Category: Commercial

When constructing or remodeling a bathroom to make it accessible to handicapped individuals, builders must comply with the guidelines set forth by the ADA. The Americans with Disabilities Act has rules about several different bathroom features.

Clear Floor Space
The floor must have a clear space, and the minimum dimensions must be 30 inches by 48 inches. Bathrooms with smaller spaces than this cannot properly accommodate a single wheelchair. The space must also allow for a parallel or forward approach to the bathroom equipment. If that space must include current fixtures, there should be enough room for a person’s legs to move freely underneath them.

Toilets
All toilets for handicapped persons must have a minimum width of 60 inches. They must have enough space to allow wheelchairs to access the sides or front of the toilet. In addition to this, there must be horizontal grab bars installed on the nearest wall or behind the toilet. Whichever option is closer is the best choice. If space restrictions are an issue, a separate partition can be installed to meet guidelines. Seats must be between 17 inches and 19 inches above the floor. The flush handle of a toilet should be located on the open side, and it must be no more than 44 inches above the floor.

Grab Bars
Since they are not as sturdy, towel racks should never be installed instead of grab bars. In order to be compliant, the grab bars must be completely anchored. They must also have smooth surfaces that are easy to grasp. To make the bars easier for anyone to grab, the pipes should be about 1.25 to 1.5 inches in diameter. The space between the grab bar and the wall must be at least 1.5 inches. This allows handicapped individuals enough space to hold the bar without rubbing against the wall. Bars must be placed between 34 and 38 inches above the floor. As a safety measure, all bars must have rounded edges. A bar’s screws and its anchor plates must also be free of any sharp edges.

Lavatories
Lavatories must have a clearance of 29 inches from the floor to the apron’s bottom side, and they must stand at least 17 inches from the back wall. They cannot exceed a height of 34 inches. For lavatories installed in counter tops, placement should be no more than two inches from the front edge.

Rotating Space
A single wheelchair must be able to rotate without difficulty in a bathroom. In order to complete a half turn, an open space of about 60 inches is required. It is possible to add existing features that allow for clear movement under them.

Hand Dryers
This is one of the easiest compliance items to install. The ADA requires hand dryers to be motion activated or have another touch-free feature. Businesses that have push-button dryers installed should replace them with new touch-free models. If this is not done, the business could face several different fines and legal action. The ADA has also set forth guidelines for dryer sizes. To meet the guidelines, dryers must not protrude more than four inches from the wall. This is because most dryers do not have automatic sensors to alert blind people of their location. If the dryer protrudes too far from the wall, a blind person could run into it and sue the business.

Before starting any bathroom building or remodeling project, it is important to review the entire list of ADA regulations. To find out more about regulations and insurance implications, discuss these issues with an agent.

The warranty that a completed job will receive compensation is called a construction contract. This document ensures compensation and defines how it is distributed. Although there are several types of construction contracts used by industry professionals, specific types of agreements are preferred by most contractors. The types of contracts are usually defined by how the disbursement is made. Contracts also specify the duration, quality and other details involved with the project.

Time & Material Contracts
These types of contracts are often preferred by contractors who have a project with an unclear scope. They are also popular in situations where the scope has not been defined at all. With these contracts, both the owner and the contractor must develop and agree on a daily or hourly pay rate. There must also be inclusions for additional expenses that may come up in the process of construction. All costs must be classified in one of the following categories:

– Direct
– Indirect
– Markup
– Overhead

In some cases, the owner may want to set a limit on the amount of time a project will take. This step is taken by owners who want to minimize their risks.

Fixed Price Or Lump Sum Contracts
With this type of contract, a fixed budget is set for all of the materials and activities related to the construction process. These contracts may also include special benefits or incentives for workers who finish the project early. However, they may also come with penalties, which are called liquidated damages. Penalties are imposed when the project is not completed in the amount of time allowed. Lump sum contracts are often preferred by contractors who have a defined scope, and they are also beneficial in situations where the owner and contractor have agreed on a schedule or time limit.

