ECEC approved provider and service owner fraudulently claimed $430,000 of WorkCover

A Victorian early childhood education and care (ECEC) approved provider has been sentenced to 22 months in jail and ordered to repay $350,000 of the $431,228 he fraudulently claimed from  the WorkCover scheme. 

Commenting on the case, WorkSafe Executive Director Insurance Roger Arnold said the fraud was “the most egregious he had seen in his time with the scheme,”  and that the level of deception and the length of time the man was willing to “keep up the act and blatantly lie” to multiple medical experts about a significant mental injury is “staggering and just totally repugnant”.

The man was convicted in the County Court yesterday after being found guilty by a jury of seven charges of obtaining financial advantage by deception relating to a claim which began in May 2006, when he was working as a school principal, and made a substantiated claim to WorkCover for a stress-related injury.

In that same month, May 2006, the man and his twin brother purchased a property with a view to demolishing it and constructing a built-for-purpose ECEC service, a goal which was completed, and began operations, in May 2009. 

In June 2009, the man’s GP provided a report to WorkCover agent CGU stating the man had depression and anxiety, would need lifelong psychiatric and psychological support and was totally unfit for any work – despite the man having engaged contractors for work, applied for planning permits and serving as the director of the ECEC service during that time.

At that time the man made a claim for permanent impairment benefits, which was referred to the independent medical panel. He told the panel he had no motivation, spent most of his day at home, and had no social contacts outside his family.

The panel concluded the man suffered from major depression related to his workplace injury and had a 20 per cent whole-person psychiatric impairment.

Throughout 2010, the man continued to report to medical experts that he was not working and stayed in bed most of the day. During this time, he was sent a significant number of invoices from office and equipment suppliers relating to the ECEC service and reported to WorkCover agent Gallagher Bassett the wages of the centre’s 15 full-time staff.

Between 2011 and 2014, the man and his brother continued to operate the ECEC service while seeking to develop a further three properties into residences and an additional ECEC service, also launching an employment and training solutions business. The man was actively involved in running the operations aspects of the business, including managing staff, making superannuation payments, purchasing supplies and equipment, applying for finance, and one year was registered as its payroll officer.

At independent medical examinations during this period, the man reported that he had not worked since March 2006, that he spent most of his time at home and that he saw himself as totally disabled and unable to work.

In August 2014, the original ECEC service constructed by the brothers was sold for $1.5 million. Data later seized from the man’s hard drive reveal the centre made a total net profit of $684,441 between 2009 and 2013.

During 2015, planning and development continued on the new properties, while the man also travelled interstate and overseas, including to conduct work for other major businesses such as Rio Tinto.

In that same period, an independent medical examination reported that the man “isolated himself in his room, presented with a major depressive disorder and did not have a current work capacity.”

The fraud was eventually uncovered in November 2015 when the man accidently sent a registration for WorkCover insurance form for the new ECEC service to his agent CGU, instead of his scheduled certificate of capacity.

An investigation was launched when, after being advised of the error, the man provided CGU with his scheduled certificate of capacity that certified him unfit for any work and included a signed declaration that he had not worked.

Further information about this case is available on the WorkSafe Victoria website.