Author: WorkCompAcademy

Detectives with the California Department of Insurance arrested nine individuals involved in a complex scheme allegedly targeting more than 230 workers’ compensation insurers and self-insured employers. Siblings Francisco Javier Gomez, Jr., 32, and Angela Rehmann, 38, owners of G&G Interpreting Services, allegedly fraudulently billed more than $24.6 million for interpreting services for injured workers with Latino surnames. G&G Interpreting Services changed their company name to American Liberty Interpreting in August 2012. The company is family owned and operated. Francisco Javier Gomez, Jr., Angela Rehmann, Cynthia Gomez, Gloria Sandoval, Arnulfo Reyes III, Crystal Garcia, and Jamilett Ortega are related.

According to Department of Insurance detectives, over a four year period G&G Interpreting allegedly billed for translation services provided to clinics where the majority of the clinic staff spoke Spanish and there was no need for translation services. In other cases, the company billed for services to clinics where 13 treating physicians spoke fluent Spanish-and again-there was no need for translation.

G&G Interpreting had a substantial operation providing Spanish-language interpreting services across the Los Angeles Basin and Southern California for injured workers receiving healthcare services through the workers’ compensation system. Billing occurred in San Diego, Riverside, San Bernardino, Orange, Los Angeles, Ventura and Santa Barbara Counties.

The investigation revealed that 83,411 interpreting service events exceeded 12 hours in a day-more hours than the clinics were actually open. Detectives also discovered that G&G Interpreting billed workers’ compensation insurers more than $422,000 for the services of an interpreter who was actually incarcerated in state prison during the time the company claimed she was providing interpreting services; in fact, she is still in state prison.

The arrest operation was conducted by the Department of Insurance with assistance from the California Highway Patrol and the Riverside County District Attorney’s Office and San Bernardino District Attorney’s Office. The case is being prosecuted by the Los Angeles County District Attorney’s Office. Officials carried out a morning raid on a North Hollywood home, which is one of the nine sites investigators arrested suspected conspirators. As the investigation continues, the California Department of Insurance said they need the public’s help to stop similar schemes.

“For example, if an interpreter does show up in the room in a medical clinic as a part of your workers’ compensation case and you don’t need one, we urge you to call the California Department of Insurance,” Jones said.

Investigators are trying to determine whether the owners of G&G, Angela Rehman and her brother Francisco Gomez, opened a new operation to hide their activities.This investigation is ongoing.

Sheik Zahid Ali was injured in 2006, after having driven a tractor-trailer rig filled with latex paint from Hayward, California to Spokane, Washington. While unloading the trailer a pressurized cap came off the trailer causing serious injury. The truck was owned by Ali’s Trucking; the trailer was owned by Trimac who was insured by Lexington Insurance Company. The injury was industrial. The significant issue was the claim of an employment relationship with Trimac.

Trimac is a multi-national corporation that specializes in transporting liquid latex-based products from producer to buyer. To transport its products, Trimac used approximately four tractors it owned driven by about six employee-drivers and about 14 tractors leased to it by about 32 “independent contractors.” One such owner/operator was Ali’s Trucking, a business owned by Intaz Ali. Intaz owned two tractors he had purchased from Trimac. He leased the tractors back to Trimac for its business, sometimes driving one himself and using other drivers. Ali’s Trucking had no business premises apart from Trimac’s Hayward location, where Ali’s Trucking kept its tractors. Ali’s Trucking entered into a contract with Trimac, entitled “Lease Agreement Independent Contractor” (Lease Agreement) which designates Trimac as “Carrier” and Ali’s Trucking as “Independent Contractor.”

However the relationships among Trimac, Ali’s Trucking and Sheik operated quite differently in practice from the way their relationships are outlined in these contracts. Most significantly was the exercise of control over drivers. Although the Lease Agreement purported to place responsibility on the Independent Contractor for “selecting, hiring, firing, supervising, training, setting wages and working conditions” for their drivers and employees. But the way in which the operation actually worked reflects substantial Trimac involvement.

At the conclusion of a hearing on the employment issue, it was found that that Sheik Zahid Ali was an employee of Trimac.  It was further found that “[t]he legal relationship between Sheik Ali, Ali’s Trucking and Trimac was one of joint employment. Both employers had the right to direct and control Sheik Ali’s activities while he was at work on the joint enterprise of transporting materials for Trimac and Ali’s Trucking and that Trimac not only had the right to control, it affirmatively exercised that control. Trimac appealed this finding.

The WCAB and the Court of Appeal affirmed in the unpublished case of Lexington Insurance Co. v. WCAB (Ali).

The seminal case of Borello and Sons, Inc. v. DIR (1989) 48 Cal.3d 341 acknowledged that the right to control work details is the primary consideration. Ultimately, Lexington’s arguments must fail because it has fallen short of demonstrating that the decision is unsupported by substantial evidence or that, as a matter of law, all commercial truck drivers whom a transportation company designates as “independent contractors” are necessarily so.

