A Case that Should Be on Most People’s North Carolina Workers’ Compensation Radar but Probably Isn’t — Major Fraud Reported in San José!

April 26, 2010, by Michael A. DeMayo

Most North Carolina workers’ compensation fraud cases pale in comparison with two breaking stories out of California.

The first involves a San Jose man named Daniel Nelson, who allegedly bilked the CA State Compensation Insurance Fund out of nearly $60,000 by failing to report $600,000 in payroll for his businesses (Monster Magic LLC and Worldwide Attraction). According to the DA’s office in Santa Clara County, an investigation began shortly after it was discovered that Monster Magic and Worldwide Attractions had failed to report nearly $80,000 in payroll for the 2006 calendar year. But the amount of underreporting turned out to be nearly 10 times that much — all told, investigators found over $614,000 in underreported payroll. Nelson was arrested by deputies in Alameda County and held on a $50,000 bail. If convicted of California workers’ compensation fraud, he could face a $50,000 fine and a jail sentence of up to five years.

Meanwhile, in a separate matter, a man named Mitchell Zogob faces a decade in California prison for collecting nearly $5 million in fraudulent California workers’ compensation insurance premiums. Zogob pled guilty to a gamut of offenses. Experts who followed the case interpreted the sentence to be a shot across the bow to other would-be workers’ comp defrauders.

How does North Carolina workers’ compensation fraud impact employees, employers, insurance companies, and the economy as a whole?

When someone bilks the NC workers’ comp system, everyone ultimately pays. Fraud does two things. First, it removes money from the system that could (and should) go to deserving claims. Second, it encourages insurers and watchdog agencies to vet claims more thoroughly. Thus, claimants with legitimate grievances often must go through extensive hurdles to collect their (rightly-owed) benefits.

Indeed, occasionally, legitimate claims get flagged as “false positives” for fraud. If you or a family member has been wrongfully accused of North Carolina workers’ compensation fraud, or if you need help with anything else regarding your workers’ comp matter, look to an established and peer-reviewed NC workers’ comp law firm near you to get strategic advice.

More Web Resources:

San Jose Man Arrested for Workers’ Comp Insurance Fraud

OC man gets 10 years for $4.6m insurance fraud