- LC 3600(a)(10) Post-Termination Defense Waived if Not Plead in Answeron November 3, 2026 at 8:49 AM
Frank Deville worked as a furnace and blast operator for Exide Technologies in Vernon, California, from December 2, 1986 until he was laid off on August 14, 2014. On April 24, 2015, about eight months after the layoff, he filed an application claiming cumulative injury to his nervous, respiratory, skin and internal systems from heat and chemical exposure. Exide’s carrier, Zurich American Insurance Group, administered by Tristar Risk Management, denied the claim on July 13, 2015.
Deville handled most of the case without a lawyer. An attorney represented him from April 2015 to October 2017, and after that he proceeded with a guardian. The guardian barred him from testifying at trial, which ran over several days in 2022. The parties disputed twelve issues. One of them was whether the claim was barred by the post-termination defense of Labor Code § 3600(a)(10). Except for psychiatric injuries, that provision bars compensation for a claim filed after a notice of termination or layoff unless the employee proves one of the statutory exceptions.
In a Findings and Award issued November 22, 2022, the workers’ compensation judge at the Riverside district office found that Deville sustained an industrial cumulative injury limited to sleep, rated at 13 percent permanent disability, with a need for limited future medical care. Relying on the neurology panel QME, the WCJ found no injury to the nervous, respiratory, circulatory, skin or other internal systems. The WCJ also disallowed EDD’s lien and found no unreasonable denial of benefits.
On the post-termination issue, the WCJ ruled that the claim was not barred by § 3600(a)(10). In the opinion on decision, the WCJ found that the defendant had waived the affirmative defense because it never filed an Answer to the application. The judge relied on Labor Code § 5505, which allows evidence on matters not pleaded by answer only on terms the Appeals Board or judge imposes. The WCJ also cited the parallel WCAB rule, Cal. Code Regs., tit. 8, § 10465, which gives the judge discretion over unpleaded matters and affirmative defenses. The WCJ declined to allow the defense in the interest of “substantial justice under the law,” noting that Deville had represented himself, with a guardian, for most of the case.
In the WCAB panel decision of Deville v. Exide Technologies, No. ADJ9932404 (October 2026), the Workers’ Compensation Appeals Board granted the applicant’s petition for reconsideration and, as its decision after reconsideration, affirmed the WCJ’s November 22, 2022 Findings and Award in full. This is a panel decision of the Appeals Board, not a court opinion, and it is not designated a significant panel decision. Panel decisions do not bind other panels or WCJs, though they may be cited as persuasive authority. The decision was signed by Commissioner Craig L. Snellings, with Commissioner Katherine Williams Dodd concurring and Chair Katherine A. Zalewski, and was filed October 22, 2026.
The reconsideration petition came from the applicant, who was challenging the limited scope of his injury and other adverse findings. The Board found his petitions hard to follow and thinly supported by the record. After independently reviewing the evidence, it concluded that the medical reports supported the WCJ. The toxicology and neurology evaluators found that Deville’s lead exposure was below that of the general population, and the psychiatric evaluator questioned psychological testing completed with help from Deville’s wife. Because Deville did not testify, the Board relied on the paper record. The Board declined to consider the applicant’s unsolicited supplemental filings under Cal. Code Regs., tit. 8, § 10964.
The Board did not separately analyze the post-termination ruling, and nothing in the decision indicates that the defendant challenged it on reconsideration. The WCJ’s waiver finding therefore stands as part of the affirmed award. The decision also doesn’t say whether the defendant first raised the defense at the pretrial stage, or what evidence, if any, it offered on notice of layoff.
For defense practitioners, the waiver ruling is the practical lesson. Section 5505 contemplates an answer within 10 days after service of the application, setting out the facts the defendant intends to rely on. Rule 10465 requires the answer to be on the Board’s prescribed form and states that a general denial does not qualify as an answer. A claim denial letter is not a substitute. Here, the layoff came roughly eight months before the application was filed, a timeline that might otherwise have supported the defense. Even so, the defendant’s failure to plead it left its fate to the judge’s discretion, and the judge weighed the applicant’s largely self-represented status against allowing it. Because the rule is discretionary, a WCJ could rule differently on other facts. Still, the safest course is to file a timely Answer that expressly pleads § 3600(a)(10) and every other affirmative defense the defendant intends to pursue.
- WCIRB Reports Medical Care Using New Resource-Based Yardstickon November 3, 2026 at 8:49 AM
When the Workers’ Compensation Insurance Rating Bureau of California counts physician care the way it always has, injured workers appear to be getting less of it. When it weighs that care by how much time, skill and expense each service actually demands, the picture flips. That is the central finding of A New Measure of Medical Service Utilization: Physician Services and the Factors Driving Change, a research report the WCIRB released on October 30, 2026. Using its new resource-based yardstick, the bureau estimates that utilization of physician services rose 8 percent from 2020 through 2025. Its traditional measure shows a 5 percent decline over the same period.
The report, written by Lucy Chen, ACAS, and Julia Zhang, PhD, is the first in a planned series on medical service utilization. It starts with physician and non-physician practitioner services, which the WCIRB describes as the largest medical service category in its medical transaction data. The stakes are significant: according to the report, medical costs made up 52 percent of total loss payments in California’s workers’ compensation system in 2025.
Medical costs are driven by price and utilization. Until now, the WCIRB has generally measured utilization as medical transactions per claim (or visits per claim for physical medicine, acupuncture and chiropractic care). Those counts are simple, but they treat a brief office visit and a spinal surgery as equal units of care.
The new measure fixes that by borrowing the relative value units (RVUs) from the Resource-Based Relative Value Scale that Medicare uses to set physician fees. The Division of Workers’ Compensation adopted the RBRVS for the physician services section of the Official Medical Fee Schedule (OMFS) in 2014 (see the DWC’s RBRVS fact sheet). Each procedure carries three RVU components — physician work, practice expense and malpractice expense — and the WCIRB adjusts each with the geographic practice cost index, then multiplies by the number of procedures billed. Services that have no RVU in the fee schedule, such as unlisted procedure codes, anesthesia and California-specific report codes WC001 through WC012, are measured by the quantity of services per claim instead. Services with RVUs accounted for about 86 percent of physician services payments and 83 percent of transactions from 2014 through 2025.
The report illustrates the difference with two hypothetical claims. Three routine office visits for an established patient in Los Angeles add up to about 8.7 utilization units, while a single lumbar laminotomy performed in the Bay Area comes to about 31.6. Under the old transaction count, the office-visit claim would look like the heavier user of care; under the new measure, the surgical claim does.
Applied to WCIRB medical transaction data for services rendered from 2014 through 2025, the two measures tracked each other closely through 2019, with the old measure showing a 12 percent decline and the new measure a 9 percent decline. They diverged beginning in 2020. The WCIRB reads that gap as evidence that the resource intensity of care has been rising even as the raw number of services has fallen. Both measures did show utilization increasing in 2024 and 2025.
The new measure also redraws the line between price and utilization. Over the full 2014–2025 period, physician services cost per claim rose 31 percent under either approach. The original measure splits that into an 11 percent drop in utilization and a 48 percent jump in price per transaction. The new measure attributes it to a 7 percent increase in utilization and a 22 percent increase in price per utilization unit. Under the new measure, prices grew about 2 percent a year, versus about 4 percent under the old one. The report notes that the slower figure lines up better with the roughly 2.2 percent annualized increase in the OMFS conversion factor, which reflects inflationary fee schedule adjustments. In other words, much of what looked like price inflation was really more intensive care. Even so, the WCIRB found that from 2020 through 2025 the cost increase was still driven mostly by price, which rose 14 percent, compared with an 8 percent rise in utilization, for a 24 percent increase in cost per claim.
The second half of the report uses the new measure to identify what is driving the trend. Southern California has consistently shown the highest physician services utilization, and by 2025 it stood 23 percent above its 2014 level, though all regions have grown faster since 2019. Cumulative trauma (CT) claims are another factor. Non-CT claims generally use more physician services during the first 12 months, but utilization tied to CT claims has grown faster since 2022, largely because CT claims make up a growing share of the claim mix. CT claims also show heavier use of certain treatments, including nerve-damage diagnostics, psychotherapy and carpal tunnel neuroplasty. The WCIRB examined the rise of CT claims in more depth in its June 2026 report, Emerging Patterns of Cumulative Trauma Claims.
By type of service, evaluation and management (E&M) visits and physical medicine did most of the work. E&M, the largest component at roughly 35 percent of utilization, jumped sharply in 2021, which the report associates with Medicare’s higher RVUs for common office-visit codes and coding rule changes allowing visit complexity to be set by medical decision-making or total clinician time. Since 2021, low-complexity office visits have declined, while high-complexity visits in 2025 ran 35 percent above their 2021 level. Physical medicine grew from 22 percent of utilization in 2014 to 26 percent, and its utilization in 2025 was 26 percent above the 2014 level. The report credits much of that to a shift toward higher-intensity services such as neuromuscular reeducation and therapeutic activities, while lower-intensity therapeutic exercise and manual therapy declined modestly.
Surgery moved the other way and was the main offset. Its share of utilization dropped from 14 percent in 2014 to 8 percent in 2025. Nervous system surgical utilization fell 50 percent and musculoskeletal surgery 35 percent over the study period, although arthroplasty has recently climbed back above its 2014 level.
Separately, utilization of services not subject to the fee schedule ran 30 percent above its 2021 level in 2024, driven largely by the unlisted physical medicine code 97799, before moderating in 2025.
The WCIRB notes that the analysis reflects insured employers only, excludes COVID-19 claims, and uses data evaluated as of June 7, 2026, so figures may change as the data mature. Some procedures lack RVUs and are measured by service counts, and because RVUs are updated yearly, changes in Medicare valuations can register as changes in measured utilization.
- Sheriff’s Chiefs Lack Authority to Settle Deputies’ Discipline Appealson November 2, 2026 at 9:45 AM
Three Los Angeles County deputy sheriffs — David Jouzi, Benjamin Alvarado, and Dellanira Aragon — were discharged for alleged misconduct and appealed their terminations to the Los Angeles County Civil Service Commission. In 2019, while those appeals were still pending, each deputy signed a settlement agreement with a Sheriff’s Department chief that purported to reduce the discipline and reinstate the deputy to employment. The deputies alleged the settlements were reached under a provision of the Department’s Manual of Policy and Procedures (section 3-04/020.80), after consultation with a constitutional policing adviser and with the Undersheriff’s approval.
The County refused to honor the agreements. According to the opinion, Alvarado and Aragon were told shortly afterward that County Counsel, the Director of Personnel, or the Board of Supervisors had vetoed the deals, and it was undisputed that the Board never approved them. The deputies, joined by the Association for Los Angeles Deputy Sheriffs (ALADS), sued the County for a writ of mandate, breach of contract, promissory estoppel, and declaratory relief.
