has improved significantly its enforcement of workers compensation insurance requirements in the past few years. Its program, which you can find here, gives you a sense of what it takes to give teeth to enforcement. It has greatly improved the success rate of enforcement.
Below is a excerpt dealing with stop work orders:

The leads can come from an employee of the company, a competitor or the Massachusetts Rating Bureau. The lead is assigned to an investigator in the area where the business is located who then conducts an investigation.

If the investigation confirms that the business is violating the statute, the investigator will notify the business and allow the business to come into compliance. If the business does not respond to the investigator or refuses to come into compliance by obtaining the requisite insurance, the investigator will then conduct an on-site investigation at the location of the business.

If the on-site investigation confirms the preliminary investigation, the investigator will then issue a Stop Work Order (SWO), which is a cease and desist order requiring the business to shut down. The business will then be given a right to appeal the SWO within 10 days.

I thank Workers Comp Insider for alerting me to this article by Gregory White, who as general counsel runs the enforcement operations of DIA.
A number of states have beefed up resources to detect and go after employers to commit labor violations, including failure to pay employees for wages earned, failure to pay overtime, failure to make unemployment insurance contributions, and failure to purchase workers compensation insurance.

Employer insurance fraud inflicts damage on workers

A not-for-attribution conversation with The Man Who Saw Everything.
Employer insurance fraud is a topic we will visit often: the toxic cocktail made by mixing strong employer incentives to cheat on workers compensation insurance with a vulnerable workforce, such as undocumented workers. An employer with a vulnerable workforce has a much greater incentive to cheat on insurance because it can expect its undocumented workers not to protest.
Here we learn from a California insurance professional, my Man Who Saw Everything. He has observed employer behavior close up for several decades from the insurer’s perspective. He knows how employers cheat.
He says that to understand the dynamics of cheating you need to know a little about cycles in the California workers compensation insurance market.
Insurance costs fell drastically in the second half other 1990s due to price-discounting competition among insurers. This left some insurers pricing their policies below any rational expectation of breaking even. Eventually some insurers failed. Insurance rates began to rise in the 2000s, to the point where workers compensation premiums in that state were over twice as high as the next costliest state in the nation. This Man Who Saw Everything believes that this huge cycle of high, low, and return to high contributed to the problem of cheating employers.
He told me:

In general, employers in high-risk occupations benefit the most when premiums fall and suffer the most when premiums rise. Roofers are among the hardest hit. While I was working for an insurance company we actually had a recent claim of a Latino worker falling from the tines of a forklift while placing shingles on a roof. This particular employer was covered but I have a roofer friend who has operated his business without WC for the past four years.

The problem is that when insurance rates fell, no employer said to itself, ”Hey, I had better bank some of these savings for tomorrow when rates rise”. Instead, they built their businesses around the lower cost factor for WC. When rates rose, they could choose to buy insurance, charge more and thereby become less competitive, or drop WC and hire workers less likely to file claims.

As to who is looking for the uninsured employers the answer is really no one. They are exposed when they draw a four after expecting an ace. One of the reliable undocumented workers falls off a roof, gets an attorney and files a claim. OSHA inspectors who cite him visit the employer, then the DOI gets involved and eventually the employer just folds his tent. You can bet they re-surface later so any enforcement agency spends considerable time chasing the same individuals.

I think this whole scenario is much more frequent in construction type industries that don’t rely on a brick and mortar location. I don’t know of any light manufacturers that exist without WC. However, I have known many who move employees on and off the books (premium fraud) and many never get caught.

The basic idea is to have two work sites. Insure one of the sites fully and correctly with a carrier but never advise of the other site. If anyone gets injured you list their work site as the one that is insured and put the worker on that payroll.

This usually gets exposed one of two ways. The carrier investigates the claim and learns of the other site when the worker provides the secondary site as the actual place of injury. It also is exposed when the employer repeatedly has workers injured on their first or second day of work. That is the day they moved the employee from one location to the other to assure the worker is covered by the WC.

Florida construction injuries and Hispanics (2005)

Construction Up, Injuries Up, but Workers’ Comp Payouts Down
This article by Jessica M. Walker first appeared in the Daily Business Review on 10/20/2005. The following is an excerpt, and the full article can be acessed at the link above. We will be carrying on a regular basis will researched journalism.
This particular articles talks about the toxic cocktail one mixes with undocumented workers with employers in high injjry industries.

In his mid-teens, Hector Noriega moved from Mexico to Miami to find work in South Florida’s booming construction industry. The immigrant followed his two brothers, who previously had found construction work there.

In August of last year, while he was pouring concrete at a residential construction site on Key Biscayne, the teenager was seriously injured when he came into contact with an electrical line. He survived the accident but suffered severe burns.

