Daily News for October 8th, 2026

• From "Job Killers" to "Cost Drivers" - CalChamber's Legislative Reports
  on October 8, 2026 at 7:22 AM

  The California Chamber of Commerce reported on October 7, 2026 that its 2026 Affordability Agenda produced strong results for business. Of 31 bills it labeled "Cost Drivers" this year, only one was signed into law. The year-end report is the second under a framework that has taken the place of the chamber's best-known advocacy tool, the annual "Job Killer" list, which CalChamber last published as a standalone list in 2024.
  
  For more than 25 years, the Job Killer label was CalChamber's way of marking the legislation it considered most damaging to employment and economic growth in California. The list began in 1997 with 57 bills, according to a May 2024 Capitol Weekly analysis, which counted 844 bills tagged through 2023, of which 64 became law. CalChamber has described the record as more than 93 percent of tagged bills halted. The final list, for 2024, contained 18 bills. In its October 2024 wrap-up, CalChamber reported that only one of them reached the governor: SB 399, which restricts mandatory employer meetings on political and religious matters. It was signed.
  
  The same Capitol Weekly analysis noted that the list had shrunk to its smallest size in more than two decades and questioned how much it still mattered. An unnamed longtime Capitol lobbyist told the publication the label counts mainly when a bill needs Republican votes, which is rarely the case under a Democratic supermajority. California Business Roundtable President Rob Lapsley, a former chamber political director, defended the list as a way to focus on bills with the broadest impact on employers. Then-Senator Steve Glazer, whose digital advertising tax bill carried the tag, said it made the chamber's advocacy "a lot less effective" on narrowly drafted measures.
  
  The shift came in April 2025, when CalChamber announced its first Affordability Agenda. The new framework sorts legislation into two groups: Cost Drivers, which CalChamber says raise costs for businesses and consumers, and Cost Cutters, which it says lower them. The initial 2025 release identified 10 Cost Drivers and three Cost Cutters. CalChamber said the Job Killer list had served it well, but that a focus on jobs alone was no longer enough. President and CEO Jennifer Barrera said that "California businesses and consumers alike are focused on the affordability of everyday life," and pointed to the 2024 election as showing that affordability was a leading concern for voters.
  
  The timing tracked a broader change in Sacramento. After Democrats lost legislative seats and voters rejected several progressive ballot measures in November 2024, Assembly Speaker Robert Rivas urged lawmakers to frame their bills around affordability, CalMatters reported in February 2025. A CalChamber executive vice president welcomed the focus in that report and called for bills that reduce costs and regulation for businesses and customers.
  
  CalChamber has not formally announced the end of the Job Killer list. Its Job Killer page still links to lists from 2021 through 2024 alongside the current Affordability Agenda, and CalChamber describes the agenda as building on the Job Killer lists while also weighing regulatory burdens and incentives for economic growth. In practice, the Affordability Agenda has been its headline bill-tracking tool for the past two sessions. CalChamber said in March 2026 that all but one of its 2025 Cost Drivers failed to move forward.
  
  The 2026 agenda launched in March with nine Cost Drivers and two Cost Cutters, and grew over the session to 31 Cost Drivers and six Cost Cutters. Barrera said at the launch that no bill should come up for a vote this year "without taking stock of its impact." The Cost Drivers ranged across air quality, antitrust, climate liability, energy, health care, privacy, taxation and employment. Bills restricting artificial intelligence and automated decision systems in the workplace made up the largest group of employment measures.
  
  According to CalChamber's year-end report, only two Cost Drivers reached Governor Gavin Newsom. He signed AB 2646 by Assemblymember Maggy Krell, which sets an industry-specific minimum wage of 19.75 dollars an hour for H-2A agricultural workers and comparable domestic workers in the same county. CalChamber says the law will raise farm labor costs and, eventually, food prices. He vetoed AB 2575 by Assemblymember Liz Ortega, which would have imposed disclosure and liability rules on the use of AI in health care facilities. Two Cost Cutters also reached the governor. He signed AB 1693 by Assemblymember Rick Zbur, which streamlines permitting for retail tenant improvements by letting licensed architects or engineers certify code compliance and setting deadlines for local action. He vetoed AB 2124 by Assemblymember Blanca Pacheco, which would have required independent review of the effect of energy legislation on utility ratepayers, citing existing analytical resources and the lack of budget funding.
  
  The headline tally does not capture every bill the chamber fought. During the session CalChamber removed the Cost Driver tag from several bills after amendments while continuing to oppose some of them and urging vetoes. Three of those were signed on September 30 as part of a package of workplace AI and surveillance laws, according to KQED and the governor's office. SB 947 by Senator Jerry McNerney bars employers from relying solely on an automated system to discipline or fire workers. SB 951 by Senator Eloise GÓmez Reyes requires notice when technology displaces workers in a layoff, relocation or termination. AB 1331 by Assemblymember Mark GonzÁlez Elhawary restricts certain workplace surveillance. California Federation of Labor Unions President Lorena Gonzalez praised the package as putting "guardrails on AI at work." KQED reported that CalChamber did not respond to a request for comment. Other Cost Drivers died before reaching the governor, including AB 2564 on litigation exposure for discount offers and AB 1018 on impact assessments for automated decision systems.
  
  For the workers' compensation community, the 2026 list included one claims measure. CalChamber tagged SB 632 by Senator Jesse ArreguÍn, which would have created presumptions of industrial injury for hospital employees providing direct patient care, and the bill did not advance. The year's significant comp changes, including the Subsequent Injuries Benefits Trust Fund reforms in SB 171, came instead through the state budget process and were not part of the agenda.
  
  The "Cost Driver" and "Cost Cutter" labels and the descriptions of each bill's effects are CalChamber's own advocacy positions. Supporters of the bills generally regard them as worker, consumer or public health protections, and the chamber's tallies count only bills that still carried its tags at the end of the session. Readers should consult CalChamber's Affordability Agenda bill list and the individual bills for complete details and final status.

