Workers Compensation

California's top insurance regulator is expected today to file a lawsuit to try to stop the governor from selling $1 billion worth of business at a state-run workers' compensation insurance company. Last month, Gov. Arnold Schwarzenegger and the Legislature approved the proposed sale to raise money to partially plug a $24-billion hole in the state budget. But Insurance Commissioner Steve Poizner vowed to fight it. "This is bad politics; it's illegal, and I'm going to stop it," said the wealthy former tech entrepreneur from Silicon Valley, who is seeking the Republican nomination for governor in 2010.

Gov. Arnold Schwarzenegger's plan to raise $1 billion by selling part of the state's scandal-plagued workers' compensation insurance company is running into strong flak from small-business advocates, the insurance industry and the state's elected insurance commissioner. The governor wants to help reduce a $24-billion budget deficit by giving private insurers a chance to buy about half of customers' policies at the government-controlled State Compensation Insurance Fund.

The owner of a security firm and two vice presidents pleaded not guilty Friday to charges of defrauding the state of $9 million in an elaborate workers' compensation scheme. Ousama Karawia, 45, owner and president of International Protective Services Inc., and Vice Presidents Larry Finley, 42, and Allan Terrill Bailey, 39, have been charged with one count each of conspiracy and multiple counts of workers' compensation premium fraud and insurance fraud, according to the Los Angeles County district attorney's office.

An executive with a security and investigations company, who also served as a reserve deputy with the Los Angeles County Sheriff's Department, was arrested Wednesday morning on suspicion of fraud after his firm allegedly failed to pay more than $9 million in workers' compensation insurance premiums, prosecutors said. The Los Angeles County district attorney's office charged Ousama "Sam" Karawia, 45, president and chief executive of International Services Inc.

Soaring medical costs may drive up premiums paid by already beleaguered California employers for workers' compensation insurance -- after rates plunged 65% over the last six years. Gov. Arnold Schwarzenegger, who forged major changes in the state workers' comp law in 2004 that slashed rates, has launched a bid to stop a potential 24.4% rate hike now being discussed in Sacramento.

The Treasury Department should deny American International Group Inc. $30 billion in bailout funds until the company agrees to take back millions in bonuses and negotiate cheaper exits from its financial contracts, congressional auditors said Tuesday. The Treasury and the Federal Reserve have committed more than $182 billion to save AIG, and the Treasury now owns nearly 80% of the New York company. Experts warn the insurance giant may require more money.

California Atty. Gen. Jerry Brown cracked down Wednesday on an alleged scheme that advises small companies on how to avoid buying costly workers' compensation insurance by turning employees into stock-owning corporate officers. In a lawsuit filed in San Diego County Superior Court, the state sought a permanent injunction and civil penalties of at least $300,000 from Contractors Asset Protection Assn. Inc. of Rancho Santa Fe and its founder-president, Eugene J. Magre.

The Whittier mother of octuplets and six other children, including a set of twins, has filed at least two claims for workers' compensation, according to state records. Few details were available about Nadya Suleman's first injury, which occurred in 1999 while she was a psychiatric technician at Metropolitan State Hospital in Norwalk.

More than 1,000 patients at Cedars-Sinai Medical Center had their personal information taken by a former employee in the hospital's billing department, according to hospital officials who said prosecutors allege that the man used the identities to steal from insurance companies. The hospital's chief financial officer warned affected patients in a letter sent last week that their information had been found during a search of the former employee's home.

Insurance authorities say two Southern California business executives have been charged with defrauding the state of $18 million in a workers' compensation scam. State Insurance Commissioner Steve Poizner said David Zahler and David Tai were charged after a 2 1/2 -year investigation of their temporary employment company, Staffing Services Inc. in Bellflower. Zahler, who is chief executive, and Tai, who is chief financial officer, are accused of misrepresenting the type of employees for whom they were seeking workers' compensation coverage so they could pay cheaper premiums.