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WCIRB Reports Lower Premium and Higher Combined Loss Ratio

The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) has released its Second Quarter 2022 Quarter Experience Report. This report is an update on California statewide insurer experience valued as of June 30, 2022.

Highlights of the report include:

– – Written premium declined sharply beginning in the second quarter of 2020 due to the economic downturn resulting from the pandemic.
– – The modest decrease in written premium for 2021 was driven by continued insurer rate decreases offsetting growth in employer payroll.
– – Written premium for the first six months of 2022 is 27% above that for the first six months of 2021. Much of this increase is being driven by higher employee wage levels and the continued economic recovery.
– – The average charged rate for the first half of 2022 is 3% below 2021 and the lowest in decades.
– – The projected loss ratio for 2021, including the cost of COVID-19 claims, is 6 points above that for 2020 and 12 points above that for 2019.
– – Projected loss ratios have been growing steadily since 2016, mostly as a result of declining insurer rate levels.
– – The projected combined ratio for 2021, including COVID-19 claims, is 8 points higher than in 2020 and 33 points higher than the low point in 2016.
– – Excluding COVID-19 claims, the projected combined ratio for 2021 is 110% and the projected ratio for 2020 is 100%, which are still higher than those of recent prior years.
– – Combined ratios have been growing in California due to insurer rate decreases and modest growth in average claim severities.
– – Indemnity claims had been settling quicker through the first quarter of 2020, primarily driven by the reforms of SB 863 and SB 1160.
– – Average claim closing rates declined sharply beginning in the second quarter of 2020 due to the pandemic.
– – After bottoming in 2021, average claim closing rates are beginning to increase in 2022.
– – Cumulative trauma (CT) claim rates increased through 2016 to be 80% above the 2005 level.
– – CT claim rates were relatively consistent from 2016 through 2019.
– – Preliminary data shows a sharp increase in CT claim rates in 2020, likely driven by shifts in claim patterns during the pandemic period.
– – In particular, the 2020 increase in CT claim rates is largest in industry sectors that had the largest job losses in 2020, suggesting an increase in post-termination claims.
– – Projected total indemnity claim severity for 2021, excluding COVID-19 claims, is 1% below 2020 but 11% above 2017.

This information presented reflects a compilation of individual insurer submissions of information to the WCIRB. While the individual insurer data submissions are regularly checked for consistency and comparability with other data submitted by the insurer as well as with data submitted by other insurers, the WCIRB can make no warranty with respect to the information provided by third parties.

SoCal VR School Executives Arrested for $1.7M Voucher Fraud

The California Department of Insurance announced the arrest of 71 year old Rene Carlos Aguero and 56 year old Gustavo Adolfo Lopez for allegedly submitting fraudulent vocational training vouchers for workers’ compensation claims and failing to provide the training at the for-profit school they run, Computer Institute of Technology (CIT).

Many of the injured workers were Spanish speakers who were asked to sign documents in English, which they did not understand.

Aguero and Lopez were charged with 18 felony counts, including conspiracy, insurance fraud, grand theft and forgery. The fraudulent insurance claims are estimated to reach $1.7 million.

For more than three years Aguero and Lopez submitted fraudulent documents to nine different insurance carriers and billed for services not rendered to recipients of the Supplemental Job Displacement Benefits (SJDB) voucher, valued between $6,000 and $10,000.

Injured workers can use the non-transferable vouchers to pay for educational retraining or skill enhancement at state-approved or accredited schools, according to the Department of Industrial Relations.

Aguero is listed in California Secretary of State records as chief executive officer of CIT’s North Hollywood location, and Lopez as chief executive officer of the school’s location in the city of Bell.

CIT is alleged to have victimized multiple injured workers by enrolling them in vocational rehabilitation courses, using their SJDB voucher and not providing the classes. In addition, CIT failed to refund the injured workers after redeeming their SJDB voucher and not providing the classes for which they were registered to take.

The investigation by the California Department of Insurance determined that CIT forged injured workers’ signatures on vocational school documents such as CIT enrollment agreements, vouchers, and contracts. In some cases, injured workers were asked to sign blank documents with no explanation. On one occasion, CIT sent an invoice for payment and an enrollment agreement to an insurance carrier with a signature and initials purportedly made by the injured worker, despite the fact the injured worker had died nearly 5 months prior to the date on the enrollment agreement.

Many injured workers were made to believe they were enrolled in a legitimate school, but never received or completed training. Some workers contacted CIT to follow up on their training, but received no help from CIT, including laptops for which CIT invoiced multiple insurance carriers.

