Workers’ Compensation Fraud Investigation Nets 32 Westchester Business Owners

ALBANY, NY (06/21/2007)(readMedia)-- New York State Workers’ Compensation Board Chair Donna Ferrara and Fraud Inspector General John H. Burgher today announced the arrests of 32 Westchester County business owners on charges of workers’ compensation fraud.

It is the largest sweep of its kind since the creation of the Office of Fraud Inspector General in 1996.

The employers are accused of falsely affirming in affidavits submitted to the Workers’ Compensation Board that they have no employees. Under New York State law, business owners who have employees are required to secure workers’ compensation insurance to cover workers injured on the job.

The arrests by New York State Police in Hawthorne followed a three-month Workers’ Compensation Board investigation that included reviews of records, site visits, interviews and video surveillance. The investigation, supported by the Westchester County District Attorney’s office and the Westchester County Health Department, revealed that the 32 business owners had not purchased workers’ compensation insurance for 84 employees.

“These arrests represent the Workers’ Compensation Board’s commitment to eliminating fraud in New York State,” Ferrara said. “When an employer refuses to protect its injured employees by securing workers’ compensation insurance, the state’s honest employers must pick up the tab.”

Each of the business owners is charged under state workers’ compensation law and state penal law with fraudulent practices, a Class E felony; first degree offering a false instrument for filing, a Class E felony; and failing to secure Workers’ Compensation benefits for employees, a misdemeanor. The crimes are punishable by up to four years in prison.

“Workers comp fraud is a felony in New York State,” Burgher said. “We are confident that these arrests will send a clear message that we are aggressively looking for employers who don’t abide by our workers’ compensation laws.”

The Board has levied a total of $550,000 in penalties, which were calculated at $250 for every 10 days the employers were out of compliance prior to April 12. Following that date, a key piece of Governor Eliot Spitzer’s workers’ compensation reform initiative became effective, raising the penalty to $1,000 for every 10 days out of compliance. The employers were assessed the higher penalty for noncompliance after April 12.