Workers' Comp Fraud Blotter – March 13, 2014
Car Wash Chains Reach Nearly $4 Million Settlement For Wage and Workers’ Compensation Violations (NY) – Two car wash chains, with 21 car washes in New York City, that are owned by John Lage, Michael Lage and Fernando Magalhaes, have reached a settlement with state and local officials for widespread labor law violations, including underpayments, underreporting of employees on state unemployment insurance returns, and failure to carry the required workers’ compensation insurance for all employees. Two-thirds of the settlement of $3.9 million will be paid as restitution to an estimated 1,000 car wash employees, or carwasheros as they are known in the labor and workers’ rights movement. The labor violations included a finding that the two car wash chains paid unemployment insurance contributions and secured workers’ compensation coverage for only a fraction of their total workforce, which is currently about 600 employees. Read more
Maine to Florida Car Hauler’s Highway Now Leads to Federal Prison and Home Detention (ME) – Lawrence Moody has been sentenced to five months in prison and then five months of home detention for federal workers’ compensation fraud. Moody filed a claim for workers’ compensation benefits and was granted medical benefits and income replacement benefits at a rate of 75% of his salary after he injured his back loading mail while working as a tractor trailer driver for the U.S. Postal Service. While collecting benefits, he operated a car hauling business known as “Snowbird Express.” Using a pickup truck and 47-foot enclosed trailer, he hauled cars for customers to Florida for the winter and back to Maine in the spring and was paid on a cash basis. Read more
Businessman Indicted For Failing To Make Workers’ Compensation Payments (OH) – Jeffrey Bonecutter has been indicted by a grand jury on charges that he allegedly failed to make his workers’ compensation payments for six years. Read more
Strip Club Dancers Sue Over Independent Contractor Classification (IL) – Brandy Apple and Amanda Sheer, who work as exotic dancers at PT’s Showclub, have sued the owner of the club, VCG Holding Corp., in federal court, claiming that they have been improperly classified as independent contractors so that their employer can avoid the requirements of the Fair Labor Standards Act. Classifying the dancers as independent contractors also allows the employer to avoid the requirement to provide workers’ compensation insurance. Read more
Business Practices of Sewer Line Contractor May Fail the Smell Test (CA) – Ronald Cupp has been charged with contracting without a license and workers’ compensation insurance and with employer tax violations. The charges arose out of a sewer line project at a shopping center that his company was working on before the state issued a stop-work order. Cupp, who declared bankruptcy last year, is also facing 50 counts of fraud and theft in unrelated business dealings and has a 1975 conviction for robbery. He is representing himself on the current criminal charges. Read more
Highway Department Employee Injured Her Knee Before She Got To Work (AR) – Regina McDowell has pled guilty to felony workers’ compensation fraud. McDowell claimed that she injured her knee while at work, but she was found to have injured it the night before while she was not working. Read more
Landscaper Was Double-Dipper For Three Years (WA) – Jose De Jesus Bernal-Ruiz has admitted to stealing state injured-worker benefits by pleading guilty to theft charges. Bernal-Ruiz filed for workers’ compensation benefits in 2007 after he injured his back while working as a landscaper. But from 2010 to 2013, Bernal-Ruiz returned to work, performing landscaping, yard work and gardening for compensation while still receiving disability benefits. Read more
Former State Senator Plea Bargains To Theft Charge (TN) – Eric Stewart, a former Tennessee state senator and Congressional candidate, has pled guilty to theft. Stewart sold a workers’ compensation insurance policy to a couple who owned a contracting company, but he then used the premium proceeds they paid to him for his own personal use instead of forwarding it to the insurer. Read more
Each week we'll be surveying what the media, state agencies, insurance companies, and others report in terms of workers' comp fraud. Just like a police blotter, our workers' comp fraud blotter lists recent arrests, charges, convictions and investigations.
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