Legal Question in Business Law in California

Re: Moffia Audit

For this kind of money you should hang up from the Internet and consult a real lawyer (with specific experience in WC ratings / the WCIRB, preferably someone who is a former state Industrial Relations Counsel) (I am, but I'm not available).

I gather you are accused of applying for insurance and stating that your company does some kind of low-risk work, when it is actually high-risk work. We used to see roofers and junkyards claiming their employees were clerical office workers. Maybe you can sue the insurance agent for leading you astray, maybe not.

SCIF is a state agency, if they violated your civil rights they could theoretically be sued. But there are short time deadlines; and if you did lie on your insurance form there is not that much that can be done.

If you are going to file for bankruptcy, if I were you I would do it Monday (Oct. 17) before the federal courthouse closes -- the laws in effect on Tuesday will be very different!!

Re: Moffia Audit

The relationship between policyholder (your husband and/or his business) and carrier (the insurance company) is one of contract. The carrier is now interested in taking necessary steps to ensure that it does not suffer a loss under the contract. Although going to your employee's house might have appeared to be a deposition or interrogation, it was probably neither. A deposition is a legal proceeding, which occurs after notice to certain people, where testimony is provided under oath, and where other people generally have the right to interpose objections to the questions asked; after a deposition, questions/answers are typically transcribed and compiled into a "booklet". Interrogation implies something more sinister. I presume that your employee could have simply declined to invite the reps into his home and/or answer their questions. This is the United States, after all; absent unusual circumstances, you are not obligated to aid other people's investigations in this way.

The answer to your core question is that the carrier can take whatever steps are necessary to enforce its contract, provided those steps are not illegal. I would presume that if you cannot settle up with the carrier, it will sue you (or your husband) for the difference in premium. There are ways to fight, but they are expensive, and there is not certainty. Typically, you would dispute the premium calculation by arguing that there are misclassifications of the workers. If there are no misclassifications, then you may legitimately owe the money. I would need more facts to make a more thorough analysis.

You may have a cause of action against your broker for misrepresentation, either negligent or intentional. But I would need more facts.

Re: Moffia Audit

The two previous responses you received were both thorough and excellent. SCIF does have the right to come to your office, audit your payroll and determine if you have assigned the proper risk categories to your employee. They have the right to contact your employees and question them and your employees have the to right to refuse answer their questions.

I am not sure how willing SCIF would be to negotiate a settlement. They have their own staff lawyers to handle litigation all over the state, so they probably would not hire an outside firm to handle the litigation. And it sounds like you've already spend a lot of money on this without being able to reach a settlement.

I am located in the same county as you, so feel to contact my office for a consultation if you are considering a bankruptcy as an option.