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Friday, May 30, 2014

Intentional Fraud

All fraud is not actionable in workers' compensation. It is similar to discrimination action actions under the workers' compensation act. There is much talk, but few claims succeed, since they are based upon the element of intent.

This case caught my eye because of David DePaolo's recent blog post highlighting the recent, as David calls it, "Truly Imaginative" behavior of an individual playing two sides of the plot line.

The fraud issue struck a note for me as I have been reviewing cases for an upcoming seminar on workers' compensation issues. The decision of Bellino v Verizon, 2014 WL 10301786 (NJ App Div 2014) is a factual situation that seem to draw the ire of many insurance companies and employers. The injured worker failed to disclose some past medical information during a proceeding. The Court held that the element of intent was not proven.

Cases involving fraud are especially fact sensitive. Rarely does someone play both sides of the story line in perpetrating an intentional workers' compensation fraud scheme. Carlos Perry in West Virginia did so as the US Justice Department reports:

Knoxville Man Sentenced To Twelve Years Imprisonment For Workers' Compensation Fraud

Carlos Perry Found to Have Defrauded Six Insurance Companies Out of $401,649 in Benefits

May 20, 2014
ABINGDON, VIRGINIA – United States Attorney Timothy J. Heaphy announced today that Carlos Perry, 58, Knoxville, Tenn. was sentenced last week in the United States District Court for the Western District of Virginia in Abingdon to twelve years in federal prison.

Perry was also ordered to pay restitution in the amount of $324,914.70. Perry had previously pleaded guilty to one count of mail fraud.

According to evidence presented at the sentencing and guilty plea hearings by Assistant United States Attorney Zachary T. Lee, between January 2011 and February 2014, Perry developed a scheme in which he defrauded six different insurance companies of workers’ compensation benefits using false business and fictitious employees.  An investigation by the United States Secret Service determined that Perry’s scheme entailed Perry impersonating an owner of six fictitious businesses located in Wise, Va., Johnson City, Tenn., Bristol, Va., and Abingdon, Va., in order to obtain workers’ compensation insurance.  Perry then filed false injury claims on behalf of the fictitious employees. 

Perry received the checks sent by the insurance companies and impersonated the fictitious employees at doctor’s visits and in communications with the insurance companies.  The United States Secret Service discovered that Perry utilized nineteen fictitious identities in the course of his scheme and used the social security numbers of numerous real persons to execute his fraud.  On January 29, 2014, Perry was arrested by the United States Secret Service and the United States Marshals Service at a doctor’s office in Kingsport, Tenn., where he was impersonating one of the fictitious employees.  As a result of Perry’s scheme, six separate insurance companies sustained a combined loss of $401,649.66. 

The investigation of this case was conducted by United States Secret Service, United States Marshals Service, and the Virginia State Police.  Assistant United States Attorney Zachary T. Lee is prosecuting the case for the United States.