Temp Service to Pay Insurance Fine

A Bellflower-based temporary employment agency has agreed to pay up to $20 million in court-ordered restitution in a workers’ compensation fraud case, but could end up paying only $5 million in a plea agreement.

Staffing Services Inc., which holds contracts for thousands of employees, agreed to a plea bargain in Los Angeles Superior Court on Jan. 15. The plea bargain was announced by the state Department of Insurance on Monday.

The agreement culminates a two-and-a-half-year investigation by the state insurance department into allegations that Staffing Services defrauded the State Compensation Insurance Fund of more than $18 million in premiums due from 2002 through 2005.

Fund investigators suspected that Staffing Services had misrepresented both the numbers and types of workers on its payrolls in order to reduce its premium payments.

An attorney for Staffing Services said that under the agreement, if the company pays in full a separate $5 million civil penalty, the $20 million penalty in the criminal case would be dismissed.

The Department of Insurance brought the case to the Los Angeles County District Attorney’s office, which filed charges against Staffing Services in November.

State Compensation Insurance Fund is the largest provider of workers’ compensation insurance in the state. Every employer must provide workers’ compensation insurance.