Authorities made three more arrests in an ongoing crackdown against workers’ compensation fraud in New York.
Douglas S. Griffen, owner of Fingerlakes Excavating LLC, was charged with multiple felonies, including grand larceny and falsifying business records, for allegedly failing to secure workers’ compensation insurance for his employees and then providing false records to the state which indicated the insurance was in place. Prosecutors allege that Mr. Griffen did not have insurance because the extra cost would have made his bid not competitive. John A. Francher, who owns Greenbriar Home for Adults, faces similar charges stemming from similar facts. Steven M. Spratley, owner of Spratley and Sons Tree Surgeons, allegedly committed perjury when he told the Workers’ Compensation Board in 2013 that an injured worker was not an “employee.”
Mr. Griffen and Mr. Francher were also charged with the misdemeanor of failing to obtain workers’ compensation insurance.
Workers’ Compensation Employer Fraud
These cases are far from isolated incidents. While the media reports worker and employee fraud as if it was an epidemic, reliable evidence indicated that only around 2 percent of workers’ compensation claims are fraudulent ones. On the other hand, as many as 30 percent of New York companies do not carry workers’ compensation insurance, even though subscription is required by law.
Employer fraud is one of the key components in the breakdown of the “grand bargain” between labor and management that created workers’ compensation about a century ago. Workers agreed to waive their claims for non-economic damages in exchange for no-fault insurance that pays out-of-pocket expenses. But rampant fraud means that there is less money in the system and smaller payouts to injured workers.
In addition to a refusal to subscribe, because it means an additional cost in a competitive business, some other common employer fraud scams include:
- Misclassification: This fraud occurs on two levels. Some employers, like Mr. Spratley, label “employees” as “independent contractors” to avoid liability. Others report that workers in a hazardous category, like construction workers, are in a low-risk category to save money on premiums.
- Cash Payments: Other bosses offer to pay medical bills under the table if the injured worker does not file a claim.
- Retaliation: In order to “send a message” to the rest of the workforce, an injured worker is laid off after filing a claim.
Injured workers are entitled to cash payments for their lost wages and medical bills; in some cases, it is possible to sue outside the system and recover additional damages.
Since the system has less money for payouts, it is critical to partner with an experienced workers’ compensation attorney to get your fair share of a shrinking financial pie.