GEORGIA STATE BOARD OF WORKERS COMPENSATION ENFORCEMENT DIVISION

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3 GEORGIA STATE BOARD OF WORKERS COMPENSATION ENFORCEMENT DIVISION Doug Williams Criminal Fraud Investigator Enforcement Division State Board of Workers Compensation P.O. Box 217 Leslie, Georgia (229)

4 Mission Statement The mission of the Enforcement Division is to work with businesses operating in Georgia to assure compliance under the Workers' Compensation Law, to deter fraud through public relations and investigations, and to enforce the rules and regulations of the Workers' Compensation Board. The Division's primary goals are to aggressively deter noncompliance through inspection and penalties, as well as, the aggressive criminal prosecution of workers compensation fraud committed by employees, employers and providers of workers compensation services. This aggressive enforcement will assure that legitimately injured workers receive those benefits allowable under the Workers' Compensation Act at the lowest possible cost to employers/insurers.

5 ENFORCEMENT DIVISION ORGANIZATION FOUR UNITS I. COMPLIANCE UNIT (non-sworn compliance officers) Compliance Officer: Compliance officers of the Enforcement Division are non-sworn staff whose primary responsibility is to conduct random and complaint based compliance inspections and investigations of businesses operating in the State of Georgia to determine if the business is subject to the Workers Compensation Act. The CO is responsible for verifying the number of employees, classification, and payroll, as well as determine that this information is being properly reported to the insurer if subject to the Act. If the business is subject to the Act and fails to be properly insured, the CO is then empowered to issue a citation to the business for assessment of civil penalties.

6 Compliance Unit Stats 2011 The Compliance Unit conducted a total of 4,725 Compliance Inspections in Employers were exempt from coverage Notices were issued. 447 Employers procured new coverage resulting in 2703 Georgia employees covered with Workers Compensation Insurance. The Insurance Premium generated from new coverage totals $1,280, $487, in fines were imposed and collected from employers found to be in non-compliance.

7 II. CRIMINAL INVESTIGATIONS UNIT (sworn law enforcement investigators) Investigators of the Enforcement Division are sworn law enforcement empowered to investigate incidences of fraud in the workers compensation system. Investigators have powers of arrest, search and seizure with properly executed search warrants, power to issue subpoenas and carry firearms. III. SECURITY UNIT (sworn police officers) Enforcement Division Security consist of sworn police officers whose responsibilities are to protect the Board s court system, building facilities and staff. IV. LEGAL UNIT (attorneys) Enforcement Division attorneys are responsible for the litigation of civil cases involving businesses found to be in non-compliance with the Workers Compensation Act. The attorneys are also responsible for bringing other actions before the Board for violations of its rules and regulations by others operating within the system.

8 COMPLIANCE STATUTORY REQUIREMENTS O.C.G.A With some exclusions and exemptions: Any employer who regularly employees three (3) or more full time, part time or seasonal employees is required to carry a policy for workers compensation insurance. EXCLUSIONS: Farm Labor to include what was originally considered to be wildlife, alligator farming. Domestic Servants, unless employed by a business whose purpose is to provide such servants Railroad Workers and Independent Real Estate Sales Persons.

9 AUTOMATIC EXEMPTIONS FROM COVERAGE Sole Proprietors Partners of Partnership Limited Liability Partnership Partners (LLP) AUTOMATIC INCLUSIONS IN COVERAGE Corporate Officers-A Corporation can Exclude up to Five Corporate Officers. However, regardless of exclusion the corporate officers are included in the number of employees to reach the magic number of 3 or more. Limited Liability Company (LLC)-a LLC can exclude up to five members. However, just as with corporate officers they are still included in the employee count.

10 WC-10 NOTICE OF ELECTION OR REJECTION

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12 O.C.G.A (e) Applicability of chapter to employers and employees - Generally. (i.e. Independent Contractors Statute) A person or entity shall otherwise qualify as an independent contractor and not an employee if such person or entity meets all of the following criteria: (1) Is a party to a contract, written or implied, which intends to create an independent contractor relationship; (2) Has the right to exercise control over the time, manner, and method of the work to be performed; and (3) Is paid on a set price per job or a per unit basis, rather than on a salary or hourly basis. A person who does not meet all of the above listed criteria shall be considered an employee unless otherwise determined by an administrative law judge to be an independent contractor.

