Texas Co. With No Employees Found Guilty of WC Fraud

July 8, 2003

In late June, Travis County (Texas) District Judge Patrick Keel found that a San Antonio janitorial company reportedly lied about its payroll to get workers’ compensation coverage so it could pursue lucrative government contracts.

According to Texas Mutual Insurance Company, at the civil trial of Miguel Delgado, owner of San Antonio’s Border Maintenance Services Inc., Keel determined that Delgado and his co-conspirator, Linda Delgado, committed fraud and ordered them to pay over $1.6 million in restitution to Texas Mutual.

During the one-day civil trial, the evidence reportedly showed that the Delgados bought workers’ compensation insurance for Border Maintenance Services Inc, doing business as Del-Kleen Inc. The Delgados paid a premium covering five employees, and they used the company’s certificates of insurance to get government contracts, which required workers’ compensation coverage.

When Texas Mutual auditors asked to review Border Maintenance Services records, Delgado refused. He claimed that Border Maintenance Services was covered separately under an occupational accident policy and that most of its 450 employees should not be included in the workers’ comp premium calculation. He offered to include some Border Maintenance Services employees in the premium.

A Texas Mutual fraud investigation discovered that Del-Kleen was a company in name only, with no employees and no payroll. The Delgados reportedly tried to invent a Del-Kleen payroll by moving some employee names over from the Border Maintenance Services books.

When confronted with these improprieties, Delgado reportedly refused to pay the additional $868,162 in premium. Judge Keel found that the two companies were operating as a single business enterprise and awarded Texas Mutual Insurance Company its premium due, plus interest and attorney’s fees, totaling $1,643,029.

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