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Case # 80709989
Date of Accident: 09/11/2007
District Office: Buffalo
Employer: NYS Police
Carrier: State Insurance Fund
Carrier ID No.: W204002
Carrier Case No.: 62429485-085
Date of Filing of Decision: 12/03/2012
Claimant's Attorney: Hurwitz & DiMatteo
Panel: Robert E. Beloten

MANDATORY FULL BOARD REVIEW
FULL BOARD MEMORANDUM OF DECISION

The Full Board, at its meeting held on October 16, 2012, considered the above captioned case for Mandatory Full Board Review of the Board Panel Memorandum of Decision filed November 30, 2011.

ISSUE

The issue presented for Mandatory Full Board Review is whether the claimant made a material misrepresentation of the truth in violation of Workers' Compensation Law (WCL) § 114-a.

The Workers' Compensation Law Judge (WCLJ) determined that the claimant did not violate WCL § 114-a as the substantial evidence in the record does not support a finding that he knowingly and intentionally made misrepresentations of a material fact in an effort to obtain compensation benefits.

The Board Panel majority agreed with the WCLJ, concluding that there is insufficient evidence in the record that the claimant knowingly made false statements with the intent to deceive or influence any determinations regarding his right to workers' compensation benefits.

The dissenting Board Panel member found that the claimant violated WCL § 114-a.

The carrier filed an application for Mandatory Full Board Review on December 30, 2011.

The claimant filed a rebuttal on January 25, 2012.

Upon review, the Full Board votes to adopt the following findings and conclusions.

FACTS

This case was established for a work-related low back injury that occurred on September 11, 2007, while the claimant was employed by the New York State Police as a Trooper.

An OC-400 (Notice of Retainer and Appearance) form was filed with the Board on February 21, 2008, indicating that the claimant retained the law firm of Hurwitz & DiMatteo as his legal counsel. OC-400.1 (Application for Fee by Claimant's Attorney Representative) forms were subsequently filed by Hurwitz & Hurwitz on May 21, 2009, and July 26, 2010, indicating representation of the claimant from February 5, 2008, through at least July 14, 2010.

In an RFA-2 (Carrier's Request for Further Action) filed on November 17, 2009, State Insurance Fund (SIF) sought a hearing on the issue of permanency based on the October 30, 2009, IME of Dr. Bauer, who opined that the claimant has a 50% permanent partial disability.

At a hearing held on January 13, 2010, awards were issued to the claimant from May 2, 2009, to July 6, 2009, at the temporary partial disability rate of $500.00, and awards thereafter were held in abeyance pending the claimant's submission of self-employment income documentation. A decision was filed on January 18, 2010, memorializing the findings reached at the January 13, 2010, hearing.

In an RFA-2 filed on January 21, 2010, SIF sought a hearing on the issues of WCL § 114-a and permanency.

In a decision filed on March 9, 2010, the WCLJ directed the claimant to file his 2009 income tax returns, directed the claimant to testify at a hearing to be held on April 14, 2010, directed SIF to produce its video surveillance and investigative reports to the claimant at the conclusion of the April 14, 2010, hearing, and directed the testimony of the investigator and the employer's lay witness at a hearing to be held on April 28, 2010.

