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HomeMy WebLinkAbout03-111~•' O~ SUP~'~~'• ..~~ .•~~~rrrrrrrrr,~~•~~ • r r' : ~ *' - ~'~~ C'*• .~ .. ~ {` ` ~ ''~ ya i ~ ` ' •1 .•'•. G'OUI~~.••~ ,~yi •••......~••~ ~ ~~aar^r~M~~~ BOARD OF SUPERVISORS COUNTY OF BUTTE, STATE OF CALIFORNIA Resolufion No. o3-t t i RESOLUTION AUTHORIZING DISTRICT ATTORNEY TO SUBMIT WORKERS' COMPENSATION FRAUD GRANT APPLICATION WHEREAS, the Butte County Board of Supervisors desires to undertake a certain program designated as the Workers' Compensation -California Insurance Code Section 1872.8, California Code of Regulations Subsection 9, Article 4, Section 2698.65 administered by the California Department of Insurance. NOW, THEREFORE, BE IT RESOLVED that the District Attorney of the Butte County District Attorney's Office is authorized, on its behalf to submit the attached proposal to the California Department of Insurance and is authorized to execute on behalf of the Board of Supervisors the Grant Award Agreement upon award including any extensions or amendments thereof. BE IT FURTHER RESOLVED that grant funds received hereunder shall not be used to supplant expenditures controlled by this body. I hereby certify that the foregoing is a true copy of the resolution adopted by the Butte County Board of Supervisors in a meeting thereof held on the 8`~' day of July, 2003, by the following vote: AYES: Supervisors Dolan, lioux, Josiassen, Yamaguchi <:nd Chair Beeler NOES: None NOT VOTING: None ABSENT: IQone BOB BEELER, Chair Butte County Board of Supervisors ATTEST: PAUL MCINTOSH, Chief Administrative Officer and Clerlc of the Board of Supervisors 13y R ~~ ~ ~ 1 ~~ ~ ~ , Butte County District Attorney WORKERS COMPENSATION INSURANCE FRAUD RFA FY 2003/2004 TABLE OF CONTENTS t. SECTION ONE i. Grant Transmittal 2. Board of Supervisors Resolution 3. Program Contact Information II. BUDGET ELEMENTS A. Personnel (Salary and Benefits) s. Operating Expenses c. Equipment D. Budget Narrative E. Carryover m. BUTTE COUNTY PLAN A. Qualifications s. Case Summaries c. Problem Statement n. Program Strategy E. Organizational Chart rv. JOINT INVESTIGATIVE PLAN v. ATTACI~VIENT A a. Copy of newspaper ad for AB749. ~ e. ~ : :~ ~ .~ ~~ ~ ~~ ~~_.~ yti~ - ~ ap ~ ~ ~ .., ,~ . ~ ~ _ _ v r DEPARTMENT OF INSURANCE GRANT APPLICATION TRANSMITTAL Office of the District Attorney, County of Butte, hereby makes application for funds under the Workers' Compensation Insurance Fraud Program pursuant to Section 1872.83 of the Insurance Code. Contact: Kristin J. Simpson, Chief Investigator Address: Butte County District Attorney's Office 25 County Center Drive Oroville, Ca 95965 (1) Program Title Workers' Compensation Fraud Prosecution Program (3) Grant Amount $320,000 Telephone: (530) 538-7356 (2) Grant Period July 1, 2003 -June 30, 2004 (4) Program Manager Michael L. Ramsey District Attorney 25 County Center Dr. Oroville, Ca 95965 (5) Fina~zcial Officer Connie Carter Chief Administrative Officer 25 County Center Dr. Oroville, Ca 95965 (6) District tt rney' Signature Name• Mi ae Title: District Attorney County: Butte Address: 25 County Center Drive Oroville, Ca 95965 Telephone: (530) 538-7411 Date: June 29, 2044 i t if :~ ~e~~~d ~f ~u~~a~~~~~~~~ Re~ol~ti~~ ~~ o~ . ~~. ~ ~~ ~ ~ o~ ~~ „~.. ~ `,. Butte County District Attorney Workers' Compensation Insurance Fraud Program Board of Supervisors Resolution The resolution will be on agenda the first Board of Supervisors meeting in 3uly. 1 1 ~ :E ~ 7 ~ 'f i p6 vi ...2 .mod ~ `...~ ~ :..i ~ ~ ~ .~ ~ ..~.~+ ~ ~~ .1 " ..l ~:::,.+' ..3 :.ff" ....dd ~..f ...d ~-~" ,~ ~ 77 :~ Tr .. r,` Rr~~r~ C~n~2~~~ ~~ ~~' Og ~ ~G~,~ stir x.~~:._~. ~ :T d ~~ a~ y ~~~ :r- ~l~:J,}.T~ ~ j'`JTj ~~ ~ ~'~'_i~~~'~~~.~ ~~~ ~J°3'3''~'I.J ~J~,~.y ~..a .f 1 vd ~ .:B .J .;~ . BUTTE COUNTY DISTRICT ATTORNEY WORKERS' COMPENSATION INSURANCE FRAUD PROGRAM PROGRAM CONTACT FORM 1. Person having day-to-day responsibility for the program: Bruce Wristen Investigator II 25 County Center Drive Oroville, CA 95965 Email: BWristen@buttecounty.net Telephone: (530) 538-6480 Faz: (530) 538-7071 2. Chair of the County of Butte, Board of Supervisors: Bob Beeler 1230 High Street Oroville, CA 95965 Email: bbeeler@buttecounty.net Telephone: (530) 538-6834 Faz: (530} 538-6881 3. District Attorney's Financial Officer: Connie Carter Chief Administrative Officer 25 County Center Drive Oroville, CA 95965 Email: CCarter@buttecounty.net Telephone: (530} 538-7207 Faz: (530) 538-7071 4. Person responsible for the data collection/reporting for the agen~y: Bruce Wristen Investigator II 25 County Center Drive Oroville, CA 95965 Email: BVJristen@buttecounty.net Telephone: (530) 538-6480 Fax: (530) 538-7071 ~. i a a s(_y I~ O~ 5ti~' _ ~ ~'~ o~ ~ .~®'~ :ice ~ ..2 ~ ~ ~ ~ f a..v ` .S ~ .d ~ ~ .8 ~ ~ ~~.d :.7 ~ ...6':2 ~7 .l ~...Af ~vd A DEPARTMENT OF INSURANCE WORKERS COMP INSURANCE FRAUD FY 2003 / 2004 July 1, 2003 -June 30, 2004 BUDGET CATEGORY AND LINE-ITEM DETAIL A. Personal Services/Salaries -Employee Benefits COST Deputy District Attorney III / IV 25% to Project Program Afforney. Sala $21,058 Benefits $6,060 Deputy District Attorney III / IV 25% to Project Program Attorney. Salary $21,058 Benefits $6,060 Deputy District Attorney III / IV 50% to Project Program Attorney. Oversees Program Sala $42,115 Benefits $12,120 District Attorney Investigator II 25% to Project Program Invesfigafor Salary $13,292 Benefits $5,964 Overtime $3,000 District Attorney Investigator II 50% to Project Program Invesfigafor Salary $20,311 Benefits $295 Overtime $0 District Attorney Investigator II 100% to Project Program Investigator Sala $43,733 Benefits $25,593 Overtime $3,000 District Attorney Paralegal 100% to Project Program Paralegal Salary $33,696 Benefits $11,806 Overtime $0 Legal Secretary 40% to Project Clerical Support to Program Salary $12,138 Benefits $3,785 Office Assistant III 50% to Project Clerical Support to Program Sala $13,030 Benefits $4,727 TOTAL -Personnel Services $302,840 6/26/2003 10:01 AM B DEPARTMENT OF INSURANCE WORKERS COMP INSURANCE FRAUD FY 2003 / 2004 Juiy 1, 2003 -June su, ~uu4 BUDGET CATEGORY AND LINE-ITEM DETAIL Operating Expenses COST Office Expense ~ $1' Expendable office supplies Professional 8 Special Services Expert witness festimony Special Departmental Expense I $2 Safety equipment / rangemaster Maintenance -Equipment Vehicle maintenance Transportation, Travel, Training $7 Conferences for personnel Hi-Tech Crime Institute / 1 attendee 1, 660 DOI Fraud Conference /4 attendees 5,000 No. Cal Fraud Conf/ 1 attendee 1,000 Transportation -Fuel Purchases $1 Fuel purchases for investigator $125/mo " 12 months 1,500 Indirect Costs 1 Administrative Overhead I $1 Annual Audif TAL -Operating Expenses ~ $17,1 6/26/2003 10:01 AM DEPARTMENT OF INSURANCE WORKERS COMP INSURANCE FRAUD FY 2003 / 2004 Julv 1.2003 -June 30, 2004 BUDGET CATEGORY AND LINE-ITEM DETAIL C. Equipment COST TOTAL -Equipment $0 FL"f'vD DISTR6SfiTlON TOTALS 1. TOTAL -Personnel Services $302,840 2. TOTAL -Operating Expenses $17,160 3. TOTAL -Equipment $0 TOTAL GRANT AWARD $320,000 6/26/2003 10:01 AM WORKER'S COMPENSATION INSURANCE FRAUD BUDGET NARRATIVE FISCAL YEAR 2003/2004 The Indirect Costs for the RFA budget were calculated at 5% of the total direct costs in accordance with the Federal OMB Circular A-87 which is on file with the State Controller's Office. The RFA is proposing to fund the staffing level the same as the 2002/2003 grant year. We have hired a 50% Investigator and a 50% Office Assistant. We are in the employment process for the a 50% Attorney and the 100% Para-Legal. With our aggressive outreach program, we are receiving referrals at a much higher level than the past few years, which has increased our work laad, and we project, will increase our filings. The Butte County District Attorney's Office utilizes afunctional time card to allow personnel, funded in various grants, to appropriately capture their grant time. The Office Assistant will track and enter Project Personnel time for those staff members who are not 100% funded. Additionally, the Office Assistant will enter and track cases in the Fraud Unit's data base and reference those referrals that are a direct result of an outreach presentation. Training, travel, and transportation for the DDA's and the Investigator's has been budgeted for in the RFA, along with associated costs for the day to day operation of the grant. r ~ y r' I ~~ O~ v' .~ ., 4 E as ~ of ,l ..3 7 ,! rT 'J O~ ~~ BUTTE COUNTY DISTRICT ATTORNEY WORKERS' COMPENSATION FRAUD PROGRAM STAFF DEPUTY DISTRICT ATTORNEY: DDA Kevin Maloney, formerly of the Mendocino County District Attorney's Office, has extensive knowledge of the Workers' Compensation investigation and prosecution. Kevin will be handling prosecutions covering the last half of the alphabet. Kevin is a graduate of the San Francisco School of Law. His first year of law practice was spent as a defense Attorney in Glenn County, followed by fourteen years as a prosecutor at Mendocino County District Attorney's Office, and was that office's Insurance Grant Administrator and prosecutor. Mr Maloney is also an instructor at CDAA/DOI fraud seminars. DDA Mike Candela graduated from the University of San Francisco, School of law in 1987. During the summer of 1986, Mr. Candela served as a law clerk for the seven justices of the California Supreme Court. After graduation he worked as a research attorney for the San Francisco Superior Court. Prior to coming to Butte County in 1997, Mr. Candela was in private practice, and prior to that he served as a Deputy District Attorney in Maria County Mr. Candela is co-author of California Criminal Law, Procedure and Practice, CEB, Second and Third Editions, 1994 and 1996. We are currently in the employment process for our third 50% Deputy District Attomey position. PROGRAM INVESTIGATORS Bruce Wristen, Investigator II, is one of the Workers' Compensation Program investigators