Amazon Driver Sentenced for Workers’ Comp Fraud in Staged Robbery Scheme
April 25, 2025 | JacobiJournal.com — Compensation fraud was at the center of a recent case in which a former Amazon delivery driver was sentenced to jail for orchestrating a fake robbery and filing a fraudulent workers’ compensation claim. Stacy Johnson, the driver, admitted to staging the incident in a failed attempt to collect benefits for stress and physical injuries that never occurred. Jail Time, Fines, and Probation Handed Down The San Joaquin County District Attorney’s Office announced that Johnson will serve four months in county jail. In addition, he will be on probation for two years and must pay $5,000 in financial penalties. This includes $2,000 in restitution to Amazon and $3,000 to reimburse investigative costs. “Workers’ compensation fraud is not a victimless crime,” said District Attorney Ron Freitas. “It directly impacts local businesses and ultimately drives up the cost of goods for all consumers.” How the Fraud Unfolded Amazon Driver Sentenced: According to investigators, Johnson staged the robbery of his own Amazon delivery truck and then filed a false claim for psychological trauma and physical ailments. However, the ruse quickly unraveled under scrutiny. Had the fraud gone undetected, Amazon would have paid nearly $35,000 in unwarranted benefits. More importantly, that financial burden would likely have been passed on to customers through higher retail prices. Crackdown on Workers’ Compensation Fraud Authorities have made it clear: San Joaquin County will not tolerate attempts to exploit the workers’ compensation system. As part of a broader campaign to eliminate insurance fraud, prosecutors are targeting these cases with renewed urgency. “This successful prosecution shows our ongoing commitment to exposing and stopping fraud,” Freitas added. “We will protect our workers and our economy.” Why It Matters Cases like this highlight how fraudulent claims can damage trust in legitimate systems. While the workers’ compensation program exists to support injured employees, abuse by a few undermines its credibility for all. Moving forward, local officials plan to continue public outreach efforts and collaborate with employers and insurers to stop similar schemes early.surance fraud: authorities are watching, and consequences will follow. Source: San Joaquin County District Attorney’s Office FAQs: Workers’ Compensation Fraud Cases in California What is workers’ compensation fraud? Workers’ compensation fraud occurs when someone intentionally provides false information to receive benefits they are not entitled to, such as staged injuries or incidents. What penalties can result from workers’ compensation fraud? Penalties can include jail time, fines, probation, and restitution payments to employers or insurers, depending on the severity of the fraud. How can companies prevent workers’ compensation fraud? Companies can prevent workers’ compensation fraud by conducting thorough claim investigations, implementing fraud detection training, and partnering with law enforcement. Visit JacobiJournal.com for ongoing coverage, legal analysis, and expert commentary on fraud investigations nationwide. 🔎 Read More from JacobiJournal.com:
Workers’ Compensation Fraud Scheme Targeted Spanish-Speaking Workers in California
April 25, 2025 | JacobiJournal.com — In a major crackdown, four individuals—among them two attorneys—face felony charges after investigators uncovered a large workers’ compensation fraud scheme aimed at Spanish-speaking workers across Southern California. The fraudulent operation allegedly netted over $550,000 in unlawful referral fees and compromised more than 1,100 legitimate injury claims. Investigation Reveals Call Center Operating Out of Mexico In October 2022, the California Department of Insurance launched a probe following reports that a call center based in Mexico was contacting Spanish-speaking workers with deceptive promises. These callers reportedly told individuals they could receive money by simply filing a workers’ compensation claim. However, investigators found that in many cases, victims were manipulated into signing official claims documents without full understanding. These completed claims were then illegally sold to attorneys in exchange for referral fees, violating California law. “This is a disturbing case of alleged fraud that preyed on vulnerable, hardworking people,” said Insurance Commissioner Ricardo Lara. “These crimes threaten the integrity of our workers’ compensation system and will not be tolerated.” Arrests and Charges Filed Against Four Defendants The Department of Insurance, in collaboration with the San Bernardino