Feds lower boom on alleged mining workers’ comp fraud scheme

On Behalf of | Mar 5, 2013 | Workers' Compensation

Workers’ compensation is supposed to be the safety net that makes sure Pennsylvania workers and their families are protected from the disastrous effects of workplace accidents. When someone is injured on the job, they and their loved ones need the confidence that their employer has fulfilled their obligation of providing adequate worker’s compensation insurance coverage. Without it, people can be cast into destitution.

Despite laws that mandate such coverage, however, some businesses look to skirt their obligations. There are even instances in which employees for the insurance companies contracted to provide compensation coverage undermine the system for their own gain. This can be particularly deleterious if the coverage is eroded in a high-risk industry.

Just such a case has been unfolding in recent weeks in West Virginia. Federal prosecutors in Charleston have charged five men in connection with a scheme to defraud BrickStreet Insurance of premiums it was due for workers of several temporary staffing companies who provide workers for coal mining in the state. Four of the men ran staffing companies. The fifth was an auditor for BrickStreet.

According to the records of the case, the four staffing companies underreported their employee numbers and the auditor allowed it. In return, the companies allegedly paid the auditor bribes and gave him gifts. Prosecutors say the activity started in 2006 and went on for more about five years. In all, officials say the auditor received some $415,000 in cash. Gifts included a pickup truck, a motorcycle and an all terrain vehicle.

In announcing the filing of charges, the federal prosecutor in Charleston said he acted for the benefit of mine safety in general. He noted that mining employers who cheat the workers’ compensation system only cheat employees who risk their lives daily performing dangerous jobs.

In addition to the fraud charges, prosecutors are accusing the employers of trying to evade taxes by underreporting wages paid and by paying a large number of workers in cash.

Source: Williamson Daily News, “Local mining contractors charged with fraud, tax evasion,” Julia Roberts Goad, Feb. 14, 2013