Florida Targets Check Cashing Industry's Comp Role

Jeff Atwater, the state's chief financial officer, announced a working group with representatives from several state agencies will target "bad actors" bent on evading payment of workers' comp premiums.

Florida has created a working group to examine check cashing industry companies that may be attempting to help customers evade paying workers' compensation premiums. The state's chief financial officer, Jeff Atwater, announced the group's creation this week and said it will include representatives from his office's Division of Insurance Fraud, as well as the Office of Financial Regulation, the attorney general's office, and the construction and money services industries.

He said the practices of some "bad actors" in the check cashing services industry are putting pressure on rates and crippling the business community.

"This growing crime trend is diverting more than a billion dollars from Florida's economy," said Atwater, whose office oversees the Divisions of Insurance Fraud and Workers Compensation. "We are committed to dismantling this scheme and putting these cheats behind bars. Bringing together stakeholders will take us one step closer to the solutions we need to expedite jail time for these con artists."

He said these operations are highly organized and run by individuals who know the construction and subcontracting industry. Florida law generally requires every employee in the construction industry to be covered by workers' comp insurance; this scheme leaves workers unprotected and lets dishonest employers outbid honest ones for construction jobs. "Not only is this fraudulent activity costly to the insurance industry, but also it leaves individuals without protection," Florida Attorney General Pam Bondi said.

John Askins, director of the Division of Insurance Fraud, said organized criminal enterprises set up "shell" companies and obtain a minimal workers' comp insurance policy. Uninsured contractors pay a fee to use the shell policy, enabling them to avoid purchasing required comp insurance. The uninsured contractor presents a copy of the shell certificate of insurance to a general contractor and often can underbid honest contractors. The scheme uses money service businesses to cash the checks made out to the shell company, he explained.

Atwater said the working group will present recommendations to Gov. Rick Scott and the Florida Cabinet this fall. The department accepts tip about suspected insurance fraud at 1-800-378-0445; tipsters can remain anonymous and are eligible for a reward of as much as $25,000 for information that directly leads to an arrest and conviction in an insurance fraud scheme.

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