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Tag: 2021 News

Farm Labor Contractors Charged for $1.42M Premium Fraud

Farm labor company owners and siblings Elias Perez, 40, of Greenfield, and Alejandra Perez, 37, of Soledad, were arraigned on over 20 felony counts of insurance and tax fraud after allegedly underreporting payroll by over $17 million resulting in a loss of over $1.42 million to their insurance companies.

The Department of Insurance discovered the alleged fraud after learning that an injured employee was treated out of a garage by an unlicensed professional.

The Perezes are owners of farm labor contracting companies in Greenfield called PFL Contracting Inc., Future Ag Management, Inc. (FAM) and Future Harvesters and Packers, Inc., (FHP), which primarily hire farm labor employees to harvest crops.

An investigation found on June 28, 2016, an employee of one of the Perezes’ businesses, FAM, sustained a work-related injury to their back when they tripped and fell while harvesting crops. The Perezes along with a FAM supervisor allegedly did not provide the injured employee with the required professional medical treatment. For two weeks, the FAM supervisor took the injured worker to seek treatment from an unlicensed professional who operated a business out of their garage.

More than two weeks after the employee’s injury, Elias Perez filed a workers’ compensation claim with their insurance company and stated the employee’s injury occurred on July 7, 2016.

FAM and FHP obtained workers’ compensation policies from two different insurance companies. A comparison of records from the insurance companies and the California Employment Development Department (EDD) showed large discrepancies in the payroll reported by the Perezes. From July 2014 to August 2017, they reported to EDD that FAM and FHP paid $28,521,347 in wages while reporting only $23,246,922 to their insurance companies for the same time period.

Investigators served bank search warrants and conducted a thorough review and audit of the payroll checks, which determined that FAM and FHP from July 2014 to August 2017 actually paid over $41 million in wages. They allegedly underreported over $17 million in wages, which resulted in approximately $1.42 million in premium owed to their insurance companies.

In addition, the Perezes underreported PFL, FAM and FHP’s wages by approximately $12.8 million to EDD resulting in potentially $1.28 million in unpaid taxes.

FAM also maintained a workers’ compensation policy with another insurance company for the Perezes’ farm labor contracting operation in Arizona. Records obtained from that insurance company and the Arizona Department of Economic Security indicated additional discrepancies in their reporting and was included in this audit and investigation.

Elias Perez was charged with five felony counts and Alejandra Perez was charged with 21 felony counts. Both were arraigned in Monterey County Superior Court.

The Monterey County District Attorney’s Office is prosecuting this case.

Sacramento Welder Faces Two Felonies for Fake Head Injury

41 year old Ahmad Zaki Noori, who lives in Sacramento, was arraigned on two felony counts of workers’ compensation insurance fraud, after allegedly misrepresenting symptoms following a work-related injury, in order to receive $21,000 in undeserved benefits.

On July 16, 2019, Noori, while working as a welder, sustained a head injury and contusions on multiple parts of his body.

Following his injury, a workers’ compensation claim was filed with his employer’s insurance company and Noori began receiving workers’ compensation benefits. He presented himself as someone with severe amnesia and as someone who had difficulty performing daily functions of living, like speaking, walking or driving.

An investigation by the California Department of Insurance found Noori misrepresented his symptoms to medical professionals and those handling his claim.

Undercover surveillance showed Noori speaking, walking, and driving – all functions he claimed not to be able to do as a result of the injury. The surveillance also showed him performing duties at an automobile dismantling yard, like loading items onto a flatbed trailer and changing a spare tire.

In addition, two of his former co-workers reported they saw him out and about acting normally. One co-worker reported seeing Noori inside a retail store and that he was walking unassisted, laughing, and speaking on the phone. The second co-worker reported seeing Noori at another retail store and that he drove a vehicle into the parking lot, exited the vehicle and was able to walk with no walking aids.

After watching the video surveillance, his doctor reported the actions Noori was performing in the video were drastically different than the actions he was performing during his office visits. The doctor also reported that Noori showed no evidence of neurocognitive or orthopedic deficits during the entirety of this claim period.

Due to Noori’s misrepresentations, he received $21,000 in undeserved workers’ compensation payments and his employers’ insurance company lost an additional $80,679 in medical, legal and investigation costs.

