- Huntington Park Doctor Resolves False Claim Act Case for $6.7Mon May 11, 2026 at 1:33 PM
A Huntington Park-based medical practice and its physician have agreed to pay more than $6.73 million to resolve allegations that they violated the False Claims Act by submitting false claims for medically unnecessary vascular interventional procedures on 20 Medicare beneficiaries.
The United States alleged that, from 2016 to 2024, Dr. Feliciano Serrano of Serrano Kidney & Vascular Access Center performed medically unnecessary dialysis access interventions, including angioplasty and stent procedures, on 18 patients, purportedly to treat stenosis in patients’ dialysis segments.
Dr. Serrano scheduled interventions on a routine basis, without waiting for complications to present, and he frequently repeated procedures on patients every few days or weeks despite that the procedures were not effective and did not result in any clinical benefit. One Medicare patient received approximately 42 stents in the dialysis segment between 2016 and 2023, including during a period when Dr. Serrano informed the patient he did not need dialysis.
The United States also alleged that from 2019 to 2024, Dr. Serrano performed medically unnecessary peripheral artery disease interventions, including stent and atherectomy procedures, on 17 patients, purportedly to treat stenosis in patients’ legs. Dr. Serrano performed interventions on patients who had only mild or no stenosis and who had only minor symptoms.
Although patients complained of pain only in one leg, he performed procedures on both legs and then repeated procedures on both legs every few months. Dr. Serrano told patients that if they did not receive the procedure, their legs would need to be amputated, when, in fact, there was little risk of amputation for mildly symptomatic peripheral artery disease. One Medicare patient received approximately 16 atherectomies in his legs between 2019 and 2023.
The United States alleged that across both categories of procedures, Dr. Serrano performed interventional procedures on vessels that did not qualify for treatment under accepted standards of medical practice; overstated the degree of stenosis to make the procedures appear to meet generally recognized medical standards when, in fact, they did not; falsely documented patient symptoms and conservative therapy measures in medical records to justify the procedures; and performed procedures in excess of accepted standards of medical practice.
As a result of the settlements, Dr. Serrano will pay nearly $6.51 million to the United States and nearly $229,000 to the State of California.
The civil settlement includes the resolution of claims brought by Lincoln Analytics, Inc. under the qui tam or whistleblower provisions of the False Claims Act. Under the act, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States and State of California ex rel. Lincoln Analytics, Inc. v. Dr. Feliciano Serrano, et al., Civil Action No. 23-cv-04178 (C.D. Cal.). Lincoln Analytics, Inc. will receive approximately $976,000 as its share of the federal recovery.
The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, the United States Attorney’s Office for the Central District of California, and the California Department of Justice, with assistance from the Department of Health and Human Services, Office of Inspector General.
Assistant United States Attorney Karen Y. Paik of the Civil Frauds Section and Justice Department Trial Attorney Tiffany L. Ho of the Civil Division’s Commercial Litigation Branch, Fraud Section handled this case.
The claims resolved by the settlement are allegations only and there has been no determination of liability.
- Jury Convicts Bay Area Man of Insurance Fraud After 7 Day Trialon May 11, 2026 at 1:33 PM
A federal jury convicted Colin Jackson of conspiracy to commit wire fraud, wire fraud, and money laundering. The jury’s verdict followed a seven-day trial before U.S. District Judge Trina L. Thompson.
The jury found that Jackson conspired with others, including a previously convicted defendant, Kirill Afanasyev, to defraud an automobile insurance company concerning the submission of a fraudulent insurance claim on an already-wrecked car in 2018.
According to court documents and the evidence presented at trial, Jackson, 39, of San Francisco, obtained an insurance policy on an undrivable car in June 2018. He made a number of misstatements in his application for that policy, including regarding his estimated annual mileage on the car.
Five months later, in November 2018, Jackson and Afanasyev worked together to submit a fraudulent claim concerning a fake accident to the insurer. Unaware it had insured a wrecked car, the defrauded automobile-insurance company approved the claim and paid Jackson about $27,000—the insurer’s estimate of the replacement value of the car, which had been titled in Jackson’s name.
The 2018 fraud followed a similar scheme in 2017, when Jackson and Afanasyev obtained a payout from the insurer of approximately $30,000 on another already-wrecked car titled in Jackson’s name.
United States Attorney Craig Missakian, FBI Acting Special Agent in Charge Matthew Cobo, and IRS Criminal Investigation (IRS-CI) Oakland Field Office Special Agent in Charge Linda Nguyen made the announcement.
Jackson is next scheduled to appear before Judge Thompson for sentencing on September 25, 2026.
With the jury’s verdict against Jackson, more than a dozen defendants have either pleaded guilty or been convicted at trial as part of an ongoing federal investigation into automobile insurance frauds and an unrelated arson conspiracy involving an overlapping defendant, Jose Badillo, who previously pleaded guilty to participating in both parts of the scheme.
Operation Hammer Down was a federal investigation into automobile-insurance frauds orchestrated by Afanasyev and Badillo, the former owner of Jose’s Towing, Auto Towing, and Specialty Towing. In total, Afanasyev, Badillo, and others submitted and conspired to submit more than 50 fraudulent insurance claims that caused in excess of $1.5 million dollars in losses to automobile insurance companies.
Operation Hammer Down also concerned arsons orchestrated by Badillo, who sought to impede his competitors’ business prospects to exact revenge against them for perceived wrongs. For his role in the arson campaign, Badillo was sentenced in February 2026 to 60 months in custody by U.S. District Judge Rita F. Lin.
- Clinic Pays $750K to Resolve Illegal Use of Misbranded Implantson May 7, 2026 at 12:03 PM
Salud Para La Gente, is a nonprofit network of primary care clinics serving low-income individuals and families in Santa Cruz County and Monterey County. Salud was founded in 1978 as a single free clinic offering healthcare primarily to farmworkers living and working on California’s Central Coast. Since that time, Salud has become a federally qualified health center (FQHC), and grown to five clinics and four school-based health centers providing healthcare to nearly 27,000 patients.
Among the services it provides, Salud offers contraceptive care, including etonogestrel marketed under the brand name Nexplanon, to Medicaid beneficiaries. Nexplanon is a thin rod that is inserted under the skin of a patient’s upper arm that, once implanted, works to prevent pregnancy. It is a prescription birth control for the prevention of pregnancy for up to 5 years.
Salud has agreed to pay a total of $750,000 to resolve allegations that it submitted false claims for payment to the Medicaid program in connection with its purchase and administration of misbranded contraceptive implants.
United States Attorneys Office for the Northern District of California alleged that between May 17, 2017, and Sept. 11, 2020, Salud purchased misbranded Nexplanon from an unlicensed wholesaler and administered the misbranded Nexplanon to Medicaid patients. According to the United States, Salud knowingly submitted false claims for payment to Medicaid by using incorrect National Drug Code numbers, unique drug identifiers used by the FDA for reporting and patient safety purposes, for the misbranded Nexplanon and for its administration.
“Patient safety must be at the forefront of medical decision-making,” said United States Attorney Craig H. Missakian. Using misbranded drugs jeopardizes public health and constitutes a serious False Claims Act violation. We will continue to hold violators accountable.”
“It’s clearly dangerous and unethical for health care providers to administer misbranded drugs obtained from unlicensed sources to their patients,” said Special Agent in Charge Robb R. Breeden of the U.S. Department of Health and Human Services Office of Inspector General (HHS OIG). “Working with our law enforcement partners, HHS-OIG will continue to aggressively protect the health and well-being of patients and the integrity of federal health care programs.”