13 Subcontractor----one who has entered into a contract, express or implied, for the performance of an act with the person who has already contracted for its performance or one who takes a portion of a contract from the principle contractor. (Black s Law Dictionary)

14 O.C.G.A Liability of principal contractor or subcontractor for employee injuries. (a) A principal, intermediate, or subcontractor shall be liable for compensation to any employee injured while in the employ of any of his subcontractors engaged upon the subject matter of the contract to the same extent as the immediate employer. (b) Any principal, intermediate, or subcontractor who shall pay compensation under subsection (a) of this Code section may recover the amount paid from any person who, independently of this Code section, would have been liable to pay compensation to the injured employee or from any intermediate contractor.

15 (c) Every claim for compensation under this Code section shall be in the first instance presented to and instituted against the immediate employer, but such proceedings shall not constitute a waiver of the employee's right to recover compensation under this chapter from the principal or intermediate contractor. If such immediate employer is not subject to this chapter by reason of having less than the required number of employees as prescribed in subsection (a) of Code Section and Code Section does not apply, then such claim may be directly presented to and instituted against the intermediate or principal contractor. However, the collection of full compensation from one employer shall bar recovery by the employee against any others, and the employee shall not collect a total compensation in excess of the amount for which any of the contractors is liable. (d) This Code section shall apply only in cases where the injury occurred on, in, or about the premises on which the principal contractor has undertaken to execute work or which are otherwise under his control or management.

16 Your Accountant Your Attorney Your Plumbing or Electrical Repairman Your Grounds Keeper

17 Principle Contractor General Contractors (most often construction and industry) An owner or Entity who serves as a contractor for another entity and hires others to perform a service Sub-Contractor One who is performing the service for a Principle Contractor One who furthers the business of the Principle Contractor

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19 COVERAGE EXEMPTION WAIVERS Georgia statute does not provide for any waiver of coverage for employers not subject to the Act by employing less than the required 3 (three) employees. Georgia does not recognize any other states waiver of coverage certificates

20 NEW STATUTE AFFECTING COVERAGE (July 1, 2009) VS. O.C.G.A (b)(1) Any employer from another state engaged in the construction industry within this state with a workers compensation insurance policy issued under the laws of such other state so as to cover that employer s employees while in this state shall be in compliance.if: (A) Such other state recognizes the extraterritorial provisions of Code Section ; and (B) Such other state recognizes and gives effect within such state to workers compensation policies issued to employers of this state.

21 WHAT DOES ALL OF THIS MEAN Basically, if you recognize a policy sold in Georgia, Georgia will recognize a Worker s Compensation policy sold in your state. If not, your contractors face civil penalties as if they did not have valid coverage. WHY YOU ASK? Premium Tax Dollars

22 Claimant Employer Provider Insurance

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24 Claimant Fraud Legitimate injuries which turn fraudulent after a period of time. Totally faked injuries. (most are soft tissue or subjective complaints) Double Dip Claimants working while drawing benefits. Submitting false claims.

25 Definitions of Employer Fraud Underreporting payroll: Employers reduce their premiums by not reporting parts of the work force, paying workers off the books or creating a companion corporation to hide a portion of the employees. Declaring independent contractors: Employers avoid premium payments for employees by classifying them as independent contractors even though they are legally employees. Misclassifying workers: Employers intentionally misrepresent the work employees do to put them in less hazardous occupational categories and reduce their premiums. Misrepresenting claims experience: Employers hide previous claims by classifying employees as independent contractors or leased employees or creating a new company on paper. Employers deliberately underestimate employment projections at the beginning of the premium year and essentially receive an interest-free loan from the insurance company for the amount that would have been required to insure new employees.

