IRVINE, CALIFORNIA – March 15, 2021
Cal-SARA has entered into a defamation lawsuit brought by Veronica Lake, CEO of Diamond PEO against one of its members, Alex Cervantes and a second defendant, Power PEO. Cal-SARA will be representing Cervantes on his defense and counterclaims.
Diamond PEO filed the defamation suit on February 26, 2021 alleging that Cervantes and the other defendant made false claims about the legality of its operations and business practices, specifically as it applies to valid workers’ compensation insurance. Diamond is asking the court to find damages in excess of $100,000 in damages.
Cervantes answered and filed counterclaims against Diamond and Veronica Lake alleging the plaintiff unlawfully gained competitive advantages over its competitors by circumventing the protections to employers and employees provided under California law.
Due to the increasing demand for a contingent workforce and declining capacity in the California workers’ compensation market, sketchy workers’ compensation insurance arrangements are surprisingly common in the California staffing industry. While this is a widely-recognized issue, regulators have been unsuccessful in their attempts to control it.
Nonprofit organization, Cal-SARA was recently established to help. “Our mission is to clean up workers’ compensation insurance fraud in the staffing industry, and this case provides a perfect opportunity to stand up for a member who is trying to move the industry in the right direction,” says Mark Bertler, Executive Director of Cal-SARA. “If we don’t act now, the underground market will continue to proliferate.”
The effects of fraud in the market continue to negatively impact the staffing industry– staffing agencies that pay for legitimate work comp programs are undercut by agencies with illegitimate and unreliable black market programs. “Allowing companies to operate without proper workers’ compensation coverage is a dangerous proposition for the workers involved and for the entire staffing marketplace,” Bertler explains. “We encourage impacted parties and whistleblowers to come forward and to partner with Cal-SARA.”
Cal-SARA has retained John Shoreman of McFadden and Shoreman to serve as counsel for this case. Shoreman has extensive trial experience with cases involving antitrust claims and commercial litigation.
Cal-SARA believes that industry self-policing is the most efficient and effective strategy for identifying and eliminating workers’ compensation fraudulent practices. By supporting aggrieved parties through legal and regulatory interventions, Cal-SARA believes that bad actors can be publicly held accountable and eventually removed from the market.
Cal-SARA promotes legal and regulatory compliance in the sale of workers’ compensation insurance and advocates for the common business interests of its members in recognizing and eliminating workers’ compensation fraud in the temporary staffing/staffing/recruiting industries. To learn more and join the fight against staffing industry workers’ compensation fraud, visit https://www.cal-sara.org/.