When Workers’ Compensation Insurers Commit Fraud

by | Published on Nov 12, 2018 | Workers Compensation

Workers’ compensation insurance is a major lifeline for workers injured on the job and is granted after detailed review processes that include a medical records review to determine the type of injury and its impact. Given that these benefits help injured employees meet many of their day-to-day needs, it is vital that employers and their insurers ensure that the money is made available to the worker in a timely manner. But what if the worker is genuinely injured but the insurer brings a fraud charge against him/her and gets the worker arrested?

That is exactly what happened to Mario Seguro-Suarez who was working for Southern Fiber. This story published in businessinsurance.com reveals what an ordeal it was for this injured worker. It was in 2003 that he fell from a height of around 18 feet on to hard concrete, broke several bones and suffered severe traumatic brain injury, as court documents say. He went into a coma and had to undergo emergency neurosurgery to relieve pressure on his brain. Though he came out of the coma, the brain injury affected his personality requiring physical, speech, and occupational therapy. He currently has issues such as significant behavioral and memory deficits, and has to depend on others for feeding, dressing and other self-care activities. The worker’s employer Southern Fiber and their insurer Key Risk admitted that his injuries were compensable according to the ruling. However, even though an authorized treating physician requested an occupational home therapy evaluation after ensuring that the worker suffered from traumatic brain injury, the insurer denied the request and refused to provide the evaluation as well as a subsequent request for an evaluation by a neurologist and additional treatment by the treating physician.

  • The insurer showed a manipulated video footage to a neuropsychologist who was treating the employee, which led him to believe that the employee was faking or exaggerating the symptoms. This video was cut from 9 hours of surveillance footage taken by the insurer over a 6-month period and edited down to 45 minutes.
  • In 2008, the North Carolina Industrial Commission ordered the insurer to authorize further treatment by the treating physician.
  • In 2010, after the insurer argued that the worker’s benefits should be cut off for fraud and misrepresentation, a deputy commissioner of the Industrial Commission entered an opinion and award requiring the insurer to pay continued compensation for his care. Following this, in 2011, the full Commission issued an opinion in the injured worker’s favor.
  • The insurer that had exhausted their appeal efforts hired an investigator to secretly surveil and record Mr. Seguero-Suarex for many weeks. They also arranged for an independent medical exam in June 2013 to determine whether the worker’s symptoms were legitimate and whether he needed ongoing treatment.
  • The insurer then asked their investigator to convince the Lincolnton Police Department to bring criminal charges against the worker alleging workers’ compensation fraud. They produced the extensively edited videotape as evidence, following which the employee was arrested, jailed and indicted.
  • However, a psychological examination to determine his competency to stand trial noted conditions consistent with his documented medical history.
  • The charges were dismissed.

Mr. Seguro-Suarez, after his release from police custody, filed a lawsuit against the insurer and the investigator asserting abuse of process, malicious prosecution, unfair and deceptive business practices, bad faith, civil conspiracy and punitive damages. Though the defendants called for a motion to dismiss, the trial court denied it. The appellate court also upheld the trial court’s order, with the exception that the trial court erred in failing to dismiss the civil conspiracy and bad faith claims. According to the court ruling, when a North Carolina worker is hurt while working, his/her injury is within the exclusive scope of the Workers’ Compensation Act and the worker can obtain relief only by filing a claim with the North Carolina Industrial Commission. However, in a case such as the above when the commission awards the benefits to the worker, and then the insurer knowingly provides false information to the police to frame him for insurance fraud, resulting in his arrest, imprisonment, and indictment on felony charges, the worker’s claims for malicious prosecution, abuse of process, and deceptive and unfair practices, is beyond the scope of the Workers’ Compensation Act and are properly before the General Court of Justice.

The worker can now pursue malicious prosecution, abuse of process, and unfair and deceptive trade practices claims against the insurer in the General Court of Justice.

Workers’ compensation is a great insurance program that is assisting so many injured workers and their families to get on with their lives more comfortably. The medical evidence to establish the injury is of paramount importance and workers’ compensation attorneys ensure that all medical proof is available with the support of dedicated medical review services. However, incidents such as the above are traumatic to workers. Fraud does exist, but only a small number of workers indulge in such deceptive activities. Employers and insurers who want to save money do engage in such dishonest practices. When employers and their insurers commit workers’ compensation fraud, it leaves the injured workers in a difficult situation, especially when it comes to their medical expenses.

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