Texas Mutual Insurance Company reported that Doze Construction Co. Inc. of Gun Barrel City, Texas, has pleaded guilty to workers’ compensation fraud-related charges. Judge Julie Kocurek of the 390th Travis County District Court ordered the company to pay a $100 fine to the state, plus $17,000 in restitution to Texas Mutual.
Texas Mutual said Doze Construction illegally transferred employee payroll into an uninsured second company, a scheme investigators call using a “shadow company.” The company then applied for workers’ comp insurance through Texas Mutual, but it reported only a fraction of its true payroll.
Because insurance companies use payroll as part of their premium calculations for workers’ comp coverage, the scam allowed Doze Construction to receive a much lower premium than it actually owed.
“Premium fraud is a serious crime,” Elliot Flood, Texas Mutual vice president of special investigations, said. “It’s bad for honest competition in the marketplace, and it’s bad for the company’s workers, who are entitled to workers’ comp benefits, a fact often hidden from them when an employer uses a shadow company scam.”
When Texas Mutual investigator Sandra Milburn uncovered evidence against Doze Construction, she contacted Assistant District Attorney Elizabeth Andrus, who prosecuted the case on behalf of the Travis County District Attorney office.
In October 2002, a Travis County Grand Jury indicted owners Stanley and Cynthia Doze on charges of “Securing Execution of a Document by Deception,” a state jail felony.
Judge Kocurek dismissed the cases against Stanley and Cynthia Doze, as recommended by the State, in return for the company’s guilty plea and immediate restitution.
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