Safety and OSHA News

Employee committed insurance fraud: Why does he still get workers’ comp?

When an employee is convicted of insurance fraud in a workers’ comp case, he’s barred from receiving benefits, right? Not necessarily, as this case shows. 

On March, 24, 2006, Leopoldo Hernandez accidentally slammed a car trunk on his left hand and crushed one of his fingers while working at Pearson Ford in California. No bones were broken, but he was unable to continue working at Pearson Ford because of pain in his hand and shoulder.

Two-and-a-half years after his injury, a neurologist examined Hernandez and found he had complex regional pain syndrome – pain injury that is out of proportion to the severity of the initial injury.

Pearson Ford and Hernandez agreed that an “agreed medical examiner” be appointed to his case: Dr. Byron King, an orthopedic specialist. In his March 2009 report, Dr. King diagnosed a crushed finger, moderately severe regional pain syndrome and a compromised ability to use his left hand.

Pearson Ford’s workers’ comp carrier hired a private investigator who videotaped Hernandez following three visits to a pain specialist in early 2010. After each visit, tapes show Hernandez taking off an arm sling, and using his left hand to get in and out of his car and steer it. Once he stopped at a grocery store and used his left hand to carry a bag of groceries.

During the same period, Hernandez also saw a hand and arm specialist. Video shows Hernandez wearing a sling on his left arm as he went into the doctor’s office. After his visit, Hernandez took off his sling, drove his car to an appliance store where, using both hands, he lifted a washing machine into the back of the car.

Following Hernandez’s 2010 doctor visits, the district attorney launched an investigation. In March 2011, Hernandez was charged with four counts of violating California insurance law – one count for each doctor visit. In May 2012, Hernandez pleaded guilty to one count of violating insurance law. He was placed on probation and required to pay $9,000 in restitution.

Dr. King examined Hernandez again while the insurance investigation was being conducted. “I do not recall seeing any individual finger motion in the [surveillance] videos but this was difficult to confirm,” the doctor said in his report.

The doctor noted improvement in Hernandez’s condition during this exam but still found 91% hand and 57% whole body impairments.

In May 2016, a workers’ compensation judge, relying on Dr. King’s report, found Hernandez suffered a 70% permanent disability and was entitled to disability indemnity, a life pension and future medical benefits. Pearson Ford appealed. The California Workers’ Compensation Appeals Board (WCAB) adopted the WCJ’s conclusions. Pearson Ford appealed to a state court.

Employer: Law says he shouldn’t get comp

Pearson Ford’s main argument was that giving Hernandez workers’ comp benefits was against the law. A section of California’s workers’ comp law says:

“Any person convicted of workers’ compensation fraud … shall be ineligible to receive or retain any compensation … where that compensation was owed or received as a result of a violation for which the recipient of the compensation was convicted.”

The appeals court said this section of California’s workers’ comp law shouldn’t be used as an automatic or broad prohibition on benefits which were not directly connected to the worker’s fraud.

The WCJ said Hernandez met the three requirements necessary to continue to receive workers’ comp benefits: a compensable injury, substantial medical evidence and his credibility hadn’t been damaged enough to make him unbelievable.

No one disputed the first requirement. The appeals court said it was bound by the WCAB’s findings about Hernandez’s credibility.

Pearson Ford based its appeal on the second requirement. The employer argued since Hernandez misrepresented the extent of his injuries to two doctors, and those misrepresentations led to his conviction, any award of benefits for those injuries is barred.

The court disagreed, saying when an employee has been convicted of comp fraud, other unrelated evidence doesn’t preclude workers’ comp benefits. “Dr. King concluded that notwithstanding Hernandez’s apparent exaggeration of his symptoms to the physicians managing his pain and prescribing pain medications for him, Hernandez was suffering from a permanent disability,” the court wrote.

The appeals court upheld the WCAB’s finding that, despite his guilty plea to one count of insurance fraud, Hernandez should continue to receive workers’ comp benefits.

(Pearson Ford v. Leopolda Hernandez, California Court of Appeal, Fourth Appellate Dist., No. D070915, 10/6/17)

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  1. Wow, that is incredible. A “crushed” finger with no broken bones that he caused himself which was not related in any way to his job duties and he could have easily have done at home. A syndrome where he can claim pain beyond the severity of the injury. Permanent disability without any physical reasons. Videos of the man removing his sling and performing tasks which included loading a dishwasher, and finally, a guilty plea to workers compensation fraud for this very case. Yet the courts decided that his “credibility hadn’t been damaged enough to make him unbelievable”. What does this guy have to get caught at to make him unbelievable in the court’s eyes?
    I’ve said it before and have seen it first hand. When a case gets in to the courts you never know what’s going to happen.

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