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HomeMy WebLinkAbout94-057••~ ~~ ~S Up "~~i• f~~r r'r ~;~ •r'~~/~•• 1- `r i ~: V • ~ ~©^ _ i~• ~ ~~ iv+~ i* ~*i ,,~~. '~ y~~a ~• r~r ~•: - ~~~ rrs~~•• BOARD OF SUPERVISORS COUNTY OF BUTTE, STATE OF CALIFORNIA Rt~so~ufion h~o. 94-57 RESOLUTION OF THE BOARD OF SUPERVISORS OF BUTTE COUNTY AUTHORIZING THE DISTRICT ATTORNEY TO ENTER INTO A GRANT AWARD AGREEMENT WITH THE STATE OF CALIFORNIA DEPARTMENT OF INSURANCE FOR THE PROSECUTION OF WORKERS COMPENSATION INSURANCE FRAUD WHEREAS, the Butte County District Attorney has undertaken and desires to participate in a project designated as the Workers Compensation Insurance Fraud Prevention Program, to be funded in part from funds made available through State general funds as authorized by California Penal Cade Section 999, et seq., and the State Insurance Fraud Prevention Program under which such funds are authorized as administered by the Office of Policy and Research & Special Projects, California Department of Insurance, NOW, THEREFORE, BE IT RESOLVED by the Board of Supervisors of the County of Butte, State of California, as follows: THIS BOARD authorized the District Attorney of the County of Butte to submit an application for State funds for Insurance Fraud Prevention purposes {Workers Compensation Fund} to the Office of Policy and Research & Special Project, California Department of Insurance, and to execute on behalf of the County of Butte the attached application for Insurance Fraud Prevention purposes including any extensions or amendments thereof. THIS BOARD certifies that grant funds received shall not be used to supplant expenditures controlled by this Board. WHEREAS, the State of California has agreed to award the Butte County District Attorney funds in the amount of $35,004. to fund a half-time prosecutor to continue this grant program for fiscal year 1993-1994 with no cost to the County of Butte. IT IS AGREED that any liability arising out of the performance of the Grant Award contract including civil court actions for damages, shall be the responsibility of the grantee and the authorizing agency and that the State of California and the Office of Policy and Research & Special Projects, California Department of Insurance, disclaim responsibility for any such liability. PASSED AND ADOPTED by the Board of Supervisors of the County of Butte this _ lath day of _ May _ 1994,by the following vote: AYES: Supervisors Dolan, Houx, Thomas and Chair McLaughlin NOES : None ABSENT: None NOT VOTING: None y y( .._..... ._..._ 1 __ _._... _..._ __ ED McLAUG LIN Chair of the Butte County Board of Supervisors ATTEST: JOHN BLACKLOCK Chief Administrative Officer and Clerk of the Board By _.._ Deputy P.`SURANCE COMI~~TISSIO~'ER OF THE STATE OF CALIFOR~'IA GRANT A WARS A GREEME~VT The Insurance Commissioner of the State of California hereby makes award of funds to the County of Butte, Office of the District Attorney in the amount and for the purpose and duration set forth in this grant award. This grant award consists of this title page and the application for the grant which is attached and made a part hereof. By acceptance of the grant award, the grant award recipient agrees to administer the grant project in accordance with all applicable statutes, regulations and Request-for-Applications {R.FA). Duration of Grant: The grant award is the first award to be made during the current program period, July 1, 1993 through June 30, 1994. Purpose of Grant: This grant award is made pursuant to the provisions of California Insurance Code Section 1872.83 and shall be used soleh~ for the purposes of enhanced investigation and prosecution of workers' compensation fraud cases. Amount of Grant: The grant award agreed to herein is in the amount of $35,004. This amount has been determined by the Insurance Commissioner with the advice and consent of the Fraud Assessment Commission and represents the first of regular grant awards to be made during the current program period to distribute moneys collected pursuant to Section 1872.83 of the Insurance Code and allocated pursuant to California Code of Regulations Subchapter 9, Article 3, Section 2698.54. Counties will be notified by letter specifi~irrg amounts of subsequent grant awards to be made for the current program period. Official Authorized to Sign for Applicant/Grant Recipient 1~li ael amse, Title: Butte County District Attorney JOI-L'~1 GAR4MENDI Insurance Commissioner By: Name: Title: Address 27 County Center Drive Date: Oroville, CA 95965 Telephone: (g 16) ~ 3 8 = 7 411 Date: Z 12 2 / 9 4 I hereby certify upon m~ o~ti~ personal lmowledge that budgeted funds are a~~ailable for the period and purposes of this expenditure. Fiscal Ofl`icer, CDI Date BUTTE Ct)UNTY DISTIi~ICT ATTORNEY 1FiICIIAEL L. I~AhISEY APPLICATION' FOR FUNDS FOR PROSECUTION' OF WORKERS' COIIiPENSATION' INSURANCE FRAUD TIIE FOLLOII'IN'G APTLICATION' IS IIEREI3Y SUB`IITTED: ~-''~ ,~ / ~ ~ ~~, -- -- j -----------yt,--------- ~------- L/ 1iICIIAEL L. IIA~ISEY-~ District Attorney Jalr 2, 1993 CONTACT: Germ A~crbek Depnt~ District Attorney 25 Coant~ Center Drive Oroville, CA 95966 (916) 538-7411 Fay: (916) 538-7071 TABLE OF CONTENTS I. APPLICATION FOR FUNDING ................................................... ............ 3 II. COUNTY PLAN A. PROBLEM STATEMENT ................................................. ............ 4 - 5 B. QUALIFICATIONS ............................................................ ............ 6 - 7 C. PROGRAM STRATEGY 1. OUTREACH ............................................................ ............ 8 2. PERSONNEL .......................................................... ............ 