• Blue Cross Says AI Coding Added $942 Million to Hospital Bills
  on October 8, 2026 at 7:22 AM

  Workers' compensation carriers and self-insured employers pay hospital bills under fee schedules built on the same diagnosis codes that group health insurers use, so a dispute now playing out between the nation's largest insurer federation and the hospital industry deserves close attention from claims and bill review professionals. On September 24, 2026, the Blue Cross Blue Shield Association (BCBSA) released a claims analysis concluding that hospitals' growing use of artificial intelligence to document and code inpatient stays has made patients look sicker on paper without any matching change in the care they received. As Fierce Healthcare reported, the association put the price of that shift at an estimated $942 million in added costs to Blue plans over 2024 and 2025, measured against a 2023 baseline.
  
  To follow the argument, it helps to understand how a hospital stay is priced. Most inpatient admissions are paid as a single lump sum determined by a diagnosis-related group, or DRG. Each DRG family typically comes in tiers. The same operation pays one amount for an uncomplicated patient, more if the record lists a "complication or comorbidity," and more still if it lists a "major" one. A single secondary diagnosis, such as anemia from blood loss, a low sodium level, or malnutrition, can move a stay up a tier and add thousands of dollars to the payment even though the surgery itself is unchanged.
  
  That is where the new software comes in. AI revenue cycle tools scan physician notes, laboratory results and other chart entries for conditions that qualify as secondary diagnoses, and ambient "scribe" products listen to patient encounters and draft the clinical note. Hospitals say these tools capture conditions that busy clinicians always treated but did not always write down. Insurers say they are finding billable diagnoses that made no difference to the patient's care.
  
  BCBSA's analysis, a short white paper covering claims from the first quarter of 2023 through the end of 2025, found that the share of inpatient cases billed to Blue plans as medically complex rose from 37 percent to 40 percent. About 70 percent of the increase came from more than 55,000 additional cases in which a secondary diagnosis pushed the claim into a higher-paying DRG. Those cases accounted for $653 million of the total, or roughly $11,000 per case. The paper used major bowel surgery as its example: claims in the highest severity tier climbed to 22.7 percent while uncomplicated cases fell from 36.6 percent to 32.8 percent.
  
  The association's central evidence is what it calls a disconnect between coding and treatment. Hospitals in the top quarter for growth in complex coding showed similar or lower rates of intensive care use, transfusion, reoperation and length of stay than their peers. For acute blood loss anemia, which BCBSA describes as a common "bump" code, the hospitals that diagnosed it most often actually transfused those patients less often, 16.9 percent compared with 19.3 percent elsewhere. Luke Chalker, the association's senior vice president of product and data science, told reporters the data showed "no change in corresponding care for a more complex patient." The September paper follows a March 2026 BCBSA and Blue Health Intelligence study that attributed about one-fifth of a 9 percent rise in per-member inpatient costs to coding intensity.
  
  Hospitals reject the conclusion. In an October 5 response, the American Hospital Association said patients today are older and more clinically complex and that AI tools help providers record their conditions accurately. "The question is whether the patient's medical record supports those diagnoses," two AHA policy executives wrote, noting that BCBSA reviewed claims rather than charts and did not identify which claims actually involved AI. The AHA made similar points in an August fact sheet, and in a statement to CNBC it criticized insurers for raising coding concerns while relying on their own automated downcoding and denial systems.
  
  The study's limits are real, and BCBSA concedes the main one. It relied on claims data, not medical records, so it cannot show that any particular diagnosis was unsupported. The link to AI rests on timing and on survey figures showing that most hospital systems now use AI somewhere in the revenue cycle, not on claims traced to specific software. The white paper is not peer reviewed, it names no hospitals, and it arrived during a period of difficult contract negotiations between plans and hospital systems. Independent researchers had nonetheless raised the same concern before the insurers did. A January 2026 viewpoint in JAMA Health Forum warned that ambient scribes marketed for their ability to capture more and more severe diagnoses could drive spending upward, and an April report from the Peterson Health Technology Institute described a payer-provider AI "arms race" that raises billing intensity without fixing underlying inefficiency.
  
  For workers' compensation payers the relevance is direct, even though the study examined commercial health claims and its examples were bowel surgery and, earlier, maternity care. California's Official Medical Fee Schedule prices inpatient hospital stays using Medicare's DRG system with a multiplier, as do the fee schedules of many other states. The DRG families that dominate comp inpatient spending, including spinal fusion, major joint replacement and fracture repair, are tiered by complications and comorbidities in the same way. Acute blood loss anemia, the code BCBSA singled out, is one of the diagnoses most frequently recorded after orthopedic surgery. A hospital that deploys AI coding software applies it to every payer's claims, not just those of Blue plans.
  
  That raises several practical points. First, bill review programs that validate only the fee schedule calculation will not catch severity drift, because a correctly priced DRG can still rest on a secondary diagnosis the record does not support. Clinical validation, which compares the coded diagnoses against the treatment actually delivered, is the test BCBSA applied in aggregate and the one payers can apply claim by claim. Second, any objection must still be made within the deadlines and explanation-of-review requirements of Labor Code § 4603.2, and unresolved payment disputes proceed through second review and independent bill review. Third, the issue cuts both ways. Applicants' attorneys and providers will point out that more complete documentation of comorbidities is legitimate and may bear on apportionment, causation and future medical needs, while defense counsel may question whether a newly charted secondary condition was ever clinically significant.
  
  Payers should also expect scrutiny of their own automation. According to an Orthopedics This Week commentary, Indiana now bars health plans from using an automated tool as the sole basis for downcoding a claim without reviewing the medical record, and lawmakers in California and several other states introduced downcoding bills this year. Those measures are aimed at health plans, but they signal where regulators are heading.
  
  BCBSA says further analyses are coming, including outpatient care and additional DRGs, and orthopedic and spine procedures are obvious candidates. The broader cost pressure is not in dispute. CNBC reported that benefits consultant Marsh projects employer health costs per employee will rise 8.2 percent in 2027. Whether AI-assisted coding represents accurate documentation finally catching up with reality or technology-enabled upcoding is a question the claims data alone cannot answer. For comp payers, the prudent step is to find out whether their bill review vendor tracks DRG severity mix over time and tests secondary diagnoses against the treatment record.

