HomeMy WebLinkAbout04-135~~~ ~~ ~S Up 6;~•i~
~ • ~ ~~i ''nn ~
'°~ '~~ BOARD OF SUPERVISORS
~~~ ~a •~i
* r ; COUNTY OF BUTTE, STATE OF CALIFORNIA
•.
•
•'•:~ L'UUN"~••'~ Resolution No. n4--t3~
~~ri1^^~~~~~
RESOLUTION AUTHORIZING DISTRICT ATTORNEY
TO UNDF,RTAKE GRANT AWARD AGREEMENT
WHEREAS, the Butte County Board of Supervisors desires to undertake a certain program
designated "Workers' Compensation -California Insurance Code Section 1872.8, California Code of
Regulations Subchapter 9, Article 4, Section 2698.65 administered by the California Department of
[nsurance.
NOW, THERE FORE, BE [T RESOLVED that the District Attorney of Butte County 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 attached Grant Award Agreement
including any extensions or amendments thereof.
BE [T FURTHER RESOLVED that the grant funds --eceived hereunder shall not be used to
supplant cxpendit~u-es controlled by this body.
1T IS AGREED that any liability arising out of the performance of this Grant Award Agreement,
including civil court actions for damages, shall be the responsibility of the grant recipient and the
authorizing agency. The State of California and Department of Justice disclaim responsibility for any
such liability.
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
Roard of Supervisors in a meeting thereof held rn~ the 3rd day of August, 2004, by the following vote:
AYES: Supervisors Do]_an, Houx, Yamauchi and Vice-Chair osiassen
NOES: Ncne
NOT VOTING: None
ABSENT: C1-:air Beeler
ATTEST:
PAUL MCINTOSH
Chief Administrative Ofticer and
Clerk of the Board of Supervisors
i~ ,
R.J. BE LER, Chair
~itue unty Board of Supervisors
by: Curt Josiassen, Vice Chair
By: ~ r -
Deputy
..,
~~ Np,EL L Rq/yS~, - ~~ ~~ ~p0
,.
~~!,, r ~
J ~ C~
~r,. ,~,. ifr Il , ~~ pL..rLA
...~i,~ ~
- o~ ~s
~~ ca~~~i~~~~ ~~~~~~~~~~ ~~~~ ~~
. _~ ~~-
Butte County District Attorney
WORKERS COMPENSATION INSURANCE FRAUD RFA
FY 2004/2005
TABLE OF CONTENTS
t. SECTION ONE
i. Grant Transmittal
2. Board of Supervisors Resolution
3. Program Contact Information
it. BUDGET ELEMENTS
A. Personnel (Salary and Benefits)
a. Operating Expenses
c. Equipment
n. Budget Narrative
E. Carryover
ru. BUTTE COUNTY PLAN
A. Qualifications
s. Case Summaries
c. Problem Statement
n. Program Strategy
E. Organizational Chart
iv. JOINT INVESTIGATIVE PLAN
v. ATTACfEVV1ENT A
A. Red Flags Flyer.
! 1 1 J 1 J 1 1 1
~ ~~ ~~ ~ ~ ~ ~ ~ ~1~~ ~~ ~~~ ~~~ ~ ~ ~ ~ ~~ ~ ~~~~ ~~
J~1J1'1'~.f:~1 ~JIIa;J IJ:~~J r~~I.1 ~I~:~!~I1"~JIJ~."-'~. rI'~)!J~~ ~..f"J`J.1`~).1.1.1
Gr~n~ ~'r~nsnti#t~!
`d
W
~~
~IJ r:J1J r)IJ!)~ ~~ ~J~~~ r1J~1"~1J);J '~`l) rIJ r1J
- ~
,~
f'' ~, ~
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
Telephone: (530) 538-7356
(1) Program Title
Workers' Compensation Fraud Prosecution
Program
(3) GrantAmount $26~{ 30?.00
(2) Grant Period
July 1, 2004 -June 30, 2005
(4) Program Manager
Michael L. Ramsey
District Attorney
25 County Center Dr.
Oroville, Ca 95965
(5} Financial Officer
Connie Carter
Chief Administrative Officer
25 County Center Dr.
Oroville, Ca 95965
(6) DistrictAttorne s Si a
Nam Mi hae L.
Title: District A orney
County: Butte
Address: 25 County Center Drive
Oroville, Ca 95965
Telephone: (530) 538-7411
Date: June 24, 2004
1~.~~.tJ'~f~~ ~JJ1J;J~11~~1'rJJI~ ~1~-~!~~s1fJ~1 rf~J!~~J .~~'~JJ~~J11~
~~~~d of ~~pe~~~
~~ 0~ ~~
yti~
fir'
~~
Ol
~1~ r;JIJ rJIJ!J~ ~~ JJ~JJ~ r1J.1'~.IJJ;~ ~JJ r1J rIJ~
~~ ~ ~ ~
({~ ~ , P~ l {`r 1(F
~~~ ~~~!~~`~1~~~~
.. /r,
~~••~
~ /~~ '.
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 July.
~1J/J1'1'~1'~1 ~J11J~~11:~~j rJ~IJ ~IJ:~!J1`~J1Jr:~ s'J'~_1!J~.~ ~J'J~1'~J11J
P~ogr~rn Cont~-~t ~~r
'~'
d
~~
~~
~IJ JIJ rJIJ!.1~~~ ~J'sJJ'rIJ J'~1JJ1J ~`lJ rIJ ?.lJ~
f ..E
r~ ( I ~ p~~
~~~~-1~~~ ~~ ~~~ ~~~~~~~~~~
o~ ~p~,a
` .. 7
I
~ ~,. -\
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 Fax: (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 Fax: (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 Fax: (530) 538-7071
4. Person responsible for the data collection/reporting for the agency:
Bruce Wristen
Investigator II
25 County Center Drive
Oroville, CA 95965
Email: bwristen@buttecounty.net
Telephone: (530) 538-6480
Fax: (530) 538-7071
r ~ t 1 r ~ ~ ~ ~ ~ ~ f ~ J ~ f ~ ~ ~ • ~ t ~' E 1 r
`J~.~Jf1~~J'~1 ~ J11.11J~.tJ~=Jr~J IJ J1J:J+Jf~J.IJ~~ rf~J!J~~ ~J~J`~.~~1j3J
Budget ~E~~t~~t~
'~\
I~NAEL ~ RqM '~' ~ ',
-i M .~-'_~---. ~
~~ O~ ~~
yti~ ~
~~
OIL
~1J `; JIJ r~1J!J ~ ~~ ;.~~JJ' rIJ ~~~fJJ;~ `a'JJ rIJ rIJ-
^1 ~ f ~
WIC Fraud Grant 04/05 FY
BUDGET CATEGORY AND LINE-ITEM DETAIL
A. Personal Services/Salaries -Employee Benefits July 1, 2004 -June 30, 2005
WIC FRAUD GRANT 90160
FIFTH YEAR AWARD
CATEGORY FY 03104
COST I MATCH TOTAL
NO CASH MATCH REQUIREMENT IN THIS GRANT
Mike Candela Deputy DA IV 25% to PSalary $20,543 $0 $20,543
320-12017
Benefits
$7,568
$0
$7,568
Hrly rate 54.06 520
Michael Sanderson Deputy DA III 25% to PSalary $14,191 $0 $14,191
320-12023
Benefits
$5,391
$0
$5,391
Hrly rate 37.66 520
Bruce Wristen DA Investigator II 100% to Project
Salary
$49,676
$0
$49,676
320-14009S
Position Extended to 06-30-05 Benefits $30,412 $0 $30,412
Hrly rate 38.50 2,080 Overtime $3,465 $3,465
Jos Van Hout DA Investigator II 25% to Project
Salary
$13,692
$0
$13,692
320-14002 Benefits $8,132 $0 $8,132
Hrly rate 41.97 520 Overtime $3,777 $3,777
John Bowers DA Investigator II 50% to Project
Salary
$20,311
$0
$20,311
Extra Help position Benefits $295 $0 $295
Hrly rate 19.81 1,040
Un-named DA Investigator II 50% to Project
Extra Help position Salary $20,311 $0 $20,311
Benefits $295 $D $295
Hrly rate 19.81 1,040
Paul, Andria Paralegal 25% to Project
Salary
$9,068
$0
$9,068
320-15005S
.25 of 1.0 FTE position Benefits $3,709 $0 $3,709
Hrly rate 24.57 520
CATEGORY TOTAL $210,834 $0 $210,834
TOTAL $210,834
WIC Fraud Grant 04/05 FY
BUDGET CATEGORY AND LINE-ITEM DETAIL
B. OPERATING EXPENSES July 1, 2004 -June 30, 2005
WIC FRAUD GRANT 90160
FIFTH YEAR AWARD
CATEGORY FY 03 ! 04
CASH
NO CASH MATCH REQUIREMENT IN THIS GRANT COST MATCH TOTAL
Communications $ 6,660 $6,660 $0 $6,660
Communications: Cell -- 40 ` 12 *4 $ 1,920
Office -- 79 * 12 * 5 $ 4,740
Office Expense $ 3,040 $3,040 $0 $3,040
Expendable Office Supplies $ 2, 000
Specialized equipment:
1DE Removable Drive Drawer Mobiie Rack (2) $ 86
3 Port IEEE-1394b FireWire 800 PCI Card (1) $ 91
FireWire cable (2) $ 174
UltraBlock-IDE Hard Drive Write Block Kit (2) $ 388
UltraBlock-BATA Hard Drive Write Block Kd (1) $ 301
Professional & Special Services $ 1,190 $1,190 $D $1,190
Special Departmental Expense $ 5,281 $5,281 $0 $5,281
Equipment Maintenance (Vehicle) $ 500 $500 $0 $500
Transportation and Travel $ 6,000 $6,000 $0 $6,000
Transportation and Travel -Fuel purchases $ 3,375 $3,375 $0 $3,375
