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Workers' Compensation Board

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Case # G0088357
Date of Accident: 12/10/2009
District Office: Binghamton
Employer: NYS Court 6th Judicial Dist
Carrier: State Insurance Fund
Carrier ID No.: W204002
Carrier Case No.: 63897318
Date of Filing of Decision: 05/19/2017
Claimant's Attorney: Coughlin and Gerhart, LLP
Panel: Kenneth J. Munnelly

MANDATORY FULL BOARD REVIEW
FULL BOARD MEMORANDUM OF DECISION

The Full Board, at its meeting on April 25, 2017, considered the above captioned case for Mandatory Full Board Review of the Board Panel Memorandum of Decision filed June 7, 2016.

ISSUE

The issue presented for Mandatory Full Board Review is whether a discretionary penalty of permanent disqualification is appropriate in this case.

The Workers' Compensation Law Judge (WCLJ) concluded that the claimant violated Workers' Compensation Law (WCL) § 114-a, and assessed a mandatory penalty from June 6, 2013, to August 5, 2015. The WCLJ did not assess a discretionary penalty.

The Board Panel majority affirmed the finding of the WCLJ.

The dissenting Board Panel member would assess a discretionary penalty of total disqualification from future wage replacement benefits.

The carrier filed an application for Mandatory Full Board Review on June 27, 2016, arguing that a discretionary penalty of permanent disqualification from further lost wage benefits should be assessed.

The claimant filed a rebuttal on July 27, 2016, requesting that the decision of the WCLJ and the Board Panel majority be upheld.

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

FACTS

This case is established for work-related injuries to the claimant's head, neck and right shoulder that occurred on December 10, 2009. The case was subsequently amended to include consequential depression.

At a hearing held on May 22, 2012, the claimant's average weekly wage was set at $1,126.45 and prima facie medical evidence was found for consequential depression. At the conclusion of the hearing, the claimant's attorney informed the Board that "claimant is also getting a draw from her employment, and we want to disclose that today. I am not sure that's concurrent employment but one could consider that probably some work activity. So we wanted to disclose that." The claimant's attorney went on to state that "she is doing some stuff" and "you can consider it work. I don't know."

At a hearing held on August 20, 2012, the claimant testified with respect to the issue of concurrent employment. The claimant testified that she stopped working for all of her employers on August 10, 2011. After the WCLJ found concurrent employment, the claimant's attorney volunteered that the claimant receives a draw from an investment.

The claimant's application for disability retirement was approved effective June 6, 2013.

In an independent medical examination (IME) intake form completed on March 28, 2014, the claimant was asked "[w]hen did you last work or return to work in any capacity including volunteer or self-employment for pay or no pay?" In response, the claimant responded "8/2011."

In an RFA-2 (Request for Further Action by Carrier/Employer) filed with the Board on November 10, 2014, the carrier argued that payments to the claimant should be suspended as of August 5, 2014, because of claimant's violation of WCL § 114-a. In an attachment to the form, the carrier indicates that it has video surveillance depicting the claimant engaged in work activities inconsistent with representations that she made concerning her work status.

At a hearing held on December 17, 2014, the carrier disclosed the existence of video surveillance in connection with its allegation that the claimant violated WCL 114-a. The carrier pointed out that the claimant indicated in paperwork completed at the behest of its consultant, Dr. Helbig, that she has not worked since August 20, 2011. In response to the carrier raising the issue of fraud, the claimant's attorney raised the issue of assessing a penalty against the carrier under WCL 114-a(3). The carrier's motion to suspend the claimant's benefits was held in abeyance.