Assistant U.S. Attorney Michelle Lo handled this matter. The resolution resulted from a coordinated effort between the U.S. Attorney’s Office for the Northern District of California, HHS-OIG, and FDA’s Office of Criminal Investigations.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
- WCRI Reports Comp Claim Costs Grew 6 Percent Annually 2022-2025on May 7, 2026 at 12:03 PM
New research from the Workers Compensation Research Institute (WCRI), based on data from 18 study states, found that total workers’ compensation claim costs grew by an average of 6 percent per year from 2022 to 2025 in the median study state.
“The increase reflects sustained growth in the last few years across all major components of a claim, including medical payments, indemnity benefits, and benefit delivery expenses,” said Sebastian Negrusa, vice president of research at WCRI. “Workers’ compensation costs were fairly flat through 2022, but in the last few years, costs began to rise again, driven by increasing wages, higher medical prices, longer disability duration, and rising costs to administer claims.”
Key findings from the studies include:
- - Medical payments per claim increased, primarily by price growth for medical services rather than changes in utilization, with high‑cost claims a key driver of growth in some states.
- - Indemnity benefits per claim continued to rise, as longer durations of temporary disability placed upward pressure on benefits; wages for injured workers continued to grow but at a slower pace in more recent years.
- - Benefit delivery expenses per claim grew steadily, reflecting increases in medical cost containment expenses and litigation expenses.
- - Cost growth was widespread across states, with most study states experiencing rising total costs per claim and increases in most cost components.
The findings are drawn from CompScope™ Benchmarks, 2026 Edition, a series of studies covering 18 states that monitor the changes in workers’ compensation claim costs and their components. The studies examine claims with more than seven days of lost time, evaluated at 12 months of experience through 2025. The study states are Arkansas, California, Delaware, Florida, Illinois, Indiana, Iowa, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Texas, Virginia, and Wisconsin.
California specific research questions include:
- - How have California’s system performance metrics changed recently?
- - How does California’s workers’ compensation system compare with 17 other states?
- - What has been the impact of changes in the economic environment during the recovery from the pandemic on California’s workers’ compensation system?
All state studies included in this edition are available free to WCRI members and for a fee to nonmembers.
- Staffing Company Arbitration Agmt. Not Applicable to Employeron May 6, 2026 at 3:10 PM
Robert Toothman was hired by Apex Life Sciences, LLC, a temporary staffing agency, which placed him on assignment at Redwood Toxicology Laboratory, Inc. As a condition of that placement, Toothman signed both an Employment Agreement and a companion Arbitration Agreement with Apex. The Arbitration Agreement bound "Employee" (Toothman) and "Company" — defined as Apex and "its affiliates, subsidiaries and parent companies" — to arbitrate any dispute "arising out of or related to" Toothman's employment with, or termination from, Company. It also waived class and representative claims.
Toothman's Apex assignment ended in April 2018. Two days later, Redwood hired him directly — without any new arbitration agreement and without any reference to the Apex documents. Toothman worked for Redwood until June 2022. In September 2022, he filed a class action against Redwood alleging Labor Code violations covering the period of his direct employment, starting no earlier than September 26, 2018 — well after his Apex tenure had ended.
After Redwood subpoenaed Apex and obtained a copy of the Arbitration Agreement, Toothman filed an amended complaint that redefined the proposed class to exclude workers staffed by third parties while on assignment, but retained individuals like Toothman himself who had transitioned from staffed to direct employment.
Redwood moved to compel arbitration of Toothman's individual claims and to dismiss his class claims, arguing three alternative theories: (1) it was a party to the Arbitration Agreement as an "affiliate" of Apex; (2) it could enforce the agreement as a third-party beneficiary; and (3) Toothman was equitably estopped from resisting arbitration. The Sonoma County Superior Court denied the motion in its entirety.
The First Appellate District affirmed the trial court's denial of the motion to compel arbitration in the published case of Toothman v. Redwood Toxicology Laboratory, Inc. Case No. A171567 (May 2026). The court reviewed the matter de novo, as the material facts were undisputed.
The court first addressed who bore the burden of proof. Because Redwood was not a signatory to the Arbitration Agreement, it could not simply produce the agreement and shift the burden to Toothman to defeat it. Relying on Jones v. Jacobson (2011) 195 Cal.App.4th 1, the court held that a nonsignatory moving party must affirmatively establish its entitlement to enforce the agreement as part of its own initial burden — whether proceeding as a party, a third-party beneficiary, or under equitable estoppel.
Redwood argued it qualified as an "affiliate" of Apex and was therefore a "Company" party to the agreement. The court rejected this, applying standard California contract interpretation principles. The term "affiliates," appearing alongside "subsidiaries and parent companies," plainly connoted relationships of common ownership or corporate control — not arms-length commercial arrangements. The companion Employment Agreement used the separate term "Clients" to describe businesses like Redwood, and the parties never incorporated that term into the Arbitration Agreement's definition of "Company." Accepted dictionary definitions — including Black's Law Dictionary (10th ed. 2014) at page 69 — confirmed that "affiliate" in a corporate context means entities related "by shareholdings or other means of control." The court also noted the practical absurdity of Redwood's theory: it would mean that Apex unilaterally prescribed dispute resolution procedures for its clients' own direct-hire employees without those clients' knowledge or consent.
Even assuming Redwood could qualify as a third-party beneficiary, the court held that Toothman's claims still fell outside the Arbitration Agreement's substantive scope. The agreement covered only disputes "arising out of or related to" employment with "Company" — i.e., Apex. Toothman's claims arose entirely from his direct employment with Redwood, which began after his Apex employment ended. The court cited Vazquez v. SaniSure, Inc. (2024) 101 Cal.App.5th 139 for the principle that an arbitration agreement from one period of employment does not automatically govern disputes arising in a separate, subsequent period.
Finally, the court rejected Redwood's argument that Toothman was equitably estopped from contesting arbitration. Equitable estoppel applies when a plaintiff's claims are "dependent upon, or founded in and inextricably intertwined with" the underlying agreement containing the arbitration clause — as articulated in Goldman v. KPMG, LLP (2009) 173 Cal.App.4th 209. Here, Toothman's Labor Code claims depended entirely on his employment agreement with Redwood, not on the Apex Arbitration Agreement. The court also rejected Redwood's contention that Toothman's amendment of the class definition was an implicit admission that his claims were intertwined with the Arbitration Agreement, finding no authority to support that proposition and noting that a plaintiff's decision to narrow or limit claims does not constitute the kind of "artful pleading" that triggers estoppel.
- Last Holdout Regeneron Signs On to Most Favored Nation Pricingon May 6, 2026 at 3:10 PM
When the White House announced a Most Favored Nation (MFN) drug pricing agreement with Regeneron Pharmaceuticals on April 23rd, it wasn't just another deal. It was the final piece of a puzzle the Trump administration had been assembling for over a year. Regeneron was the 17th — and last — of the major pharmaceutical companies targeted by the administration to sign on, completing a full sweep that few in Washington had expected to happen this quickly.
What Is "Most Favored Nation" Pricing? The concept is straightforward, even if the politics are anything but. For decades, Americans have paid dramatically more for prescription drugs than patients in other wealthy nations. The same medication sold in Germany, Japan, or Canada often carries a fraction of the U.S. price tag. The administration's MFN policy aims to fix that by tying what American patients pay to the lowest price offered in comparable developed nations — ensuring the U.S. gets the same deal as everyone else.
