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California restaurateurs facing serious work comp fraud charges

The state of California is very serious when it comes to employers and their legal obligation to maintain workers' compensation insurance coverage. To illustrate, those employers found to be lacking valid work comp coverage are viewed as uninsured and subject to not only a "Stop Notice and Penalty Assessment" from the California Labor Commissioner, but fines of $1,500 per employee (up to a maximum of $100,000).

Things can get much worse for uninsured employers in the event an employee is injured while on-the-job. Here, the Labor Commissioner can hand down fines of $10,000 per employee, while the injured worker can file a lawsuit against the employer seeking damages.

Two restaurant owners in San Diego recently learned all of this the hard way after a comprehensive investigation uncovered that they were not only operating without work comp insurance, but that they might have attempted to fake said coverage.

According to California Labor Commissioner Julie Su's office, John J. and Annette T. -- the owners of the Rhythm City Grill -- allegedly engaged in both workers' compensation fraud and forgery.

The criminal investigation unit of the Labor Commissioner's office launched an investigation into their restaurant back in January 2012 after receiving an anonymous tip that it was lacking work comp coverage.

Investigators visited the restaurant on Feb. 1, 2012 and issued a civil citation with fines totaling $18,000 to both John J. and Annette T. for failing to provide work comp insurance for 12 workers.

A subsequent inspection the following week revealed that the two owners had not yet secured the necessary work comp coverage, despite claiming that they had done so but being unable to produce the required documentation. Another notice of a labor law violation was issued at this time.

Interestingly, the investigators -- who ultimately referred the case to the San Diego County District Attorney's Office -- alleged that John J. created a false paper and forged an insurance certificate with the assistance of Annette T.

John J. and Annette T. have each been charged with two felony counts of forgery of a workers' compensation policy and one misdemeanor count of conducting business without workers' compensation insurance. John J. was also charged with submitting a false document to a government agency.

If convicted on the felony charges, the two could face up to 16 years in prison.

Stay tuned for further developments in the area of workers' compensation defense law ...

If you are an uninsured California employer facing a real problem -- prospective fine, prosecution, an employee injury or litigation -- there may be steps that can be taken to minimize the consequences. In these difficult circumstances, you may want to consider consulting with an experienced legal professional.

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

Stay tuned for further developments in the area of workers' compensation defense law ...


Insurance Journal, "Su alleges workers' comp fraud against California restaurant," Feb. 19, 2013

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