The San Diego Union-Tribune
8 executives indicted here in insurance fraud
Mass. firm handled claims for S.D. couriers
By Frank Green
STAFF WRITER
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.