His attorney, Judson Cohen of Cohen Law Offices in Miami, said Noriega might lose his leg from the accident. No longer employable, Noriega, now 16, is living with family in Miami.

Most workers in Florida would have filed a workers’ compensation claim, collected a payout, and that would have been the end of it. Noriega, however, is an undocumented alien and was not listed on the workers’ comp policy of the subcontractor, C&C Concrete Pumping, or the Miami-based general contractor, Mackle Construction Co.

Ironically, Noriega’s illegal status may allow him to proceed with a negligence lawsuit in Miami-Dade Circuit Court when a U.S. citizen or other legal worker generally could not. That could allow him to recover more than he could through a workers’ comp claim. There are a growing number of undocumented workers like Noriega laboring in the South Florida construction industry, and experts say the legal situation could arise more often.

As South Florida’s construction boom continues, more workers are pouring into the area in search of work. For both legal and illegal workers, the ability to recover damages for on-the-job injuries has been constrained due to a sweeping 2003 revision in the state’s workers’ comp law that was pushed through by business and insurance groups to curb workers’ comp costs, experts say.

Steven Field, a retired University of South Florida professor who formerly directed the Florida Association of Occupational and Environmental Medicine, said he’s seen a rising number of construction-related injuries over the past eight years in Florida. But despite the increase, workers’ comp payouts are declining.

The total amount of workers’ comp claims payouts reported to the state Department of Financial Services fell in Miami-Dade County from $5.9 million in 2002 to $2.8 million in 2004. In Broward County, payouts declined from $4.2 million in 2002 to $2.3 million in 2004. In Palm Beach County, they fell from $4.2 million in 2002 to $2.1 million in 2004.

Michael Haggard, a plaintiffs attorney who is a partner at Haggard Parks Haggard & Lewis in Coral Gables, said, “You’re seeing more accidents but not more lawsuits because of the changes in the workers’ comp law.”

Field said the construction industry has little oversight when it comes to safety. “You see situations were no safety precautions are taken,” he said. The federal Occupational Safety and Health Administration, which is supposed to enforce job safety rules, “has no standing with construction industry.”

Work injury risks in Oakland CA garment industry (2002)

This study is one of several independent studies by largely academic-based researchers on occupational risks of specific groups of workers. This one involves Asian garment workers in Oakland. It looks at injury risks and ergonomic solutions. An absorbing study, it is also exasperatingly flawed. Like the other studies (which I will introduce soon), this study reports that an extremely small portion of worker physical complaints result in workers comp claims. This is a very serious problem. But the authors fail to take into account the severity of the self-reported complaints. They appear not to have considered the very real possibility that many injuries also may have had non-occupational factors. They used no comparison group of workers. It is impossible to figure out if the work injury experience of these workers is materially worse than that of other garment workers. (I suspect it is.) The authors turned away multiple requests to discuss the study with me.
For the complete 26 page report go to We Spend Our Days Working In Pain
I have posted below the Executive Summary and Recommendations……
California sewing factories employ over 100,000 sewing machine operators, most of whom are Asian and Latina immigrants. Health and safety violations are common in the mostly small factories that employ these minimum wage workers. This report is based on the clinical findings and survey results from sewing machine operators seen at the Oakland-based Asian Immigrant Women Workers Clinic (AIWWC), a free clinic for garment workers sponsored by Asian Immigrant Women Advocates (AIWA) and the University of California San Francisco (UCSF). Findings include:

  • Garment workers are being injured on the job and are at substantial risk of permanent disability from their injuries. Ninety-nine percent of AIWWC patients had one or more diagnosed work-related conditions, including back, neck or shoulder sprains or strains. Ninety-four percent experienced pain severe enough to interfere with their daily activities.
  • Working conditions in garment factories are frequently substandard. Approximately 94% of patients reported one or more problems with their workstations including inadequate seating (90%), awkward bending and twisting (67%), breathing problems due to fabric dust (48%), less than adequate rest breaks (40%), and being yelled at by their bosses (36%).
  • Garment workers typically work over 40 hours per week for low pay and no benefits. Patients reported earnings of $6.32 an hour, 25% less than the poverty level for a family of four. Only 22% of patients had health insurance and only 12% reported paid sick leave.
  • The overall health status of garment workers is far worse than that of the general population. A total of 66% of the garment workers in this study reported “poor” or “fair” health. This is three to four times higher than the rate for women in California.
  • Garment workers have inadequate access to occupational health care, specialty treatment services and general preventive health care. Nearly one-third of these women had never been seen by a health care provider for their ongoing musculoskeletal problems. Only a small fraction had been treated by clinicians trained in recognizing and treating occupational health problems.
  • Garment workers are effectively prevented from using the Workers Compensation system. Ninety-seven percent of workers seen in the clinic were eligible to file for workers compensation for their injuries, but refused to do so primarily due to lack of knowledge about the system or because they feared reprisals on the job.
  • Musculoskeletal injuries experienced by garment workers are preventable. Technology is not the problem. In many cases there are simple, cost-effective ergonomic solutions that would prevent the common musculoskeletal problems these workers experience.

