Worker Pleads Guilty in Work Comp Case

A 25-year-old Central Washington man, Fernando Palestino, has pleaded guilty in Chelan County Superior Court to first-degree theft, second-degree perjury and first-degree identity theft after he was caught working at a variety of jobs while he was collecting workers' compensation for a workplace injury.

Palestino was sentenced to 90 days in jail and ordered to repay $24,000 to the state's workers' comp system. Palestino pleaded guilty in exchange for the county prosecutor agreeing to not file any additional charges against him.

The case grew out of a head injury Palestino claimed he suffered in February 2001 when he slipped and fell while working at the Stevens Pass Ski Resort. The Washington Department of Labor and Industries (L&I) attempted to close the claim in May of that year. Palestino appealed, telling doctors that the injury left him depressed and unable to drive and work.

An L&I claim manager requested an investigation of Palestino after his condition failed to improve despite medical treatment. L&I fraud investigators crosschecked employment records with the Department of Employment Security and determined that Palestino was working at as many as four different jobs in Washington orchards, using three different names and Social Security numbers—none of them his. L&I turned its investigation over to the Chelan County prosecutor, who eventually filed criminal charges against Palestino. The $24,000 Palestino has been ordered to repay includes $18,990 in time-loss benefits and $5,045 for the cost of medical treatment. In addition, L&I is pursuing a civil case against Palestino to recover another $12,000 in penalties. Palestino currently is being held in the Chelan County Jail.

Zenith Sues San Diego Chiropractor

Zenith National Insurance Corp. announced that its wholly-owned subsidiary, Zenith Insurance Company, has sued San Diego County chiropractor William Wu under California's Unfair Competition Law for unlawful and fraudulent billing acts and practices.

The lawsuit, filed in San Diego County Superior Court, alleged that Dr. Wu defrauded Zenith and California employers by billing for work conditioning and other services that were not in fact rendered to workers. The lawsuit further alleged that Dr. Wu, who has offices in San Diego, Encinitas, Fallbrook and Blythe, violated various criminal and civil statutes prohibiting insurance fraud by making unlawful referrals of workers for MRIs, nerve conduction studies, interpretation services and other services and by unlawfully splitting fees with persons to whom referrals were made. Although Dr. Wu and his chiropractic corporation presently are the only named defendants, Zenith anticipates amending the Complaint to join additional defendants. The Complaint sought a permanent injunction as well as restitution for monies paid to Dr. Wu.

Wash. Man Pleads Guilty to Theft

A 37-year-old former resident of Snohomish County, Timothy Smith, has pleaded guilty in Snohomish County Superior Court to first-degree theft after he was reportedly caught working for various employers while collecting workers' comp for an injury.

Smith was working for a transmission repair company in Everett, Wash., when he injured his arm and shoulder in November 2000. He underwent surgery and collected time-loss benefits until he returned to work in August 2002. A crosscheck of his name with the Department of Employment Security revealed he had been working at several other jobs while collecting benefits from the Wash. Department of Labor and Industries (L&I). Following an investigation, the department turned the case over to the Snohomish County Prosecutor, who filed charges.

Smith failed to appear in court to answer charges. He eventually wound up in California, where he was arrested in January and held until he could be extradited back to Washington. Smith was sentenced to 21 days in jail and ordered to repay costs associated with bringing him back to the state. In all, Smith owed the State Fund more than $15,000 in workers' comp insurance benefits, penalties and interest.

Calif. "Insider" Conspirators Arrested

Insurance Commissioner John Garamendi announced the arrests of nine suspects by the California Urban Auto Fraud Task Force for embezzlement, conspiracy and tax evasion in connection with an "insider" insurance scam. Investigators made the arrests in the Calif. cities of Oakland, Richmond, Vallejo, Fairfield and Norwalk and in Raleigh, N.C. Each suspect could face a maximum of five years in state prison and/or fines up to $50,000.

All suspects allegedly made fraudulent automobile insurance claims and received illegal settlement checks between 1994 and 2001, from Thomas Jackson, 55, of Elk Grove, Calif. Jackson was formerly a senior claims representative with Progressive, Grange and Zurich.

In February, Jackson pled guilty to nine counts of embezzlement and admitted enhancements for aggravated white-collar crimes totaling almost $600,000. He was sentenced to six years and four months in state prison for insurance fraud. Jackson used his "insider" position to issue fraudulent auto insurance claim checks to the nine suspects. The investigation discovered that Jackson had falsely inserted the names of his "insider conspirators" as phantom passengers in legitimate auto claim files and issued fraudulent checks to the nine suspects.

The arrests were the result of a two-year investigation into fraudulent auto insurance claims. An audit conducted by Zurich Insurance Company's special investigation unit discovered unsubstantiated settlement checks issued by their claims adjuster, Thomas Jackson. Zurich then notified Jackson's previous employers, Grange and Progressive insurance companies, who also found false settlement checks that he had issued during his employment as a claims representative for both companies.

The Urban Auto Task Force investigators then contacted the true parties involved in the traffic collisions associated with the settlement checks, including attorneys that litigated the settlements. None of them knew or could explain why the nine "insiders" had received payments.

The investigation revealed that they had all allegedly agreed to have their names inserted into legitimate auto claim files and receive fraudulent checks from the insurers. All of the individuals were arrested and could face a maximum of five years in state prison and/or fines up to $50,000. Bail was set at $1 million for three of the nine suspects. Among the nine arrested: Kelvin Douglas Joiner; Karen Ann Johnson-Harvey; Sandra Kay Joiner; Marvis Kemp McBride; Stephanie Marie Flippin; Quentin Eric Johnson; Paulette Terry; Paulette Hasty-Stewart; and Gwendolyn Ann McCoy.