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Workers Compensation Crimes – Eight Important Definitions


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.

Clipart of man chained wrecking ball Workers Compensation Crimes Rebating Company
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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.

Clipart of lady holding money with building backgrounds Workers Compensation Crimes Highly illegal
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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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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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