and is the person having day-to-day responsibility for the program. He is also responsible for the data collection/reporting fo the District Attomey's Office. Investigator Wristen has been a local law enforcement officer for over ten years. He worked in the Welfare Fraud Unit for two years prior to his current assignment and was a Patrol sergeant with the Oroville Police Department where he also had grant management responsibilities. John Bowers, Investigator II, is a 50% investigator in the Workers' Compensation Program. John comes to the unit with 24 years of law enforcement experience. Investigator Bowers worked for the Butte County Sheriffs Department, the Davis Police Department, and the California Department of Justice. After leaving the Department of Justice, John worked in the private sector as an insurance fraud investigator. Jos Van Hout, Investigator II, spent 13 years specializing in computers and electronics. This background has proven invaluable with his ten years in law enforcement. In addition to his investigative duties, Investigator Van Hout continues to maintain the computer tracking system he developed for the Insurance Fraud system. He is also the Webmaster for the Fraud Web Page. Investigator Van Hout has attended the Encase Software training sponsored by DOI and will be attending additional computer forensics courses. SUPPORT STAFF Marcie Hummel has 23 years experience as a Legal Secretary in both the private and public sectors. She has been in this office since July 2000. Her experience includes 13 years working in law firms specializing in insurance. Kris Wasser, Office Assistant, has been with the Butte County District Attorney's Office for over 15 years. Kris has worked in numerous assignments during the years and is a valued employee. We are in the employment process for the Para-Legal position. QUALIFICATIONS CONTINUED 1. In FY 1997-98, 5 investigations were initiated and involved an average of 1 identified suspects per investigation. In FY 1998-99, 7 investigations were initiated and involved an average of 1 identified suspects per investigation. In FY 1999-2000 13 investigations were initiated and involved an average of 1 identified suspect per investigations. From July 1, 2000 to June 30, 2001, 22 investigations were initiated and involved an average of 1 identified suspects per investigation. From July 1, 2001 to June 15, 2002 9 investigations were initiated and involved an average of 1 identified suspects per investigation. From July 1, 2002 to June 30, 2003 13 investigations were initiated and involved an average of 1 identified suspects per investigation. 2. In FY 1997-98 1 warrants/indictments were issued, involving an average of 1 suspects and/or defendants. In FY 1998-99 0 warrants/indictments were issued, involving an average of 0 suspects and/or defendants. In FY 1999-2000 6 warrants/indictments were issued, involving an average of 1 suspects and/or defendants. From July 1, 2000 to June 30, 2001 0 warrants/indictments were issued, involving an average of 0 suspects and/or defendants. From July 1, 2001 to June 15, 2002 2 warrants/indictments were issued, involving an average of 2 suspects and/or defendants. From July 1, 2002 to June 30, 2003 2 warrants/indictments were issued, involving an average of 2 suspects. 3. In FY 1997-98 0 arrests and 1 surrenders were made. In FY 1998-99 0 arrests and 0 surrenders were made. In FY 1999-2000 0 arrests and 2 surrenders were made. From July 1, 2000 to June 30, 2001 0 arrests and 0 surrenders were made. From July 1, 2401 to June 15, 2002 0 arrests and 2 surrenders were made. From July 1, 2002 to June 30, 2003 0 arrests and 1 surrender were made. 4. In FY 1997-98 1 conviction was obtained involving 1 defendant. Of these convictions, 0 were obtained by trial verdict, 1 were obtained by plea or settlement. In FY 1998-99 0 convictions were obtained involving defendants. Of these convictions, 0 were obtained by trial verdict, 0 were obtained by plea or settlement. In FY 1999-2000 0 convictions were obtained involving 0 defendants. Of these convictions, 0 were obtained by trial verdict, 0 were obtained by plea or settlement. From July 1, 2000 to June 30, 2001, 0 convictions were obtained involving 0 defendants. Of these convictions, 0 were obtained by trial verdict, 0 were obtained by plea or settlement. From July 1, 2001 to June 15, 2002, 1 convictions were obtained involving 1 defendants. Of these convictions, 1 was obtained by trial verdict, 0 were obtained by plea or settlement. From July 1, 2002 to June 30, 2003 2 convictions were obtained involving 2 defendants. Of these convictions, 2 were obtained by plea. S. In FY 1997-98 1 defendants were ordered to pay $100.00 in fines and penalty assessments. Of this amount $100.00 was collected from 1 defendants. In FY 1998-99 0 defendants were ordered to pay $0 in fines and penalty assessments. Of this amount $0 was collected from defendants. In FY 1999-2000 0 defendants were ordered to pay $0 in fines and penalty assessments. Of this amount, $0 was collected from defendants. From July 1, 2000 to June 30, 2001, 0 defendants were ordered to pay $0.00 in fines and penalty assessments. Of this amount $0.00 was collected from 0 defendants. From July 1, 2001 to June 15, 2002, 0 defendants were ordered to pay $0.00 in fines and penalty assessments. Of this amount $0.00 was collected from 0 defendants. From July 1, 2002 to June 30, 2003 0 defendants were ordered to pay $0.00 in fines and penalty assessments. Of this amount $0.00 was collected from 0 defendants. 6. In FY 1997-98 1 defendant was ordered to pay restitution in the amount of $1920.00 to victims. Of this amount $1920.00 was collected from 1 defendant, benefiting 1 victim. In FY 1998-99 0 defendants were ordered to pay restitution in the amount of $0 to victims. Of this amount $0 was collected from 0 defendants, benefiting 0 victims. In FY 1999-2000 0 defendants were ordered to pay restitution in the amount of $0 to victims. Of this amount $0 was collected from 0 defendants benefiting 0 victims. From July 1, 2000 to June 30, 2001, 0 defendants were ordered to pay restitution in the amount of $0.00 in fines and penalty assessments. Of this amount $0.00 was collected from 0 defendants, benefiting 0 victims. From July 1, 2001 to June 15, 2002, 1 defendants were ordered to ay restitution in the amount of $1744.12 in fines and penalty assessments. Of this amount $0.00 was collected from 0 defendants, benefiting 0 victims. From July 1, 2002 to June 30, 2003 0 defendants were ordered to pay restitution in the amount of $0.00 to 0 victims. Of this amount $0.00 were collected. E ~ ,. ',-~ ~ s~ ~~trd ~~ ~d~ o~ g 1 ~ Y xi 7 l 0~ "",,,~t~.-~ _ ~..: ~~~ ~ ,} PROSECUTIONS (CONVICTED) PRINCIPAL CRIMINAL ATTORNEY KEVIN MALONEY THIS GRANT PERIOD ZS% OF TIME DEVOTED TO THE PROSECUTION OF WORKERS' COMPENSATION CASES. CONVICTED Wemus, Michael Filed: 04/23/02 Charges: Ins.Code §1871.4 (a)1 & Special Allegation of Penal Code §667.5(b) Details: The defendant pled polo to one count of insurance fraud and admitted a special allegation of failing to remain free from prison custody following a previous sentence, to state prison. The Complaint Charged the Defendant under both the Insurance Code and section 550 of the penal code. The charges were part of one common plan or scheme to defraud as recognized by Penal Code §654 so the defendant could only be punished under any one of the charges alleged. Three of the Penal Code counts were dismissed with a Harvey Waiver in exchange for the Insurance Code plea. The defendant was involved in a altercation after work at the beginning of the weekend. As a result of the this altercation the defendant had a fracture to the side of his skull and other injuries which required medical treatment. The defendant came to work on Monday morning and claimed he slipped on the bumper of a company truck and hit his head causing the injury. Investigators were able to locate witnesses who discounted the defendants claim. CONVICTED Stephens, Jackie Filed: 12/18/02 Charges: Penal Code §550(b) Details: The defendant pled polo to one count of insurance fraud. The defendant reported an on the job injury, and claimed she had never filed a previous workers' compensation claim. Investigation revealed she had previously filed a workers' compensation claim on the same body part while employed by a previous employer, failing to disclose the same. Confidential Cases WORKER'S COMPENSATION INSURANCE FRAUD PROPOSED BUTTE COUNTY PLAN FISCAL YEAR 2003/2004 CASES FILED: Principal Criminal Attorney Kevin Maloney. Powers, Linda: Charges: 550 PC, 06/09/03 Powers is a Chiropractor in Chico California. We received a report from a Butte County Employee that she felt Powers was charging for procedures not provided. After reviewing the employees bills and discussing the procedures with her, it was determined that an investigation should be initiated between Butte County and Department of Insurance. It was determined that an undercover operation was appropriate and undercover operatives were used, along with pre- text policies provided by several insurance companies. After reviewing the bills submitted by Powers to the insurance companies, it was determined she was billing for services not rendered. A search warrant was written, approved, and served at her office and home. After reviewing the information seized during the search warrant, it was determined a second warrant should be served allowing us to review all her files. After the service of the second warrant, insurance companies were contacted and copies of billings were requested. Investigators from the Department of Insurance assisted in this process. Upon review of the bills, it was found that Powers had charged insurance companies over $50,000 for services she had not provided. There are 150+ patients involved in this fraudulent billing scheme. Although there was a large