Liberty Mutual (workmen’s comp) charged my company approx $5,000 at the annual audit for a sub contractor who had a legitimate work comp policy.

Workers Comp is truly a pain in the butt, and the regulatory structure as to who is required to be covered as an employee varies all over the country. What response did Liberty Mutual provide? You will need to get the specifics as to why the carrier thinks it is entitled to get premium from you, and be prepared to demonstrate that premium was in fact paid by the same employer on the same people at the time work was done by them for you. Get a copy of the other firm's policy and its payment records if possible.