Welcome to the
Fraud of the Day Website!

Playing by the Rules   

File with focus on the text Disability Insurance and blur effect. Concept of individual protection.
Senior Director of Strategic Alliances
LexisNexis Risk Solutions - Government

The New York Workers’ Compensation Board requires virtually all employers in the state to provide workers’ compensation coverage for their employees. Consolidated NY Services, Inc. of Brooklyn kind of complied with that requirement, but the labor broker neglected to provide a few key details when signing up for coverage. Long story short, the company falsified a workers’ compensation insurance application that was submitted to the New York State Insurance Fund (NYSIF), so they could receive a lower premium. (That is just not fair to companies who play by the rules.)

Rules provide a baseline for understanding an agreement. The rules of purchasing a workers’ compensation insurance policy include telling the truth about payroll and the industry in which the company works. (The more money that is paid in payroll, the higher the premium for workers’ compensation insurance. Make sense?) Over nearly two years, Consolidated NY Services Inc., which supplies labor to construction companies in New York City, submitted false information about its annual payroll and the type of work performed by its employees. (These are important details that the NYSIF needs to calculate insurance premiums.)

Consolidated claimed that it had a total annual payroll of less than $30,000 and provided commercial cleaning services. The company actually provided workers for the construction industry and the total annual payroll was way more than $30,000. (The person who filled out the application didn’t lie just a little, but a lot.)

The deceptive application enabled the company to receive workers’ compensation insurance through NYSIF at a much lower price. (This creates an unfair advantage for honest companies that pay the right amount for their workers’ compensation coverage. Deceptive companies can charge a lower price and win more work because their expenses are lower.) As if that were not bad enough, Consolidated did not submit its books and records for review when requested by NYSIF’s auditors. (If that wasn’t a red flag, I don’t know what is.)

Consolidated NY Services Inc. pleaded guilty to one count of Insurance Fraud in the Second Degree, a class C felony. (A class C felony in New York is a lesser felony charge but it can result in high fines and incarceration up to ten years.)

NYSIF’s mission is to provide affordable workers’ compensation insurance to New York employers, not provide a means for employers to pad their bank accounts. A negotiated plea deal allowed the company a conditional discharge upon payment of $75,000, the actual amount of the fraud, to NYSIF. (A conditional discharge means that the company will not be punished unless another crime is committed.) Let’s hope that Consolidated understands how lucky they are and follows the rules from here on out.

Today’s Fraud of the Day comes from an article, “Construction labor broker convicted of Workers’ Compensation insurance fraud,” published by Brooklyn Daily Eagle on January 19, 2022.

Consolidated NY Services Inc. of Brooklyn, a labor broker in the construction industry in New York City, pleaded guilty recently to one count of Insurance Fraud in the Second Degree, a class C felony.

Consolidated was convicted of falsifying an application for workers’ compensation insurance that was submitted to the New York State Insurance Fund (NYSIF), which has a mission of providing affordable workers’ compensation insurance to New York employers.

 

Related Articles

Get Your Fraud Fix!

Five days a week wake up to the most current fraud article in your inbox

Contact Us

Thank you for your interest in Fraud of the Day. For more information, please complete the following form.
To receive the most current fraud articles direct to your inbox, click the Subscribe button above.

"*" indicates required fields

Hidden
Would you like to subscribe to our Blog?
We respect your privacy.
This field is for validation purposes and should be left unchanged.

SUBSCRIBE TODAY

Fill out the form below to receive the Daily Fraud Highlight, the Weekly Fraud Summary or both. Thank you for your interest in FraudoftheDay.com.

"*" indicates required fields

Name*
Subscription Type*
This field is for validation purposes and should be left unchanged.