Evidence is that the MEWA continues to operate under a different name and still without a license and Federal or CDI approval. The California Department of Insurance has closed the record on American Labor Alliance’s appeal of a multi-million penalty for selling workers’ comp “coverage” without a license and in violation of multiple cease and desist orders. The people await a decision.
A Federal Bureau of Investigation raid on its headquarters occurring more than a year ago did not deter its operations.
The California Department of Industrial Relations still – years into this –– has failed to protect employees in dangerous operations and has not closed the employers operating who continue without legal workers’ comp coverage.
CDI despite evidence has not stopped, sanctioned, or penalized licensed brokers who sell this thing.
Millions & Millions in Fines – Ehh
CDI filed a $3.4 million penalty against American Labor Alliance and its founder Marcus Asay last Feb. 1st for operating without a license. ALA appealed, and the Department argued at hearing that the penalties should continue to accrue at $5,000 per day, which by now would add another $1.5 million to the total. If the department is correct, the penalty will continue to accrue until the penalty is paid.
The MEWAs simply ignores CDI.
The proposed penalty is against Marcus Asay and American Labor Alliance, which sold purported workers’ comp “benefits” through a program called CompOneUSA. Evidence presented during the hearing is that operations have now shifted to Omega Community Labor Association which is selling a program under the name Compass Pilot. Additional entities have also been created and apparently are operating. At the time of the hearing, testimony indicated that Omega covered around 300 employers with approximately 7,000 workers.
What exactly is the holdup with the Department’s decision is unclear, and Department officials are circumspect in their response to questioning. The evidentiary hearing into ALA’s challenge of the penalty was held in April. Post-hearing briefs were ordered and received by June 21. Reply briefs were filed by June 28. The evidentiary record, however, remained open until October 16, according to the evidentiary file in the case.
With the evidentiary record closed, the proposed decision by the administrative law judge on the case, Judge Kristin Rosi, should be somewhere in the works and may even be pending with Insurance Commissioner Dave Jones. The Commissioner can accept, change or send it back to the ALJ to gather more evidence. At some point, the workers’ comp community will find out which it is, but at this time the only thing the Department will say is that there is “no decision yet.”
Meanwhile, legal experts warn that employers operating without statutory workers’ comp coverage do not have the protection of California’s sole and exclusive remedy law. Injured workers, therefore, could bring claims for damages against employers in civil court rather than through the workers’ comp system and the Workers’ Compensation Appeals Board. Such claims are excluded from all Commercial General Liability policies, according to experienced brokers.
The wheels of justice may grind slowly but this case has dragged on for years, the “benefits provider” has charged for and asserted CIGA coverage falsely, is falsely collecting fees real carriers collect and pay to DIR, and continues to operate through a series of names that seem to be designed to stay one step ahead of the law.
Has California become so lawless as to allow this to continue for years or is it legal? There are many questions among them: are why the Department of Industrial Relations has not shut down those 300 employers operating without legal insurance, what is the United State Attorney doing amid USDOL’s clear statement that these people are not operating with federal permission, and just blatantly …. WTF?
For other stories on this investigative series see out Investigations page here …