output of time and assets invested in this case, the benefits to the insurance community far out weigh the time and money spent. Newman, Paul: 1871.4(A)1 IC, 2101(A) UIC, 05/09-03 Newman was working as a cement finisher. Newman and the owner of the company had an argument and Newman left the job site. The following Monday morning Newman went to the emergency room and reported an on-the job injury. Newman's claim was denied by the workers' compensation carrier. He subsequently filed for SDI benefits. Newman was taped using both arms and hands freely. He is also caught on tape working at a cement job. At deposition Newman stated he could not do anything and his left arm was in constant pain. However, the tapes clearly show him working. Ongoing investigation: Gibson, Terry: Charges: 550 PC,1871.4(A)1 IC A fraud referral was received from State Farm Insurance, alleging a possible capping scheme. A client went to Gibson Chiropractic for treatment and was pressured into signing up with a specific attorney. This was done through the attorney's administrator, who came to Gibson's office to have her sign the papers. A joint investigation was started with the Department of Insurance. An undercover operative was sent into the office using apre-text workers' compensation policy. After several visits an attorney was not offered to the U/C. A review of the bills received by the insurance company did reveal that Gibson was billing for services not rendered. A second undercover operative was sent in. Gibson told the U/C that he was sending him to an attorney and had his office staff call and make the appointment. The U/C went to the attorney's office and signed retainer papers. A review of State Farm Insurance records revealed that of 16 claims involving Gibson, 1 S involved the same administrator and 2 attorneys. A search warrant was written, approved and served on Gibson's office and home. Search warrants were also served on two attorneys' offices and homes, and two administrator's offices and their homes. The investigation is ongoing. Fog, Loren: Charges 1871.4(A)1 IC Pending Fox is a Chiropractor in Oroville, California. We received a fraud referral from Oroville Hospital concerning Fox and a local Attorney, Josef Feltner. It was reported that all injured workers going to Fox for treatment were then represented by Fellner in their workers' compensation cases. There was concern that a capping scheme was taking place. A joint Butte County and Department of Insurance investigation was initiated. An Undercover operative was sent into Fox's office using apre-text worker's compensation policy. The U/C was referred to Fellner on the second visit. The investigation is ongoing. Quezada, Maria: 1871.4(a)1 IC Pending Quezada works for Lifetouch Naticnal School Studies. ~3~Thile cff on ~.vorkers' comp. Quezada was passing out cards door-to-door that advertised house cleaning. Quezada was captured on tape cleaning houses. At deposition Quezada testified she had not worked during her time off from work. The investigation is ongoing. Banik, Pranab; 1871.4(A)1 IC Pending Banik worked for Lifetouch National School Studios. Banik was found permanent and stationary and was authorized continuing chiropractic care. When the treatment became 2 excessive a deposition was taken. Benik, who is a works in martial arts academy, testified he was not participating in class. Banik was filmed taking part in strenuous activities during class. The investigation is ongoing. Craddock, James: 1871.4(A)1 IC Pending Craddock worked for a machine shop in Oroville. He crushed his foot at work and was placed on W/C. During this time he worked under the table repairing rentals homes. Craddock was found permanent and stationary. He was video taped roofing a home after being found to be precluded from heavy lifting, bending, and squatting. The investigation is continuing. We are also looking into the rental maintenance company for possible premium fraud. Wineland Walnut: 11880 IC Pending Wineland Walnut employs several tree climbers, but is under reporting the number and claiming they are grounds men. The belief is the basis fo the under reporting is that grounds men have a lower rating than the climbers. The investigation is ongoing. United Builders: 11880 IC Pending This is a building contractor which secured several government contracts to remodel schools. The investigation revealed the jobs were bid at prevailing wage but the workers were paid less in an attempt to get lower workers' compensation premiums. The company is also under reported to EDD. The investigation is ongoing. Filed, not adjudicated: These cases were filed with the court in grant year 02/03. The cases are still ongoing in the court system. Azevedo, Karen: 550 PC Cornwell, Gary: 1871.4, (a)1 IC, 550 (A)1 PC Mulrennan, John: 11880 IC, 217.5 UC Y ~~~1~ ~t~~~~re ~~ O~ yfi~ ra_ ~Y ~~ ore ,~ ~ ~. f e ,~ WORKER'S COMPENSATION INSURANCE FRAUD PROPOSED BUTTE COUNTY PLAN FISCAL YEAR 2003/2004 PROBLEM STATEMENT Dem ~aphics Butte County is the largest county north of Sacramento, with a population exceeding 205,000 individuals, which is up 5,000 individuals from last year. This influx can be directly related to the person who works in Sacramento, but has chosen to live in a rural area where housing can be more affordable. Basically a middle class region with enclaves of significant affluence; we continue to have disproportionately large substance abuse and welfare recipient populations. The county has ahigher-than-State-average elder/retired person population and a relatively high unemployment rate. The employment picture is as diverse as the other characteristics of our county. Major employers include the California State University at Chico, Butte Community College, and various municipal, county, state and federal agencies. Rice, almond and walnut farming, along with timber related industries, are some of the major private sector endeavors. Because of the influx of people the housing construction trade is on the rise. The Chico area has experienced a housing boom, which is starting overflow into surrounding Butte County communities. We are in partnership with four surrounding counties, Sutter, Colusa, Glenn, and Tehama. Of these Sutter County is the closest in demographics to Butte County. The other three are more rural type settings. Colusa and Glenn Counties are largely rice and row crop farm counties. Tehama County is a lumber and ranching county. All four counties have large unskilled labor forces which can be a breeding ground for workers' compensation fraud by both the employees and the employers. 1 The Scope of Worker's Compensation Fraud in Butte County Prior to being awarded our first grant, worker's compensation fraud in Butte County went largely undetected and/or unreported. In our first years of the grant the Butte County District Attorney's Office concentrated on the easily prosecuted applicant fraud cases. These cases were straightforward asthe victim and suspect were readily identified, and evidence was easily obtained from the victim insurance companies. Retrospectively, we now see that workers' compensation benefit abuse or applicant fraud was a forgone, but accurate conclusion. This has been exemplified by the diversity of the individuals the District Attorney's Office has investigated. At the outset, our lack of effective techniques for gathering viable, independent fraud referrals was problematic. We have now developed the necessary skills through effective networking with allied agencies working the same legal disciplines. Again our thanks go to the Department of Insurance and the Amador County District Attorney's Office for their assistance in helping us develop our now effective outreach program. Our experience has shown that where there are reports of one type of fraudulent activity there are other types occurring as well. As our unit began to make contacts with other agencies in the investigation of these frauds our outreach program was born. Some of those agencies we contacted, such as Employment Development Department (EDD) and Medicare, enjoyed more than a passing relationship with the same suspects and schemes found in insurance fraud. We found distinct correlations between workers' compensation fraud and family support and welfare fraud issues. Fraudulent activities related to the Internal Revenue Service, the Franchise Tax Board and the EDD have also been detected in conjunction with our workers' compensation investigations. Collaborative efforts with the State Contractor's License Board, for another example, have led to the discovery of premium fraud by local employers. Now that we have an effective outreach program the sources for referrals we identified in the past, citizen informants, doctors, nurses, and other professionals, are providing referrals on a regular basis. What we believed in the past has come to fruition, these are not single incident cases, but rather a sustained history of criminal profiteering. Previously we identified three chiropractors who were billing for services not rendered and involved in "capping". Two of these cases have been actively worked over the past year. A second search warrant was served on one of the chiropractic offices 2 allowing us to identify a complex scheme of billing for services not rendered. As a spin off of one of the chiropractor cases we identified a mill type personal injury/workers' compensation law firm. We are currently conducting a parallel investigation with the State Bar of California into the unlawful practice of law and fee splitting by this firm. We are engaged in extensive outreach efforts to let the area risk managers and the insurance industry representatives know that the Butte County District Attorney's Office is now in this business in a substantial fashion. We expect these efforts to generate an increasingly lazger number of referrals as local employers become aware of where