He got workers’ comp, but worked for wife’s business: Fraud?
June 25, 2012 by Fred HosierPosted in: In this week's e-newsletter, Injuries, Latest News & Views, new court decision, Workers' comp
PDF An injured employee was awarded workers’ comp benefits for over a year. During that time, he helped out at his wife’s business but didn’t get paid. Was that fraud?
Garry McBee received temporary total disability compensation (TTC) for over 16 months due to a workplace injury.
During that time, he helped his wife with her business, but he wasn’t paid.
The Industrial Commission of Ohio found out and ruled McBee shouldn’t have received TTC. The commission also found McBee had committed fraud by submitting disability paperwork in which he said he wasn’t working.
McBee appealed.
Under Ohio law, work is usually defined as labor exchanged for pay.
However, there is an exception: Unpaid activities that directly generate income for another organization can, in some cases, be considered work for purposes of TTC eligibility.
The court found McBee shouldn’t have received TTC, but it overturned the finding that he had committed fraud. The court found the evidence in the commission’s order didn’t prove McBee knew his unpaid work for his wife’s company constituted work.
The commission took the case to the Ohio Supreme Court.
The state’s highest court agreed with the previous opinion.
The supreme court noted that fraud requires “knowing misrepresentation of a material fact.”
In this case, it was necessary to show McBee was aware his unpaid activities could be considered work.
The documents McBee used to apply for TTC advised only that an injured employee is “not permitted to work” while receiving benefits. The documents don’t define work and didn’t say unpaid activities might be considered work.
For that reason, the Ohio Supreme Court agreed that the fraud conviction should be thrown out.
What do you think about the court’s decision and the fact that in some states, unpaid work can cause recipients of workers’ comp to lose their benefits? Let us know in the comments below.
(State ex re. McBee v. Industrial Commission, Ohio Supreme Court, No. 2012-Ohio-2678, 6/19/12)
You can download a PDF of the court’s opinion here.
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Tags: Ohio, temporary total disability compensation, unpaid work, Workers' comp
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June 25th, 2012 at 10:01 am
Were the duties at the family business within his restrictions?
It may be unpaid work but the business is still seeing benefits from the situation. Instead of hiring to fill a position, they are using an “unpaid” spouse to do the work. Smells like fraud to me.
June 26th, 2012 at 9:41 am
One thing the article does not explain is what physical limitations if any was the employee on and was he working outside of those restrictions while working for his wife?
I had an employee in the past who would take FMLA leave (using his paid sick leave) to “take care of his disabled wife” while he would run his other business at local county fairs, etc. It was interesting to see that he rarely ever took FMLA leave other than times that he could run his other business. Unfortunately the laws how they are written and liberal judges do little to curtail these types of unethical behaviors.
June 27th, 2012 at 12:00 pm
Sometimes “legalese” gets in the way of the spirit of the law. Workers compensation is granted in cases where a worker gets injured and may require time to recuperate. Granted, this particular worker may not have intended to jeapordize his disability compensation or commit fraud. We also do not know the extent or physical requirements of the work that he performed for his wife. It could have been something that did not affect his recovery and may have actually had a theraputic value - we don’t know. I think that the courts got this one as right as they could. I also think that the HR department of companies involved in such matters should take a very close hands-on approach and specifically spell out in writing to the injured exactly what is and is not permitted during their “healing time”, after consulting of course with the recommendation of the treating physician. Companies need to be up front with their employees and expect the same in return.