by Reuthana Tap –
It has likely happened to you. You are at a deposition and sitting across from you is applicant and her attorney. After finishing the admonitions, you ask applicant to produce documentation confirming her identity. With fear in her eyes and sweat beading across her forehead, she nervously turns to her attorney. Suddenly, like a bat out of hell, the applicant’s attorney rises from his chair, vehemently objects and recites with pride and verbatim the Fifth Amendment of the Constitution. Thereafter, he advises applicant against providing any identification, thus preventing you from verifying applicant actually is who she purports to be.
Herein lies the problem: Who the applicant purports to be may also be a Scandinavian Drug Trafficker listed as a Specially Designated National (“SDN”) with the Office of Foreign Asset Control (“OFAC.”) 1
Part of the US Department of Treasury, OFAC:
administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States. 2
In a nutshell, OFAC operates to prohibit payments to terrorists and sanctioned entities listed on the SDN. To comply with OFAC, employers and insurers must verify the injured employee does not appear on the list and ensure no benefits are provided.3 OFAC must be notified before benefits are provided to an applicant whose name appears on the SDN and approval must be granted before such benefits are paid.4
Indeed, violations of OFAC’s rules can result in serious consequences, with corporate and personal sanctions of up to 12 years in jail and $1 million in civil penalties for each violation.5 Furthermore, because OFAC operates under the “Trading with the Enemy Act” and the “International Emergency Powers Act,” the Office itself posits that the authority in which it operates preempts even state insurance regulations.6 In other words, a WCAB judge ruling which conflicts with OFAC regulations may be acting beyond the scope of her powers.
So, what can a defense attorney to do in the above, pseudo-hypothetical situation? One might consider denying benefits until the applicant’s identity can be confirmed. Failure to do so and to obtain authorization from OFAC puts the insurer at risk for violating Federal law and may subject your client to severe penalties. Indeed, applicant’s attorney might genuinely insist and persuade you that the applicant is in no way a Scandinavian Drug Trafficker. But remember, when dealing with Federal laws in which strict compliance is required, the stakes are just too high not to be vigilant.
1 This hypothetical is loosely based on a real matter
2 Office of Foreign Asset and Control. United States Department of Treasury. Web. 16 Oct. 2014.
3 Wojcik, Joanne. All Claimants Must be Screened Under Federal Law. Businessinsurance.com. Web. 17 Oct. 2014
4 Reiss, Claire. Public Risk Pools and the Office of Foreign Asset Control. 31 May 2013. Web. 17 Oct. 2014
5 Oxfeld, Eric. National Issues Impacting Workers Compensation Claims. n.d., Web. 17 Oct. 2014.
6 Office of Foreign Asset and Control. United States Department of Treasury. Web. 16 Oct. 2014.
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