Why it's a Law in California to have Workers Compensation!

Commissioner Poizner Announces Modesto Motel Owner Arrested for Alleged Insurance Fraud.

Commissioner Poizner today announced that CDI detectives arrested a Modesto motel owner for allegedly committing workers' compensation insurance fraud. Muhammad Hassan Raza, 36, was arrested at his place of business, the Vagabond Inn in Modesto. He was booked into the Stanislaus County Jail. Bail has been set at $15,000. If convicted, Raza may be sentenced to two, three or five years in state prison and be fined up to $50,000, or double the amount of the fraud, whichever is greater.

"If you fail to maintain the appropriate workers' comp insurance for your business, you are not only breaking the law - you are putting your employees and yourself at financial risk," said Commissioner Poizner. "Do not ignore the law in an attempt to save a few bucks - you will only wind up in legal trouble with costly bills and fines."

Muhammad Raza is part owner of the Vagabond Inn in Modesto. On August 27, 2009, one of the Vagabond Inn employees was the victim of a sexual assault while working at the Vagabond Inn. Raza provided the name of the workers' compensation insurance carrier to the injured employee's family as First Comp. It was determined the Vagabond Inn was previously insured by First Comp but that policy had cancelled on December 10, 2008 due to non-payment of premium. The injured employee received treatments through her private health insurance plan and Raza paid for the ambulance bill and some of the other co-payments and bills.

On September 17, 2009, Raza applied for a workers' compensation insurance policy with State Farm Insurance. During the application process, Raza was asked if the Vagabond Inn had any workers' compensation injuries, whether insured or not, within the last three years. Raza answered that they did have an injury in 2008 but he did not disclose the injury on August 27, 2009. At the end of November 2009, the injured employee reported that Raza told her that he would give her money if she dropped her claim. The injured employee retained an attorney and ultimately filed a claim with the Department of Industrial Relations Uninsured Employers Fund.

Raza admitted to detectives that he knew he was supposed to have workers' compensation insurance and that he did not have insurance at the time of the injury because he did not pay the bill. He further said the reason why he provided First Comp as the insurance carrier to the injured worker's family was because he was negotiating with First Comp and believed he could get the policy reinstated. Raza admitted he paid the injured worker's bills and paid her salary while she was unable to work because he felt guilty but denied offering her money in exchange for her dropping her claim.

This case is being prosecuted by the Stanislaus County District Attorney's Office.