• Psychologist's License Probation for WC Fraud Conviction Upheld
  on October 7, 2026 at 12:14 PM

  Morella Bombardini has been licensed as a psychologist in California since 2011. On November 4, 2018 she was convicted in Los Angeles County, on a plea of no contest, of a misdemeanor violation of Insurance Code § 1871.4, subdivision (a)(1), the workers' compensation fraud statute. She was ordered to perform community service and pay more than 11,000 dollars in restitution to her employer. The conviction was dismissed in 2019 under Penal Code § 1203.4.
  
  The opinion gives only a limited account of the underlying offense. The claim arose from her work as a psychologist at Kaiser Permanente and involved carpal tunnel syndrome. The criminal complaint originally alleged three felony counts, and the court's minute order placed the incident on or about July 11, 2014. The Board found that she made a fraudulent workers' compensation claim in connection with that employment, but the opinion does not say which statement or representation was false. Bombardini testified that she left Kaiser because she was in severe pain and filed the claim to obtain physical therapy for her hands. She also referred to an accusation that she had lied in a deposition about carpal tunnel syndrome, and said she wanted to show that she did have the condition. The Board treated the conviction as a crime substantially related to the practice of psychology because it involved fiscal dishonesty.
  
  The Board of Psychology brought a disciplinary accusation based on the conviction. It also alleged that she had obtained her license by fraud by failing to disclose a 1984 conviction for writing checks with insufficient funds, but that charge was dismissed because the Board had known of the 1984 conviction before it licensed her. After a hearing held remotely in 2020, at which Bombardini represented herself, the Board placed her license on probation for five years, effective April 23, 2021. The conditions included a practice monitor, an ethics examination, coursework, quarterly reports and reimbursement of investigation costs. She did not seek judicial review within the 30 days allowed by Government Code § 11523.
  
  Bombardini moved to Maryland in 2021 and to Oregon in 2022, which tolled the probation, and returned to California in 2023. In July 2023 she petitioned the Board for early termination of probation. At the administrative hearing she maintained that she had never intended to commit fraud and that she had in fact suffered from carpal tunnel syndrome. The Board denied the petition in a decision effective May 23, 2024. It found she had not shown rehabilitation by clear and convincing evidence because she continued to deny her criminal conduct, claimed she was being unfairly punished, and described herself as a victim of circumstances.
  
  Bombardini filed a petition for writ of administrative mandate under Code of Civil Procedure § 1094.5 in Sacramento County Superior Court, challenging both the 2021 probation order and the 2024 denial. Judge Jennifer K. Rockwell denied the petition in its entirety. The court ruled that the challenge to the 2021 decision was untimely and, applying the substantial evidence test, that the 2024 decision was supported by the evidence. Bombardini appealed.
  
  In the partially published case of Bombardini v. Board of Psychology, No. C104172 (October 2026), the Third Appellate District affirmed the judgment denying the writ petition. The opinion is certified for publication except for parts II, III and IV of the Discussion, so only part I, on the standard of review, may be cited as precedent.
  
  In the published portion, the court addressed which test a trial court applies when a licensee seeks review of a board's refusal to lift probation early. The answer depends on whether the decision affects what the cases call a "fundamental vested right." A person who already holds a professional license has such a right to continue practicing, so a decision revoking, suspending or restricting the license receives independent judgment review, in which the trial court reweighs the evidence. The court cited Hughes v. Board of Architectural Examiners (1998) 17 Cal.4th 763 for that principle.
  
  Decisions on applications for a license are treated differently. There, courts have largely deferred to the agency's expertise and ask only whether substantial evidence in the whole record supports its findings, as explained in Bixby v. Pierno (1971) 4 Cal.3d 130. The same deferential review applies to a person seeking reinstatement of a revoked license, who has no greater rights than a first-time applicant under Flanzer v. Board of Dental Examiners (1990) 220 Cal.App.3d 1392.
  
  The court placed a petition for early termination of probation in the second category. Bombardini was not defending her license against new discipline. She was asking the Board to remove restrictions that were already final, which the court considered closer to an application for an unrestricted license. Whether a probationer can safely return to unsupervised practice is, like initial qualification, a judgment that calls on the board's expertise. The trial court therefore applied the correct test.
  
  On the merits, the court found substantial evidence for the Board's conclusion that rehabilitation had not been shown. The Board's disciplinary guidelines look both to the licensee's state of mind, meaning appreciation of the gravity of the misconduct and remorse, and to a course of conduct showing the public would be safe. Citing Seide v. Committee of Bar Examiners (1989) 49 Cal.3d 933, the court said that acknowledging wrongdoing is an essential step toward rehabilitation. Bombardini's statements that she never intended fraud, that she was being treated as a criminal, and that her attorneys had advised the no contest plea supported the Board's finding that she had not accepted responsibility. Compliance with probation terms carried little weight, because good conduct is expected of someone under supervision. Supporting letters were discounted because they predated the conviction or came from authors who did not appear to know the full facts.

• SIBTF Overhaul Leads Short List of 2026 Legislative Changes
  on October 7, 2026 at 12:14 PM

  California's 2026 legislative session produced two enacted workers' compensation measures that claims administrators, employers and practitioners will carry into 2027: a budget trailer bill that rewrites eligibility for the Subsequent Injuries Benefits Trust Fund (SIBTF) and makes the current reconsideration deadline permanent, and a short bill that keeps prepaid card indemnity payments available indefinitely. Several other closely watched proposals, including a permanent disability rate increase, did not reach the governor. The governor's deadline to act on bills passed this year was September 30.
  
  This report was compiled from the chaptered bill digests, the governor's signing announcements and legislative tracking by the Commission on Health and Safety and Workers' Compensation (CHSWC). The California Workers' Compensation Institute has issued its own summary of the 2026 session as a Bulletin, which is available to CWCI members and subscribers through its Bulletins page.
  
  The centerpiece is Senate Bill 171, a labor budget trailer bill approved by Governor Gavin Newsom on July 13, 2026 and chaptered as Chapter 83, Statutes of 2026. As a budget measure it took effect immediately. The Legislative Counsel's digest explains that case law had treated a prior condition as "labor disabling" if it could have supported an award had it been industrial, without requiring any showing of lost earnings. SB 171 replaces that approach with a statutory definition: the impairment must have caused a loss of earnings, interfered with the employee's work in their occupation, or otherwise had a demonstrable impact on the ability to work.
  