9 3. PROGRAM COORDINATION ............................ ............. 10 4. MANAGEMENT PLAN ........................................ ............. 11 D. OBJECTIVES ...................................................................... ............ 12 III. BUDGET PROPOSAL A. SALARIES AND BENEFITS ........................................... ............. 13 B. OPERATION SUPPORT COSTS ..................................... ............ 13 C. TRAVEL COSTS .................._............................................ ._......... 14 2 I. APPLICATION FOR FUNDING Michael L. Ramsey, District Attorney for the County of Butte, is pleased to submit the following application for funding for the prosecution of workers' compensation insurance fraud. The Butte County District Attorney is committed to launch an aggressive and intensified attack on workers' compensation insurance fraud within Butte County. The funding this office is requesting from the California Department of Insurance Commissioner will greatly assist us in our efforts. The Butte County District Attorney's office has an effective Economic Crime Unit that has established a reputation throughout the State for its aggressive, effective, and efficient prosecutions of welfare fraud and other white collar crimes. This will be discussed in further detail in the qualifications portion of this application. The local contact person designated to coordinate and facilitate interagency communication regarding this local program is: Deputy District Attorney Gerry Agerbek Butte County District Attorney's Office 25 County Center Dr. Oroville, CA 95965 3 II. COUNTY PLAN A. PROBLEM STATEMENT As a result of a migration from urban to rural counties, Butte County has experienced a significant increase in its population base and work force. Butte County has also experienced a significant increase in workers' compensation claims over the past several years. Due to the steady decline in the economy both on the local and statewide level, the proliferation of fraudulent claims in Butte County is on the rise as reported by the Department of Insurance. In addition to the Department of Insurance, a large number of sources currently exist within Butte County to detect and refer workers' compensation insurance fraud cases for criminal investigation and prosecution. These include the County's own self-insurance program, private insurance companies, and insurance defense law firms. However, the lack of resources makes it impossible for this office to respond to such referrals. Budget constraints prohibit the District Attorney from conducting thorough investigations and prosecutions of workers' compensation insurance fraud. Over the past two years, there has been an increase in concern expressed by local insurance carriers and their defense counsel over what they perceive as a complacent attitude on the part of the District Attorney's Office regarding a very serious problem. The amount of blatant Workers' Compensation Insurance fraud taking place is significant. With the Investigative Division of the Department Insurance concentrating its efforts in highly populated areas of Southern California, as demonstrated by the service of 153 warrants on June 30, 1993, we project the Northern California rural areas will be faced with an increase in 4 the number of workers' compensation insurance fraud "mills". Since Butte County is the largest county north of Sacramento with a population of nearly 200,000, it will act as a natural magnet attracting those seeking to escape the greater level of scrutiny found in both Southern California and the major metropolitan areas of Northern California. In order to correct this problem, it is necessary to have at least one half time deputy district attorney on staff in order to handle the anticipated case referrals. 5 B. QUALIFICATIONS The Butte County District Attorney's Office has been successful in developing specialized units to prosecute specific types of crimes {i.e. Asset Forfeiture, Child Abuse and Sexual Assault, Welfare Fraud, Narcotics, etc.). The Butte County Economic Crime Unit has been a viable part of the District Attorney's Office since its inception in 1983. In 1990, the District Attorney dedicated a deputy district attorney to work full time and handle all cases involving Fraud and Economic Crimes. The Economic Crime Unit has successfully prosecuted major fraud cases occurring within Butte County. Due to recent budget cuts and staff reductions, Butte County is in danger of losing the deputy district attorney dedicated to the Economic Crime Unit. Recently, the Economic Crime Unit successfully prosecuted a $15,000 insurance fraud case in cooperation with the Department of Insurance. Other recent cases involve the prosecution of unemployment insurance fraud, bad checks, and a number of rather large embezzlements in the $25,000 -75,000 range. Last year alone, this office filed complaints in over 100 Welfare Fraud cases. Prior to the implementation of the Bad Check Restitution and Prosecution Program in 1993 within the Economic Crime Unit, victims ~vho fell prey to bad check writers were left to their own devices civilly with limited criminal prosecution available. In the first 2-112 months of its existence, this Butte County District Attorney's office has been able to obtain restitution for local merchants in the amount of $7,850. This program has been quite popular with local merchants. Currently, the District Attorney's Office is reviewing over 25 bad check cases for potential prosecution arising out of this program. 