Inadequate Coverage

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High Angle View Of A Person With Fractured Hand Filling Health Insurance Form

Workers compensation insurance keeps employees safe. It protects workers who are injured on-the-job by providing basic benefits like medical care, temporary or permanent disability benefits, supplements, and death benefits. Workers compensation insurance also reduces an employer’s risk of being sued by employees. (It’s really a win-win solution for both parties.)

Felipe Saurez Barocio, 63, of Atwater, Calif., owner of Agriculture Services Inc., and his daughter, Angelita Barocio-Negrete, 34, of Merced are guilty of workers compensation fraud for underreporting their employee payroll by $11 million. (Such a small sum. I bet they thought it would not be detected. Unfortunately for them, that was not the case.)

In California, all employers must provide workers’ compensation benefits to their employees. Barocio did pay for workers compensation insurance; however, he underreported the amount of his company’s payroll to reduce the amount he had to pay to be insured. (So, he essentially did not provide adequate coverage for his workforce.)

California’s State Compensation Insurance Fund (SCIF) filed a claim with the California Department of Insurance alleging potential insurance fraud in October 2019. The claim purported that the owner of the farm labor contracting business underreported their employee payroll to reduce their insurance premium due to SCIF.

An investigation by the California Department of Insurance revealed that Barocio and his daughter, who served as the company’s office manager, provided SCIF with falsified quarterly employee payroll reports. (Fraudsters typically cook the books so they can save some money and have an advantage over competitors.)

It wasn’t just a one-time mistake. The falsified reports were submitted multiple times between 2015 and 2019. During that time more than $11 million was missing from the payroll as compared to the quarterly reports submitted to the Employment Development Department. (Did the dad and daughter duo really think those two organizations would not compare notes?)

Barocio and Barocio-Negrete were both sentenced to 10 years in prison after pleading no contest to six felony counts of insurance fraud each. Consequently, dad and daughter will each serve six years in custody and four years on mandatory supervision. They’ll also have to pay $2.5 million restitution – the amount of workers’ compensation insurance premiums avoided over five years. (It sounds like the justice system has provided adequate punishment for this case of inadequate workers compensation insurance coverage.)

Today’s Fraud of the Day comes from an article, “California Agriculture Company Owner, Daughter Sentenced in $2.5M Workers’ Comp Scheme,” dated February 26, 2021.

Felipe Saurez Barocio, 63, of Atwater, Calif., owner of Agriculture Services Inc., and his daughter, Angelita Barocio-Negrete, 34, of Merced, were sentenced to 10 years after pleading no contest to six felony counts of insurance fraud each.

Both serve six years in custody and four years on mandatory supervision. They were also ordered this week to pay $2.5 million restitution – the amount of workers’ compensation insurance premium they reportedly avoided paying over five years.

 

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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.