California Workers comp Cover-up

Author Subject: California Workers comp Cover-up
Tom L Posted At 11:32:39 06/24/2000
Insurance Pub Charges Government Cover-up: Division of Workers' Comp., Insurer Made Secret Deal
to Hide Fines

GRASS VALLEY, Calif.--(BUSINESS WIRE)--June 21, 2000--The state Division of Worker's
Compensation and Fremont Compensation Insurance Company, the state's second-largest workers'
comp insurer (Nasdaq:FMT), entered into a secret settlement of a dispute over fines for the
company's illegal backdating of thousands of claims files, a leading industry newsletter has

According to the Workers' Comp Executive published today, Fremont agreed to drop two
lawsuits filed against the DWC and paid a $525,000 fine, nearly double the anticipated $300,000
in fines the company was facing. Fremont also agreed to spend another $200,000 training its
staff, and must have its systems monitored by outside auditors to ensure future compliance.

The government agency and the private insurance company tried to keep the deal reached in
late March covered up and agreed in writing to "not publicize" the settlement. Last week
however the Executive obtained a copy after filing a Public Records Act request. A copy of the
agreement can be found on the Web site:, in the resources section.

"This kind of back-room dealing between a government watch-dog agency and one of the
companies it is supposed to be watching is unprecedented and not good public policy," said J
Dale Debber, publisher of the newsletter. "One wonders who was trying to hide what."

Fremont was accused of backdating more than 6,100 files in order to avoid the mandatory 10
percent penalty for sending notices late. The state's investigation was launched after the DWC
found files in the company's Fresno office that had been backdated. More backdated claims files
were allegedly also found by state investigators at Fremont adjusting offices in Glendale and
San Francisco as well as Fresno. The DWC says it found 3,700 backdated files in the company's
San Francisco offices and another 2,400 at the company's headquarters office in Glendale.
Mike Weldon Re: California Workers comp Cover-up (Currently 1 replies)
Posted At 20:39:52 06/25/2000

Tom, Thanks for posting this for us. We here in California can't get a break either. Keep up the good work. Mike

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