Cost Plus Contracts
With these contracts, payment of the actual costs for the project is a key component. This includes all material purchases and any other expenses related the project. Cost plus contracts must have detailed information outlining items that have been previously agreed upon. This information should include a percentage of the labor and material costs, which should cover the contractor’s profit and overhead. All costs should be classified and detailed properly. There are several different variations of the cost plus contract. In addition to the cost, the most popular forms include either a fixed fee, a fixed percentage, a guaranteed maximum price or a maximum price with a bonus contract.

To determine which type of contract is best, discuss the topic with an agent. It is important to choose the best option for the project, and every contractor’s needs vary based on project details.

Construction is a complicated endeavor, with a lot of moving parts. There are hundreds of things that can go wrong, possibly leading to a lawsuit, on even simple building projects. Contractors and subcontractors must be constantly on the lookout for problems not just with their own performance on the job, but with materials they order from their vendors, actions taken by their employees and subcontractors that may be dangerous, negligent or malicious, and the environment. An ill-timed rain on still-exposed drywall or other porous construction material could lead to legal problems long after you thought you were done with the project.

Here are a few examples from real life claims.

Multnomah County, Oregon

A Multmomah county builder called Swinerton Builders of Oregon was contracted to build a new multi-unit residential building by Wyndham Resort Development, Inc. Swinerton indeed built an eight-story, 415,000 square foot beachfront condominium called The Resort, located in the picturesque coastal community of Seaside, Oregon. The project was completed in 2003, and they began selling units. Swinerton moved on to the next project.

But according to Wyndham Resort Development and the condo association, a number of problems with the building gradually emerged:

• Exterior surfaces were misaligned – allowing water and wind to penetrate the building, causing extensive damage to the roof and windows.
• Dry-rot fungus, mold and mildew was pervasive.
• Trims and fixtures began to warp.
• Water damage destroyed insulation materials.
• Metal fixtures were plagued by rust as a result of water seepage.

Ultimately, the developer and condominium association filed a $42 million lawsuit against Swinerton – five years after the project was completed.  The lawsuit alleged breach of contract, and breach of warranty for construction defects. Swinerton, the plaintiffs argued, had not built the resort in accordance with the drawings and manufacturers instructions provided to it. Swinerton also failed to conform to a number of building codes, the plaintiffs alleged.

Two years after the case was filed, it was settled out of court for an undisclosed sum.

This case illustrates the importance not just of carrying current construction liability coverage, but also maintaining coverage over many years. Risk can lie dormant for years before a problem emerges resulting in possible significant liability. It’s important not only to cover yourself against claims arising from your current work, but also to ensure your construction insurance policies cover you against claims arising from work you may have done many years ago.

Multi-Million Dollar Toxic Mold Claims

In the past, if you had a mold problem in your house, you spent some money and got some cleaning supplies and took care of it. If the mold problem was significant, maybe you hired a contractor for a few thousand dollars to do a thorough de-molding. Civil judgments and settlements involving construction liability generally centered around disputes over who  should pay the mitigation costs and attorney’s fees.

But in the early 2000’s, plaintiffs’ attorneys started attacking mold disputes not from a mitigation perspective, but from a personal injury perspective. Plaintiffs began claiming severe respiratory problems arising from toxic molds. Symptoms included everything from nosebleeds to asthma to prolonged, productive coughs to migranes. All of a sudden, the argument escalated from a few tens of thousands of dollars to claims for millions of dollars for lost wages, pain and suffering, disability and punitive damages – particularly if juries could be convinced to attribute the mold to negligence in the construction process.

In one California case, Gorman v. Komack and Bourgeois, et. al.,  (2005), the plaintiff alleged that his brand new custom-built home was infested with mold. As a result, he said, his son developed a severe developmental disability. Plaintiff’s attorneys convinced the jury – to the required standard of the preponderance of the evidence – that toxic mold can cause brain damage. The plaintiff sued the contractor and lumber suppliers involved in building the home.

The result was a $23 million dollar settlement – The largest ever awarded to that date in a toxic mold case involving a single family.