and to whom to report these cases. During the last four years we have exchanged information and training with other agencies to enhance our local ability to identify, investigate and prosecute insurance fraud, as it is our experience that those practitioners who commit medical fraud are likely to commit workers' compensation fraud as well. We learned, for example, that the National Heritage Insurance Company (NHIC), the investigative arm of Medicare, has its headquarters unit in Butte County. During our exchanges with NHIC we found that they currently handle approximately two million dollars in fraudulent claims. These claims tend to be of the same type as previously described; over-billing, billing for services not rendered and billing improper modality codes. While there are a number of restrictions and rules limiting the information available to us from NHIC, we are exploring ways to enhance our information exchange capabilities. For example, we have invited NHIC to join our round table discussions, held on an as-needed basis, with local investigators. Butte County has also implemented a protocol to accept and review requests for complaints originating from NHIC fraud cases which do not rise to the federal levels of acceptance (federal fraud cases generally involve losses of $50,000.00 or more). Project personnel have contacted representatives of NHIC and are developing a collaborative plan in this regard. Our fraud unit has continued to work closely with Department of Insurance investigators and investigators from surrounding counties. This cooperation has allowed our investigators to gain a certain expertise in the workers' compensation arena, especially the area of chiropractor fraud. 3 Magnitude of Worker's Compensation Insurance Fraud Problems in Butte County Two years ago we stated that we believed our efforts to date had only identified the proverbial "tip of the iceberg" as to the extent of insurance fraud in Butte County. Because of our exhaustive efforts to educate the community through outreach programs we are now uncovering the rest of the "iceberg". Outreach has allowed us to identify several areas of workers' compensation fraud in Butte County that we were originally unaware of. One of those areas is premium fraud. Because of our outreach, we get weekly referrals on our fraud hotline of contractors paying workers under the table and not paying workers' compensation benef ts. This is also a maj or problem in our partnership counties as faun labor is one of the largest areas of employment in those counties. With the continued support of the Department of Insurance, our outreach program has grown to what we feel is a leader in the north state. Our current outreach program is multifaceted. It includes our Fraud Web Site and our 24 hour Anonymous Fraud Hot Line, plus one day training programs designed for companies, risk managers, and health care professionals. Personnel from the local colleges, hospitals, county depar(ments and timber industry receive our Workers' Compensation Fraud training. We have co-sponsored several employer workshops in conjunction with Enloe Hospital. Our outreach now includes our prosecutors and investigators networking at conferences with private industry, investigative associations and with private Special Investigative Unit (S.LU) employees, as well as the D.O.I. and allied agencies. All of this has had the effect of greatly increasing the traffic on our Fraud Hotline. Butte County sponsored one day seminar by Dr. Kneen D.C.. Dr. Kneen is a court certified expert and a member of the California Board of Chiropractors. Dr. Kneen presentation covered billing practices, including billing for services not rendered and up billing. The seminaz was attend by local investigators and investigators from DOI. With the number of referrals on the rise, we have started to quantify the workers' compensation fraud problem in Butte County. As mentioned previously, premium fraud seems to be at the top of the list, with applicant fraud being second. But there also looms another area of fraud that although is referred less, is just as rampant and that is provider fraud. We have chosen to focus a large portion of our assets in this area. We are currently working two chiropractic cases, both for billing for services not rendered. 4 Although these cases are time consuming the end product is greater than several applicant cases combined. In one chiropractor fraud case just filed there are over 100 patients involved. When this case is completed the restitution could reach $60,000. We strongly feel this has a much greater impact on workers' compensation fraud in our community, let alone the impact on the chiropractic community than stand alone applicant fraud cases. Should this fraud go left un-checked, the impact on the insurance industry, and ultimately the citizens of Butte County will grow each year. With the addition of a halftime .investigator assigned to the workers' compensation fraud unit, we can now focus our efforts on the most egregious premium and applicant fraud cases, and while continuing to focus assets on provider fraud. Since the onset of the chiropractor cases, we have received referrals on two other chiropractors in the area. We have also actively started our AB749 campaign placing newspaper ads in the local papers which have already resulted in referrals. We are also helping our partnership counties with newspaper ads in their respective papers. This will be another area of fraud which we've only touched the "tip of the iceberg". (See attachment "A") We are still in the infancy stages with our partnership counties. As we stated last year, we felt the partnership was a two year project. The first year was geared towards getting the counties on board. T1iis year we plan to help them identify their most serious problems and then develop an investigative partnership that will move them towards relying on their own resources and abilities . Tehama County has received three referrals since the mm~ing of the AB749 newspaper ad. Although the referrals are for applicant fraud the ad has stimulated activity in the Tehama County area. We will be working closely with Tehama County in developing these referrals into active cases. Tehama County DA's Office is applying for the workers' compensation grant and we have assisted that agency in this process. 5 ~ ~ ~~tt ~u ~ .= d ~~ o~ ,r-.r .~ r ..- f~ 'r`~ ~~ {'iT i ~. ~.r~J"'J °j1~';"r1:1 .rl~`` • ~ ..e'er ~ ..,~ P ..t E ~ Butte County District Attorney Workers Compensation Insurance Fraud PROGRAM STRATEGY In summary, our goals for fiscal year 2003-2004 are to: • Prosecute our completed chiropractor cases. Continue our investigation into other chiropractors in the area. • Increase the number of investigations and prosecutions over those of fiscal year 2002!2003 through public outreach, education, and continued contact and requests for information from SIU's and allied agencies. • Continue to develop working relationships with the risk managers of the major employers in the county, (tim~aer, agriculture, government, University, public health, Community College, etc.) 6 • Continue to increase the public's exposure to the Insurance Fraud Program through our established WEB site, Fraud Hotline, television and radio PSA's, local fairs, and community meetings. • Continue to explore additional techniques for identifying fraud through networking with local, state, and federal agencies. • Provide training and outreach to our partnership District Attorney's Offices in contiguous rural counties. • Provide prosecutorial expertise to those rural counties as cross- designated prosecutors, and continue to encourage those counties to develop a Workers' Compensation Fraud Unit by applying for funding. • Increase the development of collaborative investigations with our welfare fraud and child support investigators. • Complete the conversion of the surveillance van and pressing it into service for Sutte County fraud cases as well as make it available to our partnership counties. PROGRAM STRATEGY (CONTINUED) We have discovered that key staff members, effective use and development of resources, expansive outreach, good inter-agency relations and a lot of hard work are imperatives for a successful and viable program. 7 Staffing: Putting the most qualified persons in key positions. Currently staffing our Workers' Compensation Fraud program are Deputy District Attorneys Kevin Maloney and Mike Candela {each at 25% FTE) who both have proven, and strong prosecutorial backgrounds. They team with District Attorney Investigators Bruce Wristen (100% FTE), John Bowers (50%FTE), and Jos VanHout (25%FTE), who bring many years of invaluable investigative experience to the program. Marcie Hummel, an experienced Legal Secretary has been be assigned to handle the support responsibilities. A 50% funded Office Assistant position has been established for data entry to more timely capture project personnel time, send out outreach packets, track outreach contacts, presentations and subsequent referrals directly attributable to the outreach, as well as to enter and track ongoing cases in our databases. Kris Wasser, a long time Butte County District Attorney employee, will be filling this position. We have added a 50% Investigator to the unit. This position has been filled by John Bowers. John comes to the unit with many years experience as an investigator. We have funded a 100% Deputy District Attorney position. The employment process has been started to fill this opening. We also have started the employment process for a paralegal position. The paralegal will be assisting the attorneys in case and trial preparation. Because of our aggressive outreach program, our referrals have increased, thus increasing our work load. We now have the partnership counties on board which is also increaseing the work load of the investigators and attorneys. Additionally, the