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Update: Lack of Progress in State Fund Investigation Causing Concern

A previous workers' compensation defense post discussed how the lack of any discernible movement by state officials investigating allegations of malfeasance at the State Compensation Insurance Fund was drawing criticism from both lawmakers and industry insiders.

In recent developments, it now appears as if the investigation has officially closed without a single charge being filed.

According to a recently released internal memo by Tom Rowe, president of the State Compensation Insurance Fund, the investigating body "has completed its investigation of former state fund employees and directors," and the district attorney "will not be filing any criminal charges."

This statement was soon confirmed by a spokesperson for San Francisco District Attorney George Gascon.

Originally launched in 2006, the criminal investigation was meant to explore allegations of conflicts of interests, misuse of nearly $1 billion and self-dealing by certain board members at the State Compensation Insurance Fund.

It was originally led by San Francisco District Attorney (and newly-appointed California Attorney General) Kamala Harris who formed a task force comprised of the state's Department of Insurance and California Highway Patrol to investigate the matter.

However, the investigation seemed to gain little ground, and very recently became the subject of much discussion in the halls of the state legislature, as there has been no action taken for a year and a half.

Here, the primary concern was that the statutes of limitations for bringing certain criminal or civil lawsuits were close to expiring. For example, under California law, there is a three-year statute of limitations on fraud.

For the uninitiated, the State Compensation Insurance Fund is run by the state of California and provides affordable workers compensation policies to employers - mostly small and medium sized - that are otherwise unable to secure such mandated coverage due to cost restrictions.

"The end of this investigation marks another important step in closing this chapter in our history," said Rowe in the internal memo. "[The] most recent operational review has confirmed that State Fund is a much stronger and more transparent organization today."

Stay tuned for further developments in this story and other areas of workers' compensation defense ...

This post was provided for informational purposes only and is not to be construed as legal advice.

Related Resources:

Inquiry into State Compensation Insurance Fund ends (The Los Angeles Times)

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