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MA contractor misclassify workers, defraud workmens comp can go jail

Posted by Mark Paskell on Wed, Mar 09, 2016 @ 09:56 PM

This week we learned that a Massachusetts contractor was indicted by the Mass Attorney General's office for workmen’s compensation insurance fraud. According to the article the contractor misclassified workers and averted paying $120,000 in workmen's compensation insurance premiums. He claimed that he was a general contractor when he actually performed roofing work. There is a good chance he can serve time in the big house. He even has testimonials on his website stating that he did a great job doing roofing.

Contractors who misclassify workers to minimize paying the appropriate work comp rates hurt the contractors who play by the rules. In Mass we have an underground task force that seeks to find these contractors and prosecute them for misclassification and fraud. The law requires that a contractor properly classify their workers and pay the corresponding work comp rate.

Notice in the picture the men are not tied off while up on a roof. This is also a serious OSHA violation. It will be interesting to see if OSHA joins in to cite and fine this company for not training and protecting their workers. 

Here is a portion of the article from the Agency Checklist newsletter .......Agency Checklists, MA Insurance News, Mass. Insurance News

The defendant is the owner of Bob Foss Contracting

On March 3, 2016, Attorney General Maura Healey announced that the Suffolk County Grand Jury had returned four indictments charging Robert Foss, age 54, of Wilmington, with workers’ compensation fraud.

The Grand Jury’s indictments charged that between 2009 and 2012, Mr. Foss defrauded two insurance companies of $120,000 in premium under three separate insurance policies.

In announcing the indictments, Attorney General Healey stated: “We allege that this defendant [Mr. Foss] intentionally put the safety of his employees at risk by asking them to inaccurately disclose the nature of his business to insurance companies in order to avoid paying premiums.”

Additionally, Attorney General Healey affirmed that: “Our office is committed to investigating and prosecuting those who engage in this type of fraud for their own benefit.”

Fraudulent statements as to business class

The indictments allege that Mr. Foss defrauded the two insurance companies of workers’ compensation insurance premiums totaling $120,000. He accomplished this by describing his Burlington business as a general contractor rather than as a roofing company.

– imprisonment in the state prison for not more than five years or by imprisonment in jail for not less than six months nor more than two and one-half years… 

The Workers’ Compensation Ratings and Inspection Bureau (WCRIB) classifies roofing as a more dangerous occupation than general carpentry and places a higher premium on insurance.

Allegedly, Mr. Foss misrepresented the nature of his business on an application for insurance through the Massachusetts Workers’ Compensation Assigned Risk Pool. Based on this misrepresentation, the WCRIB did not classify Mr. Foss’s policy properly as a roofing risk and Mr. Foss paid $120,000 less in workers’ compensation premiums than he would have been paid, if the policies had been properly classified at the higher correct premium.

On Mr. Foss’s company’s website, Bob Foss Contracting, the company states that it is a “General Contractor in the Greater Boston Area.”

In fact, some of the testimonials from customers speak of general construction projects but others say:

Thank you so much for the excellent roofing job! You may use us as a reference. Thanks again! We’ll keep you in mind for future projects.

* * * I want to congratulate you on the men who did our roofing job.  They were polite, respectful, friendly, cheerful and hard workers.

The cost of running a business legally is usually the difference in contractors' price...

In my career I have run over 6000 leads meeting homeowners to earn their business, I sold many projects and managed salespeople who did the same. One thing I learned is the biggest difference in price between contractors is the cost of running a business legally. The company above has enjoyed an unfair advantage over others by defrauding workers comp and also allowing workers to work unsafe. Now it is time for payback.

I meet and work with many contractors who play by the rules. They pay the right insurance, abide by safety rules and overall do their best to take care of their employees and customers.  

I suspect that to many who read this post I am preaching to the quire. However, if you are reading this post and you too are misclassifying your workers or are not providing the required safety training it may just be a matter of time before some government agency comes knocking on your door! 

Tags: osha 10, osha fall protection, misclassifying workers, osha fines mass