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Individuals who work in the landscaping business have lots of opportunities to injure themselves while on-the-job. The Centers for Disease Control and Prevention (CDC) reports that landscaping is one of the highest hazard industries with a fatality rate of 25.1 per 100,000 workers. (The average for all other industries is 3.8.) A Pflugerville, Texas landscaping business tried to avoid the high cost of workers’ compensation insurance for its employees. In the process of trying to save a few bucks, the company committed workers’ compensation fraud.

 Landscape work generally includes the installation and maintenance of lawns, shrubs, plants and trees. (That requires a lot of individuals who can work with sharp objects and are not afraid of heights when it comes to trimming trees. Rakes, hoes, and hedge trimmers, oh my!)

Workers’ compensation premiums are based on an employer’s payroll, job classification codes and the employer’s past losses, which are key to predicting future losses. Over six years, the Pflugerville-based landscape company tried to trim their workers’ compensation insurance premium costs by lying about the size of their payroll. (When an employer misrepresents or manipulates any of these factors to get lower rates it’s premium fraud.)

Premium fraud is one way a dishonest business can gain advantage over ethical companies who play by the rules and pay the full cost of the premiums. (If a company’s insurance premiums are lower, they can bid lower on contracts by beating out other competitors.) It’s not fair to competitors, nor the workers who are doing the dangerous work.

The Texas Department of Insurance, Division of Workers’ Compensation (DWC) prosecuted the landscape company. A guilty plea for workers’ compensation fraud was entered and the company was ordered to pay $400,000 for misrepresenting its payroll so it could pay less for insurance coverage for its workers.

Workers’ compensation insurance is intended to provide wage replacement and medical benefits to those who are injured while working. (When a company provides this benefit, the worker loses their right to sue the company for negligence.) When dishonest companies commit workers’ compensation fraud by lying about their payroll, they not only put themselves at risk like today’s landscape company, but also their employees’ coverage. While the landscaper may be an expert in lawn care, planting flowers and the right fertilizer to use, it looks like this gardener has had his business pruned in order to produce compliance with the law.

Today’s “Fraud of the Day” is based on an article entitled, Texas Landscaper Must Pay $400K in Workers’ Comp Fraud Case,” posted on InsuranceJournal.com on April 3, 2018.

A Pflugerville, Texas, landscape company pleaded guilty March 21 to misrepresenting its payroll so it could pay less for workers’ compensation coverage, according to the Texas Department of Insurance.

Jammers Groundscapes entered the plea in a Travis County District Court and was ordered to pay $400,000 to Texas Mutual Insurance Co., the workers’ compensation carrier. The conviction resulted from a Texas Mutual investigation.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.