Workers’ Compensation Fraud Case Highlights Value of Investigators

This week, a Scarborough man was sentenced in federal court to five months in prison followed by five months of home confinement for concealing self-employment income while receiving federal wage-replacement workers’ compensation benefits. The man, a former United States Post Office driver, had been collecting weekly benefits since 2001, was required to file annual forms certifying that he was not working. In 2012 an undercover agent caught him operating a long-haul car transportation business on a cash-only basis.

This case is far from unique in the workers’ compensation field. Particularly in a rural state like Maine where seasonal, cash-based work is common, workers fraudulently collecting wage loss benefits sometimes feel safe in supplementing their income through undisclosed work. Hints or suggestions that an employee may be involved in such fraudulent activity can come from a variety of sources: the employer, social media, newspapers, and even anonymous sources. But we often rely on private investigators to confirm the fraud and obtain the proof needed to litigate or prosecute. A successful investigation could save an employer tens of thousands of dollars in weekly benefits, and occasionally will give an employer the ability to recoup benefits collected through an employee’s fraud. Occasionally, as here, such a case will even result in criminal sanctions.

Whenever an employer or insurer suspects fraud or misrepresentation in a workers’ compensation case, it should consider the use of surveillance and other investigative methods. A relatively small investment in investigation could result in significant savings.

Mixing Business with Vodka: Questioning the Sobriety of Witnesses

One of the most common questions lawyers ask at depositions is some form of the following: “Are you under the influence of alcohol or any other substance that would prevent you from testifying truthfully and accurately?”  Law schools teach us to ask this question to prevent witnesses from claiming later that their memory had been obscured by alcohol or drugs.  In many settings though, this question is not asked of witnesses.  What follows is a short (and true) story about what happened in one such instance.
An employee and his lawyer showed up to a workers’ compensation settlement hearing before a hearing officer.  The employee was to accept $50,000 from the employer to resolve his claim.  The hearing officer went through his standard set of questions, which all focused on making sure that the employee was aware that he was giving up all future claims against the employer by settling.  The employee answered all of the questions appropriately and the hearing officer approved the settlement.
The next day, the employee walked into a different lawyer’s office with a curious tale.  He claimed that he had been drunk at the prior day’s hearing, and would never had agreed to such a low settlement had he been sober.  He was even willing to produce a receipt from a liquor store where he had purchased a fifth of vodka a few hours before the hearing.  The new lawyer, curious to test the system, took the case and moved to annul the settlement.  It took months for another hearing officer to hear the case for annulling the settlement.  Fortunately for the employer, the hearing officer was not impressed by the employee’s argument and refused to annul, letting the settlement stand.
Though this saga must have been a hassle (and an unexpected expense) to the employer as well as the Workers’ Compensation Board, to this day many hearing officers do not ask employees about their sobriety at settlement hearings.  Should they?  And if they don’t, should employer counsel take steps to raise the issue of a claimant’s competency to testify at a settlement hearing?  We would appreciate your thoughts.

Don’t Like An Employee’s Facebook Posts? Think Twice Before Clicking The “Fire” Button

If your company is like most, it already has a social media policy, is working on one, or is thinking about putting one in place. Employees often talk – and gripe – about their jobs on social media sites, prompting employers to adopt policies for their employees’ internet posts about work. However, recent decisions by the National Labor Relations Board (NLRB) show that it considers certain forms of e-griping to be protected speech, and a policy preventing it could earn your company unwanted federal attention.

A typical social media policy discourages employees from making public online comments that cast the company, management, or co-workers in a negative light. However, recent rulings have shown that blanket prohibitions like these may violate Section 7 of the National Labor Relations Act (NLRA) which protects the rights of employees to act together to address wages, benefits, and working conditions, with or without a union.

As the NLRB’s recent decisions and advisories clarify, this protection extends to certain work-related conversations conducted on social media like Facebook and Twitter. Thus, any social media policy which “would reasonably tend to chill employees in the exercise of their Section 7 rights” – even if the policy is silent or ambiguous about those rights – may be struck down.

However, this doesn’t mean all policies restricting work-related online speech are necessarily prohibited. Section 7 does not protect offensive posts which are unrelated to improving wages, benefits, or working conditions. For a good example of the distinction between protected and non-protected online employee speech, click the links to see the NLRB’s decisions in Hispanics United of Buffalo and JT’s Porch.

It can be difficult to strike a balance between prohibiting offensive speech and chilling protected employee communication. For more information on how to strike that balance, contact the attorneys at Tucker Law Group.

