A federal bankruptcy court ruled that Dallas businessman Aharon Chen and A.C. Painting Inc., his now-bankrupt company, defrauded more than $3 million from Texas Mutual Insurance Co., a workers’ compensation provider. Chen was ordered to pay $1.3 million and attorney’s fees to Texas Mutual. In addition, the court upheld the company’s claim against Chen’s business’ bankruptcy estate for another $2.5 million, plus attorney’s fees and interest. Texas Mutual investigators found that Chen reportedly classified some 100 employees on his company’s payroll as independent contractors; investigators took note when A.C. Painting began filing claims for workers not reported at audit. Chen paid his unreported employees through a hidden account dubbed the “blue account.” Texas Mutual attorneys accessed A.C. Painting’s computer hard drive to discover the hidden account. By reporting a smaller staff than it actually had, A.C. Painting paid lower premiums than it should have. During the bankruptcy proceedings, Texas Mutual presented evidence of more unreported “independent contractors” who actually qualified as A.C. Painting employees. Judge Steven A. Felsenthal, U. S. Bankruptcy Judge for the Northern District of Texas, Dallas Division, found that the “independent contractor” designation was not appropriate for workers’ compensation purposes. The Texas Insurance Code requires full disclosure to worker’s comp insurers of the true nature of the ownership, operations and payroll of an insured company.
Topics Texas Workers' Compensation
Was this article valuable?
Here are more articles you may enjoy.
The Big Data/AI ‘Revolution’ Is Driving Up Verdicts, Settlements as Plaintiffs Buy In 
Washington Commanders Player Scores Workers’ Compensation Win 
Magnum Says Ben & Jerry’s Chair Fostered Toxic Culture 
Insurance Companies Join Letter to Push TPLF Disclosure in Federal Courts From This Issue
