Imagine you work as a commercial driver for a long-established trucking firm that self-insures for workers comp. You are injured on the job. You seek benefits under the comp statute. The TPA handling the claim refers you to a company doctor. The doctor determines that the injury is not work related. The adjuster for the TPA denies the claim. End of story?
Not quite. What if you shared your story with five other employees, all of whom filed comp claims, all of whom saw the same doctor (a family practitioner), with the same result: claim denied by the same adjuster at the TPA? A coincidence or a conspiracy?
Five employees of Cassens Transport in Michigan concluded that there was a conspiracy to deny their claims. They filed suit in federal court, alleging a violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”). A district court dismissed their claims, finding that their individual claims did not constitute a “pattern” of activity and that invocation of the RICO statute would violate the McCarren-Ferguson Act by interfering with state regulation of insurance.
The U.S. Court of Appeals for the 6th Circuit reviewed the case and overturned the district court’s ruling. Now the U.S. Supreme Court, by declining to get involved, has upheld the Appeals Court. The Appeals ruling is a fascinating document which explores the nature and definition of racketeering, the relationship of workers comp benefits to insurance and the roles of state and federal governments. It’s required reading for attorneys and highly recommended for all others.
Criminal Acts?
The district court has been ordered to reconsider the allegations. The five Cassens drivers allege that Cassens, their self-insured employer, Tina Litwiller, a claims adjuster for the TPA Crawford and Co., and Dr. Saul Margules conspired to deny their comp claims. (While you might expect Dr. Margules to be board certified in occupational medicine, he appears to be a family practitioner.) The Appeals Court does not address the substance of the allegations: it simply rules that denial of the workers comp claims might involve a violation of the RICO statute and thus is appropriate fodder for the federal courts.
Some folks are alarmed that the feds are getting involved in what is usually a state issue. That might be a problem, but let’s not lose sight of the delicious prospect before us. During the course of the new hearings, plaintiff attorneys will seek access to some fascinating communication records: between Cassen and Crawford, detailing the status of individual claims; Ms. Litwiller’s claim notes; and communications between Crawford and Dr. Margules, who had so much difficulty finding a connection between a given injury and work. As much as I enjoyed the Appeals Court’s discussion, I am really looking forward to the nitty-gritty details of the proceedings in the district court. (You don’t suppose that some of the written and electronic communications have disappeared, do you?)
At heart, this is a very serious matter. The five employees allege that they have been unlawfully denied the protection of Michigan’s workers comp law through a conspiracy of company, TPA and doctor. If the allegations are proven, if the accused violated the RICO statute, they will face the consequences of a criminal conspiracy. In the Insider’s burgeoning annals of fraud – employee, employer, attorney, doctor, agent, insurer – this case will surely offer one of the more compelling narratives.
Archive for December, 2009
Racketeering and Comp: When the Denial of an Injury is an Injury
Wednesday, December 9th, 2009“Exclusive Remedy” for Losing Your Face?
Tuesday, December 8th, 2009Usually employers try to prove that someone is not an employee, in order to avoid the workers comp liability. (Think “independent contractor.”) Today we examine a truly horrific case where the employer is desperate to establish compensability under workers comp, so that a grieviously injured employee can only collect comp benefits. By using the “exclusive remedy” provision of comp, the employer wants to avoid liability for pain and suffering. Some pain, some suffering!
Sandra Herold runs a towing company out of her house in Stamford, Connecticut. The company had a mascot – a 200 pound chimpanzee named Travis, who lived with Herold. I do mean lived with her: according to reports, they shared wine at candle lit dinners and shared a bed as well (no further comment possible).
Charla Nash occasionally worked for Herold, in an unspecified capacity. In February 2009, Herold called Nash and asked her to come by, as she was having trouble controlling Travis. As soon as Nash arrived, Travis attacked her, ripping off her face (literally). She lost her eyes, nose and mouth in the horrendous attack. (While images of her ravaged face are available on the internet, I do not recommend viewing them.) Police eventually were able to shoot the chimp.
Nash somehow survived the attack and is suing Herold for $50 million; a second suit against the state of Connecticut seeks an even larger amount, alleging negligence in allowing Herold to keep the animal in her home. (It is worth noting that no criminal charges have been brought against Herold.)
Exclusive Remedy?
Herold’s first line of defense is establishing workers comp as the “exclusive remedy.” She claims that Nash is an employee and thus is prohibited from suing her “employer.” While it may be premature to judge this particular strategy, it seems highly unlikely that Herold will prevail. Even if she can show that Nash was on the payroll, it is clear that Nash was not working on the day of the attack; Herold had called her and asked her to come over to help with Travis. And even if it can be proven that Nash occasionally helped out with Travis, it is unlikely that her job description included the duties of an animal trainer (for which she is not qualified).
