When Workers’ Compensation Issues Endanger Lives

Last month, a case of bankruptcy and workers’ compensation issues put Carnegie borough residents’ lives on the line when Carnegie Emergency Medical Services (CEMS) was forced to stop providing emergency services due to failure to pay for workers’ compensation insurance. Without this insurance, it is illegal for the nonprofit service provider to continue operating.

How Could This Happen?

That’s what most Carnegie residents, who were for a time unaware that no emergency services were available to them, are asking. The situation is not as uncommon a possibility as one might think. Many counties, cities, even neighborhoods contract these services out to private emergency service companies who operate independent budgets. What is bizarre is that CEMS was not exactly transparent in communicating just how dire the situation had become, leaving city officials scrambling to find an immediate solution.

A Sagging Financial Structure

We now know that CEMS was teetering on the edge of financial ruin as far back as 2014 or earlier. A decrease in volunteer paramedics and EMTs caused the organization to begin hiring paid employees, which sparked a devastating decline in financial viability that worsened with each passing year. Tax records from 2015 show CEMS reported $16,660 more in expenses than total revenues. Even more concerning was the realization that the nonprofit had just $14,479 in assets with liabilities that totaled $220,200.

CEMS was not the only county emergency provider struggling to offset rapidly increasing expenses. A survey conducted last fall revealed that of the 34 agencies who responded, 75% of them had reported financial losses for at least the last three years.

Workers’ Compensation Insurance the Final Nail in the CEMS Coffin

The Carnegie Borough Council was aware that CEMS filed for Chapter 11 bankruptcy in February 2016 but allowed it to continue operations during its financial reorganization of debts. Bankruptcy records show CEMS owed over $400,000 in unsecured debts to 12 creditors. However, what finally did the crumbling nonprofit in was its failure to pay for mandatory workers’ compensation insurance. Once this became known by the Council, CEMS ceased operations.

Workers’ Compensation is Critically Important

Ultimately, the Council ensured Carnegie residents will receive emergency medical services from nearby Scott Township EMS until a more permanent solution is available, but this particular case shows just how crucial it is to follow all laws and regulations pertaining to workers’ compensation. If you are a business owner or employee facing workers’ compensation issues, contact the capable attorneys at The Law Office of Michael L. Studd by calling (412) 400-6157.

Man suffers workers' compensation injury while at office Christmas partyImage of an airplane taking off as seen through the window of the airport where a Pennsylvania airport employee initially denied workers' compensation wins appeal.