An Ontario man was sentenced to 3 years’ probation and 120 days in jail for committing workers’ compensation insurance fraud and stealing wages from his workers, both felonies. Miguel Contreras, 36, the former owner of Ontario-based National Drywall, Inc., was also ordered to pay his insurance carrier $262,535 in underpaid workers’ compensation insurance premiums.

The conviction stems from a 2011 project in which Contreras was awarded the contract to install drywall at Joe Baca Middle School in Colton. “Because this was a ‘Public Works’ project, Contreras was required to pay his employees the current prevailing wage,” said the prosecutor in charge of the case. “However, he employed two schemes to avoid doing so.”

One method required some of his workers to “kick back” a portion of their pay on a weekly basis in order to keep their jobs. The other required some workers to alter their time cards to falsely indicate that their primary job duties included “stocking/scrapping,” which was paid at a much lower prevailing wage, when in fact they were framing and hanging drywall, which was paid at a much higher prevailing wage.

While this theft of wages was occurring, National Drywall submitted false payroll reports to its workers’ compensation insurance carrier, ICW Group, which resulted in a fraudulent reduction of its insurance premium.Contreras was originally arrested on Oct. 23, 2014. A year later, on Oct. 23, 2015, Contreras entered pleas to workers’ compensation insurance fraud, and theft of prevailing wages, and admitted his conduct was subject to California’s white collar crime enhancement.

In March 2015, the Little Hoover Commission issued a report highlighting the magnitude of California’s underground economy problem. An underground economy is one that includes activities that businesses try to hide from government licensing, regulatory, tax and law enforcement agencies, and is subsidized by businesses that otherwise would be legal operators but who are breaking the law to gain a leg up on their competition. The Little Hoover Commission believes California’s underground economy is costing the State upwards of $10 billion in annual tax revenue, money that could be used for funding education, law enforcement, and infrastructure improvements, or reducing taxes and insurance premiums for Californians who play by the rules.

According to District Attorney the theft of prevailing wages and workers’ compensation premium fraud that took place in this case are the types of illegal activity that feed California’s underground economy.

Cal/OSHA announced that the owner/operator of California’s Great America theme park in Santa Clara was at fault for a roller coaster accident that critically injured a ride mechanic on June 12.

Robert Hooks , 66, suffered serious injuries when he was s truck by the Flight Deck ride while retrieving a cell phone in a restricted area. Cal/OSHA learned that Cedar Fair Southwest, the amusement park owner/operator, failed to have safety protocols in place to ensure that the roller coaster was shut down prior to retrieving lost articles near it , and also failed to effectively train workers to shut down the ride to retrieve lost articles. The accident happened shortly after 8 p.m. that night as the train was returning to the station. A park patron on the ride also suffered a hand injury.

“Employers are required to maintain a comprehensive injury and illness prevention program that addresses all safety hazards,” said Cal/OSHA Chief Julian n Sum. “Cedar Fair Southwest ‘s lack of safety protocols and training for employees contributed to this serious workplace accident.”

Cal/OSHA issued citations with penalties totaling $70,200 for eight workplace safety violations, including five serious in nature, two of them directly related the accident . A serious violation is cited when there is a realistic possibility that death or serious harm could result from the actual hazardous condition. A willful violation is cited when the employer is aware of the law and violates it nevertheless, or when the employer is aware of the hazardous condition and takes no reasonable steps to address it. The park was issued six violations in the past 10 years, one of which was serious, according to online federal Department of Labor records.

Great America issued the following statement in response to the charges: “On Monday, December 14 California’s Great America received six OSHA citations related to events occurring at the park earlier this year. The safety of all guests and associates is our highest priority. It is our intent to appeal each of the citations that have been put forward.”

The Office of Self Insurance Plans Chief Jon Wroten is leaving the Department of Industrial Relations for new endeavors, and will retire from state service this month. Mr. Wroten is responsible for overseeing and regulating the nation’s largest self-insurance workers’ compensation marketplace in his position as Chief of DIR’s Office of Self Insurance Plans (OSIP).

“Jon Wroten is a valued member of my executive management team. He helped implement the SB 863 self-insurance reforms and worked to make California’s self-insurance program more efficient and fair,” said DIR Director Christine Baker. During Chief Wroten’s tenure, DIR and OSIP:

1) Implemented processes to manage over $22 billion in total risk exposure, protecting the self-insured benefits of 4.6 million covered workers.
2) Instituted safeguards that monitor self-insurers’ solvency, compliance and market conduct, including the actuarial-based collateral evaluation and peer-review system.
3) Successfully reduced application and financial underwriting processes from nine months to less than 21 days.
4) Deployed an electronic filing system to simplify annual regulatory reporting processes.

Prior to his appointment as OSIP Chief, Mr. Wroten worked in DIR as a Cal/OSHA senior manager, served at the California Department of Business Oversight investigating white collar financial crimes, and scrutinized political campaign finance cases for the California Fair Political Practices Commission.

Mr. Wroten will join Sedgwick Claims Management Services, Inc. as its Senior Vice President, Regulatory Compliance and Quality after his retirement from state service.