New nonprofit forms to fight fraud in staffing industry workers’ comp marketplace, files lawsuit


A nonprofit staffing trade association was formed in California with the aim of cutting fraud in the workers’ compensation marketplace serving the staffing industry. The California Staffing Agency Reform Association, or Cal-SARA, is already a plaintiff alongside a staffing firm in a lawsuit over the sale of workers’ comp insurance.

“The increasing demand for a contingent or variable workforce, combined with the decreasing supply of employees and workers’ compensation insurers, has allowed a massive black market to grow virtually unchecked,” Mark Bertler, executive director of Cal-SARA said in a statement. “These illegal practices put staffing agencies, injured workers and California taxpayers at risk. Regulators have thus far been unsuccessful in policing these activities causing the situation to get worse,”

Cal-SARA was formed in mid-October. It is also a plaintiff in along with Butler America Holdings in a lawsuit filed in federal court for the Central District of Los Angeles. The defendants are Steven Herrig, Sunz Insurance Solutions LLC, Sunz Holdings LLC, Sunz Insurance Co. and Next Level Administrators.

The suit alleges defendants’ insurance programs are “an illegal, unfiled reinsurance-related transaction that puts the policyholder insureds (i.e., the Butler plaintiffs) in the position of ultimate reinsurer of the risk.” Ultimately, the suit said, all risk in the arrangements are passed back to the policyholder.

The suit seeks the return of $7.5 million in insurance premium as well as disgorgement of all profit and damages as well as punitive damages.

Cal-SARA aims to provide education, training and legal support for its members, as well as provide assistance to regulators and insurers. Its members will include staffing agencies, insurance companies, PEOs, brokers, an associate membership category for folks interested in fighting workers’ comp. fraud

Board members include Mike DiManno from Samuel Hale and George Knowles from Partners Personnel.