On September 9, 2022, the Los Angeles District Attorney’s Office filed felony criminal charges and issued an arrest warrant for Aguero and Lopez.

Aguero’s bail was set at $150,000. His arraignment is scheduled for December 5, 2022. The case is being prosecuted by the Los Angeles County District Attorney’s Office.

DWC Suspends 178 Medical Providers for Fraud Crimes in 2022

The Department of Industrial Relations’ Division of Workers’ Compensation (DIR/DWC) and DIR’s Anti-Fraud Unit suspended 178 medical providers during the first eight months of 2022.

Providers are suspended from the workers’ compensation system when they have been convicted of fraud-related crimes, have been suspended from the Medicare or Medicaid programs due to fraud or abuse, or have lost their professional license.

Since 2017, a total of 649 providers have been suspended from participating in California’s workers’ compensation system.

DWC has also initiated new lien consolidation cases estimated at $75 million for those providers that were convicted of a fraud-related crime in 2022.

During lien hearings, medical providers have an opportunity to prove the billing is legitimate. If the providers are unable to produce such evidence, the liens are dismissed.

A total of 63,000 liens have been dismissed since 2017 with a value of nearly $775 million.

There are currently 86 criminally charged providers with 516,000 liens designated as stayed. The stays prevent criminally-charged providers from seeking payment for their liens while the criminal case is pending.

DIR’s Anti-Fraud Unit deals with suspending any physician, practitioner, or provider from participating in the worker’s compensation system per Labor Code § 139.21, and staying liens of criminally charged providers per Labor Code section § 4615. DIR has posted information on its fraud prevention efforts online, including information on suspended medical providers, lien consolidations and the Special Adjudication Unit.

DIR’s Division of Workers’ Compensation monitors the administration of workers’ compensation claims and provides administrative and judicial services to assist in resolving disputes that arise in connection with claims for workers’ compensation benefits.

LA/OC Physician Pleads Guilty to $20M Pharmaceutical Scam

The California Attorney General announced the guilty plea of a Southern California doctor, who participated in an illegal prescription scheme that defrauded the state Medi-Cal program of over $20 million.

Over the course of two years, Mohammed El-Nachef, M.D., took part in an illicit drug-prescription operation where he prescribed medically unnecessary HIV medications, anti-psychotics, and opioids to over a thousand Medi-Cal beneficiaries in the Los Angeles and Orange Counties. The medications he authorized were not kept or used by the beneficiaries, but instead diverted to the illicit market for cash.

He was charged in March 2020 with a half-dozen felony counts, including executing a scheme to defraud Medi-Cal, making a fraudulent claim for a health benefit, filing a fraudulent insurance benefit claim, conspiring in the unauthorized practice of medicine and grand theft, with sentencing enhancement allegations for aggravated white- collar crime between $100,000 to $500,000 and aggravated white-collar crime exceeding $500,000.

He was accused of helping “two convicted felons, Steve Fleming and Oscar Abrons, in a scheme to obtain expensive pharmaceuticals that were sold on the illicit market,” according to court papers filed by the state Attorney General’s Office, which was prosecuting the case.

This week El-Nachef pled guilty in the Orange County Superior Court to one count of insurance fraud and one count of aiding and abetting the unauthorized practice of medicine.

As part of his plea, El-Nachef is required to pay $2.3 million in restitution and surrender his medical license. His sentencing is set for August 1, 2023.

El-Nachef served as the prescriber at two clinics: one in Anaheim and the other in Los Angeles. El-Nachef was recruited by individuals who were involved in illegally selling the medications. These individuals solicited Medi-Cal recipients with the promise of cash payments to pose as patients, and in turn, El-Nachef agreed to prescribe these patients the medically unjustified medications. The selected drugs were among those with the highest street value.

The pharmacies billed Medi-Cal for the medications, which would ultimately end up in the hands of the individuals who recruited El-Nachef, who then sold the drugs for cash. For his part, El-Nachef received cash payments for each day he wrote prescriptions.

The California Department of Justice’s DMFEA (Division of Medical Fraud and Elder Abuse) protects Californians by investigating and prosecuting those who defraud the Medi-Cal program as well as those who commit elder abuse. These results are only made possible through the coordination and collaboration of governmental agencies, as well as the critical help from whistleblowers who report incidences of abuse or Medi-Cal fraud at oag.ca.gov/dmfea/reporting.

