Fraud of the Week:
Workers Comp Fraud – California
Amount: $234,000
Two owners of a trucking company have been charged with multiple counts of insurance fraud after deliberately misclassifying employees as independent contractors in order to avoid paying more workers compensation premiums. Payroll was underreported by $1.4 million, resulting in a loss of $234,000 to the insurer and $200,000 to the Employment Development Department.
The men had reported payroll as being $105,811. Upon an audit from the State Compensation Insurance Fund it was discovered that several employees were misclassified as independent contractors. Upon further investigation, it was discovered that $1,436,387 in unreported payroll was from these independent contractors.