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Workers' Compensation Board

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Case # 80609096
Date of Accident: 07/26/2006
District Office: Buffalo
Employer: Iroquois Bar Corp
Carrier: Assoc Bldrs & Contractors
Carrier ID No.: W333256
Carrier Case No.: ABW910600440
Date of Filing of Decision: 09/06/2016
Claimant's Attorney: Sawers & Sackel, PLLC
Panel: Kenneth J. Munnelly

MANDATORY FULL BOARD REVIEW
FULL BOARD MEMORANDUM OF DECISION

The Full Board, at its meeting on July 19, 2016, considered the above captioned case for Mandatory Full Board Review of the Board Panel Memorandum of Decision filed January 29, 2016.

ISSUE

The issue presented for Mandatory Full Board Review is whether the mandatory and discretionary penalties assessed against the claimant pursuant to Workers' Compensation Law (WCL) § 114-a are appropriate.

The Workers' Compensation Law Judge (WCLJ) found that the claimant violated WCL 114-a, assessed a mandatory penalty disqualifying claimant from receiving awards for the period from November 1, 2011, to May 1, 2012 (the hearing transcript indicates that the end date of the mandatory penalty is May 31, 2012), and assessed a discretionary penalty equal to the mandatory penalty.

The Board Panel majority affirmed the decision of the WCLJ.

The dissenting Board Panel member would impose a discretionary penalty of total wage replacement disqualification.

In its application for Mandatory Full Board Review filed February 29, 2016, the group self-insured trust (GSIT) contends that a mandatory penalty should be assessed from June 1, 2009, to May 31, 2012, and a discretionary penalty of permanent disqualification thereafter is warranted.

In his rebuttal filed March 29, 2016, the claimant requests that the decision of the Board Panel majority be affirmed.

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

FACTS

This case was initially established for injuries to the low back and right shoulder sustained on July 26, 2006, and was subsequently amended to include the neck. The claimant was classified with a moderate-to-marked permanent partial disability in a decision filed on February 2, 2009.

In an IME-4 (Practitioner's Report of Independent Medical Examination) dated April 12, 2011, the claimant reported to the GSIT's orthopedic consultant, Dr. Carr, that he has not worked since the 2006 accident and that "he has no intention of ever returning to work because of his pain."

By RFA-2 (Request for Further Action By Carrier/Employer) filed on September 5, 2014, the GSIT requested that the claimant's benefits be suspended as of October 10, 2013, as the claimant did not notify the GSIT that he was working from June 2009 to approximately May 31, 2012.

A signed plea agreement in the claimant's federal criminal case is attached to the RFA-2, wherein the claimant pled guilty to conspiracy to manufacture 100 or more marijuana plants (a violation of Title 21, United States Code, Section 846). The plea agreement indicates that:

"[b]etween in or about June 2009, the exact date being unknown, and on or about May 31, 2012, the [claimant] did knowingly, willingly and unlawfully combine, conspire and agree with . . . others . . . to manufacture 100 or more marijuana plants.

On May 31, 2012, law enforcement searched a warehouse . . . located a marijuana grow operation consisting of approximately 400 plants at various stages of growth. Immediately following the search, officers observed [the claimant] enter the location. Upon questioning, [the claimant] admitted that he was paid . . . to tend to the plants."

At a hearing held on November 14, 2014, the WCLJ continued the case on the issue of WCL § 114-a. A copy of the Judgment in the claimant's federal criminal case was submitted into evidence. According to the Judgment, the claimant plead guilty to the lesser included offense of Count 1 of the Indictment (conspiracy to manufacture 100 or more marijuana plants in violation of 21 USC § 846), was fined $100.00 and was placed on supervised release (probation) for a period of two years.

At a hearing held on February 9, 2015, the claimant testified that in November 2011, a friend he had known since high school wanted to show him a building he had just purchased because there was water coming down a wall in the building. He saw the water problem was a pinhole leak in the ceiling, which he told his friend how to fix. His friend subsequently asked him for advice on how to fix a hot water tank in February 2011 at the building and then also a sink and a thermostat. The claimant became aware in December 2011 that his friend was growing marijuana in the building. He watered the marijuana plants on two occasions when his friend was on vacation. His friend gave him money on two occasions, once in February of 2012 when he was given an envelope containing $4,500.00 in cash, and a second time in April 2012, when he was given an envelope with $1,200.00 or $1,500.00 in cash. The claimant entered into a plea agreement for his involvement in the criminal enterprise and received two years' probation and a $100.00 fine. The claimant contends that the plea agreement he signed inaccurately identified his involvement as beginning in or about June 2009, but he agreed to the plea because his criminal defense lawyer did not want to disturb the agreement by requesting changes because they could "yank the plea away" and he could be facing 40 years in prison and a $5,000,000.00 fine.