County District Attorney’s Office, arrested the following individuals: How the Scheme Unfolded From January 2022 to September 2023, Franco allegedly sold 320 clients to De La Garza and Leal for $168,750. Additionally, from September 2021 through October 2024, she sold 798 clients to Gluck for $388,500. Given that the average workers’ compensation claim costs approximately $13,000, according to the 2024 WCIRB report, the total projected loss from the scheme exceeds $14.5 million. Legal Action and System Integrity The San Bernardino County District Attorney’s Office is now prosecuting the case. Authorities emphasize the need to protect injured workers from exploitation, especially within immigrant and vulnerable communities. Source: California Department of Insurance FAQs: Workers’ Compensation Fraud Case What is workers’ compensation fraud in California? It’s when someone knowingly lies or withholds facts to obtain workers’ compensation benefits they’re not entitled to. Why were Spanish-speaking workers targeted in this fraud? The scheme exploited language barriers, misleading workers into filing claims without understanding the documents. What is the potential loss from this workers’ compensation fraud case? Authorities estimate losses exceed $14.5 million, based on the average cost of affected claims. How does California law penalize workers’ compensation fraud? In California, workers’ compensation fraud can lead to felony charges, significant fines, restitution orders, and potential prison time. Penalties depend on the scale of the fraud, the defendant’s criminal history, and whether multiple victims or vulnerable populations were targeted. Stay ahead of emerging fraud trends in workers’ comp. Visit JacobiJournal.com for the latest updates and legal insights. 🔎 Read More from JacobiJournal.com:
CAAA: Combating Fraud in the Workers’ Compensation System
April 24, 2025 | JacobiJournal.com — Workers’ compensation fraud in California is a major concern for both employers and employees, impacting the integrity and cost of the entire system. Fraud in the workers’ compensation system not only drives up insurance premiums but also delays benefits for legitimately injured workers. The California Applicants’ Attorneys Association (CAAA) has been at the forefront of addressing these issues, advocating for reforms, and ensuring the protection of workers’ rights while maintaining the integrity of the system. The Scope of Workers’ Comp Fraud Fraud within the workers’ compensation system can take many forms. It can involve workers who exaggerate injuries or claim benefits they are not entitled to, as well as employers and medical providers who engage in deceptive practices to reduce their financial responsibilities or inflate claims. These fraudulent activities undermine the efficiency of the system and can have wide-reaching consequences for businesses and employees alike. The CAAA emphasizes the importance of addressing fraud not only through legal and regulatory measures but also by fostering a culture of transparency and accountability within the workers’ compensation process. Fraudulent claims can result in increased premiums for employers, ultimately affecting their ability to provide jobs and maintain operations. Additionally, workers may suffer as well, as fraudulent practices can delay legitimate claims, leading to unnecessary financial strain. Legal Protections and Reforms In response to growing concerns about fraud in the system, CAAA works closely with legislators to advocate for reforms that reduce fraudulent activities while still ensuring that workers who are legitimately injured receive the benefits they deserve. This includes advocating for more stringent vetting processes for medical providers, better oversight of claims processing, and stronger penalties for those caught committing fraud. The association also pushes for initiatives that educate workers about their rights and the claims process to help them avoid being targeted by fraudsters. CAAA’s ongoing efforts seek to strike a balance between protecting workers’ rights and ensuring that fraud does not undermine the workers’ compensation system. Combating Fraud in the Workers’ Comp System: What Employers Can Do Employers also play a key role in preventing workers’ compensation fraud. By implementing effective safety protocols, training employees on proper injury reporting procedures, and maintaining open communication with claims adjusters, employers can reduce the likelihood of fraudulent claims. Additionally, employers should actively participate in audits and investigations related to their workers’ compensation policies to identify potential fraudulent activities