In the latest example of how indefensibly corrupt California’s workers’ compensation system has become, a former San Francisco city official pleaded guilty to embezzling $627,118 from municipal coffers by paying a fake company to “audit” workers’ comp claims.

Stanley Ellicott helped manage finances and technology for the San Francisco Department of Human Resources (DHR)’s Workers’ Compensation Division.

In his role as a DHR official, Ellicott paid Independent Auditors Group (IAG) to audit workers’ compensation claims. However, the audits never happened because IAG was a shell company registered to a friend of Ellicott’s.

In a separate case, prosecutors have also charged Ellicott with stealing taxpayer money by illegally steering city contracts to Rudolph Dwayne Jones, who served as a key staffer to Gavin Newsom when the presidential hopeful was mayor of San Francisco.  

It’s just another day in California workers’ comp.

DHR Official Plunders Workers’ Comp Division

According to a city press release, Ellicott was a senior manager in the DHR Workers’ Compensation Division Finance team. Using his “high-level access,” Ellicott funneled hundreds of thousands of dollars to the non-existent IAG.

Because the payments involved protected health information, Ellicott’s self-dealing fell outside the usual oversight of city spending, creating the perfect opportunity for graft. The city has since implemented tighter controls for municipal payment systems.

According to NBC, prosecutors alleged that Ellicott recruited a friend to register IAG, to which Ellicott funneled money that ultimately landed in Ellicott’s personal accounts in a way that appeared consistent with city payroll.

Newsom’s California: The Corruption Problem (Especially in Workers’ Comp)

Though he is not suspected of any crimes or wrongdoing, former San Francisco mayor, current California Governor, and anticipated Presidential candidate Gavin Newsom has presided over seriously shady dealings.

In a separate investigation from the workers’ comp case, prosecutors allege that Ellicott received kickbacks in exchange for steering grant money to a co-conspirator, city fixer Rudolph Dwayne Jones. According to the San Francisco Chronicle, Jones was an essential figure in Newsom’s mayoral administration.

Additionally:

• Governor Newsom’s former chief of staff was recently charged with funneling money to herself through the disused campaign fund of a former state attorney general.
• The state’s Insurance Commissioner is under investigation for spending taxpayer funds on luxury travel (while raising employers’ rates for workers’ comp coverage).

All of this occurs in an environment where insurers, vendors, and private equity profit by obstructing injured workers’ medical care and underpaying providers through both legal and illegal means.

There is significant rot in California, including in its workers’ compensation system. Mr. Ellicott’s adventures are only the latest example. We shudder to anticipate what we’ll find out next.

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