Welcome to Your First Report

Welcome to YOUR FIRST REPORT, an insurance defense blog where Maine employers, insurers, third party administrators and their attorneys can come together to discuss the latest issues relating to this area of practice. By visiting this site you will stay up-to-date on a wide variety of topics, including the latest cases, unique scenarios we have run across, as well as some lighter fare, such as the intersection of insurance defense with popular culture.

The bloggers are lawyers at Tucker Law Group, a litigation firm with a statewide insurance defense practice in Maine. Through the use of comments sections we hope to create an environment where robust commentary is respected and encouraged.

Thank you for reading and again, welcome! Please click the button on the left to follow us by email to receive notifications of new posts.

Maine’s Judges, Among the Lowest-Paid in the Nation, May Soon See a Cost-of-Living Increase

On Tuesday, January 14, the Judiciary Committee voted to support a measure granting all 60 Maine judges a 4 percent cost-of-living increase for both the current and prior fiscal year. Although the judiciary received a pay raise in July 2013 (the first since 1998), the statute also provides for annual cost-of-living increases, and the Maine bench has not received a cost-of-living increase since 2008. Even with the proposed increases, Maine’s judiciary would still be among the lowest paid in the nation. Read on for more about the proposal, and why Maine’s flagging judicial compensation should matter to Maine companies.

Despite the July 2013 raise, Maine judges are still among the lowest paid in the country. Maine lags far behind even New Hampshire, despite their similar caseloads. The following chart provides a sampling of the highest and lowest-paid judiciaries in the country:

Highest and lowest judicial salaries as of January 1, 2013. Source: National Center for State Courts (NCSC) (Link to report)

According to the National Center for State Courts (NCSC), Maine’s judicial compensation is failing to keep up with inflation.

Judiciary salaries over a decade, 2003-2013. Source: National Center for State Courts (NCSC) Maine judiciary salaries over a decade, 2003-2013. Source: NCSC

Proponents of a pay increase such as Joshua Tardy, chairman of the Judicial Compensation Commission, have expressed the concern that the professional diversity of the bench is narrowing, with most justices having a background in government or legal service agencies and no private practice or business experience. In today’s global and technology-driven economy, the Maine judiciary needs diverse and qualified candidates to keep pace with the issues affecting Maine companies and consumers. More competitive judicial compensation could help to cultivate a more diverse and qualified bench.

Before the cost-of-living increase goes through, the bill needs to pass through the House and Senate, and to receive funding approval from the Appropriations Committee.

Overtime overhaul may cost employers billions

On March 13, President Obama issued a memo to the Secretary of Labor calling for sweeping changes to the regulations that govern overtime pay. According to the President, the “regulations regarding exemptions from the Act’s overtime requirement, particularly for executive, administrative, and professional employees (often referred to as ‘white collar’ exemptions) have not kept up with our modern economy.” The President’s use of his executive power to push new rules without congressional approval has been controversial, and it is not yet clear what form the new rules will take.

Currently, employers cannot deny at least time-and-a-half overtime pay for non-executive employees who work more than 40 hours a week and make less than $455 per week, or roughly $24,000 per year. One thing the new rules are likely to do is raise that minimum threshold. If it is raised, millions more employees could be owed overtime pay.

The president will likely also try to change the rules allowing employers to define whether their workers are “executives,” and therefore exempt from receiving overtime pay. Currently, if an employer classifies an employee’s job as executive in nature, such as overseeing a work crew or making hiring and firing decisions, then the employer may exempt that employee from overtime. The new rules will likely redefine which employees can be considered “executives,” and may drastically expand employers’ liability for overtime pay.

If the Department of Labor passes the rules the president hopes for, many employees will see an increase in or become eligible for overtime pay. On the other side of the coin, many employers will see increased costs as they are required to pay more overtime or hire additional help. The new rules have yet to be written, and the attorneys at Tucker Law Group will follow them with interest and report any developments here.

The Recorded Statement: An Invaluable Resource

Research has shown that human memory deteriorates over time. The more time passes between the moment a memory is made and the time it needs to be remembered, the less accurate recall is likely to be. Unfortunately for defense lawyers, by the time a file appears on our desk, months if not years have likely passed since the event that gave rise to the claim. By the time we have a chance to interview witnesses or ask the plaintiff questions under oath, the answer “I can’t recall” becomes all too common.

Fortunately, there is a solution to this problem: the recorded statement. By taking timely and detailed recorded statements from the plaintiff, witnesses, and insured; or, in the workers’ compensation setting, from the employee and employer; an adjuster can help set down on paper details that are likely to disappear from people’s memory banks.

