Eight Workers Compensation Crimes In Every State
The Workers Compensation crimes listed below denote serious violations. Last week, I posted on J&L being referred to as a rebating company in a presentation at the annual ISO conference. We, of course, are not a rebating company. Rebating is highly illegal. I received questions on what other crimes are involved with Workers Comp. I decided to cover some of the crimes that involve Workers Compensation premiums.

Rebating – An agent or broker “rebates” part of his/her commission back to the employer to obtain the employer as a client
Twisting – A person shall not make any statement that is known, or should have been known, to be a misrepresentation· to any other person for the purpose of inducing, or tending to induce, such other person either to take out a policy of insurance, or to refuse to accept a policy issued upon an application therefore and instead take out any policy in another insurer, or
· to a policyholder in any insurer for the purpose of inducing or tending to induce him or her to lapse, forfeit or surrender his or her insurance therein.
· A person shall not make any representation or comparison of insurers or policies to an insured which is misleading, for the purpose of inducing or tending to induce him or her to lapse, forfeit, change or surrender his or her insurance, whether on a temporary or permanent plan.
Churning – Refers to the excessive buying and selling of policies by your broker, for the purpose of generating commissions and without regard to your insurance objectives.

Payroll Underreporting – An employer that intentionally does not report all payrolls to their insurance carrier or that pays wages in cash (under the table) to employees to subvert the Workers Comp premium process and the tax system. The IRS is cracking down very heavily on these employers.
Listing Employees as Subcontractors – An employer will list multiple employees as subcontractors as a method to avoid paying payroll taxes and workers compensation insurance. A quick test to see if the subcontractor is legitimate is by the subcontractor producing a certificate of insurance. The IRS has a list of very specific rules for the classifying between employees and subcontractors for taxing purposes.
Intentional Employee Misclassification – An employer intentionally lists an employee with a NCCI or state rating bureau classification code that results in a smaller premium for that employee.
Bid Rigging – Involves a conspiracy of brokers, advisers, TPA’s or insurance carriers to manipulate the market. There is a violation of antitrust and racketeering laws through a scheme that rigs bids for insurance policies and steering customers to certain carriers in return for payments or kickbacks.
Related: FREE Workers Compensation Insurance Definitions with Glossary
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