Fuel purchases: 125 * 12 * 2.25
Indirect Costs /Administrative Overhead $ - $0 $0 $0
Annual Audit $ 1,500 $1,500 $0 $1,500
CATEGORY TOTAL $27,546 $0 $27,546
TOTAL $ 27, 546
W/C Fraud Grant 04/05 FY
BUDGET CATEGORY AND LINE-ITEM DETAIL
C. EQUIPMENT July 1, 2004- June 30, 2005
W/C FRAUD GRANT 90160
FIFTH YEAR AWARD
CATEGORY FY o3 / 04
CASH
NO CASH MATCH REQUIREMENT IN THIS GRANT COST MATCH TOTAL
Equipment $7,427 $7,427 $0 $7,427
Encase Forensic Addition 1/4 Software program w/bongie $2,140
Start-up costs /Forensic Accountant:
Office Furniture $2,477
Desk Computer $1,201
Laptop Computer $1,609
Start-up costs /Additions! Investigator
Office FurniturB $2,477
Desk Computer $1,201
Laptop. Computer $1,609
Vehicle Purchase (used with radioiemergencyequIpment installed) $18,500 $18,500
CATEGORY TOTAL $25,927 $0 $25,927
$264,307 $0~ $264,307
PROJECT TOTAL
$264,307
FUND DISTRIBUTION COST ASH MATC TOTALS
1. Amount of Funds $264,307 - $264,307
2. Percentage of Funds 100% 0% 100%
WORKER'S COMPENSATION INSURANCE FRAUD
BUDGET NARRATIVE
FISCAL YEAR 2004/2005
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 increase the staffing level with anon-benefited half-
time investigator and to reduce the .5 FTE Paralegal to .25%. With our focus redirected
to premium fraud and our continued aggressive outreach program, we are receiving
referrals at a higher level than the past few years, anticipating our investigative work
load, filings and prosecutions to increase. The addition of the investigator will
necessitate start-up office costs which are included in this budget. Additionally, start-up
office costs for the Forensic Accountant are included in this budget request. Although
the salary for the Forensic Accountant is funded with the Indian Gaming Grant, the grant
is limited to salary only. ~ We believe the Forensic Accountant will spend at least 30% of
his time on workers' compensation fraud cases and that person will account for his time
in the Kronostfine-keeping system utilized by the County.
The RFA is requesting the purchase of a vehicle for the half-time investigator and
paralegal use, but rather than purchasing a new vehicle we have found a used, low
mileage vehicle in another county department that is already equipped with a police radio
and safety equipment. The purchase of this vehicle will save approximately $7900.
Our Paralegal has been tracking the convicted defendants who are on probation
and the District Attorney's Office is in the process of working with Court Compliance to
transition the restitution collection function to the DA's Office. We do not believe this
changeover will necessitate additional funding, however.
Training, travel, and transportation for the deputy district attorneys', the
investigators and the paralegal has been budgeted for in the RFA, along with associated
costs for the day-to-day operation of the grant.
We are also budgeting for updated computer equipment and software to continue
our efforts to effectively search seized computers. The Encase software is law
enforcement's standard when it comes to computer forensics. This program checks for
deleted and undeleted files. It allows for the entry of a text string (written information
relating to a case) i.e. defendants name, victim's name or case specific language. This
reduces the time it takes to search the computer hardware by the examiner. This program
also looks at an image of the hard drive so the original is preserved for evidence.
In addition to the above software, Write Blockers are also required. These units
allows the forensic examiner to take the bitmap image using the encase software without
writing information to the suspect's hard drive. As we all know, everyone is innocent
until proven guilty and we want to preserve everyone's' rights before a thorough
investigation has been completed. These units, along with the additional encase program,
will allow us to do a more professional and complete job. These components, added to
the items we currently have, will allow us to forensically obtain (search) multiple hard
drives at the same time thus reducing the hard drive acquisition time. The additional
Encase software program will allow us to speed up the investigative process with regard
to the acquired hard drive information. The Encase software is required to view the
evidence thus allowing us to either view two acquired hard drives at the same time or
acquiring a hard drive while viewing another.
This equipment also matches the Department of Insurance Forensic Team
equipment. This will allow us to work in conjunction with the Department of Insurance
with respect to the Computer Forensics required in our Insurance cases.
Butte County District Attorney
WORKERS COMPENSATION INSURANCE FRAUD RFA
Fiscal Year 2004/2005
CARRYOVER
The Butte County District Attorney's Office had a significant carryover last yeaz
due to internal accounting issues within our Auditor's Office. That carryover was
identified as the bulk of the 03/04 funding for the grant.
We are pleased to report that our project and financial personnel have been very
diligent in tracking the grant funds and there is no carryover to the 04/05 fiscal year.
J~JJf1''~.~~~ ~JI1J~~1~~~~ r~J.~.1 ~I~:~!J1`~~I~ r:~ rf ~.~,~~J ~J'J~Jf~~11~
~~tt~ county ~ta~
~t~~ t~ea~l~~~~ti~n~
d
~~
o~
~IJ ~J1J rJIJ!~~~~ ;J~JS~rIJ~.~~IJJ;J ~`lJ rIJ rIJ~
o~ ~~
. ~ _ .~ ~
BUTTE COUNTY DISTRICT ATTORNEY
WORKERS' COMPENSATION FRAUD
PROGRAM STAFF
DEPUTY DISTRICT ATTORNEY:
DDA Mike Sanderson graduated for the Cal Northern School of Law in 2000. Mr.
Sanderson has worked for the Butte County District Attorney's Office for three years. He
has spent the last six months in the Workers' Compensation Fraud Unit. Prior to going to
law school Mr Sanderson worked in private industry, most recently for SBC.
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 Marin County. Mr. Candela is co-author of California Criminal Law,
Procedure and Practice, CEB, Second and Third Editions, 1994 and 1996.
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 of the District Attorney'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.
Unfilled 50% 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. Investigator Van Hout is a 25% investigator in the grant.
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.
Andria Paul, Paralegal works 25% in the Workers' Compensation Program. Andria
graduated from Cal Northern School of Law in 1998, and has worked the last 5 years as a
Paralegal for the County of Butte. She has spent the last 10 months assigned to this
program.
J~~Jf1'.~f~~ ~JIj~~~~IJ~~J~JJI~ J.I~~!Jf~J1.lr;~ r.~~J!J~J .~'Jr~Jr~J11J
Bu~tE~ County
Rl~n Qu~li~~~ti~n~
~.