nature of the cases investigated and prosecuted requires extensive personnel hours in undercover activities, search warrant writing and service, case preparation and then prosecutorial review, filing and court time. To sustain this work load, we are seeking funding for our established positions for the 03/04 grant year. We will continue to work closely with our partnership counties as they strive to build their own workers' compensation fraud program. The Butte County District Attorney's Office Workers' Compensation Fraud Unit will provide formalized one-day training sessions for those named DA offices and will thereafter be available for informal support. Additionally, the Butte County District Attorney's Office prosecutors will reach out in a collaborative effort to seek cross-designation as prosecutors in the aforementioned offices, in order to prosecute workers' compensation cases that arise in 8 those counties if requested to do so. It is anticipated that through the outreach efforts of the Butte County District Attorney's Office project attorneys and the close working relationship the BCDA's office enjoys with the Department of Insurance, workers' compensation referrals in our neighboring rural counties will be investigated and submitted for prosecution by DOI investigators. The ultimate goal of the training and cross-designated prosecutor is to help those counties develop their own fraud units and, at a minimum, apply for the base line funding which will provide enforcement in our neighboring counties. We are confident that this will have a positive deterrent effect in the totality of the Northern Sacramento Valley rural counties. We will be assisting our partnership counties with development of a fraud website. Each of the four counties will have their own website and fraud hotline. We will run newspaper ads to make the county residents aware of the site. As referrals come in we will help the counties evaluate the referral and determine what, if any action should be taken. Using our own fraud web site as a model, we will customize the web sites to each individual county. Use and Development of Resources: The Butte County District Attorney's Office projected FY 2001/2002 to be potentially its strongest year, and certainly, with the extensive time commitments required by cases of this type, it may well have been. It was believed that with the continued development of public educarion, industry networking, case development, and the publicity derived from the June 19, 2002 operation between the Butte County District Attorney's Office and the Department of Insurance, fiscal year 2002/2003 will be an even stronger year. Although 2002/2003 did not render an increase in cases filed it was a strong year with the investigation of the chiropractor cases and potential restitution impact. With the additional personnel in the unit we will now be able to investigate and prosecute even more cases. We believe F/Y 2003/2004 will take the Butte County District Attorney's Workers' Compensation Fraud Unit into the future. 9 Public Education Outreach and education are key to building public confidence in insurance fraud enforcement and to the prosecutor's ability to protect the citizens from those who drive up insurance costs by their thefts. Public outreach and education are also essential in developing the necessary communications between the government and the citizenry, so that the theft that is taking place is identified and understood for what it is and for it's true societal consequences. Investigator Bruce Wristen has continued his outreach program with business' i.n the Butte County area. His program goes from the informal drop by and chat approach, to the formal presentation. Investigator Wristen, along with Department of Insurance Supervising Fraud Investigator Eric Weirich and DOI Investigator Brian Farnsworth provided a one day seminar on workers' compensation fraud to a group of Chico business people comprised of risk managers, personnel officers, and business owners. One employer workshop was held at ENLOE Hospital in Chico, California. Over 100 employers, risk managers, personnel officers, and insurance adjusters attended the workshop in January 2003. Insurance Fraud flyers were included in the workbook provided to each attendee. This workshop included a presentation by Butte County District Attorney Michael L. Ramsey, Department of Insurance Chief Fraud Investigator Rick Plein, and DOI Investigator Brian Farnsworth. There were 116 employers, risk managers, personnel officers, and insurance adjusters in attendance. In February of 2003 Investigator Wristen attended a one day workshop on AB749. This was held at Enloe Hospital, and was attended by 60 employers, risk mangers and personnel officers. Each year the Butte County District Attorney's Office has a booth at the Silver Dollar Fair and the Butte County Fair. The Workers' Compensation Fraud Unit participates in these booths and provides handouts and information to fair-goers. It is estimated that 10,000+ people pass by the booths annually. We continue to receive referrals from our outreach program. The one day workshops continue to be a success and we will be participating in the 2004 Enloe Hospital program. For fiscal year 2003/2004 project investigators and attorneys will continue to participate in the employer workshops and the local fairs. The Insurance Fraud Unit continues to maintain a website that facilitates anonymous fraud referrals, maintains a supply of and distributes fraud referral forms and 10 mans a Fraud Hotline. The Insurance Fraud Unit has facilitated a Public Service Announcement and an informative 30-minute television program on Insurance Fraud and will, in the near future, produce another Public Service Announcement germane to the topic of Worker's Compensation Fraud. On pages 16, 17 and 18 there is a table, which depicts the Butte County District Attorney Insurance Fraud Outreach Program contacts. The Project Investigator will continue to personally contact Butte County employers and provide the packets that contain information on Worker's Compensation laws, referral forms and a local contact person to make referrals to and answer questions. To that end: ^ The Butte County District Attorney established the Fraud Hotline, and Fraud Web Page. Each year the Fraud Unit takes advantage of the District Attorney's participation in the local Fairs and highlight the Insurance Fraud Unit using banners, handouts from the Department of Insurance, and flyers advertising the Fraud Hotline. ^ During fiscal year 2000/2001 the Butte County District Attorney produced a Public Service Announcement (P5A) to advertise the Fraud Hotline on local television and radio stations. The use of the PSA, exposure at the Fairs, and news releases will add to the public's knowledge of the existence of the Fraud Hotline and Web Page. ^ During fiscal year 2001/2002 the Butte County District Attorney produced ahalf- hour television program that u~as aired on the local FOX and L~I'N aff Bates. Department of Insurance Fraud Bureau representatives were guests on the program. ^ The District Attorney and staff members in numerous other presentations made before community groups also accomplish public education. Networking 11 The development of working relationships within the Insurance Fraud industry, as well as related investigative agencies, such as NICB, are key to the development of cases and to efficient case management. ^ This office continues to enjoy anever-stronger working relationship with the Department of Insurance Fraud Bureau. We have made the enhancement of this relationship a priority for our Insurance Fraud Unit. Good communications with DOI has been an important element of our program, not only to ensure adequate investigation and prosecution, but also to avoid any duplication of effort and to coordinate joint ventures. In our Joint Investigation Plan, specific guidelines have been established regarding communication between the investigators, the attorneys, and the Department of Insurance. We will continue to ensure that those guidelines are met. ^ The Butte County District Attorney Insurance Fraud Unit has developed relationships with many local, state, and federal agencies to expand its ability to identify and investigate Insurance Fraud. In 2003/2004 the Fraud Unit will continue to build on those developing relationships. The Fraud Unit continues to look for other resources as well. Our Fraud Unit has continued to work closely with Investigators from DOI. DOI Investigators have provided valuable assistance in the chiropractor cases being worked by our office. Because of the DOI assistance we have now filed a case against a local chiropractor, charging her with 3 felony counts, and clearing fraudulent billing on over 150 patients. The Fraud Unit anticipates future opportunities to invite investigators from other agencies to participate in similar investigations. ^ The investigators have used their membership in the Northern California Fraud Investigators Association to make known Butte County's desire to establish an effective Insurance Fraud program. ^ A specific goal for this year is to assist our partnership counties in developing a working outreach program. 