The potential liability, obviously, was far greater than any profits the companies involved could have made from building a single home. The escalation of mold cases from regular mitigation disputes represented a vast increase in the level of risk exposure on the part of builders and their vendors.

Lessons

Few contractors can absorb a hit involving tens of millions of dollars. A judgment in that amount would quickly force a business into bankruptcy and endanger its very existence as a going concern. Adequate risk management is the most important thing that can be done since most liability policies do not cover construction defects and toxic mold, however there are some specialized policies that may address and cover these types of perils. This is why it is so important to sit down with your agent to review all these risk to see what options you may have.

Again, toxic mold is a delayed-onset risk. Mold problems can lie nearly undetectable to the casual observer for months or years – until the resident pulls up some carpet or works on the HVAC system. Once mold issues become apparent, some may be tempted to connect the mold with a variety of maladies, both real and imagined.

Construction risk management exists to protect you and your business and maintain your viability as a going concern. It may also be a very good idea to hire a risk management consultant who specialized in construction risk and a good builder will include these services and costs as part of the proposal.

There are plenty of advantages with hiring subcontractors. Whether contractors hire them for renovations or new building projects, there are a few important things to know. The most important thing to think about is who the individual is and how he or she will represent the company name. When customers complain, they will likely name the company and not the individual subcontractor. In addition to this, the contractor is responsible for everything the subcontractor does. This is why it is so important to hire individuals who are capable, professional and responsible.

Before Hiring
Ask to see proof of insurance. Have the subcontractor provide a certificate of insurance. If a project will last more than one year, make note of the policy’s expiration date. When that date arrives, ask to see the new certificate of insurance to ensure the subcontractor is keeping the policy active. Make sure the individual is insured for workman’s compensation and liability. The subcontractor’s staff should also be properly insured.

Verify degree program completion. It is important to hire a subcontractor who has been properly trained. Ask to see a degree. The individual should also have a minimum of four years of experience working as a foreman.

Ensure the individual is licensed. Each state has its own rules for licensing and verification, so be sure to use individual state procedures and check local laws. If the subcontractor has additional staff working on the project, they should also be insured.

Ask for references. Ask for a minimum of three current references that can be contacted directly. It is also helpful to ask to see samples of the subcontractor’s previous work.

Make a written contract. This document should include what the contractor expects of the subcontractor and his or her staff. It should include a rate of pay, who will be responsible for mistakes and who is responsible for other various tasks. It is also important to make sure the subcontractor is willing to make repairs or changes after the job is finished.

Tour the site together. When doing this, make sure the subcontractor knows what must be done. The subcontractor should also understand how to get the job done and who is in charge of various tasks. When the job starts, there should be no guesswork involved.

Make communication a priority. The individual should be easy to contact and talk to. Communication should be good on both ends, so it is important that the subcontractor and contractor get along well.

During A Project
Keep communication lines with customers open. It is important that customers bring their concerns and questions directly to the contractor. Take necessary steps to make the customer feel that his or her input is highly valued. Messages can get lost in the network if they are passed along to the subcontractor and his or her crew, so make sure the customer has all current contact information.

Make a file for subcontractors. Keep track of all conversations and transactions. This includes emails, notes, calls, face-to-face conversations, licenses, certificates and any receipts.

After Project Completion
Do a final inspection. Walk through the construction site to make sure the job has been completed in a satisfactory manner. Bring a checklist with items that can be marked off as they are verified. Make note of any repairs or changes that must be completed.

Make sure the agreement has been upheld. It is important to make sure all the terms of the contract have been met. Subcontractors’ actions and work should comply with every detail in the agreement. The project is officially over when the terms have been met and the contractor is satisfied.

If you’ve been considering firing an employee who’s been giving you headaches about workplace safety, you might want to hold off on issuing the pink slip. That was the painful lesson learned by one Arizona-based trucking and transportation company, M3 Transport/SLT Expressway.

One of their drivers was directed to make a run with a co-driver who was a smoker. He found a whole bunch of cigarette butts in the co-driver’s truck. The problem: The cargo was explosives.

The driver refused. Smoking while hauling explosives, the driver pointed out, was a violation of HAZMAT regulations.

