Florida to Investigate Role of Check Cashing Firms in Workers’ Compensation Fraud

By Michael Adams | August 5, 2011

Florida officials are calling for an investigation into the role of check cashing services in helping construction subcontractors avoid paying their fair share of workers’ compensation premiums.

Florida Chief Financial Officer Jeff Atwater, who has called for a working group to look into the matter, said this workers’ compensation premium fraud scheme is highly organized and orchestrated by individuals who know the construction and subcontracting industry. Florida requires most individuals in the construction industry to be covered by workers’ compensation insurance.

Atwater said the working group would consist of officials from the state’s Division of Insurance Fraud, the Office of Financial Regulation, the Attorney General’s office, and the construction and check cashing services. The goal would be to develop recommendations for Gov. Rick Scott and other Cabinet officials to consider by the end of the year. Those recommendations could turn into legislation to be considered by lawmakers during next year’s legislative session.

According to investigators, organized crime groups set up fake companies and obtain a minimal workers’ compensation policy. Uninsured subcontractors then pay them a fee to use the workers’ compensation policy, which enables them to avoid purchasing required coverage. The uninsured subcontractors use the certificate of insurance to show general contractors they have insurance and often get a job since they can underbid projects by removing most of their workers’ compensation costs. The organized crime groups then use cash checking companies to cash the checks made out to the fake company by subcontractors.

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