Florida Construction Shell Company Owner Sentenced for Workers’ Compensation Fraud
- Santiago Humberto Erazo-Zelaya received fourteen months in federal prison for operating a construction shell company fraud.
- He purchased a minimal workers’ compensation policy and rented it to work crews to bypass state insurance mandates.
- The scheme allowed contractors to avoid paying $567,000 in proper insurance premiums across a $3 million payroll.
- The court ordered him to pay $26,720 in restitution to an insurance company.
Worker Denied Lawsuit Over Safety Loophole
- An injured sub-contractor worker lost his right to sue a builder after accidentally giving up his own insurance protection.
- The worker was badly hurt on a job site but could not get worker’s compensation money because he had previously signed a paper to opt out of the coverage.
- He then tried to sue the main construction company for negligence instead.
- However, the high court blocked the lawsuit, ruling that the main builder followed all safety laws and cannot be sued for the worker’s own insurance choices.
Court Victory for Injured Workers
- The New York Court of Appeals affirmed that the Justice for Injured Workers Act prohibits courts from applying collateral estoppel to workers’ compensation findings in pending or future lawsuits.
- This decision prevents defendants from using unfavorable workers’ compensation rulings to automatically defeat related personal injury and Labor Law claims.
- The statute strictly limits this prohibition to allow exceptions only for determining an employer-employee relationship.