In 2007 State Fund discovered Safehome Inc. was under reporting their employee payroll to avoid paying the proper premium. An audit was completed and indicated that Safehome Inc. had failed to pay the proper premiums for their workers’ compensation policy in the amount of $477,285. Additionally, State Fund determined the business was operating out of its classification, and related payroll was never reported to either State Fund or EDD, according to investigators.
“…the three types of most common workers’ comp fraud – injured worker fraud, provider fraud and premium fraud – haven’t changed much…”
Workers’ compensation fraud costs businesses $7.2 billion annually, roughly a fifth of all workers’ compensation payments, according to the National Insurance Crime Bureau.
In the past, it’s been challenging to prosecute workers’ compensation fraud, but recently passed legislation is making it easier for agencies like State Fund to work together to fight fraud. In June, as a result of a joint task force that included State Fund, more than 100 enforcement actions were taken against companies for failure to comply with state contracting, insurance and payroll requirements.
And earlier this year, State Fund partnered with other agencies on a fraud case that resulted in a conviction with restitution orders to both State Fund and the Employment Development Department.