On cross-examination, the claimant testified that he was arrested on or about May 31, 2012. On October 10, 2013, the claimant read and signed the plea agreement. The claimant was first asked to participate in the marijuana growing operation in January of 2012, and began watering the plants in late January 2012 while his friend was on vacation. The claimant conceded that he did not notify the GSIT that he received this money from his friend. The claimant indicated that he willingly agreed in the plea agreement to plead guilty to charge one of the indictment, but that there were several inaccuracies in the plea agreement itself, including "the June 2009 date." The claimant speculated that the June 2009 date was when the others entered into the conspiracy. The claimant completed an affidavit at the behest of the GSIT in February 2010 indicating that he had not returned to any work since July 26, 2006. This document was filed with the Board.

A ten count, sealed indictment related to the claimant's criminal case was filed with the Board on February 9, 2015. Count one of the indictment indicates a follows:

"[b]etween in or about July 2009, the exact date being unknown, and on or about May 31, 2012, in the Western District of New York and elsewhere . . . [the claimant]. . . did knowingly, willfully and unlawfully combine, conspire and agree together and with others, known and unknown, to commit the following offenses, that is to manufacture 1,000 or more marijuana plants, a Schedule I controlled substance, in violation of Title 21, United State Code, Sections 841(a)(1) and 841(b)(1)(A); to possess with intent to distribute and to distribute, marijuana, a schedule I controlled substance, in violation of Title 21, United States Code, Section 841(a)(1); and to use and maintain a place for the purpose of manufacturing and distributing marijuana, a Schedule I controlled substance, in violation of Title 21, United States Code, Section 856(a)(1). All in violation of Title 21, United States Code, Section 846."

In a decision filed February 12, 2015, the WCLJ found that the claimant violated WCL § 114-a, assessed a mandatory penalty disqualifying claimant from receiving awards for the period from November 1, 2011, to May 1, 2012 (the hearing transcript indicates that the end date of the mandatory penalty is May 31, 2012), and assessed a discretionary penalty equal to the mandatory penalty in the amount of $11,456.85. The WCLJ directed the carrier to recoup the overpayment to the claimant at the rate of $150.00 per week out of claimant's ongoing awards at the rate of $376.87 per week.

LEGAL ANALYSIS

"Workers' Compensation Law § 114-a(1) provides that a claimant will be disqualified from receiving compensation attributable to a false statement or representation of a material fact made for the purpose of obtaining wage replacement benefits. Any compensation already paid to a claimant which is directly attributable to a claimant's misrepresentations must be rescinded by the Board. The Board also has the discretionary authority to disqualify the claimant from receiving any future wage compensation benefits regardless of whether or not the claimant is subject to the mandatory penalty, even if the claimant has suffered a compensable injury. In addition, the Board may subject the claimant to an additional penalty up to the amount directly attributable to the false statement or representation" (Matter of Church v Arrow Elec., Inc., 69 AD3d 983 [2010] [internal quotation marks and citations omitted]).

Start Date of the Mandatory Penalty

The Full Board finds that the claimant is subject to a mandatory penalty from November 1, 2011, to May 31, 2012. The plea agreement signed by the claimant in November 2013 indicates that he agreed to plead guilty to count one of the indictment (violation of 21 USC § 846 [conspiracy to manufacture 100 or more marijuana plants]). Count one of the indictment specified the time frame of the conspiracy as "[b]etween in or about July 2009, the exact date being unknown, and on or about May 31, 2012." The plea agreement itself has an identical recitation with respect to the start date of the conspiracy. As such, the documents filed in the federal criminal case against the claimant are less than exact with respect to the date the claimant became engaged in the criminal conspiracy, and actually support a conclusion that the true date of the claimant's involvement was "unknown" by the prosecution. The claimant credibly testified that he did not begin his work activities for his friend until November 1, 2011, and that he did not attempt to correct the court documents indicating that he started in 2009 on the advice of counsel and based on his fear that an attempt to correct any of the documentation would jeopardize the plea agreement itself.

Discretionary Penalty

The Full Board finds, upon review of the evidence of record, that it is appropriate in this case to assess a discretionary penalty of disqualification against the claimant from May 31, 2012, forward. The claimant was convicted of conspiring to manufacture 100 or more marijuana plants in violation of federal law and received a substantial sum of money ($5,700-$6,000) for his involvement in the criminal conspiracy, which he failed to report to the GSIT. Had the claimant's plea agreement not been made part of the public record, it is unlikely that he would have disclosed his involvement in the criminal enterprise and his receipt of this money. The Board assessment of such a penalty has been upheld in other instances in which the claimant has failed to disclose a return to work as part of a criminal enterprise (see Matter of Johnson v NYS DOT, 305 AD2d 927 [2003]). In that case, the Third Department affirmed the Board's decision to disqualify the claimant from receiving future wage replacement benefits based on his failure to disclose his self-employment as a drug dealer (the claimant was convicted of the crime of attempted criminal sale of a controlled substance in the third degree), and his receipt of $270 for the sale of crack cocaine (see also Matter of Pizza Hut, 2013 NY Wrk Comp 30403387).

CONCLUSION

ACCORDINGLY, the WCLJ decision filed February 12, 2015, is MODIFIED to find that the claimant is subject to a mandatory penalty from November 1, 2011, to May 31, 2012, and a discretionary penalty of disqualification from May 31, 2012, forward. The decision is AFFIRMED in all other respects. No further action is planned by the Board at this time.