The company sent him home, and then fired him two days later.

Bad move.

The employee complained to the Department of Labor, which directed the company to pay more than $200,000 in back wages, $15,000 in interest, and punitive damages of $20,000. That’s a lot more than it would have cost to find a non-smoker who was willing to make the trip.

OSHA also directed the company to post information on workers’ right to raise workplace safety concerns without having to fear retaliation on the part of the employer.

In this particular case, the company specialized in hauling explosives for the military. So it’s easy to conclude that they should have known about the regulation forbidding smoking on explosive hauls.

Another case involving a trucking company: A driver for Interline Logistics Group LLC in Sauk Village, IL, informed his central office about a brake problem on his truck. The company instructed him to take the truck to a mechanic to have it checked out. Then dispatch instructed the driver to pick up another load. The driver refused, stating that he was already over the number of work hours allowed by law.

The company fired the driver the following day – for failing to follow the illegal instructions of the dispatch office.

Again, the driver complained to OSHA, which investigated, and found Interline Logistics Group culpable. They directed the company to rehire the driver immediately – and pay him $190,000 in back wages, citing the anti-whistleblower provisions of the Surface Transportation Assistance Act.

In a separate case, an employee accused Party Rental Enterprises, Inc., dba Able Linen Service, of firing him for raising objections over a workplace safety issue. OSHA attempted to contact the employer, but the employer was not responsive to numerous attempts to contact them.

The problem did not go away by ignoring it: The worker and OSHA secured a default judgment against the employer. A judge directed the company to pay $17,000 in back wages against the company, plus an additional $20,000 fine.

Lessons Learned

The first lesson learned is that firing employees solely on the basis of whistleblowing does not pay off. If the employee complains and the matter gains any traction or goes to court, the whistleblower receives the benefit of any doubt. The burden of proof falls on the employer, in these cases, to demonstrate based on the preponderance of the evidence that the firing was justified – and for reasons wholly unrelated to the whistleblowing.

Documentation is therefore the key to protecting your interests – and that goes for employers and employees alike. If you don’t have a record of documentation for disciplinary infractions – ideally predating the incident under review – then you have an uphill battle in court if it comes to that.

Likely, documentation becomes the employee’s friend. For example, truckers with safety or maintenance concerns over their employer’s vehicles should be diligent in filling out their daily vehicle inspection (DVIR) reports. These reports become the employee’s friend, in court, if the vehicle problems were documented ahead of time, and if the employee has a track record of being diligent about reporting vehicle maintenance problems.

Commercial transportation is a dangerous endeavor. According to the U.S. Department of Transportation, in 2010 there were 112,379 non-fatal crashes involving large trucks and 12,763 non-fatal crashes involving buses.

There were 44,310 crashes with injuries involving large trucks and 6,854 injury-crashes involving buses.

There were 2,559 large trucks involved in accidents involving hazardous materials.

There was a reduction in the number of large-truck-related and bus-related fatalities between 2006 and 2010: Fatalities fell from 5,347 in 2006 to 3,619 in 2010. There was a similar decline in injuries related to truck accidents: From 99,937 in 2006 to 75,954. Some of that decline, however, is probably attributable to the decreased level of transportation traffic on the roads in a weaker economy. Unemployment among truckers has increased substantially over the same period of time.

This data, of course, excludes injuries and deaths from commercial light trucks, sedans, pickups, delivery vans, taxicabs, police cars, and the like.

What Causes these Accidents?

The Department of Transportation published a truck accident causation study in 2007. Their findings: The number one factor associated with truck collisions with cars was brake problems. A brake problem on the truck was found to be present in 27 percent of truck vs. car crashes. Only 2 percent of accidents involved brake problems on the car. The overwhelming majority of brake problems in crashes were on the truck.

An interruption in traffic flow was the number two factor, involved in 25 percent of truck-on-car crashes. 15 percent of cases involved travelling too fast for conditions, and 19 percent involved unfamiliarity with the roadway.