This was the case’s second trip to the Court of Appeal. In the earlier round, Association for Los Angeles Deputy Sheriffs v. County of Los Angeles (2023) 94 Cal.App.5th 764 (ALADS I), the court held that the County Charter does not give County Counsel exclusive authority to settle Civil Service Commission appeals, but it also found the deputies had not yet shown the chiefs were authorized to settle. It reversed and sent the case back so the plaintiffs could amend to identify a legal basis for that authority.
On remand, the Los Angeles County Superior Court (No. 19STCP05186) sustained the County’s demurrer to the fourth amended petition without leave to amend. The trial court found the plaintiffs still had not shown that the chiefs acted under authority delegated by the Board of Supervisors or conferred by law, as Government Code section 23005 requires for anyone binding a county. A dismissal order was served in July 2025, a judgment followed on August 11, 2025, and the plaintiffs filed a notice of appeal on October 2, 2025.
In the published case of Association for Los Angeles Deputy Sheriffs et al. v. Superior Court of Los Angeles County (County of Los Angeles et al., Real Parties in Interest), No. B350110 (October 2026), the Second District Court of Appeal, Division One, treated the deputies’ appeal as a petition for writ of mandate and denied the petition, leaving in place the trial court’s ruling that the department-level settlements do not bind the County.
The procedural posture is unusual. Because the notice of appeal was filed more than 60 days after the dismissal order was served, the appeal was arguably untimely. The court nonetheless exercised its discretion to treat it as a writ petition, reasoning that the demurrer ruling had called for a proposed judgment and the later-entered judgment suggested the dismissal order may not have been intended as final, which could have misled the plaintiffs about the deadline.
The central question was whether Sheriff’s Department chiefs had authority to bind the County to settlements of pending Civil Service Commission appeals. Under Government Code section 23005, a county may act only through its board of supervisors or through agents acting under the board’s authority or authority conferred by law. The court rejected each of the plaintiffs’ four theories of authority.
First, the court refused to imply settlement authority from the Sheriff’s power to appoint, suspend, and discharge deputies. Letting department personnel unilaterally rescind discipline mid-appeal would be, in the court’s words, inconsistent with “the purpose and structure of the county’s civil service system,” which divides authority among the appointing power, the Director of Personnel, and the Commission to promote competence and guard against favoritism. Such settlements could also commit the County to pay money, including back pay, sidestepping the Board’s control over County finances. The court pointed to the fact that even County Counsel cannot settle a matter for more than $20,000 without Board approval, and declined to infer that the Board meant to give department personnel broader power. The court noted that department personnel still have options: they can bring new facts to the Commission or recommend a settlement to the Board.
Second, the plaintiffs did not show that the Department Manual provision was a valid delegation from the Board or a “law” conferring authority, and the County Code provision they cited did not delegate settlement power to department representatives.
Third, the court rejected the argument that the Department’s alleged past practice of settling Commission appeals could not be abandoned without bargaining under the Meyers-Milias-Brown Act (Gov. Code, § 3500 et seq.). Relying on Claremont Police Officers Assn. v. City of Claremont (2006) 39 Cal.4th 623 and Riverside Sheriff’s Assn. v. County of Riverside (2003) 106 Cal.App.4th 1285, the court found the plaintiffs had not analyzed whether ending the practice had a significant and adverse effect on working conditions, as the meet-and-confer framework requires.
Fourth, the court held that an earlier unpublished decision involving ALADS and former Sheriff Baca did not collaterally estop the County. That case concerned a different settlement, addressing administrative investigations of deputy-involved shootings, and never decided whether chiefs may settle Commission appeals.
- 2027 Employer Health Insurance Premiums to Increase 8.2%on November 2, 2026 at 9:45 AM
Health insurers are earning sharply more in 2026 than they did a year ago, and employer health premiums are still rising faster than wages, according to company financial filings, state insurance regulators, and two benchmark employer surveys. But the numbers also show that much of the profit rebound is a recovery from an unusually poor 2025.
The KFF 2026 Employer Health Benefits Survey, released October 22 and based on interviews with 1,937 public and private employers, found that average annual premiums for employer-sponsored family coverage reached $28,303, up 5% from 2025. According to KFF’s news release, workers’ average contribution toward family coverage rose faster, by 9%, to $7,471. Average single coverage rose 5% to $9,804.
Next year looks steeper. In its September 2 release, Marsh (formerly Mercer) projected, based on responses from more than 1,800 employers, that total health benefit cost per employee will rise 8.2% on average in 2027 even after planned cost-cutting changes. That would be the largest increase since 2003. Other consultants’ projections are in the same range: Aon has projected about 9.5%, and the Business Group on Health has projected a median 9.2% before employer plan changes, according to news coverage of those reports. The sponsored piece’s description of an 8% to 10% increase and the biggest jump in over two decades is consistent with these figures.
UnitedHealth Group’s third-quarter 2026 earnings release, filed with the Securities and Exchange Commission on October 13, reported net earnings of $4.11 billion, up from $2.35 billion in the same quarter of 2025. That is an increase of about 75%. Earnings from operations rose to $6.6 billion from $4.3 billion, while revenue was essentially flat at $112.7 billion. UnitedHealth’s net margin was 3.6%.
The comparison quarter was weak. UnitedHealth’s third-quarter 2025 profit of about $2.3 billion was down from $6.1 billion a year earlier, as Becker’s Payer Issues reported at the time. That means this year’s third-quarter profit, though sharply higher, remains below its 2024 level. Similarly, the company’s full-year 2025 results show net earnings of roughly $12.1 billion, as the sponsored piece states. That was a decline from $14.4 billion in 2024, which the piece does not mention, and it came with a 2.7% net margin and a $2.8 billion one-time charge.
The rebound is not unique to UnitedHealth. The National Association of Insurance Commissioners’ 2026 mid-year health industry report, which aggregates statutory filings from health insurers, found industry net income rose 127.6% to about $27.7 billion in the first half of 2026. The industry’s profit margin rose from 1.8% to 4.1%. The company’s SEC filing confirms that people served through Medicare Advantage and related programs fell by 935,000 since the end of 2025. The company had forecast this contraction and said it would focus on margins over enrollment.
What is driving the profit gains? UnitedHealth’s own release credits a lower medical care ratio, which fell to 88.4% from 89.9%, along with pricing discipline, benefit design changes, and lower operating costs. In other words, the company says it improved results partly by charging more relative to costs and by changing what its plans cover. The employer surveys, however, point to broader cost drivers. Marsh, for example, attributed about one percentage point of its 2027 projection to growing use of GLP-1 weight-loss drugs, and news coverage of the survey also cited provider consolidation and costly new therapies.
Independent researchers have raised a related, narrower concern: that vertical integration can make insurer profitability harder to see. A Brookings Institution analysis found that about 63% of Optum Health’s 2025 revenue of $100.5 billion was paid by related UnitedHealth entities. The analysis noted that some observers see such arrangements as improving care coordination, while others say they create opportunities to shift profits out of the regulated insurance business. A separate study in Health Affairs, as reported by Healthcare Dive, found UnitedHealthcare paid Optum-affiliated providers 17% more than other providers. UnitedHealth has disputed that study and said it pays Optum in line with the market.
For employers, the takeaway is that the cost pressures are real and well documented, and 2027 renewals are likely to be the most expensive in two decades.
- 340B Contract Pharmacy Drug Discount Controversy Intensifieson October 29, 2026 at 7:48 AM
The 340B program, created under 42 U.S.C. § 256b, requires drug manufacturers to sell outpatient drugs at steep discounts to safety-net hospitals and clinics. Those providers can then bill insurers at full price and keep the difference. In 2010, the Health Resources and Services Administration (HRSA) began allowing covered entities to contract with an unlimited number of outside pharmacies to dispense 340B drugs, and those arrangements have multiplied since.
A University of Pennsylvania study finding that 340B contract pharmacies spread mainly into wealthier, whiter neighborhoods remains one of the most contested pieces of evidence in the fight over the federal drug discount program. The fight has sharpened in 2026 with a federal appeals court split over state contract pharmacy laws, a new Medicare payment proposal and a new Department of Health and Human Services analysis of the program's incentives. The study, a research letter titled Assessment of US Pharmacies Contracted With Health Care Institutions Under the 340B Drug Pricing Program by Neighborhood Socioeconomic Characteristics, was published June 17, 2022, in JAMA Health Forum, an open-access journal in the JAMA Network.
The Penn researchers used HRSA's 340B database, Census data and the national provider registry to track 91,740 pharmacies from 2006 through 2019. They found that participation was nearly flat before the 2010 policy change and then surged, so that by 2019, 29.9 percent of all U.S. pharmacies held a 340B contract. Retail pharmacies made up 92 percent of them. The finding that drew the most attention compared how 340B and non-340B retail pharmacies changed between 2011 and 2019. Relative to other pharmacies, the share of 340B contract pharmacies fell 7.0 percent in neighborhoods with a median family income below $45,000 and rose 3.6 percent in neighborhoods at or above $80,000. It also fell in predominantly Black and Hispanic neighborhoods and in the most socially deprived areas, while the change in rural neighborhoods was not meaningful. Meanwhile, retail pharmacies overall grew slightly in disadvantaged areas, which the authors said showed the pattern was specific to 340B contracting.
The authors concluded that the growth was concentrated in affluent, predominantly white neighborhoods. In a Penn Leonard Davis Institute summary, they wrote that discounted drugs "appear to go more and more to pharmacies in wealthier communities" and that large retail chains have benefited. They acknowledged one key limitation: they could not see whether 340B discounts actually reached low-income patients. A patient who lives in a poor neighborhood can still fill a prescription at a pharmacy in a wealthier one.
Hospitals objected immediately. Speaking to 340B Report, American Hospital Association general counsel Melinda Hatton said the study "suffers from many flaws that seriously undermine its reliability." She called its demographic conclusions misleading because the study did not account for differences among communities, particularly rural areas that may have fewer minority residents. The AHA also pointed out that one author had received pharmaceutical industry grants for other research. The study's disclosures list industry grants and fees received by Doshi and Li, all reported as unrelated to this work, and the study itself was funded by Penn and federal research grants. Covered entities and their advocates generally argue that contract pharmacy savings fund care for vulnerable patients wherever the pharmacy is located.
Later research has added to the picture. A 2023 study in the American Journal of Managed Care, Income Differences Between Locations of 340B Entities and Contract Pharmacies, looked at 2019 contracts and found that the median household income where a contract pharmacy was located averaged about 35 percent higher than where its covered entity was located. That was true for both hospitals and federal grantee clinics. Its authors acknowledged the study was funded by Gilead Sciences. A 2022 county-level study by Nikpay and colleagues found a split: pharmacies contracting with hospitals tended to be in lower-poverty areas, while those contracting with safety-net clinics were more often in areas with higher uninsured rates.
