Some employers skimping on their workers’ compensation insurance got an unwelcome surprise in the last 18 months: a knock on the door from an investigator ready to charge them with a crime.
Hundreds of others had another unpleasant encounter – a fine for their neglect.
In the last year, the state Industrial Commission, responsible for enforcing workers’ compensation laws, has cracked down on employers who fail to carry proper insurance. The agency has collected nearly $1 million in civil fines from uninsured companies and charged 100 employers with misdemeanors for willingly going without coverage.
State law requires any employer with three or more employees to provide workers’ compensation insurance at no cost to the workers.
While commission leaders are proud of their progress, they know the problem persists, with workers toiling daily in vulnerable situations.
“The goal is to head it off and get to compliance before there’s an injury,” said Andrew Heath, who has overseen the commission’s work since Gov. Pat McCrory appointed him chairman in early 2013. Heath will soon leave the commission to be McCrory’s budget director; a replacement at the commission has not yet been named.
Since 2012, state leaders have worked to get companies to carry the proper insurance to make certain that workers are cared for if they get hurt on the job, or that families are compensated if they die from a work-related accident.
For years, hundreds of workers have fallen off roofs, lost limbs in machines or were crushed by cars only to face another hardship: Their boss hadn’t purchased insurance. Though the Industrial Commission is responsible for ensuring that the state’s employers carried proper coverage, it did little about it before 2012.
The News & Observer reported in April 2012 that as many as 30,000 employers in North Carolina required to purchase workers’ compensation had not. The following year, the state auditor scolded the commission for failing workers, reporting that it had done nothing to intervene as more than 11,000 businesses in 2012 canceled policies or let them lapse.
The commission is now trying to correct coverage problems before workers are hurt. In the last fiscal year, the commission investigated nearly 2,000 cases involving potential lack of coverage; those efforts brought 800 companies into compliance. In that same year, the commission ruled that 71 workers were injured while working for employers without proper insurance.
It’s unclear how many employers currently lack coverage. Because of changes made in 2013 in how the information is shared between insurance carriers and the commission, it is difficult to get an accurate and up-to-date count.
Trouble for a worker
Sean Tenney is one of those unlucky workers battling an uninsured employer to try to get his medical bills covered.
Tenney, 42, tore a tendon in his back while trying to move a 1,300-pound piece of equipment for Texas-based Highway Intelligent Traffic Solutions, a traffic light installer that contracted with the state to replace traffic signals in Greensboro in 2013 and 2014.
IF NOT FOR MY FAMILY, I MIGHT HAVE BEEN LIVING UNDER A BRIDGE.
Sean Tenney, injured worker
According to records the company submitted to secure a $660,000 state contract, its workers’ compensation policy expired in April 2014. That was a month before Tenney was injured and two months before the company’s work for the state was to be completed.
“I just never thought this would be something I was caught up in,” Tenney said by phone from Florida, where he relocated to be near family to help him after his injury. Tenney tapped his personal health insurance to pay for surgery in August 2014; his co-payments and deductibles piled up while he recuperated.
“I’ve lost a lot because of it,” Tenney said. “I basically had to start all over again. If not for my family, I might have been living under a bridge.”
Timothy Hewlett, Tenney’s attorney, has filed a claim with the Industrial Commission, but he knows that getting any compensation will be an uphill battle. He has petitioned the commission to also hold the state Department of Transportation responsible since the agency did business with a company that lacked appropriate insurance.
A DOT spokesman said he cannot comment on Tenney’s case since it is pending before the Industrial Commission. Generally, though, he said that department officials verify coverage before a contract begins and rely on the private contractor to maintain proper insurance while working for the state.
Merle Abbott, owner of Highway Intelligent Traffic Solutions, said that he believed his coverage was valid when Tenney was injured; he said he is in a dispute with his insurance carrier over the terms of his coverage.
$1 million in fines
The commission’s fraud detection has been made possible by software that combines data from several state agencies.
For years, the commission, like other agencies in the state, worked in a silo, rarely receiving or sharing information with other departments responsible for making sure companies follow the law. The system now mines several databases to flag inconsistencies that could suggest a problem with workers’ compensation coverage; data from more state agencies will be added soon.