  The bill also changes how the preexisting disability is proved. Its existence at the time of the later industrial injury must be shown by substantial evidence drawn from medical records, testimony and other evidence that already existed before that injury. In determining whether the subsequent injury meets the statutory threshold, the bill excludes any adjustment for future earning capacity or the corresponding adjustment factor. It sets a filing deadline for SIBTF claims of five years from the date of the subsequent injury or six months from the resolution of permanent disability in the underlying claim, whichever is later.
  
  How the new rules apply to the existing backlog was the most contested question. The digest states that claims filed on or before July 1, 2020, and claims that had reached a specified procedural status on or before June 1, 2026, are exempt from the changes, and that those provisions become inoperative on July 1, 2031 and are repealed on January 1, 2032.
  
  SB 171 makes administrative changes to the fund as well. The Director of Industrial Relations, as trustee of the SIBTF, replaces the State Compensation Insurance Fund as the entity that pays awards, and State Fund's authority to reimburse itself for related costs is deleted. A Senate Republican Caucus summary of the enacted budget reports 13 million dollars and 57 positions to work down backlogged SIBTF claims. That is in line with the 12.7 million dollars and 57 positions the administration requested in January, a request that CHSWC's June legislative update said would grow to 36.5 million dollars and 177 positions by fiscal year 2030-31.
  
  The reforms respond to rapid growth in the program. A July 2025 report by the Legislative Analyst's Office found a backlog of more than 25,000 claims and estimated lifetime benefit costs of 2 billion to 3 billion dollars for each annual cohort of claims, costs that are funded through assessments on employers.
  
  The second major workers' compensation provision in SB 171 concerns petitions for reconsideration under Labor Code § 5909. Since 2024, a petition has been deemed denied unless the Workers' Compensation Appeals Board acts within 60 days of the date the trial judge transmits the case to the Board. That rule was scheduled to expire on July 1, 2026, when the clock would again have started on the date the petition was filed. SB 171 removes the sunset, so the transmission-based deadline is now permanent.
  
  Two further provisions affect payers directly. Workers' compensation surcharges and assessments must now be paid by electronic funds transfer, and the bill imposes a 10 percent penalty on late or unpaid amounts and on payments not made electronically, with the penalties deposited in the Workers' Compensation Administration Revolving Fund. The bill also removes the Administrative Director of the Division of Workers' Compensation from a statutory salary schedule.
  
  The other enacted measure is Assembly Bill 1683, an Assembly Insurance Committee bill that the governor signed on July 6, 2026. Existing law allowed employers to deposit disability indemnity payments into prepaid card accounts only until January 1, 2027. AB 1683 extends that authorization indefinitely. CHSWC noted that the bill tracks the recommendation in its own report on prepaid card programs, approved in February. Because the bill is not an urgency measure, it takes effect January 1, 2027, the same day the prior authorization would have lapsed.
  
  Several bills that drew attention during the session were not enacted. Senate Bill 555 would have raised the weekly earnings range used to compute permanent partial disability indemnity from the current 240 to 435 dollars to a range of 363 to 658 dollars for injuries on or after January 1, 2027. Its first Assembly committee hearing, set for June 24, was canceled at the author's request and the bill did not advance. Assembly Bill 1576, a separate SIBTF reform vehicle, and Assembly Bill 1048, which would have required explanations of review to identify the contract behind a discounted payment and required physicians to sign requests for authorization, were both held in committee on August 13. CHSWC's update lists two more as having missed legislative deadlines: Assembly Bill 2098, on leave for medical treatment during work hours, and Senate Bill 632, which would have created injury presumptions for hospital employees providing direct patient care.
  
  The permanent disability question is likely to return. Business Insurance reported in July that the chief lobbyist for the California Coalition on Workers' Compensation told the group's conference that employers are preparing for negotiations in 2027 over permanent disability benefits, and will seek offsetting savings in areas such as cumulative trauma claims and medical-legal costs.

• Court Sets Rules for Use of Strict Liability in FEHA Cases
  on October 6, 2026 at 10:00 AM

  A California Court of Appeal has held, in an opinion certified for publication, that an employer is not strictly liable under the Fair Employment and Housing Act (FEHA) for sexual harassment by an employee who supervises other workers but has no supervisory authority over the plaintiff. In that situation the employer answers only under the negligence standard. The court described the question as one no California appellate case had directly decided.
  
  The plaintiff in this case, Jane Doe, returned to Wells Fargo in 2018 as a wealth advisor in its private bank division, where advisors assemble teams of specialists to serve high-net-worth clients. Eric Pagel was an investment strategist who handled portfolios for many of her clients and was one of the bank's top producers nationally. He was not her supervisor. Wells Fargo had not designated him a supervisor of anyone, and he could not hire, fire, or approve expenses or time off, although he gave input on the performance of the support associates who executed his trades and handled his scheduling.
  
  In January 2020, Doe, Pagel and several coworkers traveled to Bakersfield for client meetings and had dinner and drinks afterward. Doe says she blacked out that night, that Pagel later came to her hotel room, and that she was too intoxicated to consent to the sex that followed. Pagel maintains that she invited him and consented. About a month later Doe told a colleague who had been on the trip that Pagel had been harassing her, without mentioning an assault. That complaint was not escalated or investigated.
  
  On November 9, 2020, Doe reported harassment and assault to the bank's ethics hotline, to her direct supervisor and to law enforcement. Wells Fargo flagged the complaint for expedited investigation eight days later and placed Pagel on paid administrative leave. After a ten-month inquiry, the internal investigator issued a 28-page report finding the harassment and assault allegations unsubstantiated, but concluding that everyone at the dinner had violated the workplace conduct policy and that Pagel had violated the professionalism policy. Pagel received a final notice warning that further violations could lead to immediate termination.
  
  Doe sued Wells Fargo, Pagel and three other employees in Los Angeles County Superior Court in February 2023, alleging sexual harassment under FEHA and, against the bank, failure to prevent harassment and retaliation. Wells Fargo moved for summary judgment, arguing that it could not be strictly liable because Pagel never supervised Doe, and that it could not be liable in negligence because it responded promptly and appropriately once she complained. Doe's opposition argued that strict liability attaches to harassment by any supervisor, whoever that person supervises, and did not address the negligence standard. Judge Tony L. Richardson granted the motion on both grounds and entered judgment for the bank.
  