26 Employer Fraud Misrepresenting the payroll Misclassify an employee s job Filing a claim for an employee under another company Fraudulent Certificates of Insurance Taking workers compensation insurance premium out of employees paychecks Not providing workers compensation insurance coverage Failure to confirm work injury/willful denial of benefits

27 EMPLOYEE Vs. EMPLOYER The best evidence from the states that have pursued fraud and generated detailed records indicates that for every $1 lost in claimant fraud, at least $4 to $5 (and in some states as much as $10) are lost through premium fraud. Premium fraud includes a number of schemes used by employers to reduced the workers' compensation insurance premiums by underreporting payroll, misclassifying employees' occupations and misrepresenting their claims experience.

28 Provider Fraud Doctors, Attorneys and Medical Providers Submitting fraudulent bills for service Elaborate Schemes Staged accidents Recruiters/Runners

29 Insurance/Premium Fraud Misrepresenting the business payroll Misrepresenting the job classification Insurance agents taking money for policies and never submitting to insurance carrier Issuing fraudulent certificates of insurance

30 2011 CRIMINAL INVESTIGATIONS COLLECTIVE STATS JANUARY-DECEMBER 135 Fraud Cases assigned for criminal investigation Total arrested 30 (Bad guys) 79 Claimant Fraud Cases 22 arrested 9 Insurance Fraud Cases 2 arrested 47 Employer Fraud Cases 6 arrested

31 Preventative Measures General Educate supervisors on workers compensation issues and how costs affect the bottom line, so that they may help the problem. Have them prepare reports of the injury immediately. Have the injured employee give a written account of how the accident occurred if possible. Display fraud awareness and prevention posters in the work place as well as the Georgia State Board of Workers Compensation Enforcement Division s telephone number, , and website Work with your Insurer to institute a loss control program designed to eliminate as many potential safety problems as possible. Solicit employee input in this process.

32 Utilize a fraud prevention employee exit interview. When possible, have terminated employee s sign a form attesting that they have not been injured in your work place. This reduces exposure to future claims. When a claim is made, check the workers compensation fraud red flag list. Explain to the employee their benefits as well as their obligations and rules while out on disability. DOCUMENT IT! It is a good idea to make two copies the Posted Panel of Physicians, as well as, the Employee s Bill of Rights. Have the employee sign both copies as acknowledgement of receiving these documents. Place a signed copy of each in their personnel file. REMEMBER, the Posted Panel of Physicians must be completed as prescribed by law. Make sure the insurance claim handlers do the same.

33 Workers Compensation Fraud Preventative Measures for Hiring 1. Screen workers before you hire them. Verify the information on the job application and check references. If candidates lie on applications, they are not good risks as employees and may very well have the potential to commit fraud. Ask lawful pre-employment background questions. DO NOT ask them if they are currently receiving workers compensation benefits. Have the applicant sign off on a criminal background history application and then check for a criminal record. Confirm that they are who they say they are. Verify that the social security card and drivers license they possess belong to them. Make a copy of their license and social security card and place in their personnel file. Pre-employment drug testing. If you currently do not have a policy on drug testing consider it for future hiring. Better yet, become a Drug Free Workplace. Call to find out how. Visit

34 2. Provide all new hires a written statement of your company s workers compensation policies and a separate statement concerning safety. The workers compensation policy should include the following; The procedures to be followed when a worker is injured. Some basic information about how your state s workers compensation program operates. If you have a return-to-work program, a specific statement emphasizing the fact you will find work for injured workers as soon as it is conceivably possible for them to return to work. Where and to whom they should report injuries. Who your health care providers are on your panel, where the Physicians Panel and Bill of Rights Panels are located and why you chose the providers. Inform the workers that directly or indirectly, the money for injuries ultimately comes from the employer under most circumstances. (Workers are less likely to cheat their employer than an insurance company or the State.) Have all new hires complete a post employment questionnaire.

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36 Workers Compensation Claims for Plant Closing/Layoffs Put your workers compensation insurer or claims administrator on notice to review post-termination claims for potential problems. Photograph or video tape plant conditions to maintain a visual record for potential litigation, especially if the physical plant is to be demolished. Organize or update detailed job descriptions and locate them for easy access by the insurer, third party administrators and defense counsel. Indentify key people who can testify and assist defense counsel in understanding the describing job requirements and functions. Determine whether voluntary termination physicals including hearing tests and chest x-rays should be given.