President Trump signed an executive order outlining the initiative in May 2025 and launched TrumpRx.gov on February 5, 2026, a government portal where patients can access drugs at MFN-aligned prices. Since then, administration officials have been negotiating voluntary pricing agreements one company at a time.
Under the deal, Regeneron committed to several significant concessions:
- - Medicaid access at MFN prices — Every state Medicaid program will now have access to Regeneron products at MFN pricing, with the White House projecting hundreds of millions in savings for the program that serves the country's most vulnerable patients.
- - Future drugs at MFN rates — Regeneron agreed to align pricing for all new innovative medicines it brings to market with prices set in the comparable group of developed nations — a notably forward-looking commitment.
- - Praluent on TrumpRx.gov — The company's cholesterol-lowering drug will be available at a discounted price through the government portal.
- - A free gene therapy — Coinciding with the announcement, Regeneron received FDA approval for Otarmeni, the first gene therapy for genetic hearing loss. As part of the deal, the company agreed to make it available at no cost to eligible U.S. patients.
- - $27 billion U.S. investment — Regeneron separately announced a commitment to invest $27 billion in American research, development, and manufacturing by 2029, more than doubling its domestic biologic production capacity.
Regeneron co-founder and CEO Dr. Leonard Schleifer didn't sound like a reluctant partner in his statement. "For too long, American patients and taxpayers have shouldered a disproportionate share of the cost of biotechnology innovation," he said, adding that other high-income nations have not been "paying their fair share" for the breakthroughs they rely on. Schleifer has reportedly made this argument privately for over a decade — the MFN framework, in his framing, gave him a mechanism to finally act on it.
The Regeneron deal brings the total number of MFN agreements to 17, encompassing pharma giants including Pfizer, AstraZeneca, Eli Lilly, Novo Nordisk, Amgen, Bristol Myers Squibb, Gilead Sciences, Merck, Novartis, Sanofi, Johnson & Johnson, and AbbVie, among others. The White House estimates that combined U.S. pharmaceutical investment commitments under President Trump now total $448 billion over just 15 months.
The administration has also signaled it intends to expand the framework beyond the original 17, with expectations of reaching similar agreements with most manufacturers of sole-source brand-name drugs and biologics. Efforts are also underway to codify the voluntary agreements into law through Congress, which would lock in the pricing protections for the long term.
Whether the MFN model delivers lasting relief for American patients will depend on several factors still unresolved: how aggressively the agreements are enforced, whether Congress acts to make them permanent, and how drug companies manage pricing globally as they balance domestic commitments against foreign markets. Critics have also raised questions about potential impacts on pharmaceutical innovation incentives over the long run.
For now, though, one chapter has clearly closed. Every company on the administration's list has signed on — and the last holdout brought a gene therapy giveaway and a $27 billion investment pledge along with it.
- California DOI Takes Enforcement Action Against State Farmon May 5, 2026 at 10:05 AM
The California Department of Insurance announced a major enforcement action against State Farm General Insurance Company after an expedited investigation uncovered significant mishandling of insurance claims filed by survivors of the 2025 Los Angeles wildfires. Acting on consumer complaints, Insurance Commissioner Ricardo Lara ordered a Market Conduct Examination that documented a pattern of unlawful behavior in more than half of the claims reviewed.
State Farm policyholders filed approximately 11,300 residential claims related to the Los Angeles wildfires, nearly one-third of the 38,835 claims filed across all insurers, according to the Department’s official claims tracker. The violations identified by the Department indicate that thousands of survivors may have been affected.
The Department’s enforcement action seeks millions of dollars in penalties, considered the largest amount pursued this century following a wildfire disaster. In addition to penalties, the Department is requiring State Farm to take corrective actions to speed up payments and resolve outstanding claims
Department examiners reviewed a sample of 220 claims and found 398 violations of state law in 114 of those claims, many of which contained multiple violations. Major violations mirror the delays and denials reported by wildfire survivors to the Department, including:
- - Slow and inadequate investigation: State Farm failed to begin investigating claims within 15 days, failed to accept or deny claims within 40 days, and failed to pay accepted claims or provide written notice of the need for additional time within 30 days, as required by law.
- - Underpayment of claims: State Farm made unreasonably low settlement offers and underpaid claims.
- - Multiple adjusters causing confusion: State Farm failed to assign adjusters within statutory timelines and reassigned adjusters repeatedly, creating what survivors described as “adjuster roulette.”
- - Smoke damage claim denials and delays: Smoke damage claims represented nearly half of all consumer complaints. Examiners found that State Farm failed to provide required written denials for hygienist and environmental testing, misclassified testing costs, and misrepresented policy provisions related to inspections.
- - Inadequate communication: State Farm failed to respond to policyholders, send required status letters, or provide notice when additional time was needed to determine claims.
Since last January, the Department has recovered more than $280 million from all insurance companies for survivors of the Eaton and Palisades fires through direct intervention. As of March 3, 2026, insurers have paid out more than $23.7 billion to residential, commercial, and auto policyholders impacted by the fires.
The Department has filed an Accusation and Order to Show Cause against State Farm -- the first step toward a public hearing before an administrative law judge. The filing alleges violations of the Unfair Insurance Claims Practices Act and related regulations, including the 398 violations identified in the Market Conduct Examination and 34 additional violations based on consumer complaints.
Under California Insurance Code Section 790.035, penalties may reach $5,000 per violation, or $10,000 for willful violations. Penalties may be imposed by the Commissioner following the administrative hearing.
Wildfire survivors experiencing delays, disputes, smoke damage issues, or other claim problems are encouraged to file a formal complaint with the Department of Insurance at insurance.ca.gov or by calling (800) 927-4357.
Separate from today’s action, the California Department of Insurance, Consumer Watchdog, and State Farm General recently reached a three-party settlement agreement over State Farm’s emergency rate request, now set to be reviewed by an impartial Administrative Law Judge.
State Farm said in a statement it rejected any suggestions it “engaged in a general practice of mishandling or intentionally underpaying wildfire claims" and called the state’s insurance market “dysfunctional.” The company said it has paid out more than $5.7 billion on 13,700 auto and home insurance claims related to the fires.
“The threat to suspend State Farm General’s ability to serve customers over primarily administrative and procedural errors is a reckless, politically motivated attack that could ultimately cripple California’s homeowners insurance market," the statement said.
- WCRI Compares 36 States Hospital Outpatient Surgery Paymentson May 5, 2026 at 10:05 AM
The Workers Compensation Research Institute (WCRI) is an independent, not-for-profit research organization founded in 1983. WCRI provides objective information through studies and data collection that follow recognized scientific methods and rigorous peer review..
A new report from the WCRI gives policymakers an understanding of how hospital outpatient payments for common knee and shoulder surgeries compare across states and how payment rules shape costs.
“With many states reexamining hospital fee regulations, this study provides meaningful state comparisons and shows how different regulatory approaches influence payment growth and payment levels,” said Sebastian Negrusa, vice president of research at WCRI.
The report, Hospital Outpatient Payment Index: Interstate Variations and Policy Analysis, 2026 Edition, benchmarks hospital outpatient payments related to surgeries in 36 states, covering 88 percent of U.S. workers’ compensation benefits.
States included in the study are Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin.
It also compares workers’ compensation payments with Medicare rates and examines the impact of major fee regulation changes from 2005 to 2024.
Key findings include:
- - Faster payment growth in states without fixed-amount fee schedules: From 2011 to 2024, hospital outpatient surgery payments rose by roughly twice as much in charge-based states and states without fee schedules, compared with the typical fixed-amount fee schedule state.