DMFEA receives 75% of its funding from HHS under a grant award totaling $50,522,020 for federal fiscal year 2021-2022. The remaining 25% is funded by the State of California. The federal fiscal year is defined as October 1, 2021, through September 30, 2022.

At the time of his arrest in 2020 he had stipulated to disciplinary charges filed in 2019 with the California Board of Medicine and had been placed on seven years probation.

Home Health Care Agencies Cited for $2M in Worker Misclassification

The Labor Commissioner’s Office has cited Angel Connection Nursing Care and Angel Connection Nursing Services for improperly misclassifying 66 home health care workers as independent contractors.

Investigators determined that Annabelle Ricasata, the owner of Angel Connection Nursing Care, is a full-time employee of Angel Connection Nursing Services, and that she misclassified the employees as independent contractors to avoid paying required wages, workers’ compensation insurance and payroll taxes.

The two Long Beach-based companies must pay more than $1.8 million for the wage theft violations, including failure to pay 22 workers overtime wages, nine of whom were also not paid minimum wages due. One of the businesses also failed to maintain workers’ compensation insurance or provide proper itemized wage statements for the misclassified employees.

The Labor Commissioner’s Office opened its investigation into Angel Connection Inc. (dba Angel Connection Nursing Services) and J Jireh Group (which uses the name Angel Connection Nursing Care) after receiving a referral from the Pilipino Workers Center and Bet Tzedek Legal Services.

Angel Connection Nursing Services exercised control over the wages, hours and working conditions of Angel Connection Nursing Care’s employees who were misclassified as independent contractors.

Angel Connection Nursing Care owner Ricasata and Angel Connection Nursing Services owners Merjilyn Chu and Joseph Fortunato are jointly and severally liable for the $1,021,393 due to workers, which includes $213,163 in unpaid minimum wages, $283,058 in liquidated damages, $329,515 in overtime wages, $14,123 contract wages, and $181,534 in interest.

Angel Connection Nursing Care is also liable for $330,000 for the misclassification of 66 workers, $171,000 for failure to provide itemized wage statements, and $357,046 for a Stop Order Penalty Assessment for failure to provide workers’ compensation insurance.

Enforcement investigations typically include a payroll audit of the previous three years to determine minimum wage, overtime, and other labor law violations and calculate payments owed and penalties due. When workers are paid less than minimum wage, they are entitled to liquidated damages that equal the amount of underpaid wages plus interest.

California law requires civil penalties to be transferred to the State’s General Fund when collected.

State Bar Investigating LA Attorneys Disbursement of Class Action Funds

The State Bar of California’s Board of Trustees Chair Ruben Duran announced that the State Bar is investigating attorneys Mark John Geragos and Brian Stephen Kabateck in connection with the Armenian Genocide insurance settlement funds from which dispersals were made in the U.S. and France.

Courthouse News added facts to this investigation. Geragos is best known as a criminal defense lawyer, having represented such celebrity clients as Michael Jackson, Winona Ryder, Chris Brown and Jussie Smollet. Kabateck is a plaintiff’s attorney, having represented a number of surviving families of victims in the Lion Air Flight 610 crash of 2018, and Los Angeles ratepayers in the Department of Water and Power billing scandal. He is also a former president of the LA County Bar Association. Both lawyers are Armenian Americans.

Kabateck, Geragos and a third Armenian American lawyer, Vartkes Yeghiayan, filed two class actions against insurance companies on behalf of families of victims of the Armenian genocide over unpaid life insurance claims. The suits were both for a combined $37.5 million. But as the Los Angeles Times laid out in a lengthy investigation published this past March, numerous victims’ descendants, as well as churches, never got the money they were owed.

Before he died in 2017, Yeghiayan claimed Geragos and Kabateck “had splurged on first-class travel and treated the descendants’ money as ‘petty cash,'” according to the Times.

Geragos and Kabeteck, meanwhile, have blamed others for the misappropriated funds, including Yeghiayan, whom they sued in 2011. In a letter to the Times after the investigation was published, Kabateck wrote, “I have always been deeply saddened that Mr. Yeghiayan and his co-conspirators took money from the decedents of victims of the Armenian genocide, and that is why I worked so hard to reveal their actions and help hold them accountable.”

The State Bar announcement was made pursuant to California Business and Professions Code section 6086.1(b)(2), which authorizes the State Bar’s Board Chair, when warranted for protection of the public and after notice to the licensee, to issue an announcement confirming the fact of an investigation, clarifying the procedural aspects and current status of the investigation, and defending the right of the licensee to a fair hearing. Details of the investigation must remain confidential to comply with statutory limitations on disclosure.

