Prosecutions In Workers’ Compensation Fraud Matters
January 23 2016
Two Elmira men were arraigned on charges of workers’ compensation fraud, according to New York State Inspector General Catherine Leahy Scott, but the real problem still exists.
56-year-old James Hooks, Jr. was charged with a number of offenses, including third degree larceny, after he allegedly collected almost $25,000 in workers’ compensation benefits that he was not entitled to receive. Authorities state that Mr. Hooks was working at a grocery store on East 5th Street while he consistently told the insurance company that he was unemployed and unable to work because of a 1994 job injury. 53-year-old John L. VanRensselaer was similarly charged. Prosecutors allege that he shut down his auto mechanic business in 2009, but continued earning money in 2013 and 2014.
Ms. Scott boldly declared that she would “continue to use the resources of my office to pursue those who abuse the workers’ compensation system at the expense of hard-working New Yorkers.”
Ms. Scott’s discourse on fraud rings hollow when considering the massive amount of employer fraud that sucks money out of the workers’ compensation system, because these fraudsters are almost never caught or punished. While employee fraud, like the incidents described above, is a factor in only 1 percent of claims, employer fraud in New York costs the system hundreds of millions of dollars every year.
One of the main problems is there is little or no financial incentive for companies to do the right thing. Even if they are caught, which is very rare except in a few Southern states, the fines are almost always less than the amount of money the company saved through fraudulent practices. So, fraud scams like these are commonplace:
- Employee Misclassification: Most employer characterize as many workers as possible as “independent contractors,” because they do not have to withhold taxes and do not have to obtain workers’ compensation insurance.
- Job Misclassification: To lower premium payments, employers might classify high-risk workers, like roofers, as low-risk workers, like office clerks.
- Illegal Payments: Again, to keep premiums low, an employer often offers to pay an injured worker’s medical bills in cash if the victim agrees not to file a claim.
Injured workers are covered by no-fault insurance that pays cash benefits for expenses like medical bills and lost wages.
Benefits are available, but the insurance company does not give them away freely. For a free consultation with attorneys who help you claim the benefits you deserve, contact our office. You have a limited amount of time to act.