The claimant testified at the hearing held on April 14, 2010, that he began his employment as a New York State Trooper on April 11, 1994, and received several awards for distinguished service. He sustained a low back injury on September 11, 2007, while grabbing a file folder out of a supply cabinet. Claimant further testified that a friend of his was the owner of the Cabin Range, a gun and shooting store. He would go to the store after physical therapy to move around. After a couple months he began to discuss taking over the business from his friend. He began to spend time at the store in order to learn the business, including ordering, dealing with customers, completing forms from the Federal government, and completing FFL forms. He went to the Cabin Range for about one year following his accident and occasionally would help out, and he felt that the time that he spent at the Cabin Range was akin to the job re-training being suggested by SIF. He was not paid for his time at the Cabin Range. He was learning the business while there, and he eventually tried to buy the business, to no avail. He eventually opened up an outdoor store called LaRock's Outdoors in Newfane in July of 2009. He first received a paycheck from LaRock's Outdoors in January of 2010. He informed SIF of his activities at Cabin Range and LaRock's Outdoors. He did not knowingly hide anything from anyone, nor did he feel he was ever doing anything wrong. He was interrogated in the summer of 2009 as part of a New York State Police investigation into his employment while receiving pay from the State. SIF and the New York State Police were aware of his being at the Cabin Range because of the work activity questionnaires he completed, he never intended to defraud anybody out of anything connected with his workers' compensation case, he is presently working at LaRock's within his limitations, and he continues to see his medical providers for treatment of his causally related back condition.

On cross-examination, the claimant testified that he began to hang around the Cabin Range sometime after his injury in 2007. He was still receiving his full wages from the employer when he began to spend time there. The owner of the Cabin Range informed the claimant of his intention to retire. He told the claimant that he would be a perfect fit to take over the store, and as such the owner began to teach him the operation of the store, and even allowed him to have some customer interaction. In a work activity questionnaire signed by him on September 28, 2007, he denied working. He admitted that he was working in a work activity questionnaire signed by him on April 25, 2008. He indicated on the form that he was merely walking around the store and visiting with friends at that time, and learning the business without receiving pay. The work activity questionnaire signed by him on September 19, 2008, states that he is not working, but notes under comments that he is going to the Cabin Range a couple of days a week to be able to move around.

He could not explain why he provided different answers to question one in the April 25, 2008, questionnaire as compared to the September 19, 2008, questionnaire, as nothing had changed during that period. In a questionnaire signed by the claimant on December 2, 2008, he indicates that he is not working, with no explanation provided. In a questionnaire signed by the claimant on January 10, 2009, he indicated that he had done some work at the Cabin Range and that there were no differences in his activities at the Cabin Range between September of 2007 and at least January of 2009. In a questionnaire signed by the claimant on February 16, 2009, he indicated that he was not working, but that he was in discussions to purchase the Cabin Range. In a questionnaire signed by the claimant on May 23, 2009, he indicates that he is working trying to put together his own business. He was referring to LaRock's Outdoors in the May 23, 2009, questionnaire.

In a questionnaire signed by the claimant on July 17, 2009, he indicated that he was working at LaRock's Outdoors, which he opened on July 17, 2009. The next four work activity questionnaires in August, October, November of 2009 and January of 2010, indicated that he was working at LaRock's Outdoors. He worked at no other places after September 11, 2007. He never entered into a contract to purchase the Cabin Range, because of financial complications. He physically opened the Cabin Range on December 2, 2008, and began to help out once inside as the owner was hunting at that time. He was working at the store on December 17, 2008, and he could not recall informing a customer on that date that he was the owner.

On redirect, the claimant testified that the purchase of the Cabin Range fell through as the owners wanted too much money. He made no money from his involvement with the Cabin Range. A deal to buy the business was never consummated as no money exchanged hands. He said that the State Police were aware of his involvement with the Cabin Range, and that he never knowingly withheld anything from SIF or the New York State Police. He explained that the discrepancies with the work activity questionnaires can be explained based on the fact that they were completed in haste, that he currently has nothing to do with the Cabin Range, and that he performed work activities at the Cabin Range, but did not receive any pay.

At the conclusion of the April 14, 2010, hearing, the following exhibits were filed with the Board: Cabin Range invoices bearing the claimant's signature; Cabin Range utilities bills under the claimant's name; a contract for the purchase of the Cabin Range bearing the claimant's signature; twelve SIF work activity questionnaires completed by the claimant between September 19, 2008, and January 20, 2010; the claimant's 2009 W-2s; and the claimant's 2009 income tax returns.

