Your humble blogger, in the years of his youth, once read a story about a Japanese swordsmith, the twenty-seventh in his line.  Each generation, from the first all the way to his, had mastered the art of sword-making, learned secrets and new methods, and closely held those secrets within the family to consistently make excellent swords.  I marveled at the competence and skill that must have come with so long a line of craftsmen.  Of course, not all skills improve as they are passed from generation to generation.

Three generations of a family in San Bernardino County have been charged with various fraud crimes after the death of a worker in 2008.  State Compensation Insurance Fund noticed that the family’s company had been under-reporting and misclassifying employee information and payroll.

The District Attorney Investigator’s unit obtained search warrants and arrested a Husband-Wife-Daughter team, charging them with 11 felony counts of insurance code violations.  This investigation led to additional discoveries, including crimes committed by the son and grandmother, including Grand Theft and Conspiracy.  After all the family that steals together, appeals together.

WCDefenseCA congratulates Senior Investigator Hank Jun on an excellent investigation and wishes the best of luck to Deputy District Attorney Scott Byrd in prosecuting the case.

Workers’ compensation fraud is always frustrating – and for good reason.  Not only does it make you realize that you have just wasted a fortune in undeserved benefits and unrecoverable investigation and prosecution costs, but it makes you a habitual cynic, mistrustful of seemingly honest and unfortunate injured workers.

This is especially the case when the act is committed by someone in a position of trust.  Firefighters are a good example.  Policemen are another.  But even the state capitol and its guardians are not immune to the corrupting influence of fraud.

Officer Tony Yao, a California Highway Patrol officer in Sacramento has been charged with felony workers’ compensation fraud.  As alleged, Yao claimed he had a back injury during firearms training while at the Academy, and then claimed his back pain was so severe he could not even do the office work offered to him.  An internal investigation revealed unreported past back injuries, completely unused exercise equipment (perhaps the result of a typical new years’ resolution?)

Given that some public employees such as law enforcement and firefighters tend to receive various beneficial presumptions in workers’ compensation, shouldn’t there be some additional penalties for when they commit acts of fraud?  Perhaps a reader more familiar than your focused blogger could comment as to this.

But if reforms are really in the air for the workers’ compensation system, perhaps additional penalties can be drafted into legislation and regulations to be imposed on the fraudsters who breach the public trust.

Workers’ compensation insurance is just that – insurance meant to provide speedy and practical assistance to workers injured while on the job.  It is not insurance against car accidents or a tool to get back at your boss.  For Yadder Espinosa, of Ventura County, this is somewhat of a rude awakening.

WCDefenseCA doesn’t normally name names, but when workers’ compensation fraudsters finally get the conviction (criminal, not moral) that they earned, your righteous blogger has no hesitation in saving potential-future employers of such criminals from making a hiring mistake.

The basic story is as follows:  Mr. Espinosa gets into a non-industrial vehicle collision and begins treating various body parts.  Some time latter, he is fired from his job and marched off the premises.  He then returns, allegedly to recover some personal items, before stepping on an imaginary banana peel and “falling.”  Refusing medical treatment, he then drives himself to the hospital and claims injury to the same body parts affected by the vehicle collision.

Throughout the claim, while receiving $40,000 thanks to his fraud, Mr. Espinosa didn’t disclose the vehicle collision or even the fact that he was receiving treatment for the injury.

District Attorney Gregory D. Totten is to be credited with securing a felony guilty plea to a violation of Insurance Code section 1871.4.  Mr. Totten intends to seek full restitution of the $40,000 wrongfully obtained by Mr. Espinosa.  In all likelihood, however, the money has been spent, in whole or in part, and there are no funds from which to reimburse the District Attorney’s office for its time, much less the costs incurred by the employer – think of the swarm of liens, the fee-hungry applicant’s attorney, and, of course, the cost of the defense.  The damage is done and defendant will probably never be made whole.

Such is the danger of allowing fraud to go unnoticed, unchecked, unpunished, or undeterred – the employer and the district attorney’s office are to be commended for holding the line in this case and setting an example for the rest of the workers’ compensation community.

The Court of Appeal issued its opinion in the case of Barrett Business Services, Inc. v. Workers’ Compensation Appeals Board.  Generally, when there is some sort of authority in workers’ compensation, the applicants’ attorneys and defense lawyers perk our legal ears up and pay attention.  After all, this is a fairly rare thing.

But this case was an example of three levels of missing a point – the workers’ compensation Judge, the Workers’ Compensation Appeals Board, and the Court of Appeal all missed something – the unequal treatment of applicants and defendants.

To summarize the case – applicant filed a claim for various injuries sustained while employed by Barrett Business Services, Inc. and he moved several times during the life of the case.  When the matter came to settlement by way of compromise and release, the defense sent to applicant’s attorney the settlement documents for review having placed an old address on the form.

The applicant’s attorney, after supposedly reviewing the documents, signed for applicant in accordance with the power of attorney granted to him, and walked the documents through.  Defendant sent applicant’s attorney a check for $3,000, and to applicant’s old address sent a check for $17,000.  Someone else found and cashed the check with a cash-checking service while pretending (apparently applicant’s cousin was living at his old address).

Applicant complained that he never got his money – and now the question arises: who is responsible for the $17,000?

Relying on the uniform commercial code, the Court of Appeal affirmed the WCJ and the WCAB in finding that defendant must re-issue a check for $17,000 and seek a remedy from the cash-checking service that allowed the money to be pilfered.

Now, your frustrated blogger understands the position that defendant is not blameless – sure, the wrong address was used and defendant had notice of applicant’s new address.  But applicant’s attorney was on notice too – after all, it is only because applicant’s attorney noticed the new address to defendant that defendant was on notice.

In other words, there were mistakes made on both sides, but it is only defendant that bears the cost of these mistakes.  It was applicant’s attorney’s job to make sure the documents were correct before signing them, and yet he gets to keep his $3,000.

The proper course of action in this case would have been to order the applicant’s attorney to send applicant a check for $3,000.  Then applicant can enjoy a $14,000 check from the defense and a $3,000 check from his attorney.  Now, applicant’s attorney can join the defense in seeking compensation from the check-cashing service.

There was a mistake made by both sides in this case, and for some reason the defense must again bear all the costs.