Noori was arrested at his residence on April 13, 2021. He is scheduled to return to court on May 20, 2021.

This case is being prosecuted by the Sacramento County District Attorney’s Office.

DFEH Publishes Guidance on Employer Mandated Vaccinations

After patiently waiting for COVID-19 vaccine guidance in California, employers now have some clarification from California’s Department of Fair Employment and Housing (DFEH). As somewhat expected, the DFEH’s guidance issued early this month aligns with the EEOC’s Guidance issued in December 2020.

The firm of Fisher Phillips has commented on the top five takeaways for employers about COVID-19 vaccines according to the DFEH’s recent guidance regarding COVID-19 vaccines:

1. An employer may require employees to receive COVID-19 vaccines.

Consistent with the EEOC’s guidance, the DFEH states that, with certain exceptions, employers may require at-will employees to receive vaccines issued under the FDA’s Emergency Use Authorization (EUA) procedures.

2. If an employer requires vaccination against COVID-19 in its workforce, the employer must reasonably accommodate employees with disabilities or with sincerely held religious beliefs or practices.

Even if an employer may mandate vaccines amongst its employees, it does not mean you have free reign to require the vaccine for all workers. In accordance with the guidance from the EEOC, the DFEH states that if an employee objects to vaccination on the basis of disability or sincerely held religious belief or practice, you must engage in the interactive process to identify options for reasonable accommodations that do not cause undue hardship.

3. An employer is not legally required by the FEHA to reasonably accommodate all employees who refuse the vaccine.

The DFEH says that if an employee does not have a reason based on a disability or sincerely held religious belief for not being inoculated with a vaccine issued under the EUA procedures, you are not legally required to reasonably accommodate the employee.

The DFEH goes on to state that you are permitted to enforce reasonable disciplinary policies and practices if you are not retaliating against any employee for engaging in protected activity, such as opposing practices prohibited by FEHA.

4. If an employer administers a COVID-19 vaccination program, an employer may ask employees for medical information relevant to vaccination.

The DFEH indicates that you may ask for medical information, such as whether an employee is experiencing COVID-19 symptoms or a pre-vaccination screening questionnaire, so long as the inquiry is “job-related and consistent with business necessity.”

5. An employer may require its employees to provide proof of vaccination.

The DFEH specifies that simply asking employees or applicants for proof of vaccination is not a disability-related inquiry, or religious creed-related inquiry, or a medical examination.

Despite the wording of this Guidance, the five takaways require caution and guidance before implementation. The DFEH material should be read in its entirety.

Residential Care Facility Owner Indicted for $1M Premium Fraud

Marion Piggee, Jr., 68, of Los Angeles, was arraigned on seven counts of insurance fraud after an investigation by the California Department of Insurance revealed he was allegedly underreporting employee payroll by nearly $6 million in order to fraudulently reduce his business’s workers’ compensation insurance premium by over $1 million.

On November 28, 2016, the State Compensation Insurance Fund (SCIF) filed a suspected fraudulent claim with the Department of Insurance alleging potential insurance fraud. SCIF reported that Piggee, as owner of Center for Behavioral Change, an adult residential care facility, allegedly underreported employee payroll in order to reduce the proper rate of insurance premiums owed to SCIF.

A routine audit for the policy period of November 1, 2014, to November 1, 2015, found that Center for Behavioral Change reported one employee and payroll wages of $8,035. However, the audit revealed wages to be $881,593 for the same policy year. It also showed Piggee’s business had obtained workers’ compensation insurance for one facility, but failed to disclose they had also acquired eight other facilities.

The investigation found that Piggee had allegedly been underreporting company payroll from November 2009 through May 2016. The investigation also revealed Center for Behavioral Change had 60 employees, despite their reporting of only one employee. The business underreported payroll by $5,982,410, which resulted in a premium loss to SCIF of $1,017,937.

Piggee was arraigned at the Los Angeles Superior Court on April 6, 2021.

This case is being prosecuted by the Los Angeles County District Attorney’s Office.

