According to an article by Fisher Phillips, recent California class and collective lawsuits are starting to reveal a particular trend of litigation where employees are claiming unreimbursed work-related expenses.
For instance, a Private Attorneys General Act (PAGA) action filed on January 15 in the Superior Court of Merced alleges that Foster Farms failed to provide and reimburse employees for the cost of personal protective equipment (PPE). Specifically, the employees allege that they were forced to purchase PPE such as masks, gloves, and hand sanitizer without reimbursement.
In their complaint, the employees argue that California case law requires employers to provide their employees with PPE, at the employer’s expense, and employees must be reimbursed for any such materials that the employees purchase if the employer fails to do so.
In another recent 2021 lawsuit, a class action filed in Orange County Superior Court, the employee alleges that Anyone Home, Inc. failed to provide reimbursement for her and other similarly situated employees’ home internet, home telephone, personal cell phone, personal computer, utility costs, office furniture, and insurance from July 2019.
In both of these cases, the employees allege they were required to purchase alleged necessary business expenses but not reimbursed for these purchases.
Both cases are at their infancy, and no court has made a ruling on the merits of the allegations raised in either case.
California Labor Code § 2802 explicitly requires employers to reimburse their employees for the necessary business expenses that they incur. Specifically, employees must be reimbursed for expenses that are necessarily incurred in direct consequence of their job duties or in complying with an employer’s directions. In general, the law only requires reimbursement of necessary and reasonable expenses; unnecessary or unreasonably exorbitant expenses need not be reimbursed.
Traditionally, most remote work expenses have not been reimbursable because most employers’ telecommuting and remote work programs were typically voluntary and not required.
However, in today’s COVID-19-regulated environment, remote work has become mandatory for many industries, therefore changing certain employers’ reimbursement obligations. When remote work is mandatory - even if ordered by California or local authorities - employees must be reimbursed for the necessary expenses they incur while working at home. The issue of whether certain expenses were "necessarily incurred" by an employee is subject to court scrutiny and various employer defenses.
Regrettably, the California Labor Commissioner’s office has failed to issue COVID-specific expense reimbursement guidance to aid employers in navigating this new vast remote work environment.
This week, 15 Rhode Island defendants were charged by way of federal criminal complaints in U.S. District Court with wire fraud and money laundering.
WPRI reports that the state’s top federal prosecutor announced the arrests during a news conference in Providence, accusing the defendants - all Rhode Islanders - of fraudulently filing claims through unemployment insurance programs across 11 states including California. The defendants filed claims for an estimated $578,571, including $126,000 in Rhode Island, according to prosecutors.
At least one defendant was able to "line his pockets" with almost $90,000, according to the investigators.
The charges were unsealed in Rhode Island U.S. District Court Thursday afternoon, and multiple suspects were discovered in part because they took out large sums of money at Twin River Casino.
According to a sworn affidavit filed by R.I. State Police Trooper Courtney Elliott, investigators were notified in August about several "suspicious high-dollar cash advances" made at the Lincoln casino.
Upon further investigation, police said they discovered Tyrone Hazard of Central Falls had made a $9,000 cash advance using a California Employment Development Visa debit card, which is issued through the state of California to provide unemployment insurance, according to the affidavit.
After getting the cash, Hazard left the casino without playing any games, according to the affidavit. Investigators said they later discovered Hazard had previously made two different unemployment insurance claims in California and Massachusetts, according to court documents.
Similarlly, defendant Rashaad Smith Muskelly of Lincoln is accused of taking out two cash advances at Twin River, according to the complaint. Muskelly is accused of filing for unemployment insurance in eight states: Arizona, California, Massachusetts, Nevada, New York, Rhode Island, Virginia and Texas.
Applied Underwriters will be featured in episodes of an upcoming TV series called Back from the Brink.
The series, set for the fourth quarter of 2021 and the first quarter of 2022 on the Discovery Life channel, will be presented weekday evenings in prime time nationally.
Each episode will feature the real-life stories of individuals who suffered and survived near death accidents, but whose sudden, dire circumstances required an enormous degree of care from a cross-section of individuals and professionals working with unusual devotion to bring these victims back to enjoy a good quality of life.
Back from the Brink researchers identified several sources, including Applied Underwriters, because it has been regularly cited, including recently by the State of California, as a top performer in claims management.
