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Posts Tagged ‘Employer Fraud’

Two Geauga County men owe a combined $200,000 for workers’ comp fraud

McElroy and Hill sentenced in separate cases 

Two Geauga County men have been sentenced after they were convicted of fraud for working while collecting workers’ compensation benefits.  Kenneth McElroy was self-employed performing equipment repair and snow plowing services and owes $80,000 to the Ohio Bureau of Workers’ Compensation (BWC).  William Hill was discovered operating his own business, Hill’s Contracting Company, and must repay more than $133,000.

“Disability benefits are not a way to boost your salary when you are perfectly capable of working,” said BWC Administrator/CEO Stephen Buehrer. “These men may have been feeling comfortable that they could continue their scams but both cases prove that cheaters can never assume they can continue undiscovered.”

BWC’s Special Investigations Division (SID) opened an investigation into Kenneth McElroy after learning he was self-employed snow plowing and repairing lawn mower/landscape and construction equipment while receiving temporary total disability benefits.  SID conducted numerous interviews confirming that the Chardon man was performing these services at his home and at customer’s residences.

The Ohio Industrial Commission issued an order in October finding all benefits McElroy received for the period of more than five years had been overpaid.  Additionally, his benefits were terminated due to a finding of fraud.  McElroy pleaded guilty to a felony count of theft on Dec. 14 in a Franklin County courtroom and was ordered to pay $80,000 in restitution.  The judge also sentenced McElroy to five years of community control and a suspended a six month prison sentence.

William Hill became the subject of an investigation after a BWC claims service specialist suspected he may be working for his own company while receiving temporary total disability benefits. An investigation verified the Chesterland man was operating Hill’s Contracting Company for three years in direct conflict with his disability benefits.

Hill pleaded guilty Dec. 6 to one felony count of workers’ compensation fraud in Franklin County Municipal Court. He was ordered to pay $131,919.43 in restitution and an additional $2,000 for investigative costs.  He was also sentenced to five years of community control.  As part of the agreement, Hill is ordered to pay $100 per month. If Hill does not comply with probation or make the required monthly payments, he will serve six months in prison.

If you suspect anyone is committing workers’ compensation fraud, let us know. You may report it online at http://bit.ly/reportfraud or you may speak with a fraud hotline agent by calling 1-800-OHIOBWC.

https://www.ohiobwc.com/home/current/releases/2011/122111.asp

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We are hiring!

We are hiring various investigative positions throughout the state. Apply to each position below or visit http://careers.ohio.gov/.

Canton

Position

Team

Closing Date

Fraud Investigator

Region 1

12/14/2011

Cincinnati

Position

Team

Closing Date

Fraud Investigator

Health Care Provider Team

12/14/2011

Cleveland

Position

Team

Closing Date

Fraud Investigator

Region 1

12/14/2011

 Fraud Investigator 

Employer Fraud

12/14/2011

 

Columbus

Position

Team

Closing Date

Criminal Investigator

Region 2

12/14/2011

Lima

Position

Team

Closing Date

Criminal Investigator

Region 3

12/14/2011

Fraud Investigator

Employer Fraud

12/14/2011

Mansfield

Position

Team

Closing Date

Fraud Investigator

Region 1

12/14/2011

Regional Locations TBD (Canton, Cleveland, Mansfield and Youngstown)

Position

Team

Closing Date

Assistant Special Agent In Charge

Region 1

12/08/2011

BWC Investigations Result in 3 Workers’ Comp Fraud Convictions in September

Ohio Bureau of Workers’ Compensation (BWC) Administrator/CEO Stephen Buehrer today announced three individuals were convicted of defrauding Ohio’s workers’ compensation system during the month of September. The court actions are the result of investigations conducted by BWC’s Special Investigations Department (SID), which works to deter, detect, investigate, and prosecute workers’ compensation fraud.

“Those convicted in September bilked the system for more than a quarter million dollars, showing  the impact fraud can have on the State Insurance Fund,” said Buehrer.  “While we are pleased that the justice system is ensuring the perpetrators in these cases are on the hook for repayment, fraud of any kind is simply intolerable and unfair to honest employers and injured workers.”