10 percent of truck operators involved in these accidents reported feeling under work pressure that may have contributed to the accident. Fatigue only accounted for 7 percent of truck drivers in these accidents (but 15 percent of car drivers.)[i]

Truck drivers were far less likely to have been under the influence of illegal drugs (0.4 percent) or alcohol (0.3 percent) than the drivers of cars in these accidents (7 and 9 percent, respectively.)

The same study also established the top ten “causative factors” for truck accidents. These are factors that were more than just possible factors associated with the crash. These factors were determined to be critical in the accidents studied.

• Overweight
• Illegal maneuvers
• Inadequate surveillance
• Traveling too fast
• Inattention
• Following too closely
• Misjudging the gap or the other vehicles’ speed
• External distraction
• Brake problems

The author of the study, Ralph Craft, recommended the following actions:

• Inspections, compliance reviews and education programs should focus more on the driver, rather than the vehicle.
• Fleet owners and managers should develop a formal system for rating drivers.
• Focus vehicle inspections on brakes, tires and lights.

These three items were found to be the most critical safety systems on large trucks.

This particular study predated the wide use of sophisticated GPS systems. But unfamiliarity with the roads was determined to be a contributing factor in many truck-on-car accidents. Today’s much-improved GPS systems should, in theory, make it easier on truck drivers. It is, for example, theoretically possible today for drivers to conduct a virtual “rehearsal” of the entire route, using GPS technology and maps and aerial photos easily available on the Web.

Judgments Can Be Substantial

The amount of liability potentially at stake for trucking and bus companies is substantial. In one case in Osceola County, Florida, a truck rear-ended a car, causing a severe brain injury to a child sitting in the back seat of the car. The award was for $2.45 million dollars.

Another case, with the same Florida law firm, involved the claim of wrongful death of a husband and father who was helping a victim of an earlier accident when he was run down by a truck in the median of I-75. The case resulted in $2 million in compensation for the deceased man’s family. [ii]

And in another case involving the death of two individuals in a truck accident in North Carolina, plaintiffs’ attorneys were disputing a claim by the driver that he had blacked out prior to the wreck due to a medical condition that caused him to lose consciousness from coughing. The plaintiffs were able to demonstrate that the vehicle was on cruise control, the CB radio was on, and the driver had received two phone calls – one via call waiting – right before the collision. The plaintiffs were also able to demonstrate that the trucking company knew, or should have known, about the trucker’s substantial medical and personal problems that contributed to him being a safety hazard. There were logbook violations, and the trucker was still on the road even though he was in a preventable crash only 11 days prior to the fatal incident. The driver and truck company settled for $7 million – to avoid a jury trial which could have been worse.

Minimum Limits May Be Inadequate

If you study the case histories of any law firm with more than a few years’ experience regularly representing plaintiffs in truck accidents, you will see that settlements and jury awards in the high six figure range is routine, and each decently sized law firm will have a few cases they brag about that resulted in awards or settlements for their clients in the million dollar range, plus.

If a driver happens to be involved in an accident that causes the death of more than one person – which can easily happen to any trucking firm, anywhere, anytime – expect a $2 million stake at a minimum. Perhaps more if the victims are young, sympathetic or if there is evidence of negligence on the part of the driver or your managers.

Your state limits may be inadequate to cover your true exposure. What would happen to your business if you were served with a $2 million judgment? If you would have trouble paying the award or settlement, or if you would be driven into bankruptcy because of it, you should be reviewing and increasing your coverage immediately.

[i] https://ai.fmcsa.dot.gov/ltccs/default.asp

[ii] https://www.davidlaw.com/aop/florida-truck-accidents/truck-accident-lawsuit-results-case-studies/

If you’ve been in construction long enough, you know that Murphy is never far away from the work site. Indeed, he’s a regular visitor. Things go wrong on a regular basis. That’s why construction insurance exists – to protect everyone involved. The policy holder is assured that an honest mistake or oversight will not destroy a thriving business, and the client and other stakeholders are assured that no matter what foreseeable event might come to pass, there is enough liquidity on the table to compensate them for damages incurred.

