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Company and Industry Highlights

March 2006

State: New York

Area of Interest:New York Manufacturer Ordered to Pay Back Wages and Punitive Damages to Two Employees Fired for Filing an OSHA Complaint

The U.S. District Court for the Western District of New York has ordered a Ransomville, N.Y., tool manufacturer and its president to pay two workers a total of $35,800 in back wages and $10,500 in punitive damages for terminating them from their jobs after the men filed a complaint with the U.S. Labor Department's Occupational Safety and Health Administration (OSHA).

The order, signed Feb. 8, by Chief Judge Richard J. Acara, requires defendants V.R.K. Manufacturing and Tools Co. Inc. and company president Roman Klur to make payment within 60 days and permanently prohibits them from violating the anti-retaliation provisions of the Occupational Safety and Health Act.

Two employees of V.R.K. Manufacturing and Tools were fired on May 3, 2003, one week after filing a complaint with OSHA about safety and health issues at their workplace. The workers then filed a whistleblower complaint with OSHA, alleging they were discriminated against for exercising the rights granted them under the OSH Act.

OSHA's investigation found merit in the complaint and the agency sought reinstatement, back pay and benefits for the workers. When the employer repeatedly refused to settle the matter, the U.S. Labor Department filed suit in federal court to enforce the findings.

Source: Occupational Safety and Health Administration

State: Illinois

Area of Interest: Chicago Furniture Builder Fined $218,200 for Violation of Federal Workplace Safety Regulations

 The U.S. Labor Department's Occupational Safety and Health Administration (OSHA) has proposed $218,200 in fines against steel frame furniture manufacturer Dehler Manufacturing Co. Inc. following an inspection at the company's Chicago facility.

OSHA opened a follow-up inspection at Dehler after the company failed to show it had corrected safety violations involving power press brakes and mechanical power presses identified in a February 2005 inspection.

The most recent inspection, opened August 2005, found continuing problems with power presses and resulted in one serious, three willful and five repeat citations for violation of safety and health standards. Alleged serious and willful violations involved lack of guarding on mechanical power presses and power press brakes to prevent employees from exposure to amputations or crushing; failing to conduct safety inspections on the machines, and not incorporating the correct type of drive motor starter in mechanical power press controls.

Repeat violations, based on several earlier citations issued to the company, involved inadequate employee training; failure to develop and utilize hazardous energy isolation procedures for mechanical power presses; lack of periodic inspection of resistance welders, and other issues threatening the safety of workers operating mechanical power presses.

Source: Occupational Safety and Health Administration

State: Ohio

Area of Interest:Insurance Department Announces 2005 Top 10 Insurance Fraud Cases

Ohio Department of Insurance Director Ann Womer Benjamin announced the Department's "Top 10" insurance fraud cases for 2005, which involved a total of more than $5.5 million.

The Department reorganized its Office of Investigative and Licensing Services in 2005 to create a Fraud and Enforcement Office and a Market Regulation and Licensing Office. Both offices were allocated with additional resources, which immediately made a positive impact. In 2005, the Department opened 139 consumer insurance fraud cases. Fifty-six of those cases were referred for prosecution, an increase of 144% over those referred in 2004. A total of 240 insurance agent misconduct actions - compared to 108 in 2004 - were referred for administrative action, criminal action - or both.

The Department's top fraud cases for 2005 were:

1. Former Agent Sentenced for $2.5 Million Premium Misappropriation

Philip A. Regano - Cleveland: Regano was indicted August 4, 2005 on one count of mail fraud. He pleaded guilty on October 5, 2005. On December 22, 2005 he was sentenced to 63 months in prison, followed by three years of supervised release, and was ordered to make restitution in the amount of $2.5 million. Regano misappropriated over $600,000 from insurance clients by taking money to invest in policies that did not exist. He also misappropriated funds from clients by selling promissory notes in gold products and then using the money for his own purposes. The Department revoked Regano's insurance license on July 26, 2005.