SoCal Chiropractor Sentenced for $6.6M Comp Kickback Scheme

Chiropractor Joserodel Zavala Candelario, an Irvine resident, was sentenced in federal court to 36 months in federal custody for his participation in two huge health care fraud schemes, one involving the California Worker’s Compensation system, and for concealing income he received from those multi-million dollar schemes.

He was the owner of Candelario Chiropractic, a Professional Corporation, and R.I.S.E. Medical Center, a Professional Corporation, dba R.I.S.E. Wellness Center, which operated at multiple locations in the Southern District of California, including at 5030 Bonita Road, Suite B, in Bonita and at 3231 Waring Road, Suite N, in Oceanside.

Candelario pleaded guilty on January 21, 2020 to a three-count superseding information, charging Conspiracy in violation of 18 U.S.C. § 371, Conspiracy to Commit Health Care Fraud in violation of 18 U.S.C. § 1349, and False Statement on Tax Return in violation of 26 U.S.C. § 7206(1).

In addition, between March 2012 and November 2015, Candelario carried on an unlawful cross-referral scheme, in which he would receive new Workers’ Compensation patients for RISE Wellness. In return for new patients, Candelario agreed to meet a quota for the “value” of ancillary services and DME he was expected to prescribe for each patient sent to him by co-conspirators, with a “value” — such as $30-$50 per MRI referral — set by those conspirators.

As part of the scheme, Candelario, who could function as a WC primary care provider, dictated the same treatment plan for all WC patients, regardless of their individual medical needs, so he could fraudulently bill WC insurers.

Candelario admitted that he violated his duty of honest services to his patients. He received approximately 529 new WC patients as a result of the scheme, and he submitted approximately $6,605,364 in bills to insurers for services rendered to those patients. Of those billed amounts, he was paid $771,000 by WC insurers

Separately, he has been charged and has pleaded guilty in San Diego Superior Court case SCD281328 to Concealing an Event Affecting an Insurance Claim, in a violation of California Penal Code 550(b)(3).

Candelario carried out a scheme to defraud Medicare and TRICARE out of millions of dollars by using physical therapy codes to bill for supposed physical therapy services performed on patients by individuals who were not licensed to provide physical therapy, including chiropractors, massage therapists, physical therapy aides, and an acupuncturist.

Candelario and his co-conspirators told patients that RISE Wellness offered an “integrated” approach to wellness, to convince patients to accept physical therapy, acupuncture, chiropractic, and diagnostic services at RISE Wellness, in order to fraudulently bill for non-covered services provided by unauthorized individuals, and collect as much money as possible from health care benefit programs.

Once patients came in the door, the defendant pushed his staff to conduct diagnostic tests on every patient, regardless of medical necessity, to increase billing and payment, and he also demanded that staff meet quotas for the minimum number of diagnostic tests, and recommendations for durable medical equipment, or DME, massages and other services, regardless of whether specific patients needed the items and services.

He also imposed quotas for the minimum number of patients with specific types of insurance coverage at RISE Wellness, e.g., “60 Tricare patients per day,” regardless of whether those patients needed treatments.

For example, on June 6, 2014, Candelario instructed a staff member, “I need you to do 5 axonii [diagnostic tests] a day no matter what for now on.” The following month, on July 7, 2014, Candelario texted, “OK team you are receiving 2 new diagnostic testing devices this month. I need 20 patients to be tested on each one this month no matter What [sic].”

To increase billing and payment, the defendant pushed the schedulers to cram in as many as 50 patients per day for each provider. He complained when staff fell short of this goal, noting, on June 11, 2015, certain “front desk issues” including: “No[one] has called any patients to fill empty slots in provider schedules or grab patients in lobbies to put into provider schedules.”

If a patient failed to show up for an appointment, Candelario directed staff to bill the health care benefit program for the visit, even though no visit had occurred and no service had been provided. For example, on March 9, 2015, Candelario wrote, about late reimbursements, that “the only solution is to start billing the missed appointments like i asked following the system.”

It was part of the scheme that, using the mean and manners described above, and others, the co-conspirators submitted and caused to be submitted at least $7,260,327.20 in false and fraudulent bills to TRICARE and Medicare. Of those fraudulent bills, TRICARE paid a total of $3,450,596.43 and Medicare paid $37,843.04.

