May 29, 2009

Annals of Fraud: Trifecta for Bay Area GC

In the world of workers comp, there is no lack of opportunity for fraud. We've seen doctors rip off the system by billing for services that were either never provided or not needed. We've seen employees fake injuries (relatively rare) or malinger on comp long after injuries have healed. We've seen insurance agents pocket money intended for insurance premiums. We've seen insurance adjusters embezzle claims funds. We've seen state comp bureaus (Ohio) engage in fraud. And we've seen employers rip of the system in a number of ingenious ways.

Which brings us to the saga of NBC Contractors (presumably no relation to the television network), a California general contractor. Three owners of the company - Monica Mui Ung, 49, of Alamo; Joey Ruan, 31, of San Leandro; and Tin Wai Wu, 28, of Millbrae - have been charged with 48 counts of insurance fraud, labor code violations and tax fraud. Bail was set at $535,000 for each of them. (You can check out their bare-bones website here.)

With Ung listed as the (minority, female) owner, NBC Contractors qualified for preferential treatment on public projects. Between 2003 and 2007 they successfully bid on 27 public works projects, including El Cerrito City Hall and Piedmont Elementary School.

Cheater's Delight
According the indictment, NBC used a trifecta of cost cutting measures:
1. They underpaid workers comp premiums a total of $1.45 million, by misclassifying their workers into lower risk occupations and by under-stating payrolls
2. They violated fair labor standards, by failing to pay for overtime or sick leave, impacting 19 workers a total of $3.6 million
3. They underpaid payroll taxes on workers, depriving state and federal government of tax revenues

With these (criminal) "cost savings," NBC was able to underbid their competitors. These business practices cheated a lot of people: NBC's own workers, their insurance carrier, their competitors, and all law-abiding businesses who played by the rules. We can only hope that the quality of their work was up to standards, which would at least keep their customers off of the long list of parties directly injured by their actions.

| 1 Comment

1 Comment

Thank you for acknowledging that most fraud is committed by those OTHER than those for whom the system was set up: Workers on the job. However we are a LONG way from providing justice & fair play for those workers. And you do not usually have to have a limb removed to be hurt on the job. We need to build a consensus that these workers have been treated as pariahs, and that this is grossly unfair. Let's stop the injustice. Hug an injured worker today.

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This page contains a single entry by Jon Coppelman published on May 29, 2009 11:32 AM.

Bosstown's Health Wonk Review, and assorted other news briefs was the previous entry in this blog.

Cell Phones: Unsafe at Any Speed? is the next entry in this blog.

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