Workers' Compensation Insurance Fraud

Crackdown On Workers Compensation Fraud Cases Punishes Business Owners Without Workers Compensation Insurance: Two recent cases where business owners fail to maintain workers compensation insurance are showing that law officials will not stand for businesses that commit workers' compensation fraud and violate state law.

A California couple have been sentenced to jail time and extensive fines as the result of tax evasion and workers' compensation insurance fraud. Lonnieta and Kevin McCallum both were sentenced to 40 days each in jail by Judge Marla Anderson who decided the case Monday, October 15th of 2012. Kevin McCallum was placed on felony probation and ordered to pay $20,000 in fines in addition to the jail time, and Lonnieta has paid $10,000 in fines and is currently on in informal probation for the duration of the next three years. The couple were charged with intent to evade taxes, failure to register as an employer, and failure to secure workers' compensation insurance.

The couple unsuccessfully avoided securing and maintaining workers' compensation insurance and paying payroll taxes in their laundry business, Sudz Cyber Laundry, by classifying employees as independent contractors. When several of the workers attempted to collect unemployment benefits after being fired, the injustice came to light, and the investigation by Monterey County District Attorney Dean Flippo began. The couple could have potentially faced up to three years in prison for their efforts to evade paying taxes and their failure to procure the necessary insurance for their business.

Another similar instance involving failure to obtain workers compensation insurance for employees is the case of Lisa Hart in Ohio, the owner of Emergency Pet Clinic. Hart was charged with three cases of fraud when she allowed the policy to lapse in 2003 after she failed to file the necessary paperwork and pay the coverage premium. Hart bought the business in 1996 and when the policy lapsed in 2003, Hart began avoiding calls from agents attempting to get the business current.

Hart was sentenced on September 24 to five years of probation, which replaced the initial punishment of one year of incarceration. She was also ordered to pay fines and restitution on the amount of $21,023.27. In this case as well, employees had filed injury claims during the period when Hart did not have workers' compensation insurance and then discovered that there was no insurance.

Actions to Take When a Workers' Compensation Insurance Law is Violated

Workers' compensation insurance is required by law. Contacting a workers' compensation attorney should be one of the first steps when suspecting that a violation has occurred. Because laws regarding workers' compensation can vary from state to state, the aid of an attorney with expertise in this area can prove to be crucial in making a case. Suspecting that an employer does not have workers compensation insurance should lead an employee to contact a workers' compensation attorney and the state workers' compensation board. A workers compensation attorney can assist in determining how your state regulates workers' compensation insurance and how to best proceed with your case. Uninsured employers who refuse or are unable to pay for an employee's medical claim can be taken to civil court and should be held accountable for failure to abide by state law.

ABOUT THE AUTHOR: James M. Hoffmann
Attorney James M. Hoffmann concentrates his practice in workers compensation and personal injury. For more than 20 years he has been aggressively and effectively protecting the rights of injured workers in and around the St. Louis, Missouri, area. James graduated from St. Louis University’s John Cook School of Business and then attended the St. Louis University School of Law. He is a member of the Missouri Bar Association and Missouri Association of Trial Attorneys. We provide an unwavering dedication to serving our clients and establish long-term successful relationships helping those in need of legal assistance.

Copyright Law Office of James M. Hoffmann
More information about

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

Find a Lawyer

Find a Local Lawyer