~~
0~
~L1 JIJ rJIJ!J~~J ~J~JJ'rlJ~l'~IJJ~J ~~lJ r~~ rl~~
.~ ~ ~
~~ ~ ~~~ ~ ~ ~~~ ~ ~~ ~ ~~~ ~.~~ I ~ ~~
op ~,~
L .. J
~ ~~~~~ ~11~ ~~~~ ~ ~~~ ~~1~! ~~~~~~
WORKERS' COMPENSATION INSURANCE FRAUD
QUALIFICATIONS
In the last four years a dramatic change in Butte County's insurance fraud
program has evolved. Four years ago we had one full time investigator and a
limited case load, but we knew insurance fraud was out there.
We developed an aggressive outreach program, which included television
spots, public service announcements, and one on one contact with the business
community. The Butte County D.A.s insurance fraud program developed a web
page and a fraud hot line to allow citizens of Butte County a forum for fraud
referrals.
As our outreach program began to take off, the referrals started coming in,
and we were on our way. We have continued an aggressive outreach program,
participating in several employer workshops over the past few years, and
collaborating in more one-on-one contacts in the business community. Our
investigators utilize opportunity to educate a business person or citizen about our
program.
We initially concentrated on applicant fraud cases. We found these to be a
relatively short investigation, and prosecution typically brought a plea. We also
realized the impact on insurance fraud with types of cases was very minimal. Three
years ago we opened investigations into fraudulent activities of three local
chiropractors. Two of these cases are in the court process and ane is set for jury
trial in July 2004. The down side to medical provider fraud cases is the time
commitment. We found it takes hundreds of staff hours to investigate and
prosecute a case.
During this last year we have opened an investigation involving alleged
premium fraud by two local building contractors and a local arborist. We are
working jointly with the Department of Insurance (DOI), Employment
Development Department (EDD), and the Franchise Tax Board (FTB). We have
served search warrants on all three businesses. The service of the warrants on the
contractors was a joint operation with DOI, EDD, and FTB. A preliminary audit of
the contractors books by EDD shows over $500,000 in unreported wages. We have
also been in contact with State Compensation Insurance Fund (SCIF), the insurance
carrier for all three businesses, and they have initiated an audit for us.
From the inception of our fraud unit we developed a good working
relationship with the Department of Insurance. We have continued to build on this
relationship and rely on them for assistance in our investigations. We have worked
several joint operations with their investigators, always with good success.
This last year has seen several other relationships start to bud. Working with
EDD and FTB has opened up a whole new resource for our office. The Butte
County insurance fraud unit has developed contacts with both agencies, and they
have been invaluable. Not only did those agencies provide much needed assistance
with the service of the search warrants on the'two contractors businesses, they have
continued to assist us with the investigation. Because of the contacts we have
developed, we have been able to get timely information required for other premium
fraud cases this office is investigating. We also now have contacts in both the policy
side and the investigative side at SCIF, as well as a contact with a private company
which monitors compliance on prevailing wage and public works construction
contracts. This company has provided us information on the certified payroll
submitted by one of the construction companies we are investigating.
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. From July 1, 2003 to June 30, 2004 15 investigations were initiated and involved
and average of 1 identified suspect 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. From July 1, 2003 to June 30, 2004 4
warrants/indictments issued, involving an average of 4 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, 2001 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. From July 1, 2003 to June 30, 2004 0 arrests and 4 surrenders 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. From July 1, 2003 to June 30, 2004
1 convictions were obtained. Of these convictions, 1 was obtained by plea.
5. 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. From
July 1, 2003 to June 30, 2004 1 defendant was ordered to pay $272.00 in fines and penalty
assessments. Of this amount $0.00 was collected.
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 i~ 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.
From July 1, 2003 to June 30, 2004 1 defendant was order to pay restitution in the amount of
$700.00 to 1 victim. Of this amount $50.00 was collected.
CONVICTION INFORMATION
FISCAL YEAR 2001-02
cAS~
I S N ~T ROLE* SENTENCE RESTTTU-
TION/LOSS CNIL
FII1E CRIMII~AL
Fns ~C.r~ DDA
NAME
~~ 1 9-113 Wertman Claimant 36 mon robation $1,744.00 ~ 1 507.0 edgwic Maloney
~ ~ 7-112 Allen Cl~im~ 2 rs robation 3 b28.07 765.0 SCIF Malone
i
~ 3
0-119
Allen
Claimant
Combined
Combined
Combine
SCIF Malone
1 4
5
6 ~ p
7
8 '
9
10
*Role: Claimant, Fraud Ring, Premium Fraud, Lega1/Medical Provider, Insider,
Uninsured Employer, Others
FISCAL YEAR 2002-03
cASE~ SLl$JECT
NAl~~
ROLE*
SENTENCE RESTTTU-
TIONlLOSS CIVIL
FINE CRIMITQAL
Fn~E
~~crrns DDA
NAME
1 0-103 Wofford laimant 2da s 36mon ro 1 744.12 3,410.36 SCIF Malone
~ 8-118 Disne laimant 0 da s 36 mon 12 411.07 3,035.36 CIGNA Candela
3
4
5
6
7
8
9
10
*Role: Claimant, Fraud Ring, Premium Fraud, LegaUMedical Pro~Tider, Insider,
Uninsured Employer, Others
22
FISCAL YEAR 2003-04 (from July 1, 2003 to June 15, 2004)
ca.sEa S NET ROLE* SENTENCE RESTITU-
TION/LOSS CIVIL
FINE CRI114INAL
FINE VICTIM DDA
NAME
I
3-155
Bennett
:-Claimant
20day 36mon pr
$700.50
$242.00 Butte
Co.
Candela
3
4
5
6
7
8
9
10
*Role: Claimant, Fraud Ring, Premium Fraud, LegaUMedical Provider, Insider,
Uninsured Employer, Others
23
WORKERS' COMPENSATION INSURANCE FRAUD
SUMMARY OF ARRESTS
JULY 1, 2003 -JUNE 15, 2004
(USE ADDITIONAL PAGE, IF NECESSARY )
Case
Number Referred,
By Code
Section Number
Arrested Number
Held to
Answer Number
Surrender Fraud
Scheme Potential
Loss
03-1513 0 11880 I.C. 1 1 Premium 49,500.00
04-1674 P 1871.4 IC 1 1 Claimant 0
03-1517 P 1871.4 IC 1 1 Claimant 56,000.00
04-1680 P 1871.4 IC 1 1 Claimant 39,379.85
Referred by:CDI (Fraud Division, Califonua Department of Insurance), P (Private
Carrier, S.I.U.), S (Self-Insured Employers), (T) Third -Party Administrators, (L) (Local
Law Enforcement), or Q (Other)
Type of fraud scheme: claimant, premium, fraud mill, capping, legal/medical providers,
insider, uninsured employer, others.
17
FISCAL YEAR 2003-04
Total Cases in court - TOTAL
Categories and STAIQ-
MEDIUM
COMPLEX VERY TOTAL TOTAL
DEFEN CHARGEABLE
Complexities DARD COMPLEX CASES
DAI~ITS FRAUD
(From 7-1-03 to 6-15-04) (in dollars)
1. Claimant Fraud 3 3 3
$ 74,450.00
2. Premium Fraud 1
1 1 20, 891.00
3. Fraud Mili
4. Capping
5. Legal/Medical
Provider Fraud 1 1 1 56,000.00
6. Insider Fraud
7. Uninsured
Employer
8. Others
TOTAL CASES
IN COURT 3 2 5 5 $151, 341.00
*** CASE CATEGORIES
Standard Case:
1. One defendant
2. Loss under $10,000 Loss=Amount of chargeable fraud
3. One employer victim
Medium Case:
1. Loss from $10,000 up to$49,999.
20
FISCAL YEAR 2002-03
Total Cases in court - TOTAL
Categories and
STAN-
MEDIUM
COMPLEX
VERY
TOTAL TOTAL
DEFEN
CHARGEABLE
Complexities DARD COMPLEX CASES
DANTS FRAUD
(From 7-1-02 to 6-30-03) (In dollars)
1. Claimant Fraud 5
5
5
$87,428.25
2. Premium Fraud 1 1 1 20, 891.00
3. Frau d Mill
4. Capping
5. LegaVMedical
Provider Fraud
6. Insider Fraud
7. Uninsu><-ed
Employer
8. Others
TOTAL CASES
IN COURT 6 6 6 $108, 319.25
19
CASES IN COURT
FISCAL YEAR 2001-02
Total Cases in court - TOTAL
Categories and STAN-
MEDIUM
COMPLEX VERY TOTAL TOTAL
DEFEN CHARGEABLE
Complexities DARD COMPLEX CASES
DANTS FRAUD
(From 7-1-01 to 6-30-02) (in dollars)
1. Claimant Fraud 7 7 6 $255,051.54
2. Premium Fraud 1 ~ 1 1 4,139.04
3. Fraud Mill
4. Capping
5. LegaUMedical
Provider Fraud
6. Insider Fraud
7. Uninsured
Employer
8. Others
TOTAL CASES g 8 7 $259,190.58
IN COURT '
See page 20 for instruction.