early. Conclusion: A Call for Action As the workers’ compensation system continues to evolve, tackling fraud remains a priority. The CAAA’s efforts to address this issue are crucial in ensuring a fair and functional system for all involved parties. By strengthening legal protections, promoting transparency, and fostering collaboration between employers, employees, and lawmakers, California can combat fraud effectively while safeguarding workers’ rights. Source FAQs: Workers’ Compensation Fraud in California What role does CAAA play in preventing workers’ compensation fraud? CAAA advocates for legislative reforms, improved oversight, and stronger penalties to deter workers’ compensation fraud while protecting injured workers’ rights. How can employers help reduce workers’ compensation fraud? Employers can implement safety programs, train staff on injury reporting, and cooperate with claims adjusters to identify and prevent fraudulent claims early. Why is workers’ compensation fraud a problem for employees? Answer: Fraudulent claims can delay legitimate benefits, strain the system, and lead to higher insurance costs that ultimately impact workplace stability. Stay updated on fraud-related issues and other workers’ comp news by visiting JacobiJournal.com. 🔎 Read More from JacobiJournal.com:
Contractor Liable for Paralyzed Worker’s Injuries Under Statutory Employment Doctrine
April 24, 2025 | JacobiJournal.com — Contractor Liable: The Michigan Court of Appeals recently ruled that a contractor is liable for the injuries sustained by a worker who was paralyzed after falling from a height on the job. The court’s decision relies on the statutory employment doctrine, which holds contractors responsible for workers under certain contractual agreements, even if they are not directly employed by the contractor. In this case, a worker employed by an uninsured subcontractor suffered life-changing injuries after a fall on a construction site. The worker’s direct employer lacked insurance. However, the court found that the contractor’s contract with the subcontractor’s agent made the contractor the worker’s statutory employer. As a result, the contractor had to cover the worker’s medical costs, lost wages, and additional benefits due to permanent paralysis. Statutory Employment Doctrine and Workers’ Compensation The statutory employment doctrine ensures workers can seek compensation from a general contractor if their direct employer lacks workers’ compensation coverage. This case emphasizes that contractors must take responsibility for workers’ safety and insurance, even if they don’t directly employ the worker, as long as a valid contract exists. The ruling underlines the importance of ensuring that everyone involved in a construction project is properly insured. Contractors must bear responsibility when subcontractors fail to meet insurance obligations. Contractors Must Prioritize Safety and Compliance This ruling sends a strong message to contractors about the need to prioritize safety compliance and insurance coverage. Contractors must ensure workers have the right insurance, especially after an accident. Failure to do so can lead to legal consequences, as this case shows. Contractors and subcontractors should carefully review contracts and ensure all parties have adequate insurance. Doing so protects workers and helps prevent financial liability. A Legal Reminder of Worker Protection The court’s decision highlights the worker’s right to fair compensation, even if the direct employer lacks insurance. It also reinforces contractors’ responsibility to provide workers’ compensation when needed. This case could set a significant legal precedent for similar claims in Michigan and other states. Source FAQs: Statutory Employment Doctrine What is the statutory employment doctrine? The statutory employment doctrine holds contractors legally responsible for workers’ compensation benefits when their subcontractors lack proper insurance. How did the statutory employment doctrine apply in this Michigan case? The court found the contractor liable for the worker’s injuries under a valid contract, despite the worker being employed by an uninsured subcontractor. Why should contractors be concerned about the statutory employment doctrine? Failure to ensure subcontractors have insurance can lead to costly legal liability, medical expense coverage, and permanent injury compensation claims. For more insights into workers’ compensation and liability claims, visit JacobiJournal.com. 🔎 Read More from JacobiJournal.com:
California Insurers Accused of Collusion to Restrict Coverage in Wildfire Areas
