Practice Tips for Securing the Mandatory and Discretionary Penalties under WCL Section 114(a)

Once a claim has been established, there are numerous defenses a carrier may raise to limit exposure in situations where the claimant has not returned to work. One of these defenses can be found under Section 114(a) of the Workers’ Compensation Law. The applicable case law reads:

 “If for the purpose of obtaining compensation . . . a claimant knowingly makes a false statement or representation as to a material fact, such person shall be disqualified from receiving any compensation directly attributable to such false statement or representation. In addition, and as determined by the Board, the claimant shall be subject to a disqualification or an additional penalty up to the foregoing amount directly attributable to the false statement or representation.” Further, even if the claimant has suffered a compensable injury, the Board has the discretion to disqualify the claimant from receiving any future wage compensation benefits. Matter of Church v. Arrow Elec. Inc, 69 AD3d 983 (3rd Dept. 2010). The egregiousness of the violation is a factor which may be considered when assessing whether the discretionary penalty is appropriate. Matter of Peguero v. Halo’s Rest, 24 A.D.3d 986 (3rd Dept. 2005).

To summarize, this issue can be raised where the claimant has either lied, or misrepresented, a material fact in order to receive benefits. Common examples of material facts include misrepresentations on degree of disability and work activity. As we’re all aware, one of the most effective ways of securing a Section 114(a) finding occurs when the claimant is placed under covert surveillance. The claimant may be captured engaging in activity which, in theory, they should not be able to perform while under their current degree of disability. An example of this may include a claimant seen playing sports while receiving benefits at the temporary total disability rate. While this is certainly evidence in support of a Section 114(a) fraud finding, the Judge often finds in the claimant’s favor, as they typically testify that they have “good days” and “bad days.”

Alternatively, surveillance capturing a claimant engaging in work activity while they’ve been cashing benefits checks can be quite effective in securing a Section 114(a) finding. When Section 14(a) is raised, the Judge typically continues the case for claimant testimony on the issue. After hearing the testimony and reviewing any available video footage, the Judge will make a decision on whether there has been a 114(a) violation. When the Judge finds Section 114(a) has been violated, the mandatory penalty disbarring the clamant from future benefits in the present claim will be imposed. The Judge also has the ability to impose the discretionary penalty under Section 114(a), which permanently disqualifies the claimant from receiving workers’ compensation benefits.

Where there is ample evidence the claimant knowingly intended to defraud the carrier and the Board, the carrier’s argument to impose the discretionary penalty will be the strongest. Case law has established that where the claimant was simply unaware that he was no longer entitled to benefits checks, a 114(a) is not warranted. At the first hearing, the carrier’s attorney should questions the claimant on his or her work activity since the date of first lost time. This questioning should also take place at any subsequent hearings where continuing awards will be made. The claimant should be periodically made aware that they must inform the carrier and the Board if they begin to engage in work activity. Having the claimant communicate awareness of the law early in the claim will rebut any sort of ignorance argument at a later 114(a) hearing.

In some circumstances, the proper disclaimer on the checks the claimant received can bolster the carrier’s position. In one example, the back of the checks included a statement which read: “By endorsement of this check the payee under penalty of fine and/or imprisonment, certifies entitlement to this payment for benefits or services, circumstances affecting such entitlement have not changed and no false statements or representations have been made in support of the claim for payment. False representations could result in civil and criminal penalties.” After the claimant returned to work and continued to cash his workers’ compensation checks, the carrier’s attorney argued that the statement proved the claimant was aware he was committing fraud every time he endorsed a check. The Judge also found a Section 114(a) violation in this matter.

Section 114(a) is an effective vehicle to bar the claimant from indemnity benefits when there is evidence of fraud. In order to prevail, the record should be developed far in advance of raising 114(a). Claimant affirmations on work activity and knowledge of the law throughout the claim will provide the argument support necessary to prevail on this defense.


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