PEOs: A New Potential for Workers’ Comp Fraud?

When an employer is contracted with a PEO and a workers’ compensation claim is filed, questions often arise as to whether appropriate insurance has been maintained, if there is documentary evidence available to support the PEO’s responsibility to defend the workers’ compensation claim and even, sometimes, whether the PEO is fiscally solvent.

The emergence of incidents of PEO fraud in relation to workers’ compensation matters provides a cautionary tale for employers considering entering into the PEO arrangement.

From: http://www.propertycasualty360.com/2013/10/01/peos-a-new-potential-for-workers-comp-fraud?goback=.gde_5170623_member_278064611#!

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HR Comp “Piggybacking” in California

According to a release by Cal-OSHA, HR Comp was “Piggybacking” another PEO Action Personnel Agency when one of their shared employees was killed in an industrial accident. Piggybacking is an illegal activity in most states and greatly frowned upon in the Professional Employer industry.

Whether or not HR Comp will be cited for this activity remains to be seen.

Piggybacking is when one PEO enters into an agreement with another PEO to c0-employee workers in order to obtain workers compensation insurance. Given that there has been questions on whether HR Comp even had legitimate coverage in the state of California, the investigation is likely to continue.

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Cal/OSHA Cites Henkel over $200,000 Following Death of Temporary Worker

SOURCE Department of Industrial Relations; Cal/OSHA

OAKLAND, Calif., Sept. 10, 2013 /PRNewswire-USNewswire/ — Cal/OSHA cited Henkel Corporation $200,825 for multiple serious and willful violations following the April death of a 26-year-old temporary worker who became entangled with the exposed rotating shaft of a mixer while mixing industrial adhesive. Cal/OSHA sanctioned the company for failing to identify and safeguard against the hazards of working near the mixer.

“This tragedy was completely preventable, and underscores what can go wrong when employers do not take the necessary measures to correct workplace safety hazards,” said Christine Baker, director of the Department of Industrial Relations (DIR). Cal/OSHA is a division within DIR.

Cal/OSHA’s investigation resulted in citations to the Henkel Corporation for six serious violations, two of which are considered willful serious, as well as one general violation. The German multinational company has a manufacturing plant in Bay Point, where the accident occurred.

The willful violations were issued for Henkel’s failure to properly set up and maintain operation guards for the mixer involved; and for the failure to follow its own Injury and Illness Prevention Program (IIPP) provisions regarding the identification and correction of serious hazards posed by the mixer. The investigation also revealed the company continued to operate the mixer despite knowing that the partial guard on the mixer exposed workers to dangerous moving parts.

The temporary worker, an Antioch man hired by staffing agency HR Comp, was pulled into the unguarded mixer shaft and was unable to free himself from the shaft. He subsequently died from his injuries. One of the serious violations issued against Henkel was for the company’s failure to ensure that sleeves on employee coveralls fit tightly so clothing would not get caught in machinery.

“While hazards exist in most workplaces, employers have a legal responsibility to make their employees aware of those hazards and to institute a process to minimize them. When they fail to do so, tragic consequences like this death can occur,” said Acting Cal/OSHA Chief Juliann Sum.

Cal/OSHA also cited two professional employer organizations (PEOs): HR Comp, LLC, based in Tennessee; and Action Personnel Agency, Inc. dba Staffing Solutions Group, based in Pleasant Hill.  HR Comp is an online PEO providing temporary workers for Henkel and Staffing Solutions Group is the area PEO, designated to conduct OSHA-related activities for HR Comp. The PEOs were cited $1,500 each for failure to implement an effective written IIPP.

A willful violation is cited when an employer is aware that a hazardous condition exists but makes no reasonable effort to eliminate the hazard. A serious workplace safety violation is cited when there is a realistic possibility that death or serious physical harm could result from the violation. A general violation is one in which an accident or illness may result but is not likely to cause death or serious harm.

The Division of Occupational Safety and Health (DOSH), better known as Cal/OSHA, protects workers from health and safety hazards on the job in almost every workplace in California. Employers who want to learn more about Cal/OSHA and how to reduce workplace injuries can get information at the DIR Web site. For assistance from the Cal/OSHA Consultation Program, employers can call (800) 963-9424.

Employers who want to learn more about California workplace health and safety standards can find information on Cal/OSHA’s website. Cal/OSHA’s Consultation Program provides free and voluntary assistance to employers and employee organizations working to improve their health and safety programs. Employers should call (800) 963-9424 for assistance from the Cal/OSHA Consultation Program.

Employees with work-related questions or complaints may call the toll-free California Workers’ Information Line at (866) 924-9757 for recorded information, in English and Spanish, on a variety of work-related topics. Complaints may also be filed confidentially with Cal/OSHA District Offices.

For media inquiries, contact Erika Monterroza at (510) 286-1164 or Peter Melton at (510) 286-7046.

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New Information on Andrea Ball and HR Comp

We have been given some new information, but want to verify with a couple more people before publishing. If you have some recent news let us know and it may help speed up the posting.

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Student Newspaper Commenting on HR Comp

Quote:  In an email, Ingram complained that an investigation into fraud committed by one of his clients, a human-capital management company called HR Comp, was “egregious” and “driving (the) company out of business.” At 9 p.m., just three hours after Ingram’s email was sent, Cate responded that he had talked to the commissioner of commerce and insurance, who was “going to work on this first thing in the morning.”

 

http://www.insidevandy.com/opinion/columns/article_929ca87e-0f38-11e3-8827-001a4bcf6878.html

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In California, What Constitutes Employer Fraud?

Workers’ compensation fraud by employers includes willful failure to provide workers’ compensation coverage or pay for coverage and is a violation of the Labor Code as a misdemeanor. Fraudulent activity includes making false or fraudulent oral or written statements for purposes of denying compensation, intentionally underreporting payroll, misclassifying employees’ job descriptions, misrepresenting business ownership to evade proper business modifications and intentionally denying workers’ compensation benefits. The current maximum fine has increased to $150,000 or two times the amount of the fraud, whichever is greater. This is to help incentivize the reporting of fraudulent workers’ compensation claims and practices.

California Labor Code Section 3820

 

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HR COMP PLAYERS

HR COMP PLAYERS

HR Comp Players: Left to Right: John Owings (company attorney), Mike Ragsdale (former County Mayor, now an HR Comp consultant), Andrea Ball (we all know who this is), Jake Ogle (business owner), Tom Ingram (lobbyist and friend of Gov. Haslam) and David Ogle (business owner).

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August 23, 2013 · 11:16 am