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Hingham
man again accused of fraud (NICA)
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By SUE REINERT
The Patriot Ledger, May 04, 2006
The owner and president of a Braintree company, his wife, and six
current and former employees were arrested yesterday and ordered to
face charges that they schemed to evade workers’ compensation laws in
California.
Massachusetts State Police arrested the six men and two women, all
South Shore residents, at the request of California insurance-fraud
authorities.
The company, NICA Inc., continues to operate, general counsel Owen Kane
said.
This is the second time in nine years that NICA Inc. president and
founder Thomas McGrath of Hingham has faced charges involving workers’
compensation fraud. Nine years ago in federal court in Boston, he was
sentenced to community service and home detention for fraud.
NICA arranges to have drivers for courier companies in 42 states work
as independent contractors without company-paid benefits. If the
drivers were on company payrolls, their employers would have to buy
workers’ compensation insurance to cover them in case they were injured
on the job.
In releasing McGrath and the other seven defendants on $5,000 bond
each, Quincy District Judge Thomas Barrett stipulated that they must go
California to be arraigned.
Arrested were McGrath, his wife, Eileen Rogantino-McGrath; chief
operating officer Andrew Rogantino of Quincy; controller David Kenyon
of Hingham; former counsel and current project manager Wesley McClure
of Attleboro; product manager Timothy Bergin of Hull, Dan Curran of
Weymouth, whose position with the company was not identified, and
former employee Mary Graham of Braintree.
Troopers assigned to the state Attorney General’s Office took the eight
people into custody at their homes early yesterday.
A San Diego grand jury indicted each of the defendants on 50 counts of
conspiracy to commit workers’ compensation fraud and conspiracy to make
false and fraudulent statements relating to workers’ compensation
benefits being provided to injured workers, said Ernest Marugg, deputy
district attorney in San Diego.
Marugg said details of the allegations will be disclosed when the eight
are arraigned in California, probably sometime before May 31.
John Joseph McGlone III, a Quincy attorney representing the defendants,
said: ‘‘We will defend them vigorously and they feel confident they
will be vindicated.’’
Most states where NICA operates have no quarrel with the company, but
‘‘California has issues with them,’’ McGlone said. State officials have
contended that NICA ‘‘skirts’’ the rules by identifying drivers as
independent contractors when they should be considered employees
requiring workers’ compensation coverage, he said.
McGlone said the company is not breaking any rules and has won several
legal skirmishes with California.
Kane, NICA’s general counsel, said almost half the 20,000 drivers that
the company serves are in California.
Drivers pay a monthly fee of about $12 to have NICA pay them and
provide payroll services, he said. They also can buy health,
disability, life and ‘‘occupational health’’ insurance from the company
for additional fees.
The company’s Web site promotes the notion of being self-employed,
saying workers can earn more than they could on a company payroll.
NICA does not get any revenues from courier companies, only from
drivers, Kane said. However, the Web site offers legal and educational
services to companies to help them deal with drivers as independent
contractors and answer challenges from state officials. An analysis
posted on the NICA Web site estimates that a company employing 20
drivers could save $600,000 a year if drivers were independent
contractors.
In October, California insurance fraud investigators searched NICA’s
Braintree headquarters with the help of the Massachusetts Attorney
General’s Office, spokeswoman Meredith Baumann said. The office also
assisted with the arrests yesterday, she said.
Baumann could not say whether Massachusetts authorities are looking
into NICA’s activities. McGlone said the company complies with
Massachusetts rules.
California officials have not disclosed the reason for the search. The
Los Angeles Times, which reported the search in November, said
California regulators have said in the past that ‘‘occupational
accident insurance,’’ which NICA sells to drivers, could be fraudulent
if it replaces mandated workers’ compensation coverage.
In 1997, McGrath pleaded guilty and was sentenced in U.S. District
Court in Boston to five months in a community detention center and five
months of home detention for his involvement in workers’ compensation
fraud. He also was fined $20,000 and ordered to pay $43,977 as
restitution.
Prosecutors said McGrath and his company, then called National
Independent Contractors Association Inc., falsely told courier
companies that they could avoid workers’ compensation premiums by
having their employees get coverage through the association.
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