Louisiana: 1 in 5 Companies May Be Breaking Workers’ Comp Law

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As many as one in five businesses in Louisiana may be breaking the law requiring them to insure their workers against accidents, so the state is stepping up enforcement, officials say.

The Louisiana Workforce Commission and the Attorney General’s Office announced a new fraud detection program on Feb. 6.

“A big part of our goal is to attract and retain businesses,” said Tim Barfield, executive director of the commission. “We want to make sure we have an environment that’s conducive to business and that there’s a level playing field for all of our businesses. Right now, there’s a number of companies who aren’t playing by the rules.”

Chris Broadwater, head of the commission’s Office of Workers’ Compensation Administration, said violators will face penalties of $250 per employee, per incident. Repeat offenders could face criminal penalties and have the businesses shut down.

Broadwater said a spot check of 20 companies, using auditor and hotline tips, found seven of the 10 which responded out of compliance. The other 10 didn’t respond, he said.

Similar programs found $96 million in unpaid premiums in Illinois and $91 million in Massachusetts.

Louisiana businesses paid $971 million in workers’ compensation premiums last year, said Troy Prevot, senior vice president at LUBA Workers’ Comp. He said individual companies’ rates would be lower if all the companies that should be paying were doing so.

Broadwater said some businesses don’t realize they have to pay for worker’s compensation. Others know they should but don’t – or commit more active fraud by listing workers’ jobs as less hazardous than they are, or by claiming that their employees are independent contractors.

Rates for construction workers can run $13 per $100 paid to them, compared to 60 cents for clerical workers, Prevot said.

David Caldwell, the deputy director of the Attorney General’s criminal division, said his office had 40 cases when it began an insurance fraud unit in 1999, and now has more than 900.

The worker’s compensation enforcement could bring a similar increase, he said.

“How successful the Office of Workers’ Compensation will be with the program is yet to be seen, but they’re at least going down the right path in trying to do this,” Prevot said. “It’s going to be something that’s probably going to be felt in a couple of years, but if there’s more premium being paid, everybody’s rates go down.”

Information from: The Advocate, www.2theadvocate.com