Following are two of the cases that resulted in a conviction during the month of September.

Marvin Pyle (Cleveland, Cuyahoga County) was sentenced September 20 for working while receiving benefits.  BWC’s Intelligence Unit identified Pyle as possibly working while checking records with the Public Utilities Commission of Ohio. Those records showed he was stopped for a safety inspection while driving a truck for BTB Trucking (BTB).  An investigation found Pyle had returned to Hamrick Truck Driving School as a full-time student and was employed as a truck driver for GV Trucking & Excavating Inc. and BTB, despite receiving temporary total disability benefits.  Pyle provided false information to the BWC in order to obtain the benefits.  Pyle pleaded guilty to a felony count of attempted workers’ compensation and was ordered repay more than $10,300.  He was also sentenced to probation and a suspended 10 month prison sentence. 

Obie Martin and Michael Collins (Cleveland, Cuyahoga County) were sentenced for operating their business without valid workers’ compensation insurance coverage.  Investigating an allegation of fraud, SID agents interviewed Obie Martin, owner of Obon, Inc., as well as the company’s payroll officer, Michael Collins.  Agents discovered seven BWC certificates that had been altered and used by the business to obtain work contracts.  Collins admitted to altering one certificate while Martin admitted to altering the other six.  Both originally pleaded not guilty but later withdrew those pleas to plead guilty.  Martin was sentenced October 13 to six months in prison, suspended for five years of probation.  During this period, he is to repay the $236,757.34 in restitution.  Michael Collins was sentenced to one day in jail, which was suspended for time served.

If you suspect that a subject is committing workers’ compensation fraud, let us know. You may report it online at http://bit.ly/reportfraud or you may speak with a fraud hotline agent by calling 1-800-OHIOBWC.

https://www.ohiobwc.com/home/current/releases/2011/101711.asp

SID Comes of Age: A Retrospective Review at 18

In 1984, the National Crime Prevention Council designated October Crime Prevention Month. Every year since then, government agencies, civic groups, schools, businesses, and youth organizations have reached out to educate the public, showcase their accomplishments, and explore new partnerships during this special month. October has become the official month for recognizing and celebrating the practice of crime prevention, while promoting awareness of important crime prevention strategies. The month-long celebration spotlights successful crime prevention efforts on the local, state, and national levels.

In honor of Crime Prevention Month 2011, we offer the following respective review of the BWC Special Investigations Department.

Our department was formed by statute and commenced operation in 1993. For 18 years we have faithfully fulfilled our mission: effectively and proactively preventing losses to the workers’ compensation system; and deterring, detecting, investigating, and prosecuting workers’ compensation fraud.

During that time, we have achieved significant performance milestones, such as:

  • Completed 55,163 investigations;
  • Closed 22,270 founded cases;
  • Identified more than $1.4 billion in savings;
  • Identified $25,906 per closed case;
  • Referred 3,760 subjects for prosecution; and
  • Secured 1,902 criminal convictions.

Strategic Innovation. To generate these notable outcomes, supported by our agency executives we have consistently identified and implemented innovations.  For example, we created and deployed specialized teams each dedicated to combating a type of workers’ compensation fraud subject; claimants, employers, providers, MCOs, etc. We have identified and implemented new technology to detect fraud, analyze data and secure evidence. For example, the SID Digital Forensics Unit utilizes advanced forensic software and equipment to secure electronic evidence from subjects.

A Common Thread: Detection and Intelligence. The Intelligence Unit program uses various technologies and techniques to detect fraudulent activity and refer allegations to each of our specialized investigative teams. This program includes exchanging data with other agencies and organizations to identify claimants receiving total disability benefits who are gainfully employed, incarcerated, or otherwise not entitled to these benefits. Additionally, the Intelligence Unit identifies fraudulent trends by performing data analyses of BWC indemnity (lost time), medical and employer information.

