Calif. Contractor Sentenced in Workers’ Comp Fraud Case; Will Pay State Fund $605,940

The owner of a Corona, California-based construction firm has begun serving a two-year jail sentence as part of his conviction on felony workers’ compensation insurance fraud.

Lawrence S. Hatfield, 59, of Orange County, owner of Builders Framing Inc. was sentenced on April 12, 2005 in Riverside County Superior Court where he was convicted on five counts of workers’ comp insurance fraud (Insurance Code 11880). A judge also ordered Hatfield to pay State Compensation Insurance Fund $605,940 in restitution after defrauding the workers’ comp insurer. Hatfield’s contractor’s license is also being forfeited.

State Fund insured Builders Framing Inc., which specializes in new home framing projects in Riverside County, from 2002 through 2004.

A call to State Fund tipped district policy fraud investigators to conduct a review of the company’s workers’ comp policy. An internal investigation, which included review of payroll reports, unemployment documents and wage records reportedly revealed policy-reporting discrepancies. State Fund forwarded its report of suspected workers’ comp fraud to the Riverside County District Attorney’s Office and the Department of Insurance for their review.

The District Attorney’s office later obtained a search warrant and seized company records to conduct an audit of Hatfield’s business. The DA’s office uncovered Builders Framing Inc. underreported payroll, misclassified wages, failed to report wages paid in cash and failed to properly report several company employee injuries. Hatfield reportedly paid out of pocket medical costs of injured employees and did not report work injuries to State Fund.

Based on the audit, State Fund estimated Hatfield’s total fraud to have been $1,316,584.