Candelario failed to pay his fair share of taxes on the funds he fraudulently took, resulting in $505,000 in tax losses just for tax year 2013.

DWC Moves Eureka Office Permanently Online

The Division of Workers’ Compensation announced its Eureka satellite office will close the physical location at 409 K St. on July 1, 2021 and its operations will remain online.

By most accounts, the virtualization of matters proceeding through the litigation process has been a positive experience for the industry. Additionally, depositions have been successfully taken online. And some medical evaluations have been by telehealth.

The Eureka satellite office has conducted operations virtually since the COVID-19 pandemic began in 2020.

All Eureka matters will continue to be heard either by phone or video even after COVID-19 restrictions ease.

As of July 1, all filings that are sent by U.S. Mail should be directed to the Santa Rosa district office.

It is not known if this is a precursor to the “new normal,” or just the destiny for one of the smaller and remote offices of the statewide system. Over the next few months, the virtual evolution, if there will be one, will likely become more transparent.

NCCI Surveys Employer Post-Pandemic Workplace Plans

In this time of uncertainty, one thing is for sure: the workplace of the future will look different than it does today. For some companies, offering telecommuting continues to be a viable option. At the other end of the spectrum, some employers will likely continue to require high physical proximity working environments for the foreseeable future.

NCCI conducted interviews with several industry professionals to better understand what the future workplace might look like and how new challenges are being addressed.

In speaking with interviewees, NCCI consistently heard that employers have taken similar measures and developed multifaceted risk mitigation strategies, such as:

– – Working remotely when possible
– – Applying social distancing
– – Conducting health/symptom screenings
– – Cleaning and disinfecting
– – Implementing workspace layout changes
– – Limiting visitors

Some employers were able to move to a full telecommuting model within a very short time, while others used what might be called a “hybrid” approach; that is, implementing safety controls for jobs that must be performed onsite, while encouraging telecommuting for employees who can effectively perform their jobs from home.

Employers are looking for ways to reduce travel and human-to-human contact, which may impact workplace congestion, shift work, group training, overnight travel, and the use of cleaning chemicals and tools/equipment. New technologies are enabling more physical distancing to address infectious disease prevention.

Examples include virtual meetings and training sessions, as well as touchless transactions, touchless printing, and wearable technology that supports contact tracing and signaling to prevent close physical proximity.

Insurance companies have many interactions with their customers in various ways, which are critical in this time. Insurers’ roles involve exposure assessment, claims mitigation, loss prevention, audits, etc. Insurers indicated that they are taking similar proactive approaches and have already started to develop new evaluation methods to address physical proximity exposures, while simultaneously providing education and services to their customers.

Examples include using telesurveys and virtual visits for analysis, loss prevention, and audit services to cut back on in-person activity. One insurer noted that policyholders have expanded the duties of their employees to an all-hands-on-deck approach due to workforce cutbacks.

San Jose Employer Faces 20 Premium Fraud Felonies

The San Jose owner of a flooring company was charged this week with fraud, after being caught lying that he had only a single full-time employee and not paying close to a $1 million in overtime to the numerous employees who were working for him.

Martin Helda, 33, of All Bay Area Floors, is facing 20 felony counts of Workers Compensation Premium fraud, Employment Development Department fraud, and wage theft. His arraignment has not yet been scheduled.

Law enforcement is looking for other victims who worked for Helda’s company.

“Greedy business owners are banking that cheated employees won’t come forward,” prosecutor Vonda Tracey said. “These workers did the work. They are owed the pay.”

The investigation, in partnership with the California Department of Insurance, began after an insurance audit revealed that Helda’s payroll did not match the number of people he had working for him.

As part of District Attorney Jeff Rosen’s recent community reforms, this case was worked in conjunction with the newly formed Workers’ Exploitation Task Force (WE TF). DA Investigators utilized partnerships with the Department of Industrial Relations and the State Labor Commission to find justice for all victims of wage theft.

A DA investigation uncovered that Helda withheld at least $900,000 in overtime wages owed to employees known to EDD, but possibly as much as $1.7 million owed to all employees including those not known to EDD.

