Is Your Company a Victim of Workers' Compensation Insurance Fraud?
If you believe that your company is a victim of workers' compensation fraud, contact a Los Angeles workers' compensation fraud attorney at Sacks and Zolonz, LLP. Workers' compensation fraud is harmful to insurers and employers and dishonest employees should be held accountable for their actions.
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Is Your Company a Victim of Workers’ Compensation Insurance Fraud?

April 26, 2019
Sacks & Zolonz, LLP
Workers’ Compensation Fraud

According to the Federal Bureau of Investigation, numerous California companies and companies in other states may be victims of workers’ compensation and other types of insurance fraud. So far the FBI alleges that the Clovis-based, American Labor Alliance has provided fraudulent insurance policies to more than 1,000 already identified victims, but they suspect that there may be many more victims in this scheme that have yet to be identified. Recently, the FBI issued a press release seeking to identify victims of this insurance fraud scam. As Los Angeles workers’ compensation fraud attorneys know, when employers are innocent victims of insurance fraud, the consequences can be severe, especially when they rely on workers’ compensation coverage that actually provides no coverage at all.

FBI press release

The FBI issued a press release in late January seeking to identify businesses that may be victims of an alleged workers’ compensation insurance, health care insurance, and pension plan scheme. The press release stated that the American Labor Alliance and two executives were charged earlier this year with mail fraud, conspiracy to commit mail fraud, and money laundering. Among other allegations, the court documents allege that the defendant and its subsidiaries sold purported workers’ compensation coverage that may actually offer no coverage at all. The FBI recommends employers that purchased policies from American Labor Appliance or one of its subsidiaries should verify that their insurance policies are actually valid and that they provide the coverage promised.

History of the case

Several years ago, the California Department of Insurance ordered the American Labor Alliance to cease operations. It issued a $4.3 million penalty against the firm for selling workers’ compensation and liability policies without proper licensing. The American Labor Alliance and its subsidiaries have reportedly been selling fraudulent insurance policies since at least 2011.

Workers’ compensation insurance fraud

Fraudulent workers’ compensation policies that do not actually provide workers’ compensation coverage can obviously be extremely harmful to unsuspecting employers, but other, more common types of workers’ compensation fraud can be harmful as well. See below for some common workers’ compensation fraud scenarios.

  • Employees injured on the job claim that their injuries are more severe than they actually are in order to collect additional benefits that they do not deserve such as more paid time off.
  • Employees faking injuries that never occurred in an attempt to collect workers’ compensation benefits.
  • Employees claiming that their injuries occurred on the job when in fact, their injuries did not take place at work, so that workers’ compensation insurance covers their injuries instead of their own health insurance.

If you believe that your company is a victim of workers’ compensation fraud, contact a Los Angeles workers’ compensation fraud attorney at Sacks and Zolonz, LLP to discuss your case. Proving workers’ compensation fraud can be difficult for employers, but experienced workers’ compensation fraud attorneys who know the law and are familiar with fraudulent workers’ compensation tactics can make proving your case much easier. Workers’ compensation fraud is harmful to insurers and employers and dishonest employees should be held accountable for their actions.

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