18
FISCAL YEAR 2004-OS OBJECTIVES
In fiscal year 04/05 the Butte County DA fraud unit expects to initiate 20 new
investigations. In order to meet this objective we are requesting the addition of a
half time investigator. We are increasing our outreach in the construction industry
in our County which will generate more referrals and will be conducting self
generated investigations in the premium fraud arena.
In fiscal year 04/05 the Butte County DA fraud unit will initiate 5 new
prosecutions. With the addition of a half time investigator the case load will be
spread more evenly, allowing for a faster turn around time on investigations. As
more investigations are completed, more cases will be submitted for prosecution.
23 investigations will be carried over from the previous grant year.
5 prosecutions will be carried over from the previous grant year.
'i~1JI`~' 1'~1 ~~IIJ;~~1J:~~J rJ~IJ ~IJ~!JI`~J1~~:~ r'1`~J!J~~ ~fJJl'~JI1J
Caste ~umie~e~rt
~~-~~d~t~~t~~)
~~ ~~ ~~
~~~ . , ~
b
~~
o~
••.i [ 1 ~ ~ .1 ~ ~'
~-
~~~~~~~~~~~~f~~ ~~ ~~~~ ~~~~~~~~~
~,
'~
_~------
~~. wFL L Re.: r ';
PROSECUTIONS
PRINCIPAL CRIMINAL ATTORNEY Mike Candela
THIS GRANT PERIOD 25% OF TIME DEVOTED TO THE PROSECUTION OF
WORKERS' COMPENSATION CASES.
CONVICTED
Bennett, Wendy:
Filed: 10/7/03
Charges: Ins. Code Sec. 1871.4 (a)(1)
Details: The defendant pled guilty to one count of insurance fraud as a misdemeanor. In
exchange for the guilty plea and agreeing to cooperate in an ongoing premium fraud case the
charges were reduced from a felony. The defendant, a Butte County employee, claimed an on the
job injury to her wrist's. While she was off on disability she continued to work at a second job
for a janitorial company. The defendant failed to disclose this employment. When her treating
physicians were told by investigators about the janitorial work she was doing, they said this
information would have changed their opinion of the degree of disability the defendant suffered.
PRINCIPAL CRIMINAL ATTORNEY Kevin Maloney
THIS GRANT PERIOD THROUGH JANUARY 2004 25% OF TIME DEVOTED TO THE
PROSECUTION OF WORKERS' COMPENSATION CASES.
NOT GUILTY
Cornwell, Gary:
Filed: 02/07/2000
Charges: Ins. Code Sec. 1871.4 (a)(1), Penal Cade 550
Details: The defendant, a California Highway Patrol Officer, was charged with insurance fraud
involving several on the job injuries. The case went to trial, where he was found not guilty by a
j~'Y•
PRINCIPAL CRIMINAL ATTORNEY Mike Sanderson
THIS GRANT PERIOD FROM JANUARY TO PRESENT 25% OF TIME DEVOTED TO THE
PROSECUTION OF WORKERS' COMPENSATION CASES.
DISMISSED
Quezada, Maria•
Filed: 01/27/04 Charges: Ins. Code Sec. 1871.4 (a)(1)
Details: The defendant alleged an on the job injury. The defendant started a house cleaning
business while off on disability, but failed to report this to her employer. Sub Rosa was started
by the insurance company, and she was caught on film coming and going from several house
with her cleaning supplies. An investigation was started and charges were filed. Subsequent to
the charges being filed, the insurance company settled with the defendant, but did not share this
information with our office. After reviewing the information the decision was made to dismiss
the case.
J,1 Jt'1~~J':~~ ~J.Il)~J-_'..1)~~.1 ~~l rJI) ~~.1 ~!)f~~.I~~~ 1'J'~~!) ~~ J~~J~f~.ll1)
C~r~fid~ntl~l
G~s~ ~~ntr~tr~r[
d~
o~
~1J ~J1J rJ1~!J~.~ ~J~J1" ~IJ-.~~IJJ;J '~'Jl rl~ r1J~
~~
~~ ~~1~ ~ .~ ~~~'
O~ GA'I,~p~"~,~
~ ~ _~,~~
~., ~~
=''~aAE~- L RAM.,_'- -.
Confidential Cases
WORKER'S COMPENSATION INSURANCE FRAUD
PROPOSED BUTTE COUNTY PLAN
FISCAL YEAR 2004/2005
CASES FILED: Principal Criminal Attorney Mike Sanderson. 25% Devoted to the
Workers' Compensation Grant. January 2004 to Present.
Wineland Walnut (Scot Wineland): Charges: 11760 (A) IC
04/01/04 Investigator, John Bowers 50% Devoted To The Program
Scot Wineland, owner of Wineland Walnut, does custom tree trimming and tree removal. He
employees 3 to 5 employees. He was paying his employees half in cash and half by check.
Wineland also had several part time employees he payed in cash only. Wineland was not
reporting the correct wages and classification to his workers' compensation insurance carrier.
Hardwick, Randy: 1871.4(A)1 IC
06/25/04 Investigator, John Bowers 50% Devoted To The Program
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.
Quezada, Maria: 1871.4 (A) IC
01/26/04 Investigator Bruce Wristen 100% Devoted To The Program, Assisted by
Gary Sage Investigator, California of Insurance
Cases Filed: Principal Criminal Attorney Mike Candela. 25% Devoted to the Workers'
Compensation Grant
Taylor, Dana: 1871.4 (A)(1) IC, 632 (A) PC
06/10/04 Investigator, Bruce Wristen 100% Devoted To The Program, Assisted Bill
Proffitt
Taylor worked in a care home as an aid. Taylor did not successfully complete her probationary
period, and was being terminated. At her termination interview she reported a on the job injury
which allegedly happened several days prior. Taylor has made inconsistent statements during
interviews. Witnesses have been contacted give a different account of what happened the day in
question. Taylor also recorded her termination interview without advising the other parties
involved.
Ongoing investigation:
Fox, Loren: Charges 1871.4(A)1 IC
Pending Investigator Bruce Wristen
Fox is a Chiropractor in Oroville, California. We received a fraud referral from Oroville
Hospital concerning Fox and a local Attorney, Josef Fellner. 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.
De Air Company: 11880 IC
Pending Investigator Bruce Wristen
Rick Root owner of De Air Company is under reporting his employees to his workers'
compensation insurance carrier, and has had several lapse in coverage. The investigation is
ongoing.
Banik, Pranab: 1871.4(A}1 IC
Pending Investigator Bruce Wristen
Banik worked for Lifetouch National School Studios. Banik was found permanent and
stationary and was authorized continuing chiropractic care. When the treatment became
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 Investigator Bruce Wristen
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.
2
HIick Timothy: 11880 IC
Pending Investigator Bruce Wristen
Klick owns a small manufacturing plant and is reportedly paying some of his employees in cash
to avoid reporting them to his workers' compensation insurance carrier,
United Builders: 11880 IC
Pending Investigator John Bowers and Bruce Wristen, Leighton Johe Investigator
California Department of Insurance
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.
Gonzale, Norman: 1871.4 (a)1 IC
Pending Investigator JohnBowers
Gonzale is alleging an on the job back injury. Gonzale's estranged wife reported he did not
injure himself at work.
