Proposal gives $1.5 billion to employers

COLUMBUS – Ohio Governor Mike DeWine and Ohio Bureau of Workers’ Compensation (BWC) Administrator/CEO Stephanie McCloud recently proposed giving $1.5 billion to Ohio employers this year following strong returns on the agency’s investments.

“This is great news for Ohio,” said Governor DeWine. “This money will help Ohio employers expand their businesses, create jobs, and invest in capital improvements. Ohio’s economy is strong, and this proposal reinforces our goal of creating more jobs in the state.”

In addition to money for private businesses, the $1.5 billion proposal also includes money for public employers, including approximately $114 million for local governments and around $50 million for public schools.

The money would be Ohio’s fifth investment return to private and public employers of at least $1 billion since 2013 and sixth overall during that time.

“Our investment portfolio is strong, our injury claims are falling, and our safety and wellness initiatives are making a difference,” said Administrator McCloud. “All of these actions mean big savings for employers, and we’re delighted to share this success with them.”

State law requires businesses to carry workers’ compensation coverage to protect workers who suffer injuries or illnesses on the job. The employers’ premiums are invested to grow the fund that supports injured worker claims. When investment returns are strong, the agency shares a portion of the investments with qualifying employers in the form of a dividend.

The $1.5 billion dividend equals 88 percent of the premiums employers paid for the policy year that ended June 30, 2018 (calendar year 2017 for public employers). BWC insures roughly 242,000 public and private employers.

Governor DeWine and Administrator McCloud announced their proposal this morning at Dynalab Electronic Manufacturing Services in Reynoldsburg.

“I really appreciate this news today and what Governor DeWine and BWC are doing to help businesses succeed,” said Dynalab, Inc. President Gary James. “To compete in the global market, we must be on the cutting edge at all times and that takes resources. The check we’ll receive in late summer will definitely help.”

McCloud will present the proposal to the BWC Board of Directors on Wednesday during board committee meetings. A vote would follow at the board’s June 28 meeting. If approved, checks would be issued to employers in September.

BWC earned $1.3 billion in net investment income in 2018, a net return of 5.1 percent on assets of $26.9 billion.

The proposal continues a trend of lowering workers’ comp costs for Ohio’s private and public employers. BWC has repeatedly lowered premium rates in recent years, including a 12 percent cut for public employers that took effect in January and a 20 percent cut for private employers that begins July 1. The agency disbursed $1 billion or more to employers in 2013, 2014, 2017 and 2018. It also distributed $15 million in 2016 for public employers.


In total, BWC has saved employers nearly $10 billion in workers’ comp costs through dividends, credits, rate reductions and greater efficiencies since 2011.

Medicaid fraud scheme that bilked the government agency out of nearly $373,000.

Medicaid is the single largest payer for mental health services in the United States with nearly 12 million visits to U.S. hospital emergency departments. (These individuals had either a mental disorder, a substance abuse problem, or both.) Another shocking statistic from the U.S. Surgeon General claims that 11 percent of youth in the country have been diagnosed with a mental illness. Medicaid combats this growing problem by providing mental health services for vulnerable youth up to age 18 through therapeutic day treatment programs.

Unfortunately, the owner and operator of a day treatment program in North Carolina took advantage of this government-funded service to add a little here and a little there to her bills that were submitted to Medicaid. (She thought Medicaid wouldn’t notice.) Fortunately, the government healthcare program paid attention to the details in the overinflated bills and put a stop to the behavioral health service provider’s Medicaid fraud scheme that bilked the government agency out of nearly $373,000.

Services provided through therapeutic day treatment programs seek to help children and adolescents who suffer from unstable home situations, conduct disorders, adjustment problems, severe mood swings, school problems, rage outbursts, isolation, attention deficit disorder, depression and any other behavioral problems that affect troubled youth. The North Carolina mental health service provider used her certification as a bona fide Medicaid provider to submit false claims stating that she provided services to Medicaid recipients when she did not.

(The behavioral health provider inflated her bills to increase the size of her bank account.)

For more than three years, the woman added units of day treatment services to her bills for certain days and times when she did provide services, but not the amount she claimed. She also claimed that she provided services to patients, when she did not provide any at all. (Sometimes the patients were double booked at another facility where they actually received mental health treatment.) At other times, she billed for services provided even though the facility was closed for snow or for a national holiday. (It’s always the details that trip up fraudsters.) The owner also tried to bill for psychotherapy services as if they had been performed by a licensed medical doctor. (Investigators nipped that claim in the bud after interviewing the doctor who said he did not perform any psychotherapy services.)