“We started with zero and we’re trying to get to 10 as fast as we can,” said Bryan Strickland, head of the commission’s fraud unit. “It seems like we have a long way to go.”
IN FISCAL YEAR 2011, THE INDUSTRIAL COMMISSION COLLECTED $59,925 IN FINES FROM UNINSURED BUSINESSES. IN THE FISCAL YEAR ENDING JUNE 30, BUSINESSES PAID $992,000 IN PENALTIES FOR LAPSES IN COVERAGE.
Progress has been swift. In fiscal year 2011, the commission collected $59,925 in fines from uninsured businesses. In the fiscal year ending June 30, businesses paid $992,000 in penalties for lapses in coverage; the fines go to the state’s public schools.
Commission leaders want the fines and criminal charges to signal a warning to the business community: get coverage or face consequences.
During the last 18 months, investigators for the fraud unit visited businesses in six counties they suspected to be without coverage. The companies were targeted because they had a prior claim involving an injured worker, which Heath says is an indication they knew or should have known of their duty to carry insurance.
Investigators issued 100 charges, all misdemeanors, against the company owners. The charges were dismissed by prosecutors if the employer bought insurance and came to court to prove it.
Jeff Fulk of Delicious Skateboard Shop said he was startled when an officer showed up to his shop in Wake Forest last December.
“When I met him, he put the fear in me a little bit,” Fulk said. “He said ‘This is serious, you shouldn’t let this happen.’ I was like, ‘Yeah, I totally agree.’ We had let this go and that’s not good. There was some embarrassment.”
Fulk said his company inadvertently let the policy lapse when the business associate who handled the insurance left the company. Fulk said he reinstated his policy the same day the investigator visited.
Lisa Vesey Elliott of Premier Power Generation, an electrical company in Pinehurst, acted quickly, too, after an officer visited. Elliott said she had dropped the policy after cutting staff during the recession; she thought the company had so few employees it wasn’t required to purchase it.
“When somebody walks in with a badge, and you are not a lawbreaker, you just felt like you have done something wrong and you want to rectify it,” Elliott said. “We don’t want to be one of those companies.”
Trouble continues with cheaters
So far, the commission has not pursued companies treating workers who should be employees as independent contractors. The scheme, called misclassification, has persisted in North Carolina for years as some employers try to gain a competitive edge by avoiding workers’ compensation, unemployment insurance and payroll taxes.
Heath and Strickland acknowledge that misclassification is a major problem but say curbing insurance abuse by these companies has been tricky.
When a worker is injured and files a claim, commissioners evaluate the worker’s employment and determine whether he is an employee entitled to workers’ compensation benefits, even if the employer had been erroneously treating the worker as an independent contractor. Without an injury claim that provides specific circumstances to evaluate, commissioners aren’t sure how to determine whether a company’s workers are being improperly classified as contractors.
Gov. Pat McCrory, however, has ordered the commission to take a new role in stopping misclassification. In mid-December, the governor issued an executive order placing the Industrial Commission in charge of coordinating how various state agencies respond to information about businesses that might be cheating. He charged each agency to enforce its rules and issue appropriate sanctions when they find a business misclassifying workers.
McCrory acted after the legislature failed to pass legislation that would have established a team of investigators at the state Department of Revenue to go after companies misclassifying workers.
The bill stalled in the final hours of the legislative session as newspaper publishers lobbied against the legislation because of late alterations to the bill aimed at newspaper carriers. Legislators had said they would try again to pass the bill this year.
Misclassification continues to plague workers each day in North Carolina.
On Dec. 5, Mason Cox reported to his first day of work with a tree-cutting service in Gaston County, near Charlotte. Cox, 19, was assigned by his boss to operate a powerful machine that grinds tree branches and trunks, said his grandmother, Alice Neal.
Cox died after being pulled into the grinder.
In media reports after Cox’s death, company owner Jon Crawford referred to Cox as a “subcontractor.” Efforts to reach Crawford failed.