Holmes, James: 1871.4(a)1 IC
Pending Investigator John Bowers
Holmes is claiming he hurt his back at work, but has been seen by neighbors doing chores
around the house and lifting items well in excess of what he claims he can do.
Conn, Duane: 1871.4 (a)(1) IC
Pending Investigator Bruce Wristen
Conn claimed a back injury while working at a care facility. While off on disability Conn
refereed basketball and umpired softball for a local recreation district. He did not report this
employment to his doctor nor the insurance company.
Sanitorial Janitorial: 11880 IC
Pending Investigator Bruce Wristen, Investigator Alicia Daniel California
Department of Insurance
The owner of the company is paying most of his employees cash to avoid paying higher
workers' compensation insurance premiums.
Opened but not as,
Richmond, Vincent
Fisher, Tamara
Lower, Clinton
Wallace, Vicki
Huffman Charlotte
signed:
Applicant Fraud
Applicant Fraud
Applicant Fraud
Applicant Fraud
Applicant Fraud
Filed, not adjudicated:
These cases were filed with the court in grant year 02/03 and 03/04. The cases are still
ongoing in the court system.
3
Azevedo, Karen: 550 PC
Mulrennan, John: 11880 IC, 217.5 UC
Powers, Linda: 550 PC
Newman, Paul: 1871.4 (A) (1) IC
4
J~.~J1`1_~Jl~~ ~J11J~~.IJ~~J ~J~.IJ ~.tJ~!J~'~JfJ ~ r~.J!~ ~~ JJfJ JJ'~JIIJ
'S~O~ ~r 'V~`t
yti~
d
~~
Ol
~11 ~J1J rJIJ!J~~~ ~~~J'rIJ J'~1JJ;J ~'lJ rtJ r1J~
~~ ~ J~~ ~ =~ ~~~ ~ ~~ ~ ~~~ ~~~~ ~ ~.~
~~
~.
WORKERS' COMPENSATION INSURANCE FRAUD
PROPOSED BUTTE COUNTY PLAN
FISCAL YEAR 2004/2005
PROBLEM STATEMENT
Demographics
Butte County continues to be the largest county north of Sacramento, with a
large bedroom community who choose to live in a rural area with affordable housing,
but work in Sacramento. Butte County has a predominately middle class population
with small enclaves of significant affluence. Unfortunately our substance abuse and
welfare populations are on the increase. Additionally the county has ahigher-than-
State-average elder/retired population. Significant new housing starts and other new
construction has reversed our unemployment rate.
Employment in Butte County is varied, with California State University at
Chico, Butte Community College, and the hospitals located in the county being some of
our largest employers. Farming and ranching are still a main stay, although some of
the orchards are starting to feel the effects of imported fruit resulting in the downsizing
of their contracts with local canneries. New home construction in Butte County is still
on the rise, with Oroville experiencing an explosion in new homes being built. Oroville
also has a Home Depot under construction, which is expected to be completed in
November 2004. This will bring 50+ new jobs to Oroville.
1
We continue to be in partnership with four surrounding counties, Sutter,
Colusa, Glenn, and Tehama. Of these, Tehama County has applied for and received a
workers' compensation grant of it's own in the 03/04 fiscal year and will be submitting
an RFP for grant funding in the 04/05 fiscal year. During this past year we have
assisted the Tehama County District Attorney's Office with an applicant fraud case
arising out of employment at the Wal-Mart distribution center located in Tehama
County. Charges have been filed in this case.
The Scope of Workers' Compensation Fraud in Butte County
Since the first year Butte County received a workers' compensation grant we
have been on a learning curve. During our first few years we targeted the applicant
fraud cases as they were relatively uncomplicated. However we learned these cases
have a fairly insignificant impact on reducing fraud and saving dollars. In the last four
years we initiated three provider fraud investigations. All three investigations involved
chiropractors with one also involving two law firms. One case is set for jury trial in
July of 2004, with a second in the court process. The third investigation did not result
in charges being filed but referrals were made to the California State Chiropractic
Board and the California State Bar. Although one of the cases may realize a potentially
large restitution dollar amount, the time spent investigating and prosecuting these cases
has had a huge financial and staffing impact on a,small fraud unit like ours.
Butte County has also learned that the wayward medical provider tends to be
more intelligent than the average applicant, making the fraudulent schemes medical
providers use complex and hard to ferret out. The investigation into fraudulent
medical providers can take several months to two years to complete. None the less we
feel this is an area of fraud that most certainly needs to be investigated and we will
continue to review referrals to determine if an investigation should be initiated. If after
reviewing the referral we determine the investigation will be lengthy we will request the
assistance of the Department of Insurance Medical Provider Task Force. Butte County
will assist the Department of Insurance with any investigations conducted locally,
review all medical provider fraud cases submitted for charging and prosecute charged
cases.
z
During this past year we have aggressively investigated two building contractors
and an arborist for premium fraud. These investigations have spider webbed into
Employment Development Department (EDD) and Franchise Tax Board fraud. This
area of fraud is where the "Best Bang for the Buck" is, at least for our county. We
have learned over the last year that two of the biggest drains on the workers'
compensation system are the employer who is under reporting and/or not reporting
employees, and the uninsured employer. Butte County DA insurance fraud staff
recently attended a workshop at the Department of Insurance. A representative of
EDD stated a recent study showed 32% of all employers in the State are uninsured.
Our experience has shown that where there are reports of premium fraud there
are other types of fraud occurring as well. As our unit began to make contacts with
other agencies in the investigation of these frauds our outreach program evolved.
Some of those agencies we contacted, such as Employment Development Department
(EDD) experienced more than a passing relationship with the same suspects and
schemes found in insurance fraud. 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, has also led to the discovery of premium fraud by
local employers.
There is a trickle-down effect from this type of fraudulent activity. Businesses
that are under reporting and/or not reporting, and uninsured businesses have an unfair
advantage on the playing field, especially in the construction industry. Because these
businesses pay less and in some cases, no workers' compensation premiums, they are
able to constantly underbid their competitors. This eventually drives the legitimate
business person out of business. The dollar loss reaches far beyond the insurance
premiums lost by the insurance company and dips into the total economy of California.
Although our major cases at this time focus on premium fraud, we are still
actively investigating several applicant fraud cases. Through our effective outreach
program we have developed a good working relationship with our County Risk
Manager, who has given our unit several good referrals. We recently successfully
3
prosecuted a Butte County employee for applicant fraud based on a referral from our
Risk Manager. This particular defendant was offered a misdemeanor plea in exchange
for information that will lead to a premium fraud investigation on an employer. Based
on the number of referrals we have been receiving from our County Risk Manager, we
developed a Workers' Compensation Red Flags warning flyer. This flyer was given to
all department heads in the county. (See attachment "A") We have also received
referrals from citizens and business people in the community who learned about our
program through our outreach efforts.
We are engaged in extensive outreach efforts to apprise the area risk managers
and the insurance industry representatives that the Butte County District Attorney's
insurance fraud unit is in this business in a substantial fashion. We expect these efforts
to generate an increasingly larger number of referrals as local employers and
employees become aware of where and to whom to report these cases.
In fiscal year 04/05 the Butte County insurance fraud program plans to produce
several public services announcements targeting the employees in Butte County. They
would be aired on local television stations. These PSA's would tell employees about
their right to be covered by workers' compensation insurance, and how to go about
reporting it if they believe they are not covered.
Magnitude of Workers' Compensation Insurance Fraud Problems in Butte County
Butte County DA insurance fraud staff has attended several training sessions
over the last year. We have reviewed the State Board of Audits report on Workers'
Compensation, and attended Senator Alarcon's hearing. We also attended the Fraud
Commission's roundtable on Workers' Compensation Program Goals and
Expectations.. The same theme was heard across the board, the counties need to
investigate fraud which is controlling the cost drivers in the workers' compensation
insurance industry. Those areas are premium fraud and provider fraud.
In the last year, Butte County has experienced a building boom. New home
construction is up significantly in both Chico and Oroville. The shopping malls in
Chico are in a constant state of expansion. Oroville currently has a Home Depot under
construction and the Wal-Mart store is slated to be expanded to a super store.
