Ten-year Prison Sentence Handed Out in Fraud Case: North Carolina Workers' Compensation Experts Debate the Fallout

November 2, 2010, by Michael A. DeMayo

North Carolina workers’ compensation experts along with media analysts across the country are all talking about a momentous sentencing decision out of California. A Laguna Hills man convicted of perpetrating the biggest California workers’ comp premium fraud in history has been sentenced to a decade in state prison.

51-year-old Michael Vincent Petronella was ordered by the court to pay $500,000 in restitution to the CA State Compensation Insurance Fund on top of fines of equaling $550,000. In February, Petronella was found guilty of an unbelievable 33 felony counts of insurance fraud. According to an AP report, Petronella and his wife “fraudulently submitted 42 claims for uninsured workers and unreported $29 million in pay roll to avoid paying insurance premiums.” As a result of their scheme, the state lost millions in insurance premiums and over $250,000 in uncovered worker claims. At the same time, Petronella and his wife apparently lived a life of opulence. They owned 2 Ferraris, jewelry worth hundreds of thousands of dollars, and closets upon closets of apparel from luxury designers like Burberry, Chanel, and Gucci.

Petronella’s ex employees and the local Deputy District Attorney complained that the judge did not order even more forced restitution. The Deputy DA, who had asked that Petronella pay $35 million to California, said that “the court’s ruling establishes that it pays to commit fraud.” The DA wanted Petronella to spend 37 years in jail. She expressed contempt for the judge’s decisio: “[Petronella] has taken no responsibility for his conduct… when he gets out, he will do it again.”

North Carolina workers’ compensation policymakers pay attention to out of state fraud cases to understand potential industry-wide implications. Since this case against the Laguna Hills roofer may be the biggest in California’s history, the decision could indirectly inform future debates over the correct punishment for workers’ comp fraud.

Pulling back from the abstract, for a second, what might this case tell us about the rights and responsibilities of individual claimants? The biggest takeaway is that a claimant needs to be mindful of adhering closely to the rules. Even if you don’t “intend” to cheat the system, you can still be flagged for problems with your claim if, for instance, you shortcut your paperwork or miss a deadline.

If you’ve been dealing with issues regarding your claim, consult with a reputable and highly credentialed North Carolina workers’ compensation firm to strategize about the most efficient ways to eliminate the constraints on your benefits.

More Web Resources

Michael Vincent Petronella sent to prison

Roofing contractor gets 10 years for workers’ comp fraud scheme