To be considered lawfully as a contractor, Cox would have had to operate his own tree service and controlled his price and schedule.
Neal said her grandson, who lived with her, had no experience cutting or grinding trees and had been on the job only an hour and a half before his death.
“The boy just went to do an honest day’s work,” Neal said. “Mason should have not been allowed to do anything but drag leaves.”
Crawford and his company do not appear to have workers’ compensation insurance, according to a database of North Carolina companies and workers’ compensation insurance. Neal said the family has been told that Crawford had no insurance.
News of Cox’s death sent chills up the spine of Aubie Knight, chief executive officer for The Independent Insurance Agents of North Carolina. For years, he and the group’s members have been battling company owners trying to avoid workers’ compensation coverage by illegally treating employees as contractors.
“It’s such an injustice to this to the kid and his family and business owners trying to do it the right way,” he said.
THE FACTS ABOUT WORKERS’ COMP
What employers in North Carolina need to know about workers’ compensation insurance:
▪ Any employer with three or more employees must provide workers’ compensation insurance at no cost to the workers.
▪ The three or more count applies to both full and part-time workers.
▪ Employers who do not carry required insurance can be fined up to $100 a day for each day without coverage; an additional fine equal to the workers’ medical bills and disability payments may also be assessed.
▪ If the company fails to provide insurance and a worker is hurt, the company and its owners will be liable.
You can read the original article here.
JANUARY 08, 2016 10:30 AM
Raleigh – Judge Andrew Heath, a former state budget director, announced Monday he is running for a seat on the North Carolina Court of Appeals. Heath, who was appointed to the Superior Court by outgoing Gov. Pat McCrory in December, will seek the seat formerly held by Judge Doug McCullough.
“2018 will be an important election year for the direction of the North Carolina Court of Appeals, and I have been encouraged by supporters in every region of the state to run,” Heath said in a press release sent late Monday.
McCullough, a Republican, announced in April that he would retire early in order to give Gov. Roy Cooper the power to appoint his replacement, in protest of a bill that would reduce the number of Appeals Court judges from 15 to 12 members. Cooper quickly appointed Charlotte Democrat John Arrowood to the seat.
“It’s a shifting landscape,” said Heath in a phone call with the North State Journal. “There could be less seats on the Court of Appeals, which makes each seat all the more important.”
Prior to his appointment in late 2016 to the Superior Court bench, Heath served as state budget director, advising McCrory on a $500 billion economy and managing the state’s $22 billion budget. Heath had previously served as chairman of the Industrial Commission, a body that administers the state’s workers’ compensation laws. He received his law degree from Indiana University in 2006, and a bachelor’s degree from UNC Asheville in 2003.
Heath said his background sets his candidacy apart.
Monday’s campaign announcement marks Heath’s first attempt at elected office. Heath will run as a Republican, months after state lawmakers changed laws to require judicial candidates to identify their party affiliation.
Arrowood is currently serving his second short-term appointment to the N.C. Court of Appeals, having also been appointed to the bench in 2007 by Gov. Mike Easley. He lost his bid for a seat on the court in 2014 to Judge John M. Tyson.
Arrowood has not yet formally announced his intentions with respect to the 2018 race.
Last week, appellate attorney and Campbell Law School professor Allegra Collins, a Democrat, announced she will run for the Appeals seat currently held by Judge Rick Elmore, who is not seeking re-election.
For Andrew Heath, it has been a rapid rise.
A private attorney just out of law school in 2006 and chairman of the N.C. Industrial Commission by mid-2013, he’s now Gov. Pat McCrory’s state budget director, starting Monday.
Heath, 34, is taking one of state government’s most important jobs, translating the governor’s priorities into numbers to recommend to the legislature. What he does can affect tax policy, state employees’ pay, the size of government and more.
Heath, with an annual salary of $145,000, also will lead a state agency, the Office of State Budget and Management, which monitors revenue and expenses and is supposed to promote effective use of resources.
And supporters say that’s how Heath fits the job. Although he doesn’t have the direct financial background of his predecessors — he was a workers’ compensation attorney who applied that know-how at the Industrial Commission — backers say he has packed government leadership and results into a brief career.