12 Case Development ^ Through the aforementioned public education and networking, the Butte County District Attorney Insurance Fraud Unit expects to increase insurance fraud referrals. ^ Using the combined resources of this agency, those of the Department of Insurance Fraud Bureau, along with other agencies, we will enhance our ability to develop and investigate more complex cases. ^ The continued development of human resources through training, on the job experience, and involvement in insurance fraud industry networking will produce an even higher quality of investigative endeavor. ^ We also recognize we are in a position to assist with some overflow cases, in which we have joint jurisdiction from both the Sacramento and Redding Workers' Compensation Appeals Boards. ^ Cross-designation of prosecutors in the rural contiguous county District Attomey Offices will allow for training within those offices and prosecution of workers' compensation fraud cases over a greater geographical area. Butte County District Attorney Fraud Programs A strong point of the Butte County Investigation Bureau remains its proactive programs to address Elder Fhaancial Fraud, Internet Fraud, Credit Card Fraud, IdentitTy Theft, Bank Fraud, Real Estate Fraud, Gaming Fraud, Public Assistance Fraud, and Tax Fraud as well as Workers' Compensation and Automobile Insurance Fraud. The expertise gained in all these areas benefits the investigation and prosecution efforts of all fraud cases. Networking, intelligence gathering, and sharing of information have been one of our primary objectives. Joint investigations are routinely opened with county, state, and federal agencies. Training: Received and Planned 13 During the FY 2002/2003 grant year the project investigator attended the CDAA Insurance Fraud Conference. Investigator Wristen also attended a 24 hour Insurance Fraud Conference sponsored by the Northern California Fraud Investigators Association. Investigator Wristen attends the bi-monthly roundtable meetings sponsored by NICB . Investigator Wristen also attended the 80 hr DA Trial Prep course. For the 03/04 Fiscal Year all project personnel will attend the CDAA Insurance Fraud Conference and the Northern California Fraud Investigators Association conference. Investigators Wristen and Bowers will continue to attend the 1`TICB bi- monthly meetings. Restitution Butte County has developed a broad plan to collect fines and restitution to victims of all crimes, including insurance fraud. Upon an order of restitution being issued by the court, the defendant is escorted to the Court Compliance Officer, who interviews the defendant and identifies all avenues to gain compliance with the restitution order. In turn, upon the collection of fines and restitution moneys, the Court Compliance Officer ensures the monies are forwarded to the appropriate entity or individual. Ultimately, civil remedies, such as wage garnishment or attachment and real property liens, etc. are available. Additionally, where there is a grant of probation to the defendant with a restitution order as a condition of that grant, the Butte County Probation Department monitors the case and enforces all aspects of the probation order, including restitution. A petition to violate the probation of the defendant, if the terms of restitution are not adhered to, is readily available. Lastly, the Butte County District Attorney Insurance Fraud Unit closely monitors adjudicated cases to ensure fines are paid and restitution to victims is made. Uninsured Employers' A significant portion of Butte County's labor force consists of seasonal laborers and manual laborers (i.e.; ranch and farm work, wood cutting, etc). There has been a general assumption that some of the employers in this area do not provide Workers' Compensation Insurance. Effective January 1, 2003 the Butte county District Attorneys Office implemented AB749. This Assembly Bill allows District Attorneys Offices 14 fiznded by the Department of Insurance the ability to investigate employers who are not carrying workers' compensation insurance. We have started with a newspaper ad campaign which puts employers on notice and informs employees of their right to be protected by workers' compensation insurance. The employee portion of the add was provided in both English and Spanish. Long-term objectives: With a firm commitment to investigate and prosecute insurance fraud by the District Attorney; the establishment of a strong investigation and prosecution team, a viable public outreach and education program; and established networking with the Department of Insurance and other agencies, a solid foundation has been built to address insurance fraud in Butte County. Building upon each of these elements will further strengthen and expand the existing program. The addition of a half time investigator to the unit will allow us to take a more aggressive roll in premium fraud investigation. We will also continue to look at the local care providers. With filing of charges against a local chiropractor, the provider community will be on notice. To send out the strongest message that we are still watching, we must continue to actively investigate all referrals concerning providers. Like any other significant product we need name recognition to sustain public awareness. We believe, through our public education efforts, that within two years the citizens of Butte County will be able to identify the District Attorney's Office as a name linked to worker's compensation fraud prosecution. Violators will know that criminal conduct will not go undetected and that prosecution and accountability will be the norm in Butte County for participation in workers' compensation insurance fraud. As we said in the past, and we do not think we can say it better, to be recognized as a leading authority in workers' compensation fraud investigation and prosecution, based upon effectiveness, is our primary long-term objective. With a balanced program of public outreach, aggressive investigations and prosecution, we hope to become a "model" program for Workers' Compensation Fraud investigation and prosecution. While this may seem to be a lofty goal to achieve, this office has a reputation for doing our job well. Tne Butte County District Attorney's Office has developed state and nationally recognized programs, such as; Drug Endangered Children, Asset Forfeiture, and our 15 Child Abuse Response Team. We will continue to apply our knowledge, enthusiasm and talents to enable our worker's compensation fraud program to reach the same level of recognized success. This office recognizes that only a continued strong and committed partnership with the Department of Insurance Fraud Bureau will make these objectives possible. BUTTE COUNTY DISTRICT ATTORNEY Insurance Fraud Outreach Program BUSINESS OR WORKSHOP DATE CONTACT PERSON NOTES 04-10-01 INGRID CORDES 3000 employees CALIF STATE UNIV - CHICO W/C ADMINISTRATOR Given am hlets 04-25-01 BILL LUARNER INTERCARE INS. SERVICES S1U Provided rotocol OS-O1-O1 GLORIA SILVA 2200 employees ENLOE HOSPITAL W/C ADMINISTRATOR Given pamphlets PACIFIC COAST PRODUCERS OS-OS-O1 CHERYL McIntosh 404-1800 employees Given pamphlets (Seasonal) OS-08-O1 KIM I~]IXON 1100 employees OROVILLE HOSPITAL Given pamphlets OS-09-O1 MARTHA MILLER 1500 employees BUTTE COMMUNITY COLLEGE 3'~ Party Administrator Given posters & pamphlets FEATHER FALLS CASINO OS-09-O1 ELAINE THOMAS 460 employees 3'~ Party Administrator Given pamphlets WITTMEIER AUTO CENTER OS-15-O1 JAN STOTT 284 employees KEENAN & ASSOCIATES OS-22-O1 DAN STEFOFF Given protocol SIERRA PACIFIC LUMBER OS-29-O1 TRACY MOORE 3600 employees W/C ADMINISTRATOR ees lo 130 em 06-06-01 VICKI LAWS y p LUNDBERG FAMILY FARM RICE SCff is Carrier ENLOE HOSPITAL 01-23-02 SANDY GALKA 100+ employers CHICO, CALIFORNIA lhr session on workers comp fraud EMPLOYER WORKSHOP 16 PARADISE POST 01-23-02 STEVE, PRODUCTION 180 employees, PARADISE, CALIFORNIA MANAGER has reporting concerns LffETOUCH NATIONAL SCHOOL D 1-23-02 RICHARD T. RIPP 100+ employees STUDIOS PRODUCTION MANAGER No follow-up from CHICO, CALIFORNIA BRANCH insurance com anies P F RILEY AND COMPANY O 1-23-02 PAM, PERSONNEL 20 to 30 employees, CHICO, CALIFORNIA MANAGER wants local contacts OROVII,LE HOSPITAL 02-OS-02 JANET TENNANT 200+ employees OROVII,LE, CALIFORNIA ADMINISTRATIVE No follow-up from ASSISTANT insurance companies, they Given Packet have tech assigned to workers comp claims. RCBS INDUSTRIES 02-OS-02 BEV JOHNSON 50+ employees OROVILLE CALIFORNIA PERSONNEL MANAGER Glad to have local Given Packet contact OROVILLE SOLID WASTE 02-OS-02 VICTOR TRUJII.LO Wants to set up DISPOSAL OFFICE MANAGER appointment, has two claims to look Given Packet over ROPLAST INDUSTRIES OZ-OS-02 JANET, PERSONNEL Concerns with OROVILLE, CALIFORNIA MANAGER reporting, when and when not to. Will Given Packet make a ointment SIERRA PACIFIC INDUSTRIES 02-05-02 STEVE, OFFICE Will pass info on to OROVILLE, CALIFORNIA MANAGER corporate office Given Packet BUTTE AUTO SUPPLY 02-OS-02 KIRK SUNDAE, Left packet, will OROVILLE, CALIFORNIA MANAGER pass on to risk mgr at mother store in Given Packet M sville HUNTINGTON'S SPORTSMAN 02-OS-02 CHARLES HUNTINGTON, 10 employees, likes STORE OWNER the idea of local OROVILLE, CALIFORNIA Given Packet contact OROVILLE HOSPITAL 02-13-02 WILL GLASPIE, Discussed referrals, OROVILLE, CALIFORNIA KIM NIXON and follow-up. Received two W/C Given Packet referrals. COLLINS AND DENNY MARKET 3-11-02 ROBERT MAGHIA 12 employees, left OROVILLE, CALIFORNIA packet Given Packet BILLY BOB'S MARKET 3-11-02 BOB JOHNSON Family business, OROVILLE, CALIFORNIA Given Packet left acket OROVILLE SPORTS CLUB 3-IS-02 W1LL GLASPIE MGR 20 employees, tied OROVII,LE, CALIFORNIA into Oroville Given Packet Hos ital OROVII.,LE HOSPITAL 4-23-02 HIM NIXON W/C Discussed on oin 17 OROVILLE, CALIFORNIA ADMINISTRATOR W/C case and received three new referrals 5-22-02 Employer Workshop Sandy Galka Workshop for employer's and Co-sponsored by Enloe Hospital, insurance Butte County District companies. 116 in Attorney's Office attendance. Speakers from Enloe Hospital, Butte DA and Department of Insurance. 5-30-02 Richard Ripp/Brian Ring Attended Employer Life Touch Photos Risk Mgr/Personal Mgr workshop, had several referrals. 150 to 300 em to ees 5-30-02 Pro Pacific Produce Ted Dunn, Risk Mgr. Attended employer workshop. Had question about referrals. 150+ em to ees. Spectra-Physics 7-15-02 John Smith, Risk Mgr Aavisea or pro~~, and given hand outs. 150 employees 7-22-03 Gene, personnel Mgr. Discussed problems Sunsweet Growers with seasonal workers. 