The New York State Supreme Court Grand Jury recently issued a report examining
the New York worker's compensation insurance system and the potential
for fraud and misuse. The Grand Jury issued their report after the District
Attorney's Money Laundering and Tax Crimes Unit investigated the origin
of false information provided to the New York State Insurance Fund.
The New York Workers' Compensation Law was created to provide for employees
that are injured in the workplace. The program also protects employers
from potential lawsuits, as they use the insurance to pay out the costs
of injury to harmed employees. The New York State Insurance Fund handles
about 40% of all worker's compensation insurance accounts, and the
worker's compensation insurance business generates about $6 billion per year.
Recently, the Manhattan District Attorney's Office was made aware of
insurance premium fraud that has been permeating the worker's compensation
insurance industry. This fraud gives insurance companies a competitive
advantage over other businesses. At the same time, it deprives workers
of needed protections and benefits in the event of an injury. The New
York laws mandate that every employer in the state obtain worker's
compensation insurance in order to hire employees. The New York Compensation
Rating Board determines the individual employer's premium.
The rates also vary depending on the safety risks at the business. A safe
job in an office will inevitably have a lower rate than the rate for an
employer at a construction site. Some employers will misclassify employees
so that they can reduce the rates that they have to pay on worker's
compensation insurance. For example, an employer can list an electrician
as a secretary, or report that a construction worker is really a blueprint
designer in the office. This can lower the premium significantly, but
it can cause serious issues if an employee happens to be injured on the job.
Investigators believe that the New York City construction industry in 2011
cost the City and State about $500 million based on worker misclassifications.
When employers misclassify their employees, it results in catastrophic
issues that can damage not only the employee but also consumers and taxpayers.
The Manhattan District Attorney's Money Laundering and Tax Crimes Unit
has recovered approximately $4.8 million from criminal defendants who
have pleaded guilty to violating worker's compensation laws. Still,
the Grand Jury thinks that more needs to be done. The Grand Jury suggests
that there are:
- Increased penalties
- Increased transparency
- Broader data collection and collaboration
- Broader education for employees
The grand jury hopes that these suggestions will be implemented to help
improve the workers' compensation system in New York City and protect
workers. At Katz Leidman Grossman Wolfe, & Freund, we are impressed
with this report and hope that it will reduce employer abuse of the worker's
If you have been injured in a New York work accident and are seeking a
settlement based on your workers' compensation, don't hesitate to
contact a New York workers' compensation attorney at our firm today. With
the right lawyer on your side, you can argue for your rightful compensation
after an injury. Don't hesitate to talk with our professional team
to get more information about the Grand Jury's decisions and how worker's
compensation insurance fraud may be affecting your ability to achieve
the compensation you deserve!