Lockhart Man Sentenced for Workers’ Comp Fraud

A Travis County court has sentenced Henry Gomez of Lockhart, Texas on workers’ compensation fraud-related charges. Gomez paid $1,155 in restitution to Texas Mutual and was sentenced to seven months’ deferred adjudication.

Gomez reported a job-related injury while working as a truck driver and supervisor for Wims Environmental, Inc. in Garland, Texas. He claimed he was unable to work as a result of the injury, and Texas Mutual began paying income benefits to him.

Austin-based Texas Mutual Insurance Company is the state’s leading provider of workers’ compensation insurance, with approximately 34 percent of the market.  Texas Mutual is an industry leader in the fight against workers’ compensation fraud. In 2011, the company saved, identified or recovered $5 million through their claimant, health care provider and employer fraud investigations.

Meanwhile, Texas Mutual uncovered evidence that Gomez was working as a sales consultant for another employer while receiving income benefits.

Investigators call this type of scam double-dipping because the claimant collects benefits for being too injured to work when he or she is, in fact, gainfully employed. Texas law requires claimants to contact their workers’ comp carrier when they return to work. Left unchecked, double-dipping and other workers’ comp fraud can lead to higher premiums for all Texas employers.

Austin-based Texas Mutual Insurance Company is the state’s leading provider of workers’ compensation insurance, with approximately 34 percent of the market. Texas Mutual is an industry leader in the fight against workers’ compensation fraud. In 2011, the company saved, identified or recovered $5 million through its claimant, health care provider and employer fraud investigations.

Top 5 Ways to Improve Your Company

From David Letterman’s nightly Top 10 to the most recent poll of top 100 movies, albums, sitcoms, or whatever-they-think-of-next, Americans love lists. Here’s a list that can help you improve your employees’ safety, productivity and morale.

1. Hire carefully. The best place to start is usually at the beginning. In this case, the beginning starts when you hire a new employee. Review your hiring practices. Do you conduct thorough background checks? Verify work history? Check references?

All of these steps can help your company avoid hiring the type of person who commits workers’ comp fraud, abuses substances or ignores safety procedures. Any of these behaviors may hurt your company—and your other employees.

The Texas Department of Public Safety offers background checks online (for a fee) at http://records.txdps.state.tx.us. Remember that good hiring practices comply with the Texas Labor Code and the Americans with Disabilities Act.

2. Invest in safety. Workplace accidents come with price tags. Most importantly, there is the human cost of pain and suffering for injured workers and their families. Employers also have to consider the monetary costs of hiring extra help or paying overtime to make up for lost production. If you invest in a workplace safety program, you could reap up to a 600 percent return, according to the Occupational Safety and Health Administration.  

3. Consider drug testing. Employees who abuse drugs or alcohol put themselves and their co-workers at risk of being involved in workplace accidents. Employers should consider fighting illicit drug use by combining pre-employment testing with a written substance abuse policy that includes “for cause” and random drug tests for current workers. It’s also important to educate your employees about how one employee’s use of illicit drugs can affect his or her co-workers.

Consult an attorney before you launch a drug-testing program to ensure you comply with all applicable laws.

4. Launch a return-to-work program. When an employee is injured, a return-to-work program will help you get the employee back to work in the shortest possible time. It will also help reduce your out-of-pocket costs associated with on-the-job injuries, such as hiring or training temporary help or a reduction in productivity. Your program should be specific to your company, but all return-to-work programs include some key elements:

  • Keep in touch with the injured employee during the recovery period.
  • Give the treating doctor information about the employee’s job so the doctor can assess when the employee can return to modified or full duty.
  • Develop alternative productive work or modified duties for injured employees who can’t return to full duty right away.
  • Make a written bona fide offer of employment when your employee is released to work in any capacity.

5. Prevent fraud. An ounce of fraud prevention can do wonders for your company’s productivity. If you have improved your company’s hiring practices (Step 1), you’ve already taken the first step against possible workers’ comp fraud.

For the next step, adopt an anti-fraud policy that demonstrates your commitment to fighting fraud and the potential consequences of committing fraud. Report suspicions of workers’ comp fraud to your insurance carrier, or visit the Texas Department of Insurance at www.tdi.texas.gov/fraud/tdifraud.html.

Agents’ Role in Fighting Premium Fraud

Texas Mutual Insurance Company takes workers’ compensation fraud seriously. Last year, Texas Mutual saved, identified or recovered $5 million in fraud, two-thirds of which was premium fraud.

Premium fraud happens when employers knowingly misrepresent payroll, class codes or other information to artificially lower their premiums. Agents are in a good position to help us identify premium fraud because they may spot inconsistencies between lines of insurance or have knowledge about other operations.

But why should you, as insurance agents, help? After all, if your clients misrepresent information, it’s their business, right? Not necessarily.

Employers who commit premium fraud gain an unfair advantage over their honest competitors. By helping us identify premium fraud, you help ensure a level playing field for all employers and contribute to a stable workers’ compensation system in Texas. Follow these tips to help all of us win the fight against premium fraud.

Learn the basics
Most premium fraud cases fall into one of two categories. The first involves employers who misrepresent the status of employees as independent subcontractors. An employer’s workers’ comp coverage does not extend to legitimate independent subcontractors, and sometimes, employers mischaracterize their general labor as independent contractors. The second category involves employers who “hide” employees and report a smaller payroll to the insurance carrier by creating so-called shadow companies, which often share common management, locations and goals.

