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8
executives indicted here in insurance fraud (NICA)
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Mass. firm handled claims for S.D.
couriers
By Frank Green
San Diego Union-Tribune, May 6, 2006
Executives at a Massachusetts-based company that provides insurance and
tax services for courier firms in San Diego County and elsewhere have
been charged with defrauding the California workers' compensation
insurance fund.
The San Diego County District Attorney's Office has issued a 50-count
indictment against Thomas M. McGrath, founder and president of NICA
Inc., and seven other company officials for allegedly filing false
insurance claims worth hundreds of thousands of dollars.
Prosecutors said the executives at the Braintree, Mass.-based firm
conspired to make false statements involving injured courier workers to
obtain benefits from the State Compensation Insurance Fund.
The defendants, who also are charged with fraudulently obtaining
insurance policies, could be arraigned as early as next week.
Dominic Dugo, chief of the county's district attorney's insurance fraud
division, and spokespersons for the California Department of Insurance
declined to discuss details of the case until the arraignment.
McGrath and the other NICA executives were arrested in Massachusetts on
Wednesday.
If convicted, the defendants could face sentences of up to 50 years in
jail and fined up to $1.2 million each.
Search warrants were served in October at several courier companies,
including at least one in San Diego County.
McGrath and the other defendants were being charged with premium fraud
and applicant fraud, Dugo said.
Premium fraud could involve, for example, a construction company that
reports wages for its workers as if they were office employees, thus
substantially reducing premium costs.
Applicant fraud could involve a company filing workers' compensation
claims for injured people not employed at the firm.
NICA was founded in 1993 by McGrath to help courier companies cut labor
expenses by converting their employees to independent contractors.
In a previous case involving workers' compensation insurance, McGrath
was sentenced in U.S. District Court in Boston in 1997 to 10 months of
jail and home detention in a workers' compensation fraud case involving
the firm.
McGrath and NICA were accused of falsely telling courier companies that
they could forgo workers' compensation costs by having employees obtain
policies through the firm.
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