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Felony charges filed in new fraud case 

Investigations by local school districts allow the SLO D.A.’s office to pursue workers’ comp fraud cases

Last week the San Luis Obispo District Attorney’s office filed two felony counts against a San Luis Obispo man for allegedly defrauding one of the county’s largest school districts.

The D.A.’s office says that Reginald Anthony Fagan, who worked as a groundskeeper for the Lucia Mar Unified School District (LMUSD) until February 2000, filed two claims in 2004, saying that he injured his right knee while he was an employee.

That same year, the state’s Workers’ Compensation Appeals Board heard the case and rejected Fagan’s claims. But by then, the LMUSD had spent more than $26,000 on attorney fees, investigation costs, and benefits to Fagan.

On Feb. 4, the D.A.’s office issued a warrant for Fagan’s arrest. As of press time, he had not been booked into the county jail.

The case is the result of a several-years-long effort by area school districts to curb their skyrocketing workers’ comp premiums. This school year districts paid $1.4 million in insurance premiums, a number that far exceeds what they paid five years ago.

In 2003, members of SIPE — the authority that administers workers’ compensation for the county’s public school districts and community college — formed a task force to take on the issue of fraud. Over the preceding decade, 79 cases of alleged workers’ compensation fraud had been presented by different school districts to the D.A.’s office, but only 10 convictions were secured — mainly because prosecutors had inadequate information.

Diana Larsen, the deputy superintendent for business services at LMUSD, also chairs SIPE’s risk management committee. This year, SIPE has already opened 101 claims, the vast majority of which, Larsen said, are legitimate.

The employee may or may not have witnesses of their accident, she said, but the facts of the case and their treatment are consistent with the report: “We absolutely want to take care of those employees. We don’t investigate legitimate injuries. But when things are suspicious, we will go after them,� she said.

Going after them usually involves Alan Bond, a San Luis Obispo private investigator. Bond said that fraud could essentially be defined as a lie: “They’ve lied to a doctor. They’ve lied on the deposition. We just need to prove the lie.�

To do that Bond interviews co-workers, previous employers, and medical personnel, and might even conduct surveillance on the employee. School officials will also look over medical records. Then SIPE will present the information to the D.A.’s office.

“And if they like it, they file charges,� Bond said.

This is the second time SIPE’s efforts have paid off with charges being filed by the D.A.’s office.

Those investigations aren’t the only way SIPE is combating insurance rates. They now aggressively try to reeducate people who’ve had accidents. How many times, Larsen asked rhetorically, have you put something on the edge of a table, and thought, “That’s unsafe�? Rapidly twisting while trying to catch the object as it falls is an easy way to get injured.

“You’ve done it, I’ve done it. Do we know better? Yeah, we do. We don’t always think about those things. The goal of the retraining is to remind [employees] and ask them to pay more attention,� she said.

Staff Writer Abraham Hyatt can be reached at ahyatt@newtimesslo.com.

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