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“We all witnessed the hostile business climate prior to the 2004 reforms and know that if the California economy is to rebound from this great recession, we must not return to those days,” wrote Commissioner Poizner. “While there is a real need to examine the permanent disability schedule, reinstituting the schedule to pre-2004 reform levels would result in a significant increase in the Workers Compensation Cost Claims Benchmark. This increase would likely be reflected in real world rates paid by employers and could slow a recovery by California's economy.”
He also urged the incoming governor to implement reforms to the workers' compensation insurance system that would increase efficiency and reduce costs.
These recommendations, which were the result of a June 2009 hearing on ways to improve the workers' compensation system, included:
All insurers should implement pharmacy networks with or without regulations based upon the example set by Safeway and the fact that the provisions of Labor Code Section 4600.2 do not require regulations as a prerequisite.
Regulations should be implemented regarding physicians dispensing of pharmaceuticals. Legislation may be necessary to deal with this.
Require the prescribing and/or dispensing of generic drug equivalents. Utilization Review needs some utilization review of itself. If a majority of medical requests are going to utilization review and are approved, it is not effective.
Utilization review, as it was intended for health care, was for the outlier circumstance. Require billing and payment at fee schedule in return for restrictions on liens.
Regulations for electronic billing and a standard medical bill form need to be implemented.
Last year Commissioner Poizner released a top-down review of the Workers Compensation Insurance Rating Bureau and an audit of State Fund, the state's largest workers' compensation insurance company.
Both reviews included specific recommendations that would make the organizations more efficient and successful at their duties.
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“These imposters used phony documents that appeared to originate from a government office to gain payment from law-abiding businesses,” Brown said. “This settlement puts a stop to their scheme and secures restitution for the companies that were cheated.”
The civil settlement filed in San Diego Superior Court names Annual Review Board, Inc.; Business Filings Division; Corpfilers.com, LLC; George Alan Miller; Rebecca J. Miller; Argishti Keshishyan, and Kristina Keshishyan.
The settlement requires the defendants to make restitution of $1,750,000 to customers and pay an additional $650,000 in penalties and costs to the state.
To preserve the defendants' assets, the attorney general moved successfully last year to freeze their bank accounts.
The bogus operation constitutes what is known as a corporate filing scheme. Solicited victims were told they had to pay a $195 filing fee accompanying return of the phony documents.
Brown's investigation found that the defendants, based in Los Angeles County, misled well over 5,000 customers into paying by utilizing phony forms that:
Had an official looking seal;
Used a “control number”;
Had a “corporation number” or “LLC number”;
Used official sounding titles and names, such as “corporation division,” that implied a governmental connection;
Specified a “due date” and employed the phrase “Remit Immediately!”
Described the payment as an annual fee;
Warned that failure to respond could lead to the recipient being suspended and losing its right to conduct business.
The investigation was triggered by a flood of complaints to the Attorney General's Office from businesses that had been victimized. The scheme flourished because the forms seemed routine and the payments demanded were small.
As part of the settlement, the defendants are permanently enjoined from making fraudulent representations. Brown urged businesses to be vigilant against similar scams.
Restitution will be handled by a claims administrator who will be named by the Attorney General's Office. More information will be available on the Attorney General's Web site at http://ag.ca.gov/.
This is the latest settlement of eight actions the Attorney General has prosecuted against corporate filing schemes.
In a case tried in San Diego Superior Court last year, Brown won a $1.2 million judgment against Gaston Muhammad and Ronna Green for running a corporate filing scheme that swindled California companies.
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