  In the published case of Doe v. Wells Fargo Bank, N.A., No. B344642 (October 2026), the Second Appellate District, Division Four, affirmed the judgment on Doe's appeal. Justice Tamzarian, as acting presiding justice, wrote for a unanimous panel. Only the harassment claim against Wells Fargo was before the court, because Doe's briefs did not address her other causes of action.
  
  The court began with the statute. Government Code § 12940, subdivision (j)(1) expressly sets a negligence standard for harassment by an employee other than an agent or supervisor, and the California Supreme Court inferred from that wording, in State Dept. of Health Services v. Superior Court (2003) 31 Cal.4th 1026, that employers are strictly liable when a supervisor is the harasser. The statute never uses the words strict liability, and the panel found that its text does not plainly answer whether "supervisor" means any supervisor or the plaintiff's supervisor. Because the definition in Government Code § 12926, subdivision (t) turns on a person's authority over other employees, the court reasoned that someone with no authority over the plaintiff is, as to her, simply a coworker.
  
  With no helpful legislative history, the court looked to the purpose of the rule. Strict liability exists because a supervisor wields employer-conferred power over the victim, which makes harassment harder to resist and report and justifies imputing the conduct to the employer. None of that is present when the harasser's authority runs only to other people. The panel also found that Doe's reading would produce arbitrary results: an employer would be strictly liable when a shop foreman harasses an executive, or when a mid-level manager harasses her own boss, but liable only in negligence when a senior non-supervisory employee harasses a junior one.
  
  The court read Health Services as consistent with this view. That opinion spoke of "the victim's supervisor" and cautioned that the supervisor must be acting in a supervisory capacity when the harassment occurs. Later Court of Appeal decisions said the same, including Chapman v. Enos (2004) 116 Cal.App.4th 920, Atalla v. Rite Aid Corp. (2023) 89 Cal.App.5th 294, and Kruitbosch v. Bakersfield Recovery Services, Inc. (2025) 114 Cal.App.5th 200. A person who does not supervise the plaintiff at all, the panel concluded, cannot be acting as her supervisor.
  
  Doe's contrary authorities did not persuade the court. Two Fair Employment and Housing Commission decisions from the 1980s (Dept. of Fair Employment and Housing v. Hart & Starkey, Inc., FEHC Dec. No. 84-23, and Dept. of Fair Employment and Housing v. Community Hospital of San Gabriel, FEHC Dec. No. 86-08) predated both Health Services and the statutory definition of supervisor, and the court declined to follow them. Massachusetts cases she cited involved harassers with authority over, or clearly senior to, the victim. To the extent the Illinois Supreme Court's decision in Sangamon County Sheriff's Dept. v. Illinois Human Rights Com. (2009) 233 Ill.2d 125, 908 N.E.2d 39 treats direct supervisory authority as irrelevant under an analogous statute, the panel respectfully disagreed.
  
  The holding has stated limits. The court assumed, without deciding, that Pagel supervised the associates, so it did not resolve whether giving input on reviews and directing support staff makes someone a FEHA supervisor. It emphasized that strict liability is not confined to a plaintiff's direct boss or those above that boss in the reporting chain, since the broad statutory definition can make others the plaintiff's supervisor as well. It also did not address liability for harassment by an employer's agent, a theory Doe did not raise.
  
  Finally, the court held that Doe forfeited her remaining theories. She did not argue on appeal that a triable issue existed on negligence, and her contention that Wells Fargo ratified Pagel's conduct was raised for the first time in her opening appellate brief. The panel declined to exercise its discretion to reach it. As a result, the opinion does not review whether the bank's handling of the February 2020 complaint or the length of its investigation met the negligence standard.

• Waiver of Right to Avoid Arbitration in Sexual Harassment Claims
  on October 6, 2026 at 10:00 AM

  A divided California Court of Appeal has held, in an opinion certified for publication, that an employee can waive the right to avoid arbitration under the federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), 9 U.S.C. §§ 401–402. The majority found waiver where the employee knew of a sex-based harassment claim, held it back for tactical reasons while opposing arbitration on other grounds, and raised it only after the trial court had sent the case to arbitration. One justice dissented.
  
  In this case DoorDash hired Andrew Chin in 2020. He took nine weeks of parental bonding leave in early 2023 and alleges that the company then retaliated against him: it denied him the same or a comparable position on his return, interfered with three further weeks of leave, and terminated him at the end of 2023. He also alleged that a superior repeatedly asked when he would take the rest of his leave. In February 2024 he sued in Los Angeles County Superior Court for violation of the California Family Rights Act, whistleblower retaliation, wrongful termination and unfair competition. The complaint contained no harassment claim.
  
  DoorDash moved to compel arbitration under an agreement covering any dispute arising from Chin's employment. Chin's written opposition argued only that no valid agreement existed. It did not mention sexual harassment, an amended complaint, or the EFAA. At the May 28, 2024 hearing, after a tentative ruling against him, his counsel said that if arbitration were ordered Chin would ask for leave to add a sexual harassment claim to avoid arbitration under federal law. The court ordered the whole action to arbitration, stayed the suit, and declined to allow an amendment at that time. Chin's writ petition was denied. In it he stated that he had left the harassment claim out of his complaint "for strategic purposes."
  
  Chin filed an arbitration demand in August 2024 and amended it in December 2024 to add a sex-based harassment claim under the Fair Employment and Housing Act (FEHA). He alleged that DoorDash encouraged women to take full parental leave while discouraging men through intimidation, ridicule and insults. The only specific incident alleged was the superior's repeated questioning already described in the 2024 complaint. He then asked the arbitrator to return the matter to court under the EFAA, missed a ten-day window the arbitrator gave him to petition the superior court, and in April 2025 filed a second lawsuit pleading the harassment claim and seeking a declaration that the arbitration agreement was invalid as to both suits.
  
