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December 2005 State: California Area of Interest: Insurance Commissioner John Garamendi Calls for 15.3% Decrease in Workers' Compensation Pure Premium Advisory Rate Insurers have cut rates just 26% since reforms began - 10% less than the Commissioner recommended. He urges that savings be passed along more quickly Insurance Commissioner John Garamendi recommended a 15.3% decrease in the state's workers' compensation pure premium rates Thursday, his fourth consecutive decrease and an amount that brings his cumulative recommended cuts to 46.2%. In announcing the move, the Commissioner strongly
renewed his call for insurers to pass along the savings more quickly
to employers. He noted while he had called for cumulative decreases
of 36.5% prior to today, insurance companies had lowered rates by
only 26.7%. During his announcement, the Commissioner noted that much of the reforms are still being implemented, as well as additional reforms brought about by SB 899. He cautioned that as they are more fully implemented some changes may result that slow the pace of future decreases in the pure premium rate. The Commissioner also expressed concern about testimony he has received regarding the savings resulting from changes to the workers' compensation permanent disability rating schedule. Source: State of California State: Florida Area of Interest: Gallagher Announces Multiple Arrests for Staged Crash in Miami - Fraud ring billed more than $100,000 in fraudulent insurance claims Tom Gallagher, Florida's chief financial officer, announced today the arrests of eight members of an alleged staged crash ring accused of filing more than $100,000 in fraudulent insurance claims from a single staged accident. The suspected ringleaders planned and recruited the participants, according to detectives with the Department of Financial Services, Division of Insurance Fraud. All eight are charged with 13 counts each of insurance fraud and grand theft, and one already is facing a minimum sentence of two years in prison for a prior staged accident. Three clinics were involved - including a chiropractor who was previously arrested for insurance fraud and grand theft. Gallagher next year will ask the Legislature to require medical clinics to post insurance fraud posters touting the department's reward program. He also will ask the Legislature to implement a minimum two-year prison sentence for those who commit phantom and paper accidents - those that never happen - and to renew and tighten restrictions on the release of police accident reports. Source State of Florida State: Massachusetts Area of Interest: OSHA Cites Massachusetts Granite Firms for Failing to Correct Hazards ASI Industries and Atlantic Stone Industries LLC, both located in Marlborough, Mass., have been fined a total of $106,100 by the U.S. Labor Department's Occupational Safety and Health Administration (OSHA) for 14 instances of failing to correct hazards cited during OSHA inspections in 2004 and for nine new alleged safety and health violations. The two companies manufacture and process granite countertops and were first cited by OSHA in September 2004 for violations of safety and health standards. Although the companies agreed to correct all cited hazards, follow-up inspections begun May 25, 2005, found numerous hazards still uncorrected. Among ASI's uncorrected hazards were: employees overexposed to respirable silica dust and lack of engineering controls to reduce exposure levels; lack of a respiratory protection program and training; no training on noise hazards; unguarded saws and sanders; excess air pressure for a cleaning hose, and electrical hazards. ASI also received one serious citation for improper respirator selection. The company faces $77,000 in fines for these items. Atlantic Stone Industries received a failure to abate citation for not providing forklift operators with safety training. The company also received two repeat citations for employees exposed to being thrown off a forklift and unsafe storage of oxygen cylinders. Six serious citations were issued for unguarded pits and floor openings; no hearing conservation program; improperly secured loads; unguarded saws; an unguarded flywheel, and no strain relief for a power cord. Penalties of $29,100 have been proposed. Source: Occupational Safety and Health Administration State: Maine Area of Interest: OSHA Fines Fraser Paper $170,000 for Failing to Record Injuries and Illnesses The U.S. Labor Department's Occupational Safety and Health Administration (OSHA) has cited Fraser Paper for failing to record numerous injuries and illnesses that occurred at its Madawaska mill between 2003 and 2005. The paper manufacturer faces a total of $170,000 in fines. Acting on an employee complaint, OSHA examined the company's illness and injury logs and other medical data for mill employees from 2003 through 2005. OSHA's inspection found 59 instances where injuries or illnesses were not recorded in the mill's "OSHA 300" illness and injury log; 77 instances where injuries or illnesses were not recorded in the log within seven days; and two years, 2003 and 2004, for which incomplete annual illness and injury summaries were certified as being complete. Proper recording of injuries and illnesses is the foundation of a workplace safety and health program, noted Lemire. Unrecorded or misrecorded injury and illness information can obscure the types and severity of injuries occurring in a workplace, undermining efforts to prevent them. As a result of this inspection, OSHA issued three willful citations with $165,000 in fines. An additional $5,000 in fines was proposed for three other-than-serious citations for not recording medical injuries and illnesses as restricted duty days or days away from work and not including all incident reports on OSHA 300 logs. OSHA defines a willful violation as one committed with an intentional disregard of, or plain indifference to, the requirements of the Occupational Safety and Health Act and regulations. Source: Occupational Safety and Health Administration State: Florida Area of Interest: Gallagher: $32 Million in Homeland Security Funds Have Better