Playing by the Rules   

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File with focus on the text Disability Insurance and blur effect. Concept of individual protection.

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.

 

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.