The data still matter because contract pharmacies are now at the center of the 340B dispute. An October 8, 2026 brief from HHS's Office of the Assistant Secretary for Planning and Evaluation, Mission vs. Margin: Misaligned Incentives in the 340B Drug Pricing Program, reports that contract pharmacies grew from about 1,300 in 2010 to more than 31,000 by mid-2026. It also reports that five companies, Cigna, CVS Health, UnitedHealth Group, Walgreens and Walmart, account for 77 percent of them. The ASPE brief does not cite the Penn study. It argues more broadly that the program's financial incentives have drifted from its safety-net mission, and hospital groups dispute that view.
Courts are divided over whether states may force manufacturers to honor 340B pricing at contract pharmacies. On March 31, 2026, a Fourth Circuit panel in PhRMA v. McCuskey upheld a preliminary injunction against West Virginia's contract pharmacy law, finding it likely preempted by federal law. The Fifth and Eighth Circuits had upheld similar laws in Louisiana and Arkansas. The AHA has urged the full Fourth Circuit to rehear the case, warning that the ruling could jeopardize hospitals that serve low-income patients. The ASPE brief also notes that the Centers for Medicare & Medicaid Services proposed in July 2026 to cut Medicare payment for 340B-acquired drugs, and that HRSA announced a revised 340B rebate pilot on August 3, 2026, after a court paused the original version.
For employers and health plans, the stakes go beyond geography. Under 340B, plans typically pay full price for drugs that covered entities buy at a discount, and the ASPE brief cites an estimate that self-insured employers may face a $5.2 billion cost increase from lost manufacturer rebates. Whether contract pharmacy revenue is reaching the patients the program was designed to help is the question the Penn study raised but could not answer, and it remains unresolved.
- DOI Announces Insurance Long-Term Solvency Planning Regulationon October 29, 2026 at 7:48 AM
California-based insurers will soon have to show state regulators how they expect to stay solvent through 2050. Insurance Commissioner Ricardo Lara has finalized the Long-Term Solvency Planning Regulation, which requires domestic insurers to document how climate change, cyber threats, artificial intelligence and other emerging risks could affect their finances over the coming decades. According to the Department of Insurance's announcement of the final rule, the regulation took effect October 26, 2026, and insurers' first long-term solvency plans must be assembled and available to department examiners by January 1, 2028.
The department calls the rule the first of its kind in any U.S. state. It applies to insurers domiciled in California, across all lines of business, and adds a new section 2319.7 to Title 10 of the California Code of Regulations under the rulemaking file REG-2025-00025. The department cites its authority under Insurance Code § 739.9, and ties the rule to the risk-based capital provisions of Insurance Code § 739.2. Subdivision (d) of that section says insurers should try to hold capital above the minimum risk-based capital levels, as a cushion against risks the formula does not fully measure. The new regulation in effect asks insurers to document how they are analyzing those additional capital needs.
The rule operates in two tiers. Under the draft text the department released for public workshop in October 2025, every domestic insurer must maintain and keep current its data on risk mitigation technologies used by its policyholders, along with any analysis of how well those measures have performed and are expected to perform. Insurers that wrote more than $50 million in direct premium nationwide in the prior calendar year face the more extensive requirements. Because the threshold resets each year, an insurer's status can change from one year to the next.
Those larger insurers must assess which emerging risks and opportunities are material to their underwriting, investments or operations. The draft groups these into four categories. The first is technology, including the growing scale and complexity of data, data quality and cybersecurity. The second is physical climate risk, covering both acute extreme-weather events and slower, compounding changes such as sea-level rise, water availability and temperature extremes. The third is transition risk as the economy shifts away from greenhouse-gas-emitting technologies, including the effect of future government action. The fourth is a catch-all for other risks likely to grow more volatile over 20 years, such as economic trends or litigation.
For the risks they find material, those insurers must document their analysis and mitigation strategies with projections for 2030, 2040 and 2050. On the climate side, the draft calls for stress tests of forward-looking climate scenarios, explanations of how the scenarios were chosen and where the uncertainties lie, and analysis of investment concentrations and exposure to catastrophic events such as extreme heat, severe convective storms, flooding, earthquakes and hurricanes. Insurers must also set long-term investment strategy targets with performance metrics and interim checkpoints, and describe how they will identify opportunities for new products, such as coverage for low- or zero-emission infrastructure. Finally, they must explain whether their climate and technology risk expertise is built in-house or bought from outside vendors.
The plans are not filed publicly. The department describes the oversight as confidential and conducted through its financial examinations, comparing it to the Federal Reserve's supervision of U.S. banks. In its June 12, 2026 announcement of the formal proposal, the department said the rule draws on approaches used by the Bank of England, the Banque de France, the Dutch central bank, Canada's chief insurance regulator and the Monetary Authority of Singapore, as well as the International Association of Insurance Supervisors' climate risk framework. Lara said in that release that resilience "is not optional, it is a global responsibility."
The rule has been more than a year in development. The department published a workshop draft in October 2025 and held a public workshop that November, issued a formal notice of proposed action in June 2026, and held a virtual public hearing on July 28, 2026.
Industry groups pushed back during the process. As reported by InsuranceNewsNet, the American Property Casualty Insurance Association argued that property and casualty carriers write mostly short-duration business and plan on three- to five-year horizons, and that the $50 million threshold sweeps in far smaller companies than the NAIC's Own Risk and Solvency Assessment (ORSA) and climate disclosure survey do. Other trade representatives, quoted by Digital Insurance, called projections out to 2040 or 2050 too speculative and said the reporting duplicates existing ORSA requirements. Consumer and environmental groups pressed from the other direction. A July 2026 coalition letter from 11 organizations, including United Policyholders, Public Citizen and the Greenlining Institute, urged standardized reporting, science-based emissions targets that extend to underwriting, and plans to keep insurers from withdrawing from markets they serve. The department's announcement of the final rule says it builds on the June proposal, but the summaries available do not detail what changed in the final text.
For employers and policyholders, the rule does not change premiums, coverage terms or claims handling. Its significance lies in solvency oversight. It gives California regulators an early look at whether the carriers headquartered in the state, including those writing commercial and workers' compensation coverage, have thought through threats that could erode their capital long before those threats show up on a balance sheet.
- Court Limits Attorney Client Privilege in Fair Chance Act Investigationon October 28, 2026 at 10:42 AM
California's Fair Chance Act, Government Code § 12952, bars employers with five or more employees from asking about an applicant's conviction history until after a conditional job offer is made. If the employer then wants to withdraw the offer because of a conviction, it must first conduct an individualized assessment of whether the conviction has a direct and adverse relationship with the specific duties of the job, weighing the nature and gravity of the offense, the time that has passed, and the nature of the job. The employer must then give the applicant written notice of its preliminary decision, allow a response, and consider that response before making the decision final.
In a new court of appeal published opinion, Walter J. interviewed with the City of Torrance for a custodian position in September 2022 and received a contingent offer. A Department of Justice background report showed a string of misdemeanor convictions beginning in 1996, along with a 2001 felony conviction for false personation. Walter submitted materials he believed showed rehabilitation. The City accepted several of his explanations, agreeing that one conviction had been dismissed, that he had rehabilitated from a domestic battery conviction, that the felony was too old to be relevant, and that his driving offenses did not matter for the custodian job. It nonetheless rescinded the offer based on a 2019 conviction for fighting in a public place, concluding the offense was recent and relevant to a job requiring daily interaction with coworkers and the public, and citing its zero-tolerance workplace violence policy.
Walter filed a complaint with the Civil Rights Department (CRD) in October 2023. In its response, the City laid out a narrative of how it had followed the statute, identified the two decision makers who performed the assessment, and asserted that it had complied with section 12952. In October 2024, CRD filed a director's complaint and expanded the matter into a group or class investigation into whether the City was disqualifying applicants based on certain types of crimes without adequate individualized assessments.
CRD served document requests seeking the City's assessment templates, forms, and instructions, along with the assessment and reassessment records for every applicant denied employment because of criminal history since January 1, 2022. Torrance acknowledged it had responsive documents but withheld all of them, asserting attorney-client privilege and work product protection because the assessments were prepared with counsel. An assistant city attorney declared that the two template documents reflected her conclusions about what the law requires, and that two City human resources employees consulted her on each assessment and documented her legal advice. The City refused to produce a privilege log, instead supplying a list of 23 applicants whose criminal histories had been reviewed the same way as Walter's.
CRD petitioned the Los Angeles County Superior Court under Government Code § 12963.5 for an order compelling compliance with its investigative requests. Judge Virginia Keeny granted the petition, finding that the City had waived any privilege by raising the adequacy of its individualized assessments as a defense to CRD's investigation. Relying on Wellpoint Health Networks, Inc. v. Superior Court (1997) 59 Cal.App.4th 110, the court added that applying that rule to CRD investigations was especially appropriate, because otherwise an employer could escape its duty to properly analyze criminal history records simply by handing the task wholesale to in-house counsel. The court also rejected the City's vagueness and overbreadth objections, a ruling the City did not challenge on appeal. Torrance appealed under section 12963.5, subdivision (d), which makes such orders immediately appealable.
In the published case of Civil Rights Department v. City of Torrance, No. B352855 (September 2026), the California Court of Appeal, Second Appellate District, Division One, affirmed the superior court's order compelling the City to produce its Fair Chance Act assessment templates and individualized assessment records, holding that the City waived any attorney-client or work product protection by asserting that it had complied with section 12952. The opinion, authored by Justice Weingart and joined by Presiding Justice Rothschild and Justice Bendix, was filed as unpublished on September 29, 2026, and the court certified it for publication on October 27, 2026.
The court reviewed the privilege ruling for abuse of discretion, citing Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725. CRD had argued that the documents were never privileged to begin with, because the dominant purpose of the assessments was an ordinary human resources function rather than obtaining legal advice, and that Torrance was routinely involving a lawyer to shield hiring decisions from scrutiny. The panel found it unnecessary to decide that question, resting its decision entirely on waiver.
The court explained that privilege is waived when a party puts an otherwise privileged communication directly at issue and disclosure is essential to a fair adjudication, a rule drawn from Southern Cal. Gas Co. v. Public Utilities Com. (1990) 50 Cal.3d 31 for the attorney-client privilege and People v. Superior Court (Jones) (2021) 12 Cal.5th 348 for work product. Wellpoint applied that principle to an employer defending a hostile work environment claim by pointing to an investigation conducted by attorneys; an employer that relies on the adequacy of such an investigation cannot then invoke privilege to block examination of it.
The panel endorsed the trial court's reasoning, particularly its concern about delegation to counsel. The assistant city attorney had acknowledged she is involved in hiring whenever an applicant has a criminal history, and the City conceded at oral argument that it had withheld every document reflecting both the assessment and reassessment process. By routinely involving a lawyer and then claiming privilege, the court said, Torrance was seeking to shield all internal records of its decision-making.
The court rejected the City's argument that the trial court should have evaluated each document individually. As the party asserting privilege, the City bore the burden of establishing the facts supporting it under Costco, and it offered no basis for distinguishing one document from another. Because CRD is investigating the City's compliance with section 12952, the court saw no reason the waiver would reach some documents but not others.