In the unlikely scenario that this case is limited to workers comp, the claim will run in the multiple millions: comp will have to pay for Nash’s humongous medical bills – including a face transplant – and support her astronomical living expenses. This is a permanent total injury, so the indemnity portion may also be substantial. (If I were Herold’s comp carrier, I would aggressively deny this claim as not being work related.)
Herold is banking on a judicial process that finds having your face ripped off by a 200 pound beast is simply part of the job, part of the “assumption of risk” we all accept simply by showing up for work. (If that were the case, how many of us would be willing to report to work?) Herold’s house-of-cards defense will collapse with the most humble of gestures: Nash revealing her destroyed face to a jury.
Exclusive remedy is an important concept, one well worth preserving, but in this situation, it has no place. Herold must be held accountable for the actions of her late companion, Travis – anything less would be a travesty.
Fear of Talking: The Narcoleptic Dispatcher
Monday, December 7th, 2009Kenya Madden was hired as a police dispatcher for the Village of Hillsboro, Illinois, in July 2007. During the 10 week training period, she informed the trainer that she had narcolepsy, a disorder which causes people to fall asleep at unplanned moments. Some weeks later, she also informed her supervisor of her condition. The supervisor reacted with alarm. He had visions of Madden falling asleep in the middle of an urgent dispatch. He asked for Madden’s resignation. When she refused, he terminated her.
Madden filed suit under the ADA, alleging discrimination based upon (the perception) of a disability. This week, the case settled out of court for $10,001. Interesting number, interesting case.
There is no question that Madden’s supervisor mishandled the situation. With visions of disaster spinning in his head like demonic sugarplum fairies, he hastily put an end to the employment relationship. He did not ask for any details about the condition: how long she had experienced it; the degree to which medication controlled it; the last time she had an episode. He did not request permission to speak to Madden’s doctor. He reacted out of a fear totally out of proportion to the situation.
But Madden is not without fault. If her condition was under control, why did she feel obligated to disclose it twice (to the trainer and the supervisor)? If no accommodation was needed – and none was – then why did she bring up the issue?
We can read several things into the modest settlement: while the Village of Hillsboro mishandled the situation and violated the ADA, their actions appear to based upon the limited information provided by Madden: she could have attempted to reassure her supervisor by explaining the successful medical treatment she was receiving. She apparently was silent on the issue. A more gratuitous termination would have resulted in a six or seven figure settlement. Instead, Madden receives $10,000 for her trouble, with an extra dollar tossed in for good measure. That’s a pretty clear indication that while Madden was wronged, she may have had some responsibility for the situation.
This case illustrates a common problem in the way people perceive disability. We tend to jump to conclusions. “Narcolepsy” in a dispatcher sounds like an invitation to catastrophe.But it ain’t necessarily so. Try asking a few questions to determine just how big the risk is. Talk is cheap and talk, in situations like this, is definitely the way to go.
Ten Years After: the Worcester Cold Storage Fire
Friday, December 4th, 2009Most Massachusetts residents will recall how their heart sank 10 years ago upon hearing TV and radio reports of the on-the-job deaths of six firefighters in the Worcester Cold Storage fire. While firefighting is a dangerous job, this was the first time that six firefighters fatalities occurred in a building where neither a collapse nor explosion had occurred. The first two firefighters became lost in the labyrinth building and the next four were lost in trying to rescue them. Firehouse.com has a Worcester 10th Anniversary Tribute and the Telegram & Gazette have devoted a special section to the remembrance: Worcester Cold Storage and Warehouse Fire: 10 Years Later.
Worcester is a community that several of us at Lynch Ryan know well – we’ve lived there and worked there. Given the nature of our work, we are no strangers to on-the-job fatalities – we’ve heard many heartbreaking stories about work-related deaths that never should have happened. But rarely does an event hit so close to home and with such force as on that day. Many locals will remember the shock of hearing about two lost firefighters – shortly followed by the almost unbelievable word that the tally was now up to six. Many locals who knew firefighters as friends, family, or neighbors waited the long, tense vigil until names of the deceased were released, and then again waited mournfully until fellow firefighters were able to pull the bodies of their colleagues from the rubble a few days later. We all became familiar with the faces of bereaved spouses, children, parents, and siblings. We all saw and hurt for the heavy burden of grief that the fellow firefighters labored under.