25 to 250 employees Oroville yard Builders Supply, 7-23-03 Jim Newton Given Packet, 25 employees Builders Supply, Paradise yard 7-24-03 Rocky, Yard foreman Given Packet, 18 employees 8-6-03 John Adams, owner Discussed problems Comac Mfg. of small employer, 7 employees. Foothill Lumber Co. 8-13-03 Rod, Mgr Given Packets, 13 emplyees. 8-21-03 Talked to store owners in 5 Contacted approx. 20 Downtown Oroville block area. stores, handout packets. Employer Workshop, Chico 10-9-03 Attended by I S employers Gave 2hr told on W/C. Meeks Building supplies 10-16-03 Norm, yard foreman 25 employees. 10-22-03 Contacted store owners in 5 Contacted approx 40 Downtown Chico block area business' 18 North Valley Indian Health 11-12-03 Donna Dunn, Ofc Mgr Discussed possible - referrals as they treat injured employees. They have 18+ employees. Aldred Scrap Metal 11-18-03 George Jones, Owner Given Packet, 11 employees Chico Scrap Metal ] 1-18-03 Rich, Owner Given Packet, 9 employees Butte County Rice Growers 12-10-03 Roger Lewis Discussed problems with part time employees. 14 full time, 25+ parttime Cherokee Farms 12-11-03 John Given Packets, 4 full time employees, 15 seasonal. Red top Rice Growers 1-7-03 Rick Smith, Foreman Given Packet Meridian Rock Quarry 2-18-03 Mark Lernar, Foreman Discussed problems of employees being around heavy equip. 25 employees. Enloe Hospital Workshop/Employer 1-21-03 115 employers, risk day mgr, and personnel officers Napan Ranch 2-19-03 Bob Napan, Owner Has seasonal employees Hobbie Chevrolet 3-11-03 Tres Hobbie, Owner Questions about injured employees, had 2 referrals. Exchange Club of Oroville 3-24-03 Jim Hollingsworth Set presentation time for mid summer California Parks and Rec 4-10-03 Kate Foley, Ranger tallced about problems in the state service. Discussed possible employee program. 19 PROJECTED ACTIVITIES Fiscal Year 2003 - 2004 TRAINING • Project attorneys will attend the following training: CDAA Evidence Seminar CDAA Consumer Protection Seminar Insurance Fraud Conference CDAA SLUnmer Conference/Fraud Committee Meeting DOI Fraud Bureau and other CDAA training as it becomes available • Project Investigators will attend the following training: Insurance Fraud Conference CDAA & DOI Fraud Bureau training as it becomes available OUTREACH • Continue public exposure to the Insurance Fraud Program through the established Web site (which has been linked to the Butte County web site), as well as through the Fraud Hotline, television and radio PSA's, newspaper and community meetings and fair booth. • Continue contact with employers and private company risk managers for the purposes of training, identification, appropriate referrals and provision of materials. INVESTIGATIONS • Initiate a process to receive referrals directly from the County's Risk Manager and/or the Insurance Carver. • Continue to explore identifying fraud through networking with local, state and federal agencies. • Continue to complete current joint investigations with the Department of Insurance. f ff ~-:~ ~ X11=~1.~ ~~:~.~ -1.~~~'1~ ~:~~ .~j ~`~1J`-~ ~~ ~"1..~=;a1 r.~ ~~''..:~.~IY~.f ~ut~E~ ~ur~ 1~ ~~i~~tta~l it~~ ~S~ ~~ c~A `~`~ yti~ ~~: ~ ~z i ~tl~ o~ ~ ~ E J v1 BUTTE COUNTY DISTRICT ATTORNEY INSURANCE FRAUD UNIT ORGANIZATIONAL CHART 03/04 MICHAEL L. RAMSEY DISTRICT ATTORNEY KRISTIN SIMPSON CHIEF INVESTIGATOR TONY KOESTER ASSISTANT CHIEF INVESTIGATOR MAJOR CRIMES UNIT FRANCISCO ZARATE CHIEF DEPUTY DISTRICT ATTORNEY KEVIN MALONEY 25% DEPUTY DISTRICT ATTORNEY MICHAEL CANDELA 25% DEPUTY DISTRICT ATTORNEY . SHANE RUBINOFF SENIOR INVESTIGATOR BRUCE WRISTEN 100% FRAUD INVESTIGATOR JOS VAN HOUT 25% FRAUD INVESTIGATOR JOHN BOWERS 50% FRAUD INVESTIGATOR UNNAMED 50% DEPUTY DISTRICT ATTORNEY MARCIE HUMMEL 40% LEGAL SECRETARY KRIS WASSER 50% OFFICE ASSISTANT UNNAMED 100% PARALEGAL ~~i~tt 1~ t~ ~t~~ Est a~ ~o ~ti~ ~ , ~ti ~~ ~7 ~ ~d~ o~ -, 'IJ r;'~~J rJIJ'J:~ _~ ~~"Jl"~J~~.~IaJ;sJ !~~I} Pst~ r~. Memorandum of Understanding Re: Joint Investigative Plan 1. Introduction (a) The "parties" to this joint investigative plan are the California Department of Insurance -Fraud Division, and the Butte County District Attorney's Insurance Fraud Unit. (b} The parties to this joint investigative plan recognize that the C.D.I. -Fraud Division was established to investigate allegations of insurance fraud throughout the State of California, and is the primary investigative agency in this field. However, while the headquarters for the Fraud Division in Central -Northern California is based in Sacramento, its investigative responsibilities encompass twenty-five central and northern counties. Due to this considerable geographical territory, the number of referrals/cases, and the finite number of investigators available, the Fraud Division cannot reasonably be expected to devote its efforts in any one particular county. Thus the important need for an effective joint plan to address the problem of insurance fraud in each jurisdictional territory. (c) The ability of the Butte County D.A.'s insurance fraud unit to conduct independent investigations enhances the goals of the statewide program to combat insurance fraud, as well as relieving some of the investigative burden the Fraud Division would otherwise experience in Butte County, better enabling the Fraud Division to meet its investigative obligations throughout the state. The ability to conduct independent investigations also enables the D.A.'s insurance fraud unit to respond quickly to the concerns of local employers, insurance carriers and administrators, and law enforcement agencies. 2. Statement of Goals (a) To promote a close working relationship between the D.A.'s insurance fraud unit and the Fraud Division, based on dedication to the common goal of fighting insurance fraud, commitment to the highest professional and ethical standards, and mutual respect as law enforcement officers devoted to the pursuit of justice and the protection of the citizens of Butte County and the State of California. (b) To investigate in a timely manner, using professional standards and procedures, and prosecute when appropriate, as many identifiable causes of suspected insurance fraud as we can. (c) To achieve the best possible anti-insurance fraud program we can produce, through the efficient and effective use of the limited resources provided, and the promotion of awareness in this community that the serious problem of insurance fraud is being addressed in a meaningful way by law enforcement. 3. Receipt and Assignment of Cases (a) Present law requires that an insurer who knows or reasonably believes that an act of insurance fraud has been committed report this information to the Department of Insurance Fraud Division and the local district attorney (Penal Code section 550). (b) The parties will communicate at least once a week to discuss SFC's and case referral packages received, with the objective being to avoid duplication of investigative efforts, and to insure that all referrals are being appropriately addressed. In addition, each party will prepare a written report the first week of each month showing case intake and assignments.. (c) If the SFC or case referral package is sent only to the Fraud Division, the Fraud Division will address the matter, exercising its discretion on how best to proceed, with appropriate notice to the D.A.'s insurance fraud unit of the action taken. If the SFC or case referral package is sent only to the D.A.'s insurance fraud unit, it will notify the Fraud Division and determine what action, if any, the Fraud Division desires to take, as indicated in paragraphs (d), (e), and (fj below. (d) As the primary investigative agency in the field of insurance fraud, the Fraud Division will have "first claim" to any SFC or case referral package sent by an insurer for investigation. There can be an exception to this provision if the referring insurer specifically requests that the investigation be done by the D.A.'s office. The Fraud Division will be notified immediately to discuss the situation and avoid any duplication of investigative efforts. (e) If the Fraud Division elects to pursue an investigation of an SFC or case referral package sent by an insurer, the D.A.'s insurance fraud unit will suspend any further action of the case, pending the outcome of the Fraud Division's investigation, and will notify the insurer of this fact in writing. (f) If the Fraud Division elects not to pursue an investigation of a viable SFC or case referral package sent by an insurer, because of excessive caseloads, resource limitations, or any other reason, or chooses to defer any matter referred, the D.A.'s insurance fraud unit will undertake the investigation. The referring insurer and the D.A. will be notified of this fact in writing. (g) If the D.A.'s insurance fraud unit receives a case referral from an insurer and it is determined that jurisdiction does not lie in Butte County or venue is better placed in another county, the case will be forwarded to the district attorney's office in the appropriate county, with written notice of this fact to the C.D.I. 4. Investigations (a) Pursuant to the above provision, and to maximize the expenditure of resources it is expected that each party will conduct its own investigations independently in most cases. However, it is understood and agreed that either party will provide assistance to the other upon request in any investigation where such assistance is needed. This could include serving search warrants, interviewing witnesses, making arrests, etc. (b) Joint investigation may be undertaken in cases where the parties determine it is beneficial to combine resources to achieve the most efficient and effective result. This will be determined on a case-by-case basis. (c) It is expected that cases will be developed from referrals by insurers, other law enforcement/governmental agencies (CAP; EDD; etc.), informants, and other responsible