American Indian Firm Settle Workers’ Compensation Suit Against State
Blue Lake Rancheria of Humboldt County and its Mainstay Business Solutions subsidiary have agreed to waive sovereign immunity claims and create a self-insurance program to pay workers' compensation costs as part of a settlement with the state, the Sacramento Bee reports (Kasler, Sacramento Bee, 3/31).
State officials in 2003 launched an investigation of Mainstay, which has sold hundreds of companies lower-cost alternatives to traditional workers' compensation insurance plans. Officials alleged that Mainstay was operating illegally and that its operators were using its special legal status as an American Indian tribe to avoid state workers' compensation regulations.
Mainstay said that its business was legitimate and offered workers' compensation coverage that was 25% less expensive than other coverage by using a cost-conscious network of doctors and by processing treatment disputes through a tribal appeals court to reduce litigation costs (California Healthline, 11/25/03).
Under the settlement, workers who believe they are not receiving proper compensation can have their case heard by the Workers' Compensation Appeals Board. Mainstay also will pay about $30,000 to settle claims that the firm's workers' compensation system was inadequate filed by some workers against Mainstay clients.
Mainstay attorney Nicholas Roxborough said by adopting a self-insurance workers' compensation program at Mainstay, the tribe will retain most of the control over its workers' compensation program.
John Rea, acting director of the Department of Industrial Relations, said in a statement, "Our goal is to ensure all employees working in the state have the same rights and protections. ... With this settlement, Mainstay employees can rest assured they are fully covered under workers' compensation insurance and employers can be certain they are doing business with an entity that is in compliance with California's workers' compensation laws."
Roxborough said, "This thing could have been tied up for years and years and years in the courts. You can be in this battle for several years, and everybody can spend a lot of money."
Mainstay CEO Michael Hansen said the firm decided to settle to "protec[t] our client companies" (Sacramento Bee, 3/31).