6 Previous prosecution in the specific area of Workers' Compensation Fraud has been non-existent due to lack of referrals and resources. In addition, the District Attorney has not conducted original investigations in this area. However, the District Attorney is philosophically dedicated to preserving the integrity of the Workers' Compensation Insurance system. As funding permits, the District Attorney intends to aggressively prosecute those who abuse the system. In summary, the Butte County District Attorney's Office has a proven record of effectively developing specialized units to deal with both white collar crime and fraud. To this end, it should be noted this office currently employs 19 investigators each with their own area of expertise. We would very much like to add Workers' Compensation Fraud as one of those areas of expertise. On that basis, this office is well qualified to put in place an effective program for the investigation and prosecution of Workers' Compensation Fraud. 7 C. PROGRAM STRATEGY OUTREACH The principal source of cases will come from those parties most affected by fraudulent claims; the Department of Insurance, local insurance companies, and their defense counsel. In addition, the deputy district attorney handling this assignment will be meeting with I) members of insurance defense law firms, 2) third party administrators, 3) local insurance carriers, 4} local government risk management officers, 5} economic crime investigators of the local police agencies, and 6) with the Investigation Division of the Department of Insurance office. In addition, the District Attorney will hold press conferences and participate in seminars and panels aimed at educating the public about workers' compensation insurance fraud. The District Attorney recently participated in a seminar sponsored by State Compensation Insurance Fund in which he was a member of a distinguished panel of experts in the field of workers' compensation insurance fraud. As public awareness escalates, so will the demand for future presentations by the insurance industry and those prosecuting fraud. 8 2. PERSOI\fNEL ATTORNEY: At the prosecution level, the program would fund one half time attorney position. The position would be funded at the Attorney III level. The attorney funded by this program will be a prosecutor with significant felony jury trial experience. Such level of experience is required to insure the cases, which are likely to be complex and present unique legal issues, are handled with the level of sophistication necessary for success. 9 3. PROGRAM COORDINATION The Butte County District Attorney's workers' compensation insurance fraud Unit will contact all public agencies and private entities involved in insurance fraud investigations and advise them of the District Attorney's newly established unit. The Investigation Division of the Department of Insurance has already been contacted and ongoing communication established in regard to workers' compensation insurance fraud and outreach. Particular caze will be taken to give information to those private entities so word of the new unit can be spread through them. The Butte County District Attorney shall use maximum media coverage as a resource to educate the community about Workers' Compensation Insurance laws and the consequences of fraudulent claims and the existence and purpose of the workers' compensation insurance fraud unit. The unit will call upon all training and investigative resources available by the Department of Insurance for areawide training. 10 4. MANAGEMENT PLAN a. STAFF: The workers' compensation insurance fraud unit will consist of the following staff: (1) One half time Deputy District Attorney who will be responsible for the day to day prosecution of the workers' compensation insurance fraud caseload, and direction of the activities of investigators. b. ADMINISTRATIVE SUPPORT: Secretarial support for the unit will be provided by existing District Attorney secretarial resources, including legal secretaries and the secretarial staff of the criminal investigators. Service of subpoenas will be done by the existing District Attorney process serving staff. 11 D. OBJECTIVES 1. The estimated number of investigations which can be anticipated during the grant period is 15-25. This figure is based upon the number of cases which the Department of Insurance currently has pending in their office for the past 12 months. This is also based on the knowledge that the Department of Insurance investigative staff is being increased dramatically and the new staff members being dedicated to the investigation and prosecution of workers' compensation insurance fraud within the Butte County District Attorney's office. 2. The estimated number of prosecutions which can be anticipated during the grant period is approximately 12-20, or two-thirds of the anticipated investigations. 12 III. BUDGET PROPOSAL A. SALARIES AND BENEFITS I. One (1) Attorney III Criminal, (half time) Salary ......................................................... $ 19,938.00 Benefits ..................................................... $ 6,396.00 (includes Retirement, FICA, Insurance, Workers Compensation, SUI} 2. Indirect Costs/Administrative Overhead .. $ 1,995.00 TOTAL PERSONNEL COSTS B. OPERATION SUPPORT COSTS 1. EQUIPMENT: Equipment for Attorney III: One {1} Personal Computer ................... $ 4,500.00 One (1) Computer Work Station .......... $ 500.00 ' Telephone Charges ................................. $ 400.00 CDAA dues .......................................... $ 50.00 State Bar Dues ..................................... $ 225.00 SUBTOTAL 2. ACCOUNT AUDITING maximum $ 500.00 3. TR.AINIi~TG/CONFERENCE EXPENSES $ 500.00 TOTAL OPERATING EXPENSES TOTAL BUDGET $ 28,329.04 $ 5,675.00 $ 6,675.00 $ 35,004.00 13