By Brian Johnson
BridgeTower Media Newswires
A Minnesota framing contractor has been charged in Hennepin County District Court with workers’ compensation fraud, one of a dozen such cases referred to the Minnesota Department of Commerce so far this year.
Jose Merino, owner of JMC Framing LLC and JMC Contracting LLC of Inver Grove Heights, faces two counts of theft by swindle stemming from a Minnesota Department of Commerce investigation that began in March 2019.
From 2017 to 2019, Merino allegedly “engaged in a scheme to evade workers’ compensation insurance premiums” and made “multiple misrepresentations in his applications for workers’ compensation insurance,” the investigation revealed, according to court documents.
Those actions allegedly allowed the defendant to “obtain coverage for which he would not otherwise have qualified, coverage that did not sufficiently cover potential risk due to the nature of his business, and pay significantly reduced premiums,” according to the court filing.
Merino couldn’t be reached for comment.
Mo Schriner, communications director for the Minnesota Department of Commerce, said the Commerce Fraud Bureau received 29 workers’ compensation/premium evasion referrals in 2022 and has fielded 12 so far in 2023.
Historically, the Commerce Fraud Bureau has had the authority to conduct investigations into workers’ compensation fraud, such as the Merino case, if there was a “nexus to insurance fraud,” Schriner said in an email.
“These types of cases are most readily identified when contractors fail to disclose the true number of their employees to their insurance company, thus evading workers’ compensation insurance premiums,” he added.
Last year, the Minnesota Legislature authorized the department to open investigations “when there is an allegation of wage theft, regardless of whether insurance fraud is purported to have been committed,” Schriner noted.
In Merino’s case, according to the court filing:
- At least six workers were injured on the job while working for Merino on various jobsites throughout the Twin Cities. The workers reported their injuries to Merino, but the defendant didn’t report the injuries to his workers’ compensation insurance policy.
- Between July 6, 2018, and Feb. 26, 2019, the defendant concealed more than $3 million in payroll to two different insurance companies, which resulted in more than $340,000 in unpaid premiums due to the companies.
Two years ago, workers filed a class action lawsuit against Merino. The lawsuit alleges that Merino failed to pay overtime wages to workers who put in 50 to 60 hours a week while working for the defendant on a large apartment project in the Twin Cities.
As co-director of the Centro de Trabajodores Unidos en Lucha (CTUL), a Minneapolis-based worker advocacy group, Merle Payne tracks wage theft-related cases in the Twin Cities.
In the past three and a half years, Payne said, the Twin Cities has seen at least nine cases where “construction labor brokers have been charged criminally for labor trafficking, sexual assault, wage theft, theft by swindle, and more.”
Speaking in general terms, Payne said labor brokers often misclassify workers as independent contractors or pay them in cash in order to avoid paying workers’ compensation.
Payne said he’s pleased to see workers’ compensation cases moving forward, but “the part that feels a bit frustrating is that the human consequences of this are not a piece of [the criminal investigation]. It’s much more about, ‘How is the insurance company being screwed over?’”
|