For Immediate Release March 25, 2014
Empanelled at Request of Manhattan DA’s Office, Grand Jury Finds Evidence of Workers’ Compensation Insurance Premium Fraud Costing New York Nearly $500 Million Annually
Report Released on 103rd Anniversary of Greenwich Village Triangle Shirtwaist Factory Fire
Manhattan District Attorney Cyrus R. Vance, Jr., today announced that a New York State Supreme Court Grand Jury has issued a report examining the vulnerability of New York’s workers’ compensation insurance system to fraud and misuse. The Grand Jury’s report stemmed from investigations by the District Attorney’s Money Laundering and Tax Crimes Unit into false information provided to the New York State Insurance Fund in connection with applications for, and audits of, workers’ compensation policies.
Taking into account a June 2013 report of the Fiscal Policy Institute and other estimates, New York City’s construction industry in 2011 cost the City and State approximately $500 million based on worker misclassifications. The largest component of the loss was unpaid workers’ compensation premiums, with personal income tax, withholding, unemployment insurance, and various other business taxes accounting for the remainder.
Premium fraud affords wrongdoers an improper competitive advantage over all law-abiding businesses, makes workers vulnerable by depriving them of important protections and benefits, and deprives New York State and New York City of substantial revenue. Every lost dollar must be made up by a dollar increase somewhere else, usually by a cost-shifting phenomenon that affects us all. Every law-abiding employer is a victim of this criminal conduct, as is every hard-working employee, every consumer, and every honest taxpayer
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