Cheat the workers’ comp system once, you could get fined. Cheat is a second time, you could go to jail. That’s the lesson a business owner in Washington is learning.
Prosecutors have charged David Rau with intentional false reporting, a felony, for failing to report his workers in an effort to save on workers’ comp costs.
The case involving Rau’s business, Davey’s Roofing of Lake Stevens, WA, first came to light in April 2010 when one of its employees was seriously injured when he fell off a roof.
Medical bills for the worker have accumulated to over $70,000, and they continue to grow as he continues to recover.
This case would be noteworthy even if this was the first time Rau was alleged to have skipped workers’ comp payments by claiming he had no employees.
But in 2001, Washington Labor and Industries (L&I) audited Davey’s Roofing and found Rau had failed to report 13 workers. He was fined $3,000 and educated on his responsibility to report his workers and pay for comp insurance to cover them if they’re injured.
It appears that first lesson didn’t make an impression on Rau.
From 2001 until the time of his worker’s injury in 2010, Rau didn’t report a single worker.
Witnesses told L&I investigators that Davey’s Roofing employed multiple workers during that time period.
An audit showed Davey’s Roofing owed more than $150,000 in unpaid premiums and penalties.
If convicted, Rau faces a maximum penalty of five years in prison and a $10,000 fine plus restitution and costs.
Workers’ comp fraud negatively impacts other businesses. When rogue businesses fail to report workers and buy workers’ comp insurance for them, they are able to unfairly underbid honest businesses. It also leaves others to cover the costs of injuries to uncovered workers.