4
The Butte County DA fraud unit staff have learned through experience and
training that where there's construction, there's premium fraud. With increased
construction projects in the County, more people are working. Employers will be
bringing on seasonal and part time employees to meet the demands. Based on training
and experience this combination increases the likelihood of premium fraud and
uninsured employer fraud. The Butte County DA fraud unit staff intends to intensify
its outreach program in the construction field.
Our current outreach program is multifaceted. It includes our Fraud Web Site
and our 24 hour Anonymous Fraud Hot Line, one day training programs designed for
companies, risk managers, and health care professionals. Personnel from the local
colleges, hospitals, county departments and timber industry attend 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.I.U) employees, as well as the Department
of Insurance and allied agencies. These efforts have greatly increased the traffic on our
Fraud Hotline.
With the number of referrals on the rise, we have started to quantify the
workers' compensation fraud problem in Butte County. As we mentioned in previous
years, premium fraud seems to be at the top of the list, with applicant fraud being
second. Butte County will be requesting the addition of anon-benefited half time
investigator in the grant. This will give the grant two fulltime investigator positions
along with the current 25% funded investigator position. With the addition of the
halftime investigator we will be able to focus more attention on the premium fraud
problem in our county and still give applicant fraud investigations the appropriate
attention. We are also requesting additional computer equipment which will allow our
computer forensic investigator to acquire (search) multiple seized hard drives at one
time.
In one ongoing premium fraud investigation, 23 computers were seized during
the service of a search warrant. Our computer forensic investigator spent
approximately seven days just acquiring (searching) the seized hard drives, and this
effort included the assistance of the Department of Insurance computer forensic team
5
for two of those days. The additional computer forensic equipmentwould cut that time
in half and free up the Department of Insurance investigators for other assignments.
This equipment would also allow an investigator to review the evidence as it is being
captured, speeding up the investigation. Since the inception of our computer forensic
lab the investigator trained in the field has spent 51 % of his computer forensic
investigation time in the workers' compensation area. (See attached graphs)
As stated before one study states that 32% of the employers in California are
uninsured. AB749 has allowed district attorney offices to actively investigate these
businesses. Butte County feels we have more than our fair share of these uninsured
employers. One roofing contractor was cited earlier this year for not maintaining
insurance and we have an ongoing investigation involving an uninsured janitorial
service. This investigation also has EDD fraud allegations. Although failure to
maintain workers' compensation insurance is a misdemeanor violation which typically
results in a citation, it levels the playing field for all businesses.
Provider and Premium Fraud Strategies and Objectives
The Insurance Commissioner and the Fraud Assessment Commission have
stated district attorneys should focus on investigating provider fraud and premium
fraud. Butte County has received fewer referrals on medical providers recently.
However we have received numerous referrals for premium fraud and are actively
working several cases at this time. In the 2004/2005 grant year we plan to expand our
efforts in this area.
With the addition of a halftime investigator we will be able to accomplish more
field contacts with employers. We will also be able to follow-up even the most limited
referrals. For example we get numerous phone calls each month on our Fraud Hot
Line with just a simple statement such as, "I think so and so doesn't have workers'
comp insurance". The additional investigator will be tasked with following up on these
calls, verifying the information, and opening an investigation if deemed appropriate.
We have our surveillance van operational and will be using it on a more regular
basis. We will be able to do surveillance at job sites with suspected fraud and
document employees coming and going etc..
6
Butte County has received funds through an Indian Gaming Grant for the
hiring of a forensic auditor. The grant allows the auditor to be used in all types of
economic fraudulent crimes committed throughout the county. Premium fraud cases
typically have the need for a forensic auditor, and with the addition of a forensic
auditor the insurance fraud unit will have access to the forensic auditor at a moment's
notice that will benefit on two fronts: 1) the auditor can review preliminary
information and help direct the investigation, and 2) once evidence is collected, it can be
reviewed in a much more timely manor thus expediting the investigation and allowing
for a quicker filing time.
With the additional investigator and the forensic auditor, the Butte County DAs
fraud unit expects to substantially increase the number of completed investigations
during grant year 2004/2005. We also expect to receive more referrals that will
necessitate utilize the surveillance van. With more planned outreach in construction
industry we expect our fraud referrals to increase, which get us to the bottom line:
more fraud investigations equal more successful prosecutions equal more publicity
equal more impact on workers' compensation fraud in Butte County.
Long-term Goal
The Butte County District Attorney fraud unit realizes there is no short term fix
for workers' compensation insurance fraud. We plan to continue an aggressive attack
on the problem. As our county grows we will need to expand our program accordingly.
The Butte County District Attorneys office is committed to doing this. We will
continue to attend current training seminars. It seems that as we are becoming aware
of one fraudulent scheme, the criminals devise two more, and the only way to stay up
with the ever evolving crime scheme is through training and experience. Will we
continue with our aggressive outreach program in the county. We plan to utilize
sources in the industry such as the Department of Industrial Relations, the
Contractors' State Licensing Board, and compliance firms which monitor public works
jobs to help us uncover fraudulent schemes. The Butte County District Attorney's
Office is in this for the long haul.
7
V ~
~
W N
~
H
~
0
a
~~ ~:
._
s
V
~~~ '~
,'
:w Ip I ~I i
~ ~. f
n
~
kris.~lz . ~x ..
C
.
0
~
O
V
~ o
_ U oM+,
~ ~ M
Q a
~
O
a, O N O N V
~ a
~
V c
~~
h L
V
f ~ .a
O O N N
C
R
~
/~
~~/
Vl
r/ Z O O H r
V m
.
~
C
L a
o co o r~
0 a
L
d C'7 O O M
U
d N f~ ~- O
"
O ~ ~
V
GI ~-NOIM
ml O N ~I~
U ~- ~
y
d
y
A
u
.y
t
d
0
d
y
a
E
0
U
O
d
Z
d
y O
0
3~
~A
~ W N
U
w.. : .
O z
~ a~
air
1~ v
d
y
0
Q \
9 ~
U
d o
r ~
0
V ~
W N
3~
v
0
N
0
0
rv
N
O
O
N
NON
G~ m ~
~ {f1 at M N y
y
j 0000 ~
~ 0000 ~.,
N N N N F
~
tt ~ M n0'1 N N ~11f-1 ~Oi N O
Butte County District Attorney
Workers' Compensation Insurance Fraud
PROGRAM STRATEGY
In summary, our goals for fiscal year 2004-2005 are to:
• Complete the prosecution of our chiropractor case currently in the
court system.
• Increase the number of investigations and prosecutions over those of
fiscal year 2004/2005 through public outreach, education, and
continued contact and requests for information from SILT's and allied
agencies. We will also take a proactive approach to detecting fraud
in the construction industry through self initiated investigations
s
• Continue to develop working relationships with the risk managers of
the major employers in the county, (timber, agriculture, government,
University, public health, Community College, etc.)
• 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.
• Continue to 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.
• Continue to use the completed surveillance van for Butte County
fraud cases as well as make it available to our partnership counties.
PROGRAM STRATEGY (CONTINUED)
9
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.
Staffing: Putting the most qualified persons in key positions.
Currently staffing our Workers' Compensation Fraud program are Deputy
District Attorneys Mike Sanderson 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), unfilled
(50%FTE) investigator, 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.
Andria Paul has filled our 25% Paralegal position. Andria comes to the unit
with several years of experience in the paralegal field.
We are requesting an additiona150% investigator position in this years grant.
Because of planned aggressive approach to premium fraud and uninsured employer
fraud another 50% investigator will be needed to absorb the increased workload. 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 are in the second year of having partnership counties on board which is also
increasing 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 and an additional 50% investigator for the 04/OS grant year.
We will continue to work closely with our partnership counties. One of our
partnership counties has built their own workers' compensation fraud program and
will be requesting their second grant this year. The Butte County District Attorney's
to
Office Workers' Compensation Fraud Unit will continue to provide training sessions
for those named DA offices and will continue to be available for informal support.
Butte County will continue to provide support to partnership counties and assist in the
investigation and prosecution of fraud cases.
We have assisted one of our partnership counties with development of a fraud
website. As referrals are received we will help our partnership counties evaluate the
referral and determine what, if any action should be taken.
