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Nantucket Business to Pay $42,000 for Workers’ Compensation Avoidance

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A Nantucket business owner has pleaded guilty to charges that he failed to accurately report his total payroll and number of employees. He also misclassified his business to avoid paying thousands of dollars in insurance premiums.

Attorney General Martha Coakley said “Premium avoidance is a serious crime that undermines the insurance system and puts lawful employers at a disadvantage. The prosecution of these schemes prevents the increase in insurance premiums that often result from these crimes.”

James Lydon pleaded guilty in Suffolk Superior Court to the charge of five counts of workers’ compensation fraud. After the plea, Lydon was sentenced to two years of probation and ordered him to pay a lump sum of $42,000 in restitution.

Lydon is the owner of James Lydon, Sons & Daughters (Lydon & Sons), a roofing and siding company based out of Nantucket. Lydon & Sons has been insured previously by Travelers Companies Inc. and Liberty Mutual.

To evade the high insurance premiums, Lydon misrepresented the actual number of employees to his insurance company and misclassified the type of work performed by his employees. Because of his misrepresentations, Lydon was granted the minimum premium rate for his policy. Because of this, he put his insurance providers at risk to cover any employees who were not enumerated for injuries that occurred.

Contrary to the insurance providers’ records, Lydon employed at least four full-time employees from 2005 to 2009 and misclassified the work of his company during this time. Because of his scheme, Lydon also underpaid his workers’ compensation insurer thousands of dollars in premium payments.

Pulgini & Norton, LLP attorneys have handled workers’ compensation claims for over 25 years in and around Boston and its surrounding areas. If you or a family member has been injured at work and would like to seek legal assistance, please contact us at (781) 843-2200 or (888) 344-2046 or email us.

Cited Sources:

Mass. Biz Owner to Pay $42K for Workers’ Comp Premium Avoidance Scheme, Insurance Journal, February 20, 2013

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