Wash. L&I Suspends Registration of Contractors for Failure to Pay Workers’ Comp Premiums

March 11, 2004

Two Vancouver, Wash.-area construction companies and a Port Angeles contractor are the first to lose their registration as a result of action taken by the Wash. Department of Labor and Industries (L&I) for failure to pay workers’ compensation premiums.

The owners of 1st Millenium Ventures, Surefire Construction and American West Inc. were sent letters on Monday notifying them that their registration has been suspended and that they can no longer legally do construction work in Washington. The action by L&I was effective as of midnight Monday night and came after repeated attempts to work out payment agreements failed.

1st Millenium Ventures was suspended because its owner, Philip Brill, was principal owner and a corporate officer of Brill’s Contracting Inc., which reportedly owes more than $240,000 in workers’ compensation premiums, penalties and interest dating back to December 1997. Surefire Construction was suspended because its owner, Richard Rehak, reportedly owes $320,000 in workers’ compensation premiums, penalties and interest dating back to 1995.

A third contractor, Howard G. Parker, the owner of American West in Port Angeles, reportedly owes the State Fund $42,000 in back premiums, penalties and interest and has been suspended.

This is the first time L&I has used its authority to suspend a contractor’s registration for non-payment of premiums.

“These actions are taken as a last resort,” said Robert Malooly, L&I
assistant director for Insurance Services, which runs the state’s workers’ compensation system. “It’s a question of fairness. The vast majority of employers pay into a system that protects them and their workers. From a business sense, they’re at a disadvantage when they have to compete with employers who shirk their responsibility and ignore the law.”

Government agencies are prohibited from issuing building permits to
companies and individuals that aren’t registered contractors. Any contractor or individual who hires an unregistered contractor can be held responsible for their unpaid workers’ compensation premiums. Contractors who continue to work after being suspended are subject to a $1,000-a-day fine. L&I also has the authority to shut down building sites where contractors are unregistered.

Fraud and abuse of the workers’ compensation system were the biggest complaints L&I heard at a series of statewide rate hearings last fall. Employers complained about workers who collected workers’ compensation benefits they didn’t deserve. They also complained about having to compete against companies that operate in the underground economy.

Labor and Industries responded by making the detection and prosecution of fraud and abuse of the system one of the agency’s highest priorities. It is reassigning and adding staff to its worker, employer and health-care-provider fraud units. It also is dramatically increasing the number of validity checks it makes with employers to determine if a workplace injury claim is legitimate.

In the area of provider fraud, L&I also is exploring the possibility of
hiring a company that specializes in detecting irregular and questionable billing practices.

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