It’s A Sign of Fraudulent Times

Construction worker has an accident while working

According to the National Academy of Social Insurance, employer costs for workers’ compensation totaled more than $96.5 billion in 2016. While most workers’ compensation claims are considered to be legitimate, the Department of Labor estimates that between one and two percent of all workers’ compensation claims are fraudulent. A man from Sugar Land, Texas who recently committed workers’ compensation fraud is one of the reasons why those employer costs are so high.

The Social Security Administration states that workers’ compensation was the first type of social insurance to spread widely in the United States. It is intended to provide cash and medical care for those who are unable to work due to a work-related injury. In exchange for receiving benefits after an on-the-job injury, employees or family members of workers who died from a work-related incident agree not to sue the employer for damages. (How about the right for employers to sue employees who submit fraudulent workers’ compensation claims? That seems fair don’t you think?)

 The Texan in today’s fraud case reported an on-the-job injury while he was working as a sign installer for a Houston company that manufactured custom interior and exterior graphics. Even though he stated he could not work as a result of the injury, he was double-timing his company by working as an installer for another sign company. (Unfortunately, his actions are a sign of our fraudulent times.)

The insurance company paying the Texas man’s benefits eventually discovered his workers’ compensation fraud scheme. He pleaded guilty to workers’ compensation fraud and was sentenced to state jail with five years deferred adjudication. He also has to write a restitution check for $26,471.43 to the insurance company.

In the end, it’s the employer who has to pay higher premiums to cover the costs of fraudulent acts such as in today’s case. Fraud causes employers to lose money because they have to absorb the loss. Eventually, this raises costs for consumers and potentially lowers salaries for future workers. Let’s hope that today’s successful prosecution and conviction will be a sign of fewer workers’ compensation fraud cases to come.

Today’s “Fraud of the Day” is based on an article, Man Sentenced for Workers’ Comp Fraud Must Pay $26.4K to Texas Mutual, published by Insurance Journal on June 3, 2019.

A man sentenced for workers’ compensation fraud must repay Texas Mutual Insurance Co. more than $26,000, a Travis County district court said.

According to Texas Mutual, Ricky Allen Martinez of Sugar Land, Texas, reported a job-related injury while working as a sign installer for Graphtec Inc., in Houston, and claimed he was unable to work because of his injury. Texas Mutual began paying income benefits to him, but then discovered Martinez was working as an installer for another company.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.