  Three motions were heard in July 2025: Chin's motion to consolidate the two suits, his motion to invalidate the arbitration agreement under the EFAA, and DoorDash's motion to compel arbitration of the second suit. Judge Jon R. Takasugi said he was "not happy with the way this has gone" but believed the law required a ruling for Chin. He found that Chin had plausibly pleaded a sex-based harassment claim and had not waived the EFAA by asserting that claim in arbitration. He granted both of Chin's motions, denied DoorDash's, and so undid the earlier order compelling arbitration. The court did not address DoorDash's argument that Chin's conduct before that earlier order amounted to waiver. DoorDash appealed.
  
  In the published case of Chin v. DoorDash, Inc., No. B348844 (October 2026), the Second Appellate District, Division Eight, reversed all three orders and remanded with instructions to grant DoorDash's motion to compel arbitration. Justice Scherb wrote the majority opinion, joined by Justice Viramontes. Acting Presiding Justice Wiley dissented and would have affirmed. DoorDash was awarded its costs on appeal.
  
  The majority started from the statutory text. The EFAA does not void arbitration agreements automatically. It applies at the election of the person alleging harassment, and nothing in it displaces the ordinary rule that statutory rights can be waived. Chin did not argue otherwise. Reviewing an undisputed record de novo, the court assumed that waiver had to be shown by clear and convincing evidence.
  
  Waiver is the intentional relinquishment of a known right, and the majority explained that it can be implied from deliberate, tactical litigation conduct as well as from express words. It relied on California authority that grounds for resisting arbitration must be raised in court before the arbitration goes forward, citing Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1 and Cummings v. Future Nissan (2005) 128 Cal.App.4th 321. A party who knows of such a ground and keeps it in reserve loses it.
  
  Applying those principles, the majority found waiver on four points. Chin knew of the harassment claim in 2024, since the one specific incident he later relied on was already in his first complaint. He withheld it by his own account for strategic reasons, and conceded at oral argument that the fair inference was a plan to defeat the agreement entirely before turning to the EFAA. He opposed arbitration vigorously without invoking the statute, and his reference to "federal law" at the hearing came too late and explained nothing. He then waited almost a year to file the second suit. The majority also noted the cost of sending the parties back and forth between court and arbitration.
  
  The majority treated the Ninth Circuit's recent decision in Ding v. Structure Therapeutics, Inc. (9th Cir., Aug. 19, 2026, No. 25-1532) as supporting its result. Ding confirmed that EFAA rights may be waived under ordinary principles, but found no waiver where the plaintiff discovered her harassment claim during arbitration and invoked the statute as soon as she faced a motion to compel. The majority distinguished Quilala v. Securitas Security Services USA, Inc. (2025) 117 Cal.App.5th 75, where the complaint already pleaded harassment and the trial court raised the EFAA itself.
  
  Chin's remaining arguments were rejected. He could not avoid waiver by pointing out that no harassment claim had been pleaded before arbitration began, because withholding the claim was the deliberate choice that produced the waiver. His contention that trial counsel believed an amendment was barred once the motion to compel was filed had no support in the record. The court also declined to read the EFAA as a right to move between forums at will. Because the EFAA applies to an entire case, the waiver reached both the claims Chin pleaded and the one he withheld. The majority did not decide whether his allegations stated a harassment claim sufficient to trigger the statute.
  
  In dissent, Justice Wiley agreed that the delay and expense were regrettable and said he would be sympathetic to sanctions requiring plaintiff's counsel to reimburse the fees wasted. But he concluded that Chin never purposely gave up a court forum, since escaping arbitration was his aim throughout. In his words, "It looks more like a blunder," and a miscalculation is not a waiver.

• Civil Litigation Limited While Employer Negligence a WCAB Issue
  on October 5, 2026 at 1:24 PM

  Guadalupe Reyes-Cano was driving his employer’s tomato truck in the course of his employment when a vehicle driven by a Pacific Gas and Electric (PG&E) employee struck him. He received workers’ compensation benefits through his employer’s carrier, Federal Insurance Company (FIC). In April 2021, he sued PG&E and its driver for negligence. Their answer asserted, as an affirmative defense, that the negligence of others caused the crash. Separately, Reyes-Cano pursued his workers’ compensation claim before the Workers’ Compensation Appeals Board (WCAB), where he alleged his employer was negligent.
  
  FIC served a notice of lien for $208,778.08 in May 2023. Before mediation of the civil case, the PG&E defendants argued in their mediation brief that the employer was partly to blame, because the truck was 5,000 pounds over the legal weight limit and Reyes-Cano could not stop in time. FIC received that brief, and its attorney attended the mediation. The civil case settled in August 2023, but FIC’s lien was not resolved. At FIC’s request, Reyes-Cano’s attorney set aside $125,000 of the settlement in a client trust account, pending final resolution of the lien. The attorney later told FIC that the employer negligence issue would have to be litigated to determine the lien’s value. The money has stayed in the trust account ever since, and the employer negligence issue is still pending before the WCAB.
  
  FIC then sued Reyes-Cano in Sacramento County Superior Court for conversion, imposition of a constructive trust, money had and received, and money paid. It also sought punitive damages.
  
  The trial court granted summary adjudication on every cause of action and entered judgment for Reyes-Cano. It reasoned that because the WCAB had not yet decided whether the employer’s negligence contributed to the injuries, the amount FIC was owed was not yet a specific, identifiable sum. A specific, identifiable sum is required for a conversion claim, and FIC’s other claims rested on the same premise. The court also overruled FIC’s evidentiary objections because they were not filed in the required format.
  
  In the unpublished case of Federal Insurance Co. v. Reyes-Cano, No. C103530 (September 2026). The Court of Appeal affirmed the summary judgment in full and awarded Reyes-Cano his costs on appeal.
  
  The panel rejected each of FIC’s four arguments. First, the court found no abuse of discretion in overruling FIC’s evidentiary objections. FIC did not dispute that it failed to comply with California Rules of Court, rule 3.1354, which requires objections to be filed separately and to identify and quote the material objected to. On appeal, FIC also failed to identify which objections were at issue or explain why they had merit, so the court treated the argument as forfeited.
  
  Second, and most significant for carriers, the court rejected FIC’s argument that the possibility of employer negligence was irrelevant. FIC’s position was that the PG&E defendants never properly pleaded employer negligence as an affirmative defense, so its lien was protected and the WCAB’s eventual negligence finding would affect only its credit against future benefits. The court agreed that the PG&E defendants had not specifically pleaded employer negligence, citing Difko Admin. (US) Inc. v. Superior Court (1994) 24 Cal.App.4th 126. It noted, however, that FIC had actual knowledge of the issue from the mediation. Because the issue was never resolved in the civil case, the court held, FIC could rely on its lien rather than intervene.
  