A State Bar investigation seeks to determine whether there is a basis for filing a Notice of Disciplinary Charges. An attorney who is the subject of an investigation has a right to a fair hearing and must be presumed innocent of any misconduct warranting discipline until any charges that might be brought have been proven in a proceeding before the State Bar Court.

“The State Bar is charged with protecting the public,” said Ruben Duran, Board Chair. “Confidence in our ability to do so has unfortunately been shaken in recent times by the Girardi matter and what it represents. Restoring and maintaining the public’s trust in the disciplinary apparatus of this agency is imperative. To that end, it is important to emphasize that the State Bar investigates possible misconduct wherever it might occur. The status of attorneys, or the size of their practice, cannot and will not impact our decisions to investigate misconduct. I want to stress that in and of itself this announcement is not an indication of any misconduct by the attorneys being investigated. Lastly, the State Bar expresses gratitude to the LA Times for its excellent reporting on the distribution of Armenian Genocide settlement funds.”

The State Bar of California is still reeling from the Tom Girardi scandal, in which it was badly implicated. Girardi, another prominent plaintiff’s attorney – and famously married to “Real Housewives of Beverly Hills” star Erika Jayne – has been accused of stealing tens of millions of dollars from his clients, including some families of the Lion Air crash. A Times investigation found that Girardi was, for decades, able to avoid discipline and hide his misdeeds, in part by befriending judges and key figures in the bar association.

In a phone interview, Geragos said he was infuriated by the announcement. “They’re waiving confidentiality on an investigation they haven’t done, in a matter that’s been investigated three times in the last 12 years by both inside and outside counsel,” he said.

In a written statement, Kabateck said: “The undisputed facts are and will always be that an independent third-party appointed, approved, and overseen by the Ccurt (like in any class action) distributed the settlement funds to the class members. Neither Mr. Kabateck nor Mr. Geragos were involved in any decision relating to individual payments to victims, nor were they able to decide, review or influence claims made by class members. We have fully cooperated with multiple prior investigations and inquiries conducted by the state bar and others (all of whom found no wrongdoing).”

Simply Business Partners with biBERK to Offer Comp Coverage

Simply Business, LLC., a Boston-based digital insurance agency focused on small businesses, announced the launch of a partnership with biBERK Business Insurance, a Berkshire Hathaway company, to offer workers’ compensation products online to small business owners in the United States.

biBERK is a small business insurance company that’s part of the Berkshire Hathaway Insurance Group. All of the Company’s major insurance subsidiaries are rated A++ by A M Best Company with millions of customers and over 75 years of insurance experience.

This offering is currently available to small business owners in Washington D.C. and all 46 states where private carriers are eligible to operate.

Through this new partnership, small business owners can receive a biBERK workers’ compensation quote through the Simply Business website. They also have the option to digitally bind policies and speak to a licensed insurance agent to ensure that the coverage they’ve selected best meets the needs of their business.

We’re committed to helping small businesses grow by providing specially tailored insurance solutions, and this new partnership makes it easier for our customers to get exactly what they need,” said David Summers, Group CEO of Simply Business. “With the help of biBERK, we’re able to provide more comprehensive coverage to entrepreneurs across the country.”

Simply Business says it is changing the way small business owners find business insurance by offering customers tailored insurance coverage online. The company began in the United Kingdom and expanded to the United States in 2017, naming Boston it’s home state.

With over 850,000 customers globally, Simply Business says it has become a leader in the space through its commitment to a customer-first model, focusing heavily on simplicity, choice and value.

However it would seem to share that space with Palo Alto based NEXT Insurance. It also claims to provide small business insurance with simple, digital and affordable coverage. It offers policies that it says are easy to buy and provides 24/7 access to Live Certificates of Insurance, Additional Insured, and more, with no extra fees.

This month NEXT Insurance announced a partnership with Intuit Quckbooks accounting platform. QuickBooks is the accounting software of choice for more than 29 million small businesses in the U.S. They have over 80% market share

It does seem clear that newer and easier technologies are the emergent model for placing workers’ compensation insurance with at least small business owners.

Proposed Regulations to Allow Unsupervised Care by Nurse Practitioners

Less than half of the 139,000 licenses physicians in California are actively engaged in providing patient care. Of this number, only 32% are primary care physicians. The distribution of physicians also varies greatly by region with the San Joaquin Valley, Inland Empire and rural areas suffering the greatest shortages.

