State Fines 2 Firms Over Workers’ Comp Policies

State regulators said Monday that they disciplined two insurance agencies for attempting to sell illegal workers’ compensation policies issued by an unlicensed company based on an Indian reservation.

The California Department of Insurance levied penalties and enforcement costs of $19,000 against Barlocker Insurance Agency Inc. of Salinas, Hall-Schenk Inc. of Camarillo and two of their agents. The two firms, which neither admitted nor denied guilt, couldn’t be reached for comment.

The firms were accused of trying to sell a bogus policy to a home healthcare business. State law requires that all workers’ comp coverage be backed by a state-licensed insurer or a state-approved employer self-insurance plan. Instead, the agencies touted coverage issued by Mainstay Business Solutions, which claimed to be licensed by the Blue Lake Rancheria Indian tribe in Humboldt County.

The company contended that Blue Lake’s sovereign status as a federally recognized tribe gave it authority to license insurers. However, the state Department of Industrial Relations, which administers California’s workplace laws, took legal action against several restaurants whose owners had purchased the Mainstay comp coverage.

Mainstay is close to reaching a settlement that would allow the company to operate as a self-insurance program, the Department of Insurance said.