sources of information. Outreach programs are encouraged to promote this aspect of the plan. (d) It is the intent of this joint investigative plan to avoid duplication of investigative efforts by maintaining regular communication to discuss case loads and share information concerning current investigations. (e) The supervising deputy district attorney of the D.A.'s insurance fraud unit, or his/her designee, will be available to meet with the Fraud Division investigator at any time during the investigation of a case when so requested by the investigator to discuss any aspect of the case. (f) It is the intent of the parties that by maintaining regular communication and adhering to the agreed upon plans and procedures, the completed investigation will result in the filing of criminal charges and a successful prosecution. At the same time, however, it is understood that not every case that is investigated will result in a prosecution. This can happen when the evidence does not develop as expected, material witnesses are no longer available, the case lacks jury appeal, the reasonable likelihood of conviction is minimal, or other unforeseen circumstances develop. The parties will take all possible steps to avoid such situations, as it is not desirable to expend investigative resources on cases that are not prosecuted in court. (g) Special or unusual financial costs incurred during the course of the investigation will be borne by the parties as follows: (a) prior to the preliminary hearing, by the Fraud Division, (b) after the preliminary hearing, by the D.A.'s insurance fraud unit. The need for any special expenditure will be discussed and. agreed upon before it is made. 5. Undercover Operations (a) Both parties recognize the importance of undercover investigations in those cases where it is felt this technique is a viable means (often the only means) of developing evidence to prove a suspected insurance fraud. However, the parties also agree that undercover operations need to be highly organized and carefully monitored by supervisor level personnel to insure the efficiency and integrity of the investigation. It is understood that undercover operations can be very labor intensive and time consuming, and don't always produce the desired result. (b) Either party may decide to conduct an undercover operation in a particular case using its own personnel and resources. In a situation where the Fraud Division conducts its own independent undercover investigation in Butte County, the D.A.'s insurance fraud unit will be available to provide any advice or other assistance requested. (c) In a case where there will be a "joint" undercover investigation, there will be a memorandum of understanding (M.O.U.) prepared prior to the start of the investigation, which outlines and specifies the goals and objectives of the investigation, as well as the duties and responsibilities, including personnel and financial responsibilities, of each of the parties in the investigation. 6. Case Filing Requirements (a) The investigation of suspected insurance fraud cases should focus not only on the development of probable cause to make an arrest, but also on the obtaining of sufficient evidence to prove the charge beyond a reasonable doubt in a criminal court. It is understood that each case is unique, and that certain action may need to be taken in one case that would not be taken in another. (b) When submitting a case for prosecution, the investigator should present as complete a package as possible, including an arrest warrant declaration {statement of probable cause), and a case summaryldetails report, which outlines the offenses alleged to have been committed, the details of the investigation, and the evidence available to prove the charges, including identification of available witnesses and supporting documentation. In cases involving alleged false statements or misrepresentations, there must also be identified evidence to show the materiality of the alleged false statements or misrepresentation to the claim. The investigator should also identify any perceived problems or weaknesses in the case. (c) To promote efficiency in this area, Fraud Division investigators are encouraged to contact the Butte D.A. early in the investigation of a case to share ideas and develop strategies that will lead to a prosecutable case. (d) After the formal presentation of a ion wi 1 be made within fourteen (14) workingA's insurance fraud unit, a filing decis days, with notice to the investigator of the decision. If additional investigation is necessary, the investigator will be notified immediately in writing of the additional investigation requested. If a case is rejected, the investigator will be notified of the reasons for the rejection. 7. Trainin (a) Both parties have been, and will continue to be, active participants in the annual CDAAJCDI insurance fraud-training seminar. This seminar will provide a significant portion of the ongoing training of both parties in the area of insurance fraud. In addition, NCFIA, VICIA, IASIU, and similar association training seminars will be attended when appropriate. (b} The parties will participate in joint informal training sessions as necessary on issues important to the investigation and prosecution of insurance fraud cases. (c) The parties will assist each other, when requested, in training sessions for insurance carriers and administrators, on issues important to the detection, investigation, and prosecution of insurance fraud cases. 8. Problem Resolution (a) It is the intent of this joint plan that any problems or differences that may arise between parties be resolved quickly through early, direct, and open communication by those personnel directly involved in the dispute. If necessary, the Chief Investigator of the Fraud Division and the prosecutor in charge of the D.A.'s insurance fraud program maybe called upon to resolve any dispute, concentrating on the best interests of the overall insurance fraud program. 9. Joint Acceptance of Plan (a) The above stated joint investigative plan between the California Department of Insurance -Fraud Division and the Sutte County District Attorney's Office Insurance Fraud Unit is agreed upon this ~ ~ ` ~` day of June, 2003, at Sacramento, California. Richard Plein California Department of Insurance Fraud Division Kr' J. Simps Chief Investigator Butte County District Attorney's Office 8 .~! t .,F E t ! Y ~ 1 i ~ ~ ~ ~:# '.,# its :~ ~f,"" ..:t ~E ~~ O~ yet- ~,~ ~Y a ~~ o~ ~~ P E %, e;~s ~ ~~';~~ ~'~. Jam' ~ ~...~.~ ~~r17~~~.~~~ ~ &~ _ ~F ~'`b ;~ ~' f -...._ _, -.. _. -uL __.E.... _..„,a...b.. _._ .-..._..- _._._ ~_.. area ._..,__ ..„ i 'did ~ ~~~ ~.z....~__ a ~ ~ ,. 4 _. , z _... IClai ltlal y've ;ues ners rices and >cale =om- nany ;ends mar- they real- ;ingle ;o she -mak- people 'said ing in ,fernet iunt of ing. for a ante of 'When e put EMPLOYEES: AB 749 also. raises workers compensation benefits for injured workers. Remember, workers' compensation coverage is required by law. If you have been injured on the job and have been denied benefits, we can help. Contact the Butte County DA Fraud line at: 1=866-DA-FRAUD (1-866-323-7283 EMPLEADOS: AB 749 tambien levanta las ventajas de la remuneracion de los trabajadores para los trabajadores danados. Recuerde, la cobertura de la remuneration de los trabajadores es requerido por la ley. Si le han danado en el trabajo y se han negado ventajas, podemos ayudar. Contacto con la linea del fraude del abogado de districto del condado de Butte en: 1-866-DA-FRAUD (1-866-323-7283 EMPLOYERS:. , :._ DON'T GET,CAUGHT-~;J WITHOUT IT.;-~-,-~ =_~~ _J' ,WORKERS ':. _ _ . COMPENSATION. ,.,::. _ .,;,:: ;.~.; INSURANCE, IT'S ~TLiE ; ~ , '.. '' LAW" ~ .. _ - . .. . :- Effective Jan, a, 2Q03, fir; -~~ Assembly Bill 749 _amertds, existing labor law;to ~;y _r establish a new cooperative program to target those employers who are not currently carrying..vvorkers'--_:.. coinpensation~coverage for their employees. The Butte County District Attorney's Office, in cooperation with the Calrfornia Department of Insurance, and the::Cali.forrua -; Department of Industrial Relations will be condueti.rtg ongoing investigations into ":' employers who are not -~ carrying workers' compensation coverage; as ;. required by law. Employers: If convicted you:could face. fines and penalties and your business could be closed until you can provide -proof of workers compensation coverage. "DON'T GET CAUGHT WITHOUT IT" E~iPL(3'~~~5: ~.. e = al l~l~ ~~~J~Til~il\ 1.~~~ ~ 1 ~il ~~ L~~~ - Effective Jan. 1, 2003, Ass~mbiy Fill 74~ atncnds existing labor law to establish ~ net cc~ape~fiive pro- grin to target those ~mpluy~~s who arc not ~uzrently ca~:~ry~ng warker~; compensation coverage for their em~layoes. AB 749 also raises workers camget~sa- tion benefits for injured workers. Reixa~~~ ber, workers' compeasatitm eoverage is required by law. If yc~u have. been tz~jured an +~he job and have been denied bcttefi~.s, we can help. contact the ~'eliama County Dis#~~ct Attorney Fraud Line at X530} 529-35913 EN~PL~AD(~S: AB 7~9 tambi~n lev~nta lay ventajas de la remu~-er~cinn; a los trabajadvres Sara los ~xaba}adores t~a~a~c~s. Recuer~e, la cobcrt~a de la reinuneracidn de los traba- jadore$ es requerido gor Ia ley, Si le ban. danada en el trabajo y se non negado ven- tajas, podemQs ayudar. ~ontacto con la linen del frauds del abogado de distr~.o del condado de Te- hatna en: The Teha~a, County District At- tarney's C3ffice, in cQaperatian ~i~h the Galifor~a Department of Incur- once, and the ~alt~rnla Depart- ment of lnd~rial Relations wit be' c€~nduc~ing ongoing invesrigatians ~nta o~:play~rs whc~ are not carry- ing barkers' camgensatian cav~r- age, as required by lave. ,~p~t+~yers: If cdnvict~d you could face ~~ az~d ~erialti~s and your business could be closed until you::.. can pro- vide proof of workers c~mgcn~-_ Sian coverage:. ~~~~~ ~~~ (530} 529-3590 r C~