37 Update all pending claims. Select one defense attorney or law firm to handle all workers compensation claims arising out of layoff or shutdown. Explore outplacement options for laid-off employees. Consider bringing someone from the unemployment office to the facility so workers can file for benefits before they leave, since a vast majority of the workers compensation claims or after a layoff/closing are due to capping or Soliciting of clients, often outside unemployment offices. During exit interviews, inquire about possible work related injuries or illnesses. Provide immediate medical attention if the employee reports a new injury.

38 Georgia State Board of Workers Compensation Enforcement Division Georgia State Board of Workers Compensation 270 Peachtree Street, N. W. Atlanta, Georgia WORKERS COMPENSATION FRAUD Is someone you know cheating the system? Everyone pays the price for W.C. Fraud! Contact the Workers Compensation Enforcement Division. Toll Free Fraud Hotline: Office: (404) Fax: (404) Visit our Website at sbwc.ga.gov WORKERS COMPENSATION FRAUD WILL BE PROSECUTED.

39 James Risi Risi Insurance Risi plead guilty to 20 Counts Insurance Fraud In Brantley Co. and was sentenced to serve 10 years on probation $5400 Restitution $5500 to SBWC Risi plead guilty to 4 counts Insurance Fraud in Glynn Co. and was sentenced to serve 10 years - $1700 Restitution $9400 to SBWC

40 SAVANNAH, GA -- The Office of Eastern Judicial Circuit/Chatham County District Attorney Larry Chisolm Office of Eastern announced, the conviction of defendant Tony Andrew Harris, 42, for receiving income benefits from a false Worker s Compensation Claim. Harris plead guilty Wednesday, March 04, 2011, in State Court to eight counts of receiving income benefits that he was not entitled to receive and a single count of making false statements in a Worker s Compensation claim. The investigation revealed that he illegally took $7, in temporary full-time disability while continuing to work as a longshoreman between August 20, 2007 and December 26, State Court Judge Greg Fowler sentenced Harris to eight years of probation, during which he is required to pay full restitution in the amount of $12,175.00, which includes both the money that was illegally taken and the full cost of prosecution. He will also be required to pay an additional fine of $

41 Cynthia K. Crews Crews Insurance On Crews plead guilty after being charged with Insurance Fraud. She was sentenced to serve 7 years on probation. $15,000 Restitution $2,000 Fine

42 O.C.G.A Insurance Fraud Felony (6 Counts) O.C.G.A Forgery in the First Degree Felony (3 Counts) O.C.G.A Filing by employer of evidence of compliance with insurance requirements. Misdemeanor (1 Count) J. W. Williams 10 years Probation $7, Restitution $3, Fine

43 Phoebe Powette Owner of Day Care Civil penalty of $ for failure to have WC insurance coverage on 10 employees. Then, 1 month later the policy cancelled for nonpayment. Criminally charged with misdemeanor failure to have coverage. Pled guilty and received $ fine and 12 months probation w/order to maintain coverage.

44 Jean Baylot (injured employee) went back to work simultaneously with receiving benefits. Charged with 32 counts misdemeanor unentitled to benefits, 32 counts of false and misleading statements, 1 felony count false swearing on deposition. She returned to work for an orthopedic practice in Atlanta who was providing her treatment and rehab simultaneously with her receiving weekly TTD. Pled Guilty to 5 counts. Judge would not accept plea deal without anytime. She served 14 days in jail,12 months Probation, and $13,500 restitution to the insurer.

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47 Larry D. Daniel Was a correctional officer who faked a work related injury. Daniel was charged with Penalty for receiving unentitled to benefits (14 Counts), penalty for false and misleading statements when obtaining or denying benefits (14 Counts), false statements and writings, concealment of facts, and fraudulent documents in matters within jurisdiction of state or political subdivisions and violation of oath by public officer. Daniel plead guilty and was sentenced on to serve 60 months probation, $6, fine, plus restitution to Insurance Company. Correctional Officer Certification was revoked.

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