The court likewise rejected the City's claim that, unlike the employer in Wellpoint, it had never put the sufficiency of its assessments at issue. The City could not simultaneously assert compliance with section 12952 and deny that the adequacy of its assessments was in play, the court reasoned, because compliance turns on whether the assessments considered the statutory factors and the applicant's response. The court pointed to California Code of Regulations, title 2, § 11017.1, subdivision (c)(1), which requires a reasoned, evidence-based determination of whether a conviction is directly and adversely related to the job, and observed that an employer "may not go through the motions." By claiming it complied with the statute and regulations, Torrance put at issue how it performed its individualized assessments and waived any privilege as to their content.
- 75% CTE Rate in Post Mortem Study of 2,362 of Former NFL Playerson October 28, 2026 at 10:42 AM
About three of every four former National Football League players who died between 2008 and 2023 likely had chronic traumatic encephalopathy, or CTE, according to a Boston University study published October 28, 2026, in JAMA Network Open. The researchers put the bias-adjusted prevalence at 74.5% among the 2,362 former players who died during that 16-year period. News coverage describes it as the first population-level estimate of CTE among deceased NFL players.
CTE is a degenerative brain disease associated with repeated head impacts, and it can be definitively diagnosed only by examining the brain after death. That has long made its true frequency hard to measure. Earlier research relied on brains donated to research banks, and families of players who showed symptoms in life are more likely to donate. A widely cited 2017 Boston University analysis found CTE in 99% of donated NFL players’ brains, a figure critics argued was inflated by that selection effect.
The new study, titled “Bias-Adjusted Prevalence of Chronic Traumatic Encephalopathy Among Deceased National Football League Players,” tries to correct for donation bias. According to reporting by The Boston Globe and Science News, the team started with nearly 400 former players whose brains were in Boston University’s brain bank. About 94% of those donors had CTE. The researchers then used death certificate data from the National Death Index on every former player who died during the study period. They also considered records of dementia and cognitive symptoms, along with age at death, position played, and years in the league. Players with cognitive symptoms were about five times more likely to have their brains donated, and the team adjusted for that difference when extending its estimate to players whose brains were never examined.
ABC News reported that the researchers also estimated 27.2% of the former players had dementia during their lifetimes, a figure the authors said likely understates the true rate. For comparison, the Globe reported that CTE prevalence in the general population is estimated at under 1%. It added that former NFL players may be roughly four times more likely than the general population to develop dementia and other neurodegenerative diseases.
The authors acknowledge that no adjustment can remove every source of bias. Senior author Yorghos Tripodis, a Boston University biostatistics professor, told ABC News that the estimate did not drop below 60% even under very conservative assumptions. Lead author Julia Gallini, a doctoral candidate at the Boston University School of Public Health, cautioned in the Globe that the result is an estimate for deceased former players and does not predict the share of current players who will develop CTE. Not every case of CTE produces symptoms, and symptoms tend to appear in later stages of the disease. The players’ head impacts also often began in youth, high school, or college football rather than in the pros, according to co-author Daniel Daneshvar of Mass General Brigham.
The study refines an August 2026 analysis by several of the same researchers. That earlier work, which Insurance Journal reported was led by Daneshvar, examined former players who died between 2016 and 2021. It set a conservative minimum of about one in four with CTE. ABC News reported that the earlier study’s plausible range ran from 25% to 98%, and Tripodis said the team wanted to narrow that range. Dr. Ramon Diaz-Arrastia of the University of Pennsylvania, who was not involved in the study, told the Globe it is a paper the field “has been waiting on for a long time.”
The NFL pointed to the statement it issued after the August study, saying it continually works to make the game safer and remains committed to providing resources for players’ well-being. The NFL Players Association told the Globe that such studies are critical to understanding football’s long-term effects.
For employers and insurers, the findings bear on the cumulative-trauma and occupational-disease claims that former professional athletes have long pursued, including in California’s workers’ compensation system. A credible population-level estimate of brain disease among NFL veterans could figure in how such claims are evaluated and reserved, although the study itself does not address compensation or causation in any individual case. The researchers’ emphasis on exposure beginning in youth and amateur football may also interest carriers that write coverage for schools, colleges, and youth sports organizations, as well as other contact-sport employers.
- Busy Schedule No Defense to State Fund Premium Audit Suiton October 27, 2026 at 8:00 AM
In February 2022, Creditors Adjustment Bureau, Inc., suing as assignee of the State Compensation Insurance Fund, filed a collection action in Fresno County Superior Court against Barry Halajian, doing business as Industrial Electrical. The complaint sought $86,858.26 allegedly owed under four workers’ compensation insurance policies. According to the complaint, the insurer priced each policy at inception using an estimate based on Halajian’s own representations. When the insurer later tried to audit his payroll records as the policies allowed, he refused to cooperate, so the insurer calculated an estimated premium that increased his balance. Halajian refused to pay.
The bureau served Halajian by leaving the summons and complaint at the commercial mailbox center he used for all correspondence on his policies, and then mailing a second copy to that address—the same address Halajian later listed on his own court filings. He did not respond, and the court entered his default on May 25, 2022.
In August 2022, Halajian moved to set aside the default for excusable neglect under Code of Civil Procedure section 473, subdivision (b). He did not challenge service. Instead, he said extensive out-of-town travel and a heavy work schedule kept him from answering. The trial court denied the motion in November 2022, explaining that a “press of business” excuse is generally not a ground for relief and that Halajian had shown no effort to contact a lawyer or ask the plaintiff for more time. Because the court said it strongly preferred to decide the case on the merits, however, it denied the motion without prejudice so he could try again with a better factual showing.
Halajian’s second motion, filed in January 2023, simply elaborated on the same excuse. He declared that a construction project about 90 minutes from Fresno kept him working out of town from January through early April 2022, often 12 to 15 hours a day, and that he sometimes went days without checking his mail. Most of the motion argued the merits of his defenses. In May 2023 the court denied relief with prejudice, finding that neither a busy schedule nor a decision to proceed without counsel amounts to excusable neglect and that the merits of his defense were irrelevant to that question. Reconsideration was denied.
The court entered a default judgment on January 13, 2025. Halajian then moved to vacate it, invoking the court’s equitable power to set aside judgments for extrinsic mistake or fraud. He argued that he never received notice of the request for default judgment, that his defenses were meritorious, that he deserved leniency as a self-represented litigant, and that the bureau lacked standing. The court denied the motion in May 2025, noting he had not attached a proposed answer, that a defaulted party is not entitled to notice of the default judgment request, that he offered no evidence he had paid his premiums, and that he provided no new explanation for failing to answer. A further reconsideration motion was denied, and Halajian appealed in pro. per.
In the unpublished case of Creditors Adjustment Bureau, Inc. v. Halajian, No. F090331 (October 2026), the Fifth District Court of Appeal affirmed the default judgment, holding that the trial court did not abuse its discretion in refusing to set aside either the entry of default or the default judgment. The opinion, filed October 20, 2026, was not certified for publication, so under California’s rules of court it generally may not be cited or relied on by courts or parties in other cases. The court awarded the bureau its costs on appeal to the extent not covered by Halajian’s fee waiver.
As a threshold matter, the court rejected the bureau’s argument that the appeal should be dismissed or narrowed. Although it found Halajian’s briefing difficult to parse at times, it liberally construed his notice of appeal and briefs as challenging both the entry of default and the default judgment. That also disposed of the bureau’s contention that reversing only the judgment would be an “idle act” because the underlying default would still stand.
On the merits, the court reviewed the denial of relief for abuse of discretion. It acknowledged the strong policy, stated in Elston v. City of Turlock (1985) 38 Cal.3d 227, that doubts under section 473 are resolved in favor of the party seeking relief and that only very slight evidence is required. But the court emphasized that the policy has limits. The test, under Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, is whether a reasonably prudent person in similar circumstances might have made the same error, and California courts have long held that the press of business is not excusable neglect. Elston itself observed that a litigant who was simply busy with other matters would not qualify. The court also relied on Bellm v. Bellia (1984) 150 Cal.App.3d 1036, which upheld denial of relief to a defendant overwhelmed by holiday-season sales orders.
The court analyzed the statutory and equitable requests together because both turned on the same question: why Halajian failed to answer in 2022. Equitable relief requires satisfying the “stringent three-pronged test” described in Rappleyea v. Campbell (1994) 8 Cal.4th 975 and Pittman v. Beck Park Apartments Ltd. (2018) 20 Cal.App.5th 1009: a meritorious defense, a satisfactory excuse for not defending in the first place, and diligence in seeking relief. Under Manson, Iver & York v. Black (2009) 176 Cal.App.4th 36, relief for extrinsic mistake or fraud is unavailable where the moving party’s own negligence allowed the mistake to occur. Across his motions, Halajian offered only his work schedule, and his equitable motion merely pointed back to the justification he had already given. The trial court acted within its discretion in rejecting it.
The court distinguished the cases Halajian relied on. Olivera v. Grace (1942) 19 Cal.2d 570 involved a litigant left mentally incapacitated by a head injury, a condition the opposing party exploited. Rappleyea involved a clerk’s miscommunication about a filing fee after a timely response. Gamet v. Blanchard (2001) 91 Cal.App.4th 1276 involved a disabled, out-of-state litigant whose attorney withdrew and who received confusing orders from the court. Halajian, by contrast, was validly served under Code of Civil Procedure section 415.20, which permits service at a private commercial mailbox, as recognized in Sweeting v. Murat (2013) 221 Cal.App.4th 507. He never disputed service and apparently took no action until August 2022.
Halajian’s reliance on Zamora and Minick v. City of Petaluma (2016) 3 Cal.App.5th 15 for the idea that failing to pick up his mail was an understandable mistake also failed. Both cases involved errors by counsel—a clerical mistake in one and an attorney’s serious illness in the other—raised within about a week. Section 473 distinguishes attorney fault from a client’s own negligence, and Halajian’s default resulted from his own conduct.
Finally, the court rejected Halajian’s remaining arguments. Self-represented litigants are held to the same procedural rules as attorneys, citing County of Orange v. Smith (2005) 132 Cal.App.4th 1434. His challenges to the insurer’s corporate structure and the bureau’s standing to sue on its behalf were summarily rejected as without merit, and due process arguments raised for the first time in his reply brief were not considered.
- SB574 - California is First State to Pass AI Rules for Lawyerson October 27, 2026 at 8:00 AM
California has become the first state to regulate lawyers’ use of generative artificial intelligence by statute. Gov. Gavin Newsom signed Senate Bill 574 on September 30, 2026, and its new rules take effect January 1, 2027. The law bars attorneys from handing the practice of law over to AI tools. It also requires lawyers to verify AI output and to personally verify every citation in a court filing, to disclose AI use to the court, and to keep confidential client information out of AI systems that are not access-restricted. Arbitrators face new limits as well.
