Employment Law Blog

News, trends and analysis in employment law and HR

Sep 14, 2017

Wage Replacement is Not a Start-Up Fund: Employee Faces Charges for Operating Insurance Business

Workers’ Comp 

Workers’ Comp exists for a good reason: to aid employees when they have been hurt on the job. It’s a type of insurance that protects not only employees, but employers. But like any type of insurance, it’s subject to fraud. In a recent case involving workers' comp, insurance was actually what helped bring charges of fraud against an employee at a Snohomish County manufacturer.
 
Selling Insurance is Work
Claiming he couldn’t work due to an on-the-job knee injury and after filing multiple injury claims, the employee started receiving wage-replacement checks from L&I. According to the criminal charges, after his injury he opened an insurance company, selling policies and naming himself company president. His attorney notified L&I of the new business and the wage-replacement checks ceased. All fair and good, as workers are required to notify L&I if they start working again.
 
After claiming he was no longer able to operate the insurance business due to the past injuries, he informed L&I, again through his attorney, that he was selling the business. His workers’ comp benefits were reinstated.
 
Investigation Reveals Profits
But an L&I investigation in 2015 discovered that the insurance company had never been sold, and had, in fact, generated profits of more than $800,000. The investigation also revealed that while he was receiving money from L&I, the man had not only sold insurance policies, but personally communicated with clients, vendors and marketing companies and had appeared at sales and corporate meetings.
 
Add that $800,000 to the $233,000 he received in wage-replacement checks, and you have a case for felony fraud. He has pleaded not guilty and his case goes to trial this month.

When you’re a member of the Vigilant Retro group, our team can help spot injured worker fraud, including working while collecting time loss benefits and engaging in inappropriate activities. Check out another fraud story from 2016 where Vigilant assisted with the investigation.

Get help with your workers' comp claims today!

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