Kevin and Bob Pickell ran KDN Lanchester Insurance Agency in Sinking Spring PA. It’s not just the spring that’s sunk. The not-so-kissing cousins (bad day photos here) have been convicted of diverting workers comp premium payments from area school systems into their own pockets.
As fraud goes, agents pocketing premiums is pretty dreary stuff: it’s not a matter of if, but when they get caught. In this case, the carrier notified one of the schools that premiums had not been paid. In jumps the state attorney general, with the result that the Pickells are going to prison for over a year, followed by restitution and 20 years of probation.
The cousins do not appear to be planning a return to the brokerage business. They have offered the domain site (kdnins.com) for sale. Let’s see. Brokers in jail, a bit of bad press. Not exactly a once-in-a-lifetime business opportunity.
Many good folks testified to the character of the defendants. They were known for their generosity in the community, along with living the lavish life style that inevitably accompanies this type of crime: big houses, fancy cars, expensive wines…
Opportunities for Fraud
Agents are just one of a number of parties in the workers comp system who see opportunities for making money the fast and not-exactly-legal way. Along with agents we have:
Employees:
• Faking injuries
• Lying about health problems that impact their ability to perform jobs safely
• Exaggerating symptoms to prolong disability (malingering)
• Being injured away from work and claiming the injury is work related
• Working a second job (usually under the table) while still collecting indemnity
Employers:
• Under-reporting payroll
• Misclassifying employees as “independent contractors”
• Misclassifying employees into lower risk – and lower premium – job classes
• Failing to report injuries
• Threatening employees who do report injuries
Doctors:
• Billing insurance companies for treatments not provided
• Exaggerating the nature of services provided
• Performing unnecessary tests
• Selling drugs (pain killers) to injured workers
• Conspiring with attorneys by faking diagnoses of compensable injuries
Attorneys:
• Helping workers exaggerate medical symptoms to secure benefits (providing unnecessary neck braces, crutches, slings, etc.)
• Coaching injured workers on malingering
• Helping workers develop a false “injury narrative”
• Stealing settlement dollars (very rare)
Claims adjusters:
• Securing kick-backs on medical or indemnity payments
• Setting up phony claims and pocketing payments
Investment companies:
• Bribing public officials to secure dollars for investment (see the “Coingate” scandal in Ohio)
• Offering (illegal) perks to decision makers who manage public dollars
Despite the myriad opportunities for fraud in the comp system, outright fraud is still relatively rare. The vast majority of transactions within the system, involving all of the above players in every state across the nation, are carried out with integrity and good faith. Nonetheless, eternal vigilance is necessary to ensure that comp dollars are spent prudently, wisely and fairly.