April 23, 2025 | JacobiJournal.com — California Insurers: Two lawsuits recently filed in Los Angeles accuse major home insurance companies, including State Farm, of colluding to limit coverage in California’s wildfire-prone communities. According to the plaintiffs, this alleged scheme aimed to push homeowners into the state’s FAIR Plan, a last-resort insurance option offering limited coverage and exorbitant premiums. The lawsuits target 25 major insurers controlling 75% of California’s home insurance market. The plaintiffs argue that in 2023, these companies dropped coverage or halted issuing new policies in neighborhoods highly vulnerable to wildfires. Notably, areas like Pacific Palisades and Altadena, which were devastated in the January wildfires, are named in the lawsuits. The fires destroyed nearly 17,000 structures and claimed at least 30 lives. As a result, many homeowners have been forced into the FAIR Plan, leaving them underinsured and struggling to rebuild their homes and lives. Related: State Farm’s California Emergency Rate Request Dropped to 17% Allegations of Illegal Collusion and Market Manipulation Michael J. Bidart, the attorney representing the homeowners, stated, “Insurance provides homeowners with peace of mind and essential support after disasters. By colluding to push plaintiffs into the FAIR Plan, insurers have profited from high premiums while depriving homeowners of the coverage they needed to recover from disasters like the January wildfires.” This legal action comes amid a broader crisis in California’s insurance market. In 2023, several insurers increased rates, limited coverage, or entirely withdrew from the state, citing the growing threat of wildfires and other natural disasters. With these risks increasing due to climate change, many insurers claim they can no longer accurately price coverage for properties in vulnerable areas. California Insurers Related: Southern California Edison’s $925M Rebuilding Plan After LA Wildfires Growing Struggles and Increased Reliance on the FAIR Plan The FAIR Plan serves as a safety net for homeowners who cannot obtain private insurance due to high-risk conditions. As of March 2025, over 555,000 homes were covered under the FAIR Plan, a sharp increase from 2020. However, the plan offers basic coverage, with premiums far higher than those of traditional insurers. This limited protection leaves many homeowners at risk, especially when dealing with the financial aftermath of natural disasters. Critics argue that insurers are pushing homeowners into the FAIR Plan to limit their own financial responsibility. In February 2025, California’s top insurance regulator ordered insurers to contribute $1 billion to the FAIR Plan to cover claims from the LA wildfires. However, insurers will only have to absorb half of this cost, with the remaining burden shifted onto policyholders. California Insurers Efforts to Regulate California’s Insurance Market California’s regulatory approach is shifting to give insurers more flexibility to raise premiums in exchange for offering more policies in high-risk areas. Under new regulations, insurers can factor in climate change when setting their rates, and they can pass the costs of reinsurance onto consumers. This strategy aims to stabilize the market but also raises concerns about affordability and access to coverage for California homeowners. FAQs: California Insurers Sued for Wildfire Coverage Collusion in 2025 What are California insurers accused of in the lawsuits? They are accused of colluding to restrict coverage in wildfire-prone areas, pushing homeowners into the limited FAIR Plan. How does the FAIR Plan impact California homeowners? The FAIR Plan offers basic, high-cost coverage, often leaving wildfire victims underinsured and unable to fully rebuild. What regulatory changes affect California insurers in 2025? New rules allow California insurers to raise premiums if they offer more policies in high-risk wildfire zones, factoring in climate change risks. Stay informed about California’s insurance crisis and recovery efforts in the wake of natural disasters. For comprehensive updates on workers’ compensation and other industry news, visit JacobiJournal.com. 🔎 Read More from JacobiJournal.com:
Florida Insurance Broker Pleads Guilty ACA Fraud Scheme
