Posted On: April 23, 2007, 1:30 pm CDT

Posted By: media mogul

This story is very poorly reported by IJ because it does not specify the mechanisms of fraud and deceit used in this case.

Employee leasing firms are often Ponzi schemes--assuming huge liabilities/ deductibles/ SIRs, rating plan debits, etc. on group health and workers compensation/employer's liability, not to mention for policies that supposedly cover their special liabilities as co-employer, etc. I won't have anything to do with them. I've been in meetings in the past with leasing co. financial people and watched them try to deny or otherwise ignore or sweep under the carpet such vital issues as claims development and IBNR--trying to recruit others into lying to proppsective insurers as they lied to their bankers. Unsavory--to say the least.

If things go ok, they survive and some prosper to become model citizens. Too often they end like this. These people merely seem to have gotten a head start on removing assets from the company--perhaps it was their intention from the start--the facts should come out in prosecution.

More effective regulation is certainly needed--otherwise this is just another "success" story for the "free" market. Perhaps some liabilities will be uncovered in litigation that will lead to some recovery for the victims--perhaps some unwise insurers are paying WC claims during the time they (may have) hsd real WC coverage--otherwise, it's once again average citizen taxpapyers having to pay up for damage done by yet another set of heroic entrepreneurs, such as those with Enron....bet the local newspaper society columns thought that these people were so great...

Note to employers: Don't use less than stellar and established employee leasing companies in an atemptget around an uninsurable group or bad workers compensation rcord. Man up, or get out.