Agency says it will force employers to pay injured workers
By Mandy Locke
The state Industrial Commission will be taking a tough line next month against uninsured employers it has ordered to settle claims with injured workers: Pay up or go to jail.
More than a dozen employers have been ordered to come to a hearing May 22 and settle a claim that has dragged for years. If the business owners don’t – and can’t settle a portion of the claim – they’ll be ordered to jail. Law enforcement will be sent to arrest those who don’t show up for the hearing, officials say.
The efforts follow a News & Observer investigation this month which revealed that tens of thousands of employers required to protect their workers with insurance don’t. And when workers were hurt, the commission has done little to ensure the uninsured employer paid the workers’ medical bills and wages for missed work. Some workers ended up permanently disabled and reliant on Medicaid and welfare to survive.
“In response to the issues you raised, we now have some concrete plans,” said Pamela Young, chairwoman of the North Carolina Industrial Commission, the state agency charged with enforcing the workers’ comp laws.
In addition to the May 22 contempt hearing, the commission will schedule other special hearings to deal with lingering uninsured cases. Commission staff reached out to nearly 100 workers who reported they’ve been injured on the job and whose company didn’t have coverage. Most of those cases had fallen through the cracks because the worker didn’t have an attorney to press for collection.
About 125 uninsured employers who ignored the commission’s orders to pay the worker and penalties will be called back, too.
Young said the commission is spreading the word that it is serious about enforcing workers’ compensation laws, which require employers with three or more employees to carry insurance for workplace injuries. The law, which dates back to the 1930s, is supposed to ensure that industry takes care of its own accidents.
Leonard Jernigan, a workers’ compensation lawyer and national expert on employer fraud, said Young’s efforts are a step in the right direction.
“I’m delighted that they are in fact going after this,” Jernigan said. “It’s been greatly needed.”
A big gap
The Industrial Commission has long struggled with enforcement of workers’ compensation coverage. The commission, whose members are appointed by the governor, has the power to demand employers routinely show proof of coverage.
It has instead turned to the N.C. Rate Bureau, a private group that lobbies for insurance companies, to provide information on which carriers cover which employers.
Last month, the Rate Bureau accounted for about 140,000 companies covered through private insurers doing business in the state. Another 117 large companies have been certified with the Department of Insurance as having the ability to pay should their workers be injured.
That leaves a wide gap. The Department of Commerce estimates that as many as 170,000 companies operate in North Carolina that have four or more employees, one employee above the trigger for required coverage. Dun and Bradstreet, a firm that tracks businesses, counts about 174,000 companies with three or more employees headquartered in North Carolina; that number doesn’t account for those based elsewhere.
Young said she has now requested the Rate Bureau send the commission a report when companies cancel their policies or let them lapse.
But Young is still confounded by the prospect of trying to account for all the businesses without coverage.
“If you have a business out there that does not have any intention of having workers’ compensation, how do you capture that?” Young asked. “How do you find these people?”
In plain sight
Some of the businesses forgoing workers’ compensation duties are in plain sight, compliant with other agencies that deal with businesses.
G&J Transport, a trucking company in Beaufort County, is one of the companies whose owners face possible contempt charges next month.
Gregory and Joyce Nixon, the company’s owners, decided to drop their workers’ comp policy in October 2004 to cut costs. Twelve days later, a driver died in a crash. And, in 2007, while the company was still without coverage, another driver died on the job.
Through those years, the company was registered as a limited liability corporation with the N.C. Secretary of State. The Nixons paid taxes, and they registered a fleet of trailers with the Division of Motor Vehicles.
Gregory Nixon has declined to comment. He could not be reached Wednesday.
The commission fined the Nixons in 2009 for failing to carry workers’ compensation insurance. They owe $50 for each day without coverage, which amounts to $41,500.
A long process
Young says she has been working for more than two years to establish a contempt process at the commission. In December 2009, Young said, she began meeting with local judges, sheriff’s deputies and magistrates in Wake County to come up with the right forms and procedures when the commission forces an employer to jail.
Still, the program wasn’t in place. And until the N&O report, there was no immediate plan to start.
Tracy Curtner, the former assistant attorney general who was assigned to the Industrial Commission, said she had already created a contempt procedure in 2008 when she worked for the commission.
“The process was set and ready to go,” said Curtner, now in private practice.