The owner of the North Carolina-based mental health services business pleaded guilty to one count of Medicaid fraud for overbilling the government program in the amount of $372,917.74. (The total loss to Medicaid was $337,615.42. Think of all the youth who could have received critical mental health services for that amount of money.) Let’s hope that when this selfish woman is sentenced, she will receive an appropriate sentence along with the requirement to pay restitution in full. (She might receive prison time and be banned from participating as a Medicaid provider.) Whatever the punishment, it’s a given that she will never be able to make up for the lack of quality care she was entrusted to provide.

Department of Justice press release entitled, “Medicaid Fraud Provider Plea,” released March 29, 2019.  

RALEIGH – Robert J. Higdon, Jr., United States Attorney for the Eastern District of North Carolina, announced that in federal court, United States Magistrate Judge Robert B. Jones, Jr. accepted a guilty plea in a health care fraud matter.

ANDREA BOATMAN HALL, now known as, ANDREA MONIQUE PURNELL, 32 years of age, from Sanford N.C., pled guilty to one count of Medicaid Provider Fraud.    

Psychiatrist claimed private disability policy Social Security disability benefits, While Still working!

There are two types of mind games. Individuals who want to maintain a healthy brain keep their mind active by completing activities such as crossword puzzles, Sudoku, learning how to play a musical instrument or doing something they’ve never done before. The other type of mind games involves engaging in actions that psychologically affect others. (Usually not in a good way, I might add.)  Today, you will learn about a psychiatrist from Hobe Sound, Florida who you might think would be the last person to play mind games due to the nature of his profession. However, that did not stop him from stealing about $800,000 from the federal government through a Social Security Disability fraud scheme and a tax fraudscheme he carried out over seven years. (He deliberately played a game of deception with the federal government.)

According to court documents, the psychiatrist claimed he was unable to work and filed a claim with his private disability policy in 2002. (As a result, he began receiving disability payments from the private insurance company.) One year later, the doctor also applied for Social Security disability benefits. (Again, his claim was approved.) The Social Security Administration (SSA) began paying the supposedly disabled man Social Security disability benefits. There was nothing wrong with this situation until the psychiatrist neglected to inform the SSA that he had returned to work. In fact, he was gainfully employed by a Pennsylvania hospital making more than $1.6 million in income. (That amounts to about $230,000 a year in salary, not including the disability payments he was receiving simultaneously.)

Not only did the psychiatrist fail to report to his private insurance company and the SSA that he had gone back to work, he also took steps to conceal his income from the private insurance company, the SSA and the Internal Revenue Service (IRS). (As you can guess, nothing good came from that really bad decision.) The steps he took amounted to directing his income to be paid to nominee individuals and corporations. Today’s fraud article also mentions that although he filed personal tax returns, he did not report his $1.6 million in income. And, another nail that sealed his coffin was the submission of fraudulent documentation to his insurance company that falsely stated he was not working.

All of the lies finally caught up with the doctor who tried to outmaneuver the government. The Hobe Sound, Florida psychiatrist pleaded guilty to tax fraud and Social Security Disability fraud.

When sentenced, the doctor faces a maximum sentence of five years in prison for tax evasion, 20 years behind bars for wire fraud, and five years for Social Security fraud. Then, on top of that he could receive a period of supervised release and will have to pay $451,026 in restitution to the SSA, $341,032 to his private insurance company and an amount to be determined by the IRS, plus monetary penalties. (Notice that the government doesn’t play any mind games. Prosecutors simply tell it like it is: if you think you can get away with committing fraud against the government, be mindful of the outcome of today’s case.)

Department of Justice press release entitled, “South Florida Doctor Pleads Guilty to Tax Evasion and Disability Fraud,” released on November 20, 2018.  

A South Florida doctor residing in Hobe Sound, Florida, pleaded guilty today to tax evasion, wire fraud, and Social Security disability fraud, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Ariana Fajardo Orshan for the Southern District of Florida.

According to court documents and information provided to the court, Arthur John Kranz was a doctor specializing in psychiatry.  Beginning in 2002, Kranz made a claim on his private disability policy that he was unable to work, and began receiving disability payments from his insurance company.  In December 2003, Kranz submitted an application to the Social Security Administration (SSA) for disability benefits, which was later approved. Kranz then began receiving SSA disability payments in addition to the private disability insurance payments.  Kranz was required to notify his insurance company and the SSA if he returned to work.

Opioid–Related Litigations on the Rise

Potential costs and expenses for liability for opioid based claims are formidable, leaving many companies wondering whether insurance policies offering commercial general liability insurance (“CGL”), product liability insurance (“PLI”), and directors’ and officers’ insurance (“D&O”) provide coverage for direct and opioid-related claims.  “Opioid-related claims” refers to litigation filed by governmental entities and other groups against multiple defendants which feature allegations of mass marketing and distribution of opioid products to the public at large – as opposed to personal injury claims brought by individual plaintiffs.  “Direct opioid claims” include typical private lawsuits brought by an injured plaintiff for personal injuries or as the spouse of a decedent for wrongful death claim under a theory of products liability, fraud and statutory violations.

