Workers' Comp Fraud Gets Man 14 Months in Prison

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.

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.

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.