2. Former Agent Gets Four Years for $200,000 Theft

William Tad Cuckler - Athens: Cuckler pleaded guilty on December 15, 2005 to three counts of theft and one count of aggravated theft for stealing more than $200,000 from his clients. Cuckler took their money to invest in annuities, but instead he used it for his own purposes. In some cases he used money from new clients to pay back money he had taken from previous clients. Cuckler was sentenced on January 27, 2006 to four years in prison. The Department revoked Cuckler's insurance license on October 24, 2005.

3. Agent's License Revoked for Stealing $215,000 from Seniors

David B. Paige - Marietta: Paige was found guilty of two counts of theft, and was sentenced to five years in prison on April 15, 2005. Paige withdrew $215,000 from his three clients' retirement annuities for his own use. The insurance companies which held the annuities made the victims whole, and Paige was ordered to pay restitution to the insurance companies. The Department revoked Paige's insurance license on January 31, 2005.

4. Agent Steals $80,000 from Elderly Client

Randall L. Webb - Springboro: Webb was convicted on July 15, 2005 of theft by deception for stealing approximately $80,000 from the annuity of a retired elderly client. Webb was sentenced two years in prison. The Department is pursuing revocation of his license.

5. Agent Disciplined for $49,000 Annuity Theft

Michael L. Fair - Cincinnati: Fair was convicted on November 9, 2005 of one count of theft for stealing $49,000 of annuity retirement money from an elderly client. Fair was sentenced to one year in jail, but the sentence was suspended when he made full restitution to the victim. Fair is serving one year under community control. The Department revoked his insurance license on December 12, 2005.

6. Arson and $250,000 Insurance Fraud Nets Prison Time

Kevin Dalton - Athens: Dalton pleaded guilty on January 21, 2005 to engaging in a pattern of corrupt activity, aggravated arson and insurance fraud. He was sentenced to eight years in prison and was ordered to forfeit his real estate valued at more than $300,000. Dalton was responsible for burning down two residences in Athens County, after being paid by the homeowners to carry out the act. This was part of a scheme to defraud two insurers of $250,000 of insurance proceeds. Both homeowners also pleaded guilty to insurance fraud and were each sentenced to three years in prison.

7. Fake Flood Claim of $122,000 Results in Indictment for Claimant

Martin McNamee - Columbus: In July of 2001 McNamee submitted a flood loss claim to his insurer for a broken water line, which was settled for $122,000. An investigation determined that he allegedly staged the loss and used the proceeds to finance his struggling business. He was indicted on August 12, 2005 by a grand jury on charges of money laundering, mail fraud and for filing false tax returns.

8. Illegal $1.6 Misappropriation Ruins Business, Hurts Many

Gloria Long and Mike Wozniak, Midwest Title - Delaware: Gloria Long and her husband Mike Wozniak were indicted on November 15, 2005 on six counts of theft, six counts of money laundering and one count of engaging in a pattern of corrupt activity. The charges arose out of allegations that Long, the owner of Midwest Title, had spent more than $1.6 million that had been improperly transferred from the escrow accounts of Midwest Title. These acts caused the collapse of Midwest Title and resulted in serious financial hardship for consumers whose escrowed funds disappeared. The Department revoked Gloria Long's license on July 2, 2001. This matter is scheduled for trial before the Delaware County Common Pleas Court.

9. Duo Indicted on 52 Felony Charges in $760,000 Fraud

Carl Fanaro - Columbus: On July 1, 2005 Fanaro and a co-defendant, William Mayes, were indicted on 52 felony charges relating to the illegal sales of securities. They were indicted on January 27, 2006 on 105 felony charges, including securities violations, receiving stolen property and engaging in a pattern of corrupt activities. These charges arose out of allegations as to their conduct in making sales of investment contracts to a number of Fanaro's insurance clients. Fanaro's insurance license was revoked on December 8, 2004. The criminal charges are set for trial before the Licking County Common Pleas Court.