There was an amazing tribute for the fallen firefighters: fifteen-thousand firefighters from around the globe came for the memorial service. President Clinton and Vice President Gore spoke at the service, along with local Senators Kennedy and Kerry. Senator Ted Kennedy, a man who was no stranger to tragedy, encapsulated things by saying that “Sometimes life breaks your heart.” It was fitting that Kennedy was at the ceremony for the fallen firefighters, he fought for worker safety throughout his career.
In the aftermath of the tragedy, Two major reports were issued: the U.S, Fire Administration’s Abandoned Cold Storage Warehouse Multi-Firefighter Fatality Fire and a report from NIOSH.
Firefighter safety still has a long way to go. Tragically, two and a half years ago, nine firefighters lost their lives in Charleston SC. The fire was in a furniture showroom and warehouse – and again, a labyrinth building where firefighters became disoriented.
Firefighters continue to study and learn from the hard lessons of these warehouse fires. In 2001, Firefighters in Jersey City battled a warehouse fire with similar conditions to the Worcester blaze. Fire authorities credit a seminar that they took with members of the Worcester Fire Department for guiding their strategy in fighting this fire and preventing loss of life. In addition, many communities have been more vigilant about monitoring large vacant properties, and firefighter communication technologies have been improved.
The matter of firefighter disorientation is still an issue of concern and one that is under study. (See: U.S. Firefighter Disorientation Study). This has given impetus to other safety initiatives, such as advances in First Responder Locator Systems. These include a system developed at a local university, Worcester Polytechnic Institute, where engineers are nearing completion of a First Responder Locator System.
Turkey Shoot
Thursday, December 3rd, 2009William 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.
Images – Lasting and Otherwise
I could not help but think of the other Mathew (sic) Brady, the 19th century photographer whose iconic images of the Civil War still resonate with us. As pathetic as investigator Brady’s situation is, his earlier namesake fared even worse. After the Civil War, Mathew Brady found that war-weary Americans had little interest in purchasing photographs of the bloody conflict. Having risked his fortune on his Civil War enterprise, Brady lost the gamble and fell into bankruptcy. His negatives were neglected until 1875, when Congress purchased the entire archive for $25,000, which might sound like a lot, but was not even enough to cover Brady’s debts. He died in 1896, penniless and unappreciated. In his final years, Brady said, “No one will ever know what I went through to secure those negatives. The world can never appreciate it. It changed the whole course of my life.”
The world may ultimately take little note of the suffering of the other Matthew Brady, wounded as he crouched in that desolate Annsville field. His life, too, has been significantly changed. But he at least will benefit from the wonders of modern medicine and the cushion of weekly indemnity, until he once again pursues his craft as a comp investigator. But the next time he is asked to don camouflage, he just might want to take a pass.
Cavalcade of Risk, Linkedin, AIG, fraud, Station Nightclub fire, & strip searches
Wednesday, December 2nd, 2009Nancy Germond is hosting Cavalcade of Risk #93 – check it out. And while you’re at it, check out Nancy’s regular insurance column on AllBusiness.
Mark Wall’s excellent WC forum on LinkedIn – While recently attending the National Workers Compensation & Disability Conference in Chicago, I had the opportunity to meet Mark Walls who is the founder of LinkedIn’s excellent Workers’ Compensation Forum. Mark, who is a genuinely nice person as well as a commensurate professional, has created an impressive network of more than 2,400 members, which includes employers, claims adjusters, insurance carriers, third party administrators (TPAs), brokers, attorneys, risk managers, regulators, EH&S professionals, and vendors that provide service to the workers’ comp industry. The group illustrates some of the best advantages and features of social media: industry networking, active discussion boards, and news feeds to blogs and alternative media sources. Members can pose questions or topics and get feedback from other members. Plus, Mark does a great job of ensuring that posts are on-topic and he is strict about disallowing spam. To join, you need to first be a member of LinkedIn, and then you can register to join the Workers’ Compensation Forum. Hope to see you there!
The soft market and AIG – if you are wondering why the soft workers comp market persists, read Joe Paduda’s post on the implications of AIG’s price cutting – it certainly offers some clues. Of course, AIG’s pricing isn’t the only factor, but when you have an elephant in the room, it certainly can’t be ignored.
Fraud surveillance – Roberto Ceniceros talks about cuts in fraud surveillance in both the public and the private sector. He’s looking for feedback from others who are experiencing a similar trend. We’ve also heard talk about cuts in safety and loss control services offered by insurers as part of work comp policies. Any feedback on these issues? It would seem shortsighted to relax on either of these important services.