- - Higher payments in non-fee-schedule states: Payments were substantially higher—often more than double—than in fixed‑amount states.
- - Wide variation across states relative to Medicare: Payments ranged from 35 percent ($2,711) below Medicare in Nevada to 471 percent ($28,713) above Medicare in Alabama.
The study, authored by Drs. Olesya Fomenko and Rebecca Yang, is free for members and available to nonmembers for a fee.
- Railcar Repairman Not Under FAA Transportation Worker Exemptionon May 4, 2026 at 3:40 PM
Arturo Vela was hired by Harbor Rail Services of California, Inc. (Harbor) as a railcar repairman and was terminated five months later in October 2021. Before beginning work, Vela signed a mutual arbitration agreement covering all employment-related claims. The agreement also contained a class and representative action waiver, meaning Vela gave up his right to pursue claims on behalf of other workers.
Harbor was not itself a railroad, it was a repair and inspection contractor working under a service agreement with Pacific Harbor Line (PHL), a short-line railroad operating a train yard in Wilmington, California. Larger railroads Burlington Northern Santa Fe and Union Pacific would deliver freight cars to PHL's yard, where the cars were disconnected from locomotives, taken out of service, and left for inspection and repair. Vela's work consisted of changing wheels and brake pads, disassembling and reassembling train cars, and welding and fabricating metal components — all performed on decommissioned cars sitting in the yard. Once repaired, the cars were returned to PHL and eventually back to the freight railroads.
In October 2023, Vela filed suit in Los Angeles County Superior Court against Harbor, asserting a slate of California Labor Code violations — unpaid overtime, missed meal and rest period premiums, unpaid minimum wages, late final wages, noncompliant wage statements, and unreimbursed business expenses — along with an Unfair Competition Law claim. Vela brought these claims on his own behalf and on behalf of a proposed class of current and former Harbor employees.
Harbor moved to compel Vela's individual claims to arbitration and to dismiss his class claims. The trial court held multiple rounds of briefing and, after receiving supplemental evidence and argument, granted Harbor's motion in February 2025. The court ordered Vela's individual claims to arbitration and dismissed and struck his class claims, finding the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., governed the parties' agreement and that no exemption removed it from the FAA's reach.
The Court of Appeal affirmed the dismissal and striking of Vela's class claims in the published case of Vela v. Harbor Rail Services of California, Inc., Case No. B344723 (May, 2026).
Railroad Employee. Section 1 of the FAA exempts "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." Vela argued he qualified as a "railroad employee" because his work was performed for PHL under Harbor's service contract with that entity. The court rejected this theory on a threshold ground: a "contract of employment" under Section 1 must have the qualifying worker as one of its parties. Vela had no contract with PHL. Citing Fli-Lo Falcon, LLC v. Amazon.com, Inc., 97 F.4th 1190, 1196–1197 (9th Cir. 2024), and Amos v. Amazon Logistics, Inc., 74 F.4th 591, 596 (4th Cir. 2023), the court held that the Harbor–PHL service agreement — a business-to-business contract — could not qualify. The court also rejected Vela's reliance on the Railway Labor Act's definition of "employee," finding no evidence that PHL supervised or directed Vela's work; Harbor, by contract, retained exclusive control over its workers.
The FAA Exemption — Transportation Worker. The Supreme Court's decision in Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022), requires courts to (1) identify the class of workers to which the individual belongs based on the work they typically perform, and then (2) determine whether that class is "engaged in foreign or interstate commerce." Under Saxon, workers who are "directly involved in transporting goods across state or international borders" fall within the exemption. For workers whose duties are more removed from that activity, they must play a "direct and necessary role in the free flow of goods across borders" to qualify. The Ninth Circuit subsequently applied Saxon in Ortiz v. Randstad Inhouse Services, LLC, 95 F.4th 1152, 1160 (9th Cir. 2024), requiring that a worker's relationship to the movement of goods be "sufficiently close enough" to play "a tangible and meaningful role" in interstate commerce, and in Lopez v. Aircraft Service International, Inc., 107 F.4th 1096, 1101 (9th Cir. 2024), which found an airplane fuel technician qualified because refueling was a "vital component" of an aircraft's ability to engage in interstate transportation.
Applying this framework, the court held that Vela's class — workers who inspect and repair freight cars that have been removed from service and placed in a maintenance yard — is too far removed from actual transportation to qualify. The cars were decommissioned and unusable until Vela and his coworkers finished their tasks. It was only after repairs were completed that the cars re-entered service and resumed a role in moving goods. The court also noted the absence of any evidence that Vela's class typically worked on cars that still contained freight. Cases Vela cited in support, including Betancourt v. Transportation Brokerage Specialists, Inc., 62 Cal.App.5th 552 (2021) (package delivery driver), and Nieto v. Fresno Beverage Co., Inc., 33 Cal.App.5th 274 (2019) (delivery truck driver), were distinguished because those workers played active roles in moving goods — Vela did not.
Because the FAA applied and no exemption saved Vela from it, the class action waiver in his arbitration agreement was enforceable under federal law, which preempts California doctrine that would otherwise void such waivers. See Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348, 359 (2014).
- O.C. PET Scan Provider to Pay 8.3M to Resolve Kickback Caseon May 4, 2026 at 3:40 PM
Modern Nuclear Inc. (MNI), a La Habra-based mobile PET scan company, has agreed to pay more than $8.3 million plus additional money based on future revenue to resolve False Claims Act allegations that it violated federal law by paying referring cardiologists excessive fees to supervise positron emission tomography (PET) scans.
According to the Justice Department, from September 2016 to January 2025, MNI knowingly submitted false or fraudulent claims to federal health care programs arising from violations of the Anti-Kickback Statute. Specifically, MNI allegedly paid kickbacks to referring cardiologists in the form of above-fair market value fees, ostensibly for cardiologists to supervise PET scans for the patients they referred to MNI.
These fees substantially exceeded fair market value for the cardiologists’ services because MNI paid the referring cardiologists for time they spent in their offices caring for other patients or while they were not on site at all, or for additional services beyond supervision that were never or rarely actually provided.
MNI purported to rely on an attorney-opinion letter regarding fair market value that the United States alleged was premised on fundamental inaccuracies and that the consultant ultimately withdrew.
In connection with the settlement, MNI entered into a five-year corporate integrity agreement (CIA) with the United States Department of Health and Human Services Office of Inspector General (HHS-OIG). This agreement requires, among other compliance provisions, that MNI implement measures designed to ensure that arrangements with referring physicians are compliant with the Anti-Kickback Statute.
The agreement also requires that MNI implement a compliance program to identify and address the Anti-Kickback Statute risks associated with other financial arrangements and retain an Independent Compliance Expert to perform a review of the effectiveness of the compliance program.
The civil settlement resolves claims brought under the qui tam or whistleblower provisions of the False Claims Act by relators Matt Lieberman and James Whitney. Under those provisions, a private party or relator can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. Lieberman v. Modern Nuclear, Inc., et al. (No. 8:23-cv-01646-DOC-KES) (C.D. Cal.). The relators will receive 16% of the total recovery in this matter.
The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the Central District of California, with assistance from the HHS-OIG and the Defense Health Agency Office of Inspector General.
Assistant United States Attorney Paul B. La Scala of the Civil Division’s Civil Fraud Section and Senior Trial Counsel Sanjay M. Bhambhani of the Justice Department’s Civil Division handled this matter. The claims resolved by the settlement are allegations only and there has been no determination of liability.