  But the defective pleading did not protect the lien from reduction. It simply meant the third-party defendants settled without seeking to offset their own liability against the employer’s share of fault. Under Roe v. Workmen’s Comp. Appeals Bd. (1974) 12 Cal.3d 884, when employer negligence has not been decided in the third-party action, the employee may have it decided by the WCAB. The court rejected FIC’s attempt to confine that determination to future credits. The WCAB’s authority under Labor Code § 3861 reaches the employer’s compensation liability as a whole, including reimbursement. The court also relied on Hone v. Climatrol Industries, Inc. (1976) 59 Cal.App.3d 513, which holds that the WCAB has exclusive jurisdiction to decide the validity of an employer’s lien when it is the employee, not the third party, who seeks to prove employer negligence.
  
  Under Associated Construction & Engineering Co. v. Workers’ Comp. Appeals Bd. (1978) 22 Cal.3d 829, a concurrently negligent employer recovers only to the extent its compensation outlay exceeds its proportionate share of the employee’s total damages. Allowing FIC to collect its full lien without first resolving the employer’s fault, the court said, would let it recover all benefits paid regardless of that fault. That would conflict with the policy that a negligent employer should not profit from its own wrong. The court called the outcome equitable as well. If the employer is found free of fault, FIC can recover what it paid and seek credit against future benefits; if the employer is found negligent, FIC’s recovery will be reduced accordingly.
  
  Third and fourth, the court agreed that FIC could not establish a triable issue on any of its claims. Under Voris v. Lampert (2019) 7 Cal.5th 1141, money can be the subject of a conversion claim only when a specific sum capable of identification is involved. FIC’s constructive trust and common count claims likewise depended on its right to a specific sum. FIC argued that Labor Code § 3860(b) makes a settlement subject to the employer’s full reimbursement claim. It also argued that the agreed $125,000 set-aside was, by definition, identifiable. The court disagreed on both points. Sections 3860 and 3856 give the employer a first lien, but they do not guarantee full reimbursement when the employer may share fault. Until the WCAB rules on employer negligence, the $125,000 does not represent a specific sum that FIC owns or has a right to possess.
  
  The punitive damages claim failed for the same reason. A simple failure to pay money owed is not conversion. And because FIC could not yet show it was entitled to the money, it could not show malice in Reyes-Cano’s position that the funds would be released only after the employer negligence issue was decided.
  

• School District Ordered to Classify Temporary Teacher as Permanent
  on October 5, 2026 at 1:24 PM

  Melissa Washington began teaching first grade at the Alta Loma School District’s Stork Elementary on August 2, 2019. She was told in her interview that she was filling a new position created by a last-minute jump in enrollment, and the principal later testified to the same thing. When she arrived to sign her contract, however, it classified her as a temporary employee who could be terminated at any time. The human resources director told her that was just part of the process and that she would be reclassified as probationary later.
  
  That did not happen. In each of the next two years, the principal told her that, because of uncertainty created by the COVID-19 pandemic, all returning temporary teachers would again receive only temporary contracts, with no exceptions. He apologized, and she was told she might even receive tenure the following year. Washington signed temporary contracts for the 2020–2021 and 2021–2022 school years. In March 2022, the District told her it would not offer her, or any of its temporary teachers, a contract for 2022–2023, citing lost pandemic-related funding and low enrollment. She applied for temporary positions the District advertised for the next year but was not hired.
  
  In February 2023, Washington petitioned for a writ of mandate ordering the District to reinstate her as a permanent employee with an August 2, 2019 seniority date and to compensate her for lost pay and benefits. She argued she should have been classified as probationary for her first two years, which would have made her permanent by operation of law in her third.
  
  The District defended the temporary classification on a single theory. It said Washington had been hired to fill in for two permanent teachers who shared one full-time position under a voluntary job-sharing arrangement, and that the job share was a grant of leave under Education Code § 44920. That section allows a district to hire a temporary teacher for up to a year when a certificated employee has been granted leave for a semester or year or is experiencing long-term illness.
  
  The trial court found that Washington was not in fact hired to fill a vacancy created by the job share; she was hired because of increased enrollment. It nonetheless denied the petition. It agreed with the District that one of the job-sharing teachers was effectively on leave at any given time. Relying on District spreadsheets, it also found that the number of temporary teachers did not exceed the number of teachers on leave, counting job shares as leave. The court added that if it reached the issue, the District’s laches defense would be persuasive, because Washington waited until after her third year to sue.
  
  In the published case of Washington v. Alta Loma School District, No. D088028 (October 2026). The Court of Appeal reversed and remanded with directions. The trial court must issue a writ of mandate ordering the District to reinstate Washington as a permanent employee with a seniority date of August 2, 2019. It must also hold further proceedings to determine her lost compensation. Washington recovers her costs on appeal.
  
  The Court of Appeal began with the Education Code’s classification scheme. Certificated teachers fall into four categories: permanent, probationary, substitute, or temporary. Unless the Code specifically requires another classification, a teacher must be classified as probationary. That rule appears in Education Code § 44915 and was applied in Stockton Teachers Assn. CTA/NEA v. Stockton Unified School Dist. (2012) 204 Cal.App.4th 446. Under Balen v. Peralta Junior College Dist. (1974) 11 Cal.3d 821, the temporary and substitute classifications carry no statutory due process protections, so they must be strictly construed. Districts have no discretion to deviate from the statutory scheme.
  
  Applying that strict construction, the court held for the first time that leave in § 44920 means a leave of absence, and that a voluntary job-sharing arrangement is not one. Because § 44920 does not define leave, the court read it together with related sections of the Education Code. Leaves of absence are addressed at length in the Code’s article on resignations, dismissals and leaves of absence. That article covers medical, parental, workers’ compensation, study, bereavement, and other leaves, but not job sharing. Reduced workloads instead fall under the separate employment article, where Education Code § 44922 lets districts allow teachers to reduce their workload from full-time to part-time.
  
