3.Information received from workers or other insiders that employees are being misclassfied. 4.Audit reports of misclassification. The assigned risk pool will accept employers with poor loss experience but will not accept any employer that owes premiums to an insurer for an earlier audit. Some employers or employee leasing operations that owe premium will create a new corporation entity in an attempt to obtain coverage through misrepresentation. The proper reaction by an employer to a higher premium due to experience should be to take steps to make their operations safe and avoid employee injuries.
Some employers choose to misrepresent their history instead.
This misrepresentation is a third degree felony. This scheme is identical to the same scheme previously described but is perpetrated by agents who place workers' compensation insurance. Sometimes an agent, in an attempt to retain a client by obtaining the lowest premium, will either alter the application submitted by an employer or advise the employer incorrectly on the meaning of entries. In either case, the result is an application that misrepresents the coverage actually required. Even though the employer may not be fully aware that the application is in violation of the law, his signature on the form may bring him into a conspiracy to obtain lower premiums unlawfully.