Several of the episodes will be drawn from Applied Underwriters' files, notably the stirring saga of an electrical lines worker who was electrocuted falling to his "near death" only to be rescued and brought back to life with the use of his limbs and a reconfigured face and neck through groundbreaking surgeries.
A second, compelling story is that of a severely injured lumberjack who fell 60 feet to the ground and was crushed by the tree he was cutting, only to be brought back to vitality by an amazing concert of a giving family, devoted clergy, and a talented, focused team of professionals.
The choice of Applied Underwriters' experiences and successes in treating patients all the way through to the revitalization of their lives and capacities is a great source of pride for Applied, according to Steve Menzies, the Company's Chairman: "The role that our Claims Department and others have played in the recovery of so many injured workers over the years is itself a deep source of gratification to the Company's dedicated staff; that it is recognized and selected for airing, is a second source of great satisfaction to us all."
Mr. Menzies continued, "Our philosophical approach is 'service well beyond the letter of the policy and the financial resolution. We believe that our Company's good soul is expressed in the treatment of claimants, especially injured workers who have had to come 'back from the brink.'"
The program will look at the ways an injured person's community of resources worked to overcome challenging odds, following changing courses and regimens as the patients recovered and reached the plateaus that marked progress, according to Mr. Menzies, who concluded: "We believe that the insurance industry does not get the credit it deserves for playing a role beyond simply paying claims fully and promptly, so we appreciate the angle that this show takes - demonstrating that recovery is a concerted effort of many committed professionals who, while concentrating upon one injured worker, martial resources from far and wide to bring to bear - all, with special determination and courage. We hope the series will present insurers in a more fittingly favorable light and have a great following. We are delighted to be a part of it."
Health Net Federal Services LLC has paid $97,237,391 to resolve duplicate and inflated claims submitted to the Department of Veterans Affairs.
In 2013, Health Net entered a $5.05 billion contract with the VA under the Patient-Centered Community Care program, which offered private health care to veterans when VA facilities could not do so in a timely manner.
The Veterans Access, Choice and Accountability Act of 2014 expanded the services to cover veterans who waited more than 30 days for care or lived more than 40 miles away from a VA medical facility. Under this contract, Health Net served as the third-party administrator that secured private health care for veterans, reimbursed these providers for services to veterans, and in turn billed the VA for the services.
In 2017, the VA Office of Inspector General (VA OIG) audited Health Net and found evidence suggesting the company had billed the VA for duplicate claims amounting to approximately $30 million and failed to reduce billings to the VA for approximately $1 million in provider rate savings, as contractually required.
The ensuing investigation confirmed the conduct, and Health Net ultimately repaid $93,682,428 in overpayments, as well as $3,554,963 in interest.
"Providers must be held to the highest standard of care and must rigorously comply with their contractual obligations," said Acting U.S. Attorney Talbert. "This office is committed to assisting the VA and other agencies of the United States to ensure the integrity of important federal programs, such as those reimbursed by this settlement that will help our veterans."
"The VA Office of Inspector General is strongly committed to promoting fiscal accountability throughout VA," said VA Inspector General Michael J. Missal. "This settlement will return funds to VA programs and services that directly benefit our nation’s veterans. I applaud the teamwork and dedication that led to this significant recovery."
This settlement is the result of work by the U.S. Attorney’s Office for the Eastern District of California and the Civil Division’s Commercial Litigation Branch, with help from the Department of Veterans Affairs Office of Inspector General and the Federal Bureau of Investigation. Assistant U.S. Attorney Catherine J. Swann handled the matter for the United States.
A commentary which was published in the VC Star anticipates a "once a decade" war over changes to the California workers' compensation system.
According to the commentary, work comp "is so immense that it supports a permanent cadre of interest groups and their lobbyists who joust constantly over operational rules."
Over the last half-century, a predictable cycle has emerged. Once a decade - or once a governorship - the five contending factions go to war, three of the five cut a deal to grab bigger slices of the financial pie, and push it through the Legislature. It takes a few years for the changes to impact the system and a few more for a new tripartite alliance to form for another battle.
It last happened a decade ago when Jerry Brown resumed the governorship 28 years after his first stint expired.
Employers and labor unions struck a deal, with the implicit blessing of work comp insurers, to curtail medical costs and use the savings to increase cash benefits for disabled workers and decrease employers’ insurance premiums.
The two factions left out of the deal - lawyers who specialize in work comp cases and providers of medical care, therapy and rehabilitation - howled. But with Brown’s blessing and the unions’ political clout, it was enacted.
It worked as planned, in fact too well in the eyes of the two left-out factions and labor unions, which complained that employers benefited more than their injured employees.
Insurance costs as a percentage of payroll have dropped by more than two-thirds from their peak in 2003, thanks to both the changes signed by Brown and those muscled through the Legislature a decade earlier by predecessor Arnold Schwarzenegger. That said, California employers are still paying the nation’s fourth highest work comp costs, according to Oregon’s annual state-by-state compilation.
So what now?
Last year, in response to the COVID-19 pandemic, the Legislature and Gov. Gavin Newsom decreed that some medical workers would have a presumption that certain illnesses would qualify them for work comp benefits without having to prove connections to their jobs.
This year, several bills would expand presumptions to other workers and other maladies. One, for example, would expand the presumption that San Diego’s lifeguards now have for skin cancer to include nine other illnesses. Another would expand the lifeguards’ skin cancer presumption to include game wardens and state park rangers. Still another would create an extensive slate of presumptions for nurses.
Medical care providers, who were on the short end of the last big work comp deal, want legislation to provide automatic inflation increases in their fees. Another bill would create a state-operated network of medical care providers for work comp treatment that would bypass employers’ provider networks.
These and other measures would directly or indirectly increase costs and/or re-slice the pie. The most important of the five factions is labor and if it forges an alliance with the medical and legal groups, chances of a major work comp overhaul are strong - right on the decennial schedule.
The The Division of Workers’ Compensation has issued a notice of conference call public hearing, for a proposed evidence-based update to the Medical Treatment Utilization Schedule, which can be found at California Code of Regulations, title 8, section 9792.24.7.
The conference call public hearing is scheduled for Friday, May 14, at 10 a.m. and members of the public may attend by calling 866-390-1828 and using access code 5497535#. Members of the public may review and comment on the proposed updates no later than May 14.
The proposed evidence-based update to the MTUS incorporates by reference the latest published guideline from American College of Occupational and Environmental Medicine (ACOEM) for the Coronavirus (COVID-19) Guideline (ACOEM March 29, 2021).
The March 29, 2021 update includes the following major changes:
- - New guidance on rehabilitation (pulmonary, cardiac, cognitive, musculoskeletal, debility) for severe and/or chronic COVID-19 cases
- - Vaccination information, including travel advice for vaccinated individuals, success against common virus variants, and adverse effects
- - New recommendation on the Johnson & Johnson COVID-19 vaccine
- - Upgraded recommendation for baricitinib from insufficient evidence (I) to evidence (B)
- - Upgraded recommendation for bamlanivimab from insufficient evidence (I) to evidence (C)
- - Upgraded recommendation for interferon beta-1b from insufficient evidence (I) to evidence (B)
- - Upgraded recommendation for low-molecular-weight heparin from insufficient evidence (I) to evidence (C)
- - Downgraded recommendation for convalescent antibodies to No Recommendation (I)
- - Review of evidence for ivermectin (insufficient evidence, with no recommendation)
- - Review of masking efficacy
- - Updates from the CDC on physical distance in K-12 classrooms
The proposed evidence-based update to the MTUS regulations are exempt from Labor Code sections 5307.3 and 5307.4 and the rulemaking provisions of the Administrative Procedure Act. However, DWC is required under Labor Code section 5307.27 to have a 30-day public comment period, hold a public hearing, respond to all the comments received during the public comment period and publish the order adopting the update online.
Daniel Cory Clapp was a CHP officer at the Chester area substation of the Susanville office, when he was injured on the job. He claimed injuries to his shoulder, head, and knees.
In April 2012, based on a tip, the worker’s compensation fraud unit of the CHP began investigating officer Clapp. The unit conducted surveillance, including on travel, doctor’s visits, shopping, and camping, which included boating, swimming, and chopping wood.
In October 2013, CHP investigators showed the surveillance videos to defendant’s doctor. Based on the videos, the doctor agreed if she had been aware of defendant’s activities, she would have released him to work in April 2012. She also agreed that Clapp’s complaints had been a "gross misrepresentation."
Clapp pleaded no contest to concealing the true extent of his physical activities and abilities from his employer, the Department of the California Highway Patrol (CHP), and the State Compensation Insurance Fund (SCIF).
Consistent with the resolution negotiated by the parties, the trial court granted defendant three years’ probation, and as a condition of probation, ordered him to pay restitution. Following a restitution hearing, defendant was ordered to pay $30,095.68 to SCIF for temporary disability benefits and $81,768.01 to CHP for benefits wrongfully obtained.
He was also ordered to pay $1,350 and $70,159 to SCIF and CHP respectively for investigative costs.
CHP officers logged 1,761 hours investigating defendant and his activities on disability leave. Based on a median wage of $41.27 per hour, CHP sought reimbursement for $70,159 in salary costs to investigate the case. CHP did not seek restitution for gas and vehicle maintenance, lodging and meals for investigators while on assignment, overtime pay for investigators, medical treatment and exams for defendant, or video production.
SCIF investigators spent 59 hours investigating defendant’s claims. At an average salary of $30 per hour, the agency spent approximately $1,770 on wages to investigate this case.
Defendant appeals the restitution award as to investigation costs contending that, as public investigative agencies, neither SCIF nor CHP is entitled to reimbursement for the costs of investigating his claim.
The Court of Appeal agreed with the trial court, and concluded that "as direct victims of defendant’s fraud, both CHP and SCIF are entitled to restitution for investigative costs incurred in an effort to justify discontinuance of payments and recoup money defendant fraudulently obtained" in the published case of People v Clapp.
The Court concluded that a victim’s restitution right is to be broadly and liberally construed.(Nichols, supra, 8 Cal.App.5th at p. 342.) Section 1202.4, subdivision (f) requires victims receive restitution for "for every determined economic loss incurred as the result of the defendant’s criminal conduct" and the term "economic loss" is entitled to broad and expansive interpretation. (Keichler, supra, 129 Cal.App.4th at p. 1046; Johnny M., supra, 100 Cal.App.4th 1128, 1133.)
The "including but not limited" statutory language as it relates to section 1202.4, subdivision (f), allows for restitution for wages beyond those expended in "assisting the police or prosecution" as specified in subdivision (f)(E).
" We believe it is consistent with the restitution statute’s purpose, to fully reimburse direct victims and deter future criminality, to allow government agencies that are direct victims of fraud to receive restitution for their investigative costs, where those costs were incurred in an effort to justify ending payments and recoup wrongfully obtained funds, as well as assist in any prosecution."
Former fire fighter, and former Iron Man triathlete, 34 year old Perry Adam Lieber, who lives Santa Barbara, was ordered to pay $198,025 in victim restitution and $30,000 in criminal fines. Victim agencies, the County of Ventura and the Ventura County Fire Department, sustained extensive losses as a result of workers’ compensation fraud committed by Lieber.
In March 2020, Lieber resigned from his position with the Ventura County Fire Department after working at the agency for more than three years.
On December 7, 2020, Lieber pled guilty to making false material statements to obtain disability benefits he was not entitled to during a workers’ compensation claim while employed with the Ventura County Fire Department.
Additionally, the court ruled that multiple financial accounts controlled by Lieber, that were previously frozen by the court, are to be liquidated to satisfy the order in full.
Over $228,000 of his financial assets will be liquidated as a result of this order.
Lieber will also serve 90 days in jail and complete 24 months of felony probation as a condition of his guilty plea.
A hearing relating to the final payment of restitution and fines is scheduled for April 29, 2021, at 9:00 a.m. in courtroom 26 of the Ventura County Superior Court.
According to a March 2021 press release, he is currently a health and fitness expert and entrepreneur in Santa Barbara, California.
He graduated from the University of California, where he earned a Bachelor's in English and a minor in Sports Science and Nutrition. He also participated in his first Ironman competition, an endurance multisport event that involves swimming, cycling, and running over various distances.
Lieber opened his very own elite training facility called The Workplace, where he provides one-on-one training to a range of clients, including celebrities, professional athletes, and top executives.
His website perrylieber.com provides substantial information about his current level of fitness.
A new California Workers’ Compensation Institute study on the Independent Medical Review process used to resolve California workers’ comp medical disputes shows that after climbing to a record high in 2018, the number of IMR decision letters declined in both 2019 and 2020, falling to an all-time low last year.
The CWCI study is based on a review of more than 1.1 million IMR decision letters issued from 2014 through 2020.
The study notes that the number of IMR determination letters increased from 143,983 in 2014 to a record 184,735 in 2018, but then declined by 26% over the next two years, falling to 163,899 letters in 2019 and 136,746 letters in 2020.
That decline coincided with the implementation of the Prescription Drug Formulary, which as of 2018, established categories of drugs that were Exempt from prospective UR, Non-Exempt (or subject to prospective UR), or Not Listed, as well as subcategories of Non-Exempt drugs (Special Fill and Perioperative drugs) to allow for special circumstances or pre- and post-operative situations in which physicians can prescribe limited amounts of certain drugs that would otherwise be subject to prospective UR and IMR.
At that point, prescription drug disputes accounted for 46.4% of all IMRs, but within a year, that percentage was down to 41.1%, and in 2020 it fell to 39.1%.
Since 2018, opioids’ share of the pharmaceutical IMRs have declined from 32.2% to 28.3%, while over the same two-year span the biggest increase has been in dermatologicals, which have jumped from 10.9% to 14.8% of the pharmaceutical IMRs. With prescription drugs accounting for a declining share of the IMR disputes since 2018, the study noted a shift in the mix of services submitted for IMR, with physical therapy; injections; and durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) all seeing their share of the IMRs increase by 1.5 to 2.0 percentage points over the past two years.
The study notes that last year’s decline in IMR volume was also spurred on by the pandemic, as the number of job injury claims declined as California’s unemployment rate spiked from 5.5% in March to 16.4% in April and millions of Californians began to work from home.
The impact on IMR volume was immediate, as a comparison of monthly IMR determinations from 2019 and 2020 shows a similar number of IMRs in March of each year, but in April 2020 there were 1,762 fewer IMRs than in April 2019, while the differential was 5,387 fewer IMRs in May; 3,666 fewer IMRs in June; 2,841 fewer IMRs in July; and 3,848 fewer IMRs in August. IMR volume was down across all regions of the state last year, with the biggest decline occurring in Los Angeles County, which had about 9,400 fewer IMR determination letters in 2020 than in 2019.
As in prior studies, the latest results show that a small number of physicians continue to drive much of the IMR activity, with the top 1% of requesting physicians (89 doctors) accounting for 39.8% of the disputed service requests that underwent IMR in 2020. The top 10 individual physicians alone accounting for 10.2% of the disputed requests, and the study found that seven of the top 10 physicians in 2020 were also on the top 10 list for 2019.
IMR outcomes were fairly stable as IMR physicians upheld the UR doctors’ modification or denial of services 89.4% of the time last year, compared to 88.2% of the time in 2019. Uphold rates broken out by the type of medical service request ranged from 80.7% for evaluation/management services to 91.3% for DMEPOS and injections.
CWCI has released its latest IMR analysis as a Research Update Report, "Independent Medical Review Decisions: January 2014 Through December 2020."
51 year old Jose Velasquez, who lives in Ojai California, pled guilty to two counts of felony insurance fraud on March 30, 2021. At the time of his pleas, Velasquez paid full victim restitution to Wesco Insurance Company, an AmTrust Company, in the amount of $30,483.
From March 1, 2015, through March 1, 2020, Velasquez owned and operated Velasquez Gardening located on 82 Crown St. in Ojai.
During that time, Velasquez systematically misrepresented the number of his employees and the total amount of his payroll to his workers’ compensation insurance company, Wesco Insurance. This fraud resulted in an underpayment of insurance premiums totaling $30,483.
Prosecutors say that Velasquez’s fraudulent actions resulted in inflated costs to his workers’ compensation insurance company, which are ultimately passed on to local consumers. Further, Velasquez’s fraud provided an unfair advantage by allowing him to underbid competitors by not paying his fair share of workers’ compensation insurance premiums. Workers’ compensation insurance fraud is not a victimless crime and will be prosecuted to the fullest extent of the law.
This case was investigated by the Ventura County District Attorney’s Office Workers’ Compensation Fraud Unit.
Sentencing is set for April 28, 2021, at 9:00 a.m. in courtroom 23 of the Ventura County Superior Court. Velasquez faces a maximum sentence of six years in felony jail.