Failed to Report Total Payroll
A Woburn, Massachusetts business owner was recently arraigned on charges he failed to accurately report his total payroll or number of employees to his insurance provider to avoid paying the proper insurance premium, Attorney General Martha Coakley announced.
Edward App, 50, was arraigned on charges of Workers Compensation Fraud (4 counts) and Larceny Over $250 (3 counts).
Employee Injured in Life Threatening Accident
App is the owner and sole proprietor of App Tree Inc. (App Tree), a tree service company based in Woburn. The Insurance Fraud Bureau of Massachusetts (IFB) referred this case to the Attorney General’s Office after an investigation into an insurance claim filed by an employee who was injured in a life threatening accident when he was crushed by a falling tree.
Stated Owner was Only Employee of Company
According to authorities, App Tree was assigned to AIM Mutual Insurance Company (AIM) through the Assigned Risk Pool for workers comp insurance in 1999. Authorities allege that in an effort to evade high insurance premiums, App reported to AIM that he was the sole employee of the company and failed to disclose any information about additional employees. Based on his reporting, App was granted the minimum premium rate on his policy.
Put AIM Mutual Insurance Company at Risk
As a result of this alleged fraud, App put AIM unknowingly at risk to cover any employees who were not disclosed for injuries that occurred or might have occurred during the policy periods.
Authorities allege that contrary to reports made to his insurance provider, App employed at least two full-time employees and a number of sporadic part-time workers at various times between 2005 and 2009.
As a result of this alleged premium avoidance scheme, App underpaid his workers’ comp insurer a total of $42,115 in premium payments. Additionally, AIM paid more than $700,000 in medical and disability payments to the injured employee.
Grand Jury Indictment
A Special Statewide Grand Jury returned indictments against App in June. App was arraigned in Middlesex Superior Court where he pleaded not guilty and was released on personal recognizance.
Author Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: [email protected].
WORKERS COMP MANAGEMENT MANUAL: www.WCManual.com
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
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