Contracts Contribute to Damages

There is the occasional straight-ahead case,  but in most cases, determining a single party to be at fault is extremely difficult. Often, the actions or oversights of multiple parties create the conditions for damage to occur. Even then, these conditions must sometimes be combined with an act of God to create an actionable claim. In some case, the drafters of the contract itself can unwittingly push contractors into a corner where they are financially incentivized to make unsound decisions.

For example, in one case, according to construction and business research firm Longwoods.com, a general contractor hired a roofer to put a roof on a building. The overall arrangement was a design-build contract that provided the general contractor with a bonus schedule based on meeting a series of completion milestones. But the contractor had to forfeit damages if construction ran behind schedule.

Bad weather hampered progress on the roof, and the roofing contractor recommended holding off on work until weather improved.

The general contractor insisted that work move forward. Furthermore, the general contractor was providing many of the roofing materials in the project. The roofing materials were not fitting together well, however, and while both the general contractor and the subcontractor knew of leak problems, they weren’t able to fix the issue prior to the owner taking delivery. The building occupant later reported that “moisture damage” was in excess of $1 million.

So what happens now?

Well, the general contractor has liability for leak damage, sure. But perhaps something else caused the moisture damage.

What could have caused the damage?

Moisture damage could have been caused  simply by the overall humidity and climate in the area. It could also be moisture wicking upward through the concrete from the ground.

The goods the occupant claimed were damaged could have already had damage, or the packaging could already have had significant moisture that then led to the damage.

Furthermore, at first glance, a roofing company should be assigned primary responsibility for its own roofs. Its work on the roof would be a more proximate cause to any faults in the end product, but in reality, there are externalities that mitigate the roofing company’s liability; the general contractor provided the faulty materials and ignored the recommendation of the subcontractor to halt work until weather improved. The case is still in litigation, but among the lessons learned:

Document your recommendations to change the method, timetable or scope of work, as well as any other party’s refusal to accept your recommendations. Don’t needlessly micromanage the operations of subcontractors if you can avoid it. Had the general contractor left it to the subcontractor to select the roofing materials, the general contractor may be held to a lower degree of culpability. The assumption, of course, is that the subcontractor knows more about roofing than the general contractor.

Don’t roll over too soon.

In another case involving accusations of contractor negligence, a California homeowner accused a contractor of leaving her bathroom in an “unsafe condition.” According to the plaintiff, the contractor’s negligence caused her to trip and fall, and caused her to break her foot and ankle, resulting in the need for multiple surgeries. She sued, claiming total damages of over $700,000.

The contractor didn’t roll over, though, and their counsel and their insurance carrier’s counsel insisted on checking on her background and claims and medical history. Through this discovery process, the defendants tore the plaintiff’s claims apart. They found that the plaintiff had already experienced a similar injury. They also found that the plaintiff was partially at fault for the slip and fall. The case was settled in mediation for just $37,500.[i]

The moral of the story: Don’t buy everything the plaintiff tells you, and don’t be quick to admit fault before you have spoken with an attorney.

[i] Hodges v. Mead, et al., San Diego Superior Court Case No. 37-2010-00084443-CU-PO-CTL

When it comes to construction, owner-builders face their own set of risks. Before starting any project, it is important to understand these risks and compare them against the potential benefits.

What Is An Owner-Builder?
As the term implies, an owner-builder is an individual who owns a property and acts as his or her own contractor on a job. The individual may do his or her own work or have subcontractors complete the project. In order to be classified as an owner-builder, the project at hand must be on the site of the owner-builder’s principal residence. In addition to this, the individual must have lived in the home for at least 12 months prior to the project’s completion. During a three-year period, the owner may not build more than two structures to sell.

Responsibilities Of Owner-Builders
When owner-builders sign building permits, they must assume all responsibility for the entire project. In addition to this, they are required to pull all building permits. Projects must pass all of the necessary inspections and meet all relevant codes. Owner-builders must order all of their own materials and pay their suppliers. They are also responsible for overseeing the work of subcontractors. However, they must be careful about who they select as workers. Unless workers are licensed subcontractors or family members, owner-builders may be classified as employers by hiring them. This classification brings even more responsibilities and work. Anyone who is considered an employer must register with the federal government and his or her state government. In addition to this, employers must withhold taxes from employees’ paychecks. They must also cooperate in the areas of disability insurance, unemployment contributions and workers’ compensation insurance.