SB 574, authored by Sen. Thomas Umberg (D-Santa Ana), was one of 13 AI-related bills the Governor signed the same day. The Governor’s announcement described the measure as keeping lawyers responsible for practicing law by barring them from fully turning over core legal work, such as drafting briefs or exercising legal judgment, to AI. The bill responds to a steady stream of court decisions sanctioning lawyers for filing briefs with fabricated, AI-generated case citations.
The core duties appear in a new Business and Professions Code section 6068.1, which is part of the State Bar Act and applies to all California-licensed attorneys, including in-house counsel. The section provides that an attorney may use generative AI to assist in the practice of law but may not delegate the practice of law to it. Existing duties of competence and diligence are expressly preserved.
On confidentiality, attorneys may not enter confidential, personal identifying, or other nonpublic information into a generative AI system unless access to it is limited to the attorney and people the attorney has authorized who are themselves obligated to protect the information. The law defines personal identifying information broadly to include dates of birth, Social Security and driver’s license numbers, addresses and phone numbers of parties and witnesses, medical or psychiatric information, financial information, account numbers, and sealed or otherwise confidential material. In practical terms, commentators read this as keeping client data out of public, consumer-grade AI tools.
Attorneys using AI must also take reasonable steps to verify the accuracy of its output, including all case and statutory citations, and must correct any erroneous or “hallucinated” output in material they use. That verification duty is not limited to litigation. Finally, attorneys must disclose their use of generative AI to the court for all documents submitted to the court, and must consider whether to disclose AI use in content they provide to the public. The law defines generative AI as a system that can generate derived synthetic content that emulates its training data. That definition covers drafting and research tools but not conventional search engines, predictive analytics, or automated data processing.
Separately, the bill amends Code of Civil Procedure section 128.7, California’s counterpart to federal Rule 11. As amended, any brief, pleading, motion, or other paper filed in any California court may not contain citations that a responsible attorney has not personally verified. That requirement applies whether or not AI supplied the citation, and regardless of where the attorney is licensed. Violations are enforced through section 128.7’s existing sanctions procedures. These include a 21-day safe-harbor period to withdraw or correct a challenged paper, sanctions limited to what is needed to deter repetition, and joint responsibility of the law firm for violations by its partners, associates, and employees absent exceptional circumstances.
A new Code of Civil Procedure section 1282.1 bars arbitrators from delegating any part of their decision-making to a generative AI tool. It also bars them from relying on AI-generated information outside the record without first making appropriate disclosures to the parties and, where practical, letting the parties comment. The bill also amends Business and Professions Code section 6173, which concerns State Bar oversight of alternative dispute resolution providers. A new Code of Civil Procedure section 180 directs the Judicial Council to consider whether to update its nonbinding judicial administration standard on judges’ use of generative AI. The Assembly committee analysis of the bill describes its purpose as codifying safeguards for those receiving legal services.
Law firm commentary has broadly agreed that the law codifies duties lawyers already had, while adding statutory teeth and leaving several key terms undefined. The most frequently flagged gap is that the statute never defines what it means to “delegate” the practice of law. The law does not resolve how attorney-client privilege and work-product protection apply to AI-generated material. It further suggests that the arbitrator provisions may be stricter than the American Arbitration Association’s rules for AI-led arbitration, under which an AI drafts a preliminary award for a human arbitrator to review.
King & Spalding flags two drafting questions. First, read literally, the disclosure clause could require an attorney who used AI for anything to say so in every court filing. The firm suggests the better reading limits disclosure to AI use in preparing the particular document. Second, the statute does not say which attorney is “responsible” for verifying citations when several lawyers work on a filing. The firm adds that handing the check to a second AI tool is unlikely to satisfy the personal-verification requirement. It advises companies to make sure their outside-counsel billing guidelines do not discourage the required checks, and to configure internal AI tools to protect confidential information. The Metropolitan News-Enterprise characterized the law as codifying warnings already issued by courts and the State Bar.
- LC 3600(a)(10) Post-Termination Defense Waived if Not Plead in Answeron November 3, 2026 at 8:49 AM
Frank Deville worked as a furnace and blast operator for Exide Technologies in Vernon, California, from December 2, 1986 until he was laid off on August 14, 2014. On April 24, 2015, about eight months after the layoff, he filed an application claiming cumulative injury to his nervous, respiratory, skin and internal systems from heat and chemical exposure. Exide’s carrier, Zurich American Insurance Group, administered by Tristar Risk Management, denied the claim on July 13, 2015.
Deville handled most of the case without a lawyer. An attorney represented him from April 2015 to October 2017, and after that he proceeded with a guardian. The guardian barred him from testifying at trial, which ran over several days in 2022. The parties disputed twelve issues. One of them was whether the claim was barred by the post-termination defense of Labor Code § 3600(a)(10). Except for psychiatric injuries, that provision bars compensation for a claim filed after a notice of termination or layoff unless the employee proves one of the statutory exceptions.
In a Findings and Award issued November 22, 2022, the workers’ compensation judge at the Riverside district office found that Deville sustained an industrial cumulative injury limited to sleep, rated at 13 percent permanent disability, with a need for limited future medical care. Relying on the neurology panel QME, the WCJ found no injury to the nervous, respiratory, circulatory, skin or other internal systems. The WCJ also disallowed EDD’s lien and found no unreasonable denial of benefits.
On the post-termination issue, the WCJ ruled that the claim was not barred by § 3600(a)(10). In the opinion on decision, the WCJ found that the defendant had waived the affirmative defense because it never filed an Answer to the application. The judge relied on Labor Code § 5505, which allows evidence on matters not pleaded by answer only on terms the Appeals Board or judge imposes. The WCJ also cited the parallel WCAB rule, Cal. Code Regs., tit. 8, § 10465, which gives the judge discretion over unpleaded matters and affirmative defenses. The WCJ declined to allow the defense in the interest of “substantial justice under the law,” noting that Deville had represented himself, with a guardian, for most of the case.
In the WCAB panel decision of Deville v. Exide Technologies, No. ADJ9932404 (October 2026), the Workers’ Compensation Appeals Board granted the applicant’s petition for reconsideration and, as its decision after reconsideration, affirmed the WCJ’s November 22, 2022 Findings and Award in full. This is a panel decision of the Appeals Board, not a court opinion, and it is not designated a significant panel decision. Panel decisions do not bind other panels or WCJs, though they may be cited as persuasive authority. The decision was signed by Commissioner Craig L. Snellings, with Commissioner Katherine Williams Dodd concurring and Chair Katherine A. Zalewski, and was filed October 22, 2026.
The reconsideration petition came from the applicant, who was challenging the limited scope of his injury and other adverse findings. The Board found his petitions hard to follow and thinly supported by the record. After independently reviewing the evidence, it concluded that the medical reports supported the WCJ. The toxicology and neurology evaluators found that Deville’s lead exposure was below that of the general population, and the psychiatric evaluator questioned psychological testing completed with help from Deville’s wife. Because Deville did not testify, the Board relied on the paper record. The Board declined to consider the applicant’s unsolicited supplemental filings under Cal. Code Regs., tit. 8, § 10964.
The Board did not separately analyze the post-termination ruling, and nothing in the decision indicates that the defendant challenged it on reconsideration. The WCJ’s waiver finding therefore stands as part of the affirmed award. The decision also doesn’t say whether the defendant first raised the defense at the pretrial stage, or what evidence, if any, it offered on notice of layoff.
For defense practitioners, the waiver ruling is the practical lesson. Section 5505 contemplates an answer within 10 days after service of the application, setting out the facts the defendant intends to rely on. Rule 10465 requires the answer to be on the Board’s prescribed form and states that a general denial does not qualify as an answer. A claim denial letter is not a substitute. Here, the layoff came roughly eight months before the application was filed, a timeline that might otherwise have supported the defense. Even so, the defendant’s failure to plead it left its fate to the judge’s discretion, and the judge weighed the applicant’s largely self-represented status against allowing it. Because the rule is discretionary, a WCJ could rule differently on other facts. Still, the safest course is to file a timely Answer that expressly pleads § 3600(a)(10) and every other affirmative defense the defendant intends to pursue. - WCIRB Reports Medical Care Using New Resource-Based Yardstickon November 3, 2026 at 8:49 AM
When the Workers’ Compensation Insurance Rating Bureau of California counts physician care the way it always has, injured workers appear to be getting less of it. When it weighs that care by how much time, skill and expense each service actually demands, the picture flips. That is the central finding of A New Measure of Medical Service Utilization: Physician Services and the Factors Driving Change, a research report the WCIRB released on October 30, 2026. Using its new resource-based yardstick, the bureau estimates that utilization of physician services rose 8 percent from 2020 through 2025. Its traditional measure shows a 5 percent decline over the same period.
The report, written by Lucy Chen, ACAS, and Julia Zhang, PhD, is the first in a planned series on medical service utilization. It starts with physician and non-physician practitioner services, which the WCIRB describes as the largest medical service category in its medical transaction data. The stakes are significant: according to the report, medical costs made up 52 percent of total loss payments in California’s workers’ compensation system in 2025.
Medical costs are driven by price and utilization. Until now, the WCIRB has generally measured utilization as medical transactions per claim (or visits per claim for physical medicine, acupuncture and chiropractic care). Those counts are simple, but they treat a brief office visit and a spinal surgery as equal units of care.
The new measure fixes that by borrowing the relative value units (RVUs) from the Resource-Based Relative Value Scale that Medicare uses to set physician fees. The Division of Workers’ Compensation adopted the RBRVS for the physician services section of the Official Medical Fee Schedule (OMFS) in 2014 (see the DWC’s RBRVS fact sheet). Each procedure carries three RVU components — physician work, practice expense and malpractice expense — and the WCIRB adjusts each with the geographic practice cost index, then multiplies by the number of procedures billed. Services that have no RVU in the fee schedule, such as unlisted procedure codes, anesthesia and California-specific report codes WC001 through WC012, are measured by the quantity of services per claim instead. Services with RVUs accounted for about 86 percent of physician services payments and 83 percent of transactions from 2014 through 2025.
The report illustrates the difference with two hypothetical claims. Three routine office visits for an established patient in Los Angeles add up to about 8.7 utilization units, while a single lumbar laminotomy performed in the Bay Area comes to about 31.6. Under the old transaction count, the office-visit claim would look like the heavier user of care; under the new measure, the surgical claim does.
Applied to WCIRB medical transaction data for services rendered from 2014 through 2025, the two measures tracked each other closely through 2019, with the old measure showing a 12 percent decline and the new measure a 9 percent decline. They diverged beginning in 2020. The WCIRB reads that gap as evidence that the resource intensity of care has been rising even as the raw number of services has fallen. Both measures did show utilization increasing in 2024 and 2025.
