Another Criminal Conviction For Premium Avoidance

A California employer got a rather unpleasant Halloween trick--he was convicted of defrauding his Workers Comp insurer of $52,000 in premium. His sentence is 364 days in jail and thee years probation.

More and more often, employers who have improperly shaved their Workers Comp premium charges face the threat of criminal prosecution. This may come as a shock to some old school employers, who have occasionally taken a sort of "all's fair in love and Workers Comp" approach to their insurance costs.

Of course, I have yet to hear of an insurance company executive facing reciprocal criminal penalties, even though insurance companies do overcharge employers with some regularity. Mind you, it's not that I condone premium fraud by employers--just the opposite. But many in the insurance industry have got a very selective sense of moral outrage when it comes to Workers Comp insurance premiums.  Mistakes that lower premium are viewed with great suspicion of criminal intent, while mistakes that increase premiums are honest mistakes.

Most overcharges we find really do appear to be genuine mistakes--but they are mistakes that could be greatly reduced, if insurers only gave as much effort to catching mistakes that increase premiums as they do to catching mistakes that lower premiums. And some of our recent projects have identified at least some insurers who appear to be doing something more systemic and deliberate with certain kinds of mistakes. We can't talk about those things publicly yet, but sometime in the near future some of these things may be reported in the press, at least in the insurance trade press.