The California Department of Insurance says a workers’ comp program that claims to offer an alternative to traditional insurance or self-insurance is actually operating illegally in California. It ordered the American Labor Alliance to cease and desist immediately. ALA describes itself as a MEWA – a Multiple Employer Welfare Arrangement. The company also operates as CompOneUSA and the Agricultural Contracting Services Association. Coverage has been sold through several brokers.
“Our attorneys and our organization are going to fight this all the way,” ALA’s principal, Marcus Asay, tells Workers’ Comp Executive, noting that they have already requested an administrative hearing to contest the department’s action. “The Department of Insurance is looking at this thing all wrong.”
Asay explained to Workers’ Comp Executive that the MEWA is “federally licensed” and that the state government has no authority to regulate it. There is no MEWA federal license, although ALA has registered, which requirement is filling out a form.
While he has told other his rates are filed with the Department of Labor, it says no such thing has taken place. Asay has previously admitted to Workers’ Comp Executive the organizations have no licenses or permits from CDI or any other state authority.
CDI warns that employers with workers’ comp certs issued by any of these organizations may actually be operating without valid workers’ comp coverage.
Workers’ Comp Executive has also been investigating American Labor Alliance. It has developed some startling revelations and will have additional details to provide as time moves forward.
At this time, however, CDI is recommending that employers who have conducted business with any of these organizations contact the Fraud Investigations Division at 661-253-7500 to determine the validity of their coverage. Brokers, with facts, may also contact Workers’ Comp Executive.
Workers’ Comp Executive has also learned that several staffing firms were issued certificates by American Labor Alliance. Brokers and employers using a staffing company should verify the staffing company’s coverage.
The Department’s cease and desist order lists several certificates of liability issued by American Labor Alliance listing Travelers Casualty & Surety Company and National Union Fire Insurance Co as insurers. CDI says they did not issue the policies.
Asay refused to answer questions about the carriers on the cert.
ALA was also listed as an insurer, but “Respondents are not currently licensed or authorized by the Insurance Commissioner to act in any capacity regarding the transaction of insurance in California, and during relevant periods herein, did not hold any license, Certificate of Authority, or permit, issued by the Insurance Commissioner to act in any capacity regarding the transaction of insurance in California,” the Department says in the order.
It is illegal for an employer to operate at all without valid statutory workers’ compensation coverage which includes coverage B or 2 unless it is a permitted SELF Insured or member of a SIG.