At a hearing held on February 2, 2015, the claimant testified that she owns, with her family, a business on the St. Lawrence River that consists of a marina, a restaurant and a shuttle boat service. She explained that she takes a weekly draw of $125.00 from the business, but that she is not an employee of the business. She receives the $125.00 weekly draw whether she was there or not. The claimant conceded that she helped out with waitressing if someone called in or the restaurant was busy. She was never asked by the carrier to explain her activities at the business. She also helped out at the marina by answering phones if no one else was available. She also conceded that she pays the bills for the restaurant. On re-direct, the claimant testified that she had concerns about the restaurant's manager drinking on the job and stealing and that the manager walked off the job at 3:00 PM on June 30, 2014.

On cross-examination, the claimant denied performing any work subsequent to August 10, 2011, for any other employer other than the restaurant and marina. The claimant did volunteer for a church. She is limited in what she can do around her own home. The restaurant opened in 2013. The restaurant is only open during the warm months of the year. The claimant testified that she is at the restaurant every day that it is open, to open and close it, and some of the time she is also there working. In 2014, she, along with the cook, assumed the day-to-day operation of the restaurant after the manager quit. The claimant bartended, waited on tables, did some cooking, bused tables, washed dishes, cleaned, stocked shelves, did the ordering and scheduling along with the cook, did the hiring and firing, trained employees, operated the cash register and changed out soda tanks. She had to do some lifting and some bending at the waist in the course of her work at the restaurant. The claimant typically was at the restaurant 6 days a week for 9 hours a day. The claimant indicated that she sometimes received cash tips. She did not regularly work at the marina. She and her husband purchased a jet ski at some point in time and she rode on it with him subsequent to August 10, 2011. Claimant verified that she completed a claimant responsibility form at the carrier's request on December 21, 2009, acknowledging that she was to report any work activity to the carrier. The claimant testified that she did not feel that she was working at the restaurant as she was an owner, and therefore was not required to inform the carrier of her activities. On March 28, 2014, she attended an IME with Dr. Helbig and completed an intake sheet indicating that she last worked for pay or otherwise in August 2011. When asked if she disclosed her work activities to her treating provider, Dr. Bennett, who opined that the claimant was totally disabled, the claimant indicated that she did not recall, but that he was aware that she was the owner of the business. The claimant confirmed that she received medical treatment in 2013 and 2014 on Mondays, as this was the day that the restaurant was closed. The manager at the restaurant worked in 2013 and through June 30, 2014. On re-cross, the claimant testified that the restaurant will be opening 2015 and she is training someone to be the manager.

At a hearing held on February 10, 2015, four investigators hired by the carrier to conduct surveillance of the claimant testified.

Investigator one testified that he conducted covert surveillance of the claimant on August 5, 6, 7, 8, 10 and 13, 2014. On those dates, he observed the claimant waiting on tables, working the cash register, entering and exiting the kitchen, tending bar, serving patrons and taking orders at the restaurant. Each date that he was at the restaurant, he saw the claimant. At the conclusion of the testimony of investigator one, a 31-page investigation report, part of which contained his report of the surveillance performed on the aforementioned dates, was entered into evidence.

Investigator two testified that he performed a covert investigation of the claimant at the restaurant on August 6, 7, 9 and 12, 2014, at the behest of the carrier. He observed the claimant on those dates bartending and serving food.

Investigator three testified that he conducted covert surveillance of the claimant at the restaurant on August 8, 9, 10 and 15, 2014. He personally observed the claimant working behind the bar, washing dishes, bending over at the waist to wash dishes, carrying a metal tank, taking orders from customers, operating the cash register, washing dishes, emptying garbage into a container and folding napkins. Investigator three testified that the video that was produced from his surveillance of the claimant had an incorrect time stamp. The investigator overheard the claimant discussing rising workers' compensation costs with a customer.

Investigator four testified that he completed covert surveillance of the claimant at the request of the carrier on August 14 and 17, 2014, at the restaurant. He observed the claimant bartending, talking to customers, and decorating cupcakes.

The Director of Regional Investigations of the investigation firm that the carrier hired to surveil the claimant also testified at the February 10, 2015, hearing, that the 31-page report that summarizes the August 5 through August 17, 2014, surveillance of the claimant contains a typographical error with respect to the date (July 30, 2014), and that the report is a true representation of the investigation conducted by the four investigators.

