A business owner in Columbus, Ohio has pleaded guilty to a charge of workers’ compensation insurance fraud. He has paid more than $43,000 to the Ohio Bureau of Workers’ Compensation (BWC) in restitution.
Between 2009 and 2015, Gyorgy Benedek reported a zero payroll for his cleaning company, Maintenance Free Building Services Inc. Benedek’s company, in fact, had more than 30 employees during this period, and his unreported payroll totaled more than $650,000.
According to Ohio state law, all employers with one or more employees must have workers’ compensation insurance coverage. By claiming he had no employees, Benedek avoided the workers’ compensation insurance premiums he was legally obliged to pay.
Across the country, more and more businesses have been discovered attempting to avoid paying workers’ compensation insurance. One common approach has been to misclassify workers. For example, I recently reported on another Ohio business, Earth ‘n’ Wood Products, that had classified semitruck drivers as office workers in order to reduce its workers’ compensation insurance premiums. Another approach—the one used here by Benedek—is to underreport payroll.
Workers’ compensation premiums represent a sizeable cost for businesses. In 2018, employers in Ohio have paid on average $1.40 per $100 of payroll on workers’ compensation insurance. At 82 percent of the national median rate, this may seem low compared to the. Ohio’s rates, however, have been increasing compared the countrywide average: in 2016, they were only 79 percent of the national median rate.
While attempting to land a new cleaning contract, Benedek falsified three BWC certificates to make it seem to his potential new client that he was fully compliant with the law.
“We got a tip from a company doing business with Mr. Benedek that his BWC certificates looked suspicious, so we checked it out,” explained the director of BWC’s special investigations department, Jim Wernecke. “We found multiple problems with the certificates, indicating Mr. Benedek was attempting to skirt his legal obligation to protect his employees and carry proper insurance.”
BWC’s investigation showed that the falsified certificates appeared to cover a period when Benedek’s insurance coverage had lapsed. The certificates were apparently signed by Marsha P. Ryan. Ryan was CEO of the BWI until January 2011. Had they been authentic, the certificates would have been signed by her successor, Steven Buehrer.
After submitting a check for $43,069 to BWC, Benedek pleaded guilty in the Franklin County Court of Common Pleas to the reduced charge of Failure to Comply.
There have been several similar cases recently in Ohio. In Cincinnati, Philip Ayers, the owner of Ayers Transportation Services, pleaded guilty to workers’ compensation fraud. He has agreed to pay BWC $159,000 in compensation. In Cleveland, the owner of Triple R Auto Sales was discovered to have been operating his business without workers’ compensation insurance coverage for 11 years. The owner pleaded guilty to one count of Failure to Comply.
“We made every attempt to bring these employers into compliance with Ohio law,” said Wernecke. “They wouldn’t cooperate, and were forced to bring charges against them. I can’t stress this to employers enough: if you’re struggling with your BWC premiums, work with us. Avoiding us will only make your situation worse.”
Florida Workers’ Compensation Fraud Defense Attorney
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