Just Because You Don’t Get Paid for Working at the Racetrack While You’re off on Workers’ Compensation Doesn’t Mean You Aren’t Committing Fraud, Says the Ohio Supreme Court

The Ohio Supreme Court recently terminated the permanent total disability (“PTD”) compensation of a man who was caught performing various horse-training and grooming activities at a racetrack in exchange for a waiver of housing and feeding expenses for the worker’s own horses.  In the case, (The State Ex Rel. Seibert v. Richard Cyr, Inc., 2019-Ohio-3341, August 22, 2019) the Court addressed two separate, but related, questions. First, does unpaid work constitute “sustained remunerative employment” that makes an injured worker ineligible to received permanent total disability compensation?  Second, did the worker commit fraud by bartering for services and not reporting it to the Ohio Bureau of Workers’ Compensation?

What type of “work” disqualifies an injured worker from PTD?

Permanent total disability is defined as “the inability to do any sustained remunerative work.”   Payment can take the form of a cash payment or a cash-like benefit.  Work need not be regular or daily to qualify as sustained.

Seibert engaged in a bartering system by washing, harnessing, jogging, and feeding others’ horses in exchange for a reduction of his stall-rental and feed fees for the two horses he owned.  On non-race days, Seibert typically worked Monday to Saturday for two to three hours. On race days, which occurred once a week, he worked from 9 a.m. to 3:30 p.m.

Although he did not receive any cash payments, the Court found that the system still qualified as sustained remunerative employment.  Per the Court, if Seibert had not been performing the racetrack activities, he would have had to pay someone else to perform them. Seibert also testified that the jobs he was performing would normally be paid. Accordingly, the Supreme Court found that Seibert was no longer eligible to receive permanent total disability compensation.  The Court then went on to address the issue of fraud.

What are the elements of Fraud?

Fraud has six elements in Ohio, all of which must be met for the Industrial Commission to make a finding of fraud. The elements are:

  • a representation or, where there is a duty to disclose, concealment of a fact, (b) which is material to the transaction at hand, (c) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred, (d) with the intent of misleading another into relying upon it, (e) justifiable reliance upon the representation or concealment, and (f) a resulting injury proximately caused by the reliance.

If the Commission makes a finding of fraud, the BWC or self-insured employer can take immediate action to recover all monies wrongly paid to the injured worker (as opposed to using the repayment schedule in the Revised Code).  The injured worker can also be subject to civil and possibly criminal penalties.

In Seibert’s case, the Supreme Court pointed out that Seibert “received letters from the Bureau of Workers’ Compensation informing him that he was not permitted to work, yet he concealed his work activity while receiving PTD compensation. Second, Seibert’s concealment enabled him to receive benefits to which he was not otherwise entitled. Third, but for Seibert’s concealment, the bureau would not have paid him. Fourth, Seibert failed to notify the bureau that he was working. Fifth, the bureau justifiably relied on his representation that he was not working. And sixth, the bureau suffered injury by paying Seibert PTD compensation.”

However, Seibert argued that he lacked the requisite intent to commit fraud because he was unaware that his raceway activities constituted work.  The Supreme Court rejected that argument.  The Court pointed to the fact that Seibert testified at an Industrial Commission hearing that he knew the activities he was performing at the raceway were ordinarily paid work. He also testified that he knew that he was not permitted to work while receiving PTD compensation.  Accordingly, the Court found that Seibert falsely represented that he was not working and that he made the false representations knowingly.

The lessons?  First off, work does not have to be paid to preclude an injured worker from receiving temporary total or permanent total disability compensation.  Second, if you’re receiving PTD compensation, leave the horse-training work to someone else.

Thanks to Jon Hyman at Ohio Employer Law Blog for including last week’s post in his Friday roundup.

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