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At an Aug. 2 Cabinet meeting, Florida CFO Jeff Atwater announced the creation of a working group to review the practices of some in the check cashing services industry involved in workers’ compensation premium fraud.

According to Atwater, organized criminal enterprises set up shell or fake companies and obtain a minimal workers’ compensation insurance policy. Uninsured contractors pay a fee to use the shell policy and then present a copy of the shell certificate of insurance to a general contractor. The fraudsters often get the job because they are able to underbid honest contractors by removing the cost of workers’ compensation insurance from their expenses. The schemers use money service businesses to cash the checks made out to the shell company.

Florida law generally requires every employee in the construction industry to be covered by workers’ compensation insurance. The effect of this scheme is that workers are left unprotected and honest employers suffer from an uneven playing field.

The working group will include representatives from the CFO’s Division of Insurance Fraud, the Office of Financial Regulation, the Attorney General’s Office, and the construction and money services industries. Atwater said the group will develop recommendations and present them to Gov. Rick Scott and the Cabinet in late fall.

Florida has an insurance fraud hot line at 800-378-0445. Individuals who provide tips can remain anonymous and are eligible for a reward of up to $25,000 for information that directly leads to an arrest and conviction in an insurance fraud scheme. The Department of Financial Services to date has awarded almost $250,000 to approximately 40 citizens as part of the program.

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Florida CFO Announces Effort to Fight Work Comp Fraud

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