A nonprofit staffing trade association was formed in California with the aim of cutting fraud in the workers’ compensation marketplace serving the staffing industry. The California Staffing Agency Reform Association, or Cal-SARA, is already a plaintiff alongside a staffing firm in a lawsuit over the sale of workers’ comp insurance.

“The increasing demand for a contingent or variable workforce, combined with the decreasing supply of employees and workers’ compensation insurers, has allowed a massive black market to grow virtually unchecked,” Mark Bertler, executive director of Cal-SARA said in a statement. “These illegal practices put staffing agencies, injured workers and California taxpayers at risk. Regulators have thus far been unsuccessful in policing these activities causing the situation to get worse,”

Cal-SARA was formed in mid-October. It is also a plaintiff along with Butler America Holdings in a lawsuit filed in federal court for the Central District of Los Angeles. The defendants are Steven Herrig, Sunz Insurance Solutions LLC, Sunz Holdings LLC, Sunz Insurance Co. and Next Level Administrators.

The suit alleges defendants’ insurance programs are “an illegal, unfiled reinsurance-related transaction that puts the policyholder insureds (i.e., the Butler plaintiffs) in the position of ultimate reinsurer of the risk.” Ultimately, the suit said, all risk in the arrangements are passed back to the policyholder.

The suit seeks the return of $7.5 million in insurance premium as well as disgorgement of all profit and damages as well as punitive damages.

Cal-SARA aims to provide education, training and legal support for its members, as well as provide assistance to regulators and insurers. Its members will include staffing agencies, insurance companies, PEOs, brokers, an associate membership category for folks interested in fighting workers’ comp. fraud

Board members include Mike DiManno from Samuel Hale and George Knowles from Partners Personnel.

Statement

The following statement was sent by Sunz regarding the lawsuit and information reported in the article. It was initially included in a comment section of this article:

The published article above is a shocking distortion of truth and accuracy. SUNZ invites the reader to its website to read a complete response: www.sunzinsurance.com/response012721. In this full statement is a description of the type of people behind Cal-Sara.

This is a litigation tactic that relates to lawsuits SUNZ filed against Butler American Holdings in early 2019 in Manatee County, Florida because Butler refuses to reimburse claim expenses, pay premium, permit a premium audit and pay claims collateral on its large deductible work comp program with SUNZ. Butler abandoned its injured employees and refuses to reimburse any part of its employees work comp claims. SUNZ will make sure all injured workers get the benefits, care, and treatment to which they are entitled, despite Butler’s behavior. Butler also owes millions of dollars in premium and collateral. Rather than spend money for its injured workers, Butler chooses to litigate.

For purposes here, understand SUNZ Insurance is in good standing in every state in which it conducts business.  Its business model, policies, endorsements, program agreements, and processes have been reviewed, vetted, audited, examined, and re-examined by various states including the Florida Office of Insurance Regulation, its domicile regulator. In all regards and without reservation, SUNZ Insurance and its affiliates are in good standing and compliant in all aspects in all states. For further information, please visit SUNZ’s website at www.sunzinsurance.com/response012721.