December 16, 2017

Ohio BWC Workers’ Comp Fraud Task Force Targets Postal Contractors

COLUMBUS – A task force created by the Ohio Bureau of Workers’ Compensation (BWC) Special Investigations Department (SID) in collaboration with the US Postal Service Office of Inspector General (USPS OIG) has uncovered workers’ compensation fraud at six businesses that contract with the Postal Service. The task force was created in 2009 to address a trend among contractors of failing to maintain workers’ compensation coverage despite being paid to do so by the Postal Service.

“Because these contractors were unable to resist the temptation of a fast buck, they’ve failed to provide their employees with the protection they deserve,” said BWC CEO/Administrator Stephen Buehrer. “I appreciate the Postal Service’s partnership in helping to identify and weed out fraud, an essential part of effectively and efficiently managing workers’ comp premiums.”

As part of the contract with companies that move mail between post offices, the Postal Service makes payments directly to these vendors to cover workers’ compensation premium costs. USPS OIG special agents contacted BWC after a review of contracts found inconsistencies indicative of fraudulent activity. The task force uncovered several contractors that had received payment for BWC coverage but failed to maintain an active policy.

USPS OIG Eastern Area Special Agent in Charge Elizabeth A. Farcht stated: “These investigations are part of the OIG’s mission of preventing and detecting fraud, waste, and abuse in the Postal Service, and promoting the integrity and efficiency of postal programs. The Ohio BWC SID’s efforts have been instrumental in these investigations.”

Several cases are pending investigation and the task force continues its review of contracts. The following is a list of cases that have already been referred for prosecution.

Aero Cartage Express-Postal (Brookpark, Cuyahoga County): Owner Ray McConaghy advised BWC agents that he had no coverage because he ceased operations as of March 2009 and no longer had any employees or clients, including the US Postal Service. McConaghy then submitted BWC documents cancelling his BWC coverage and verifying the closure of his business. During a second interview, McConaghy admitted he provided false information on those documents and during the previous interview with investigators. His business was still under contract with the Postal Service and he still had one employee. McConaghy admitted he paid his workers’ compensation premiums until March 2009 but then directed the resources to other business expenses. McConaghy was later indicted on two counts of tampering with records and two counts of theft. McConaghy has been placed in the Cuyahoga County Pre-Trial Diversion Program. As a result, he will be required to become compliant and remain compliant with the BWC throughout a court ordered probation period.

Vernel Solomon-Postal (Fairlawn, Summit County): Owner Vernel Solomon acknowledged during an investigatory interview to paying employee wages with the payments he received to cover workers’ compensation premiums. On August 13, 2010, Solomon pleaded guilty to six counts of Workers’ Compensation Fraud. He received six months suspended incarceration for each count, and was placed on probation for six months. Solomon agreed to pay the BWC $6,500 in outstanding premiums and maintain an active policy.

Robert Nickson-Postal (Alliance, Stark County): Robert Lee Nickson had been reimbursed for BWC premiums for several years but his BWC policy had lapsed in 2002. During an interview, Nickson admitted he knew his coverage was not active and interviews revealed three drivers were working for him. Nickson acknowledged that he used the money he was paid by the Postal Service for workers’ compensation premiums to pay his drivers and for truck maintenance. Nickson pleaded guilty to six counts of theft. Nickson was sentenced to 180 days incarceration for each count, which was suspended on condition of good behavior for two years. Additionally, Nickson was ordered to pay $30,000.00 in restitution.

Gary L Tekamp dba Tekamp Postal Service (Celina, Mercer County): Owner Gary L. Tekamp failed to reinstate workers’ compensation coverage after his policy was cancelled January 1, 2006. On April 8, 2010, Tekamp was interviewed and advised he paid spot labor to fill in for him when he was unable to complete his route. On December 3, 2010, he pleaded no contest to one count of Failure to Comply, a misdemeanor of the second degree and was ordered to pay $591.97 and keep his BWC policy current. Prior to Tekamp’s plea, he paid restitution in full to BWC.

R & E Trucking Co/Reed A Russell Sr. (Toledo, Lucas County): An investigation of Reed A. Russell, owner of R & E Trucking, revealed he continued operating with two employees although his BWC policy was cancelled effective May 31, 1999. Russell was indicted on June 2, 2010, and in September pleaded guilty to one count of Theft, a felony of the fifth degree. Russell was sentenced to three years of Community Control and ordered to pay $5,543.21 in restitution.

Rizzo Transfer (Akron, Summit County): Owner Ronald Rizzo continued to collect payment from the Postal Service for workers’ compensation premiums after allowing his BWC policy to lapse in 2003. During this time, one of his employees filed a claim for a workplace injury. During an interview with investigators, Rizzo admitted he knew his BWC policy was lapsed and that he was required to secure coverage for the three employees working for him. Rizzo was convicted on six counts of workers’ compensation fraud and one count of theft. He issued a check to the court at the time of his plea and $14,500 was applied to his outstanding debt. Rizzo entered into a payment plan to settle the remaining balance and his BWC policy was reinstated.

Source: Ohio BWC

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