April 22, 2025 | JacobiJournal.com – A South Florida insurance broker has pleaded guilty to orchestrating a $134 million Affordable Care Act (ACA) fraud scheme that exploited federal health subsidies and targeted society’s most vulnerable. Dafud Iza, 54, of Pembroke Pines, entered his guilty plea last Friday in federal court in the Southern District of Florida. He now awaits sentencing and could face up to 10 years in prison, along with a substantial restitution order. Broker Licenses Revoked After Years in the Industry Florida Insurance Broker: Iza previously held multiple insurance licenses in Florida, including property and casualty, temporary life, and health insurance credentials. However, the Florida Department of Financial Services confirmed all his licenses are now inactive. His appointment with Liberty Mutual Insurance expired in 2012. Although court records did not identify his most recent employer, Iza’s LinkedIn profile listed him as Director of Operations at Compass Health Insurance in Tequesta since May 2024. Before that, he spent nearly eight years as Executive Vice President at Fiorella Insurance Agency in Stuart, Florida. Scheme Targeted Vulnerable Populations According to the U.S. Department of Justice, Iza and his accomplices specifically targeted low-income individuals—including those facing homelessness, job loss, or mental health and substance abuse challenges. Street-level marketers, allegedly working under Iza’s direction, offered cash incentives to entice these individuals to enroll in ACA health plans. How the Fraud Worked The ACA, also known as ObamaCare, provides federal tax subsidies to insurers that enroll eligible consumers. Iza’s team manipulated this system by submitting falsified applications. They exaggerated applicants’ incomes to meet subsidy requirements and sold ACA plans to individuals who didn’t qualify. As a result, federal insurers disbursed $134 million in improper subsidies based on the false data. The scheme not only drained taxpayer funds but also compromised the integrity of a healthcare system designed to help those in genuine need. Upcoming Sentencing and Legal Fallout Iza pleaded guilty to felony charges related to health care fraud and could face up to a decade in prison. Federal prosecutors emphasized that restitution will be pursued, though the final amount remains undetermined. The case underscores the ongoing risks of fraud in publicly subsidized healthcare programs—and the importance of oversight in broker-led enrollments. Learn more about ongoing federal enforcement actions by visiting the U.S. Department of Justice – Health Care Fraud Cases. FAQs: Florida Insurance Broker ACA Fraud Scheme What did the Florida insurance broker plead guilty to? The Florida insurance broker admitted orchestrating a $134 million ACA fraud scheme that exploited federal subsidies and targeted low-income, vulnerable individuals. How did the Florida insurance broker ACA fraud scheme work? The broker and accomplices submitted falsified applications, inflating incomes so applicants would qualify for ACA subsidies, resulting in $134 million in improper payouts. What penalties does the Florida insurance broker face? The broker faces up to 10 years in federal prison, restitution for the $134 million in fraudulent subsidies, and permanent revocation of all insurance licenses. Stay informed on the latest developments in insurance fraud and healthcare regulation at JacobiJournal.com. 🔎 Read More from JacobiJournal.com:
Fresno Executives Sentenced in Pension, Workers’ Comp Fraud Case
April 17, 2025 | JacobiJournal.com – Fresno Executives Sentenced behind a long-running fraud operation will now serve time in federal prison. A U.S. District Court sentenced Marcus Asay, 69, and Antonio Gastelum, 53, for their roles in an elaborate scheme that targeted over 3,000 victims nationwide. Judge Dale A. Drozd sentenced Asay to five years and Gastelum to two years in prison. Their company, Agricultural Contracting Services Association—doing business as American Labor Alliance (ALA)—must also pay a $2.5 million fine. Additionally, both Asay and ALA owe $69,250 in restitution. Fraud Spanning Nearly a Decade A federal jury convicted the defendants in June 2024 after a five-week trial. Prosecutors proved that from 2011 to 2019, Asay and Gastelum orchestrated multiple fraudulent operations through ALA, including pension fraud, workers’ compensation fraud, and an Affordable Care Act (ACA) exemption scam. They also laundered money to cover their tracks. How the Pension Scheme Worked Asay and Gastelum promised clients that their retirement savings would grow through a 401(k) plan managed by ALA. However, instead of investing those funds, the duo diverted the money for personal use. They splurged on fine dining, rare coins, online companionship services, and rent for Asay’s upscale lakefront home in Fresno. To conceal the missing funds, they redirected revenue from their workers’ compensation scam and falsely labeled it as pension money. This manipulation led to over $620,000 in losses. Fresno Executives Sentenced Faking Workers’ Compensation Coverage In a separate scam, the defendants falsely