The owners of an Irvine-based company that provides housekeeping services for luxury resorts and major hotel chains in Southern California have been indicted in what prosecutors call a $7 million insurance and tax fraud scheme, the San Diego County district attorney’s office announced Monday.
Prosecutors alleged in a news release that Hyok “Steven” Kwon and Woo “Stephanie” Kwon hid the existence of about 800 employees for almost a decade through a “methodical and systematic shell game involving six straw owners.”
The scheme enabled the Kwons to avoid paying more than $3.6 million in housekeeping workers’ compensation insurance premiums and more than $3.3 million in payroll taxes, prosecutors said.
The Kwons’ company, Good Neighbor Services, has high-profile clients in San Diego, Los Angeles and Riverside counties, including the Hotel del Coronado and hotel chains such asÂ Ritz-Carlton, Four Seasons, Hilton and Hyatt, according to prosecutors.
“These defendants lied on the backs of their employees who were cleaning rooms in some of the most prestigious hotels in California,” San Diego County District Attorney Bonnie Dumanis said in a statement. “If employees got hurt on the job, they were threatened with being fired.”
Prosecutors allege that housekeeping and other employees at Good Neighbor Services were not paid overtime and not granted workers’ compensation benefits if they were hurt on the job.
One worker whom investigators interviewed said she had to repeatedly ask for medical attention when she was hurt, and when the Kwons did send her to a doctor, it was a dentist, not a physician, according to the district attorney’s office.
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We recently read an account of a 48-year-old female who had two complete knee replacements and got hired as a housekeeper. Within the first three months, she injured her bad knee, and the cost of her workersâ€™ comp claim will be in the tens of thousands of dollars. If this employee had received a pre-placement screening prior to her hiring, the doctor may have recommended her for a different position
According to a recent study by the National Institute of Health (NIH), hotel workers have higher rates of occupational injury and illness compared with workers in other service industries, particularly in the area of musculoskeletal disorders. So is it any wonder why so many hotel employers are throwing up their arms in surrender every time they see their workersâ€™ compensation premiums soar out of control? Many employers treat those premiums with a â€œthereâ€™s nothing I can do about itâ€ mentality when there actually is something that can be done.
The starting point is always your experience mod, or the numbers that dictate what you will pay in premiums, based on your industry. Fifty percent of all experience modifiers are incorrect, and 80 percent of all experience modifiers are mismanaged. You need to understand the importance of managing and reducing your experience modifierâ€”itâ€™s not just a number. Taking a passive or nonchalant attitude can cost you plenty. And this can happen in a number of ways: misclassifications, incorrect payroll audits, recovery at work programs that are weak or in some cases non-existent, and an overall lack of an established safety culture.
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A workersâ€™ compensation judge (WCJ) found Dr. Reeve didnâ€™t prescribe medical marijuana and concluded that the pot program wasnâ€™t reasonable and necessary medical care as required by workersâ€™ comp…the appeals court had found the certification required under the Compassionate Use Act by a person licensed in New Mexico to prescribe and administer controlled substances is the functional equivalent of a prescription.
In a state where medical marijuana is legal, a recent court decision has reinforced a previous one regarding pot prescriptions under workersâ€™ comp.Â
Miguel Maez suffered injuries to his lumbar spine in February and March 2011 while working forÂ Riley Industrial in New Mexico.
Maez receivedÂ temporary disability benefits under workersâ€™ comp. Dr. Anthony Reeve treatedÂ him forÂ back pain starting in June 2011 andÂ prescribed medication for pain management. He also referred Maez to another doctor for spinal injections.
During aÂ test required for pain management patients, Maez tested positive for marijuana. Dr. Reeve told Maez that if he was going to continue toÂ take marijuana, he needed to have a license for Dr. Reeve to continue administering other narcotics.
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