A good example of LA politics at play

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NEW ORLEANS (WVUE) - A business owner who sits on two different state board has been sanctioned in two separate investigations surrounding insurance claims.

The Louisiana State University Board of Supervisors website describes member Lee Mallett as a ‘respected businessman’ who has created businesses ‘that support good-paying jobs and give back to the community’ -- but Mallett’s companies have been investigated twice by state agencies in relation to coverage under a state worker’s compensation program.

Mallett, who also serves as chairman of the State License Board of Contractors, owns several manufacturing and construction companies in the Lake Charles area. In 2018, his companies purchased workers compensation insurance through a state created entity, the Louisiana Worker’s Compensation Corporation. The coverage protects workers hurt on the job, as long as their company signs up for coverage and pays a premium.

The premium is based on the salary of each employee.

When applying for the worker’s compensation coverage, one of Mallett’s companies, Progressive Buildings, claimed one employee drove the equivalent of New Orleans to Atlanta every day of the week.

State records obtained by FOX 8 show the company claims it paid the woman about $18,000 in wages and then paid her another $95,000 in mileage reimbursements. That figure is key because the premium paid to the worker’s compensation corporation is based on the employee’s salary, not their other earnings and reimbursements. So in this example, 84 percent of the employee’s total earnings were not included in calculating the premium paid to the state corporation

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In 2005, investigators found another Mallett company had “the same sort of inaccuracies." Initially the company had a lower worker’s compensation premium -- $8,100 -- but after an extensive audit, investigators found the correct premium should have been nearly $1.3 Million.

“He’s been caught before,” Friedman said. “So this is a continuing course of conduct -- clearly a knowing course of conduct to defraud the worker’s comp board."

According to the Worker’s Compensation Corporation, after the audit, it asked Mallett to pay the correct premium -- $1.3 Million -- but it says rather than pay the premium owed, Mallett transferred the ownership of the company to his father who then put the company in bankruptcy.

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The same company claims it made nearly $200,000 in donations to employees. Those donations are also excluded from the calculation of worker’s compensation premiums. The Worker’s Compensation Corporation canceled the coverage a month after Mallett’s companies signed up for the policy. The corporation started investigating right after the companies signed up for the insurance.

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“Do as we say, not as we do” seems to be the appropriate motto for the Louisiana State Licensing Board for Contractors (LSLBC). Recent reports of insurance fraud and corruption are making it clear that there are problems within the Residential Contractors Board. According to a recent news story, it appears that at least one of these Contractors Board members has been caught for a second time defrauding workers comp insurance companies by reclassifying payroll to avoid paying premiums.

This is ironic considering that the millionaires that make up the board recently began trying to enforce unlawful rules designed to dominate their smaller competitors by requiring nearly every subcontractor to carry workers comp and general liability insurance. These new rules, which are not required by state law, are being enforced on everyone from cement finishers to brick layers.

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If the Contractors Board feels that insurance premiums are so high that fraud is justified among their members, why are they crushing working families with these same burdens? These insurance premiums eat up profits and add unnecessary costs to consumers.

Imagine for a moment, if you will, a board that is made up of wealthy businessmen who work to gain advantage over their smaller competitors (a board that decides who gets disciplined and who does not). And keep in mind, the only way to get on this board is to be politically connected. It’s not as though ordinary business owners are serving on this board. You have to be in the know, and be able to pay to play. As the story showed, the board member in question has donated over a million dollars to political campaigns (roughly the same amount that he supposedly swindled out of workers comp).

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