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Staffing firm to pay $20 million in fraud case

January 26 2010

A judge ordered Staffing Services Inc., a Bellflower CA-based staffing firm, 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.

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 two-and-a-half years before bringing charges against it on Nov. 26, 2008. The plea bargain was reached Jan. 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.

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