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Business Accused of Jacking Up Mileage to Lower Payroll and Premiums

  • State: Louisiana
  • Topic: SOUTH
  • - Average time spent on item: 16 minutes
  • - Popular with: Insurance

A prominent Louisiana businessman and member of a state university governing board is under investigation — again — for allegedly finding creative ways to avoid workers' compensation insurance premiums.

Lee Mallett

Lee Mallett

Lee Mallett, owner of a number of manufacturing and construction companies in the Lake Charles area, is the subject of an investigation by the Louisiana Workers' Compensation Corp., a state-run workers' comp carrier, according to a local TV news report.

The LWCC investigators reportedly determined that one of Mallett's companies was able to lower its comp premiums by claiming to pay workers a small salary but a huge travel expense. Premiums are based in part on payroll, but not mileage reimbursement.

Records obtained by the news station show that Mallett's company, Progressive Buildings, paid one worker about $18,000 in wages and another $95,000 in mileage. In total, investigators found that the company paid 46 employees about $452,000 in wages and $553,000 in mileage reimbursements, and another $200,000 in what were termed “donations.”

A lawyer for Mallett said an employee may have made errors on the wages and mileage, and those would be corrected.

It's not the first time a Mallett company has been accused of shirking its comp coverage, according to the news report. In 2005, investigators found that his company had a comp premium of $8,100, but an audit showed that the correct premium should have been about $1.3 million.

When the LWCC asked the company to pay up, Mallett transferred it to his father's ownership, and the father filed for bankruptcy for the company. Mallett's attorney suggested that the latest investigation was done to punish Mallett for not paying the $1.3 million in premiums.

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