Most recently, SID has recently increased its staffing to even more effectively combat fraud. In June 2011, BWC Administrator/CEO Stephen Buehrer approved us to post and fill critical vacancies, including those with our Intelligence Unit. The selected professionals will generate significant increases in SID performance results.

Be sure to read more about our fraud investigative strategies and successes in the SID FY 2011 Annual Report.

Look for our next fraud awareness article that will commence a series focused upon health care provider fraud. If you suspect that a subject is committing workers’ compensation fraud, let us know. You may report it online at http://bit.ly/reportfraud or you may speak with a fraud hotline agent by calling 1-800-OHIOBWC.

BWC Investigations Result in Eight Workers’ Comp Fraud Convictions in August

September 19, 2011 2 comments

Ohio Bureau of Workers’ Compensation (BWC) Administrator/CEO Stephen Buehrer today announced eight individuals were convicted of or pleaded guilty to charges related to defrauding Ohio’s workers’ compensation system during the month of August. The court actions are the result of investigations conducted by BWC’s Special Investigations Department (SID), which works to deter, detect, investigate, and prosecute workers’ compensation fraud.

“Eight more convictions during the month of August are the result of close monitoring of suspicious activity by our investigators and detailed follow-up on allegations of fraud,” said Buehrer. “Their diligence helps to protect the State Insurance Fund on behalf of Ohio injured workers and employers.”

Following is a sampling of cases that resulted in a guilty plea or conviction during the month of August.

Cecil Webb (Dayton, Montgomery County) pleaded guilty to eleven felony counts of deception to obtain a dangerous drug and one first degree misdemeanor count of workers’ compensation fraud. The SID originally received an allegation that Webb may have been working while collecting disability benefits. During the investigation, investigators identified numerous instances in which Webb sought narcotics from three different physicians and one nurse practitioner over the same period of time. The investigation also revealed that Webb utilized four different pharmacies in the Dayton area to conceal his deception. Webb was ordered to pay $1,689.39 in restitution and mandated that all his medications be verified and taken as prescribed. The court also ordered Webb to comply with treatment, seek employment or show medical documentation that he cannot work, and comply with a curfew and a child support order.

Robert Black, DBA Mallard Home Services (Westlake, Cuyahoga County) pleaded guilty to workers’ compensation fraud for operating his business without coverage. BWC received an allegation that Black was operating Mallard Home Services although his coverage had been canceled. Surveillance conducted at this business revealed it was fully operational. BWC later received an allegation that an altered certificate of coverage was provided to a Mallard customer. Investigators interviewed the customer and obtained a copy of an altered Mallard workers’ compensation certificate. Agents interviewed Black, who indicated the altered certificate was a clerical error on his part, and then admitted to operating a business while his business’ coverage was in final cancel status and submitting false payroll and other information to BWC. Black pleaded guilty in Cuyahoga County Court of Common Pleas on August 23. Sentencing is scheduled for September 29, 2011.

Dr. John Esarco, DC (Youngstown, Mahoning County) pleaded guilty to workers’ compensation fraud for billing for services not rendered. SID received an allegation that Esarco, a chiropractor, was improperly billing BWC and executed a search warrant to analyze medical records and interview patients. The investigation found Esarco was billing for exercise therapy, a service which he did not perform. Esarco pleaded guilty August 22 and was sentenced to six months in jail, suspended, and ordered to pay restitution. Esarco provided a check for $44,184.80 at the hearing to satisfy the ordered restitution. Esarco also signed a voluntary BWC decertification letter, which decertifies him as a BWC provider.

George Seiber (Brunswick, Medina County) pleaded guilty to working while receiving benefits. SID received an allegation from a BWC employee who suspected Seiber of working, and an investigation found he was employed with Roofer Inc.com while receiving temporary total disability benefits. Seiber owned and operated the company and performed work activities including contacting customers, appraising roofs, preparing proposals, supervising staff, and handling money transactions. Seiber pleaded guilty August 10, 2011 in the Franklin County Common Pleas Court. His sentencing is scheduled for September 22.