While a number of initiatives, including loan forgiveness and expanded residency programs, have focused on improving this situation. But it is not expected that there will be enough interested primary care physicians to meet the need for healthcare in California.

One of the top recommendations from the California Health Workforce Commission, representing thought leaders from business, health, employment, labor and government, after it spent a year looking at how to improve California’s ability to meet workforce demands, was to allow full practice authority for Nurse Practitioners.

The California Legislature responded in 2020 by passing AB 890.

A Nurse Practitioner (NP) is a registered nurse (RN) who has additionally earned a postgraduate nursing degree, such as a Master’s or Doctorate degree, and obtained a certificate from a certifying body.

At the state level, the Board of Registered Nursing (BRN) sets the educational standards for NP certification. According to the BRN, an NP is an advanced practice RN who meets BRN education and certification requirements and possesses additional advanced practice educational preparation and skills in physical diagnosis, psycho-social assessment, and management of health-illness needs in primary or acute care.

As a result of their additional training, NPs tend to perform additional functions through standardized procedures than non-advanced practice RNs. NPs also have specific authorization to furnish controlled substances and medical devices under standardized procedures, except that standardized procedures for Schedules II and III must include patient-specific protocols approved by a treating or supervising physician.

The passage of AB 890 ultimately added Business and Professions code section 2837.103 and 2837.104, which provided for Nurse Practitioners who were suitably trained and certified, to perform certain standardized procedures without physician supervision. The new law could not have effect until the BRN provided suitable regulations.

Taking AB 890 a step further toward implementation, this September the California Board of Registered Nursing (BRN) released a Notice of Proposed Action to the California Code of Regulations.by adding sections 1482.3 and 1482.4.

From the standpoint of California worker’s compensation claims, the implementation of this new law will in essence relieve shortages of physicians elsewhere, presumably adding services available for injured workers, and lowering costs for care. It is possible that the labor code could be later amended to define if and how NPs can directly be involved in care.

The Board has not scheduled a public hearing on this proposed action. The Board will, however, hold a hearing if it receives a written request for a public hearing from any interested person, or his or her authorized representative, no later than 15 days prior to the close of the written comment period.

Judicial and Regulatory Health Care Disruptions Expected Soon

Last May the US Supreme Court agreed to review the case of Health and Hospital Corp. v. Talevski, which was brought by the wife of a Medicaid patient with dementia who sued his nursing home, alleging abuse and violations of his rights.

The nursing home successfully argued in a lower court that federal rules for Medicare and Medicaid recipients originate from the government’s spending powers and amount to contracts between the government and providers. By that reasoning, individuals can’t sue for the entitlements the program promises.

But the 7th U.S. Circuit Court of Appeals last year reversed the decision, finding precedent for a right to sue, including situations in which hospitals took states to court over Medicaid reimbursement rates.

The outcome could decide if tens of millions of people in public welfare programs can go to court if essentials like health care and food are endangered. The outcome of the case could extend beyond Medicaid, to CHIP, the Supplemental Nutrition Assistance Program, Head Start and other programs, Oral argument in the case is set for November 8, 2022.

The Amicus Brief filed by the California Advocates for Nursing Home Reform (CANHR), a nonprofit organization that represents the interests of approximately 100,000 California nursing home residents and their families, AARP and a number of other organizations provided a view of arguments in favor of SCOTUS sustaining the 7th Circuit ruling that allows individual suits against operators.

Regulatory enforcement alone cannot do the job. Regulatory enforcement determines facilities’ compliance with standards. It does not vindicate a resident’s individual entitlement to quality care or violations of their rights. In addition, regulatory enforcement has failed to stop many pervasive harms, including illegal discharges and chemical restraints. Moreover, even if regulatory enforcement functioned perfectly, which it does not, it still would not compensate residents for harms that result from facilities’ violating their rights.”

Thus, residents must be able to go to court to enforce their rights themselves. A decision affirming their ability to enforce their rights under Section 1983 will give residents the mechanism they need to hold government-run facilities accountable for violating their rights.”

And CalMatters reports on another disruption to health care delivery. It says that more than 1.7 million Medi-Cal patients may get a new insurance provider in the coming months as a result of the state’s first-ever competitive bidding process, but critics and some providers fear the change will cause major disruptions to care.

California’s Department of Health Care Services last month announced its intent to award $14 billion-worth of Medi-Cal contracts to three companies – Health Net, Molina and Anthem Blue Cross – down from nine.

