Florida Workers' Compensation Lawyer & Attorney : David A. McCranie : Serving Jacksonville, Miami, Tampa, St Petersburg

Bologna v. Schlanger, though not a workers' compensation case, is an interesting recent decision from the Fifth District Court of Appeal on the issue of "fraud" which could have some application in the workers' compensation setting.  The trial court had dismissed Bologna's negligence claim after concluding that she had lied in her deposition about prior injuries.  Reversing, the Fifth DCA held that Bologna was entitled to an evidentiary hearing before the ultimate sanction of dismissal was warranted.

 

The court focused on whether Bologna's deposition testimony was knowingly false under the circumstances, particularly in light of the fact that it was only because of her previous truthful answers to interrogatories that defense counsel learned of the prior injuries in the first place: 

It is difficult to envision a scheme to conceal a prior injury that includes identifying the doctor who treated it.

 

The court also seemed to question the tactics of the defense counsel:

This record, as well as others, hints that there may now be a “fraud” strategy on the part of defense counsel. If a plaintiff denies a particular prior injury or treatment or pattern of pain, rather than probe in detail-which may risk the jogging of the plaintiff's memory-the questioning on this point just stops until the inevitable motion to dismiss for fraud is ruled on.

Judge Griffin's concurring opinion is also worth a read.

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I wrote here about three businessmen who were recently convicted in federal court of conspiracy, mail fraud, wire fraud, and money laundering in connection with various fraudulent workers' compensation schemes.  They've now been sentenced to a combined 55 years in prison along with forfeiture of $75M in assets.

 

You can read the story here.

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As I discussed here, an employer's or carrier's allegation that an employee has committed workers' compensation fraud by violating one or more provisions of §440.105 can sometimes have collateral consequences.  For example, in Sickles v. Pasco Co. Sheriff's Office, JCC Hafner concluded that Sickles, a deputy sheriff, had knowingly made false statements in connection with his workers' compensation claim in violation of §440.105 and that any further benefits on account of his accident must be denied for that reason.

 

Two days later, according to this 5/29/2008 article from the Tampa Tribune, the Pasco County Sheriff's Office suspended Sickles from his job without pay and without benefit of a pre-suspension hearing.  That prompted Sickles' request for an injunction from the circuit court on the grounds that PCSO's action violated the "Police Officer's Bill of Rights" [see §112.532, Fla. Stat., which sets forth various procedural due process rights of law enforcement officers charged with misconduct].  According to the article, the lawsuit has now been "settled," although it appears that the sheriff's office is continuing its investigation.

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I wrote here about whether an employee who knowingly presents false evidence of his identity to his employer in obtaining employment, thereby violating §440.105(4)(b)9, Fla. Stat., also thereby forfeits his right to workers' compensation benefits if he is injured in a subsequent on-the-job accident.  The authors of this article in the October 2007 edition of the Florida Bar Journal argued that he should.

 "Not so fast," said the First DCA in Matrix Employee Leasing v. Hernandez, decided on 3/10/2008.  The Court concluded that before an employee's benefits may be forfeited, §440.09(4)(a), Fla. Stat., requires that the false statement of identity must have been presented "for the purpose of securing workers' compensation benefits." 

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I wrote here and here about whether false evidence of identification in the form of a false Social Security number can constitute "fraud" under §440.105(4)(b)9, Fla. Stat.  JCC John P. Thurman in Gainesville recently weighed in on the subject in Gonzalez v. Williston Timber, OJCC No. 07-018284JPT.

 

Mr. Gonzalez, who possessed a fifth grade education, purchased from some individuals whose names he could not recall a Social Security card upon migrating illegally to the United States.  He was later told by some friends that his card was not valid, but he did not believe them.  When he went to work for Williston Timber, no one told him that his card was invalid, and in fact Williston Timber never received any notice from the Social Security Administration that his number was not valid.  Following his on-the-job accident, he presented his Social Security number to his employer, to his authorized treating physician, and on his subsequent petition for benefits.  At some point after he filed his petition for benefits - the order does not say when or how - Mr. Gonzalez realized that the number was not valid, and he never used it again.

 

Based on these facts, JCC Thurman found that Mr. Gonzalez did not knowingly present false evidence of his identity, and he was therefore not guilty of violating §440.105.  Accordingly, he did not forfeit his right to future workers' compensation benefits under §440.09(4), Fla. Stat.

