Legal Roundup: Social Security Fraud, Gig Worker-Status in Seattle and More

The latest court decisions involving risk management and the insurance industry.
By: | July 8, 2020

Man on Disability Uses Wife’s Social Security Number to Keep Working

The Case: Robert Strasbaugh suffered a knee injury while working as a delivery driver. That led to wage-replacement payments and eventually pension payments for life from the Washington State Department of Labor and Industries.

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The only contingency? Stragbaugh could no longer work.

An anonymous tip led investigators to learn that Strasbaugh was still working, just under his wife’s name.

The Vashon-Maury Island Beachcomber reports: “While receiving L&I, he used his wife’s name and Social Security number for his work for about three years. The company owner said Strasbaugh’s job included unloading freight weighing between 100 to 500 pounds. He also contracted under his own name for an apple delivery company, and rented delivery trucks 26 times while signing his name and his company’s name.”

Scorecard: Strasbaugh pleaded guilty to first degree theft, must pay back almost $340,000, and be electronically monitored at home for 45 days.

Takeaway: Workers’ comp fraud is no joke. From doctors and organized-crime rings perpetuating sophisticated, multimillion-dollar schemes to individuals feigning disabilities and employers falsifying payroll numbers, there’s never a shortage of workers’ compensation fraud. Diligence is key.

Yes, IMDb Can Show Actors’ Ages

The Case: In Hollywood, age can be the difference between a leading role or a struggling career. That’s why some actors hope to keep their true ages a secret. If they can pass for 25, who cares if they’re really in their late 30s?

Claiming that showing actors’ ages helps facilitate discriminatory hiring practices, the Screen Actors Guild – American Federation of Television and Radio Artists  union (SAG-AFTRA) sponsored a California law that “requires subscription-based entertainment casting/hiring databases to remove paid subscribers’ date of birth from its websites upon request,” according to Deadline.

The law is primarily targeted toward IMDb, an online database of all things entertainment, including the personal biographies of the stars.

After a challenge from IMDb,  a U.S. District Court found the law to be unconstitutional, a violation of First Amendment Rights. SAG-AFTRA and the State of California appealed.

Scorecard: In June, the Ninth Circuit Court of Appeals affirmed the lower court’s ruling that a law barring the publication of ages is unconstitutional, and that SAG-AFTRA failed to show that the law created discriminatory hiring practices. The union vows to continue fighting.

Takeaway: Not every piece of biographical data is considered personally identifiable information that deserves confidentiality, though the owners of that information may disagree. Any company dealing with personal information should consult the legal definition of PII and thoroughly understand applicable privacy laws before sharing such data in order to avoid costly legal action.

Instacart Sues Seattle Over Gig Worker Pay

The Case: Grocery delivery company Instacart is suing the city of Seattle over a new ordinance requiring gig workers to receive premium pay during the COVID-19 crisis.

Gizmodo writes: “Workers are entitled to an additional $2.50 for their first stop, and another $1.25 for every subsequent stop on each and every order. Considering most Instacart orders involve going to a grocery store and then delivering the specified goods to a customer’s home, an added $3.75 or more per order might help alleviate some of the economic anxiety experienced by contingent workers.”

Instacart countered that the new ordinance is a “blatant overreach of power” and invalid, because it contradicts a prior ballot initiative forbidding taxes and fees on groceries.

Scorecard: The case has just been filed and has not yet come to a resolution.

Takeaway: Gig workers are classified as independent contractors — meaning they are not entitled to protections like minimum wage, workers’ compensation and unemployment compensation. In return, they get flexibility and control over work hours. Increasingly, though, gig workers argue that exchange does not warrant a prohibition of employment rights and benefits.

The Seattle ordinance is just the latest government initiative aiming to grant gig workers access to more legal protections, safer work environments and fair pay. For example, the gig law in California, passed in 2019, makes it much harder to classify gig workers as independent contractors and could force companies to hire them as employees.

Novartis to Pay $678M Over ‘Educational Events’ That Distributed Cash, Fancy Dinners to Doctors

The Case: Pharmaceutical company Novartis had been accused of using an education speaker series as a way to allegedly bribe doctors to prescribe its drugs.

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The Associated Press reports that Acting Manhattan U.S. Attorney Audrey Strauss “said the company splurged on ‘speaking fees, exorbitant meals, and top-shelf alcohol that were nothing more than bribes to get doctors across the country to prescribe Novartis’s drugs.’ ”

Scorecard: Novartis settled the case and agreed to pay the U.S. government and several states $678 million.

According to the Associated Press: “The settlement resolves a 2011 whistleblower lawsuit accusing Novartis of violating the federal False Claims Act and Anti-Kickback Statute. The company admitted giving doctors cash, golf and fishing trips, and lavish meals at some of the nation’s fanciest restaurants to induce them to prescribe Novartis cardiovascular and diabetes drugs that were reimbursed by federal health care programs.”

Novartis claims it now has a more comprehensive commitment to ethics.

Takeaway: The line between “networking dinner” and “bribe” should never be fuzzy. Clear behavioral policies and ethics guidelines – and the enforcement of those policies – should be a top priority to avoid accusations of bribery or deception. &

Jared Shelly is a journalist based in Philadelphia. He can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]