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California employers arrested for worker’s compensation fraud

Posted on November 8, 2012 in Workers' Compensation

There are many hazards on the job that can cause worker’s compensation to be a necessity. There are job injuries that occur due to the nature of the work itself, such as repetitive motion injuries, as well as accidents and illnesses that occur when exposed to dangerous work conditions or hazardous chemicals. Regardless of the cause, workers’ compensation is an essential part of a worker’s protection against financial ruin caused by injury.

Recently, however, three Fresno business owners who owned a commercial floor care business were arrested and charged with workers’ compensation premium fraud. Specifically, the men were charged with under-reporting over $5 million in employee payroll to their insurance carrier, costing insurers over $782,000 in workers’ compensation premiums and costing the state of California $187,000 in tax revenue from withholdings. Also, it was discovered that one of the men who operated the business failed to pay employees the minimum wage and locked them inside their work area without supervision.

In this case, the business owners were defrauding the state and their workers by failing to file worker’s compensation claims with their insurance company, thereby causing their employees to be inadequately insured. But any worker injured on the job or made sick by a toxic chemical in the state of California is entitled to receive worker’s compensation benefits. Such workers may receive temporary or permanent disability benefits, medical treatment benefits, or if he or she has died, then his or her family may receive death benefits.

Worker’s compensation premium fraud weakens the entire worker’s compensation system and puts employees at risk. If convicted, the men in this case could face up to one year in either the county jail or state prison for each felony count. Two of the men are charged with 61 felony counts, and the other man is charged with 23 counts.

Source: Central Valley Business Times, “Central Valley Business Owners Arrested in Workers’ Comp Fraud Case,” Oct. 25, 2012