claimed that national insurance carriers backed ALA’s workers’ comp policies. They issued forged certificates and policy declarations to customers in California and other states. Many businesses relied on those documents to stay compliant and retain contracts. Rather than admit wrongdoing, Asay actively discouraged customers from cooperating with investigators. Authorities later confirmed the policies had no backing from legitimate insurers. This part of the scheme brought in $2.25 million in premiums. Misleading Health Insurance Exemption Offers Additionally, ALA sold fake ACA hardship exemptions to consumers for hundreds of dollars. In reality, only the federal government can issue such exemptions—and qualified individuals can receive them at no cost. By misrepresenting this process, ALA exploited consumers who were seeking relief from healthcare penalties. Lies Under Oath Add to Their Sentences Both Asay and Gastelum took the stand in their defense. However, the court found they lied under oath, which resulted in longer prison sentences. Their perjury underscored their continued intent to deceive, even during trial. Broad Investigation, Federal Charges Federal agents from multiple agencies collaborated to bring the case to court, including: Assistant U.S. Attorneys Michael Tierney, Joseph Barton, and Stephanie Stokman led the prosecution, which ultimately held the perpetrators accountable. Read the official U.S. Attorney’s Office press release on Fresno Executives Sentenced for full case details and court statements. FAQs: Fresno Executives Sentenced 2025 What crimes were the Fresno executives sentenced for? The Fresno executives were sentenced for pension fraud, workers’ compensation fraud, ACA exemption scams, and money laundering. How long will the Fresno executives sentenced in 2025 serve in prison? Marcus Asay received five years, and Antonio Gastelum received two years in federal prison for their roles in the fraud scheme. What restitution must the Fresno executives sentenced in this fraud case pay? They must pay $69,250 in restitution and a $2.5 million fine as part of their sentence. Stay informed with the latest updates on insurance fraud, workers’ compensation violations, and more at JacobiJournal.com. 🔎 Read More from JacobiJournal.com:
Marketer Susan Postnikoff Linked to CA Workers’ Comp Ghostwriting Scheme
April 21, 2025 | JacobiJournal.com – California Workers’ Comp Ghostwriting Scheme: Jacobi Journal has learned of an investigation into a scheme at DWC Pros, a California Medical Legal Practice Management Company, to ghostwrite QME reports for its doctors. The mastermind is said to be Peggy Susan Postnikoff, a Canadian immigrant and former Marketing Director at DWC Pros. Postinikoff now holds a similar marketing position with Spectrum Medical Evaluations in El Cajon, CA. The investigation follows Pasadena doctor Kevin Tien Do’s guilty plea related to a $3 million conspiracy to defraud California’s Subsequent Injuries Benefit Trust Fund (SIBTF). Jacobi contacted DWC Pros and Spectrum Medical Evaluations employees about the ongoing “ghostwriting” investigation. Both organizations claimed Postnikoff is merely a consultant and not affiliated as an employee. However, our investigation uncovered direct involvement. Michelle Kaminer, a DWC Pros employee, described her role as writing and editing medical-legal reports by synthesizing various medical documents, including diagnostic studies and physician notes, and performing copy editing, proofreading, and fact-checking. Ms. Kaminer admitted that Postnikoff pressured her and other staff to engage in high levels of medical report writing that violates California Labor Code Section 4628, so that Postnikoff could attract new doctors to the firm and earn a sales commission. Sources also indicate that these unlawful practices contributed to the departure of several prominent QME physicians from DWC Pros, including orthopedic surgeons John Burge, Daniel Davis, Sanagaram Shantharam, Keith Robertson, Casey Pyle, Stephan Sweet, and Sahil Vohra. This is not the first time Postnikoff has been linked to wrongdoing. She was the subject of a criminal investigation into Mortgage Fraud, affiliated with the investigations of Stephan Stepaniuk and Jennifer White for marketing kickbacks, and now faces questions related to her citizenship status. To date, Postnikoff has eluded prosecution and now works with Spectrum Medical Evaluations in a similar marketing position. Jacobi recommends that Claims Adjusters operating in California be on the lookout for ghost-written QME reports. A ghost-written QME report can be challenged through Deposition and ultimately thrown out with reimbursement denied. Please