West Virginia Premium Auditor Colludes With Employer
A West Virginia premium auditor who had worked for Brickstreet was charged with fraud. Brickstreet had taken over the monopolistic West Virginia Fund in 2006. The auditor had worked for them since day one.
Please note this is no reflection on Brickstreet as they were the one actually shorted on what amounted to millions of dollars in premium from employment agencies that provided employees to coal mines. All insurance carriers trust their auditors to the nth degree.
As I have posted very often in this blog, we review policies and audits for any overcharges that may possibly be refunded to employers. I have not seen a situation where the insurance carrier’s premium auditor actually reported artificially low numbers and received any type of funds from an employer.
A similar charge and conviction was brought against a “premium consultant” and a South Carolina company owner a few years ago.
The names of the auditor and the companies involved will not be mentioned in this post. You may read further on the subject by clicking on the first link in this post.
There was no grand jury convened to charge the individuals involved with the fraud scheme. There seems to have been some type of plea deal reached as the charges were brought under an information document.
The West Virginia coal industry had been plagued with avoidance of premiums for many years. According to the WV Gazette,“Before the system went private, the issue of workers’ compensation payments for coal contractors was highly controversial, with major producers allegedly creating a web of contract firms to avoid insurance premiums. A decade ago, a series of state lawsuits, backed by organized labor, forced the industry to pay back millions in workers’ comp debts.”
There may be some recovery of premiums from the auditor as “prosecutors are seeking to seize $415,000 they say is traceable to the crimes, including $226,000 in cash from a safe deposit box. The government also is seeking to seize a Dodge Ram truck, a Harley-Davidson motorcycle and a Yamaha ATV, court records show.”
I have not really ever seen any instances of where an insurance company’s Workers Comp premium auditor had been bribed to keep an employer’s premium artificially low. Temporary employment agencies used to be the bane of the Workers Comp system by closing and reopening each year so that their E-Mods would stay at 1.0.
Rating agencies such as NCCI and many of the state-based rating agencies enacted rules that basically eliminated the repetitive open and closing of the same temp agency, but under a new name each time. Their E-Mods or X-Mods now follow them regardless of the name of the company.
All of our temporary employment agency clients are honest, hard-working people. I do not think the actions of a few should taint our view of a much needed service in this lagging economy.
©J&L Risk Management Inc Copyright Notice