Workers compensation claims adjusters who have retailers as insureds, must prepare for the affect of the upward bound economy.  With markedly increased growth for retailers, claims have the ability to rise in three distinct areas.

three up arrows


It will be easier for an employee out on a comp claim to find another retail position to work while collecting.

Retail worker’s compensation claims are more transient than an artisan or professionally licensed occupation where the opportunities for relocation are less prolific.  The multitude of positions available and the transference of skills in most of the retail sectors create an environment where employees have the leverage in a strengthening economy.  Median turnover rates for part-time retail workers jumped back up to 74.9 percent in 2013, according to Hay Group, a management consulting firm cited in a September 23 2014 CNBC article .  The availability of positions is on the rise again, and so with it will be the ease for an employee to find work.  As there is a churn of labor, retailers often compete for the same talent, and are willing to be less stringent in their screening processes, more apt to lower some of their standards and for smaller independent retailers, may even hire help off the books.

To retain workers, larger companies have raised their pay, but this also has the effect of creating an enticement for an employee to change companies to get a better paycheck.  Allegiance to a retailer is often lacking as employees in retail have felt the whiplash effect of economy as they were cut, replaced, merged and placed in reduced positions of earnings and advancement.

This is a fertile forest of opportunities growing for retail workers compensation claims to increase in volume and in level of deceit.


Not every employer/ employee relationship is adversarial.  A spike in bad claims can occur when everyone involved is just trying to help each other out.

As it becomes harder to locate and finance new hires in the strengthening market,  some  Mom and Pop stores will struggle to keep the people they have.   It has happened that an employee with a workers’ compensation claim is asked to come in and help out some.  This happens at first when the employee’s injury is legitimate.  The employer, grateful for the assistance allows the employee to collect for the worker’s compensation claim albeit while continuing to work.  It is a way for the store to supplement the wages and keep the store operational while temporarily reducing payroll.  The employee can be paid off the books, or through deferred or non wage compensation.  If the person on a workers’ compensation claim happens to be a principle of the company, then the ability to extract non payroll disbursement  is even easier.

An employer can also be complicit in allowing an employee to work for them while collecting workers compensation from another employer.  The turnover rate of a retail work force creates lots of opportunities for public and proprietary records to be camouflaged so no red flags appear on first perusal.  When an employee that works for three employers in the year, records don’t necessarily show that there was a 6 month overlap of being on workers compensation from store 2 while working for store 3.


Fraud and abuse is not limited to the small companies.  Larger companies allow the claims to rise, unchecked as a cost of doing business.  To let a trouble-employee collect workers compensation without reporting apparent abuse to the claims administrators is often seen as a way to maintain morale, without “sicking”  the insurance adjuster on the employee, and without bringing back a troublemaker.  To Return To Work is not a desire for the manager of a trouble-employee anymore than it is for the employee. Enough work is coming and profit numbers are high enough that it doesn’t matter how much is paid in workers compensation claims; profits are coming in fast enough to make up for the loss and then some.  It would be disruptive to the core business of selling, if time were devoted to the claims process of bringing a problem-employee back to work.

GOOD TIMES, BAD TIMES  -In a recession a claimant who is well enough to return to work, might not have a job to return to, or at least not the hours needed.   There are fewer opportunities for fraud and more potential for simply malingering.   However, with a lower unemployment rate, if a claimant has an opportunity to collect and if there is no desire to return to the insured company, then there is a way to try out a new employment position   before ending their claim.  Of course there is also the realized benefit for those who are so tempted to collect the workers compensation check and a pay check from a new employer.

Backgrounds, Social Media Searches, and Surveillance of activities are often the most cost effective answer to quickly determine the validity of the claim.   Working with professional field investigators and being diligent is the only way to keep control of the claims and reduce non deserved claims as the flurry of economic activity heats up in the retail sector.


Top 5To ensure their legitimacy, claims in these categories need to be viewed along with the circumstances of the injury and the extent of the medicals versus the lost time.  If a cumulative cloud of duplicity forms then the claim warrants closer scrutiny by field investigation and surveillance.

  1. Seasonal help and temporary help –Employees can be hired as a temporary solution, but some can become a full time problem when it is decided that a workers’ comp claim is a way to extend cash flowing past the season.
  2. Staff affected by location closings or moving – This group feels abandoned and so their allegiance wanes quickly.  Where they might have quickly returned to work so as not to leave co-workers shorthanded and shouldering their load, employees of a closing or relocation lose their connection socially as well as economically.  Watch for employees that know they might lose their job to lay the ground work for a potential worker’s compensation claim for a past minor injury from which they have returned to work.
  3.  The principles of a small retailer – An owner or principle involved with day to day operations of retail seldom has a contingency plan to be out sick for a week, never to mind considering being out for an extended period with a Workers Comp injury.  A principle will usually find a way back into the store, if they don’t, that is a red flag by itself.  They might actually be back in the store, but drawing worker’s comp checks also.  This can be a side effect of financial necessity/ poor cash flow.
  4.  Employees with attendance and disciplinary issues – By definition a person in this category is not an automatic abuser of compensation benefits, but anyone disgruntled does have a higher probability of seizing upon an opportunity to stage, elaborate or misrepresent an injury for the double purposes of creating a way out from the employer with whom they have had problems, and a way to “stick it to the man”.
  5.  Comp clusters – This is a group of claims usually created by poor management that doesn’t provide for advancement, training or give encouragement or considerations for extra efforts.  This boils up into a closed loop of employees complaining to each other how badly a manager or company policy treats the peons.  So, once an employee of this network happens onto a worker’s compensation claim, it becomes viewed as an escape from the job and retribution to the lousy work environment. Friends and co-workers quickly share the antidotes of the company reaction, the process and qualifications to make it work.  The collective absolve does not see a frivolous claim as wrong as everyone is doing it, the company deserves it, and it is only do it for awhile until something else comes along.