Timely recorded statements are taken before most people have had a chance to develop their litigation strategies, and so useful answers are easier to get. And useful does not always mean honest. A personal injury claimant with a questionable claim is more likely to claim that he never felt pain in his back before the accident if he does not yet know that he will have to turn his medical records over to the other side. Such statements can then be key to impeaching claimants or witnesses who wish to tailor their stories to fit their legal theories.

Pre-Settlement Questionnaires and Medical Exams

Have you ever settled a case for a substantial sum only to see the claimant’s obituary in the newspaper a few weeks later? What steps can you take to come up to speed on the claimant’s health status before you settle?

When settling a case involving injuries to a specific body part, it is often easy to focus on that body part exclusively without looking too deeply into the claimant’s overall health status. This could be a serious mistake. The parties’ expectations about the claimant’s life expectancy often dictate the value of a settlement. It is therefore wise to get detailed information to help estimate what that life expectancy may be.

One method an insurer might use is to refuse to settle unless the claimant fills out a pre-settlement questionnaire which would include questions about any conditions the employee is suffering from. They could take this a step further and demand the production of all primary care medical records to verify the claimant’s health status. Insurers could even require a full pre-settlement IME with lab work. Whichever method they chose, insurers should be aware that more information is better when it comes to settlement.

Beware of Policies That Ban Employees from Discussing Pay

A common component of a company handbook is a policy prohibiting employees from discussing wages and benefits with coworkers. Such policies often warn employees that violators will be disciplined up to and including termination. Employers should be cautious about including this kind of language in their personnel materials, because such limitations may run afoul of the National Labor Relations Act (NLRA).

Section 7 of the NLRA gives employees the right to engage in “concerted activities for the purpose of collective bargaining or other mutual aid or protection.” That right applies to both union and nonunion employees. Section 8 of the NLRA makes it an unfair labor practice for an employer to limit its employees’ Section 7 rights.

The National Labor Relations Board (NLRB) takes the stance that these sections of the NLRA prevent employers from banning employee discussions about pay and benefits. Even if such a policy is never enforced, simply having a policy establishing an outright ban on wage-related discussions on the books may well constitute an unfair labor practice under the NLRA.

On the other hand, a more finely-tuned policy addressing pay discussions may well pass muster under the NLRA. Employers can set guidelines to limit wage-related discussions while employees are supposed to be engaged in work, as long as the limitations also apply to other kinds of discussions unrelated to work.

For more information and advice, please contact the attorneys at Tucker Law Group.

Medical Marijuana Law’s Effect on Employers’ Drug Policies Still Hazy

In light of the protections Maine’s Medical Use of Marijuana Act (MMUMA) affords to qualifying patients, many employers are left wondering how the law impacts them.  And while medical marijuana use is legal in Maine, possession and use of the drug still violates federal law.  In this complex legal environment, employers must use caution in making employment decisions based on their employees’ medical marijuana use.
Maine’s medical marijuana law provides, among other protections, that patients whose conduct is authorized by MMUMA may not be subjected to “disciplinary action by a business or occupational or professional licensing board or bureau.”
However, MMUMA does not require employers to accommodate marijuana use in the workplace, or allow any employee to work while under the influence of the drug.  It also prohibits employees from being under the influence at work if doing so would be negligent or violate professional standards.
While these provisions are a nod to common sense, less obvious is the way MMUMA interacts with drug-testing laws and policies.  An employer with a federal- or state-approved drug-testing policy must be careful in making employment decisions based on drug tests.  For instance, a CDL driver who tests positive for using legal medical marijuana outside of work may, under DOT regulations, be removed from duty.  While that employee must then be referred to a Substance Abuse Professional, terminating that employee may or may not violate MMUMA’s protection of patients against disciplinary action (more on that below).
While MMUMA does appear to protect employees from discipline due to medical marijuana use outside of work, it is unclear just how far the protection extends.  Courts in other states, such as the 6th Circuit Court of Appeals, have recently found that employers have the right to discharge employees for testing positive for medical marijuana use outside of work.  The 6th Circuit reasoned that Michigan’s act only prevents state occupational and professional boards – and not private employers – from disciplining employees for medical marijuana use.
You may be wondering, why does Michigan’s law matter to Maine employers?   Because the language the 6th Circuit interpreted in the Michigan Act is identical to the relevant language in MMUMA.   The very same language in MMUMA which appears to prevent private Maine employers from disciplining employees for medical marijuana use outside of work has been interpreted by at least one federal court to extend no such protection.
Because no Maine case has yet addressed this issue, and because there are so many variables at play, a wise employer will tread carefully when making employment decisions based on medical marijuana use.  As always, feel free to contact the attorneys at Tucker Law Group if you have any questions on this issue.