Because of scant employee records, the DA’s Office cannot identify many of the workers, who could be eligible for compensation.

Workers for Helda at the All Bay Area Flooring Company, are asked to contact Investigator Lt. Michael Whittington at (408) 808-3742 or mwhittington@dao.sccgov.org.

WCRI Study – California Claim Costs “Mostly Stable”

A new series of studies, CompScope Benchmarks, 21st Edition, from the Workers Compensation Research Institute provides in-depth analysis of costs per claim and other performance metrics across 18 state workers’ compensation systems for claims with experience through March 2020 for injuries up to and including 2019.

“The CompScope studies can help policymakers and other stakeholders identify current cost drivers and emerging trends in a wide variety of workers’ compensation system components,” said Ramona Tanabe, executive vice president and counsel of WCRI. “The studies include experience on claims through March 2020, at the very beginning of the coronavirus (COVID-19) pandemic, so they are a good baseline for evaluating the impact of the virus on workers’ compensation claims.”

The 18 states in the study are Arkansas, California, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Tennessee, Texas, Virginia, and Wisconsin. There are individual reports for every state except Arkansas, Iowa, and Tennessee.

The state studies explore the time from injury to first indemnity payment, the average total cost per claim, the average payment per claim for medical care, and the average payment per claim for indemnity benefits, as well as how state results may reflect system features and processes.

The following are sample findings for some of the study states:

– – California: Total costs per claim with more than seven days of lost time in California have been mostly stable since 2010. In 2019, the most recent year in the study period, total costs per claim increased 4 percent, which was largely driven by a 6 percent increase in indemnity benefits per claim.
– – Florida: From 2014 to 2018, total costs per claim with more than seven days of lost time in Florida had been growing moderately at 4 percent per year at all claim maturities. In 2019/2020, this measure increased 8 percent, driven by faster growth in indemnity benefits and medical payments per claim in the latest 12-month valuation. Growth in costs per claim in Florida since 2014 was faster than in most states.
– – Georgia: Total costs per claim with more than seven days of lost time have remained fairly stable in Georgia since 2008 and were higher compared with other study states. Higher indemnity benefits per claim and litigation expenses per claim in Georgia were the main drivers of the higher-than-typical total costs per claim.
– – Illinois: Total costs per claim with more than seven days of lost time in Illinois have grown between 1 and 3 percent per year since 2012, based on claims with 12-48 months of maturity. This growth reflects small increases in medical payments per claim, indemnity benefits per claim, and benefit delivery expenses per claim.
– – Indiana: Total costs per claim in Indiana increased 3 percent per year from 2014 to 2019 for claims with more than seven days of lost time at 12 months of experience. Those results, however, mask underlying changes from 2014 to 2016 in the key cost components – medical, indemnity, and benefit delivery expenses (expenses for managing medical costs and litigation expenses allocated to claims) – related to provisions of House Enrolled Act 1320.

For more information on these studies, visit https://www.wcrinet.org/compscope-benchmarks-21st-edition.

Simi Valley Contractor Pays SCIF $152K for Premium Fraud

49 year old James Wood, who lives in Simi Valley, pled guilty to two felony counts of workers’ compensation insurance fraud.

At the time of his guilty pleas, Wood paid full restitution to the victim insurance carrier State Compensation Insurance Fund (SCIF) in the amount of $151,891.

Wood, a general contractor, has operated Wood Construction Company since March 1997. He admitted to misrepresenting his total payroll and number of employees between 2015 and 2017, to fraudulently obtain lower workers’ compensation insurance premiums, defrauding SCIF of $151,891.

Sentencing in this case is scheduled for May 13, 2021, at 9:00 a.m. in courtroom 23 of the Ventura County Superior Court.

Wood faces a maximum sentence of six years in jail.

The Ventura County District Attorney’s Workers’ Compensation Fraud Unit vigorously investigates and prosecutes insurance fraud in Ventura County. Workers’ compensation premium fraud is not a victimless crime, it results in inflated costs to insurance carriers that are passed along to other law-abiding employers and, ultimately, to consumers.

Perpetrators of premium fraud also obtain an unfair competitive advantage over law abiding businesses because their costs are much lower than their competitors’.