RI nightclub fire settlements – Insurance Journal covers a recent report on settlement details in the 2003 Rhode Island nightclub fire that killed 100 people and injured 200 others. More than 300 survivors and victims’ relatives sued after the fire. You can also follow some of our past coverage related to workers’ comp, or the lack of it, in this sad case: Workers’ Comp and the Station Nightclub; Avoid Comp Premiums and Pay the Price; Station Nightclub: Who Pays?; Stone Walls and Steel Bars for Business Decisions
Strip search not covered by comp – For nearly a decade, fast food chains throughout the nation were plagued by a cruel and bizarre telephonic hoax, the so-called strip search hoax. The “pranksters” who posed as detectives called fast food restaurants and retail chains and somehow convinced store managers to detain hapless employees. The managers were then guided through a series of progressively questionable and invasive actions such as strip searches of the alleged criminal employees, supposedly on behalf of the police. Sounds weird? It certainly was. In recent developments, Louise Ogborn, a McDonald’s employee and the victim in one of these cases, was awarded $6 million in damages for her humiliating ordeal. McDonald’s attorneys appealed the ruling, invoking the exclusive remedy of workers’ compensation. The Kentucky Court of Appeals disagreed, stating that “We do not find manifest injustice in the trial court’s ruling that Ogborn was not acting in the course and scope of her employment while she was held in the manager’s office.”
Concussions: A Softening in the NFL’s School of Hard Knocks
Tuesday, December 1st, 2009Hines Ward is the epitome of the NFL tough guy. As a wide receiver for the Pittsburgh Steelers, he is known for his flamboyant personality and his ability to give and take ferocious hits. He was the most valuable player in Superbowl XL. In his pursuit of athletic excellence, he is a gambler. No, he is not betting on games. He is betting with his own life.
In the course of his football career, Ward has suffered numerous concussions. But he continues playing. He has even lied about his symptoms, so that the doctors would allow him to keep playing.
In this regard, Ward is part of the mainstream culture of professional athletics. Play today, pay (perhaps) tomorrow.
Until recently, the NFL was complicit in allowing players like Ward to gamble away their futures in the interest of the next game. The league’s leading advisor on concussions, Dr. Ira Casson, routinely dismissed every outside study finding links to dementia and other cognitive decline, including three papers published by the University of North Carolina’s Center for the Study of Retired Athletes.
The NFL is in the midst of a major change of policy regarding concussions. Dr. Casson has resigned. The league is requiring teams to have an independent consulting neurologist examine players with concussions. They have finally acknowledged what has been obvious for years: repeated concussions, especially when occuring over a relatively short period of time, can have a devastating effect on the brains of athletes. Well, duh!
Roethlisberger Sits, Ward Frets
Hines Ward came face to face with the new, more cautious NFL this past weekend, when star quarterback Ben Roethlisberger sat out a crucial game against the Baltimore Ravens. He suffered a concussion the prior week, when his head collided with the knee of an opposing player. Even though he practiced with the team all week, Big Ben suffered from recurring headaches toward the end of the week. At the last minute, the coach kept him from the game and substituted a relatively inexperienced quarterback. The Steelers lost.
After the game, Ward said the Steelers players were split 50-50 on whether Roethlisberger should have played. Ward added that, “these games, you don’t get back.”
“I understand what the league is doing,” he said. “I don’t judge another man.”
He went on to say: “We needed him out there. We wanted him out there. This is the biggest game of the year. We lost and we kind of dug ourselves a hole. Me being a competitor, I just wish we would’ve had all our weapons out there. It’s frustrating.”
Paradigm Shift: Sudden or Gradual?
The NFL will never be for sissies. Nonetheless, the policy shift on concussions is long overdue and most welcome. However, it may not be easy to enforce. Players like Ward may soon learn to remain silent on critical symptoms (dizziness, headache). They may avoid talking to the team doctors so they can stay in the game. These old school tough guys might even call out teammates who choose a more cautious route. As the legendary coach Vince Lombardi supposedly said: “Winning isn’t everything. It’s the only thing.”
Well, not quite. There are many things in life that are a lot more important than winning. Just ask one of the many retired NFL players with Parkinson’s or dementia.
In the conventional workplace we tend to fret about people with minor injuries, who may resist returning to work even though it is safe to do so. In professional sports, it’s usually the opposite: athletes will do almost anything to get back into the game, even jeapordize their future health. Just as we could use a little more of a “get me back in the game” attitude from reticent employees, we need to recognize that concussions require time to heal. Toughness is fine in its place, but let’s not be stupid about it. A game is just a game, a job is just a job. Neither is worth a single life.
