Category Archives: Workers Compensation

Staged Robbery for Comp Benefits

On February 24, 2010 a woman who ‘staged’ a robbery at the store she worked at plead guilty to a charge of insurance fraud. Miranda Lorraine Pruitt helped ‘stage’ a robbery of the convenience store she worked at in order to collect workers’ compensation benefits. She reportedly collected $3,360 in disability and workers’ compensation benefits after she quit her job citing ‘anxiety and stress-related symptoms’ made her unable to work. She claimed that she suffered post-traumatic stress disorder thinking about the robbery she helped to stage!

Her sentencing is expected to take place on April 20.

Reconstructing Wages in New Jersey

“Wages” of hourly or part-time workers are determined by “multiplying the hourly rate by the customary number of working hours constituting an ordinary day int he character of the work involved” ( New Jersey Workers’ Compensation Act N.J.S.A. 34:15-37). What this means is that if an employee earned $10 per hour, and worked 20 hours per week, her ‘average weekly wage’ would be $200, if the ‘ordinary’ employee doing that job was part-time worker.

In practice, claims adjusters should obtain “26-week wage statements” from insured/employers so that an average wage can be computed. Why 26 weeks? The Workers’ Compensation Act (N.J.S.A. 34:15-37) uses “six months” as the appropriate look-back period for wages.

Wages of a part-time employee may be reconstructed for purposes of fixing the rate for permanent partial disability in accordance with N.J.S.A. 34:15-37 based upon “diminished future earning capacity.” An important case, Katsoris v. S. Jersey Publishing Co., 131 N.J. 535 (1993) established the precedent: disability benefits should be adjusted ‘up’ (reconstructed) when the employee can demonstrate that the disability ‘adversely affected’ his earning capacity for future temporary or full-time employment.

In a case recently decided by a judge of compensation, there was a significant dispute about the employee’s wages. The employer argued that the employee’s wages should be based on his actual earnings (as evidenced by tax records) and commission statements (Case: Sormaz v. Alpha Moving and Storage, A-3482-08T3 (App. Div., decided February 18, 2010). The employer argued that the claimant’s weekly earnings for the period immediately preceding the accident should be used to establish his benefit rates. The employee argued that the period just before the accident was a “slow time” and that the business (a moving company) did less business in the winter months.

The Judge of compensation, without any controverting evidence presented by the employer, accepted the claims of the petitioner that the claimant’s wages were artificially low because the accident happened during a ‘slow period’ and set benefits rates base don a forty-hour workweek. The Judge did not make any findings or hear any evidence regarding the customary number of hours and days worked int he moving industry. Instead, the judge ruled that the claimant’s hours “fluctuated” depending on the time of year and ruled that the claimant’s benefit rates should be based on an ‘ordinary’ 40-hour work week.

The Judge of Compensation was upheld. Reviewing the decision of the Appellate Division, it seems clear that the reviewing panel sidestepped the real issue – that of ‘reconstructing’ wages for claimants who can show an impact on future earnings – and allowed the Judge of Compensation to base the benefits rates on an ‘ordinary’ work week. By declaring that the claimant’s work week “fluctuated” and then selecting a period of time (the busy summer months) to base earnings on, the Judge of Compensation clearly did ‘reconstruct’ a fictitious wage.

This (unreported) case must be kept in mind when assessing benefit rate challenges. In this case (Sormaz) the claimant did not show that his future earning capacity was affected by is disability, and got a benefit rate that exceeded his weekly earnings at the time of the accident. Mindful defense counsel should have presented evidence regarding the customary number of hours and days worked in the moving industry, and forced the claimant to demonstrate reduced current earnings at the time of trial.

New York's 'Coming-and-Going' Rule

Going-and-Coming rules
Employees are not deemed to be in the course of their employment when they are traveling to- and from-work. This rule of thumb is referred to as the ‘going-and-coming rule” or the “portal-to-portal” rule. Basically, there is no ‘door-to-door’ coverage: the risk of travel to and from work is not distinctly related to any specific employment, and so is generally considered not ‘arising out of and in the course of’ any particular employment.
Exceptions to the ‘Going-and-Coming Rule’
Of course, there are exceptions. For example:
Outside workers – like traveling salesmen – who do not work at a fixed location and are required to travel between work locations.
Special errands – being sent by the employer to do something specific (and work-related).83
Paid travel expenses – where an employee is paid to use their own car for work-related travel, an injury occurring during that travel may be found to be compensable.
Some home office situations – the WCB recognizes that it is not unusual for management and professional workers to have home office with links tot he employer’s office, making injuries in those locations compensable.84
Entering or leaving the employer’s premises – in particular, injuries sustained while the employee is entering the worksite have been held compensable where the entrance to the worksite posed a ‘special hazard.’

In a recent case (Davis v. Labor Ready, 891 N.Y.S.2d 759 (App. Div. 201), decided January 21, 2010, the WCB denied a claim for dependency benefits to the widow and two children of a worker who died in a car accident while traveling in a carpool arranged by his employer to a job site.

The claimant was an employee of “Labor Ready’ which provides temporary workers. Labor Ready did not provide the employee with a ride to his work location, or pay for his travel time or travel expenses. Instead, labor ready encouraged employees to ‘carpool’ to remote locations.

In the Davis case, the claimant was killed in a car accident on the 26 mile return trip. A Workers’ Compensation Law Judge awarded benefits to the decedent’s widow and two minor children.

The employer argued that the claimant was not in the course of his employment at the time of the accident. Labor Ready argued that the claimant was not paid an hourly wage while he traveled to the wrk site. It was undisputed that Labor Ready did not provide the transportation, and that the claimant was actually paying his co-employee $2 in gas money for the ride to the work site. The driver, a Labor Ready employee, was not paid for driving the co-workers to-and-from the worksite.

The Appellate Division upheld the denial of benefits, stating “we cannot conclude that Labor Ready had ‘exclusive control of the conveyance’ that was used to provide transportation.

Fraudster Busted Skydiving

On February 11, 2010, claimant Jacob Bancroft limped up to the defendant’s table to face criminal prosecution for workers’ compensation fraud. Bancroft was charged with counts of grand larceny, insurance fraud and falsifying business records. Bancroft plead guilty to a felony charge of ‘falsifying business records.’ He was sentenced to 5 years of probation and is required to pay back $54,000 in workers’ compensation benefits.

What did Bancroft do to deserve such punishment? While out of work collecting benefits for a “back injury” the 29-year-old was actually working a job as a construction laborer and volunteering as a firefighter. He wasn’t just working – he was also playing. Bancroft was videotaped skydiving. Bancroft posted pictures of himself on his MySpace page showing him hiking while carrying a backpack.

In addition to the criminal penalties (restitution and probation) Bancroft is likely going to be sued in civil court for the difference in benefits paid ($83,000) and the restitution ordered by the court ($54,000). Bancroft faces up to four years in state prison if he does not comply with the terms of his probation and restitution.

Increasingly, social networking sites like MySpace and Facebook are becoming a resource for investigating possible insurance fraud.

Look Up Before You Lie

Security Guard Randolph Olsen forgot to look up before faking injuries from an alleged car accident. Olsen was employed as a school security guard. He collected $8,726 in workers’ compensation benefits for injuries caused by a “hit-and-run” car accident while patrolling the school’s parking lot.

The accident never happened. Olsen, the security guard, was apparently unaware that the parking lows were monitored by closed-circuit television cameras, which contradicted his claims (there was no accident).

On February 10, 2010 Olsen was sentenced to 30 days in County jail, five years probation, and ordered to make restitution.