A Pflugerville, Texas, landscape company pleaded guilty March 21 to misrepresenting its payroll so it could pay less for workers’ compensation coverage, according to the Texas Department of Insurance.
Jammers Groundscapes entered the plea in a Travis County District Court and was ordered to pay $400,000 to Texas Mutual Insurance Co., the workers’ compensation carrier. The conviction resulted from a Texas Mutual investigation.
The Texas Department of Insurance, Division of Workers’ Compensation’s (DWC) prosecution unit obtained the conviction. The DWC prosecution unit is embedded in the Travis County District Attorney’s Office and was created during the 85th Texas Legislature.
Workers’ compensation premiums are based on an employer’s payroll, job classification codes, and the employer’s past losses which are used to estimate future losses. Manipulating or misrepresenting one or more of these factors to get lower rates is premium fraud.
From 2009 to 2015, Jammers Groundscapes defrauded Texas Mutual by concealing payroll associated with a related company that didn’t carry workers’ compensation insurance. This misrepresentation of payroll resulted in a lower workers’ compensation policy premium.
“When dishonest companies commit premium or payroll fraud, they can put their employee’s coverage at risk,” Tim Riley, DWC’s deputy commissioner of Compliance and Investigations, said in TDI’s announcement. “It’s also a way dishonest businesses can gain a business advantage over ethical companies that are paying the full cost of their premiums.”
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