- Huntington Park Doctor Resolves False Claim Act Case for $6.7Mon May 11, 2026 at 1:33 PM
A Huntington Park-based medical practice and its physician have agreed to pay more than $6.73 million to resolve allegations that they violated the False Claims Act by submitting false claims for medically unnecessary vascular interventional procedures on 20 Medicare beneficiaries.
The United States alleged that, from 2016 to 2024, Dr. Feliciano Serrano of Serrano Kidney & Vascular Access Center performed medically unnecessary dialysis access interventions, including angioplasty and stent procedures, on 18 patients, purportedly to treat stenosis in patients’ dialysis segments.
Dr. Serrano scheduled interventions on a routine basis, without waiting for complications to present, and he frequently repeated procedures on patients every few days or weeks despite that the procedures were not effective and did not result in any clinical benefit. One Medicare patient received approximately 42 stents in the dialysis segment between 2016 and 2023, including during a period when Dr. Serrano informed the patient he did not need dialysis.
The United States also alleged that from 2019 to 2024, Dr. Serrano performed medically unnecessary peripheral artery disease interventions, including stent and atherectomy procedures, on 17 patients, purportedly to treat stenosis in patients’ legs. Dr. Serrano performed interventions on patients who had only mild or no stenosis and who had only minor symptoms.
Although patients complained of pain only in one leg, he performed procedures on both legs and then repeated procedures on both legs every few months. Dr. Serrano told patients that if they did not receive the procedure, their legs would need to be amputated, when, in fact, there was little risk of amputation for mildly symptomatic peripheral artery disease. One Medicare patient received approximately 16 atherectomies in his legs between 2019 and 2023.
The United States alleged that across both categories of procedures, Dr. Serrano performed interventional procedures on vessels that did not qualify for treatment under accepted standards of medical practice; overstated the degree of stenosis to make the procedures appear to meet generally recognized medical standards when, in fact, they did not; falsely documented patient symptoms and conservative therapy measures in medical records to justify the procedures; and performed procedures in excess of accepted standards of medical practice.
As a result of the settlements, Dr. Serrano will pay nearly $6.51 million to the United States and nearly $229,000 to the State of California.
The civil settlement includes the resolution of claims brought by Lincoln Analytics, Inc. under the qui tam or whistleblower provisions of the False Claims Act. Under the act, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States and State of California ex rel. Lincoln Analytics, Inc. v. Dr. Feliciano Serrano, et al., Civil Action No. 23-cv-04178 (C.D. Cal.). Lincoln Analytics, Inc. will receive approximately $976,000 as its share of the federal recovery.
The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, the United States Attorney’s Office for the Central District of California, and the California Department of Justice, with assistance from the Department of Health and Human Services, Office of Inspector General.
Assistant United States Attorney Karen Y. Paik of the Civil Frauds Section and Justice Department Trial Attorney Tiffany L. Ho of the Civil Division’s Commercial Litigation Branch, Fraud Section handled this case.
The claims resolved by the settlement are allegations only and there has been no determination of liability. - Jury Convicts Bay Area Man of Insurance Fraud After 7 Day Trialon May 11, 2026 at 1:33 PM
A federal jury convicted Colin Jackson of conspiracy to commit wire fraud, wire fraud, and money laundering. The jury’s verdict followed a seven-day trial before U.S. District Judge Trina L. Thompson.
The jury found that Jackson conspired with others, including a previously convicted defendant, Kirill Afanasyev, to defraud an automobile insurance company concerning the submission of a fraudulent insurance claim on an already-wrecked car in 2018.
According to court documents and the evidence presented at trial, Jackson, 39, of San Francisco, obtained an insurance policy on an undrivable car in June 2018. He made a number of misstatements in his application for that policy, including regarding his estimated annual mileage on the car.
Five months later, in November 2018, Jackson and Afanasyev worked together to submit a fraudulent claim concerning a fake accident to the insurer. Unaware it had insured a wrecked car, the defrauded automobile-insurance company approved the claim and paid Jackson about $27,000—the insurer’s estimate of the replacement value of the car, which had been titled in Jackson’s name.
The 2018 fraud followed a similar scheme in 2017, when Jackson and Afanasyev obtained a payout from the insurer of approximately $30,000 on another already-wrecked car titled in Jackson’s name.
United States Attorney Craig Missakian, FBI Acting Special Agent in Charge Matthew Cobo, and IRS Criminal Investigation (IRS-CI) Oakland Field Office Special Agent in Charge Linda Nguyen made the announcement.
Jackson is next scheduled to appear before Judge Thompson for sentencing on September 25, 2026.
With the jury’s verdict against Jackson, more than a dozen defendants have either pleaded guilty or been convicted at trial as part of an ongoing federal investigation into automobile insurance frauds and an unrelated arson conspiracy involving an overlapping defendant, Jose Badillo, who previously pleaded guilty to participating in both parts of the scheme.
Operation Hammer Down was a federal investigation into automobile-insurance frauds orchestrated by Afanasyev and Badillo, the former owner of Jose’s Towing, Auto Towing, and Specialty Towing. In total, Afanasyev, Badillo, and others submitted and conspired to submit more than 50 fraudulent insurance claims that caused in excess of $1.5 million dollars in losses to automobile insurance companies.
Operation Hammer Down also concerned arsons orchestrated by Badillo, who sought to impede his competitors’ business prospects to exact revenge against them for perceived wrongs. For his role in the arson campaign, Badillo was sentenced in February 2026 to 60 months in custody by U.S. District Judge Rita F. Lin. - Clinic Pays $750K to Resolve Illegal Use of Misbranded Implantson May 7, 2026 at 12:03 PM
Salud Para La Gente, is a nonprofit network of primary care clinics serving low-income individuals and families in Santa Cruz County and Monterey County. Salud was founded in 1978 as a single free clinic offering healthcare primarily to farmworkers living and working on California’s Central Coast. Since that time, Salud has become a federally qualified health center (FQHC), and grown to five clinics and four school-based health centers providing healthcare to nearly 27,000 patients.
Among the services it provides, Salud offers contraceptive care, including etonogestrel marketed under the brand name Nexplanon, to Medicaid beneficiaries. Nexplanon is a thin rod that is inserted under the skin of a patient’s upper arm that, once implanted, works to prevent pregnancy. It is a prescription birth control for the prevention of pregnancy for up to 5 years.
Salud has agreed to pay a total of $750,000 to resolve allegations that it submitted false claims for payment to the Medicaid program in connection with its purchase and administration of misbranded contraceptive implants.
United States Attorneys Office for the Northern District of California alleged that between May 17, 2017, and Sept. 11, 2020, Salud purchased misbranded Nexplanon from an unlicensed wholesaler and administered the misbranded Nexplanon to Medicaid patients. According to the United States, Salud knowingly submitted false claims for payment to Medicaid by using incorrect National Drug Code numbers, unique drug identifiers used by the FDA for reporting and patient safety purposes, for the misbranded Nexplanon and for its administration.
“Patient safety must be at the forefront of medical decision-making,” said United States Attorney Craig H. Missakian. Using misbranded drugs jeopardizes public health and constitutes a serious False Claims Act violation. We will continue to hold violators accountable.”
“It’s clearly dangerous and unethical for health care providers to administer misbranded drugs obtained from unlicensed sources to their patients,” said Special Agent in Charge Robb R. Breeden of the U.S. Department of Health and Human Services Office of Inspector General (HHS OIG). “Working with our law enforcement partners, HHS-OIG will continue to aggressively protect the health and well-being of patients and the integrity of federal health care programs.”