Multiple state and federal courts have addressed CGL and PLI policies’ coverage for defense costs in opioid-related litigation; no courts have yet considered indemnity for settlement or judgment amounts.  The courts follow the same general rules of insurance contract interpretation in order to determine whether there is coverage for the defense of opioid-related claims that they do in other cases.  The outcomes vary from case-to-case, turning on the precise wording of the applicable insurance policy, the local law applied, the posture of the case, and the nature of the claims.  There is authority supporting coverage for defense costs in opioid litigation when at least one negligence-based claim resulting in bodily injury or property damage is alleged.

There is scant authority dealing with an insurer’s duty to defend and indemnify individual personal injury claims arising from “opioid crisis” allegations.  On the other hand, there is no reason why the coverage analysis should depart from the analysis applicable to any other pharmaceutical products liability claim.

Good arguments exist supporting a claim for defense costs under PLI policies based on allegations of arguably negligent conduct separate and apart from the type of intentional and fraudulent conduct that is excluded; there is also case law supporting the argument that the type of economic damages sought by the municipalities, and insurance companies are damages that “arise from bodily injury”.  Coverage under the CG policy will follow a similar analysis but will depend on whether or not product based claims are excluded.

Liability policies typically cover “‘bodily injury or property’ damage resulting from an ‘occurrence.’”  Generally, “occurrence” is loosely defined as an “accident.”  The critical point is that the harm claimed is not intentionally caused; liability insurance policies exclude coverage for harm caused by intentional conduct.

The opioid suits typically allege both intentional and negligence-based conduct.  Most jurisdictions hold that as long as there is a claim in an underlying lawsuit that is eligible for coverage, an insurance company must defend the insured.  This evaluation is made on the face of the pleadings.  The Court determines whether or not negligence is the operative theory uniting the claims or whether there is a valid negligence claim amongst the intentional conduct claims.

Courts also have reasoned that the economic losses claimed by municipalities qualified as damages caused by or resulting from “bodily injury or property damage” covered under the policies.

Current literature regarding indemnification for opioid suits under D&O coverage offers little guidance, but we believe the usual principles should apply allowing indemnification when the policy terms are met.  Complaints have been filed by shareholders of pharmaceutical companies claiming violations of federal security laws in regards to the marketing, manufacturing and distribution of opioids against pharmaceutical companies and their individual officers, including past and current CEO’s, VP’s and SVP’s; in other actions, individual officers and directors have been subject to regulatory and derivative claims.

I Broke A Safety Rule. Can I Still Collect Benefits?

Pennsylvania employees may still be able to collect workers’ compensation benefits even if they break a safety rule at work. The workers’ compensation system is no-fault, meaning that, in most cases, injured employees may collect benefits no matter who was to blame for the accident. In exchange for providing workers’ compensation insurance regardless of fault, employers are protected from personal injury lawsuits for their employees’ work injuries. However, depending on each state’s laws regarding employee conduct, there may be exceptions to this general rule.

Pennsylvania Employees May Still Be Eligible for Benefits
Generally, workers are eligible for workers’ compensation benefits even if their accident was caused by their own negligence or carelessness. However, workers’ compensation insurance companies will often look for ways to deny benefits and may initially deny a worker’s claim. Insurers may deny benefits because they dispute whether the injury happened at work, they suspect fraud, or they claim another defense, including:

Willful misconduct – When an employee intentionally disregards an employer’s rules or interests, the insurance company may use the willful misconduct defense. An injured employee may be denied coverage if he or she purposely violated a known and enforced safety rule.
Horseplay – Workers who are injured as a result of engaging in horseplay at work may be denied benefits. To avoid paying benefits, employers must show that the injury was caused by the employee’s violation of a workplace rule, that the employee knew about the rule, and that the horseplay was disconnected from the employee’s duties.
Intentional self-infliction of injuries – If an employee intentionally injures him or herself, the employer is not required to provide benefits. However, the employer does bear the burden of proving that the employee intentionally engaged in high-risk behavior, which caused his or her injury.
Intoxication/illegal drug use – Workers who are injured while intoxicated or under the influence of illegal drugs may be ineligible for workers’ compensation. However, benefits may be granted if it is determined that the injury would have happened whether the employee was intoxicated/under the influence or not.
Injured Workers Are Not Automatically Excluded from Coverage Due to Safety Rule Violations
Whether an injured worker may collect workers’ compensation benefits even though they violated a workplace safety rule depends on the specific facts of the case. Generally, employees are still entitled to benefits even if they violate a safety rule because the workers’ compensation system in Pennsylvania is no-fault.