click on the link below for tips in identifying ghostwritten reports: How To Spot a Ghost Written Medical Report Stay informed — visit the California Division of Workers’ Compensation website to understand QME compliance rules and how to challenge unlawful medical-legal reports. FAQs: California Workers’ Comp Ghostwriting Scheme What is a California Workers’ Comp ghostwriting scheme? A California Workers’ Comp ghostwriting scheme involves unlicensed individuals drafting QME medical-legal reports, violating Labor Code Section 4628. How can claims adjusters detect ghostwritten QME reports? Claims adjusters can spot ghostwritten QME reports by identifying inconsistencies in medical opinions, repeated template language, and mismatched physician signatures. Why is ghostwriting in California Workers’ Comp cases illegal? Ghostwriting violates California Labor Code Section 4628, which requires that QME physicians personally prepare their reports to maintain accuracy and integrity. What should I do if I suspect a California Workers’ Comp ghostwriting scheme? Report suspicions to the California Division of Workers’ Compensation (DWC) and preserve all documentation for investigation. Can a ghostwritten QME report in a California Workers’ Comp ghostwriting scheme be thrown out? Yes. If proven ghostwritten, a QME report can be excluded from evidence, with related reimbursement claims denied by the insurer or the DWC. Get the latest updates on California Workers’ Comp fraud, legal cases, and industry investigations delivered straight to your inbox. Subscribe to JacobiJournal.com and never miss a critical story. 🔎 Read More from JacobiJournal.com.
Consumer Watchdog Sues CA Department of Insurance Over FAIR Plan Surcharges
April 17, 2025 | JacobiJournal.com – A consumer advocacy group has filed a lawsuit against the California Department of Insurance and Commissioner Ricardo Lara, seeking to block hundreds of millions in new insurance surcharges set to impact homeowners statewide. Consumer Watchdog alleges that the Department’s recent decision allows private insurers—who operate the state’s FAIR Plan, California’s insurer of last resort—to pass catastrophe-related costs onto policyholders, rather than absorbing them as the law requires. $500 Million Burden on Homeowners The dispute stems from a $1 billion FAIR Plan assessment approved in February, after wildfires swept through Palisades and Eaton Canyon. Consumer Watchdog argues that the decision allows up to $500 million in costs to be pushed onto homeowners, undermining the purpose of the FAIR Plan. “The commissioner’s decision is unjustified,” said Ryan Mellino, staff attorney for Consumer Watchdog. “It shifts risk to the public while profits remain with the insurers.” According to the group, the decision violates the Administrative Procedure Act, as it was made without public input. The lawsuit also claims the pass-through surcharges breach FAIR Plan statutes, which mandate that insurance companies must share in both the profits and losses of the plan. Industry Pushes Back In response, the American Property Casualty Insurance Association (APCIA) slammed the lawsuit as a “reckless stunt.” “Blocking cost recovery jeopardizes last-resort coverage for homeowners,” said Denni Ritter, APCIA’s VP of state government relations. “This move could push California’s already fragile insurance market toward collapse.” Ritter argued that distributing recovery costs across a broader base helps stabilize the market and keeps essential coverage available to more Californians. State Regulator Responds Gabriel Sanchez, press secretary for the Department of Insurance, said the lawsuit hinders efforts to provide homeowners and small businesses with reliable insurance options. He noted that the goal is to transition consumers away from the limited and expensive FAIR Plan to more competitive coverage options. “This litigation harms the very people it claims to protect,” Sanchez said. “It also undermines our work to strengthen the insurance market overall.” Advocacy Group Warns of Future Impact Consumer Watchdog maintains that the policy sets a dangerous precedent, potentially paving the way for billions more in future surcharges. “California homeowners have already suffered enough,” Mellino said. “This is an unlawful bailout that prioritizes insurance companies over everyday Californians.” Despite the backlash, the insurance industry points out that it has already contributed over $500 million to support the FAIR Plan’s solvency—without collecting premiums from FAIR Plan policyholders. Consumer Watchdog’s full legal petition is available here. FAQs: California FAIR Plan Surcharge Lawsuit What is the California FAIR Plan surcharge lawsuit about? The California FAIR Plan surcharge lawsuit challenges a decision allowing private insurers to pass wildfire recovery costs onto homeowners instead of absorbing them. Who filed the California FAIR Plan surcharge lawsuit? Consumer Watchdog, a California-based advocacy group, filed the lawsuit against the Department of Insurance and Commissioner Ricardo Lara. How could the California FAIR Plan surcharge lawsuit affect homeowners? If upheld, the surcharges could add up to $500 million in costs for homeowners statewide, potentially setting a precedent for future assessments. For the latest updates on insurance litigation and market trends, visit JacobiJournal.com. 