Assistant U.S. Attorney Michelle Lo handled this matter. The resolution resulted from a coordinated effort between the U.S. Attorney’s Office for the Northern District of California, HHS-OIG, and FDA’s Office of Criminal Investigations.
The claims resolved by the settlement are allegations only, and there has been no determination of liability. - WCRI Reports Comp Claim Costs Grew 6 Percent Annually 2022-2025on May 7, 2026 at 12:03 PM
New research from the Workers Compensation Research Institute (WCRI), based on data from 18 study states, found that total workers’ compensation claim costs grew by an average of 6 percent per year from 2022 to 2025 in the median study state.
“The increase reflects sustained growth in the last few years across all major components of a claim, including medical payments, indemnity benefits, and benefit delivery expenses,” said Sebastian Negrusa, vice president of research at WCRI. “Workers’ compensation costs were fairly flat through 2022, but in the last few years, costs began to rise again, driven by increasing wages, higher medical prices, longer disability duration, and rising costs to administer claims.”
Key findings from the studies include:
- - Medical payments per claim increased, primarily by price growth for medical services rather than changes in utilization, with high‑cost claims a key driver of growth in some states.
- - Indemnity benefits per claim continued to rise, as longer durations of temporary disability placed upward pressure on benefits; wages for injured workers continued to grow but at a slower pace in more recent years.
- - Benefit delivery expenses per claim grew steadily, reflecting increases in medical cost containment expenses and litigation expenses.
- - Cost growth was widespread across states, with most study states experiencing rising total costs per claim and increases in most cost components.
The findings are drawn from CompScope™ Benchmarks, 2026 Edition, a series of studies covering 18 states that monitor the changes in workers’ compensation claim costs and their components. The studies examine claims with more than seven days of lost time, evaluated at 12 months of experience through 2025. The study states are Arkansas, California, Delaware, Florida, Illinois, Indiana, Iowa, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Texas, Virginia, and Wisconsin.
California specific research questions include:
- - How have California’s system performance metrics changed recently?
- - How does California’s workers’ compensation system compare with 17 other states?
- - What has been the impact of changes in the economic environment during the recovery from the pandemic on California’s workers’ compensation system?
All state studies included in this edition are available free to WCRI members and for a fee to nonmembers. - Staffing Company Arbitration Agmt. Not Applicable to Employeron May 6, 2026 at 3:10 PM
Robert Toothman was hired by Apex Life Sciences, LLC, a temporary staffing agency, which placed him on assignment at Redwood Toxicology Laboratory, Inc. As a condition of that placement, Toothman signed both an Employment Agreement and a companion Arbitration Agreement with Apex. The Arbitration Agreement bound "Employee" (Toothman) and "Company" — defined as Apex and "its affiliates, subsidiaries and parent companies" — to arbitrate any dispute "arising out of or related to" Toothman's employment with, or termination from, Company. It also waived class and representative claims.
Toothman's Apex assignment ended in April 2018. Two days later, Redwood hired him directly — without any new arbitration agreement and without any reference to the Apex documents. Toothman worked for Redwood until June 2022. In September 2022, he filed a class action against Redwood alleging Labor Code violations covering the period of his direct employment, starting no earlier than September 26, 2018 — well after his Apex tenure had ended.
After Redwood subpoenaed Apex and obtained a copy of the Arbitration Agreement, Toothman filed an amended complaint that redefined the proposed class to exclude workers staffed by third parties while on assignment, but retained individuals like Toothman himself who had transitioned from staffed to direct employment.
Redwood moved to compel arbitration of Toothman's individual claims and to dismiss his class claims, arguing three alternative theories: (1) it was a party to the Arbitration Agreement as an "affiliate" of Apex; (2) it could enforce the agreement as a third-party beneficiary; and (3) Toothman was equitably estopped from resisting arbitration. The Sonoma County Superior Court denied the motion in its entirety.
The First Appellate District affirmed the trial court's denial of the motion to compel arbitration in the published case of Toothman v. Redwood Toxicology Laboratory, Inc. Case No. A171567 (May 2026). The court reviewed the matter de novo, as the material facts were undisputed.
The court first addressed who bore the burden of proof. Because Redwood was not a signatory to the Arbitration Agreement, it could not simply produce the agreement and shift the burden to Toothman to defeat it. Relying on Jones v. Jacobson (2011) 195 Cal.App.4th 1, the court held that a nonsignatory moving party must affirmatively establish its entitlement to enforce the agreement as part of its own initial burden — whether proceeding as a party, a third-party beneficiary, or under equitable estoppel.
Redwood argued it qualified as an "affiliate" of Apex and was therefore a "Company" party to the agreement. The court rejected this, applying standard California contract interpretation principles. The term "affiliates," appearing alongside "subsidiaries and parent companies," plainly connoted relationships of common ownership or corporate control — not arms-length commercial arrangements. The companion Employment Agreement used the separate term "Clients" to describe businesses like Redwood, and the parties never incorporated that term into the Arbitration Agreement's definition of "Company." Accepted dictionary definitions — including Black's Law Dictionary (10th ed. 2014) at page 69 — confirmed that "affiliate" in a corporate context means entities related "by shareholdings or other means of control." The court also noted the practical absurdity of Redwood's theory: it would mean that Apex unilaterally prescribed dispute resolution procedures for its clients' own direct-hire employees without those clients' knowledge or consent.
Even assuming Redwood could qualify as a third-party beneficiary, the court held that Toothman's claims still fell outside the Arbitration Agreement's substantive scope. The agreement covered only disputes "arising out of or related to" employment with "Company" — i.e., Apex. Toothman's claims arose entirely from his direct employment with Redwood, which began after his Apex employment ended. The court cited Vazquez v. SaniSure, Inc. (2024) 101 Cal.App.5th 139 for the principle that an arbitration agreement from one period of employment does not automatically govern disputes arising in a separate, subsequent period.
Finally, the court rejected Redwood's argument that Toothman was equitably estopped from contesting arbitration. Equitable estoppel applies when a plaintiff's claims are "dependent upon, or founded in and inextricably intertwined with" the underlying agreement containing the arbitration clause — as articulated in Goldman v. KPMG, LLP (2009) 173 Cal.App.4th 209. Here, Toothman's Labor Code claims depended entirely on his employment agreement with Redwood, not on the Apex Arbitration Agreement. The court also rejected Redwood's contention that Toothman's amendment of the class definition was an implicit admission that his claims were intertwined with the Arbitration Agreement, finding no authority to support that proposition and noting that a plaintiff's decision to narrow or limit claims does not constitute the kind of "artful pleading" that triggers estoppel.
- Last Holdout Regeneron Signs On to Most Favored Nation Pricingon May 6, 2026 at 3:10 PM
When the White House announced a Most Favored Nation (MFN) drug pricing agreement with Regeneron Pharmaceuticals on April 23rd, it wasn't just another deal. It was the final piece of a puzzle the Trump administration had been assembling for over a year. Regeneron was the 17th — and last — of the major pharmaceutical companies targeted by the administration to sign on, completing a full sweep that few in Washington had expected to happen this quickly.
What Is "Most Favored Nation" Pricing? The concept is straightforward, even if the politics are anything but. For decades, Americans have paid dramatically more for prescription drugs than patients in other wealthy nations. The same medication sold in Germany, Japan, or Canada often carries a fraction of the U.S. price tag. The administration's MFN policy aims to fix that by tying what American patients pay to the lowest price offered in comparable developed nations — ensuring the U.S. gets the same deal as everyone else.
