Worker’s Compensation Investigations in New York and North Carolina

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This is an interesting exploration of the antagonistic nature of worker’s comp claims. To read the complete article click below

In Workplace Injury System, Ill Will on All Sides


Published: Thursday, April 2, 2009 at 5:14 a.m.
Last Modified: Thursday, April 2, 2009 at 5:14 a.m.

TONAWANDA, N.Y. — The sprawling DuPont plant along the Niagara River here can be a grim place, but less so on the days when the company hands out coupons to reward workers for a few weeks without injury.

“You know that if you report an injury, everybody says, ‘You son of a bitch,’ ” said Dan Austin, who worked at the plant for 30 years. “I’ve heard people say, ‘So-and-so reported an injury and it’s going to cost us our safety bucks this month.’ ”

Companies across the state have recently introduced reward programs to curtail injuries, in part to keep their workers safe, in part to cut down on workers’ compensation claims, which managers cite as a huge factor in the high cost of doing business in New York.

“There are an awful lot of situations where people aren’t truly injured on the job,” said Gregory Harden, the president of Harden Furniture, a 380-employee company based in McConnellsville.  Monday is always the day with the highest injury rate for us. Someone comes in on Monday, and their back is really sore for whatever reason, and they end up missing a few weeks of work.”

The state’s multibillion-dollar workers’ compensation system is plagued by many shortcomings: endless delays, suspect doctors, and a rudimentary form of justice that prevails as employees and employers seek to survive.

Workers say companies are going to extraordinary lengths to cut back on claims: contesting injuries, checking on workers at home, even firing those who file for benefits.

Employers say that the compensation system is so expensive, so riddled with fraudulent claims, that they need to take aggressive steps to curb their costs. A single injury can easily cost $10,000, and sometimes several hundred thousand dollars when a badly maimed worker draws benefits for life.

Though no independent study has established that claimant fraud is rampant, many executives say the system is skewed against them by judges who favor claimants and by malingerers who collect benefits when they are well enough to work.

The state is putting reforms in place to reduce costs for companies and ease tensions in the workplace, but it remains unclear how much they will help. And the economic downturn has only added to the pressure to control costs.

Experts say it is difficult to estimate how often employers in New York retaliate against workers who file compensation claims because there is no tracking of such data. But several studies have found that the perception of widespread retaliation has contributed to the decline in the number of compensation claims in New York and nationwide in recent years.

“There are lots of people out there who aren’t filing claims because it’s not worth the hassle and because of the fear of retaliation by the employer,” said Leslie Boden, a professor of public health at Boston University.

Legal experts say New York makes it easy to fire workers who file claims. The law bars retaliation, but states that as long as an employer has a “valid reason,” like a prolonged absence, the firing is legitimate.

Mr. Willette said that even after he was dismissed, the company challenged his claim. A private investigator for its insurance carrier began parking outside his house and trailing him to the doctor and the supermarket, he said.

“At first we thought it was the police,” Mr. Willette said. “But the cops said, ‘He’s a private investigator watching you.’ ”

After leaving Addison, Mr. Willette held a few lower-paying jobs for a few months, but his breathing did not improve, and he slipped into a depression for nearly a year. He felt too short of breath for his favorite pastime, fishing.

Now he spends his days watching television. Occasionally he visits his father, gathering strength to go out for an hour or two by using an oxygen tank at home.

He now receives benefits, $278 a week. But because the company challenged his claim, those benefits did not start until 18 months after he was let go.

“You feel very low from what they put you through,” he said. “They try to grind you down.”

Fearing Fraud

As the sixth president in the Curtis Screw Company’s 100-year history, Paul Hojnacki wants the company to survive another century in Buffalo, the city where it was founded.

But Mr. Hojnacki is so angry about the state’s workers’ compensation system that he sometimes talks of moving the factory, which makes precision auto parts. He denounces the delays in settling cases, complains about the “pro-worker judges” and about the way some employees, he said, are allowed to milk the system. Most of all, he indicts the costs.

Curtis Screw, he said, spent $4,900 per employee in 2007 for workers’ compensation coverage for its 220 workers, more than 10 times what it cost at its factory in Cornelius, N.C.

“The cost of this monstrosity,” he said of the system, “has to be taken into consideration because it’s driving businesses out of New York State.”

Mr. Hojnacki says he is similarly upset by the $200,000 his company pays out annually to 15 former employees who have been classified as having permanent partial or permanent total disabilities. Nearly all of them, he said, were terminated for poor performance, then filed for compensation.

“We have 15 people that we terminated that we cut a check to every week, some that date as far back as 1993-94,” he said. “It’s absolutely ludicrous. Even with the workers’ comp reforms, this legacy cost we literally have to pay until these people pass.”

The Buffalo factory self-insures because Curtis Screw finds it cheaper to pay its compensation costs itself, rather than use an outside insurer. Mr. Hojnacki said his yearly compensation expenses include $850,000 to cover medical expenses for current workers, replacement wages for those workers and state assessments to finance the comp system.

Mr. Hojnacki cited a machinist who worked at Curtis Screw for several years and then filed a claim for a back injury.

“We did surveillance on him,” Mr. Hojnacki said. “We had a videotape where this individual was doing work on his house, lifting sheets of drywall and carrying them around and taking them from the outside to the inside by himself. We took it to the judge. The judge ruled, ‘We find that the individual was having a good day.’ ”

The worker was classified as having a permanent partial disability, for which, Mr. Hojnacki said, the company pays him $400 a week.

“The workers’ comp judges are totally sympathetic with the workers,” he continued. “One judge told me, ‘It’s workers’ comp. It’s not employers’ comp.’ ”

One reason that Curtis Screw’s costs are so high, Mr. Hojnacki acknowledged, is that his company has so many injuries, including a half-dozen workers who have had costly surgery for carpal tunnel problems. None of his workers in North Carolina have ever received compensation for such an injury, he said.

“We have 25 injuries each year, and of the 25 the vast majority are legitimate situations where people scrape a finger or slip or twist a knee,” he said. “The vast majority of workers, they can’t wait to be released from workers’ comp and come back to work. For them, workers’ comp is exactly what it should be — it compensates them for the short period they’re out. But then there’s this small group of employees that play the system.”

Mr. Hojnacki said that with his company facing competition from China, high energy costs and a devastating downturn in the auto industry, it cannot afford to be saddled with illegitimate compensation claims.

“It’s just devastating that you can have people who take advantage of the system,” he said. “They are taking money that we could be sharing with other workers.”

To read the complete article, click here

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