 

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Three men were recently convicted by a federal jury in Jacksonville on various counts of conspiracy, mail fraud, wire fraud, and money laundering.   According to the 73-page indictment, the men defrauded client companies of various professional employer organizations (PEOs) by having them pay premiums for workers' compensation insurance coverage.  The problem was that the insurance companies allegedly providing the coverage were sham corporations, and the defendants simply pocketed the premiums - millions of dollars' worth.  You can read the story from the Florida Times-Union here and a press release from the United States Attorney for the Middle District of Florida here.

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Section 626.989(9), Fla. Stat., directs the Department of Financial Services to prepare an annual "joint performance report" to the legislature on workers' compensation fraud by January 1 of each year.  The Department has now issued its report covering the period 7/1/2006 through 6/30/2007, which you can read here. 

 

Among the statistics: 184 convictions for workers' compensation fraud consisting of claimant fraud (58), working without workers' compensation insurance (65), premium fraud (13), fraudulent certificate of insurance (29), identity theft (1), grand theft (10), and violation of stop work order (8).

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Although it's difficult to tell all of the facts from the Court's brief opinion, it would appear that the employee had an employment contract with his employer in which he agreed to arbitrate rather than litigate any employment-related claims under the "Employment Retirement Income Security Act, Title VII of the Civil Rights Act of 1964, the Equal Pay Act, the Americans with Disabilities Act, the Older Workers' Benefits Protection Act, as well as all other federal, state, and local employment-related laws, regulations, rules or theories."  The contract specifically excluded from arbitration, however, those claims brought under "the workers' compensation laws." 

 

 

The employee here brought suit against the employer for malicious prosecution.  The Third DCA held that "the instant claim stems directly from [the employer's] actions during the workers' compensation case," and therefore "it is not arbitrable under the parties' agreement."  Although the opinion doesn't say so, I suspect that this must stem from some allegedly false accusation of workers' compensation fraud.  Cross v. Braman Motors, Inc. 

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This post is slightly off the topic of Florida workers’ compensation law, but I wrote here about the debate over whether an employee has committed “fraud” under §440.105(4)(b)9 - thereby justifying the termination of his workers’ compensation benefits pursuant to §440.09(4) - if he has deliberately provided his employer with false evidence of his identity in the form of a fake Social Security number. But what if the employer actually knows or has reason to know that the Social Security number is a fake and continues the claimant’s employment anyway? Should an employer (or its carrier) be able to profit by denying the compensability of an otherwise compensable workers’ compensation claim based on such “fraud” if the employer itself had knowledge of the “fraud” all along? Obviously, all of this is tied in with the current national debate over illegal immigration and what should be done about it. 

 

Actually, 8 U.S.C §1324a(a)(2) makes it unlawful for an employer either to “hire” or to “continue to employ” an alien “knowing the alien is (or has become) an unauthorized alien with respect to such employment.” The key word here is the word “knowing,” because 8 C.F.R. §274a.1(l)(1), the regulation implementing the statute, defines “knowing” as having either “actual” or “constructive” knowledge.

 

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Other than perhaps that of attorney's fees, probably the hottest topic in Florida workers' compensation law over the last few years has been that of "fraud."  Section 440.105(4)(b)1, Fla. Stat., makes it unlawful for "any person" to "knowingly make, or cause to be made, any false, fraudulent, or misleading oral or written statement for the purpose of obtaining or denying any benefit or payment under this chapter."  In turn, §440.09(4)(a), Fla. Stat., requires a complete forfeiture of any further workers' compensation benefits - both indemnity and medical - upon a judicial determination that the employee "has knowingly or intentionally engaged in any of the acts described in s.440.105 or any criminal act for the purpose of securing workers' compensation benefits."

 

In addition, however, §440.105(4)(b)9, Fla. Stat., makes it unlawful for any person to "knowingly present or cause to be presented any false, fraudulent, or misleading oral or written statement to any person as evidence of identity for the purpose of obtaining employment or filing or supporting a claim for workers' compensation benefits"  (Emphasis added).  So what if an employee is injured on the job and the employer/carrier later discover that the employee provided a false Social Security number to the employer when he commenced his employment?  Does he forfeit his entitlement to workers' compensation benefits as a result?

