Woman pleads guilty to $5.9 million comp fraud scheme

A Tennessee woman has pleaded guilty to conspiracy in a $5.9 million workers compensation scheme that involved collecting premiums for nonexistent comp policies.

Andrea Rudd faces up to five years in prison and a fine of $250,000, according to the plea agreement filed earlier this month in the United States District Court for the Eastern District of Tennessee in Knoxville. Ms. Rudd also pleaded guilty to one count of tax evasion totaling $10.4 million, which carries the same potential sentence.

Ms. Rudd operated Powell, Tennessee-based HR Comp L.L.C., a professional employer organization that provided employee benefits and payroll processing services. Between January 2010 and October 2015, HR Comp accepted premium payments from client companies for workers comp coverage that was not actually provided and furnished fraudulent certificates of liability insurance to those clients, court records show.

HR Comp paid workers comp claims submitted by client companies out of its own funds in order to continue the deception, the plea agreement says. In total, the company collected nearly $5.4 million in premiums from client companies for comp coverage that never existed, the filing says.

HR Comp was cited and fined $1,500 by the California Division of Occupational Safety and Health in 2013 after a temporary worker the company provided to Dusseldorf, Germany-based Henkel Corp.’s plant in Bay Point, California, died as the result of a work-related injury.