The new measure also redraws the line between price and utilization. Over the full 2014–2025 period, physician services cost per claim rose 31 percent under either approach. The original measure splits that into an 11 percent drop in utilization and a 48 percent jump in price per transaction. The new measure attributes it to a 7 percent increase in utilization and a 22 percent increase in price per utilization unit. Under the new measure, prices grew about 2 percent a year, versus about 4 percent under the old one. The report notes that the slower figure lines up better with the roughly 2.2 percent annualized increase in the OMFS conversion factor, which reflects inflationary fee schedule adjustments. In other words, much of what looked like price inflation was really more intensive care. Even so, the WCIRB found that from 2020 through 2025 the cost increase was still driven mostly by price, which rose 14 percent, compared with an 8 percent rise in utilization, for a 24 percent increase in cost per claim.
The second half of the report uses the new measure to identify what is driving the trend. Southern California has consistently shown the highest physician services utilization, and by 2025 it stood 23 percent above its 2014 level, though all regions have grown faster since 2019. Cumulative trauma (CT) claims are another factor. Non-CT claims generally use more physician services during the first 12 months, but utilization tied to CT claims has grown faster since 2022, largely because CT claims make up a growing share of the claim mix. CT claims also show heavier use of certain treatments, including nerve-damage diagnostics, psychotherapy and carpal tunnel neuroplasty. The WCIRB examined the rise of CT claims in more depth in its June 2026 report, Emerging Patterns of Cumulative Trauma Claims.
By type of service, evaluation and management (E&M) visits and physical medicine did most of the work. E&M, the largest component at roughly 35 percent of utilization, jumped sharply in 2021, which the report associates with Medicare’s higher RVUs for common office-visit codes and coding rule changes allowing visit complexity to be set by medical decision-making or total clinician time. Since 2021, low-complexity office visits have declined, while high-complexity visits in 2025 ran 35 percent above their 2021 level. Physical medicine grew from 22 percent of utilization in 2014 to 26 percent, and its utilization in 2025 was 26 percent above the 2014 level. The report credits much of that to a shift toward higher-intensity services such as neuromuscular reeducation and therapeutic activities, while lower-intensity therapeutic exercise and manual therapy declined modestly.
Surgery moved the other way and was the main offset. Its share of utilization dropped from 14 percent in 2014 to 8 percent in 2025. Nervous system surgical utilization fell 50 percent and musculoskeletal surgery 35 percent over the study period, although arthroplasty has recently climbed back above its 2014 level.
Separately, utilization of services not subject to the fee schedule ran 30 percent above its 2021 level in 2024, driven largely by the unlisted physical medicine code 97799, before moderating in 2025.
The WCIRB notes that the analysis reflects insured employers only, excludes COVID-19 claims, and uses data evaluated as of June 7, 2026, so figures may change as the data mature. Some procedures lack RVUs and are measured by service counts, and because RVUs are updated yearly, changes in Medicare valuations can register as changes in measured utilization. - Sheriff’s Chiefs Lack Authority to Settle Deputies’ Discipline Appealson November 2, 2026 at 9:45 AM
Three Los Angeles County deputy sheriffs — David Jouzi, Benjamin Alvarado, and Dellanira Aragon — were discharged for alleged misconduct and appealed their terminations to the Los Angeles County Civil Service Commission. In 2019, while those appeals were still pending, each deputy signed a settlement agreement with a Sheriff’s Department chief that purported to reduce the discipline and reinstate the deputy to employment. The deputies alleged the settlements were reached under a provision of the Department’s Manual of Policy and Procedures (section 3-04/020.80), after consultation with a constitutional policing adviser and with the Undersheriff’s approval.
The County refused to honor the agreements. According to the opinion, Alvarado and Aragon were told shortly afterward that County Counsel, the Director of Personnel, or the Board of Supervisors had vetoed the deals, and it was undisputed that the Board never approved them. The deputies, joined by the Association for Los Angeles Deputy Sheriffs (ALADS), sued the County for a writ of mandate, breach of contract, promissory estoppel, and declaratory relief.
This was the case’s second trip to the Court of Appeal. In the earlier round, Association for Los Angeles Deputy Sheriffs v. County of Los Angeles (2023) 94 Cal.App.5th 764 (ALADS I), the court held that the County Charter does not give County Counsel exclusive authority to settle Civil Service Commission appeals, but it also found the deputies had not yet shown the chiefs were authorized to settle. It reversed and sent the case back so the plaintiffs could amend to identify a legal basis for that authority.
On remand, the Los Angeles County Superior Court (No. 19STCP05186) sustained the County’s demurrer to the fourth amended petition without leave to amend. The trial court found the plaintiffs still had not shown that the chiefs acted under authority delegated by the Board of Supervisors or conferred by law, as Government Code section 23005 requires for anyone binding a county. A dismissal order was served in July 2025, a judgment followed on August 11, 2025, and the plaintiffs filed a notice of appeal on October 2, 2025.
In the published case of Association for Los Angeles Deputy Sheriffs et al. v. Superior Court of Los Angeles County (County of Los Angeles et al., Real Parties in Interest), No. B350110 (October 2026), the Second District Court of Appeal, Division One, treated the deputies’ appeal as a petition for writ of mandate and denied the petition, leaving in place the trial court’s ruling that the department-level settlements do not bind the County.
The procedural posture is unusual. Because the notice of appeal was filed more than 60 days after the dismissal order was served, the appeal was arguably untimely. The court nonetheless exercised its discretion to treat it as a writ petition, reasoning that the demurrer ruling had called for a proposed judgment and the later-entered judgment suggested the dismissal order may not have been intended as final, which could have misled the plaintiffs about the deadline.
The central question was whether Sheriff’s Department chiefs had authority to bind the County to settlements of pending Civil Service Commission appeals. Under Government Code section 23005, a county may act only through its board of supervisors or through agents acting under the board’s authority or authority conferred by law. The court rejected each of the plaintiffs’ four theories of authority.
First, the court refused to imply settlement authority from the Sheriff’s power to appoint, suspend, and discharge deputies. Letting department personnel unilaterally rescind discipline mid-appeal would be, in the court’s words, inconsistent with “the purpose and structure of the county’s civil service system,” which divides authority among the appointing power, the Director of Personnel, and the Commission to promote competence and guard against favoritism. Such settlements could also commit the County to pay money, including back pay, sidestepping the Board’s control over County finances. The court pointed to the fact that even County Counsel cannot settle a matter for more than $20,000 without Board approval, and declined to infer that the Board meant to give department personnel broader power. The court noted that department personnel still have options: they can bring new facts to the Commission or recommend a settlement to the Board.
Second, the plaintiffs did not show that the Department Manual provision was a valid delegation from the Board or a “law” conferring authority, and the County Code provision they cited did not delegate settlement power to department representatives.
Third, the court rejected the argument that the Department’s alleged past practice of settling Commission appeals could not be abandoned without bargaining under the Meyers-Milias-Brown Act (Gov. Code, § 3500 et seq.). Relying on Claremont Police Officers Assn. v. City of Claremont (2006) 39 Cal.4th 623 and Riverside Sheriff’s Assn. v. County of Riverside (2003) 106 Cal.App.4th 1285, the court found the plaintiffs had not analyzed whether ending the practice had a significant and adverse effect on working conditions, as the meet-and-confer framework requires.
Fourth, the court held that an earlier unpublished decision involving ALADS and former Sheriff Baca did not collaterally estop the County. That case concerned a different settlement, addressing administrative investigations of deputy-involved shootings, and never decided whether chiefs may settle Commission appeals. - 2027 Employer Health Insurance Premiums to Increase 8.2%on November 2, 2026 at 9:45 AM
Health insurers are earning sharply more in 2026 than they did a year ago, and employer health premiums are still rising faster than wages, according to company financial filings, state insurance regulators, and two benchmark employer surveys. But the numbers also show that much of the profit rebound is a recovery from an unusually poor 2025.
The KFF 2026 Employer Health Benefits Survey, released October 22 and based on interviews with 1,937 public and private employers, found that average annual premiums for employer-sponsored family coverage reached $28,303, up 5% from 2025. According to KFF’s news release, workers’ average contribution toward family coverage rose faster, by 9%, to $7,471. Average single coverage rose 5% to $9,804.
Next year looks steeper. In its September 2 release, Marsh (formerly Mercer) projected, based on responses from more than 1,800 employers, that total health benefit cost per employee will rise 8.2% on average in 2027 even after planned cost-cutting changes. That would be the largest increase since 2003. Other consultants’ projections are in the same range: Aon has projected about 9.5%, and the Business Group on Health has projected a median 9.2% before employer plan changes, according to news coverage of those reports. The sponsored piece’s description of an 8% to 10% increase and the biggest jump in over two decades is consistent with these figures.
UnitedHealth Group’s third-quarter 2026 earnings release, filed with the Securities and Exchange Commission on October 13, reported net earnings of $4.11 billion, up from $2.35 billion in the same quarter of 2025. That is an increase of about 75%. Earnings from operations rose to $6.6 billion from $4.3 billion, while revenue was essentially flat at $112.7 billion. UnitedHealth’s net margin was 3.6%.
The comparison quarter was weak. UnitedHealth’s third-quarter 2025 profit of about $2.3 billion was down from $6.1 billion a year earlier, as Becker’s Payer Issues reported at the time. That means this year’s third-quarter profit, though sharply higher, remains below its 2024 level. Similarly, the company’s full-year 2025 results show net earnings of roughly $12.1 billion, as the sponsored piece states. That was a decline from $14.4 billion in 2024, which the piece does not mention, and it came with a 2.7% net margin and a $2.8 billion one-time charge.
The rebound is not unique to UnitedHealth. The National Association of Insurance Commissioners’ 2026 mid-year health industry report, which aggregates statutory filings from health insurers, found industry net income rose 127.6% to about $27.7 billion in the first half of 2026. The industry’s profit margin rose from 1.8% to 4.1%. The company’s SEC filing confirms that people served through Medicare Advantage and related programs fell by 935,000 since the end of 2025. The company had forecast this contraction and said it would focus on margins over enrollment.
What is driving the profit gains? UnitedHealth’s own release credits a lower medical care ratio, which fell to 88.4% from 89.9%, along with pricing discipline, benefit design changes, and lower operating costs. In other words, the company says it improved results partly by charging more relative to costs and by changing what its plans cover. The employer surveys, however, point to broader cost drivers. Marsh, for example, attributed about one percentage point of its 2027 projection to growing use of GLP-1 weight-loss drugs, and news coverage of the survey also cited provider consolidation and costly new therapies.
Independent researchers have raised a related, narrower concern: that vertical integration can make insurer profitability harder to see. A Brookings Institution analysis found that about 63% of Optum Health’s 2025 revenue of $100.5 billion was paid by related UnitedHealth entities. The analysis noted that some observers see such arrangements as improving care coordination, while others say they create opportunities to shift profits out of the regulated insurance business. A separate study in Health Affairs, as reported by Healthcare Dive, found UnitedHealthcare paid Optum-affiliated providers 17% more than other providers. UnitedHealth has disputed that study and said it pays Optum in line with the market.
For employers, the takeaway is that the cost pressures are real and well documented, and 2027 renewals are likely to be the most expensive in two decades. - 340B Contract Pharmacy Drug Discount Controversy Intensifieson October 29, 2026 at 7:48 AM
The 340B program, created under 42 U.S.C. § 256b, requires drug manufacturers to sell outpatient drugs at steep discounts to safety-net hospitals and clinics. Those providers can then bill insurers at full price and keep the difference. In 2010, the Health Resources and Services Administration (HRSA) began allowing covered entities to contract with an unlimited number of outside pharmacies to dispense 340B drugs, and those arrangements have multiplied since.
A University of Pennsylvania study finding that 340B contract pharmacies spread mainly into wealthier, whiter neighborhoods remains one of the most contested pieces of evidence in the fight over the federal drug discount program. The fight has sharpened in 2026 with a federal appeals court split over state contract pharmacy laws, a new Medicare payment proposal and a new Department of Health and Human Services analysis of the program's incentives. The study, a research letter titled Assessment of US Pharmacies Contracted With Health Care Institutions Under the 340B Drug Pricing Program by Neighborhood Socioeconomic Characteristics, was published June 17, 2022, in JAMA Health Forum, an open-access journal in the JAMA Network.
The Penn researchers used HRSA's 340B database, Census data and the national provider registry to track 91,740 pharmacies from 2006 through 2019. They found that participation was nearly flat before the 2010 policy change and then surged, so that by 2019, 29.9 percent of all U.S. pharmacies held a 340B contract. Retail pharmacies made up 92 percent of them. The finding that drew the most attention compared how 340B and non-340B retail pharmacies changed between 2011 and 2019. Relative to other pharmacies, the share of 340B contract pharmacies fell 7.0 percent in neighborhoods with a median family income below $45,000 and rose 3.6 percent in neighborhoods at or above $80,000. It also fell in predominantly Black and Hispanic neighborhoods and in the most socially deprived areas, while the change in rural neighborhoods was not meaningful. Meanwhile, retail pharmacies overall grew slightly in disadvantaged areas, which the authors said showed the pattern was specific to 340B contracting.
The authors concluded that the growth was concentrated in affluent, predominantly white neighborhoods. In a Penn Leonard Davis Institute summary, they wrote that discounted drugs "appear to go more and more to pharmacies in wealthier communities" and that large retail chains have benefited. They acknowledged one key limitation: they could not see whether 340B discounts actually reached low-income patients. A patient who lives in a poor neighborhood can still fill a prescription at a pharmacy in a wealthier one.
Hospitals objected immediately. Speaking to 340B Report, American Hospital Association general counsel Melinda Hatton said the study "suffers from many flaws that seriously undermine its reliability." She called its demographic conclusions misleading because the study did not account for differences among communities, particularly rural areas that may have fewer minority residents. The AHA also pointed out that one author had received pharmaceutical industry grants for other research. The study's disclosures list industry grants and fees received by Doshi and Li, all reported as unrelated to this work, and the study itself was funded by Penn and federal research grants. Covered entities and their advocates generally argue that contract pharmacy savings fund care for vulnerable patients wherever the pharmacy is located.
Later research has added to the picture. A 2023 study in the American Journal of Managed Care, Income Differences Between Locations of 340B Entities and Contract Pharmacies, looked at 2019 contracts and found that the median household income where a contract pharmacy was located averaged about 35 percent higher than where its covered entity was located. That was true for both hospitals and federal grantee clinics. Its authors acknowledged the study was funded by Gilead Sciences. A 2022 county-level study by Nikpay and colleagues found a split: pharmacies contracting with hospitals tended to be in lower-poverty areas, while those contracting with safety-net clinics were more often in areas with higher uninsured rates.
The data still matter because contract pharmacies are now at the center of the 340B dispute. An October 8, 2026 brief from HHS's Office of the Assistant Secretary for Planning and Evaluation, Mission vs. Margin: Misaligned Incentives in the 340B Drug Pricing Program, reports that contract pharmacies grew from about 1,300 in 2010 to more than 31,000 by mid-2026. It also reports that five companies, Cigna, CVS Health, UnitedHealth Group, Walgreens and Walmart, account for 77 percent of them. The ASPE brief does not cite the Penn study. It argues more broadly that the program's financial incentives have drifted from its safety-net mission, and hospital groups dispute that view.
Courts are divided over whether states may force manufacturers to honor 340B pricing at contract pharmacies. On March 31, 2026, a Fourth Circuit panel in PhRMA v. McCuskey upheld a preliminary injunction against West Virginia's contract pharmacy law, finding it likely preempted by federal law. The Fifth and Eighth Circuits had upheld similar laws in Louisiana and Arkansas. The AHA has urged the full Fourth Circuit to rehear the case, warning that the ruling could jeopardize hospitals that serve low-income patients. The ASPE brief also notes that the Centers for Medicare & Medicaid Services proposed in July 2026 to cut Medicare payment for 340B-acquired drugs, and that HRSA announced a revised 340B rebate pilot on August 3, 2026, after a court paused the original version.
For employers and health plans, the stakes go beyond geography. Under 340B, plans typically pay full price for drugs that covered entities buy at a discount, and the ASPE brief cites an estimate that self-insured employers may face a $5.2 billion cost increase from lost manufacturer rebates. Whether contract pharmacy revenue is reaching the patients the program was designed to help is the question the Penn study raised but could not answer, and it remains unresolved. - DOI Announces Insurance Long-Term Solvency Planning Regulationon October 29, 2026 at 7:48 AM
California-based insurers will soon have to show state regulators how they expect to stay solvent through 2050. Insurance Commissioner Ricardo Lara has finalized the Long-Term Solvency Planning Regulation, which requires domestic insurers to document how climate change, cyber threats, artificial intelligence and other emerging risks could affect their finances over the coming decades. According to the Department of Insurance's announcement of the final rule, the regulation took effect October 26, 2026, and insurers' first long-term solvency plans must be assembled and available to department examiners by January 1, 2028.
The department calls the rule the first of its kind in any U.S. state. It applies to insurers domiciled in California, across all lines of business, and adds a new section 2319.7 to Title 10 of the California Code of Regulations under the rulemaking file REG-2025-00025. The department cites its authority under Insurance Code § 739.9, and ties the rule to the risk-based capital provisions of Insurance Code § 739.2. Subdivision (d) of that section says insurers should try to hold capital above the minimum risk-based capital levels, as a cushion against risks the formula does not fully measure. The new regulation in effect asks insurers to document how they are analyzing those additional capital needs.
The rule operates in two tiers. Under the draft text the department released for public workshop in October 2025, every domestic insurer must maintain and keep current its data on risk mitigation technologies used by its policyholders, along with any analysis of how well those measures have performed and are expected to perform. Insurers that wrote more than $50 million in direct premium nationwide in the prior calendar year face the more extensive requirements. Because the threshold resets each year, an insurer's status can change from one year to the next.
Those larger insurers must assess which emerging risks and opportunities are material to their underwriting, investments or operations. The draft groups these into four categories. The first is technology, including the growing scale and complexity of data, data quality and cybersecurity. The second is physical climate risk, covering both acute extreme-weather events and slower, compounding changes such as sea-level rise, water availability and temperature extremes. The third is transition risk as the economy shifts away from greenhouse-gas-emitting technologies, including the effect of future government action. The fourth is a catch-all for other risks likely to grow more volatile over 20 years, such as economic trends or litigation.
For the risks they find material, those insurers must document their analysis and mitigation strategies with projections for 2030, 2040 and 2050. On the climate side, the draft calls for stress tests of forward-looking climate scenarios, explanations of how the scenarios were chosen and where the uncertainties lie, and analysis of investment concentrations and exposure to catastrophic events such as extreme heat, severe convective storms, flooding, earthquakes and hurricanes. Insurers must also set long-term investment strategy targets with performance metrics and interim checkpoints, and describe how they will identify opportunities for new products, such as coverage for low- or zero-emission infrastructure. Finally, they must explain whether their climate and technology risk expertise is built in-house or bought from outside vendors.
The plans are not filed publicly. The department describes the oversight as confidential and conducted through its financial examinations, comparing it to the Federal Reserve's supervision of U.S. banks. In its June 12, 2026 announcement of the formal proposal, the department said the rule draws on approaches used by the Bank of England, the Banque de France, the Dutch central bank, Canada's chief insurance regulator and the Monetary Authority of Singapore, as well as the International Association of Insurance Supervisors' climate risk framework. Lara said in that release that resilience "is not optional, it is a global responsibility."
The rule has been more than a year in development. The department published a workshop draft in October 2025 and held a public workshop that November, issued a formal notice of proposed action in June 2026, and held a virtual public hearing on July 28, 2026.
Industry groups pushed back during the process. As reported by InsuranceNewsNet, the American Property Casualty Insurance Association argued that property and casualty carriers write mostly short-duration business and plan on three- to five-year horizons, and that the $50 million threshold sweeps in far smaller companies than the NAIC's Own Risk and Solvency Assessment (ORSA) and climate disclosure survey do. Other trade representatives, quoted by Digital Insurance, called projections out to 2040 or 2050 too speculative and said the reporting duplicates existing ORSA requirements. Consumer and environmental groups pressed from the other direction. A July 2026 coalition letter from 11 organizations, including United Policyholders, Public Citizen and the Greenlining Institute, urged standardized reporting, science-based emissions targets that extend to underwriting, and plans to keep insurers from withdrawing from markets they serve. The department's announcement of the final rule says it builds on the June proposal, but the summaries available do not detail what changed in the final text.
For employers and policyholders, the rule does not change premiums, coverage terms or claims handling. Its significance lies in solvency oversight. It gives California regulators an early look at whether the carriers headquartered in the state, including those writing commercial and workers' compensation coverage, have thought through threats that could erode their capital long before those threats show up on a balance sheet. - Court Limits Attorney Client Privilege in Fair Chance Act Investigationon October 28, 2026 at 10:42 AM
California's Fair Chance Act, Government Code § 12952, bars employers with five or more employees from asking about an applicant's conviction history until after a conditional job offer is made. If the employer then wants to withdraw the offer because of a conviction, it must first conduct an individualized assessment of whether the conviction has a direct and adverse relationship with the specific duties of the job, weighing the nature and gravity of the offense, the time that has passed, and the nature of the job. The employer must then give the applicant written notice of its preliminary decision, allow a response, and consider that response before making the decision final.
In a new court of appeal published opinion, Walter J. interviewed with the City of Torrance for a custodian position in September 2022 and received a contingent offer. A Department of Justice background report showed a string of misdemeanor convictions beginning in 1996, along with a 2001 felony conviction for false personation. Walter submitted materials he believed showed rehabilitation. The City accepted several of his explanations, agreeing that one conviction had been dismissed, that he had rehabilitated from a domestic battery conviction, that the felony was too old to be relevant, and that his driving offenses did not matter for the custodian job. It nonetheless rescinded the offer based on a 2019 conviction for fighting in a public place, concluding the offense was recent and relevant to a job requiring daily interaction with coworkers and the public, and citing its zero-tolerance workplace violence policy.