 

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Jorge Diaz, an injured worker, was accused by the employer/carrier of committing workers' compensation fraud by submitting false mileage reimbursement requests.  The Judge of Compensation Claims agreed to "bifurcate" the issues, that is, to conduct a hearing where the issues would be limited solely to whether Diaz was guilty of committing fraud and therefore whether any further workers' compensation benefits would be barred pursuant to §440.09(4), Fla. Stat.  In this order, the JCC concluded that Diaz in fact was not guilty of fraud, and the employer/carrier sought review of that decision by way of a petition for writ of certiorari to the First District Court of Appeal.

 

In this decision rendered on 8/8/2006, the First DCA denied the petition, but "without prejudice to appellants seeking review after the Judge of Compensation Claims issues a final order on the merits of the claims pending below."  Later, rather than proceeding to a hearing on the merits, the parties settled the pending petition for benefits, as reflected in this stipulation and order from the JCC dated 2/13/2007.  The employer/carrier then sought to raise the denial of its fraud defense on appeal for the second time.

 

But in Isol Auto Supply v. Diaz, decided on 9/12/2007, the First DCA once again refused to consider the employer/carrier's fraud defense on its merits.  In the stipulation, the parties agreed, among other things, that "all issues are resolved except as to the amount of attorney's fees and costs."  This agreement, said the court, rendered the fraud defense moot.

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An adjudication that an injured worker has violated §440.105(4)(b), Fla. Stat., the so-called "fraud" provision of the Florida Workers' Compensation Act, will result in the worker's loss of any right to claim workers' compensation benefits resulting from his otherwise compensable accident.  See §440.09(4), Fla. Stat.

 

A "fraud" charge can have other consequences, too.  Violation of §440.105 is actually a felony, so of course there can be criminal liability for the claimant, not just a loss of his workers' compensation benefits.  Or, as I wrote about here, a false charge of fraud can lead to the filing of a civil lawsuit by the injured worker against the person or persons bringing the charges.

 

But what if the employer believes that the injured worker has committed workers' compensation fraud and uses that as a basis not for terminating the claimant's workers' compensation benefits, but for terminating his employment?  That's what happened in Escambia County School Board v. Fowler, DOAH Case No. 06-4028, decided on 6/8/2007.

 

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Falsely accusing someone of being a criminal is usually considered defamatory.  In this case, a jury found that a police lieutenant had defamed one of his subordinates by falsely accusing him of committing workers' compensation fraud. They awarded him $50,000 in damages. 

 

On appeal, however, the Fourth District Court of Appeal reversed the award with directions that judgment be entered in favor of the lieutenant.  Relying upon earlier precedent, the Court concluded  that the lieutenant, a "public official" whose statements were made in the course of his duties as police officer, was immune from liability for those statements.  In Florida, said the Court, "public officials who make statements within the scope of their duties are absolutely immune from suit for defamation."

 

 

 

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Here's an interesting case from the Sixth Circuit U.S. Court of Appeals, decided on 7/10/2007.  The plaintiffs there were injured workers who alleged that, in order to deprive them of benefits under the Michigan Workers' Disability Compensation Act,  their self-insured employer, its workers' compensation servicing agent, and the authorized treating physician had sent fraudulent communications among themselves and to the plaintiffs by mail and by wire in violation of federal law, and that these violations constituted the  "predicate acts" necessary to state a civil cause of action against them for violation of the federal Racketeer Influenced and Corrupt Organizations Act ("RICO").

 

In a 2-1 decision, the Sixth Circuit affimed the federal district court's dismissal of the complaint for failure to state a cause of action - but not because the plaintiffs' allegations of mail and wire fraud were insufficient.  Under the law prevailing in the Sixth Circuit (covering Kentucky, Michigan, Ohio, and Tennessee), a plaintiff alleging a RICO violation must allege and prove that he relied upon the defendants' alleged fraudulent acts.  [RICO provides a private right of action and treble damages for "any person injured in his business or property by reason of a violation" of the act].  Because allegations of detrimental reliance were absent from the plaintiffs' complaint, the appellate court agreed that the complaint failed to state a cause of action.  Nevertheless, two of the three judges argued that the issue should be considered by the entire Court sitting en banc. 

 

Thanks to How Appealing for the heads up on this case.

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