President Trump signed an executive order outlining the initiative in May 2025 and launched TrumpRx.gov on February 5, 2026, a government portal where patients can access drugs at MFN-aligned prices. Since then, administration officials have been negotiating voluntary pricing agreements one company at a time.
Under the deal, Regeneron committed to several significant concessions:
- - Medicaid access at MFN prices — Every state Medicaid program will now have access to Regeneron products at MFN pricing, with the White House projecting hundreds of millions in savings for the program that serves the country's most vulnerable patients.
- - Future drugs at MFN rates — Regeneron agreed to align pricing for all new innovative medicines it brings to market with prices set in the comparable group of developed nations — a notably forward-looking commitment.
- - Praluent on TrumpRx.gov — The company's cholesterol-lowering drug will be available at a discounted price through the government portal.
- - A free gene therapy — Coinciding with the announcement, Regeneron received FDA approval for Otarmeni, the first gene therapy for genetic hearing loss. As part of the deal, the company agreed to make it available at no cost to eligible U.S. patients.
- - $27 billion U.S. investment — Regeneron separately announced a commitment to invest $27 billion in American research, development, and manufacturing by 2029, more than doubling its domestic biologic production capacity.
Regeneron co-founder and CEO Dr. Leonard Schleifer didn't sound like a reluctant partner in his statement. "For too long, American patients and taxpayers have shouldered a disproportionate share of the cost of biotechnology innovation," he said, adding that other high-income nations have not been "paying their fair share" for the breakthroughs they rely on. Schleifer has reportedly made this argument privately for over a decade — the MFN framework, in his framing, gave him a mechanism to finally act on it.
The Regeneron deal brings the total number of MFN agreements to 17, encompassing pharma giants including Pfizer, AstraZeneca, Eli Lilly, Novo Nordisk, Amgen, Bristol Myers Squibb, Gilead Sciences, Merck, Novartis, Sanofi, Johnson & Johnson, and AbbVie, among others. The White House estimates that combined U.S. pharmaceutical investment commitments under President Trump now total $448 billion over just 15 months.
The administration has also signaled it intends to expand the framework beyond the original 17, with expectations of reaching similar agreements with most manufacturers of sole-source brand-name drugs and biologics. Efforts are also underway to codify the voluntary agreements into law through Congress, which would lock in the pricing protections for the long term.
Whether the MFN model delivers lasting relief for American patients will depend on several factors still unresolved: how aggressively the agreements are enforced, whether Congress acts to make them permanent, and how drug companies manage pricing globally as they balance domestic commitments against foreign markets. Critics have also raised questions about potential impacts on pharmaceutical innovation incentives over the long run.
For now, though, one chapter has clearly closed. Every company on the administration's list has signed on — and the last holdout brought a gene therapy giveaway and a $27 billion investment pledge along with it. - California DOI Takes Enforcement Action Against State Farmon May 5, 2026 at 10:05 AM
The California Department of Insurance announced a major enforcement action against State Farm General Insurance Company after an expedited investigation uncovered significant mishandling of insurance claims filed by survivors of the 2025 Los Angeles wildfires. Acting on consumer complaints, Insurance Commissioner Ricardo Lara ordered a Market Conduct Examination that documented a pattern of unlawful behavior in more than half of the claims reviewed.
State Farm policyholders filed approximately 11,300 residential claims related to the Los Angeles wildfires, nearly one-third of the 38,835 claims filed across all insurers, according to the Department’s official claims tracker. The violations identified by the Department indicate that thousands of survivors may have been affected.
The Department’s enforcement action seeks millions of dollars in penalties, considered the largest amount pursued this century following a wildfire disaster. In addition to penalties, the Department is requiring State Farm to take corrective actions to speed up payments and resolve outstanding claims
Department examiners reviewed a sample of 220 claims and found 398 violations of state law in 114 of those claims, many of which contained multiple violations. Major violations mirror the delays and denials reported by wildfire survivors to the Department, including:
- - Slow and inadequate investigation: State Farm failed to begin investigating claims within 15 days, failed to accept or deny claims within 40 days, and failed to pay accepted claims or provide written notice of the need for additional time within 30 days, as required by law.
- - Underpayment of claims: State Farm made unreasonably low settlement offers and underpaid claims.
- - Multiple adjusters causing confusion: State Farm failed to assign adjusters within statutory timelines and reassigned adjusters repeatedly, creating what survivors described as “adjuster roulette.”
- - Smoke damage claim denials and delays: Smoke damage claims represented nearly half of all consumer complaints. Examiners found that State Farm failed to provide required written denials for hygienist and environmental testing, misclassified testing costs, and misrepresented policy provisions related to inspections.
- - Inadequate communication: State Farm failed to respond to policyholders, send required status letters, or provide notice when additional time was needed to determine claims.
Since last January, the Department has recovered more than $280 million from all insurance companies for survivors of the Eaton and Palisades fires through direct intervention. As of March 3, 2026, insurers have paid out more than $23.7 billion to residential, commercial, and auto policyholders impacted by the fires.
The Department has filed an Accusation and Order to Show Cause against State Farm -- the first step toward a public hearing before an administrative law judge. The filing alleges violations of the Unfair Insurance Claims Practices Act and related regulations, including the 398 violations identified in the Market Conduct Examination and 34 additional violations based on consumer complaints.
Under California Insurance Code Section 790.035, penalties may reach $5,000 per violation, or $10,000 for willful violations. Penalties may be imposed by the Commissioner following the administrative hearing.
Wildfire survivors experiencing delays, disputes, smoke damage issues, or other claim problems are encouraged to file a formal complaint with the Department of Insurance at insurance.ca.gov or by calling (800) 927-4357.
Separate from today’s action, the California Department of Insurance, Consumer Watchdog, and State Farm General recently reached a three-party settlement agreement over State Farm’s emergency rate request, now set to be reviewed by an impartial Administrative Law Judge.
State Farm said in a statement it rejected any suggestions it “engaged in a general practice of mishandling or intentionally underpaying wildfire claims" and called the state’s insurance market “dysfunctional.” The company said it has paid out more than $5.7 billion on 13,700 auto and home insurance claims related to the fires.
“The threat to suspend State Farm General’s ability to serve customers over primarily administrative and procedural errors is a reckless, politically motivated attack that could ultimately cripple California’s homeowners insurance market," the statement said. - WCRI Compares 36 States Hospital Outpatient Surgery Paymentson May 5, 2026 at 10:05 AM
The Workers Compensation Research Institute (WCRI) is an independent, not-for-profit research organization founded in 1983. WCRI provides objective information through studies and data collection that follow recognized scientific methods and rigorous peer review..
A new report from the WCRI gives policymakers an understanding of how hospital outpatient payments for common knee and shoulder surgeries compare across states and how payment rules shape costs.
“With many states reexamining hospital fee regulations, this study provides meaningful state comparisons and shows how different regulatory approaches influence payment growth and payment levels,” said Sebastian Negrusa, vice president of research at WCRI.
The report, Hospital Outpatient Payment Index: Interstate Variations and Policy Analysis, 2026 Edition, benchmarks hospital outpatient payments related to surgeries in 36 states, covering 88 percent of U.S. workers’ compensation benefits.
States included in the study are Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin.
It also compares workers’ compensation payments with Medicare rates and examines the impact of major fee regulation changes from 2005 to 2024.
Key findings include:
- - Faster payment growth in states without fixed-amount fee schedules: From 2011 to 2024, hospital outpatient surgery payments rose by roughly twice as much in charge-based states and states without fee schedules, compared with the typical fixed-amount fee schedule state.
