Work Comp Placebo Sovereignty Dispute
By Robert Warne - September 23, 2003They can own and operate casinos in many parts of the country and even hunt whales in other parts, but the California Department of Insurance (DOI) is on the hunt to prevent Indian sovereignty from harpooning the state’s work comp system.
The San Francisco Business Times recently reported that state regulators want to nip the latest backdoor work comp placebo in the bud.
At the center of the current dispute is a program offered by certain Indian tribes that pushes the envelop of sovereign immunity beyond the bounds of the reservation.
The tribes in question are using the benefits they are afforded by sovereignty and marketing it to businesses burdened by work comp.
By forming employment agencies, the tribes will hire a company’s employee base and then lease the staff back.
The attractive proposition which reportedly can save a company as much as 40 percent utilizes an Occupational Injury Indemnity and Medical Benefits insurance policy in place of a work comp policy.
According to the Business Times the claims are administered by Intercare Insurance Services and the policy is written by an American International Group (AIG) subsidiary.
But even though these familiar names make the coverage seems legitimate, Jerry Whitfield, assistant chief counsel in the legal division for DOI told the Business Times that a California employer that leases employees is viewed as a co-employer and must conform to California law.
He also said that there’s no question that this isn’t a workers’ compensation system and that the tribes have no compact with the state other than for the purpose of gaming.
The Department of Industrial Relations has also stated that the businesses utilizing the tribal system without having the required workers’ compensation coverage in place may be criminally liable and fined up to $100,000. And on top of that, the business can also be sued in civil court for negligence.
| 
__May11th2017.gif)
.gif)