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Case # G0784033
Date of Accident: 05/22/2013
District Office: Hauppauge
Employer: Devos Ltd
Carrier: Federal Insurance Company
Carrier ID No.: W080006
Carrier Case No.: 040513046602
Date of Filing of Decision: 07/12/2017
Claimant's Attorney: Gilbert Blaszcyk & Milburn LLP
Panel: Kenneth J. Munnelly

MANDATORY FULL BOARD REVIEW
FULL BOARD MEMORANDUM OF DECISION

This Amended Mandatory Full Board Review Full Board Memorandum of Decision is issued solely to correct a typographical error in the Conclusion. The Conclusion states that claimant is disqualified from receiving indemnity benefits after June 11, 2003; the correct date should be June 11, 2013. The amended portion of the decision is in italics.

The Full Board, at its meeting on May 16, 2017, considered the above captioned case for Mandatory Full Board Review of the Board Panel Memorandum of Decision filed October 27, 2016, and amended on November 25, 2016.

ISSUE

The issue presented for Mandatory Full Board Review is whether the claimant violated Workers' Compensation Law (WCL) § 114-a.

The Workers' Compensation Law Judge (WCLJ) found that the claimant did not violate WCL § 114-a(1), and that the carrier violated WCL § 114-a(3) for instituting and continuing a frivolous proceeding.

The Board Panel majority reversed the WCLJ decision, finding that the claimant violated WCL § 114-a(1) and that the carrier did not violate WCL § 114-a(3). The Board Panel majority permanently disqualified the claimant from all future indemnity benefits.

The dissenting Board Panel member would find that the claimant did not violate WCL §114-a(1) and that the carrier did not violate WCL § 114-a(3).

The claimant filed an application for Mandatory Full Board Review on November 9, 2016, arguing that the carrier's evidence was not sufficient to prove the claimant violated WCL § 114-a because her symptoms waxed and waned, and her testimony was about her symptoms at the time she testified, not her condition when the video was recorded. Additionally, the claimant asserts that the carrier did not provide notice of the surveillance video's existence before she testified.

The carrier filed a rebuttal on December 9, 2016, that the majority's finding of a violation of WCL § 114-a(1) is correct because the video surveillance produced by the carrier shows that the claimant misstated her complaints of pain to her doctor, the carrier's IME, the carrier's investigators and by her testimony during the May 21, 2014, hearing.

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

FACTS

The claimant filed a C-3 (Employee Claim) alleging that she sustained multiple injuries on May 22, 2013, when a co-worker "body slammed into me hard enough that my shoulder popped and the other employee dropped his car keys." The carrier controverted the claim.

In a June 3, 2013, narrative report, claimant's treating physician, Dr. Finger, reported that claimant "states that on 5/22/2013 she collided with another coworker injuring her right shoulder."

The carrier's consultant, Dr. Zimmerman, examined claimant on July 25, 2013. In his report, Dr. Zimmerman stated that, "[c]laimant reports that on 5/22/13 a coworker 'body slammed' into her shoulder. That is he collided with her. She felt her shoulder 'pop'."

In a November 20, 2013, narrative report, claimant's treating physician, Dr. Cherney, stated that claimant "was originally injured at work when she was leaving work at the end of the day. A coworker ran into the back of her. She describes a significant jarring and had a sensation that her shoulder 'popped out of joint'."

On August 28, 2013, the Board received video evidence submitted by the carrier consisting of security video taken at the employer's premises on the date of claimant's alleged accident (video #1). That evidence was referenced in the carrier's pre-hearing conference statement filed with the Board the previous day.

At the hearing on September 11, 2013, the carrier argued that the claimant did not sustain an accident as she alleged based on the video evidence it submitted on August 28, 2013 (video #1). The WCLJ found that the carrier had not filed a timely notice of controversy and was therefore barred from pleading certain defenses to the claim, including the defense that claimant did not sustain an accidental injury arising out of and the course of her employment, pursuant to WCL § 25(2)(b). The WCLJ then established the claim for the right shoulder and made awards. The findings and awards made at the September 11, 2013, hearing are reflected in a decision filed September 16, 2013.

The carrier requested administrative review of the WCLJ's September 16, 2013, decision and the Board Panel, in a decision filed February 6, 2014, found that the carrier had filed a timely notice of controversy pursuant to WCL § 25(2)(b) and rescinded the establishment of the claim and all awards, without prejudice. The Board Panel returned the matter to the trial calendar for further development of the record, with the carrier permitted to raise and litigate all relevant defenses.

A hearing was scheduled for May 21, 2014, to consider multiple issues, including accident, notice and causal relationship, period and extent of disability, loss of earnings, and rate of compensation.

The claimant testified at the hearing on May 21, 2014, that she worked for the employer as a processor for almost five years. Her job required her to lift boxes from pallets and process them. She was injured on May 22, 2013, when a co-worker who was rushing to leave "slammed his whole body into my right shoulder" (transcript, 5/21/14 hearing, p. 4). She also worked at a home improvement store as a part time cashier.

The claimant testified that she reported the accident to her supervisor and saw a doctor the following day. She attempted to return to work, but the employer would not let her work with a shoulder brace. The employer terminated the claimant on July 29, 2013. The claimant tried to keep working at the home improvement store, but she had difficulty lifting products, so her hours were reduced. She then took a job with a large law firm processing intake forms for new clients, which lasted until April 12, 2014.

After the claimant's direct testimony concluded, the carrier's attorney provided notice that it possessed surveillance video of the claimant before beginning cross-examination (video #2).

On cross-examination, the claimant testified that she did not return to work at the home improvement store until about two weeks after the May 22, 2013, accident, because they would not let her work while wearing a sling. After the accident she used her left hand while working at the home improvement store, and denied using her right hand. The claimant asserted that she used a scan gun with her left hand and obtained help lifting items over ten pounds.

At the conclusion of claimant's testimony at the May 21, 2014, hearing, the carrier argued that claimant had violated WCL § 114-a. The WCLJ did not make a decision on whether claimant had violated WCL § 114-a, but did establish the claim for the right shoulder and set claimant's average weekly wage at $644.82, taking into account her concurrent employment. The carrier did not seek review of that decision.

On November 7, 2014, the carrier filed records it had subpoenaed from the home improvement store where claimant was concurrently employed which contained payroll records indicating that claimant worked 36.5 hours during the weekly pay period ending May 26, 2013, 40 hours during the week ending June 2, 2013, and 34.75 hours during the week ending June 9, 2013 (doc. #236555354, p. 5).

At a hearing on October 21, 2015, the carrier produced video #2 for review by the WCLJ in camera. The carrier also produced four investigators who were prepared to testify, as well as investigation reports. Video #2 consists of video surveillance of the claimant taken on June 15, 2013, July 25, 2013, August 8, 2015, and October 19, 2015.

Ultimately, the WCLJ, in a decision filed January 25, 2016, found that claimant did not violate WCL § 114-a(1), and that the carrier violated WCL § 114-a(3) for instituting and continuing a frivolous proceeding.

The carrier requested administrative review of that decision, arguing that the record supported a finding that claimant violated WCL § 114-a(1). The carrier argued that the video surveillance of claimant in video #2 showed claimant performing activities at the home center where she was concurrently employed that were entirely inconsistent with the abilities she testified to at the hearing on May 21, 2014, that she conveyed to her treating physicians and the carrier's IME, and in discussions with the carrier's investigators. The carrier further contends that claimant's testimony on May 21, 2014, is inconsistent with the payroll records from the home center where claimant was concurrently employed. The carrier requests that claimant be subject to permanent disqualification from receiving further lost wage benefits.

In rebuttal, claimant argued that the WCLJ correctly concluded that she did not violate WCL § 114-a(1).

LEGAL ANALYSIS

Video Surveillance

It is well established that an employer or carrier must disclose the existence of surveillance and investigation materials to a claimant prior to the claimant's testimony. This obligation serves to "limit the gamesmanship which might otherwise occur" (Matter of Morelli v Tops Mkts., 107 AD3d 1231 [2013][ internal quotation marks and citation omitted]; see also Matter of DeMarco v Millbrook Equestrian Ctr., 287 AD2d 916 [2001]). "Generally, the carrier must disclose its surveillance materials at the earliest possible time so that the claimant is aware of the existence of those materials prior to any testimony by the claimant" (Matter of Daytop Village Inc., 2017 NY Wrk Comp G1035951).

Failure to notify the claimant of the existence of videotaped surveillance prior to testifying warrants preclusion of the videotaped surveillance and associated investigative reports (see e.g. Matter of Gary Cummings, 2006 NY Wrk Comp 79911267; Matter of St. Charles R.C. School & Church, 2005 NY Wrk Comp 00048213).

In this case, the carrier's attorney clearly did not provide notice of the surveillance videos until after the completion of claimant's direct testimony at the May 21, 2014, hearing. Therefore, the video surveillance, as well as any associated investigators' reports and testimony, are hereby precluded.

WCL § 114-a(1) - Other Evidence

"Workers' Compensation Law § 114-a authorizes the Board to disqualify a claimant from receiving future wage replacement benefits if it finds that the claimant knowingly made a false statement or misrepresented a material fact in order to obtain workers' compensation benefits or to influence any determination regarding such benefits (see Matter of Phelps v Phelps, 277 A.D.2d 736 [2000])" (Matter of Johnson v New York State Dept. of Transp., 305 AD2d 927 [2003]).

At the hearing on May 21, 2014, claimant testified that she tried to keep working at the home center after her accident, but she had difficulty lifting products, so her hours were reduced. She also testified that she did not return to work at the home improvement store until about two weeks after the accident, because they would not let her work while wearing a sling. However, the payroll records submitted by the carrier from the home center reflect that claimant continued to work full-time during the weeks following the May 22, 2013, accident, with little diminution in the hours she worked (see doc. #236555354, p. 5). Claimant had not offered an explanation for this glaring discrepancy.

Therefore, the Full Board finds that claimant knowingly made a misstatement of material fact in violation of WCL § 114-a(1) when she testified that she did not return to work at the home improvement store until about two weeks after the accident and that her hours were reduced as a result of her shoulder injury.

WCL § 114-a(1) Penalties

"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]). However, the discretionary "penalty imposed may not be disproportionate to the underlying misconduct (Matter of Harp v New York City Police Dept., 96 NY2d 892 [2001])" (Matter of Kodra v Mondelez Intl., Inc., 145 AD3d 1131 [2016]). In support of a determination that this onerous penalty is warranted, the Board must provide an explanation that the underlying deception was egregious or severe, or there was a lack of mitigating circumstances (Kodra, 145 AD3d 1131 [2016]). "The giving of false testimony strikes at the very heart of the judicial system" (Matter of Friedman, 196 AD2d 280 [1994], quoting Matter of Popper, 193 App Div 505 [1920]).

Here, the Full Board finds that a discretionary penalty disqualifying the claimant from future indemnity benefits is warranted based on claimant's misstatements, which were made under oath, at the hearing on May 21, 2014, concerning her then controverted claim for worker's compensation benefits. Claimant failed to testify truthfully, exaggerating the extent to which her injury caused her to miss time from work. These misstatements were sufficiently egregious to warrant the penalty of permanent disqualification.

In addition, the WCL § 114-a(3) penalty assessed by the WCLJ against the carrier should be rescinded.

CONCLUSION

ACCORDINGLY, the WCLJ decision filed January 25, 2016, is REVERSED. The Full Board finds that claimant violated WCL § 114-a(1) and that claimant is permanently disqualified from receiving indemnity benefits after June 11, 2013. The WCL § 114-a(3) penalty assessed against the carrier and the direction that the carrier pay a deposition fee of $400.00 to Dr. Cherney are rescinded. No further action is planned by the Board at this time.