Wednesday, December 9, 2015

Taking Generosity Too Far

Unemployment benefits were created to help people who recently lost their jobs manage expenses as they look for new opportunities. (Therefore, it should go without saying that in order to qualify for unemployment insurance, the person applying for the benefits should be unemployed.) tells the story of a Michigan roofing company that ordered its employees to apply for unemployment benefits while they were actually working on a part time basis. (That’s a bit of a twist.)

According to the story, the part time roofing company employees were instructed to “bank” their hours in the winter months until they added up to one full 40-hour week of pay. (During that time, the employer falsely certified to the Unemployment Insurance Agency that the workers were unemployed.) At that point, the employer would pay the workers and inform the UIA that they had worked for one week. This practice prevented the loss of multiple weeks in unemployment insurance benefits.  (The part timers collected more than $100,000 over five years.)

Apparently, this was not the only scam going on under the company’s roof.  The company was also in trouble for requesting that employees lie about where they became injured so that accidents experienced on the job would not be recompensed through workers’ compensation insurance. (This cost multiple health care plans more than $70,000 over two years.)

U.S. Attorneys alleged that by having their employees report injuries as “off-the-job” incidents, the roofing company owners were able reduce workers’ compensation premiums. As a result, the company maintained a low “incident rating,” enabling the business to bid on contracts that they would have been disqualified from bidding on with their actual number of workplace accidents. (It appears that this company specialized in building roofs over their house of lies. They may have kept out the elements, but not the government.)

The company owners pleaded guilty to mail fraud and health care fraud and must pay $174,267 in restitution to the Michigan Employment Security Commission as well as several health care providers. The company may also face up to $1 million in fines and five years of organizational probation.

The owners of this company built an extensive fraud conspiracy under the guise of generosity to their employees. What they failed to consider is that the government is only generous to those who qualify for help, not to those who intend to steal funds they do not deserve.

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