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Gallagher: Fraud Division’s Aggressive Pursuit of Workers’ Comp Fraud Leads to Reduction in Premiums

3/17/2006

CONTACT: Nina Banister
(850) 413-2842

Tougher Laws Lead to More Fraud Arrests, Lowered Cost for Business Owners
 
TALLAHASSEE—Tom Gallagher, Florida's chief financial officer, announced today that the Department of Financial Services, Division of Insurance Fraud's aggressive pursuit of workers' compensation fraud is leading to increased arrests and lower costs for Florida's small businesses.
 
In fact, the Division is on target to surpass last year's record of 213 workers' compensation fraud arrests.  In February 2006 alone, the division made 25 workers' compensation fraud arrests – almost one a day – and since July 1, 2005, has arrested more than 153 individuals on charges of workers' compensation fraud.
 
Arrests, along with laws passed in 2003 that created tougher penalties for workers' compensation fraud, have pushed workers' compensation premiums down for three consecutive years. 
 
Gallagher spearheaded the passage of Senate Bill 50A in 2003 that reformed the state's workers' compensation system, including tougher penalties for workers' compensation fraud and premium evasion.  Workers' compensation rates have dropped by more than 30 percent in the last two years, generating nearly $1 billion in savings. 
 
"Meaningful reforms, more aggressive investigation of workers' compensation fraud and compliance efforts have led to dramatic savings for Florida's businesses," Gallagher said.  "We will continue to aggressively investigate cases of suspected fraud to continue to improve the system for our small businesses and our workers."
Recent arrests include:
 
• Edward L. Bee, 47, owner of Bee Corp., Inc. doing business as Harris Electric in Bartow, arrested for failing to provide workers' compensation coverage for a worker who suffered fatal burns after an electrical transformer exploded.  Bee is charged with workers' compensation fraud and grand theft, both third-degree felonies punishable by up to five years in prison and $5,000 in fines.  The accident occurred at a job site in Fort Meade.
 
• Six men were arrested in a multimillion-dollar workers' compensation insurance scheme that involves hundreds of general contractors throughout South Florida.  The men are accused of setting up shell companies, which had no equipment or employees, to insure one or two people to receive legitimate insurance certificates. Contractors would give the shell company a check, which would be cashed at a Pompano Beach check-cashing store. The contractor would then pay his employees in cash, thus avoiding paying the proper workers' compensation insurance premium.
 
• Jose Uriarte, 33, owner of Uriarte Framing, Inc. in Clermont, was arrested after being ordered to stop work at three construction sites because he did not have workers' compensation coverage for his workers.  The department's Division of Workers' Compensation issued Uriarte a Stop Work Order (SWO) last April and a second one in October at construction sites in East Orange County when he was found employing a crew without workers' compensation coverage.  His last SWO was issued in February when investigators found Uriarte with a crew working in Osceola County without workers' compensation coverage.  Uriarte is accused of falsely claiming that the employees were leased to explain why he had no coverage for them.

The Department of Financial Services, Division of Insurance Fraud, investigates fraud in all types of insurance, including health, life, auto, property and workers' compensation.  To report information about this case or any other possible insurance fraud case, call the department's Fraud Fighters hotline at 1-800-378-0445.  A reward of up to $25,000 is offered for information leading to a conviction.