James Frank Smith, 54, of Roslyn has been charged in Thurston County Superior Court with 17 counts of theft for allegedly working while he was receiving permanent disability payments from the state Department of Labor and Industries.
Smith’s arrest highlights the public’s responsibility to turn in cheaters so L&I investigators can root out fraud in the state’s injured worker system.
Judy Schurke, director of the Department of Labor and Industries, applauded The Olympian’s front-page coverage of Smith’s arrest, saying the more tips her office receives on fraudulent claims, the better. “Our ability to eliminate fraud depends a lot on tips from the public and in turn, on their awareness and feelings of ownership about the system,” Schurke said. “While Mr. Smith set himself up with his reality TV show activities, most of our 2,100 tips in 2009 came from citizens.”
Schurke encourages members of the public to keep up the pressure by reporting fraud tips to the agency’s hot line at 1-888-811-5974 or online at www.fraud.lni.wa.gov.
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Smith has pleaded not guilty to the two counts of first-degree theft and 15 counts of second-degree theft leveled against him. What sets Smith apart from others arrested for workers’ compensation fraud is his high profile. He and his son were regulars on the History Channel’s reality TV show “Ax Men.”
According to court papers, since April 2007, Smith has received more than $50,000 in L&I time-loss and pension benefits after submitting two injury claims, one in 1993 and another in 1996.
In October 1993, Smith filed a workers’ compensation claim with L&I stating that he had injured his left knee while working at Schneider Construction. He filed a secondary claim in 1996, alleging that while working for Beck Petroleum “he injured his right leg, tibia, shoulder and back.” He was placed on L&I pension Dec. 16, 2010.
L&I awarded Smith time-loss benefits totaling $21,277.13 from April 1, 2007, to Dec. 15, 2007. It also awarded him pension benefits from Dec. 16, 2007, to March 15, 2009, totaling $29,603.29.
L&I investigators learned in March 2009 that Smith was working as a logger in Florida.
Based on the reality show film clips and the fact that he was receiving monthly payments and medical benefits while working as a logger in Florida, the attorney general filed the 17 counts of theft against Smith. According to court papers, he also was paid for his appearances on “Ax Men” and didn’t tell L&I about the job.
While Smith’s arrest has captured headlines, not every case of fraud against the state’s workers’ compensation system does. Carl Hammersburg, fraud prevention and compliance manager at L&I, in an agency blog noted that Scott Walker, 49, of Mount Vernon recently was sentenced to 21 days in jail, placed on home monitoring and ordered to pay restitution for illegally drawing $76,000 worth of time-loss benefits.
Alexander Stoops, 36, of Richland, was working as a cable installer when he injured his lower back in January 2008. According to a Tri-City Herald story on the case, over the following nine months Stoops worked as a sub-contractor with another company installing satellite dishes — a job prosecutors said required the injured Stoops to lift 30- to 50-pound boxes. Stoops will pay nearly $24,000 in restitution to L&I for the familiar case of going back to work while collecting time-loss benefits from the state system.
Worker fraud is only one element of the kinds of cases Labor and Industries investigates. There are also cases of unlicensed contractors, medical provider fraud and employer fraud. Simply put, there are people involved in all aspects of the workers’ compensation program trying to scam the system.
It’s the public’s responsibility to blow the whistle on them.
According to a recent L&I report, the fraud prevention and compliance program brought in $7 for every dollar invested. In the 2010 fiscal year, L&I collected $137.4 million in fraud recovery, delinquent employer premiums, audit assessments, and overpayments to workers, to health care providers and vocational providers.
Honest taxpayers shoulder the burden when cheaters get away with fraud. The public can play an important role in holding cheaters accountable for their deceit by alerting L&I investigators through the toll-free hot line or online.