Refusal to Provide Workers’ Compensation is Expensive
Post 5240
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In Illinois Department of Insurance, Insurance Compliance Department v.USA Water And Fire Restoration, Inc., And Nicholas Pacella, Individually And As Officer, Nos. 23WC021808, 18INC00228, No. 25IWCC0467, the Illinois Department of Insurance (Petitioner) initiated an investigation after the Injured Workers’ Benefit Fund (IWBF) was added to a pending workers’ compensation claim. The claim alleged a work-related injury during employment with the Respondents who failed to maintain workers’ compensation Insurance.
Company Overview:
USA Water & Fire Restoration, Inc. was incorporated on January 17, 2014, and dissolved on June 14, 2019, for failure to file annual reports and pay franchise taxes. It then operated under assumed names including USA Board Up & Glass Co. and USA Plumbing and Sewer. The business involved rehabilitating structures damaged by fire or water (e.g., remodeling, repairs), subjecting it to automatic coverage under the Illinois Workers’ Compensation Act (Act).
Officers/Agents:
Tad Christensen (who was later identified as the true officer) had a history of fraud (e.g., 2005 insurance fraud charges under Action Fire Restoration; prior imprisonment). The Commission took judicial notice of Christensen’s criminal history.
Employee Evidence:
Illinois Department of Employment Security (IDES) quarterly wage reports showed employees (up to 6) from Feb. 2016–Aug. 2017 and Oct. 2017–Apr. 2018; zero reported in Sep. 2017. Illinois Department of Revenue records confirmed business activity (e.g., 2017 tax return signed by Christensen) but incomplete filings.
Violation Periods:
145 total days without coverage while doing business and employing workers.
Key Testimonies
Antonio Smith (Petitioner Investigator, 8 years experience) confirmed company’s subjection to Act; that there was no insurance during violation periods.
Summary of Law - Jurisdiction and Coverage
Section 3(1) of the Act (820 ILCS 305/3):
Automatically subjects employers to the Act if engaged in “erection, maintaining, removing, remodeling, altering or demolishing of any structure.” The company’s fire/water restoration (remodeling damaged structures) qualified.
Section 4(a) of the Act (820 ILCS 305/4(a)):
Requires all covered employers to secure workers’ compensation coverage via insurance or Commission-approved self-insurance.
Penalties and Culpability
Section 4(d) of the Act (820 ILCS 305/4(d)): For knowing/willful failure to comply with §4(a):
1. Civil penalty up to $500 per day per violation (post-1989 amendments).
2. Minimum $10,000.
3. Each day is a separate offense.
4. Personal liability for corporate officers/directors (e.g., Christensen) if they knowingly/willfully failed; primary liability on employer, secondary on officers if unpaid after 30 days.
Penalty Factors
1. Duration of violation (here: 145 days—significant but not continuous).
2. Number of claims (1 pending).
3. Prior awareness.
4. Number of employees (up to 6).
5. Ability to secure/pay coverage (no evidence of inability).
6. Mitigating circumstances (none alleged; intermittent prior coverage noted in mitigation).
7. Ability to pay penalty (no evidence presented).
Decision and Rationale
Findings:
The Company and Christensen knowingly/willfully violated §4(a) and Rule 9100.90 during 145 days (employees present, business active, no coverage/self-insurance). Violation was “knowing/willful” by inference from ignored notices, history of lapses, and non-appearance.
Penalty Assessed:
Maximum $500/day × 145 days = $72,500 against USA Water & Fire Restoration, Inc., and Tad Christensen (personally as officer). Exceeds minimum $10,000; justified by duration, claim, and awareness, tempered slightly by non-continuous lapses.
Enforcement:
Payable within 30 days by certified check/money order to Commission. Enforceable as circuit court judgment; judicial review per §19(f) of Act (bond fixed at $75,000). Debt owed to State.
ZALMA OPINION
Workers’ Compensation systems allow injured workers to obtain compensation for work related injuries without needing to prove anyone was responsible for the injury. It is a crime in almost every state to fail to report accurately employees for workers’ compensation insurance and a failure to provide any coverage requires punishment.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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Montana County Attorney Admits to Insurance Fraud & Is Only Suspended from Practice for 60 Days
Post 5251
Read the full article at https://lnkd.in/gnBaCjmv, see the video at https://lnkd.in/gfpVsyAd and at https://lnkd.in/gC73Nd8z, and at https://zalma.com/blog plus more than 5250 posts.
A Lawyer Who Commits Insurance Fraud and Pleas to a Lower Charge Only Suspended
In The Matter Of: Naomi R. Leisz, Attorney at Law, No. PR 25-0150, Supreme Court of Montana (December 23, 2025) the Montana Office of Disciplinary Counsel (ODC) filed a formal disciplinary complaint with the Commission on Practice (Commission) against Montana attorney Naomi R. Leisz.
On September 25, 2025, Leisz tendered a conditional admission and affidavit of consent. Leisz acknowledged the material facts of the complaint were true and she had violated the Montana Rules of Professional Conduct as alleged by ODC.
