Tuesday, July 8, 2014

California Business Owner Arrested And Charged For Deliberately Failing To Get Workers' Compensation Insurance

There is more pressure on businesses to get employees covered for workers' compensation insurance, and in some cases are being charged with workers' compensation insurance fraud for deliberately failing to get the insurance or for asking employees or workers to state that the injury did not occur at work.

On June 24, 2014, a plumbing contractor, Tim Shelley, was arrested on felony charges of workers' compensation insurance fraud and grand theft filed by the Humboldt County District Attorney's Office.  The California Department of Insurance investigated and alleged that Mr. Shelley's business Tim's Plumbing deliberately failed to obtain workers' compensation insurance for his employees. It was also alleged that there were instances in which employees were injured and were discouraged from claiming workers'compensation benefits. As a result, it was alleged that severely injured workers were unable to afford their medical costs for treatment and suffered significant financial hardships.

Under Insurance Code Section 1871.4 it is illegal for an employer or his agents, such as supervisors or foremen, to make misrepresentations to deny or discourage an injured worker from receiving workers' compensation benefits.  It is considered a violation of this statute if an employer:
  • asks or tells an employee or worker that an injury did not happen at work,
  • asks or tells an employee or worker to use health care insurance to cover the work related injury, or
  • asks or tells an employee or worker to tell the hospital or doctor that the employer is self-insured and that the employer will pay directly pays all hospital or doctor bills directly

Compliance.  We have been brought in cases where employers have not been compliant with the laws and there is an interim period of handling uninsured workers or independent contractors who are not properly classified or have been injured. In these cases, we assist the employer in handling the outstanding claims while workers' compensation insurance is obtained.  In these cases, we handle any requests for interviews or statements since we do not want anyone at the company to incriminate themselves or build a case against themselves.

Investigations by Department of Insurance and Carriers.  One reason the counties are prosecuting these cases is that there are special units, funded by the insurance companies and policy fees, that are given grants to file these cases.  Even small cases are being filed. It is important not to take these investigations lightly and to understand the investigations are criminal and civil. If there is a request for an interview or records, do not handle this yourself and seek experienced counsel to represent you. Anything anyone states is evidence and can be used as an admission. The point is to handle the investigation without creating evidence that will be used to charge anyone.

Posted by Tracy Green, Esq.
Phone: 213-233-2260
Email: tgreen@greenassoc.com


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