Use and Development of Resources:
The Butte County District Attorney's Office projected FY 2003/2004 would take
us into the future and in fact it has. The Insurance Commissioner and the Fraud
Assessment Commission have stated the future of the workers' compensation
. investigation is to focus on those cases that will reduce cost drivers. Butte County is
already there. We are currently investigating two large construction firms for
premium fraud, EDD fraud and Franchise Tax fraud. A preliminary audit by EDD
shows over $500,000 in unreported wages. These wages were also not reported to the
company's workers' compensation carrier. We also have two other premium fraud
investigations which have just been started.
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.
11
Investigator Bruce Wristen has continued his outreach program with business'
in the Butte County area. His program goes from the informal drop by and chat
approach, to the formal presentation.
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 Insurance Fraud Unit continues to maintain a website that facilitates anonymous
fraud referrals, maintains a supply of and distributes fraud referral forms and mans a
Fraud Hotline.
On pages 16, 17, 18,19, 20, 21 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 (PSA) 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.
12
• During fiscal year 2001/2002 the Butte County District Attorney produced ahalf-
hour television program that was aired on the local FOX and UPN affiliates.
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
The development of working relationships within the Insurance Fraud industry, as
well as related investigative agencies, such as NICE, are key to the development of cases
and to efficient case management.
• This office continues to enjoy an ever-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. During 2003/2004 we developed a strong
working relationship EDD and SCIF. Through this relationship we have been able
to share information on ongoing investigations in a direct fashion making the
investigation run much smoother. The Fraud Unit continues to look for other
resources as well. Our Fraud Unit has continued to work closely with Investigators
13
from DOI. DOI Investigators have continued provided valuable assistance to cases
being worked by our office. 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.
Case Development
• Through the aforementioned public education and networking, the Butte County
District Attorney Insurance Fraud Unit expects to continue 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.
Butte County District Attorney Fraud Programs
A strong point of the Butte County Investigation Bureau remains its proactive
program to address Internet Fraud, Credit Card Fraud, Identity 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
14
primary objectives. Joint investigations are routinely opened with county, state, and
federal agencies.
Training: Received and Planned
During the FY 2003/2004 grant year the project investigators attended the CDAA
Insurance Fraud Conference. Investigator Wristen also attended a 24 hour Insurance
Fraud Conference sponsored by the Northern California Fraud Investigators
Association. Investigators Wristen and Bowers attend the bi-monthly roundtable
meetings sponsored by NICB .
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 NICB bi-
monthly meetings.
Restitution
During FY 2003/2004 Butte County developed a new restitution plan taking it out of
the hands of probation and court compliance. Upon an order of restitution being issued
by the court, the defendant is ordered to contact the Butte County District Attorney's
Office. The person is interviewed, and a determination is made on how much he'or she
can pay each month. A contract is then signed outlining the payment amount and the
day of the month the payment must be made by. The contract also sets down guide
lines to follow if a payment cannot be made. Our paralegal monitors the program and
if the contract is violated, a violation of probation charge is filed. A copy of the court
order is attached.
Ultimately, civil remedies, such as wage garnishment or attachment and real
property liens, etc. are available.
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
15
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
funded 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. We are continuing our efforts in this area.
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
applicant and provider fraud.
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 thinkwe 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
16
reputation for doing our job well. The Butte County District Attorney's Office has
developed state and nationally recognized programs, such as; Drug Endangered
Children, Asset Forfeiture, and our 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
T,c.rn,T.ao nn c:rr~nvcunn TIATF f'(1NTACT PF.R~ON NOTES
LVUll\JJVV v
04-10-01
INGRID CORDES
3000 employees
CALIF STATE UNIV - CHICO W/C ADMINISTRATOR
Given pamphlets
04-25-01 BILL LUARNER
INTERCARE INS. SERVICES S1U
Provided protocol
OS-O1-O1 GLORIA SILVA 2200 employees
ENLOE HOSPITAL W/C ADMINISTRATOR
Given pamphlets
PACIFIC COAST PRODUCERS OS-08-O1 CHERYL McIntosh 400-1800 employees
Given pamphlets (Seasonal)
OS-08-O1 KIM NIXON 1100 employees
OROVILLE HOSPITAL Given pamphlets
05-09-01 MARTHA MILLER 1500 employees
BUTTE COMMUNITY COLLEGE 3~a party Administrator
Given posters & pamphlets
FEATHER FALLS CASINO OS-09-O1 ELAINE THOMAS 460 employees
3`a Party Administrator
Given pamphlets
WITTMEIER AUTO CENTER 05-15-OZ 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
17
06-06-01 VICKI LAWE 130 employees
LUNDBERG FAMILY FARM SCIF is Carrier
ENLOE HOSPITAL 01-23-02 SANDY GALKA 100+ employers
CHICO, CALIFORNIA lhr session on
PARADISE POST 01-23-02 STEVE, PRODUCTION 180 employees,
PARADISE, CALIFORNIA MANAGER has reporting
concerns
LIFETOUCH NATIONAL 01-23-02 RICHARD T. RIPP lOp+ employees
SCHOOL STUDIOS PRODUCTION No follow-up from
CHICO, CALIFORNIA BRANCH MANAGER insurance
companies
P F RILEY AND COMPANY 01-23-02 PAM, PERSONNEL 20 to 30 employees,
CHICO, CALIFORNIA MANAGER wants local contacts
OROVILLE HOSPITAL 02-OS-02 JANET TENNANT 200+ employees
OROVILLE, 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 TRUJILLO Wants to set up
DISPOSAL OFFICE MANAGER appointment, has
two claims to look
Given Packet over
ROPLAST INDUSTRIES 02-OS-02 JANET, PERSONNEL Concerns with
OROVILLE, CALIFORNIA MANAGER reporting, when
and when not to.
Given Packet Will make
appointment
SIERRA PACIFIC INDUSTRIES 02-OS-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 Marysville
HUNTINGTON'S SPORTSMAN 02-OS-02 CHARLES 10 employees, likes
STORE HUNTINGTON, the idea of local
OROVILLE, CALIFORNIA OWNER contact
Given Packet
18
OROVILLE HOSPITAL OZ-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 SOB'S MARKET 3-11-02 BOB JOHNSON Family business,
OROVILLE, CALIFORNIA Given Packet left packet
OROVILLE SPORTS CLUB 3-15-02 WILL GLASPIE MGR 20 employees, tied
OROVII.LE, CALIFORNIA into Oroville
Given Packet Hospital
OROVII,LE 4-23-02 KIM NIXON Discussed on going
HOSPITALOROVILLE, W/CADMINISTRATOR W/C case and
CALIFORNIA received three new
referrals
Employer Workshop 5-22-02 Sandy Galka Workshop for
Co-sponsored by Enloe Hospital, employer's and
Butte County District insurance
Attorney's Office companies. 116 in
attendance.
Speakers from
Enloe Hospital,
Butte DA and
Department of
Insurance.
Life Touch Photos 5-30-02 Richard Ripp/Brian Ring Attended Employer
Risk Mgr/Personal Mgr workshop, had
several referrals.
150 to 300
employees
Pro Pacific Produce 5-30-02 Ted Dunn, Risk Mgr. Attended employer
workshop. Had
question about
referrals. 150+
employees.
Spectra-Physics 7-15-02 John Smith, Risk Mgr Advised of
program, and given
hand outs.
150 employees
Sunsweet Growers 7-22-02 Gene, personnel Mgr. Discussed problems
with seasonal
workers. 25 to 250
employees
19
Builders Supply, Oroville yard 7-23-02 Jim Newton Given Packet, 25
employees
Builders Supply, Paradise yard 7-24-02 Rocky, Yard foreman Given Packet, 18
employees
Comac Mfg. 8-6-02 John Adams, owner Discussed problems
of small employer, 7
employees.
Foothill Lumber Co. 8-13-02 Rod, Mgr Given Packets, 13
emplyees.
Downtown Oroville 8-21-02 Talked to store owners in 5 Contacted approz.
block area. 20 stores, handout
packets.
Employer Workshop, Chico 10-9-02 ' Attended by 15 employers Gave 2hr told on
WlC.
Meeks Building supplies 10-16-03 Norm, yard foreman 25 employees.
Downtown Chico 10-22-02 Contacted store owners in 5 Contacted approz
block area 40 business'
North Valley Indian Health 11•-12-02 Donna Dunn, Ofc Mgr Discussed possible
referrals as they
treat injured
employees. They
have 18+ employees.