At the hearing held on April 28, 2010, one of the owners of the Cabin Range testified that he has owned the store for 35 years. He is friends with the claimant. He was in the process of entering into an agreement with the claimant to purchase the Cabin Range. The claimant began to show up at the store shortly after his work-related injury and helped out on occasion and eventually they discussed his purchasing the business. The claimant helped wait on customers if he was busy. Talks progressed concerning the claimant's purchase of the business to the point that a contract was drawn up, the owners of the business signed the contract and the claimant signed one copy. The owner wanted it pulled back to make some changes. The claimant began to actively participate in the running of the store in November of 2008. The owner stepped away from the business at that time and let the claimant run the business on a day-to-day basis. The claimant wasn't officially on his own as the license was not yet in the claimant's name. The utilities were transferred to the claimant, and claimant ran the business for three months. At that point, the deal fell apart in February of 2009, and he and the claimant parted ways. On cross-examination, the owner testified that he was not aware of the claimant making any money from his time at the Cabin Range.

Also at the April 28, 2010, hearing, SIF's investigator testified that he is the President of Invex Investigation Agency, Inc., he was commissioned by SIF to conduct an investigation of the claimant in December of 2008, he personally conducted the investigation of the claimant, he filed reports and surveillance video of the investigation, he conducted surveillance of the claimant on December 2, 10 and 17 of 2008 and March 2 and 4 of 2009, and that the video surveillance being submitted today was of the claimant on these dates. On cross-examination, the investigator testified that SIF sent him an on-line request for an investigation of the claimant, along with information about the claimant and his case, SIF did not inform him that the New York State Police investigated the claimant, and he was not made aware of this fact until he spoke with one of the owners of the Cabin Range.

At the conclusion of the April 28, 2010, hearing, the DVDs covering surveillance of the claimant on December 2, 2008, December 10, 2008, December 17, 2008, March 2, 2009 and March 4, 2009, were filed with the Board and entered into evidence. SIF's investigator's report dated January 1, 2009, and March 9, 2009, were also entered into evidence and the parties were directed to submit briefs by May 28, 2010.

The January 1, 2009, investigator's report details the surveillance conducted of the claimant on December 2, 2008, December 10, 2008 and December 17, 2008. The report indicates that the claimant opened the Cabin Range on December 2, 2008, was present and appeared to be working at the store on all three dates, and stated to the investigator on December 17, 2008, that he was the owner of the business. The March 9, 2009, investigator's report indicates that the claimant is no longer affiliated with the Cabin Range.

In a reserved decision filed on July 1, 2010, the WCLJ concluded there is not substantial evidence establishing that the claimant knowingly and intentionally made misrepresentations of material fact in an effort to obtain compensation benefits, that claimant did not violate WCL §114-a and is entitled to benefits subsequent to July 6, 2009. The WCLJ determined that while the claimant could have provided more detail regarding his activities and that some of his responses to SIF's work activity questionnaires were ambiguous, that such inadequacies were insufficient to support a finding of a WCL § 114-a violation. The WCLJ concluded that the claimant's testimony was credible in all respects, that SIF was able to conduct an investigation into the claimant's activities at the Cabin Range based on his truthful completion of SIF's work activity questionnaires, and that the claimant did acknowledge work activities at the Cabin Range by April 2008. The WCLJ additionally distinguished this case from the finding in Matter of Galarneau Builders Inc., 2009 NY Wrk Comp 50606948, finding that the claimant herein did not completely deny work activities as the claimant in Galarneau did, that the claimant credibly testified that he received no payments or income from his activities at the Cabin Range, and the claimant's activities at the Cabin Range were intended to help him learn a new business and as a result, was time well spent. The WCLJ also concluded that the claimant's activities at the Cabin Range were consistent with the physical restrictions imposed by his work-related back disability.

LEGAL ANALYSIS

If a claimant knowingly makes a false statement or representation as to a material fact for the purpose of obtaining compensation or for the purpose of influencing any determination regarding any such payment, such person shall be disqualified from receiving any compensation directly attributable to such false statement or representation (WCL § 114-a; Matter of Johnson v New York State Department of Transportation, 305 AD2d 927 [2003]).