Dana Fordenwalt (West Salem, Wayne County) , owner of Twin Peaks Roofing, pleaded guilty to three misdemeanors for failure to comply with the law for underpaying his workers’ compensation and misrepresenting the number of workers employed by his business. BWC investigators determined that over a period of three years Fordenwalt did pay his premium but was knowingly underpaying by submitting false payroll documentation. Sentencing is pending. Fordenwalt is no longer in business.

Make ‘em pay for it: The Employer Fraud Team

When employers fail to comply with the workers’ compensation system, SID’s Employer Fraud Team responds to ensure compliance and integrity of the system. During the last two years, their investigations have resulted in over 160 criminal referrals and 60 convictions. Be sure to read more about the Employer Fraud Team’s success in our SID FY 2011 Annual Report.

SID has recently increased its staffing to combat employer fraud, such as, misclassifying employees as independent contractors.

Misclassification: A National Issue

BWC, as well as other federal and state agencies, continue to see misclassification as a major issue. Employers that misclassify their employees as independent contractors have an unfair advantage as they compete against employers operating legitimately.

What’s misclassification? Here’s a quick overview:

Misclassification occurs when an employer claims a person as an independent contractor, when they should be classified as an employee.

Workers are generally considered employees when someone else controls how and when they perform their work. In contrast, independent contractors are generally in business for themselves and control how and when they perform services.

In addition to legitimate businesses, federal, state and local governments also lose when employers intentionally misclassify employees. Employers are required to withhold taxes from employees’ pay and also pay taxes, such as Social Security, Medicare, unemployment and workers’ compensation, based on their employees’ wages. Employers generally do not have to withhold or paid taxes for independent contractors.

Misclassification costs the State of Ohio millions. A 2009 report by the Ohio Attorney General estimated that Ohio has 92,500 misclassified workers. This level of misclassification annually costs the state up to $20 million in unemployment taxes, up to $103 million in workers’ compensation premiums and up to $36 million in income tax revenue.

To combat this issue, the Internal Revenue Service (IRS) launched a program last year to randomly examine 6,000 companies over the course of three years to specifically address employee misclassification. The federal government estimates the program will generate $7 billion in 10 years through tighter enforcement.

BWC’s Special Investigations Department continues to pursue exchanging data with partners and reviewing our own data to ensure employers pay their fair share or else we make ‘em pay for it.

This concludes our employer fraud awareness series. Look for our next fraud series awareness series on claimant fraud.

If you suspect that an employer is not paying their fair share of premiums, let us know. You may report it online at http://bit.ly/reportfraud or you may speak with a fraud hotline agent by calling 1-800-OHIOBWC.

Make ‘em pay correctly: BWC Premium Audit Department

Checking balanceBy Michael Glass, Director, Premium Audit Department

BWC’s Premium Audit Department is responsible for ensuring proper payroll reporting and manual classification assignment. By auditing employers’ payroll, the Premium Audit Department strives for a fair and equitable rating structure.

The Premium Audit Department works closely with the Employer Compliance Department and the Special Investigations Department in BWC’s efforts to fight fraud. For example, Special Investigations Department staff may request an audit when an employer subject’s amount of premium is needed to support a criminal case. The Premium Audit Department refers policies to the Special Investigations Department when, in the course of an audit, it is suspected that willful and possibly illegal activity has occurred.

A Case In Point

The Special Investigations Department received a referral from the Premium Auditing Department that a Kenton pizzeria was operating their business with lapsed workers’ compensation coverage. The Premium Auditing Department contacted the employer several times in an attempt to bring the employer into compliance but the employer failed to secure coverage. An investigation by the Special Investigations Department confirmed that several employees work at the business, thus confirming the need for workers’ compensation coverage. Investigators requested that the Premium Auditing Department conduct an audit to calculate premiums owed, however, the owner of the company failed to cooperate with the audit. The owner pled guilty to one second degree misdemeanor count of failure to comply.

If you suspect that an employer is not paying their fair share of premiums, let us know. You may report it online at http://bit.ly/reportfraud or you may speak with a fraud hotline agent by calling 1-800-OHIOBWC.