Ask questions
You can stop premium fraud scams before they start by simply asking questions. Review applications carefully, watching for appropriate class codes. Identify who is performing the labor, and ask questions about independent subcontractor relationships that do not make sense. Compare what the client represents on their workers’ comp application with what is on their applications for other lines of insurance. Explore the relationships between companies that do not elect to be insured. Remember that direction and control, not ownership, determine risk exposure.

Practice the three Ds: document, document, document
Documentation is to premium fraud what location is to real estate. It is everything. If a premium fraud case goes to trial, your files will be closely scrutinized. If you repeatedly ask the client whether the class codes on the application are correct or the subcontractors on the job are truly independent, write it down.

Red flags for premium fraud
Premium fraud is the knowing or intentional misrepresentation of information necessary to determine a business’s actual risk exposure. If you see two or more of these red flags, notify your workers’ comp provider immediately:

  1. Inconsistencies with prior policies. Past insurance policies indicate significantly more payroll or premium than the insured is currently reporting.
  2. Hidden ownership. The insured lists common owners on applications for other carriers or lines of insurance. The officers, shareholders or control people are different from those listed on the workers’ comp application.
  3. New business. The insured is a new business with significant payroll or multiple-state exposure.
  4. Certificates of insurance. The number of certificates of insurance you are asked to issue exceeds the number usually anticipated for a business of that size and type.
  5. Misinformation. Incorrect information is shown on the application about the number of employees, their duties, location of operations or the number of entities included for coverage.
  6. Business location. Multiple businesses are shown at the same address, the location visited is the same as previously visited for a different risk, or the business logo is not present at the location.
  7. Non-cooperation. The insured refuses or delays access to appropriate personnel. The insured refuses to provide records, documents or files for audits or claim adjusting. Records are located somewhere other than the principal place of business.
  8. Business operations. Requested coverages are inconsistent with the type of work being performed. Marketing materials or business name are inconsistent with operation. Company letterhead allows author to choose employer. Certificates or licenses for operations reflect a name other than that of the insured.
  9. Safety. Employer is not concerned with employee safety, even though there is a high rate of loss.
  10. Claim reporting. Insured fails to report claims, or number and type of claims reported are inconsistent with payroll and classification information.

For more information about workers’ comp fraud, visit www.texasmutual.com/fraud/fightfraud.shtm.

Put a Safe Spark in Fourth of July

This time of year, roadside fireworks stands line highways as people start planning their Fourth of July celebrations. Many celebrate the holiday by providing their own “rockets’ red glare” to the night’s sky. It’s one of the staples ofAmerica’s Independence Day—picnics, friends, family and fireworks.

Unfortunately, while fireworks can produce a nice visual, they can also be safety hazards. According to the National Council on Fireworks Safety, between 7,000 and 11,000 people are injured in fireworks-related accidents each year. While injury reports have been in a decline in recent years—according to the Texas Fireworks Safety website—there are still far too many injuries and accidents caused by fireworks. In addition to the physical injuries, more than $36 million in property damage is reported each year. Many of these accidents could have been prevented.

Carelessness and misuse of fireworks are the most common causes of injuries and accidents. There are a number of precautions people need to consider when using fireworks. Aside from label warnings that are included on every package, there are many online resources available to provide helpful tips and safety practices.

Here are some of the most common safety practices that will help ensure a safe and happy Fourth of July celebration:

Most municipalities ban discharge of fireworks within city limits.  Avoid an unplanned discussion with law enforcement by checking on the restrictions in your area.

  • Only buy fireworks from licensed retail outlets.
  • Never experiment with homemade or altered fireworks.
  • Carefully read and follow all of the directions on the package.
  • Only use fireworks outdoors, away from buildings and dry grass, and on a flat surface.
  • Keep wet towels, a water hose, a bucket of water or a fire extinguisher nearby.
  • Light one firework at a time, and then move away quickly.
  • Never shoot fireworks from a glass or metal container.
  • Never point roman candles, bottle rockets or other shooting fireworks at people or animals.
  • Do not hold lit fireworks.
  • Never position any body part over lit fireworks. 
  • Never point or throw fireworks at animals or people.
  • Always have emergency contact information available and an emergency plan in place.
  • Do not try to reignite malfunctioned fireworks.
  • Wear protective clothing, such as gloves and goggles. 
  • Keep spectators and pets a safe distance away.
  • Don’t overestimate a child’s ability to handle fireworks. Always make sure there is adult supervision.

In Texas, high temperatures and an often dry summer create another concern for fireworks users. According to the City ofRound Rock, fire departments in theUnited Statesrespond to more fires on the Fourth of July than any other day of the year. Because of the Texas heat, it’s important to know if there is a fire danger in the area before making plans for a fireworks spectacle for friends and family.

There are plenty of resources to know what condition county and city grounds are in or if there is a burn ban in the area. Watch the local news, visit the city website, or call the local police department or city office for information.

The most important tip for safety is to use common sense when using fireworks. If families still want to enjoy a fireworks show, but don’t want to put one on themselves, many communities host events that provide large-scale fireworks shows in a controlled environment.

The best thing to do is either follow proper safety procedures and closely monitor children, or leave the fireworks to the professionals.

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