Ohio Supreme Court Affirms Fraud and Overpayment Findings in Business Owner Case

In State ex rel. Perez v. Industrial Commission, 2016-Ohio-5084 (Ohio, July 26, 2016), the Supreme Court of Ohio found a business owner receiving temporary total disability compensation (TTD) guilty of workers’ compensation fraud and TTD overpayment.

This case originated in 2002 when claimant was injured while working construction.  The allowed conditions include neck sprain, lumbar sprain, bulging disc and protruding discs, cervical spondylosis, major depression, and cognitive disorder. The claimant owned an auto repair shop, which he lived over.

In 2012, an investigation was opened after the Bureau received a tip that claimant was working at his auto repair shop while on TTD.  The investigation revealed the claimant was performing work at the shop, including ordering and picking up parts, meeting with clients, and scheduling appointments.  The Bureau filed a motion alleging that claimant had received an overpayment of TTD based upon his work activities, and requested a finding that claimant was fraudulent in his requests for TTD compensation.  The Commission granted the Bureau’s motion finding the claimant did commit fraud and declared an overpayment, after which the claimant filed a writ of mandamus.

The Court of Appeals affirmed the overpayment but overturned the finding of fraud.   Both parties appealed the court of appeals’ findings to the Ohio Supreme Court.  The claimant argued against the finding of overpayment, citing two cases in which other injured workers owned businesses and were permitted to engage in business-related activities that did not themselves generate income.  The first of these cases, State ex rel. Ford Motor Co. v. Indust. Comm., 2002-Ohio-7038, concerned a claimant who hired outside people to perform all of the labor while he did minimal work necessary to continue operating the business, such as signing paychecks.  In the second case, State ex rel., Honda of Am. Mfg. Co. v. Indus. Comm., 2007-Ohio-969, the claimant owned a scrapbook store and was seen on occasion in the shop talking with customers, and once using the cash register.  The Supreme Court held the Commission did not abuse its discretion when finding an overpayment noting that evidence was presented that claimant purchased $43,000 in auto parts during the period of investigation, and unlike Ford and Honda, claimant’s activities were income generating activities for the business.  The court further overturned the court of appeals ruling to the extent it set aside the Commission’s finding of fraud.  The court noted sufficient evidence was presented to support the finding of fraud including multiple requests submitted to the Commission by the claimant stating he had not worked since 2002, and claimant’s failure to report his work activities to his treating doctors, instead telling them that he rarely left home and spent his days watching television.


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