Corruption Scandal Threatens To Engulf
by Steve Zeltzer
February 5, 2005
WHILE MOST OF the state last week was focussed on the resignation of
California Secretary of State Kevin Shelley, another resignation took
place that threatens to engulf the plans and reputation of California¹s
Governor Arnold Schwarzenegger.
On Friday afternoon February 4, after a demonstration of injured workers
took place at the giant California State Compensation Fund, a quasi-public
group multi-billion dollar insurance corporation that controls more the half
of California¹s workers¹ comp market. Dianne Oki, president of the fund
resigned only hours after the injured workers protest.
Her resignation came not only as she faced a disabled
workers¹ protest in front of her offices but after specific questioning
about the case of Larry Nign www.mystatefraudstory.com/index.aspx
and the role of her agency in a reported criminal cover-up by her agency.
While virtually the entire corporate controlled media has ignored this
story, it is building up as an explosive danger to both the governor and the
politicians who were responsible for the workers¹ comp deregulation bill.
The Friday began with a film showing of "Almost Broken"
www.almostbroken.com about the 13 year battle of injured worker Larry Nign
to get justice. Los Angeles film maker and IATSE Local 33 member Christine
Peitz had the premiere screening in San Francisco at the Main Public
Library which is also only blocks away from the California State Fund
offices. Peitz herself was injured at Disney in Los Angeles and had became
angered and frustrated with a system that was preventing her from getting
proper care and running up against the "deregulated" insurance industry. Her
riveting film tells the story of how injured worker Larry Nign was denied
benefits and judges, lawyers and the State Fund investigators conspired to
deny him his healthcare benefits and compensation. It recounts the long,
excruciating and lonely struggle that Larry Nign and his family faced as an
injured worker. This story according to Nign and Peitz is now being
repeated by tens of thousands of workers throughout the state who are
reaching a brick wall in getting their benefits and injuries covered.
Also revealed by workers at the screening, was the growing injured worker
crisis at State Fund itself. As a result of cutbacks and a massive increase
in injured workers cases, more and more State Fund employees are now being
forced out on disability and are met with the same problems as those outside
Following the film screening, the disabled and injured workers marched over
to the State Fund offices. Chanting "Stop the Cover-up", and "No More
Corruption At State Fund", the protesters were met by San Francisco police
who had been called to protect the State Fund bosses from disabled workers.
Injured firemen, healthcare workers and others took the bull horn to talk
about their battles against the insurance companies to get their injuries
From inside the building on the first floor President Dianne Oki and several
top executives watched and giggled as the demonstration and rally continued.
One of the newspaper reporters entered the building for an interview and was
accused of "being a protester". When he told them he was a reporter, they
knew they had real problems.
As the demonstrators demanded on the bullhorn that Oki and the executives
come out a face the people, they panicked and rushed out of the lobby. They
had previously issued a memorandum to all State Fund employees that there
was no reason to panic but that injured workers would picketing in what
they hoped would be a "peaceful" demonstrations.
Governor Schwarzenegger had also been invited by film maker Christine Peitz
to view the film and later the same afternoon she received a call to her
home from the governor¹s office that he was unable to attend to the
In fact injured worker Larry Nign and Christine Peitz had both made numerous
requests for the governor to investigate the problems and conflicts of
interest at the State Fund.
It Wasn¹t Supposed To Happen?
None of this, of course was supposed to take place under the new state bill
SB 899 that has been lauded by the governor and voted on almost unanimously
by the state legislature as the solution to the workers¹ comp crisis. Most
of the legislators admitted that they had not even read the bill and much
like the electrical deregulation bill, this was passed in a rush at midnight
without proper hearings. This scheme like the deregulation of electricity by
the state was supposed to "solve the problems". It was also unopposed by
Secretary Treasurer Art Pulaski and California Federation of Labor. The
deregulation of the industry has legitimized the ability of the insurance
companies to deny real disability claims and face no punishment for their
The deregulation of the workers¹ comp industry has also enticed investors
and Governor Schwarzenegger¹s billionaire friends and contributors like
Warren Buffet to re-enter the workers¹ comp insurance market. It is also
creating havoc for injured workers , doctors and caregivers throughout
California who are stuck in a collapsing disability system.
Injured workers who need pain medication, treatment and immediate surgery
have been put on hold and in some cases some workers have even committed
suicide. Workers who were injured even prior to the passage of SB899 and
were told by their insurance companies that they would be covered by medical
care for life in lieu of a large cash settlement are now being denied care
and medical coverage.
Many of the injured workers are so caught up in the efforts to deal with
their injuries and take care of themselves and their families that this is
now adding to their medical problems. They are in a state of shell shock as
they seek to deal with a collapsing system supposedly organized to protect
them when they are injured on the job.
Foxes Guarding The Chickens
An important reason for the failure to investigate the criminal cover-up by
lawyers, investigators and even judges is the funding of district attorney¹s
offices in California. District attorney¹s offices throughout the state
receive millions of dollars from the insurance companies to investigate
fraud in the workers¹ comp system. Most of the money however is directed
toward operating costs of these departments and not toward the small amount
of worker fraud. District attorney¹s as recounted in the film "Almost
Broken" in fact are fearful of investigating the very state agency that is
providing them with funding for their operations. District Attorney offices
in most cases have also refused to investigate and file criminal charges
against employers who have conspired to prevent their workers from getting
healthcare coverage when injured on the job. Forms have been illegally
changed and destroyed but the DA¹s have refused to take action.
Also joining in the demonstration was a newly formed committee called the
California Coalition For Workers Memorial Day www.workersmemorialday.com
CCWMD. The coalition is organizing for a statewide protest on April 28, 2005
at the State Capital of injured and disabled workers from throughout
California. They hope to get many union locals in California to get busses
for their injured and disabled workers so they can participate in the event.
At the same time that the Coalition is protesting the attacks on disabled
workers, they are also calling for the establishment of a "single payer"
health care system that would cover all people regardless of whether workers
are injured at work or at home. At present, the healthcare system is an
employment based system that requires a job for coverage.
The establishment of single payer would provide for medical coverage for
injured workers and give them the right to directly sue the employer for
This of course would not only eliminate the insurance industry from
healthcare for injured workers but would make employers directly liable for
the health and safety violations on their job sites.
As the escalating problems of the Workers¹ Comp system build, the danger for
both the insurance companies and employers could reach a boiling point and
the resignation of Oki could be only the beginning of what is coming down
the road. Larry Nign with the establishment of his web page has been able to
get the information out despite the media blockade of the story. The LA
Times and other broadcasting companies have refused to cover this growing
scandal despite the effort of Nign and others to provide all documentation
and evidence. His web site is now being hit by many government law
enforcement agencies as well as the State Fund agency.
This issue will also be covered in a newly established TV show called
"Injured Workers On The Job" www.injuredonthejob.tv produced by
Sam Gold. Gold also is the Executive Director of the California Injured
Workers Coalition www.injuredworkerscoalition.com. He is an injured
sheetmetal worker of San Francisco Sheetmetal Workers Local 104 and
established the show to expose the increasing assaults on the state¹s
injured workers. It is programmed on cable stations around the state and is
also streamed on the web.
It is clear that this crisis will only deepen and the injured and disabled
rights activists are now successfully making their own media to get this