However, insurance companies may deny coverage by claiming several defenses, including willful misconduct, horseplay, intentional self-infliction of injuries, or intoxication/illegal drug use. Employees should therefore seek advice from a qualified attorney in their local area who can evaluate their case and explain all their legal options.

Driver in Pennsylvania charged with insurance fraud...

A woman in Delaware County, Pennsylvania has been charged with insurance fraud over a claim she made for a car accident in December 2018.

Margaret Towell filed an accident claim with Farmers Insurance in December 2018 after the vehicle she was allegedly driving swerved and hit a pole after being hit from behind by another car. However, investigators later found that it was actually her boyfriend that was behind the wheel – and driving under the influence at that. 

“As a result of the investigation, it was determined that Margaret Towell provided false information when she filed her claim with Farmers Insurance when she reported she was the individual driving at the time of the accident,” Katayoun Copeland, district attorney for Delaware County, said in a release given to the Delaware County Daily Times.

“Here in Delaware County we have zero tolerance for insurance fraud, and individuals, such as Margaret Towell, who commit insurance fraud will be held accountable for their actions,” said Copeland.

According to the Daily Times, Towell was charged with false/fraudulent/incomplete insurance claim, theft by deception involving false impression, and criminal use of a communication facility. A preliminary hearing is scheduled in May.

KICKBACKS, BRIBES AND NARCOTICS, OH MY!

Just as Dorothy was extremely worried about coming across wild animals such as lions, tigers and bears on their way to The Emerald City, the federal government must constantly be on the lookout for wild behavior by deceptive Medicare providers who stalk healthcare programs on a regular basis, just waiting to jump their prey. (Fraudsters are constantly looking to ravage the pot of money intended for beneficiaries who have paid into the program and truly deserve the associated benefits.) Just like the Wizard of Oz, the owner of two Detroit, Michigan area health clinics was hiding behind her two businesses, all the while using kickbacks, bribes and narcotics to carry out her $8.9M Medicare fraud scheme.

As we open up the curtains on today’s fraud case, you will see the owner of the two Detroit-based health clinics working together with several co-conspirators to falsify claims for home healthcare and other physician services. Her businesses grew as the owner offered to pay kickbacks and bribes in cash and write prescriptions for narcotics (like oxycodone) to Medicare beneficiaries in exchange for the use of their Medicare beneficiary numbers. Then, she falsely billed Medicare for services allegedly provided by the two clinics.

Over five years, the clinic owner and her co-conspirators worked hard to defraud the Medicare healthcare program through fake claims worth $8.9 million. Court evidence showed that the defendants falsified medical records and signed false documents to make it appear that the services claimed were provided. The services she billed for were usually medically unnecessary, provided by an unlicensed physician or not provided to the beneficiaries at all. (Keeping with the Wizard of Oz theme, you could say that she was the Wicked Witch of the Midwest.)

The 34-year-old clinic owner from Shelby Township pleaded guilty to one count of conspiracy to commit healthcare fraud and one count of healthcare fraud involving the submission of $8.6 million in false claims to Medicare. She was sentenced to 13 years in prison and ordered to pay $6.3 million in restitution along with her co-conspirators. (She must also forfeit the same amount of money.) After a separate four-day trial, a 47-year-old co-defendant from Detroit was convicted of healthcare fraud and will serve 11 years behind bars for her part in the scheme. Another co-conspirator from Oakland Township was sentenced to 42 months in prison while the fourth person involved in the scheme – a 39-year-old from Canton Township – received a prison sentence of 27 months.

Fortunately, the Medicare Fraud Strike Force whipped through this case like the twister that sent Dorothy’s house flying, shutting down the illegal operation. The perpetrators in this case most likely understand that they are not in Kansas, nor Detroit, anymore. And, after serving a few years behind bars, they’ll realize that there’s no place like home. (They should have thought about that before they committed Medicare fraud.)

 “Owner of Detroit health clinics gets 13 years for $8.9M in Medicare Fraud,” published by The Detroit News on November 14, 2018.

The owner of two Detroit health clinics was sentenced to 13 years in prison Wednesday for her role in an $8.6 million scheme involving fraudulent Medicare claims.

Jacklyn Price, 34, of Shelby Township, was sentenced by U.S. District Judge Robert Cleland, who also ordered Price to pay $6.3 million in restitution along with her co-conspirators and to forfeit the same amount, the U.S. Attorney’s Office said in a released statement.