In the instant case, the claimant accurately filled out the first work activity questionnaire dated April 25, 2008, explaining that he was working without pay at the Cabin Range waiting on customers and learning the business. The information on that questionnaire is consistent with the testimony of the claimant and the owner of Cabin Range. The Board Panel finds that the information on this questionnaire is not false and there is no intent to deceive. The claimant provided similar information on subsequent questionnaires. The Board Panel finds that the claimant provided accurate information concerning his activities at the Cabin Range to the carrier on questionnaires. The Board Panel notes that the claimant also provided inaccurate information on other questionnaires in which he simply answered no where he was asked if he had engaged in work activities, and also notes that some of the claimant's answers on the questionnaires do not fully detail his activities at Cabin Range. The claimant testified that he could not recall why he filled out some questionnaires differently than others, but he alluded to the fact that he did not put much thought into his answers.

Upon review of the record in this case, the Board Panel finds that the claimant testified credibly concerning his work activities at Cabin Range. His testimony is consistent with the detailed information the claimant set forth on the work activity questionnaires that contained details, and is consistent with the testimony of the owner of Cabin Range and the reports of the carrier's investigator. Although the claimant also provided inconsistent answers on some questionnaires, and left off relevant information from others, the Board Panel finds that there is insufficient evidence that the claimant knowingly made false statements with an intent to deceive or to influence any determination regarding his right to workers' compensation benefits.

Therefore the Full Board finds, upon review of the record and based upon a preponderance of the evidence, that the WCLJ properly found that the claimant did not violate WCL § 114-a.

Moreover, if a proper OC-400 form is in the file, a carrier should not send written communications to a claimant without sending a copy to the claimant's attorney, unless authorized or directed to do so by statute or regulation. Such conduct constitutes a direct communication with a represented claimant and is contrary to principles of fairness, creates an unacceptable risk that unsophisticated claimants may be misled, and interferes with the attorney/client relationship announced in the notice of retainer. Any such communication with a claimant, absent prior notification to the claimant's attorney or simultaneous provision of a copy to the claimant's attorney, is improper and irregular; and any information obtained from such contact is not admissible (Matter of Rochester Business Alliance, 2011 NY Wrk Comp 70511177 ).

The claimant completed a total of twelve work activity questionnaires sent to him by SIF. The last six completed by the claimant between May 23, 2009, and January 1, 2010, are for a period after his involvement with the Cabin Range ended and each consistently indicate his involvement with LaRock Outdoors. As such, only the first six work activity questionnaires dated September 28, 2007, April 25, 2008, September 19, 2008, December 2, 2008, January 10, 2009, and February 16, 2009, are relevant to the discussion of whether the claimant violated WCL § 114-a.

The record as developed indicates that the claimant was represented by Hurwitz & DiMatteo as of February 5, 2008. The record further indicates that SIF failed to provide a copy of the WA-1 work activity questionnaires sent to the claimant after that date, which were ultimately completed by the claimant on April 25, 2008, September 19, 2008, December 2, 2008, January 10, 2009, and February 16, 2009, to Hurwitz & DiMatteo. SIF conducted an investigation into the claimant's activities at the Cabin Range based on these completed work activity questionnaires. The Board's holding in Matter of Rochester Business Alliance provides that written correspondence from a carrier to a represented claimant must be simultaneously copied to the claimant's representative. In that decision, a Board Panel found that such a rule embodies principles of fairness, prevents an unsophisticated claimant from being taken advantage of, and preserves the attorney/client relationship.

Here, the Full Board finds that SIF failed to comply with Matter of Rochester Business Alliance, the WA-1s, and therefore the evidence subsequently obtained as a result, which formed the basis of SIF's WCL § 114-a prosecution of the claimant, are inadmissible. WCL § 114-a.

CONCLUSION