Aldred Scrap Metal 11-18-02 George Jones, Owner Given Packet, 11
employees
Chico Scrap Metal 11-18-02 Rich, Owner Given Packet, 9
employees
Butte County Rice Growers 12-10-02 Roger Lewis Discussed problems
with part time
employees. 14 full
time, 25+ parttime
Cherokee Farms 12-11-02 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
20
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 talked about
problems in the
state service.
Discussed possible
employee program.
City of Chico 7-9-03 Personnel officer Talked about
program.
City of Oroville 7-17-03 Personnel officer Talked about
program
Town of Paradise 7-24-03 Personnel officer Talked about
program
Carrie construction 8-13-03 Jan, officer manager Given packet
Western Ready Mix 9-9-03 Bill, yard foreman Given packet
Mathews Ready Mix. 9-9-03 Bill Ricter, plant mgr. Given packet
A&A concrete 9-9-03 John, yard foreman Given packet
Modern Building Co.
2-18-04
Bill, officer mgr
Given packet
BCM Construction 2-18-04 John Davis, const. Forman Given packet
Simmons Construction 2-18-04 Bill Simmons Given packet
Ben Sparks Construction 2-18-04 Ben Sparks Given packet
Silver Dollar Fair 5-26-04 ~8~~motc[ey
21
PROJECTED ACTIVITIES
Fiscal Year 2004 - 2005
TRAINING
• Project attorneys will attend the following training:
CDAA Evidence Seminar
CDAA Consumer Protection Seminar
Insurance Fraud Conference
CDAA Summer 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 Carrier.
• Continue to explore identifying fraud through networking with local, state
and federal agencies.
• Continue to complete current joint investigations with the Department of
Insurance.
J~1J~`1'~.~:~~ rsJIJ•)~."-'~1):~)rJJI) ~1):~!JJ~~)IJr;~ rI`~)'1~~ ~fJJf~)II)
~`~ _ ~
d~
o~
~JJ 1JIJ rJIJ!J~ ~~ ~J~J1/ r1J~J~:~I ~JsJ ~`JJ rl~ 'rIJ
~~ ~~~~ ~~ ~~~ ~~~JJ~J~~J~~~J~~
~~~l~~ ~11~ ~~~~ ~ ~~.~ JJ~~::~! J~`~.~.~~ ~ .
BUTTE COUNTY DISTRICT ATTORNEY
INSURANCE FRAUD UNIT
ORGANIZATIONAL CHART
2004/2005
MICHAEL L. RAMSEY
DISTRICT
ATTORNEY
KRISTIN J SIMPSON
CHIEF
INVESTIGATOR
FRANCISCO ZARATE
CHIEF DEPUTY
DISTRICT ATTORNEY
TONY KOESTER
ASSISTANT CHIEF
INVESTIGATOR
MAJOR CRIMES
UNIT
KORY HONEA
SENIOR
INVESTIGATOR
BRUCE WRISTEN
100% FRAUD
INVESTIGATOR
JOS VAN HOUT
25% FRAUD
INVESTIGATOR
JOHN BOWERS
50% FRAUD
INVESTIGATOR
UN-FILLED
50%
INVESTIGATOR
MICHAEL SANDERSON
25% DEPUTY
DISTRICT ATTORNEY
MICHAEL CANDELA
25% DEPUTY
DISTRICT ATTORNEY
MARCIE HUMMEL
40% LEGAL
SECRETARY
ANDRIA PAUL
25%
PARALEGAL
J
1~1J.~1~~I`:~1 ~J11~~.'-'~IJ~~J~rJ~I~ .~11:~!~1's~I.l ~ .r.J'~1!~~ ~1'JJ.~.}11~
.~~tnt I~sv~~~i~~tt~~ lit
/.
:--
,!~
. DEL L Re.._ ~ ~ '~.
`~~'°~ ~A `G~`!
stir _ ~-
d
~~
o~
J1~ r:J1~ rJ~~!J~~~ ~J~~1`~1J~1'~JJJ~J ~`» rl~ rl~
~~~~~~~ ~~1~ ~1~~
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 ofreferrals/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.
(d) The Fraud Division and the District Attorney will work together to identify common
areas of fraud that tend to drive up the cost of workers' compensation insurance. This
would also include identifying those employers who commit premium fraud. Once the
entities involved in these areas of fraud have been identified, the parties agree to work
together to arrive at a plan as to how best to reduce or minimize these fraudulent
activities.
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 (f) 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
anothei 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.Investi ations
(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 inmost 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 maybe 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
enforcementJgovernmental agencies (CHP; 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 fmancial 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 summary/details 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 Sacramento 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 case by a Fraud Division investigator to the D.A.'s
insurance fraud unit, a filing decision will be made within fourteen (14) working 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. Training
(a) Both parties have been, and will continue to be, active participants in the annual
CDAA/CDI 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, IASILJ, 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 may
be 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 Butte County District Attorney's Office Insurance Fraud Unit is
agreed upon this a-1 ~ day of June, 2004, at Sacramento, California.
~ _ ~
Richard Plein
California Department of Insurance
Fraud Division
~ ~~,
.~
istin J. Sir~son ~ y
Chief Investigator
Butte County District Attorney's Office
11JJ_1'1~~1'~1 riJl.tJsl~l~:~~.1~'~JI) ~.I~J!J:f`=JIJ ~r~' rI"~ i~ f~ ~I`JJ1`~.111~
J
~1tta~~trt~~n~ ~
~~$ dP ~~
~~ ~~
~~
o~
J1~ J.1J r~IJ! ~ ~~ 1J:~.~ rI ~ ~~~IJ~ JJ ~'./~ rJ~ r1J
r
r'`\\~ / 1
-^
January 6, 2004
._~:- .
IAhJD CJF ~JATURAI :h1EA!TN At~D r?EAUTY
MarCHAEL L. RAMSEY
District Attamey
FRANCISCO R. ZARATE KRISTINJ. SIMPSON
Chief Deputy District Attorney Chief Investigator
TO: Butte County Department Heads
FROM: Michael L. Ramsey, District Attorney
RE: Workers' Compensation Fraud
Pursuant to the request of the Management Council in our December 2003 meeting, attached are
Red Flags to consider and be aware when you suspect an employee of worker's compensation
fraud.
Additionally, please feel free to call our fraud investigator, Bruce Wristen at 538-6480 to either
discuss your suspicions or to make a fraud referral.
15 County Center Drive ~ Oroville ~ California ~ 95965-3385 ~ Tel: (530) 538-7411 ~ Fax: (530) 538-7071
a~ a..
"" `~`*~
a~~~~ 4k"Ywy `i'()li~I~l:IIS' (;()~ll~l~~ ~ . ' ' ~
~ ~~~ 1 I()\ 1 ll~~iJl)
,~,, ~ ll
,`- ~;~~;
4, ~~ 1 1 ~ ~
~. -1~
,~
1) A delayed report or a blind claim.
a) I actually hurt myself a week ago, but it just now started
bothering me so I thought I'd better report it.
2) Anew employee.
a) Employee thinks for what ever reason they might not make probation.
3) The injuries claimed are inconsistent with the facts of the accident.
4) An injury occurring early on Monday morning, late on Friday afternoon,
at lunchtime, or at the beginning or end of a work shift.
5) An unwitnessed injury.
6) An injury reported following disciplinary action or following an
announcement of impending layoffs, reduced work hours, or
employee-perceived threats to job security.
7) Employee files injury report after being terminated or laid off.
8) Employee protests light duty job assignment and improvement
not consistent with injury.
9) Employee changes doctors when release to work has been issued.
a) Doctor Shopping.
10) Employee fails to keep appointments, and is uncooperative
with claims adjuster.
11) Prior to injury employee was involved in contact sports or
physically demanding hobbies.
12) Employee is a seasonal worker, and injury occurs near the
end of employment.
Although there are other warning signs these are the most
common RED FLAGS in workers compensation fraud.
The key to a successful workers' compensation fraud investigation
is early reporting. As soon as you suspect it, report it.
If you suspect fraud contact the D.A:s Office Fraud Unit at: 538-6480