Are State P.I. Licenses required for federal government work?


We recently bid on a federal contract for investigation services  and lost to a competing  private American Flaginvestigation firm that submitted a bid that was significantly higher.  You can’t win them all.  But then I checked to see if the company that won the bid was even licensed as a PI agency to conduct work in all the states that were outlined in the solicitation.  They were not, so I sent a letter of protest.

I have removed the identifying information about the agency, contract and even the responding contracting officer, because this is more about the information –

The response contained the following …

The solicitation did not specifically require private investigator state licensing for the performance of the work.  While, the solicitation included Section xxxxxx-70 Contractor Responsibilities (APR 1984), which stated, “The contractor shall obtain all necessary licenses and/or permits required to perform this work,” state licenses were not specifically mentioned nor required by [gov. agency] in the solicitation.

No state workers’ compensation program, commission, or licensing structure can reach, affect, or control the federal system contemplated here. The essential element is the federal Government’s judgment as to what contractors it deems competent to fulfill Government requirements and the Federal Government’s right to administer federal law without interference from the states. The states cannot control federal decisions or requirements in this regard. Thus, no state can impose its licensing requirements on a federal contractor investigating federal workers’ compensation cases.

The two principles that support this are federal primacy and pre-emption.

Under America’s  federalism system, federal law commands primacy over state law so that a conflicting state law must be set aside in favor ofthe controlling federal law, PPL Energyplus, LLC v. Solomon,

766 F.3d 241 (C.A. N.J. 2014).  The federal system comes first and has the ultimate authority.  Any state law that interferes with or is contrary to federal law on the point must yield ground, see U.S. Const. Art.

6, Cl.2, and comp. Free v. Bland, 369 U.S. 663, 666, 82 S.Ct. 1089, 8 L.Ed.2d 180 (1962).  Federal law has primacy over state law, White v. National Steel Corp., 938 F.2d 474 (C.A. 4 1991).

Besides, in this matter, federal workers would be either under the Federal Workers’ Compensation  Act (FECA), 5 U.S.C. §§8101 et seq. or the Federal Longshoremen’s and Harbor Workers Compensation Act (FLHWCA), 33 U.S.C. §§901 et seq. Under federal primacy, federal installations are not subject to state workers’ compensation laws, and the U.S. Government cannot be  held secondarily liable under state law, Wilcox v. United States, 910 F.2d 477 (C.A.8 1990); the other federal system would be the Longshoremen’s and Harbor Workers’ Compensation Act, Kalaris v. Donovan, 697 F.2d 376 (C.A.D.C. 1983).

Under Leslie Miller, Inc. v. State of Arkansas, 352 U.S. 187,77 S.Ct. 257 (1956), United States contracts and written instruments are immune from state control. Under Johnson v. State of Maryland,

254 U.S. 51, 41 S.Ct. 16 (1920), states cannot interfere with federal primacy and work, a doctrine hearkening back to the landmark McCulloch v. Maryland, 4 Wheat 316. A state has no standing to interfere with either the award or administration of a federal contract.

Under the parallel doctrine of pre-emption, if a state law interferes with Congress’s  purposes and objectives, federal law and requirements pre-empt the state law, Sickle v. Torres Advanced Enterprise Solutions, LLC, –F.Supp.–, 2013 WL 7231238 (D.D.C. 2013). Sickle states, “When a state law stands

as an obstacle to the accomplishment  and execution of the full purposes and objectives of Congress, that

state law is pre-empted under the doctrine of conflict pre-emption,” see also Hines v. Davidowitz, 312

U.S. 52,61 S.Ct. 399, 85 L.Ed. 581 (1940).  A Court will find pre-emption where it is impossible for a private party to comply with both state and federal law and where the state law is an obstacle to the accomplishment and execution of Congress’s full purposes and objectives, cf. Crosby v. National Foreign Trade Council, 530 U.S. 363, 120 S.Ct. 2288 (2000).  A state workers’ compensation commission could not bar an investigator under a federal contract looking into federal workers’ compensation matters for want of a state license.

In conclusion on this point, a contractor conducting federal administrative investigations involving federal matters under this [gov. agency] contract would not be required to be licensed in a given state. The states have no authority over federal operations.

Red Flag Criteria for Workers Compensation Claims

XXL red flag


Establishing a red flag criteria starts by determining what set of circumstances or behavior is considered unusual in nature.  First determine what baseline of activity is consistent with an injured employee making a good faith effort to heal and/or return to work.  A red flag is a variation from the base line.  It is the signal that something is out of the ordinary and needs to be investigated further. Red flags are only a warning that something could be amiss, but are not a sign of guilt or innocence.  It is through the investigation process that the aberration is justified or that abusive, malingering and fraudulent claims are uncovered.

Facebook and Other Searches

Even if a Facebook user sets their friends list to private, an investigator might still be able to see part of that  list.  Check out the blog post of Shay Priel of The CyberInt Group, that reveals that even if a friends list is set to be private, that doesn’t exclude the friendship from showing up on a friend’s news-feed, on a list of mutual friends.  As the axiom goes, a “An enemy of my enemy is my friend, but a friend of my subject is a backdoor into learning about their activities through Facebook …”  Or something like that.

For access to a list of publicly available records,  searchable by state check out this website. http://www.publicrecordsources.comSocial Med