California Contractors Network Secures Workers' Comp Fraud Conviction.

Plumber to Serve Two Years for Insurance Fraud

ONTARIO, Calif. -- Fraud busters at California Contractors Network self insured workers' comp group, managed by Self Insured Solutions (SIS) (http://www.calsig.com), has secured an Insurance Fraud conviction against Honorio Pena, a former employee at Executive Plumbing in Corona, according to Tom Wheeler, SIS's President.

"This conviction is the result of excellent work on the part of Great Western Administrators, who spearheaded the investigation and subsequent prosecution," Wheeler explained. "Through GWA's drive and determination, we were able to save the group more than $90,000 in disability and medical claims payments.

"Our aggressive stance on pursuing fraudulent claims, and the strong support we receive from our claims manager Great Western is what really sets us apart from other workers' comp providers, and that is why this conviction is so important," Wheeler noted. "Not only do we save Executive Plumbing and our other members the cost of treating a fraudulent claim, but this conviction puts other employees on notice that fraudulent claims will be prosecuted - and that those who perpetrate Insurance Fraud could wind up in state prison, as has happened with Mr. Pena.

"This conviction was the result of a thorough investigation of the fraud, and the tenacious efforts of our legal defense team that doggedly pursued a criminal conviction," Wheeler said. "Our team collaborated with local law enforcement officials during all phases of this case, and never once wavered from their pursuit of a successful prosecution of Mr. Pena."

In February, 2005, Pena had a minor on-the-job accident. Witnesses reported that a 15-foot length of 1-inch copper pipe slipped out of Pena's hands and hit the outside of his ankle. Although the incident only resulted in minor visible injuries, Pena's fraud began when he claimed that the accident caused serious injuries to his right leg, foot and ankle; to a finger; and even to his back, neck and shoulder. He further claimed that this minor accident caused him headaches, eye problems, restricted movement to his knee and right elbow, as well as problems with his stomach and sleep deprivation. He even claimed this ankle injury gave him varicose veins.

Although witnesses told a different story, Pena maintained that the pipe striking his ankle caused more injuries than a major car accident, and he filed his claim accordingly.

To bolster his case, Pena perjured himself under oath, denying any prior injuries. However, investigations revealed several prior injuries, including injuries caused during a previous arrest and incarceration. Investigators found that Pena had also filed workers' comp claims for similar injuries. In 2000, Republic Indemnity paid Pena $23,000 for his alleged injuries and subsequent disability.

California Contractors Network, based on the testimony of eyewitnesses and an initial physical examination of the injuries, accepted the original minor claim. However, CCN repeatedly denied Pena's spurious add-on claims, as well as his continuing disability claims.

Pena repeatedly shopped for doctors who would certify his disability, and based on their reports, California's Employment Development Department paid Pena $13,364 in disability and made a claim against CCN for that amount.

In addition to his initial temporary disability benefits, Pena's final treating physician, Orthopedist Ralph N. Steiger of Orange, California, found Pena to have a permanent disability worth approximately $30,000. CCN, with strong evidence to the contrary, denied this claim as well.

Pena's doctors continued to provide medical services without CCN's approval, and all those claims were denied. As a result, at least 15 different healthcare service providers filed liens against CCN for medical and interpreting services, for a total in excess of $43,000. In addition, Riverside County filed a lien for delinquent Child Support of $16,603.25.

However, thanks to the efforts of CCN's fraud-busting team - under the leadership of Great Western Administrators' Ron Ramos and Danny Thorn - the self insured group knew this was a fraudulent case, and successfully fought back. In a mandatory settlement conference last year, when faced with the evidence of fraud, Pena agreed to dismiss his case "with prejudice." This voluntary dismissal saved CCN over $45,000 in claimed disability benefits. In April of this year, a Lien Trial Judge reviewed the evidence and dismissed all outstanding liens, saving an additional $45,000 in medical claims.

CCN then pursued the case with the local District Attorney, and in September, Riverside County Deputy District Attorney Jeanne Roy filed 13 counts of Insurance Fraud and Perjury against Pena, who - during a preliminary hearing - pled guilty to one felony charge and received a two-year sentence in a California State Prison.

CCN is continuing to pursue an order of restitution - attempting to recover benefits paid, as well as investigation and defense costs. "Although it's unlikely that Pena will ever pay," Wheeler explained, "we pursue fraud convictions through every stage of the legal process, ensuring that covered employees understand the consequences of faking an injury or trying to defraud their employers.

"Our ability to detect and prosecute fraud is one of three key reasons why we give members better rates than those offered by competitors," Wheeler explained. "When a claim is legitimate, we pay it quickly because getting the worker back on the job as soon as possible saves money. When there's fraud, we fight back. And finally, our on-site job safety training program reduces on-the-job accidents so we have fewer claims to deal with."

About Self Insured Solutions

With offices in Ontario, Self Insured Solutions (http://www.calsig.com) is one of California's most successful developers and administrators of private self-insured workers' compensation groups (SIGs).

Self Insured Solutions offers hands-on safety services to members of the California Agricultural Network (www.cansig.com), California Agricultural Products (www.capsig.com), California Farm Management (www.cfmsig.com) and California Livestock Producers (www.clpsig.com), as well as to the California Contractors Network, a self insured group serving the building and construction industry (www.ccnsig.com).

Each of these self insured workers' comp groups is managed by Self Insured Solutions, and - with the exception of CCN, which serves the construction industry - each exclusively serves one segment of California's multi-billion dollar agricultural industry.

For more information about California-based Self Insured Solutions - or to interview Tom Wheeler, please contact Ned Barnett - 702-696-1200 or [e-mail].