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A former claims adjuster who worked for a company in Alaska that has a state contract to process workers compensation claims testified to an special prosecutor that Gov. Sarah Palin's office requested that the firm deny a benefits claim filed by Palin's ex brother-in-law in the spring of 2007.

The claims adjuster, Johanna Grasso, was interviewed by Steve Branchflower, the special prosecutor appointed in July to investigate whether Palin fired Public Safety Commissioner Walt Monegan because he refused to fire Palin's former brother-in-law, Mike Wooten, an Alaska state trooper who was engaged in a bitter divorce and child custody dispute with Palin's sister.

Earlier this month, Branchflower had spoken with Murlene Wilkes, who runs Harbor Adjustment Service, where Grasso was employed, and questioned whether she was pressured by Palin or anyone in the governor's office to deny workers compensation claim filed by Wooten. Wilkes told Branchflower there wasn't any pressure to reject the claim.

But then Grasso contacted a tip line set and left a message stating that she recalled that Wilkes told her Palin's office wanted Wooten's claim denied.

Branchflower contacted Grasso and under oath she testified that Wilkes told her Palin's office did say that Wooten's workers compensation claim should be denied.

However, Wilkes's sister, Carol Lindsey, in a series of email exchanges, vehemently denied that her sister changed her story during her testimony. Lindsey said the suggestion that Wilkes recanted her previous statement was an "outright lie." 

"I can only say that [Murlene] will tell anyone and everyone who asks her that she gave a statement and she has never changed that statement," Lindsey said. "Beyond that I have no information. The story that she has changed her statement is a lie. You could ask her."

A message left for Wilkes at Harbor Adjustment late Wednesday was not returned. Her attorney, Robert Erwin, a former Alaska Supreme Court justice, was out of the office Wednesday afternoon and did not return a message left for him. 

Erwin's daughter, attorney Roberta Erwin, represented Palin's sister, Molly McCann, in divorce proceedings from Wooten.

Lindsey did not say whether Wilkes told her the substance of her testimony.

"I do not know the particulars of the case as this is a confidential matter," Lindsey said in an email.

However, in a transcript of a conversation between Frank Bailey, Palin's director of boards and commissions, and Alaska State Trooper Lt. Rodney Dial, Bailey confirms that the governor's office interceded to some degree in Wooten's workers compensation after Todd Palin took the photograph of Wooten on a "snowmachine". 

"The situation where [Wooten] declared workers comp, but then was caught on an eight-mile snowmachining [sic] trip days - days after, you know, that - that started coming up there," Bailey said. "So we collected statements that we forwarded on to workers comp."

"Frank Bailey was getting people to say that [Wooten] was lying on his workers comp form," Cyr said. "The governor's family was following Mike around everywhere. They forwarded that information to the workers comp division."

Wilkes recently succeeded in renewing her company's $1.2 million state contract despite lower competing bids. When the contract was renewed this year, Wilkes's firm got a raise to $1.5 million even though there were at least three other bids that came in at $1.2 million.

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