Continue reading Work injury risks in Oakland CA garment industry (2002)

North Carolina employer tries to keep a work fatality out of the workers comp system

The Ashville NC Citizen Times (reporter: Jay Ostendorf) carried several articles about this case, which was related to me by the health worker cited below. Certain details are omitted due to the current sensitivity of the matter at this time (1/06).
In western North Carolina, a local newspaper, The Sylvia Herald, carried a funeral home notice that Raul Carbajal, 37, of Hendersonville, North Carolina died Thursday, August 12, 2004, from injuries sustained in an vehicle accident. “A memorial service was held at Immaculate Conception Catholic Church in Hendersonville. The body will be sent to Comitan, Mexico, for service and burial.”
As reported by the Ashville Citizen Times, Mendez was one of eight in a pickup truck which crossed a highway grass median and on-coming lane traffic, broke through the guardrail, and rolled over spilling out passengers and tomato boxes. Mendez died; most others were hospitalized. The other occupants and condition a few days post accident were Armando Sanchez Soto, 44, stable condition; Orlando Martin Lopez, 25, stable condition; Jose Carlos Sanchez, no age available, serious but stable condition; Diego Jimenze, 23, treated and released; Adan Trujillo, 30, stable condition; Antonio Melgar, 35, stable condition; Sander Carillo, 22, treated and released.
An outreach worker at the local public health clinic arranged for an attorney to take on the cases for resolution in the workers comp system. For doing this normally uncontroversial act, the outreach worker was castigated by Mendez’s Hispanic employer, who still today (Winter, 2006) will not let this worker onto its worksite. According to this worker, the employer was intent on pretty much isolating its workers from the state’s work safety, workers comp, and other labor standards.

The Erosion of Worker Safety (1/4/06)

I wrote this Op-Ed article for the Boston Globe, starting with:

Massachusetts’ distinguished promise of worker safety is fraying. More of our workers work unsafely. When they sustain a serious work injury they are less able to access the protections of our four-generations-old workers’ compensation system.

“It has become easier for employers to cut corners on their legal obligations. If Congress succeeds in criminalizing undocumented worker status, it will become even easier.”

The Brazilian Immigrant Center was very helpful in my research for this article, as well as Jon Coppelman of Lynch Ryan, a workers comp expert and former union carpenter who works with small employers to reduce injuries.
Combining vulnerable undocumented workers with employers willing to violate safety and workers comp laws makes a toxic cocktail. Enforcement of workers comp laws includes making sure that employers required to purchase workers comp insurance do so. This is strictly a state responsibility.
As a first step in enforcing the insurance provisions, state regulators and prosecutors need to take enforcement provisions seriously. This means monitoring employers, translating leads quickly into investigations, and getting employers to comply with the law without necessarily shutting the employer down and thus destroying jobs.
The Massachusetts Department of Industrial Accidents (617-727-4900) is aggressively enforcing the employer insurance provisions. It has greatly improved the results from leads. According to the Department the large majority of employers it has targeted stay in business while complying with the law.
Unions, community activists, legal aid attorneys, and medical doctors are excellent sources of information about non-complying employers. They and state regulators need to work closely.

Continue reading The Erosion of Worker Safety (1/4/06)

Workers compensation rights of undocumented workers (2006)

Work Comp Central discusses a noteworthy new report issued by a task force of workers compensation lawyers:

State courts have not yet resolved tensions between federal immigration law and workers’ compensation statutes, leaving in question exactly what benefits to which illegal aliens are entitled when they are injured on the job, according to an analysis by the American Association of State Compensation Insurance Funds (AASCIF).

The legal analysis, written by lawyers for the Ohio Bureau of Workers’ Compensation and the New York State Insurance Fund, outlines key state court decisions and how they interact with the federal Immigration Reform and Control Act of 1986 (IRCA).

In a future post, I will be offering commentary on this analysis. AASCIF is the American Association of State Compensation Insurance Funds. Its members are workers compensation insurers, which at some time in the past were created in part with state government support to make sure that employers will have access to insurance. A few of the largest, in CA, NY, OH and WA, are state agencies staffed by civil servants.
The full report and a complete list of members with contact information can be found at AASCIF.