At a hearing held on April 14, 2015, the former manager of the restaurant testified that she worked at the establishment from June of 2013 to June of 2014, and that she was at the restaurant 6 days a week for approximately 62 hours a week. The former manager testified that the claimant was present at the restaurant every day that she was there. The claimant's duties included bartending and food ordering. The claimant would occasionally have to do lifting while at work, including lifting buckets of wet linens, garbage and soda tanks. The claimant received income in the form of tips while working at the restaurant. The former manager verified that the claimant occasionally filled in at the marina and also catered meals for chartered trips to Singer Castle.

The claimant testified at the April 14, 2015, hearing that she informed the carrier that she last worked in August of 2011 because she previously disclosed her involvement in the family business to the carrier at a hearing in 2012, and she thought it was "covered." She did not recognize her activities at the restaurant to be work activities as she owns the business. Claimant denied ever having to change out a soda canister at the restaurant, although she did recall moving an empty canister that weighed approximately 4 pounds.

In a reserved decision filed on August 19, 2015, the WCLJ concluded that while the claimant's 2015 testimony was consistent with the video surveillance from August 2014, she failed to fully disclose the nature and extent of her involvement with the family business to the Board, the carrier and the medical professionals. The WCLJ also found that the level of claimant's activities in 2013 and 2014 as depicted in the carrier's surveillance video is inconsistent with the description of her activities and level of disability documented in the medical reports at that time. The WCLJ concluded that the claimant violated WCL § 114-a as her work activities in 2013 and 2014 rose to the level of a material misrepresentation, knowingly made for the purpose of obtaining benefits. The WCLJ assessed a mandatory penalty from June 6, 2013, to August 5, 2015, but elected not to assess a discretionary penalty of permanent disqualification in light of the carrier's failure to fully investigate the claimant's initial disclosure of work activity and income made in 2012.

The carrier requested administrative review.

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]).

There is no question that the claimant violated WCL § 114-a by failing to disclose her 2013 and 2014 work activities at Foster's Harbor Inn. The claimant not only failed to disclose income (tips) derived from this endeavor, she also grossly misrepresented her physical capabilities to the medical professionals of record. The claimant also failed to comply with the WCLJ's directive to release full tax returns to the carrier. The claimant's testimony indicates that she was involved in the day-to-day operation of the restaurant in 2013 and 2014. The video surveillance of the claimant indicates that she essentially worked full time in the restaurant in August of 2014, engaging in physical activities inconsistent with her presentation to the doctors. As such, the claimant clearly misrepresented the truth in violation of the statute, and the assessment of a mandatory penalty against the claimant from June 6, 2013, to August 5, 2015, was clearly supported by the record.

Therefore, the sole question is whether a discretionary penalty should have also been assessed against the claimant. The Board clearly has the discretion to assess an additional penalty of permanent disqualification of benefits in this matter. The claimant's misrepresentations were particularly egregious in this case as she failed to disclose her 2013 return to work to the Board, the carrier or the medical professionals of record. Claimant acknowledged her obligation to report any return to work in the carrier's 2009 claimant responsibility form. The claimant denied a return to work when specifically asked by an IME in a 2014 intake form, instead stating that she last worked in August of 2011. The claimant was depicted in the carrier's video surveillance engaged in acts wholly inconsistent with what she portrayed to her treating medical providers and the IMEs, most of whom opined that she was totally disabled.

Therefore, a discretionary penalty of permanent disqualification is assessed against the claimant subsequent to August 5, 2015.

CONCLUSION

ACCORDINGLY, the WCLJ reserved decision filed on August 19, 2015, is MODIFIED to assess a discretionary penalty of permanent disqualification from further lost wage benefits pursuant to WCL § 114-a. That decision is otherwise affirmed. No further action is planned by the Board at this time.