10. Trial Date Set in $60,000 Staged Accident Case

Terri Pennington - Columbus: Between July and September of 2004 Pennington was allegedly involved in five staged accidents in Franklin County. These accidents involved claims of bodily injuries being filed with various insurance companies. On July 28, 2005 Pennington and five others were indicted on charges of insurance fraud, theft and falsification. The case is scheduled for trial before the Franklin County Common Pleas Court.

Source: State of Ohio

State: Alabama

Area of Interest: OSHA Proposes More Than $332,000 in Penalties for Workplace Hazards At Birmingham Foundry

The U.S. Labor Department's Occupational Safety and Health Administration (OSHA) has cited McWane Cast Iron Pipe for 38 safety and health hazards at the company's Birmingham plant. The agency is proposing penalties totaling $332,700.

In August, OSHA conducted comprehensive safety and health inspections at the facility under its site-specific targeting program that identifies workplaces with high rates of injuries and illnesses. The program is used to target inspections based on an annual survey of some 80,000 workplaces in high-hazard industries.

OSHA issued 10 repeat citations, with proposed penalties of $242,700, against the company. Alleged violations included exposing workers to: silica above permissible levels; "struck by" injuries from improperly blocked and stacked pipes and from a ladle without safety latches that carried hot molten metal; unguarded machinery, electrical hazards and falls through unguarded floor openings and platforms.

Source: Occupational Safety and Health Administration

Area of Interest: OSHA Issues Final Standard on Hexavalent Chromium

The Occupational Safety and Health Administration (OSHA) will publish a final standard for occupational exposure to hexavalent chromium in the Feb. 28, 2006, Federal Register. The standard covers occupational exposure to hexavalent chromium (Cr(VI)) in general industry, construction and shipyards.

The new standard lowers OSHA's permissible exposure limit (PEL) for hexavalent chromium, and for all Cr(VI) compounds, from 52 to 5 micrograms of Cr(VI) per cubic meter of air as an 8-hour time- weighted average. The standard also includes provisions relating to preferred methods for controlling exposure, respiratory protection, protective work clothing and equipment, hygiene areas and practices, medical surveillance, hazard communication and recordkeeping.

Hexavalent chromium compounds are widely used in the chemical industry as ingredients and catalysts in pigments, metal plating and chemical synthesis. Cr(VI) can also be produced when welding on stainless steel or Cr(VI)-painted surfaces. The major health effects associated with exposure to Cr(VI) include lung cancer, nasal septum ulcerations and perforations, skin ulcerations, and allergic and irritant contact dermatitis.

Source: Occupational Safety and Health Administration

State: Ohio

Area of Interest: Ohio Property and Casualty Insurance Rates Still Among Lowest in Nation

Ohio insurance consumers continued to benefit from a healthy property and casualty market in 2005 and rates are not expected to change significantly in 2006, Ohio Department of Insurance Director Ann Womer Benjamin announced. Homeowners insurance rates offered by the state's top ten insurers rose less than one percent in 2005 while automobile insurance rates decreased 1.6 percent.

Department statistics indicate that homeowners insurance rates across the state rose 2.2 percent in 2004, following increases of 9.9 percent in 2003 and 18.1 percent in 2002. In 2005, rates rose only 0.3 percent statewide. State Farm, Ohio's largest home insurer with 22.4 percent of the market, dropped its rates 2.5 percent in 2005.

From 2001 to 2003, automobile insurance rates increased 4 percent each year. The three-year trend ended in 2004 with an average increase of only 0.2 percent. In 2005, automobile insurance rates decreased 1.6 percent. State Farm, Progressive, Westfield, Cincinnati, Erie and American Family insurance companies all implemented decreases in rates in 2005, according to the Department.

Department analysts expect that rates for homeowners and automobile insurance, overall, will not change significantly in 2006. Changes in homeowners insurance rates can be attributed to building and materials costs and weather-related claims, while changes in automobile insurance rates can be attributed to repair costs, medical costs, weather-related claims, and the number of cars on Ohio's roads.

Source: State of Ohio

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