COVID-19 brings new fraud scams to the workplace

By Jeff Jones
Special to the UCBJ

Employers have faced numerous challenges throughout the pandemic, including the issue of fake COVID-19 claims by employees seeking to take advantage of paid leave or other benefits. 

In one such case an employee in Georgia – Antonio Davis – texted his supervisor advising that he had tested positive for COVID-19, and that he would be sending over the discharge papers with quarantine instructions. Davis later told the plant manager by telephone that he had received a positive COVID test result. The plant manager explained to Davis that if he in fact had COVID-19, the company would shut down the plant for cleaning and would need to notify other employees in close contact with Davis that they would have to be quarantined also. Minutes later, Davis emailed the plant manager a copy of what appeared to be a medical excuse letter, stating Davis had been admitted to a medical center in Atlanta, that he should quarantine for 14 days, and avoid contact with people if possible. The letter did not indicate that Davis had been treated for or diagnosed with COVID-19. 

The letter eventually made its way to the company’s Human Resources Manager, who observed some indications of fraud, primarily some questionable dates, the fact that the letter was unsigned, and did not appear to be on a formal letterhead. After an investigation, including inquiries and unanswered phone calls to the employee, the Human Resources Manager placed Davis on unpaid suspension status and in several voicemails and text messages, advised Davis that if he did not provide his test results immediately, his employment would be terminated. 

Davis never responded to these contacts and never provided documentation of a positive COVID-19 test result. Davis was eventually terminated from his employment but in reliance on Davis’ representations and to protect its employees and the public from serious public health issues, the company closed the plant for thorough cleaning, and paid the salaries of employees who quarantined because they had been in close contact with Davis. According to an affidavit filed in U.S. District Court by a Special Agent with the FBI, the incident cost the company in excess of $100,000.

Davis was arrested by the FBI in May on federal charges of knowingly devising a scheme to defraud by using false or fraudulent pretenses, representations or promises about a material fact with the intent to defraud and transmitting by wire a communication in interstate commerce to help carry out the scheme to defraud in violation of 18 U.S.C. §1343. (Davis was also charged with violation of 18 U.S.C. §1344, based on bank fraud regarding a fraudulent mortgage application.) Wire fraud includes any number of interstate communication devices – such as a mobile phone, telephone, e-mail, fax, text message or even through social media – and these are interstate communications because they generally cross state lines.  On Dec. 14, 2020, Davis pled guilty to the criminal charges; sentencing is scheduled for March 25, 2021 in the U.S. District Court for the Northern District of Georgia. 

So… what does all of this mean for employers? 

Recently, the EEOC provided guidance on how employers should proceed with various COVID-19 scenarios. The guidance suggests merely asking or requiring an employee to show proof of receipt of a COVID-19 vaccination is not a disability-related inquiry as it is not likely to elicit information about a disability. Employers should continue to ask employees for proper documentation and analyze the documentation thoroughly to prevent situations like the ones in Georgia. HR is uniquely equipped in many cases to observe indications of fraudulent claims and to handle them appropriately in accordance with applicable laws.  

On Dec. 21, 2020, the U.S. Department of Health and Human Services Office of Inspector General alerted the public about fraud schemes related to the COVID-19. The OIG indicated scammers are using various methodologies for COVID-19-related scams. Of note, these scammers are offering individuals COVID-19 tests, HHS grants, and Medicare prescription cards in exchange for personal details, including Medicare information. For more information and details visit https://oig.hhs.gov/coronavirus/fraud-alert-covid19.asp.  

If employers choose to require employees to provide proof that they have received a COVID-19 vaccination from a pharmacy or their own health care provider, the EEOC suggests that employers make clear to employees not to provide any medical information as part of the proof, to avoid implicating the Americans with Disabilities Act. In other words, ensure your policy and procedure for COVID-19 is explicit and provides that no other personal, medical details of the employee should be on their proof of vaccination documentation. Keep in mind if an employee refuses to work because they believe there is an immediate or imminent threat of death or serious harm due to their COVID-19 concerns, an employer should immediately analyze the situation and consult with employment counsel to determine the viability of the employee’s concern. 

The same care should be taken with respect to claims for unemployment compensation, which is another area recently noted as having many fraudulent claims. For example, in California a grand jury returned an indictment involving a prison-based scheme out of the Central California Women’s Facility (CCWF). An inmate and a parolee were indicted for conspiracy to commit mail fraud and aggravated identity theft charges for the submission of several fraudulent Employment Development Department unemployment insurance claims. The scheme was discovered via recorded jail calls and emails which showed the inmate obtained names, dates of birth, and social security numbers for inmates at CCWF. The inmate then relayed this information to the parolee, who submitted fraudulent claims. These claims falsely stated that the inmates at CCWF had worked within the prescribed period as hairstylists, barbers, and other occupations, and that they were available to work when they were actually incarcerated.  Both women were able to steal $200,000 from the Employment Development Department. 

In another recent California scam, a former Employment Development Department employee is currently accused of a mail scheme involving almost 100 fake unemployment claims filed in other people’s names. According to the criminal complaint, the employee was able to get at least 12 of those claims processed for a value of over $200,000 in unemployment benefits. For reference, if all 100 claims were accepted, it is anticipated the former employee would have made at least $2 million in stolen money.

Do not let a COVID-19 incidents like the ones mentioned above cost your company. Employers should look to the CDC recommendations and EEOC guidance when dealing with various COVID-19 scenarios but its best to consult with employment counsel regarding your policies and procedures. Consulting with counsel ensures proper protocol is in place, that the policies and procedures implemented are consistent, and that any questions of falsities or discovery of fraudulent behavior is reported to the proper authorities. 

Jeffrey G. Jones is a regional managing member for Wimberly Lawson Wright Daves & Jones PLLC. He can be reached at jjones@wimberlylawson.com.

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