“He has a significant advantage that I did not have coming in,” said outgoing budget director Lee Roberts, “which is that he is already running an agency in state government. He knows the players; he knows the lay of the land. When I started, I didn’t even know what most of the acronyms stood for.”
Roberts’ experience was mostly in banking. After roughly 18 months as budget director, he announced recently that he was returning to the private sector.
Roberts said Heath is known for getting things done.
In a recent interview, Heath opened a booklet of numbers and graphs to show action during his less than three years as chairman of the Industrial Commission, including tapered spending and an increase in penalties collected from employers who weren’t compliant with workers’ compensation coverage requirements.
“In the past, the commission only saw noncompliance after the injury occurred,” Heath said. “You don’t want it to get to that point.”
N&O reporting has spotlighted the state’s lack of policing of workers’ comp insurance in recent years. Under Heath, the commission last fiscal year collected nearly $1 million in fines from noncompliant employers, compared with $175,000 two years earlier. One hundred employers were charged with related misdemeanors.
“He’s the one who took initiative,” said Bill Rowe, general counsel with the left-leaning N.C. Justice Center, which has worked on the issue. “He’s the one who started collecting more fines and penalties and getting businesses compliant, and also was the one who took the initiative to try to find some solutions for North Carolina to try and deal with a serious problem.”
The commission has about 160 employees and a $15 million budget, with 22 deputy commissioners. Heath, as chairman, was in charge of appointing deputies, which generally were career positions until a 2014 law change made them political appointments.
After he joined the commission as chairman, Heath said, he eyed deputies’ travel expenses for cuts. Rather than send a deputy commissioner to the injured worker’s locale for a hearing, he and his team planned out regional offices for deputies. He said the subsequent productivity gains, in addition to trimmed expenses on mileage and lodging, justified the elimination of two deputies, whose salaries were about $100,000 each. Added up, the savings far eclipsed the roughly $70,000 outlay for the regional office leases, he said.
“We try to find low-hanging fruit like that and implement it here at the commission to achieve cost savings,” he said. “And that’s an example of a program that we came up with, we planned for and we executed, and I want to take that sort of model to the budget office and try to encourage programs like that across the state.”
Heath has contributed financially to McCrory in his gubernatorial bids. Campaign finance reports at the State Board of Elections show that Heath gave at least $1,225 to McCrory, mostly between summer 2011 and fall 2012.
McCrory appointed Heath to the Industrial Commission in February 2013, at which point Heath was barred from such political giving under the judicial code of conduct. He hasn’t contributed to any candidate since.
After Heath’s announcement as budget director, some took to social media to portray him as a McCrory faithful with more political alliance than experience. A posted photo showed him wearing a McCrory campaign sticker as a Cape Fear Young Republicans organizer at a 2012 fundraiser.
“I don’t think it’s a surprise that I’m a McCrory supporter,” Heath said. “I was a McCrory supporter in 2008. I was a supporter in 2012. And of course I am now. I’m a fan of the governor, and I’m a fan of what he’s doing.”
When asked why he sees Heath as qualified to be budget director, McCrory in a statement pointed to Heath’s work at the commission. The governor said he was “confident that (Heath) will continue the high standards of excellence and leadership that have been set by his predecessors” — Roberts and, before that, businessman Art Pope.
Timing may be good
Observers say Heath comes in at a good time.
A base spending plan already is in place for this fiscal year and next, and it will be nearly May before the legislature meets to discuss updates.
He has been shadowing Roberts at meetings with state department heads to get a handle on their financials and operational needs.
And, Heath says, the state is in good budgetary health. “The challenge for me is just to keep it on the same trajectory.”
Rep. Nelson Dollar, a Cary Republican and senior budget writer in the House, noted that while the budget director communicates the governor’s priorities, any state budget goes through plenty of crafting hands in the legislature. “I think that anyone who’s in that role has a learning curve,” Dollar said. “We’ll work with him. We want the budget process to be successful.”
House and Senate Democratic leaders did not respond to requests for comment.
You can view the original article here.
JANUARY 30, 2016 11:06 AM