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Pennsylvania Risk Manager Pockets $490,000

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Pennsylvania Risk Manager Bills His Own Employer

A central Pennsylvania county Risk Manager is able to illegally bill his own employer – Dauphin County – twelve times over five years.  The amount of money that was embezzled was a staggering $490,000.  The most amazing conclusion was that no one checked on the bills.  They were just rubber stamped and paid.

Picture Of Man Risk Manager Looking At Line Graph
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The first $120,000 was actually billed to a TPA, Inservco Insurance Services.  The Risk Manager billed from a shell company that he created in 2007.  The Risk Manager then approved the payments through the TPA.   I would have thought this would have possibly been very hard to catch as the TPA had been billed for the services.

The next $370,000 is a different story.  This is where I think that any oversight would have at least raised questions.  The Risk Manager then billed the county directly.  The amount billed to the TPA must have been large enough to cause  the RM to bill the county directly so as to not raise any eyebrows.

There were many inconsistencies and red flags that should have been discovered:

  • The bogus company was generically named Risk Management Associates of PA.

    Man Risk Manager Sitting On Couch Thinking
    StockUnlimted
  • There were 12 checks in all averaging over $40,000 each.  I wonder if that was below some signing authority such as $50,000 per check.
  • This happened over five years – if someone would have just investigated the bogus company, the RM’s wife was the owner as registered with the State of PA.
  • $100,000 per year is quite a large amount of funds to go completely unnoticed.  I am wondering if the County Comptroller at least asked for an IRS W-9 form for vendors.
  • I am assuming there are no audits by an outside accounting firm.  This would have stopped the scheme very quickly.

Dauphin County will very likely have employee dishonesty coverage as part of their GL (general liability) insurance package.  I am not sure this would be covered under that type of policy.

As the RM was not convicted, I left his name off this post.  You can follow the link for that information.  I will follow up on the story if there are any more articles written on this matter.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt 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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