ADMISSIONS
Leisz admitted that in April 2022, her minor son was involved in a car accident in which he hit a power pole. Leisz’s son ...
Montana County Attorney Admits to Insurance Fraud & Is Only Suspended from Practice for 60 Days
Post 5251
Read the full article at https://lnkd.in/gnBaCjmv, see the video at https://lnkd.in/gfpVsyAd and at https://lnkd.in/gC73Nd8z, and at https://zalma.com/blog plus more than 5250 posts.
A Lawyer Who Commits Insurance Fraud and Pleas to a Lower Charge Only Suspended
In The Matter Of: Naomi R. Leisz, Attorney at Law, No. PR 25-0150, Supreme Court of Montana (December 23, 2025) the Montana Office of Disciplinary Counsel (ODC) filed a formal disciplinary complaint with the Commission on Practice (Commission) against Montana attorney Naomi R. Leisz.
On September 25, 2025, Leisz tendered a conditional admission and affidavit of consent. Leisz acknowledged the material facts of the complaint were true and she had violated the Montana Rules of Professional Conduct as alleged by ODC.
ADMISSIONS
Leisz admitted that in April 2022, her minor son was involved in a car accident in which he hit a power pole. Leisz’s son ...
Insurer’s Exclusion for Claims of Assault & Battery is Effective
Post 5250
Read the full article at https://lnkd.in/gBzt2vw9, see the video at https://lnkd.in/gEBBE-e6 and at https://lnkd.in/gk7EcVn9, and at https://zalma.com/blog plus more than 5250 posts.
Bar Fight With Security is an Excluded Assault & Battery
In The Cincinnati Specialty Underwriters Insurance Company v. Mainline Private Security, LLC, et al., Civil Action No. 24-3871, United States District Court, E.D. Pennsylvania (December 16, 2025) two violent attacks occurred in Philadelphia involving young men, Eric Pope (who died) and Rishabh Abhyankar (who suffered catastrophic injuries). Both incidents involved security guards provided by Mainline Private Security, LLC (“Mainline”) at local bars. The estates of the victims sued the attackers, the bars, and Mainline for negligence and assault/battery. The insurer exhausted a special limit and then denied defense or indemnity to Mainline Private Security.
INSURANCE COVERAGE
Mainline had purchased a commercial ...
Court Must Follow Judicial Precedent
Post 5252
Read the full article at https://www.linkedin.com/pulse/sudden-opposite-gradual-barry-zalma-esq-cfe-h7qmc, see the video at and at and at https://zalma.com/blog plus more than 5250 posts.
Insurance Policy Interpretation Requires Application of the Judicial Construction Doctrine
In Montrose Chemical Corporation Of California v. The Superior Court Of Los Angeles County, Canadian Universal Insurance Company, Inc., et al., B335073, Court of Appeal, 337 Cal.Rptr.3d 222 (9/30/2025) the Court of Appeal refused to allow extrinsic evidence to interpret the word “sudden” in qualified pollution exclusions (QPEs) as including gradual but unexpected pollution. The court held that, under controlling California appellate precedent, the term “sudden” in these standard-form exclusions unambiguously includes a temporal element (abruptness) and cannot reasonably be construed to mean ...
Lack of Jurisdiction Defeats Suit for Defamation
Post 5250
Posted on December 29, 2025 by Barry Zalma
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He Who Represents Himself in a Lawsuit has a Fool for a Client
In Pankaj Merchia v. United Healthcare Services, Inc., Civil Action No. 24-2700 (RC), United States District Court, District of Columbia (December 22, 2025)
FACTUAL BACKGROUND
Parties & Claims:
The plaintiff, Pankaj Merchia, is a physician, scientist, engineer, and entrepreneur, proceeding pro se. Merchia sued United Healthcare Services, Inc., a Minnesota-based medical insurance company, for defamation and related claims. The core allegation is that United Healthcare falsely accused Merchia of healthcare fraud, which led to his indictment and arrest in Massachusetts, causing reputational and business harm in the District of Columbia and nationwide.
Underlying Events:
The alleged defamation occurred when United ...
Zalma’s Insurance Fraud Letter
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ZIFL Volume 29, Issue 24
Subscribe to the e-mail Version of ZIFL, it’s Free! https://visitor.r20.constantcontact.com/manage/optin?v=001Gb86hroKqEYVdo-PWnMUkcitKvwMc3HNWiyrn6jw8ERzpnmgU_oNjTrm1U1YGZ7_ay4AZ7_mCLQBKsXokYWFyD_Xo_zMFYUMovVTCgTAs7liC1eR4LsDBrk2zBNDMBPp7Bq0VeAA-SNvk6xgrgl8dNR0BjCMTm_gE7bAycDEHwRXFAoyVjSABkXPPaG2Jb3SEvkeZXRXPDs%3D
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/
Zalma’s Insurance Fraud Letter
Merry Christmas & Happy Hannukah
Read the following Articles from the December 15, 2025 issue:
Read the full 19 page issue of ZIFL at ...
