Running a company takes a great deal of responsibility. Owners have obligations to investors and employees. One of the most important obligations is to carry workers’ compensation.
Recently, an unlicensed workers’ compensation agent took advantage of unsuspecting business owners, defrauding them out of millions. It is important to know that there are measures you can take to protect your business.
Consult the Los Angeles workers’ compensation defense attorneys of Sacks Law Group, APC to discuss preventative measures you can take to safeguard your company. You can contact us for a consultation of your case by clicking here or calling 310-216-7778.
Companies Defrauded Out of Millions in California Workers’ Compensation Premiums
An unlicensed insurance agent, Karyl Lynn Reed, was recently taken into custody on multiple felony counts of embezzlement, forgery, and grand theft. The 57-year-old former Costa Mesa resident was found in Seabrook, Texas.
According to police documents, Reed ran two companies, Envoy Business Partners and Allenn Specialty Group, CDI. She allegedly used those companies to produce fraudulent certificates of insurance, tricking companies into believing they had workers’ compensation insurance while pocketing the premium payments.
The California Insurance Commissioner, Ricardo Lara, said her “actions put these businesses owners’ livelihoods at risk by stealing their money and leaving them uninsured.”
What Can You Do to Prevent Workers’ Compensation Insurance Fraud
Insurance fraud is a multi-billion-dollar industry. Fraud can occur anytime, whether you are purchasing workers’ compensation insurance from an agent or filing a claim for an employee.
The National Association of Insurance Commissioners has estimated that:
- Fraud costs consumers between $400 and $700 a year in premiums
- Workers’ compensation fraud costs employers nearly $6 billion a year
- Insurance fraud has increased by 75% since 2014
The organization also found that premium diversion is the most common form of insurance company fraud. Premium diversion refers to an agent or broker keeping the premium payments rather than paying the insurance company.
Fraudulent activity cannot always be prevented. However, there are warning signs, including:
- The insurance company’s contact information is difficult to find and not freely given
- The insurance agent uses high-pressure sales tactics
- The premiums offered are between 15% and 20% lower than their competitors
Your company is import. Workers’ compensation fraud increases exponentially during strained economic times, especially if your industry is considered high-risk. If you want to mitigate your risk and exposure to fraudulent activities from insurance companies, agents, or employees, call Sacks Law Group, APC, for a consultation.
Consult Our Los Angeles Workers’ Compensation Defense Attorneys
Fraud affects millions of companies every year. While there is no fool-proof method to prevent fraudulent workers’ compensation claims or insurance, there is help. A workers’ compensation defense attorney can discuss your concerns and strategize ways to reduce your risk.
At Sacks Law Group, APC, our dedicated legal team has the knowledge and experience to protect your best interests. Schedule a case evaluation today by clicking here or calling 310-216-7778.
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