The new contract includes strict new quality standards for patient outcomes and financial penalties for providers that do not meet the goals. But the selections have raised questions about whether the plans can actually meet the new quality standards. Over the past decade, health outcomes and quality metrics have stagnated or gotten worse for Medi-Cal enrollees, and the three winners, which have current contracts across two-thirds of the state, maintain spotty track records.

Losing bidders have submitted appeals in more than half the counties where bidding took place, claiming competitors overpromised their Medi-Cal services and that the Department of Health Care Services implemented an unfair scoring system.

One such appeal came from Community Health Group, the largest Medi-Cal provider in San Diego County and one of the highest-performing insurance plans in the state. It lost the initial bid to Health Net and Molina.

DA Drops Charges in Premium Fraud Case – in 4th Week of Jury Trial

Charges have been dropped against three people accused of defrauding the state’s compensation insurance fund to save more than $127,000 in workers’ compensation insurance premiums.

El Dorado Superior Court Judge Mark Ralphs dismissed the charges on Tuesday during the fourth week of a jury trial.

According to the report by MSN, the ruling came after last-minute evidence surfaced that showed the defendants were acting on the professional advice of a Roseville insurance agency. A representative of the insurance agency advised the defendants in an email that a carpentry company qualified as a new business and thus lower insurance rates from the State Compensation Insurance Fund.

“In light of this new evidence, the People do not believe we can prove the case beyond a reasonable doubt against the defendants,” stated a Sept. 20 memo by El Dorado County Deputy District Attorney Joddie Jenson asking the judge to drop the case.

Troy Williams, 49 of Angel Camp, John Allison, 63, of Rocklin, and Nanci Morman, 68, of Somerset, were charged last May with multiple counts of insurance fraud after a joint investigation by the California Department of Insurance and the El Dorado County District Attorney’s Office.

This has been a nightmare for me,” said Williams, who suffers from brain cancer. He said the investigation started back in 2018 and has caused constant anxiety while dealing with his medical issues.

Before this month’s trial, Williams said he was offered a plea deal of paying a $127,000 fine and no jail time if he agreed to plead guilty to misdemeanor charges. Otherwise, he faced a multi-year prison term if found guilty. “I am adamant that I am not going to let my own government try to blackmail me into saying I did something I didn’t do,” Williams said in an interview. While he won’t be paying a fine, his legal bills have cost more than $125,000, he said.

Authorities had contended that Williams, the owner of Archer Building Co. in El Dorado Hills, had conspired with John Allison back in 2016 to move his employees to a new company, Allison Development in Roseville, in order to save on worker’s compensation rates.

During a 4-year period, from 2016 to 2020, the three defendants were alleged to have saved more than $127,000 in insurance premiums.

Allison had been a senior employee of Williams at Archer Building Co. Archer had seen its worker compensation rates spiral because of several accidents on construction sites. Morman was the bookkeeper for both companies.

The three defendants had insisted the movement of employees from Archer to Allison wasn’t to save on workers’ compensation rates but to keep several dozen Archer workers including Allison employed in case of Williams death.

Williams in the interview said his business partner Jay Young had died in 2016 and that he was receiving chemotherapy that prevented him from managing his business adequately. He said he also wanted to reduce his workload and not have any direct employees. So. Williams said he continued his business without direct employees, relying on subcontracted workers from Allison Development.

The Department of Insurance and The El Dorado County District Attorney had contended until this week it was all a ploy between the three individuals to save on their workers’ compensation premiums.

In a statement, El Dorado County District Attorney Vern Pierson said defense attorneys for the three individuals did not disclose the email from the insurance broker. Pierson maintained that defense attorneys had the email in their possession the entire time this case was pending, despite repeated requests and an order from the court to provide discovery of their files.  “If they had disclosed this information earlier, we would not have filed charges,” he said. “If they had disclosed this information prior to trial, we would have dismissed.”

But Travis Owens, the lead attorney for the three charged individuals, said he had not seen the email until last week. He said the prosecutor’s office and state fraud investigators had done “an inadequate investigation.” Owens said the email from insurance broker Chad Watts that Allison Development could file for workers’ compensation insurance as a new business, which resulted in lower rates than Archer was paying, was only discovered by bookkeeper Morman in her files in the last few days.

Both officials of Pierson’s office and Owens said that Watts had previously been interviewed as part of their due diligence. But that the prior interviews had not turned up the information or the email that Watts had given the three defendants his professional advice that ended up resulting in lower insurance premiums for Allison Development.