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Motel proprietor booked for insurance fraud

POSTED September 24, 2010 9:10 p.m.
A Modesto motel owner was arrested on allegations of insurance fraud, as a result of an investigation by the California Department of Insurance.

Muhammad Hassan Raza, 36, part owner of the Vagabond Inn in Modesto, was arrested on suspicion he committed workers’ compensation insurance fraud, according to insurance investigators.

The arrest stems from a workers’ compensation claim made by one of Raza’s employees.

On Aug. 27, 2009, one of the Vagabond Inn employees was the victim of a sexual assault while working at the Vagabond Inn. Raza provided the name of the workers’ compensation insurance carrier to the injured employee’s family as First Comp. It was determined the Vagabond Inn was previously insured by First Comp but that policy had been cancelled on Dec. 10, 2008, due to non-payment of premium. The injured employee received treatments through her private health insurance plan and Raza paid for the ambulance bill and some of the other co-payments and bills.

On Sept. 17, 2009, Raza applied for a workers’ compensation insurance policy with State Farm Insurance. During the application process, Raza was asked if the Vagabond Inn had any workers’ compensation injuries, whether insured or not, within the last three years. Raza allegedly answered that they had an injury in 2000, but he did not disclose the injury on Aug. 27, 2009.

At the end of November 2009, the injured employee reported that Raza told her that he would give her money if she dropped her claim. The injured employee retained an attorney and ultimately filed a claim with the Department of Industrial Relations Uninsured Employers Fund.

According to the Department of Insurance, Raza admitted to detectives that he knew he was supposed to have workers’ compensation insurance and that he did not have insurance at the time of the injury because he did not pay the bill. He further said the reason why he provided First Comp as the insurance carrier to the injured worker’s family was because he was negotiating with First Comp and believed he could get the policy reinstated. Raza admitted he paid the injured worker’s bills and paid her salary while she was unable to work because he felt guilty but denied offering her money in exchange for her dropping her claim.

"If you fail to maintain the appropriate workers’ comp insurance for your business, you are not only breaking the law – you are putting your employees and yourself at financial risk," said Commissioner Steve Poizner.

This case is being prosecuted by the Stanislaus County District Attorney’s Office.

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