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Staffing Firm Ordered to Pay $20 Million in Fraud Case

January 26, 2010
A judge ordered Bellflower, California-based staffing firm Staffing Services Inc. to pay $20 million in restitution after a plea bargain was reached in a workers’ compensation fraud case, the California Department of Insurance announced Monday, January 25.

Staffing Services allegedly misrepresented the types and number of employees in order to pay smaller workers’ comp premiums, according to the office.

“Business owners have to realize that they have a moral and legal obligation to report the correct number and types of employees and then make sure they have adequate workers’ compensation insurance for those employees,” said California Insurance Commissioner Steve Poizner.

The Department of Insurance investigated Staffing Services for 2½ years before bringing charges against it November 26, 2008. The plea bargain was reached January 15.

Staffing Services allegedly defrauded State Fund, a workers’ comp provider established by the California Legislature, of more than $18 million in workers’ comp premiums from 2002 to 2005, according to the office. With penalties, the amount negotiated during the plea bargaining amounted to $20 million.

Filed by Staffing Industry Analysts, a sister company of Workforce Management. To comment, e-mail editors@workforce.com.

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