Owner-Builder Potential Risks
Before deciding to become an owner-builder, it is important to carefully consider all of the risks and benefits. Since mistakes can be costly, people who are not knowledgeable about construction should avoid taking on such tasks alone. In addition to the expenses of repairs for mistakes, some types of damage may take a great deal of time to fix. If suppliers or subcontractors are not paid on schedule, they can file liens against the owner-builder’s property. Another risk to think about is injured workers. Some subcontractors do not carry the workers’ compensation insurance or liability coverage they should be using. If a worker sustains injuries on the property, the owner-builder could be required to pay for medical costs.

All homeowners should be cautious of people who claim to be contractors and offer to guide a person through the owner-builder process for a fee. In most cases, such individuals are not licensed. The results can be disastrous for any family’s budget. To avoid such scams and to learn more about the risks or advantages, discuss concerns with an agent.

If employees are hurt on the job, workers’ compensation coverage will protect them. This coverage pays for lost wages, medical bills and any other related expenses workers incur while recovering. Since the number of scams with this type of insurance are very small, it is safe to assume that the majority of employees are honest about getting hurt. Another incentive for this is the requirement that a doctor must provide an assessment. If an employee were not really hurt, a doctor may be able to identify a false claim. However, some scam artists slip through the cracks, and the damage they cause is substantial enough that it costs billions of dollars every year. In addition to this, some employers skip paying premiums. Both offenses are considered workers’ comp fraud.

Although the scam rate is lower for workers’ comp than it is in other areas of insurance, the perpetrators are causing premiums to increase for everyone. This is costly for honest workers and businesses alike. When dishonest employees make bogus claims about injuries, their motives vary. One of the most common motives is free money. In most cases, the workers claiming to be injured have other jobs or secret businesses they use for additional income. Another motive is free vacation time. Many workers want to collect money and have time off to enjoy traveling, hobbies or other activities.

How Bogus Claims Work
There are several different ways workers can make claims and get away with their lies. The following paragraphs outline some of the most popular methods they use.

Exaggerated Injuries
If a worker is using this method, he or she will have a very minor injury. It may be a slight pain in the back, wrist or any other location. However, he or she will embellish the injury’s severity enough to take time off of work. After taking time off, the worker will usually claim that it is taking a long time to recover in order to collect more money.

Off-Site Injuries
People who get hurt while they are off the job may wait until they return to work to file a claim. They may fake an incident that would result in the same injury they sustained while away from work.

Fake Injuries
In some cases, workers may fabricate the details of a nonexistent injury. Some of the most popular scams involve soft-tissue damage. Back and neck problems are common claims. Since some of these are hard to disprove, employers may have to pick up the tab for a such a worker’s dishonesty.

While these are the most common methods used, some workers may use an old injury or malingering to gain money. With old injuries, workers pretend the damage is new in order to get out of work or to get paid for treating injuries they may not be able to afford to treat otherwise. Malingering is abusing the system by staying home longer than necessary.

Stolen Premiums
In some cases, workers’ comp fraud is committed by business owners who reduce the premiums they owe. Such premium scams may be hard to detect. If businesses use this method, they often hide their swindles behind covers, tax records, dummy companies or fake accounting records. Although the number of bogus claims made each year exceeds the number of premium scams, the scams have a much larger financial impact. One scam alone can cost hundreds of thousands of dollars. If a scam lasts for several years, the total may reach into the millions.

Whether businesses are avoiding paying premiums, lying about the number of workers on the payroll or lying about workplace safety, workers comp fraud is a serious offense. Lying claimants and crooked doctors also face serious consequences if they are caught. Employers can fight back by being insured properly, making the workplace safer and making the environment at work a happy place for employees. To learn more about this type of fraud and how to prevent it, discuss concerns with an agent.