2 Deny Guilt in Insurance Fraud Case

An administrative supervisor for the State Compensation Insurance Fund and another woman pleaded innocent Thursday to charges of conspiring to defraud the company’s Woodland Hills office out of more than $13,000 in phony workers’ compensation claims.

The women were arrested Wednesday after the company turned over the results of an internal investigation to the district attorney’s office. After entering their pleas in Los Angeles Municipal Court, they were ordered jailed in lieu of posting $15,000 bail each.

Prosecutors allege that insurance fund employee Valerie Jean Flowers, 27, had ordered that four checks totaling $13,493.13 be sent to Eva Renee Newsome, 27, of Sun Valley in October. Newsome, whose employer had been insured by the fund, had recently filed a workers’ compensation claim.

The pair did not get all of the money, said Deputy Dist. Atty. Robert Saria. The last check, for about $8,500, had been flagged as a problem by the company’s computer and a stop payment order was issued. Despite the order, the bank’s policy allowed it to pay about $2,000 on the check. The pair had received a total of a little more than $6,000, Saria said.

“You issue a lot of checks and there’s a lot of ways to divert funds,” said Renee Koren, communications manager for the company’s headquarters in San Francisco. “But we also have built-in precautions in the system.”

The State Compensation Insurance Fund is a quasi-government agency staffed by state employees but is self-supported.

Both women are charged with workers’ compensation fraud and conspiracy to commit insurance fraud. If convicted, Flowers could serve up to six years in prison and Newsome could get a maximum sentence of seven years.