Prepared Florida for Disasters, Including Terrorist Attacks Tom Gallagher, state fire marshal, said today that more than $32 million in federal Homeland Security funds have been funneled through the State Fire Marshal's Office to fire departments throughout Florida, helping communities prepare to respond to natural disasters as well as chemical, biological, radiological or nuclear threats. The funds have helped establish, train and equip 50 technical rescue teams, seven urban search and rescue (US&R) teams and to better equip and train 28 existing regional hazardous materials teams. The money has also provided almost 300,000 hours of training to nearly 1,700 first responders serving on these teams. The technical rescue teams and regional hazardous material teams are under the State Fire Marshal's Office. The US&R teams use local personnel and are a part of the new Florida Urban Search and Rescue System. The value of these teams has already been proven: Florida-based US&R teams completed nearly 4,900 technical searches of structures within hours of Hurricane Ivan's landfall in the Panhandle last year. This year, state technical rescue teams from Tampa Bay, Central Florida, Jacksonville, North Central Florida, and Miami-Dade and Volusia counties were among the first search teams to arrive in Mississippi after Hurricane Katrina hammered the Gulf Coast region. Source: State of Florida State: New York Area of Interest: Governor Pataki Leads Effort For Renewal of The Terrorism Risk Insurance Act Governor George E. Pataki is leading the effort of 28 Governors around the nation, writing to Senate Majority Leader Frist, House Speaker Hastert, Senate Minority Leader Reid and House Minority Leader Pelosi calling for the expeditious renewal of the Terrorism Risk Insurance Act (TRIA) program to ensure New York's and the nation's businesses continue to be protected against the threat of terrorist attack. TRIA is set to expire on December 31, 2005. The Terrorism Risk Insurance Act of 2002 was signed into law on November 26, 2002. The law established the federal Terrorism Insurance Program that provides for a system of shared public and private compensation for insured losses resulting from acts of terrorism, in order to protect consumers by addressing market disruptions and ensure the continued widespread availability and affordability of property and casualty insurance for terrorism risk. Source: State of New York State: Ohio Area of Interest: Two Indicted After Investigation into Midwest Title Agency An investigation into Midwest Title Agency by the Ohio Department of Insurance resulted in the indictment of Gloria Long Wozniak and Michael Wozniak on charges of theft, money laundering, and engaging in a pattern of corrupt activity, Ohio Insurance Director Ann Womer Benjamin announced today. The indictment states that both Long and Wozniak committed six thefts and six acts of money laundering and engaged in a pattern of corrupt activity. The indictment alleges that Ms. Long, while acting as the president and owner of Midwest Title Agency, illegally diverted escrow funds from escrow accounts held by Midwest Title to other bank accounts. The funds were subsequently used for operating expenses, payroll expenses, and personal usage by the Wozniaks. The total theft from escrow accounts is suspected to be in excess of $1.6 million. The Department's investigation was lengthy due to the unique circumstances of the case and the amount of forensic evidence that needed to be collected before presenting the facts to the grand jury. The investigation was a joint effort by the Department of Insurance, the City of Powell Police Department, the Delaware County Prosecutor's Office and the Ohio Attorney General's Office. Source: State of Ohio
Area of Interest: Marin County General Contractor Pleads Guilty to Workers' Compensation Insurance Premium Fraud Investigation reveals up to $1.4 million in potential losses A licensed general contractor and owner of a Marin County roofing company has pled guilty to workers' compensation insurance premium fraud, unemployment insurance fraud, and filing false income tax returns - potentially costing up to $1.4 million in combined losses. An 18-month multi-agency state investigation revealed that Kenneth Scott Cooper, 50, of San Rafael, failed to accurately report his employee payroll at Ken Cooper Roofing and Gutter Systems of Marin County from 1999-2003. Cooper pled guilty to the charges on Tuesday in Marin County. The investigation included the California Department of Insurance (CDI), State Compensation Insurance Fund (SCIF), Franchise Tax Board (FTB), Employment Development Department (EDD) and the Marin County District Attorney's Office, which filed charges against Cooper on May 10. A multi-agency audit for the period January 1, 1999 through November 7, 2003 revealed that Cooper intentionally underreported his payroll to SCIF for the purpose of obtaining workers' compensation insurance at less than the appropriate rates. The audit determined that Cooper owes SCIF approximately $550,000 in premiums. Additionally, the investigation revealed that Cooper was paying some of his employees a lower hourly wage than he reported to SCIF, artificially reducing his premiums. He also paid a portion of his employees' payroll in cash, enabling him to understate the total payroll he paid his employees to both SCIF and EDD. This saved him a significant amount in his annual premiums and employment taxes. According to investigators, Cooper owes EDD more than $308,000 in taxes, penalties and interest. FTB also conducted an investigation into Cooper's state income tax returns and determined that he filed false returns for the years 1999 through 2003 and will owe FTB approximately $485,000 in taxes, tax penalties and interest. Cooper pled guilty to violating Section 11880(a) of the California Insurance Code, Section 2119 of the California Unemployment Insurance Code, and Section 19705 of the California Revenue and Taxation Code. Cooper will be formally sentenced and full restitution determined in the Marin County Superior Court on January 13, 2006. Source: State of California
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