By Jeff Baker, Program Administrator, BWC Special Investigations Department
Several of our earliest blogs in this Fraud Awareness Series addressed the critical topic of employer fraud. In “Turning a blind eye to the pot: Employers that operate without coverage,” dated August 10, 2011, we advised readers:
“Ohio law requires employers with one or more employees to obtain workers’ compensation coverage. Noncompliant employers are responsible dollar for dollar for claim costs incurred during a non-covered period.”
This point is certainly worthy of emphasis and reiteration. More than four years later, we continue to close investigations in which we have found employers failed to maintain coverage while employees sustained work related injuries or illnesses. Eventually, their noncompliance would have been detected and investigated without the filing of a claim. However, just one employee’s injury or illness immediately identified the employers as noncompliant. Yes, some of owners and operators initially tried to float an alibi: asserting that the injured employee wasn’t really an employee, just a “volunteer” or a “contracted laborer”. But, of course, truth being the truth – and given the knowledge, skill and experience of our fraud analysts and special agents – the facts disproved the lies. And an employer’s deceit proved the fraud.
Why did the owners and/or leaders of these organizations operate without coverage? Why did they make the unwise decision to incur such risk?
Well, greed is the simplest answer. However, a more full explanation is that the noncompliant owners or operators sought to maximize short-term profitability. Their short-term thinking resulted in short-sighted vision and a failure to recognize future risks – risks that were wholly unnecessary and avoidable. Ultimately, by their noncompliance and incurring dollar for dollar for claim costs, they dramatically increased their operating costs and decreased their long-term profitability. Short-term thinking generated long-term losses.
These noncompliant employers also subjected themselves to criminal and civil proceedings, such as felony workers’ compensation fraud charges, liens and injunctions. These outcomes were probably not consistent with the established vision or mission statement for their business. Moreover, the notoriety they experienced at the point of their criminal sentencing likely did not help them achieve their local marketing and promotional goals.
This was likely the case when Ayed Kanaan, owner of Yaya Food Mart in Cleveland (Cuyahoga County) was sentenced recently after he pled guilty to operating without workers’ compensation coverage. Kanaan did not maintain his coverage even after BWC attempted to work with him to bring the business back into compliance with state law. He will be responsible for the entire cost of a claim that was filed when he didn’t have coverage. Kanaan received a 90 day suspended jail sentence, one year of community control and was ordered to pay restitution in the amount of $7,477.
By their short-term thinking and short-sighted vision, non-compliant employers are blinded to the truth that criminal behavior is never a viable business strategy.
Did you know?
For more information about employer fraud, see page 4 of our Special Investigations Department Fiscal Year 2015 Annual Report.
What you can do.
You can determine if an employer operating in Ohio has workers’ compensation coverage by visiting BWC’s online employer lookup at: https://www.ohiobwc.com/provider/services/mcolookup/nlbwc/default.asp.
If you suspect that an employer is operating without workers’ compensation, let us know. You can report it online at http://bit.ly/reportfraud or you can speak with a fraud hotline agent by calling 1-800-644-6292.