- - Higher payments in non-fee-schedule states: Payments were substantially higher—often more than double—than in fixed‑amount states.
- - Wide variation across states relative to Medicare: Payments ranged from 35 percent ($2,711) below Medicare in Nevada to 471 percent ($28,713) above Medicare in Alabama.
The study, authored by Drs. Olesya Fomenko and Rebecca Yang, is free for members and available to nonmembers for a fee. - Railcar Repairman Not Under FAA Transportation Worker Exemptionon May 4, 2026 at 3:40 PM
Arturo Vela was hired by Harbor Rail Services of California, Inc. (Harbor) as a railcar repairman and was terminated five months later in October 2021. Before beginning work, Vela signed a mutual arbitration agreement covering all employment-related claims. The agreement also contained a class and representative action waiver, meaning Vela gave up his right to pursue claims on behalf of other workers.
Harbor was not itself a railroad, it was a repair and inspection contractor working under a service agreement with Pacific Harbor Line (PHL), a short-line railroad operating a train yard in Wilmington, California. Larger railroads Burlington Northern Santa Fe and Union Pacific would deliver freight cars to PHL's yard, where the cars were disconnected from locomotives, taken out of service, and left for inspection and repair. Vela's work consisted of changing wheels and brake pads, disassembling and reassembling train cars, and welding and fabricating metal components — all performed on decommissioned cars sitting in the yard. Once repaired, the cars were returned to PHL and eventually back to the freight railroads.
In October 2023, Vela filed suit in Los Angeles County Superior Court against Harbor, asserting a slate of California Labor Code violations — unpaid overtime, missed meal and rest period premiums, unpaid minimum wages, late final wages, noncompliant wage statements, and unreimbursed business expenses — along with an Unfair Competition Law claim. Vela brought these claims on his own behalf and on behalf of a proposed class of current and former Harbor employees.
Harbor moved to compel Vela's individual claims to arbitration and to dismiss his class claims. The trial court held multiple rounds of briefing and, after receiving supplemental evidence and argument, granted Harbor's motion in February 2025. The court ordered Vela's individual claims to arbitration and dismissed and struck his class claims, finding the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., governed the parties' agreement and that no exemption removed it from the FAA's reach.
The Court of Appeal affirmed the dismissal and striking of Vela's class claims in the published case of Vela v. Harbor Rail Services of California, Inc., Case No. B344723 (May, 2026).
Railroad Employee. Section 1 of the FAA exempts "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." Vela argued he qualified as a "railroad employee" because his work was performed for PHL under Harbor's service contract with that entity. The court rejected this theory on a threshold ground: a "contract of employment" under Section 1 must have the qualifying worker as one of its parties. Vela had no contract with PHL. Citing Fli-Lo Falcon, LLC v. Amazon.com, Inc., 97 F.4th 1190, 1196–1197 (9th Cir. 2024), and Amos v. Amazon Logistics, Inc., 74 F.4th 591, 596 (4th Cir. 2023), the court held that the Harbor–PHL service agreement — a business-to-business contract — could not qualify. The court also rejected Vela's reliance on the Railway Labor Act's definition of "employee," finding no evidence that PHL supervised or directed Vela's work; Harbor, by contract, retained exclusive control over its workers.
The FAA Exemption — Transportation Worker. The Supreme Court's decision in Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022), requires courts to (1) identify the class of workers to which the individual belongs based on the work they typically perform, and then (2) determine whether that class is "engaged in foreign or interstate commerce." Under Saxon, workers who are "directly involved in transporting goods across state or international borders" fall within the exemption. For workers whose duties are more removed from that activity, they must play a "direct and necessary role in the free flow of goods across borders" to qualify. The Ninth Circuit subsequently applied Saxon in Ortiz v. Randstad Inhouse Services, LLC, 95 F.4th 1152, 1160 (9th Cir. 2024), requiring that a worker's relationship to the movement of goods be "sufficiently close enough" to play "a tangible and meaningful role" in interstate commerce, and in Lopez v. Aircraft Service International, Inc., 107 F.4th 1096, 1101 (9th Cir. 2024), which found an airplane fuel technician qualified because refueling was a "vital component" of an aircraft's ability to engage in interstate transportation.
Applying this framework, the court held that Vela's class — workers who inspect and repair freight cars that have been removed from service and placed in a maintenance yard — is too far removed from actual transportation to qualify. The cars were decommissioned and unusable until Vela and his coworkers finished their tasks. It was only after repairs were completed that the cars re-entered service and resumed a role in moving goods. The court also noted the absence of any evidence that Vela's class typically worked on cars that still contained freight. Cases Vela cited in support, including Betancourt v. Transportation Brokerage Specialists, Inc., 62 Cal.App.5th 552 (2021) (package delivery driver), and Nieto v. Fresno Beverage Co., Inc., 33 Cal.App.5th 274 (2019) (delivery truck driver), were distinguished because those workers played active roles in moving goods — Vela did not.
Because the FAA applied and no exemption saved Vela from it, the class action waiver in his arbitration agreement was enforceable under federal law, which preempts California doctrine that would otherwise void such waivers. See Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348, 359 (2014). - O.C. PET Scan Provider to Pay 8.3M to Resolve Kickback Caseon May 4, 2026 at 3:40 PM
Modern Nuclear Inc. (MNI), a La Habra-based mobile PET scan company, has agreed to pay more than $8.3 million plus additional money based on future revenue to resolve False Claims Act allegations that it violated federal law by paying referring cardiologists excessive fees to supervise positron emission tomography (PET) scans.
According to the Justice Department, from September 2016 to January 2025, MNI knowingly submitted false or fraudulent claims to federal health care programs arising from violations of the Anti-Kickback Statute. Specifically, MNI allegedly paid kickbacks to referring cardiologists in the form of above-fair market value fees, ostensibly for cardiologists to supervise PET scans for the patients they referred to MNI.
These fees substantially exceeded fair market value for the cardiologists’ services because MNI paid the referring cardiologists for time they spent in their offices caring for other patients or while they were not on site at all, or for additional services beyond supervision that were never or rarely actually provided.
MNI purported to rely on an attorney-opinion letter regarding fair market value that the United States alleged was premised on fundamental inaccuracies and that the consultant ultimately withdrew.
In connection with the settlement, MNI entered into a five-year corporate integrity agreement (CIA) with the United States Department of Health and Human Services Office of Inspector General (HHS-OIG). This agreement requires, among other compliance provisions, that MNI implement measures designed to ensure that arrangements with referring physicians are compliant with the Anti-Kickback Statute.
The agreement also requires that MNI implement a compliance program to identify and address the Anti-Kickback Statute risks associated with other financial arrangements and retain an Independent Compliance Expert to perform a review of the effectiveness of the compliance program.
The civil settlement resolves claims brought under the qui tam or whistleblower provisions of the False Claims Act by relators Matt Lieberman and James Whitney. Under those provisions, a private party or relator can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. Lieberman v. Modern Nuclear, Inc., et al. (No. 8:23-cv-01646-DOC-KES) (C.D. Cal.). The relators will receive 16% of the total recovery in this matter.
The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the Central District of California, with assistance from the HHS-OIG and the Defense Health Agency Office of Inspector General.
Assistant United States Attorney Paul B. La Scala of the Civil Division’s Civil Fraud Section and Senior Trial Counsel Sanjay M. Bhambhani of the Justice Department’s Civil Division handled this matter. The claims resolved by the settlement are allegations only and there has been no determination of liability.