Charges: Minnesota drywall employees stiffed out of workers' comp
A Minnesota drywall company faces theft and insurance fraud charges for allegedly falsifying records to avoid paying workers compensation’ premiums.
Hennepin County prosecutors announced the charges Tuesday against Leroy and Joyce Mehr, a husband-and-wife team who ran Merit Drywall, which was based in Wright County until it closed late last year.
Hennepin County Attorney Mike Freeman said his office is watching similar allegations in the construction industry after prosecuting the county’s first labor-trafficking case, in which Ricardo Batres pleaded guilty late last year to exploiting undocumented workers.
“I've done other work comp fraud cases but not of this magnitude,” Freeman said of the case. "It cheats the workers from the health care insurance they're entitled to; second, it cheats the insurance company who is supposed to provide the coverage; and third, it cheats the companies that compete with a fraudulent corporation."
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Freeman said the Mehrs didn’t take advantage of workers in the same manner that Batres did, but they’ve profited by claiming their employees were independent contractors, therefore responsible for insuring themselves. He added that the practice of denying workers’ comp was widespread and “ought to end.”
The company had sales of about $7.7 million from 2016 to 2017, according to the complaint. It notes that the Mehrs avoided paying more than $300,000 in insurance premiums.
Burt Johnson, attorney for the North Central States Regional Council of Carpenters, which assisted with the investigation, said "criminally low" construction bids are common and concerning.
"For the developers and general contractors, they receive bids from all kinds of contractors, contractors that are violating the law … and contractors that are abiding by the law and paying their workers on the books,” he said. “For them, if you look at the bid and you see that the low bidder is hundreds of thousands of dollars cheaper, you should be asking more questions."