  The court found that the plain meaning of leave of absence points the same way. It implies a temporary absence with an intention to return to the same position. The District’s own collective bargaining agreement treats leaves of absence as holding the teacher’s place. Job-sharing teachers, by contrast, have no right to return to their prior position; they are restored to full-time work only if a position becomes available and no probationary or permanent teacher would be laid off. The court also rejected the District’s reliance on American Federation of Teachers v. Board of Education (1977) 77 Cal.App.3d 100. That case dealt with a teacher reassigned to a categorically funded program, not a job share. The Legislature later addressed that situation separately. And the American Federation court did not apply the strict construction Balen requires.
  
  Because job shares do not count as leave, the trial court’s spreadsheet comparison also failed, since it treated job-share vacancies as leave. The appellate court therefore did not need to decide whether Washington was actually hired as the job-share placeholder.
  
  The consequences followed directly from the Code. Washington defaulted to probationary status for her first two school years. The District never notified her by March 15 of her second year that she would not be reelected; instead, it rehired her. Under Education Code § 44929.21(b), she therefore became a permanent employee at the start of her third year. A permanent teacher can be dismissed only on statutory grounds and after an opportunity for a hearing, and the District followed none of those procedures. It thus had a clear, ministerial duty to reelect her for 2022–2023, which supports mandate relief and lost compensation under Code of Civil Procedure § 1095.
  

• San Mateo County Deputy Sheriff to Serve 5 Months for Comp Fraud
  on October 1, 2026 at 8:22 AM

  A former San Mateo County sheriff’s deputy who collected more than $61,000 in workers’ compensation benefits for an elbow injury has been sentenced to five months in county jail. Surveillance video showed him lifting, driving, and working out hard at the gym. Jorden Tuiveta Faatiga, 35, of Patterson, was sentenced on Tuesday, September 29, 2026, according to the San Mateo County District Attorney’s Office, as reported by KRON4 and by Bay City News in the Redwood City Pulse.
  
  Faatiga pleaded no contest on April 30 to felony charges of workers’ compensation fraud and filing a false document. San Mateo County Superior Court Judge Jeffrey Jackson placed him on two years of supervised probation, conditioned on serving five months in the county jail. He was also ordered to pay $61,534.02 in restitution to the County of San Mateo. According to KRON4, the District Attorney’s Office said he has already repaid $40,000 of that amount. Faatiga remains out of custody and has been ordered to surrender at the county jail on January 9, 2027.
  
  According to the prosecutors’ account, the case began in October 2024, when Faatiga reported an on-duty injury to his right elbow and filed a workers’ compensation claim. He then worked in a modified-duty assignment through February 2025 while receiving benefits. Investigators from the District Attorney’s Workers’ Compensation Fraud Unit reviewed surveillance video that, prosecutors said, showed him using the supposedly injured elbow in ways that contradicted the restrictions he had described to his treating physician. The activities included lifting, driving, and intense gym workouts. Prosecutors also said he regularly misrepresented his symptoms to doctors in order to keep receiving benefits.
  
  The conviction also ended Faatiga’s law enforcement career. The California Commission on Peace Officer Standards and Training (POST) disqualified his peace officer certification in August 2026. That makes him ineligible to serve as a peace officer anywhere in California, according to KRON4 and the Redwood City Pulse.
  
  The case drew wide attention when the plea was first announced. The National Insurance Crime Bureau highlighted it in its regional news roundup, citing earlier reporting by KTVU. The same Bay City News account of the sentencing also ran in The Almanac.
  
  For public employers and claims administrators, the case is a familiar pattern with a notable twist. Surveillance that contradicts reported work restrictions is a common basis for claimant fraud prosecutions. Here, though, the claimant kept working in a modified role and still faced felony charges, apparently based on how he described his condition to his doctors. The case also shows the collateral consequences a fraud conviction can carry for public safety employees: apart from jail and restitution, Faatiga lost his peace officer certification.
  
  All descriptions of Faatiga’s conduct come from the District Attorney’s Office as relayed in news coverage. His defense attorney was not available for comment, according to the Redwood City Pulse. The District Attorney’s original announcement could not be located on the office’s website, so this account relies on news outlets that reported from it. The sources do not specify the exact statutes charged.

• Pakistani Nationals Indicted for DME Health Care Fraud
  on October 1, 2026 at 8:22 AM

  On Sept. 17, a grand jury indicted Nouman Mustafa, 36, of Torrance, and Mohsin Khan, 40, of Bakersfield, on multiple counts of health care fraud and aggravated identity theft for submitting millions of dollars in fraudulent claims for durable medical equipment to Medicare, U.S. Attorney Eric Grant announced today.
  
  On Feb. 11, 2026, Mustafa was arrested on a criminal complaint at the Los Angeles International Airport while trying to board a one-way flight to Pakistan. Khan was arrested at his home in Bakersfield and will make his initial court appearance today.
  
  According to court records, Mustafa and Khan are Pakistani nationals with dual United States citizenship who have worked in the United States as security guards, warehouse managers, and licensed insurance agents.
  
  From January 2025 through January 2026, they created a series of shell companies designed to look like legitimate durable medical equipment (DME) companies. In reality, none of the companies had physical storefronts, warehouses, or any locations where legitimate business could have been conducted. Mustafa and Khan then used these companies to quickly submit more than $3.5 million in fraudulent claims to Medicare. They typically relied on one company for only a few weeks or months until its claims began getting denied for suspected fraud, at which point they shifted to the next company.
  
  Mustafa and Khan got the information to file the fraudulent claims from their contacts in Pakistan and elsewhere. This information included details about real Medicare beneficiaries and their doctors. The defendants kept approximately 30% of the proceeds and sent the remainder back to their contacts.
  
  The U.S. Department of Health and Human Services Office of Inspector General conducted the investigation with assistance from the Bakersfield Police Department. Assistant U.S. Attorneys Arelis Clemente and Joseph Barton are prosecuting the case.
  
  If convicted, Mustafa and Khan face up to 10 years in prison and a fine of up to $250,000 for each of the health care fraud counts and a mandatory minimum of two years in prison, consecutive to the sentences they receive for any other counts, for each of the aggravated identity theft counts. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

Archived Daily News Stories