Hamberger & Weiss LLP


Court Sets Minimum Level of Conduct for Full Disqualification of Benefits After Fraud Finding

In Kodra v. Mondelez International, Inc., decided on 12/1/16, the Appellate Division appears to set a minimum threshold level of conduct for imposition of the discretionary penalty of disqualification from all indemnity awards when a claimant has violated the fraud statute under WCL §114-a. 
The claimant owned and operated a lawn care and plowing business separate from his work with the employer of record. He suffered a compensable injury with the employer of record and underwent shoulder surgery in May 2013. He returned to work approximately 5 months later in October 2013. Surveillance showed claimant working for his lawn care business in July and August 2013 when he was allegedly totally disabled. The Board made a fraud finding and imposed a discretionary disqualification from all future indemnity awards. 
The legal standard for imposition of a discretionary disqualification penalty is that it must not be disproportionate to the claimant’s misconduct. The court stated, “[i]n cases where this very significant sanction has been approved, the underlying deception [by the claimant] has been deemed “egregious or severe, or there was a lack of mitigating circumstances.” The court held that the Board failed to articulate a rationale for imposing the discretionary disqualification penalty, but, more importantly, also held that even if a rationale had been articulated, the facts in the record would not support the discretionary disqualification penalty. 
The court’s decision can be interpreted as holding that a discretionary disqualification penalty would not be appropriate under similar circumstances where a claimant fails to disclose a very limited period of work when totally disabled. However, the court’s decision would not foreclose imposition of a discretionary penalty for a fixed period of time as opposed to a discretionary forfeiture from all future indemnity awards.

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