🔎 Read More from JacobiJournal.com:
Former Texas Insurance Broker Charged in Alleged Fraud Scheme
April 17, 2025 | JacobiJournal.com — A former Texas insurance broker is facing felony theft charges after allegedly collecting payments from clients for policies he never purchased. Edgar Peralta, of Peralta Insurance Brokerage LLC, turned himself in to Friendswood Police on April 10, 2025. The former Texas insurance broker is charged with theft, a state jail felony, filed by the Galveston County District Attorney’s Office. Fraud Uncovered After Traffic Stop Friendswood Police began investigating Peralta on March 3, 2025, after receiving a fraud complaint from a longtime client. The client had used Peralta for several years to secure homeowner, auto, and flood insurance policies. In May 2024, Peralta reportedly advised the client to prepay for policies covering the upcoming year, promising significant cost savings. However, after a January 2025 traffic stop, the client discovered their auto insurance was invalid. Upon contacting the insurer, they learned the policy had been canceled for non-payment. Further inquiries revealed the same issue with both the homeowners and flood policies. The client provided wire transfer records showing they had paid Peralta directly. However, investigators believe he never forwarded the funds to the insurance companies. License Revoked Months Earlier The situation escalated when the client discovered that Peralta’s insurance license was revoked in June 2024—months before he accepted their latest payments. This revelation raised serious concerns about how the former Texas insurance broker continued operating despite being legally barred from conducting insurance transactions. According to industry regulations, once a license is revoked, an agent is prohibited from soliciting, selling, or managing any insurance policies. However, investigators allege Peralta ignored these restrictions and continued to present himself as a legitimate broker. This not only violated state insurance laws but also placed clients at risk of being uninsured without their knowledge. Authorities say this pattern of behavior underscores a larger issue in the insurance industry—how revoked agents can exploit personal relationships with clients to commit fraud. For victims, the trust built over years of service made it harder to suspect wrongdoing until financial harm had already occurred. Ongoing Investigation Friendswood PD has referred the case to the Texas Department of Insurance, which has launched its own investigation into the former Texas insurance broker and his alleged fraudulent activities. Authorities are reviewing financial records, client communications, and policy documentation to determine the full extent of potential violations. Additional charges may follow based on their findings, especially if more victims step forward with similar claims of premium payments that never resulted in active coverage. The former Texas insurance broker remains under investigation, and authorities urge any other potential victims to come forward immediately to aid in the ongoing case. If you suspect fraudulent activity by an insurance agent or broker, report it immediately through the Texas Department of Insurance’s official fraud reporting portal to protect yourself and other consumers. Source: Friendswood Police Department FAQs: Former Texas Insurance Broker Why was the former Texas insurance broker charged with theft? Authorities allege he collected payments for insurance policies he never purchased and kept the funds. When was the former Texas insurance broker’s license revoked? His license was revoked in June 2024, months before he allegedly continued selling insurance policies. How can clients report fraud by a former Texas insurance broker? Victims can contact the Texas Department of Insurance or local law enforcement to file a report. Stay ahead of insurance fraud news by following updates on JacobiJournal.com. 🔎 Read More from JacobiJournal.com: