Menu Close

Workers’ Compensation Daily News for June 23rd, 2024

  • Newsom and Business Leaders Announce PAGA Reform Agreement
    on June 21, 2024 at 3:25 PM

    Governor Gavin Newsom, in partnership with legislative leadership and business and labor groups, announced an agreement on needed reforms to the Private Attorneys General Act (PAGA) that avoids a contentious ballot measure campaign.

    Once the legislation reflecting this agreement is passed and signed into law by the Governor, proponents of the PAGA ballot initiative eligible for the November ballot have agreed to withdraw their measure. Here’s what this PAGA reform proposal would do:

    Reform penalty structure

    - - Encourages compliance with labor laws by capping penalties on employers who quickly take steps to fix policies and practices, and make workers whole, after receiving a PAGA notice, as well as on employers that act responsibly to take steps proactively to comply with the labor code before even receiving a PAGA notice.
    - - Creates new, higher penalties on employers who act maliciously, fraudulently or oppressively in violating labor laws.
    - - Ensures that more of the penalty money goes to employees by increasing the amount allocated to employees from 25% to 35%.

    Reducing and streamlining litigation

    - - Expands which Labor Code sections can be cured to reduce the need for litigation and make employees whole quickly.
    - - Protects small employers by providing a more robust right to cure process through the Labor and Workforce Development Agency (LWDA) to reduce litigation and costs.
    - - Codifies that a court may limit both the scope of claims presented at trial to ensure cases can be managed effectively.

    Improving measures for injunctive relief and standing

    - - Allows courts to provide injunctive relief to compel businesses to implement changes in the workplace to remedy labor law violations.
    - - Requires the employee to personally experience the alleged violations brought in a claim.

    Strengthening state enforcement

    - - Give the Department of Industrial Relations (DIR) the ability to expedite hiring and fill vacancies to ensure effective and timely enforcement of employee labor claims.

    "This package provides meaningful reforms that ensure workers continue to have a strong vehicle to get labor claims resolved, while also limiting the frivolous litigation that has cost employers billions without benefiting workers," said Jennifer Barrera, President & CEO, California Chamber of Commerce. "We thank Governor Newsom, Senate President pro Tempore McGuire and Assembly Speaker Rivas for navigating this agreement, and we encourage the legislature to pass this package quickly."

    "We are happy to have negotiated reforms to PAGA that better ensure abusive practices by employers are cured and that workers are made whole, quicker," said Lorena Gonzalez, principal officer of the California Labor Federation, AFL-CIO. "PAGA is an essential tool to help workers hold corporations accountable for widespread wage theft, safety violations, and misclassification. We appreciate the work of the Governor’s office and Legislative Leadership to help us reach agreement with the Cal Chamber of Commerce to protect this innovative law and strengthen labor law enforcement."

    "Today’s agreement is critical to the long-term success of workers and businesses here in the Golden State," said Senate President pro Tempore Mike McGuire (D-North Coast). "Commonsense reform of PAGA has been discussed for years, and thanks to the collaboration of all sides, including the work of the Governor, this agreement will continue to provide strong worker protections and implement long talked-about reforms. Next steps include working with Speaker Rivas to move legislation forward in the days to come."

    "This agreement is important because it protects working people, who are the real engine behind California’s economic strength," said Speaker of the Assembly Robert Rivas (D-Salinas). "It also recognizes companies that follow labor laws, and it puts more muscle into enforcement. I grew up watching farmworkers and employers find common ground, so it means a lot to me that so many groups came together and found consensus. This is a hard-earned agreement, and that makes the positive outcomes we’ll see for businesses and workers even better."

  • After Imposing $40K in Sanctions WCAB Seeks More Against Garretts
    on June 21, 2024 at 3:25 PM

    After issuing a notice of intent on April 10, 2024, and having received and reviewed the responses of Susan Garrett and Lance Garrett, on May 16, 2024, the Appeals Board issued an en banc order imposing sanctions and costs in eight cases collectively of $20,000.00 against attorney Susan Garrett (CA BAR #195580) in eight (8) instances where she filed petitions for reconsideration with willful intent to disrupt or delay the proceedings of the Workers’ Compensation Appeals Board or with an improper motive, or where it appeared that such actions were indisputably without merit.

    The Appeals Board issued a second order imposing costs and sanctions collectively of $20,000.00 against hearing representative Lance Garrett in eight (8) instances where he filed petitions for reconsideration with willful intent to disrupt or delay the proceedings of the Workers’ Compensation Appeals Board or with an improper motive, or where it appeared that such actions were indisputably without merit.

    Prior to these orders the Garretts were provided with a Notice of Intent and were given an opportunity to present their defense to the charges.

    The WCAB characterized the response by writing "Susan Garrett and Lance Garrett’s responses trivialize the act of filing multiple frivolous petitions for reconsideration as an 'inconvenience.' However, their conduct here goes far beyond inconvenience. The filing of frivolous petitions for reconsideration significantly hampers the work of the Appeals Board. Each petition costs significant time and resources and delays the issuance of other decisions pending at the Appeals Board. More significantly, it delays a determination of applicant’s benefits in each of the cases at bar."

    And that may have precipitated the WCAB to seek even more than the $40,000 total sanction imposed thus far. The WCAB just announced two new groups of cases where it intends to impose even more sanctions, and has issued it's Notice of Intent, En Banc, accordingly.

    On June 17, 2024, in Abel Hidalgo, et al vs. Roman Catholic Archbishop, permissibly self-insured, Case Nos. ADJ13332737, ADJ15218980, ADJ12640295, the Appeals Board issued an en banc order consolidating three cases and issued a notice of intention to impose costs and sanctions collectively up to $7,500.00 against attorney Susan Garrett (CA BAR #195580) in three (3) instances where it appeared that she filed petitions for reconsideration with willful intent to disrupt or delay the proceedings of the Workers’ Compensation Appeals Board or with an improper motive, or where it appeared that such actions were indisputably without merit.

    In the same case the Appeals Board issued a second notice of intention to impose costs and sanctions collectively up to $7,500.00 against hearing representative Lance Garrett in three (3) instances where it appeared that he filed petitions for reconsideration with willful intent to disrupt or delay the proceedings of the Workers’ Compensation Appeals Board or with an improper motive, or where it appeared thaIt such actions were indisputably without merit. Garrett has 20 plus 5 days to file a response to the notice.

    And also in Guillermo Gonzalez, et al vs. The Bicycle Casino; Arch Indemnity Ins. Co., administered by Gallagher Bassett, et al.Case No. ADJ12226694, ADJ12414651, ADJ12414992, ADJ12414993, two nearly identical Notices of Intent for two instances of alleged sanctionable conduct, and each are subject to an additional $5000.

    They both have 25 days to respond to the Notice of Intent.

  • Amazon Cited $6M for Violating California’s Warehouse Quotas Law
    on June 20, 2024 at 8:44 AM

    The Labor Commissioner’s Office cited Amazon.com Services, LLC $5,901,700 for violations of the Warehouse Quotas law in two of their distribution warehouses in Moreno Valley and Redlands.

    This law requires warehouse employers to provide employees written notice of any quotas they must follow, including the number of tasks they need to perform per hour and any discipline that could come from not meeting the quota.

    Amazon failed to provide written notice of quotas. The employer argued they did not need a quota system because they use a peer-to-peer evaluation system.

    However, this law defines a quota as work that must be performed at a specified speed or the worker suffers discipline. It also places limits on quotas that prevent compliance with meal or rest periods, use of bathroom facilities, or compliance with occupational health and safety laws. A quota may be illegal if it is not disclosed to workers or precludes employees from exercising these statutory rights.

    The Labor Commissioner’s Office began its initial inspection on September 22, 2022. The investigation found there were 59,017 violations for the Moreno Valley and Redlands warehouses from October 20, 2023 to March 9, 2024. Penalties were issued under Labor Code 2699(f), which provides penalties of $100 for each violation.

    The Warehouse Worker Resource Center (WWRC) assisted the Labor Commissioner’s investigation. WWRC is a nonprofit organization dedicated to improving working conditions in the warehouse industry in Southern California.

    The Warehouse Quota law went into effect on January 1, 2022 pursuant to the provisions of AB 701, which created 13 new sections of the Labor Code (2100 - 2112) regulating the use of quotas by "Warehouse Distributions Centers.The key provisions of this law include:

    - - Locations: Facilities covered by the law are defined in Labor Code section 2100 by referring to North American Industry Classification System (NAICS) codes. These include General Warehousing and Storage, Durable Goods Merchant Wholesalers, Nondurable Goods Merchant Wholesalers, and Electronic Shopping and Mail-Order Houses. Section 2100 specifically exempts Farm Product Warehousing and Storage from the warehouses covered by the new law.
    - - Employers: The law covers employers with 100 or more employees in a single warehouse or 1,000 warehouse employees in California. Included in staff totals are staffing agency hires if they are under control of the warehouse operator.
    - - Disclosure: As of January 1st 2022, employers must provide written descriptions of all quota systems to employees. The details should describe the task and timeframe of quotas and potential repercussions of not meeting a quota. All new hires must receive disclosures at time of employment.
    - - Repercussions or Adverse Employment Action: Any employer action that negatively impacts employment, including negative reviews, are considered repercussions. Reduction in pay, reduction in hours, termination, and negative reviews are all adverse employment actions.
    - - Quota Limitations: Quotas cannot make it harder for employees to take meal breaks, rest breaks, use the bathroom, or comply with health and safety regulations or standards. Quotas that impact these are illegal.
    - - Employee Rights: Employees can request copies of their data for the last 90 days, the quotas they are subject to and records on their performance. Employers have 21 days to comply.
    - - No Retaliation: Employers are not to retaliate against request for data, and employers are not to retaliate against employees who fail to meet an undisclosed quota. A penalty of $750 will be applied to employers who do not meet the required data disclosure requests in a timely fashion.

    Similar protective laws were adopted by New York and Washington, triggered by the rapid growth of e-commerce during the pandemic. Amazon was a specific example of abuse noted by the Legislative Analysis prepared when AB 701 was introduced.

    The Analyst noted " the National Employment Law Project (NELP) reported that Amazon, Inc., "relies on an extreme high-churn model, continually replacing workers in order to sustain dangerous and grueling work pace demands." This report further found that workers who can't keep up with extreme productivity goals are fired or encouraged to quit and many workers leave their jobs due to injuries. Additionally, NELP analyzed publicly available Census Bureau data for five California counties where Amazon fulfillment centers have had a significant presence in the warehouse sector between 2011 and 2017 and concluded that "turnover for all California warehouse workers (including Amazon) grew from 42.1% in 2011 to 83% in 2017."


  • Memorial Services Now Scheduled for Anthony Macauley Esq.
    on June 20, 2024 at 8:44 AM

    Last month, with deep sadness and heavy hearts, the firm of Floyd Skeren Manukian and Langevin announced the death of our colleague and friend, Anthony (Tony) Macauley, who passed away on Saturday May 11, 2024. His cause of death was cardiac related and was unexpected.

    He was survived by his wife, Nancy and one brother Ben Gulli and his wife Kim and their two children, Max and Hana.

    The services of Anthony Macauley have now been scheduled, will be held on Saturday, June 29th at 4pm at:

    - - Storrier Stearns Japanese Garden
    - - 270 Arlington Dr, Pasadena, CA 91105
    - - (626) 399-1721

    Valet parking for the memorial will be provided as there is no parking on the street.

    If you wish to send cards, flowers or other offerings they may be sent to: 514 South Arroyo Blvd., Pasadena CA 91105

    The Floyd Skeren firm will miss him more than words can express. He was a kind and gentle soul. He loved his family deeply and always aimed to please. Tony was a valued member and contributed to the firm in many ways. Besides being a dedicated FSML family member, he was always good-humored and considerate towards his colleagues. His sense of humor and laughter were infectious and he was the consummate gentleman. The void he left is immeasurable.

    He practices workers’ compensation defense over the entire Los Angeles basin. Mr. Macauley was admitted to the State Bar of California in 1987 and became a certified specialist in the field of worker’s compensation in 1993.

    He worked at the workers' compensation defense firms of Hanna Brophy for years as well as Kegal Tobin before finding his home at Floyd Skeren Manukian and Langevin.

    He was one of the most well respected attorneys in the industry. He was a zealous advocate for his clients and developed a stellar reputation amongst peers, judges, and opposing counsel.

    Tony was a fellow of the College of Workers’ Compensation Lawyers and a member of the American Bar Association, as well as its Tort Trial and Insurance Practice Sections (TIPS), where he is in leadership on three TIPS committees, which focus on Workers’ Compensation, Medicine, Law and Insurance regulations."

  • Court of Appeal Reinstates COVID-19 Wrongful Death Case Against Employer
    on June 18, 2024 at 11:36 AM

    Plaintiff Maria Chavez is the widow of Leodegario Chavez Alvarado, who worked for Alco Harvesting, LLC as a foreman and bus driver. Alco provided decedent and other Alco workers housing at the Hotel Santa Maria. The company, 210 Nicholson, LLC, operated the hotel.

    Plaintiff filed a wrongful death case against her husband's employer and alleged her husband died of COVID-19 complications after contracting the disease while working for Alco. Plaintiff claimed that some of the Alco employees were placed in close living quarters that precluded social distancing. Alco was aware such placement facilitated the transmission of COVID-19. Alco was aware such placement facilitated the transmission of COVID-19.

    According to the allegations in her second amended complaint it "was no surprise that a COVID-19 outbreak soon began at the Hotel Santa Maria." Alco and 210 Nicholson became aware of a COVID-19 outbreak at the hotel well before decedent’s viral exposure. The outbreak was unknown to decedent. Alco failed to report the outbreak to the health department, notify its employees, or "implement adequate safety measures or measures to prevent or curb the outbreak."

    Decedent began feeling ill on or about June 26, 2020, and his symptoms "were those associated with a COVID-19 infection." Decedent immediately reported feeling unwell to his supervisors. Plaintiff alleged that by virtue of their superior knowledge regarding the outbreak, "Defendants knew, even before [d]ecedent, that he had contracted the virus." Plaintiff further alleged decedent "was unaware that he had contracted COVID-19. However, upon notifying them of his symptoms, Alco and 210 Nicholson had actual knowledge of [d]ecedent’s illness . . . ." Alco nonetheless failed to inform decedent of the outbreak or that his symptoms were that of COVID-19."

    Decedent tested positive for COVID-19 on July 2, 2020, a week after he had reported his symptoms to Alco. On that date, decedent was placed at a Motel 6. Decedent waited for medication to arrive, but none did. On July 7, 2020, he died of COVID-19 complications. Plaintiff alleged that because of the outbreak, decedent "was exposed to COVID-19 and fell ill. Alco’s deliberate concealment of the outbreak and the nature of decedent’s illness resulted in the aggravation of his illness to the point that he was unable to recover and succumbed to the disease."

    The trial court sustained Alco’s demurrer to the second amended complaint without leave to amend. Plaintiff appealed. The Court of Appeal reversed in the published case of Chavez v. Alco Harvesting, LLC -B329282 (June 2024).

    Plaintiff argued that her second amended complaint sufficiently pleaded all elements of the fraudulent concealment exception to the workers’ compensation exclusivity rule. The Court of Appeal agreed.

    As a general rule, an employee injured in the course of employment is limited to the remedies available under the Workers’ Compensation Act.

    An exception exists "[w]here the employee’s injury is aggravated by the employer’s fraudulent concealment of the existence of the injury and its connection with the employment . . . ." (Lab. Code, § 3602, subd. (b)(2).)2 Thus, three elements comprise this exception: "(1) the employer knew that the plaintiff had suffered a work-related injury; (2) the employer concealed that knowledge from the plaintiff; and (3) the injury was aggravated as a result of such concealment." (Palestini v. General Dynamics Corp. (2002) 99 Cal.App.4th 80, 90 (Palestini); see also Jimenez v. Mrs. Gooch’s Natural Food Markets, Inc. (2023) 95 Cal.App.5th 645, 658.)

    The employer must have actual knowledge of the injury; constructive or imputed knowledge is insufficient. (Hughes Aircraft Co. v. Superior Court (1996) 44 Cal.App.4th 1790, 1796.). In Foster v. Xerox Corp. (1985) 40 Cal.3d 306 (Foster), the California Supreme Court analyzed the pleading requirements for the fraudulent concealment exception. The Court recognized the statutory injunction to "liberally construe pleadings with a view to achieving substantial justice between the parties. (Ibid.; Code Civ. Proc., § 452.) "

    Thus, with respect to the first element of the exception, the Court of Appeal concluded that "Construing the pleadings liberally as Foster did, plaintiff’s SAC fairly apprised Alco of the action’s basis - namely, that Alco knew decedent had contracted COVID-19 from his employment and concealed that knowledge from him, thereby aggravating his illness."

    With respect to the second element of the exception, Alco also argues plaintiff does not allege it "fraudulently concealed the alleged massive outbreak with the intent to induce [d]ecedent to continue working for any benefit." The Court of Appeal disagreed, and said this "argument fails because the intent to extract more labor is simply not a requirement of the fraudulent concealment exception."

    The SAC sufficiently pleaded the final element of aggravation. The SAC alleged a week elapsed between decedent reporting his symptoms to Alco and a positive COVID-19 test. He died five days after that positive test. The SAC alleged "Alco’s deliberate concealment of the outbreak and the nature of [d]ecedent’s illness resulted in the aggravation of his illness to the point that he was unable to recover and succumbed to the disease." Alco faults the SAC’s references to aggravation as conclusory.

    The Court of Appeal responded by saying this "critique ignores Foster’s guidance that we should liberally construe the SAC, which may be pleaded in general terms. (Cf. Palestini, supra, 99 Cal.App.4th at pp. 89-90.)

    "In sum, the SAC survives Alco’s demurrer because it states a cause of action under section 3602, subdivision (b)(2)."

  • CWCI Examines California's Proposed Agricultural Heat Injuries Presumption
    on June 18, 2024 at 11:36 AM

    A bill that would give a presumption of compensability to farmworker heat-related injury claims if the employer is found to be out of compliance with Cal/OSHA’s outdoor heat illness prevention standard would likely create more challenges than it would solve, entail significant administrative friction costs, and is unlikely to have an appreciable impact on agricultural worker safety according to a California Workers’ Compensation Institute (CWCI) study.

    CWCI’s analysis of SB 1299 (Cortese), examines the population of agricultural workers covered by the legislation, measures the percentage of workers’ compensation claims filed by agricultural workers that involve heat-related injuries, and compares the percentage of heat-related claims in the agriculture sector to the percentage for non-agricultural workers covered by the high-heat procedures in the Cal/OSHA Outdoor Heat Illness Prevention Standard. In addition, the analysis considers the impact of the legislation on the California workers’ compensation system.

    Among the findings:

    - - Despite global warming and climate change, there are very few agricultural heat illness claims in California workers’ compensation. CWCI’s review of more than 3.2 million claims filed by California workers from 2019 through 2023 found that only 659 of the 100,777 claims filed by agricultural workers (0.65%) were due to heat-related illness. That proportion was comparable to other industries covered by the Cal/OSHA high heat standard, such as landscaping (0.65%), construction (0.67%) and mining, oil and gas extraction (0.56%).

    - - The small percentage of claims involving heat illnesses likely reflects the success of Cal/OSHA’s outdoor heat illness prevention standard, enacted in 2005 and amended in 2015. The standard requires, among other things, access to shade and water, active monitoring of employees who need to acclimatize to heat, supervisor and employee training, and a heat illness plan. In addition, it requires employers to initiate high heat procedures if the temperature exceeds 85 degrees, and if the temperature crosses 95 degrees, agricultural workers must take a mandatory 10-minute cool-down break every two hours. Employers also must inform their workers that they may exercise their rights under the standard without fear of retaliation and advise them of acclimatization procedures and appropriate first aid and emergency responses to heat illness.

    - - While several studies have found that increases in temperature lead to increases in injuries overall, a recent UCLA study that focused on California exclusively found that this phenomenon largely ceased following implementation of the Cal/OSHA Outdoor Heat Illness Prevention Standard in 2005.

    - - Outdoor agricultural workers have a workers’ compensation claim denial rate of 11.0%, which is lower than the 12.4% to 13.3% denial rates for other outdoor occupations covered by the Cal/OSHA outdoor heat standard, and lower than the 14.7% denial rate for all claims.

    - - The presumption created by SB 1299 would shift the initial determination of whether a Cal/OSHA heat injury illness standard violation occurred from the Occupational Safety and Health Appeals Board to the Workers’ Compensation Appeals Board (WCAB). Given the lack of subject matter expertise on the part of WCAB judges, and the challenge of determining violations without citations from Cal/OSHA, the administrative burden and frictional costs of SB 1299 would be significant.

    Workers’ compensation presumptions shift the burden of proof that a claim is work-related from the employee to the employer. Because they represent an exception to the grand bargain of workers’ compensation, they have historically been limited to police and firefighters for specific injuries such as cancer or heart disease that that may arise from the unique risks inherent in their public service jobs, and even then, only when there is clear and compelling evidence of a lack of hazard abatement, a high incidence of injury, and a high denial rate. In the case of SB 1299, which would open the door to private sector presumptions, CWCI’s analysis indicates such evidence is lacking. The Institute has issued its analysis as an Impact Analysis report that is available for free under the Research tab at www.cwci.org.

  • Cal. Supreme Ct. Clarifies Vertical v Horizontal Integration of Excess Insurance
    on June 17, 2024 at 12:10 PM

    From 1944 through the 1970s, Kaiser Cement and Gypsum Corporation manufactured asbestos-containing products at numerous different facilities. By 2004, more than 24,000 claimants had filed product liability suits against Kaiser alleging that they had suffered bodily injury (primarily asbestosis or cancer) as a result of exposure to Kaiser’s asbestos products. Truck Insurance Exchange, is a primary insurer for Kaiser.

    Kaiser tendered these claims to Truck, one of several primary insurers that had issued commercial general liability (CGL) policies to Kaiser during this time period. The subsequent litigation has generated multiple appellate decisions that have addressed a wide range of complex questions regarding insurance coverage and policy interpretation.

    In 2001, Truck initiated this insurance coverage action to determine its indemnity and defense obligations to Kaiser. Several years later, Truck amended its complaint to add a cause of action for contribution against several of Kaiser’s excess insurers that had issued first-level excess policies to Kaiser for policy years where the directly underlying primary policy had been exhausted.

    Relying on the California Supreme Court's reasoning in Montrose Chemical Corp. of California v. Superior Court (2020) 9 Cal.5th 215 (Montrose III), Truck argued that the excess insurers’ indemnity obligations were triggered immediately upon exhaustion of the directly underlying primary policies. Truck further reasoned that because the excess insurers owed a coverage duty to Kaiser, they were effectively responsible for indemnifying the same loss as Truck and should therefore be required to contribute to Truck’s coverage costs.

    According to the excess insurers, Montrose III’s analysis is limited to excess policies that sit over other excess policies, not first-level excess policies that sit over primary insurance.

    The Court of Appeal agreed with the excess insurers that Montrose III did not extend to excess policies that sit over primary insurance, which has characteristics that are distinct from excess insurance including immediate coverage and defense obligations. In so ruling, the court rejected SantaFe Braun, Inc. v. Insurance Co. of North America (2020) 52 Cal.App.5th 19 (SantaFe), which held that Montrose III’s reasoning does apply in the context of first-level excess policies. The court further concluded that because the excess insurers had no coverage obligation under their policies until all primary insurance had been exhausted (including Truck’s primary policy), Truck was not entitled to contribution.

    The appeal of this decision to the California Supreme Court required it to resolve the question that it left open in Montrose III: whether standard language in commercial general liability policies that are excess to primary insurance policies should be interpreted to require vertical or horizontal exhaustion. In other words, can an insured access a first-level excess insurance policy upon exhaustion of underlying primary insurance obtained for the same policy period (vertical exhaustion), or is the insured required to exhaust all primary policies issued during the continuous period of damage (horizontal exhaustion)?

    Contrary to the Court of Appeal reasoning, the California Supreme Court in Truck Ins. Exchange v. Kaiser Cement & Gypsum Corp.-S273179 (June 2024) concluded that its analysis in Montrose III applies equally here and reversed the Court of Appeal.

    In the context of standard "occurrence based" CGL insurance policies, California has adopted what is known as the "all-sums-with-stacking" approach to continuous injuries. This approach has three primary components. First, in Montrose Chemical Corp. v. Admiral Ins. Co. (1995) 10 Cal.4th 645, 656 (Montrose I), the Supreme Court adopted the "continuous injury trigger of coverage" principle (id. at p. 685), under which "bodily injury and property damage that is continuous or progressively deteriorating throughout several policy periods is potentially covered by all policies in effect during those periods." (Id. at p. 655.) In other words, the insured may call upon any policy that was in effect during the continuous period of injury.

    Second, in Aerojet-General Corp. v. Transport Indemnity Co. (1997) 17 Cal.4th 38, the Supreme Court adopted "the 'all sums' rule" (State of California v. Continental Ins. Co. (2012) 55 Cal.4th 186, 191 (Continental)), pursuant to which each policy triggered during a long-tail injury is potentially liable for the total amount of the loss, regardless of whether a portion of the loss occurred outside the policy’s coverage period. The rule "envisions that each successive insurer is potentially liable for the entire loss up to its policy limits. When the entire loss is within the limits of one policy, the insured can recover from that insurer, which may then seek contribution from the other insurers on the risk during the same loss." (Id. at p. 200.)

    Third, in Continental, supra, 55 Cal.4th 186, the Supreme Court construed language in standard CGL policies to permit "stacking," which allows an insured "to add together the maximum limits of all consecutive policies that [were] in place during the [period of continuous injury]." (12 Couch on Insurance (3d ed. 2010) § 169:5; see Continental, at p. 200 ["stacking’ generally refers to the stacking of policy limits across multiple policy periods that were on a particular risk"].) In other words, " '[w]hen the policy limits of a given insurer are exhausted, [the insured] is entitled to seek indemnification from any of the remaining insurers [that were] on the risk [during the continuous period of injury].' " (Continental, at p. 200.) If, for example, an insured purchased 10 annual policies that each had a coverage limit of $1 million, and all the policies were triggered by a continuous injury, the insured would be permitted to stack all of the policies to collect up to $10 million in total coverage.

    In this current case involving Kaiser, the language of the first-level excess policies is essentially identical - and in some cases actually identical - to the policy language in the higher-level excess policies that the Supreme Court considered in Montrose III. The policies also share many of the same characteristics that it found "strongly suggest[ive]" of vertical, rather than horizontal, exhaustion.

    "Thus, as in Montrose III, we believe the first-level excess policies are most reasonably construed as requiring only vertical exhaustion."

  • CEO and President of ADHD Telehealth Company Arrested for $100M Fraud
    on June 17, 2024 at 12:10 PM

    The founder and CEO of a California-based digital health company and its clinical president were just arrested in connection with their alleged participation in a scheme to distribute Adderall over the internet, conspire to commit health care fraud in connection with the submission of false and fraudulent claims for reimbursement for Adderall and other stimulants, and obstruct justice.

    Ruthia He,also known as Rujia He, the founder and CEO of Done Global Inc., was arrested in Los Angeles and was expected to make her initial appearance in a Los Angeles federal court.

    David Brody M.D., the clinical president of Done Health P.C. (collectively, Done), was arrested in San Rafael, California, and will make his initial appearance in San Francisco, California. Brody is a psychiatrist who maintained a DEA registration number and was authorized to prescribe controlled substances in the State of California.

    The charges coincide with an ongoing shortage of several stimulant medications commonly prescribed to treat ADHD, according to the U.S. Centers for Disease Control and Prevention. A disruption "involving this large telehealth company could impact as many as 30,000 to 50,000 patients ages 18 years and older across all 50 U.S. states," the agency said.

    Back in September 2022 The Wall Street Journal and people familiar with the inquiries claimed that U.S. Drug Enforcement Administration agents have questioned people about telehealth company Done Global Inc.’s practices for prescribing controlled substances.

    According to court documents, He and Brody allegedly conspired with others to provide easy access to Adderall and other stimulants in exchange for payment of a monthly subscription fee. The indictment alleges that the conspiracy’s purpose was for the defendants to unlawfully enrich themselves by, among other things, by increasing monthly subscription revenue and thus increasing the value of the company. Done allegedly arranged for the prescription of over 40 million pills of Adderall and other stimulants, and obtained over $100 million in revenue.

    He and Brody allegedly obtained subscribers by targeting drug seekers and spending tens of millions of dollars on deceptive advertisements on social media networks.

    They also allegedly intentionally structured the Done platform to facilitate access to Adderall and other stimulants, including by limiting the information available to Done prescribers, instructing Done prescribers to prescribe Adderall and other stimulants even if the Done member did not qualify, and mandating that initial encounters would be under 30 minutes. To maximize profits, He allegedly put in a place an "auto-refill" function that allowed Done subscribers to elect to have a message requesting a refill be auto-generated every month. He wrote that Done sought to "use the comp structure to dis-encourage follow-up" medical care by refusing to pay Done prescribers for any medical visits, telemedicine consultation, or time spent caring for patients after an initial consultation, and instead paying solely based on the number of patients who received prescriptions.

    He and Brody allegedly persisted in the conspiracy even after being made aware that material was posted on online social networks about how to use Done to obtain easy access to Adderall and other stimulants, and that Done members had overdosed and died. They also allegedly concealed and disguised the conspiracy by making fraudulent representations to media outlets to forestall government investigations and action and induce third parties to continue doing business with Done.

    He, Brody, and others also conspired to defraud pharmacies and Medicare, Medicaid, and the commercial insurers to cause the pharmacies to dispense Adderall and other stimulants to Done members in violation of their corresponding responsibility; Medicare, Medicaid, and the commercial insurers to pay for the cost of these drugs; and Done members to continue to pay subscription fees to Done. He and others allegedly made false and fraudulent representations about Done’s prescription policies and practices to induce the pharmacies to fill Done’s prescriptions. As a result, Medicare, Medicaid, and the commercial insurers paid in excess of approximately $14 million.

    The indictment also alleges that He and Brody conspired to obstruct justice after a grand jury subpoena was issued to another telehealth company and in anticipation of a subpoena being issued to Done, including by deleting documents and communications, using encrypted messaging platforms instead of company email, and ultimately failing to produce documents in response to a subpoena issued to Done by a federal grand jury.

    If convicted, He and Brody each face a maximum penalty of 20 years in prison on the conspiracy to distribute controlled substances and distribution of controlled substances counts.

    Any patient of Done or medical professional who has been involved with the allegedly illegal conduct should call to report this conduct to the DEA hotline at 646-466-5159.

  • California Chamber of Commerce "Job Killer Bills" Miss Key Deadline
    on June 13, 2024 at 1:43 PM

    Last April, the California Chamber of Commerce released its initial 2024 job killer list which, at the time, included nine bills dealing with labor and employment, taxation, unemployment insurance, environmental and health care issues. Subsequently, additions and deletions were made to the list as legislative activity progressed.  Three of the five remaining California Chamber of Commerce Job Killer bills missed the end of May deadline to pass the house in which they were introduced.

    Stalled Bills: The following job killer bills failed to pass before Friday’s deadline:

    - - ACA 16 (Bryan; D-Los Angeles): Has far-reaching negative consequences that would impair government operations, stunt development for new housing, infrastructure and clean energy project development and the strong potential to destabilize California’s economy. This constitutional amendment still is likely to come up for a vote in the next couple of weeks.
    - - SB 1327 (Glazer; D-Contra Costa): Implements a discriminatory 7.25% tax on the revenue generated from the sale of digital advertising. The bill is likely unconstitutional and will lead to costly litigation for the state.
    - - SB 1497 (Menjivar; D-Los Angeles): Imposes an ill-defined tax on a broad set of entities that will increase costs for goods and services in California.

    Amended to Remove Job Killer Tag

    AB 2499 (Schiavo; D-Chatsworth) will be amended to remove certain qualifying reasons for leave that are not related to safety, narrow the accommodations provisions, and limit the amount of time off an employee can take for certain reasons. The Appropriations Committee had also amended the threshold of applicability to apply to employers with 25 or more employees, which is consistent with existing law. Before amendments, it significantly expanded the 12-week leave related to crimes and lowered the threshold of applicability to employers with just five employees.

    Opposed Bills Stopped: Additionally, three CalChamber-opposed bills also failed to pass their house of origin on time. The following bills are dead for the year:

    - - AB 2648 (Bennett; D-Ventura): Prohibits the state from purchasing and all food services inside state facilities from offering any single-use plastic bottled beverages despite this packaging having one of the highest recycling rates in the country and despite the negative impacts to both the environment and state budget from using less efficient and more expensive packaging.
    - - AB 3155 (Friedman; D-Glendale): Sets disturbing precedent by creating liability without proof for oil well owners/operators if individuals who lived within 3,200 feet of a wellhead develop certain health conditions.
    - - SB 1494 (Glazer; D-Contra Costa): Eliminates an important economic development tool by prohibiting local governments from entering into sales tax sharing agreements with businesses. SB 1494 failed passage on a vote of 17-11 on May 23; reconsideration was granted.

    What Remains:

    - - SB 1116 (Portantino; D-Burbank) Increased Unemployment Insurance Taxes to Subsidize Striking Workers. SB 1116 will allow striking workers to claim UI benefits when they choose to strike. Because the UI Fund is paid for entirely by employers, SB 1116 will effectively add more debt onto California employers. Moreover, SB 1116 will effectively force employers to subsidize strikes at completely unrelated businesses because the UI Fund’s debt adds taxes for all employers, regardless of whether they’ve had a strike.
    - - SB 1327 (Glazer; D-Contra Costa) Tax on Digital Advertising Revenue. Implements a discriminatory 7.25% tax on the revenue generated from the sale of digital advertising. The bill targets taxpayers that annually make at least $2.5 billion of revenue from these services.

  • The EEOC Sued 15 Employers for Failure to File EEO-1 Report
    on June 13, 2024 at 1:42 PM

    Title VII of the Civil Rights Act of 1964 mandated employers to maintain records that could be used to identify potential discrimination in hiring practices.Following this, in 1966, the Equal Employment Opportunity Commission (EEOC) implemented a requirement for certain employers to report employee data categorized by job category, race, ethnicity, and sex. This data collection became known as "EEO-1."

    While EEO-1 data collection has been in place for decades, it wasn't until 2020 that the current EEO-1 Component 1 report format was finalized. In 2016, the EEOC sought approval to collect this specific data set, which focuses on workforce demographics. After receiving final approval from the Office of Management and Budget (OMB) in June 2020, the EEO-1 Component 1 report became the official format for this mandatory data collection.

    The EEO-1 Component 1 report is a mandatory annual data collection that requires all private sector employers with 100 or more employees, and federal contractors with 50 or more employees meeting certain criteria, to submit demographic workforce data to the EEOC.

    The EEOC has the authority to compel employers to file EEO-1 reports through court order pursuant to Section 709(c) of Title VII of the Civil Rights Act.

    The U.S. Equal Employment Opportunity Commission (EEOC) just announced it has filed suit against 15 employers in 10 states this week, alleging the companies failed to comply with mandatory federal reporting requirements. The list of employer includes companies from the retail, construction, restaurant, manufacturing, logistics, and service industries.

    Federal law requires employers with 100 or more employees to submit workforce data to the EEOC. The data collected includes workforce information by job category and sex, race, or ethnicity. This workforce demographic data is used for a variety of purposes including enforcement, analytics and research, and employer self-assessment.

    "This data collection is an important tool for ensuring compliance with Title VII’s prohibition on workplace discrimination," said EEOC General Counsel Karla Gilbride. "Not only did Congress authorize the EEOC to collect this data, Congress also authorized the agency to go to court to obtain compliance when employers ignore their obligation to provide the required information."

    The 2023 EEO-1 Component 1 data collection is currently underway. The EEOC began collecting EEO-1 Component 1 data from employers for the 2023 reporting cycle on April 30, 2024. The published deadline to file the 2023 EEO-1 Component 1 report was June 4, 2024.

    The EEOC publishes an Instruction Booklet for employers to assist them in complying with this mandatory reporting requirement, which is available at https://www.eeocdata.org/eeo1

    For more information on EEO data collection, please visit https://www.eeoc.gov/data/eeo-data-collections.

Archived Daily News Stories