According to the California Department of Insurance, the landscaping company underreported wages in an attempt to unlawfully save on insurance costs, a common tactic used by employers to avoid paying required premiums. Employers are required to accurately report their employees’ job classifications and the amount of payroll expended to ensure proper workers’ compensation coverage.
Businesses that fraudulently lower their premiums gain an unfair market advantage, allowing them to charge less for labor and underbid competitors who pay appropriate premiums. The San Diego County District Attorney’s Office is prosecuting the case.
About Insurance Fraud
Insurance fraud is any act committed with the intention of defrauding an insurance process. This type of fraud can occur when a claimant attempts to obtain benefits or advantages to which they are not entitled, or when an insurance provider knowingly denies benefits that are rightfully due. Fraudulent insurance claims are those filed with the intent to deceive the insurance company. Common schemes include premium diversion, fee churning, asset diversion, and workers compensation fraud, and perpetrators can be either insurance company employees or claimants.
Insurance fraud has been present since the inception of insurance as a commercial enterprise and accounts for a substantial portion of all claims received by insurance companies. This type of fraud costs billions of dollars annually and comes in various forms, affecting all areas of insurance. The severity of insurance crimes varies, from minor exaggeration of claims to deliberate accidents or damage. Fraudulent activities not only directly impact innocent individuals through accidental or intentional injury or damage, but they also indirectly affect others by leading to higher insurance premiums. Insurance fraud is a significant issue, and governments and other organizations make efforts to deter such activities​.
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