Walter filed a complaint with the Civil Rights Department (CRD) in October 2023. In its response, the City laid out a narrative of how it had followed the statute, identified the two decision makers who performed the assessment, and asserted that it had complied with section 12952. In October 2024, CRD filed a director's complaint and expanded the matter into a group or class investigation into whether the City was disqualifying applicants based on certain types of crimes without adequate individualized assessments.
CRD served document requests seeking the City's assessment templates, forms, and instructions, along with the assessment and reassessment records for every applicant denied employment because of criminal history since January 1, 2022. Torrance acknowledged it had responsive documents but withheld all of them, asserting attorney-client privilege and work product protection because the assessments were prepared with counsel. An assistant city attorney declared that the two template documents reflected her conclusions about what the law requires, and that two City human resources employees consulted her on each assessment and documented her legal advice. The City refused to produce a privilege log, instead supplying a list of 23 applicants whose criminal histories had been reviewed the same way as Walter's.
CRD petitioned the Los Angeles County Superior Court under Government Code § 12963.5 for an order compelling compliance with its investigative requests. Judge Virginia Keeny granted the petition, finding that the City had waived any privilege by raising the adequacy of its individualized assessments as a defense to CRD's investigation. Relying on Wellpoint Health Networks, Inc. v. Superior Court (1997) 59 Cal.App.4th 110, the court added that applying that rule to CRD investigations was especially appropriate, because otherwise an employer could escape its duty to properly analyze criminal history records simply by handing the task wholesale to in-house counsel. The court also rejected the City's vagueness and overbreadth objections, a ruling the City did not challenge on appeal. Torrance appealed under section 12963.5, subdivision (d), which makes such orders immediately appealable.
In the published case of Civil Rights Department v. City of Torrance, No. B352855 (September 2026), the California Court of Appeal, Second Appellate District, Division One, affirmed the superior court's order compelling the City to produce its Fair Chance Act assessment templates and individualized assessment records, holding that the City waived any attorney-client or work product protection by asserting that it had complied with section 12952. The opinion, authored by Justice Weingart and joined by Presiding Justice Rothschild and Justice Bendix, was filed as unpublished on September 29, 2026, and the court certified it for publication on October 27, 2026.
The court reviewed the privilege ruling for abuse of discretion, citing Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725. CRD had argued that the documents were never privileged to begin with, because the dominant purpose of the assessments was an ordinary human resources function rather than obtaining legal advice, and that Torrance was routinely involving a lawyer to shield hiring decisions from scrutiny. The panel found it unnecessary to decide that question, resting its decision entirely on waiver.
The court explained that privilege is waived when a party puts an otherwise privileged communication directly at issue and disclosure is essential to a fair adjudication, a rule drawn from Southern Cal. Gas Co. v. Public Utilities Com. (1990) 50 Cal.3d 31 for the attorney-client privilege and People v. Superior Court (Jones) (2021) 12 Cal.5th 348 for work product. Wellpoint applied that principle to an employer defending a hostile work environment claim by pointing to an investigation conducted by attorneys; an employer that relies on the adequacy of such an investigation cannot then invoke privilege to block examination of it.
The panel endorsed the trial court's reasoning, particularly its concern about delegation to counsel. The assistant city attorney had acknowledged she is involved in hiring whenever an applicant has a criminal history, and the City conceded at oral argument that it had withheld every document reflecting both the assessment and reassessment process. By routinely involving a lawyer and then claiming privilege, the court said, Torrance was seeking to shield all internal records of its decision-making.
The court rejected the City's argument that the trial court should have evaluated each document individually. As the party asserting privilege, the City bore the burden of establishing the facts supporting it under Costco, and it offered no basis for distinguishing one document from another. Because CRD is investigating the City's compliance with section 12952, the court saw no reason the waiver would reach some documents but not others.
The court likewise rejected the City's claim that, unlike the employer in Wellpoint, it had never put the sufficiency of its assessments at issue. The City could not simultaneously assert compliance with section 12952 and deny that the adequacy of its assessments was in play, the court reasoned, because compliance turns on whether the assessments considered the statutory factors and the applicant's response. The court pointed to California Code of Regulations, title 2, § 11017.1, subdivision (c)(1), which requires a reasoned, evidence-based determination of whether a conviction is directly and adversely related to the job, and observed that an employer "may not go through the motions." By claiming it complied with the statute and regulations, Torrance put at issue how it performed its individualized assessments and waived any privilege as to their content. - 75% CTE Rate in Post Mortem Study of 2,362 of Former NFL Playerson October 28, 2026 at 10:42 AM
About three of every four former National Football League players who died between 2008 and 2023 likely had chronic traumatic encephalopathy, or CTE, according to a Boston University study published October 28, 2026, in JAMA Network Open. The researchers put the bias-adjusted prevalence at 74.5% among the 2,362 former players who died during that 16-year period. News coverage describes it as the first population-level estimate of CTE among deceased NFL players.
CTE is a degenerative brain disease associated with repeated head impacts, and it can be definitively diagnosed only by examining the brain after death. That has long made its true frequency hard to measure. Earlier research relied on brains donated to research banks, and families of players who showed symptoms in life are more likely to donate. A widely cited 2017 Boston University analysis found CTE in 99% of donated NFL players’ brains, a figure critics argued was inflated by that selection effect.
The new study, titled “Bias-Adjusted Prevalence of Chronic Traumatic Encephalopathy Among Deceased National Football League Players,” tries to correct for donation bias. According to reporting by The Boston Globe and Science News, the team started with nearly 400 former players whose brains were in Boston University’s brain bank. About 94% of those donors had CTE. The researchers then used death certificate data from the National Death Index on every former player who died during the study period. They also considered records of dementia and cognitive symptoms, along with age at death, position played, and years in the league. Players with cognitive symptoms were about five times more likely to have their brains donated, and the team adjusted for that difference when extending its estimate to players whose brains were never examined.
ABC News reported that the researchers also estimated 27.2% of the former players had dementia during their lifetimes, a figure the authors said likely understates the true rate. For comparison, the Globe reported that CTE prevalence in the general population is estimated at under 1%. It added that former NFL players may be roughly four times more likely than the general population to develop dementia and other neurodegenerative diseases.
The authors acknowledge that no adjustment can remove every source of bias. Senior author Yorghos Tripodis, a Boston University biostatistics professor, told ABC News that the estimate did not drop below 60% even under very conservative assumptions. Lead author Julia Gallini, a doctoral candidate at the Boston University School of Public Health, cautioned in the Globe that the result is an estimate for deceased former players and does not predict the share of current players who will develop CTE. Not every case of CTE produces symptoms, and symptoms tend to appear in later stages of the disease. The players’ head impacts also often began in youth, high school, or college football rather than in the pros, according to co-author Daniel Daneshvar of Mass General Brigham.
The study refines an August 2026 analysis by several of the same researchers. That earlier work, which Insurance Journal reported was led by Daneshvar, examined former players who died between 2016 and 2021. It set a conservative minimum of about one in four with CTE. ABC News reported that the earlier study’s plausible range ran from 25% to 98%, and Tripodis said the team wanted to narrow that range. Dr. Ramon Diaz-Arrastia of the University of Pennsylvania, who was not involved in the study, told the Globe it is a paper the field “has been waiting on for a long time.”
The NFL pointed to the statement it issued after the August study, saying it continually works to make the game safer and remains committed to providing resources for players’ well-being. The NFL Players Association told the Globe that such studies are critical to understanding football’s long-term effects.
For employers and insurers, the findings bear on the cumulative-trauma and occupational-disease claims that former professional athletes have long pursued, including in California’s workers’ compensation system. A credible population-level estimate of brain disease among NFL veterans could figure in how such claims are evaluated and reserved, although the study itself does not address compensation or causation in any individual case. The researchers’ emphasis on exposure beginning in youth and amateur football may also interest carriers that write coverage for schools, colleges, and youth sports organizations, as well as other contact-sport employers. - Busy Schedule No Defense to State Fund Premium Audit Suiton October 27, 2026 at 8:00 AM
In February 2022, Creditors Adjustment Bureau, Inc., suing as assignee of the State Compensation Insurance Fund, filed a collection action in Fresno County Superior Court against Barry Halajian, doing business as Industrial Electrical. The complaint sought $86,858.26 allegedly owed under four workers’ compensation insurance policies. According to the complaint, the insurer priced each policy at inception using an estimate based on Halajian’s own representations. When the insurer later tried to audit his payroll records as the policies allowed, he refused to cooperate, so the insurer calculated an estimated premium that increased his balance. Halajian refused to pay.
The bureau served Halajian by leaving the summons and complaint at the commercial mailbox center he used for all correspondence on his policies, and then mailing a second copy to that address—the same address Halajian later listed on his own court filings. He did not respond, and the court entered his default on May 25, 2022.
In August 2022, Halajian moved to set aside the default for excusable neglect under Code of Civil Procedure section 473, subdivision (b). He did not challenge service. Instead, he said extensive out-of-town travel and a heavy work schedule kept him from answering. The trial court denied the motion in November 2022, explaining that a “press of business” excuse is generally not a ground for relief and that Halajian had shown no effort to contact a lawyer or ask the plaintiff for more time. Because the court said it strongly preferred to decide the case on the merits, however, it denied the motion without prejudice so he could try again with a better factual showing.
Halajian’s second motion, filed in January 2023, simply elaborated on the same excuse. He declared that a construction project about 90 minutes from Fresno kept him working out of town from January through early April 2022, often 12 to 15 hours a day, and that he sometimes went days without checking his mail. Most of the motion argued the merits of his defenses. In May 2023 the court denied relief with prejudice, finding that neither a busy schedule nor a decision to proceed without counsel amounts to excusable neglect and that the merits of his defense were irrelevant to that question. Reconsideration was denied.
The court entered a default judgment on January 13, 2025. Halajian then moved to vacate it, invoking the court’s equitable power to set aside judgments for extrinsic mistake or fraud. He argued that he never received notice of the request for default judgment, that his defenses were meritorious, that he deserved leniency as a self-represented litigant, and that the bureau lacked standing. The court denied the motion in May 2025, noting he had not attached a proposed answer, that a defaulted party is not entitled to notice of the default judgment request, that he offered no evidence he had paid his premiums, and that he provided no new explanation for failing to answer. A further reconsideration motion was denied, and Halajian appealed in pro. per.
In the unpublished case of Creditors Adjustment Bureau, Inc. v. Halajian, No. F090331 (October 2026), the Fifth District Court of Appeal affirmed the default judgment, holding that the trial court did not abuse its discretion in refusing to set aside either the entry of default or the default judgment. The opinion, filed October 20, 2026, was not certified for publication, so under California’s rules of court it generally may not be cited or relied on by courts or parties in other cases. The court awarded the bureau its costs on appeal to the extent not covered by Halajian’s fee waiver.
As a threshold matter, the court rejected the bureau’s argument that the appeal should be dismissed or narrowed. Although it found Halajian’s briefing difficult to parse at times, it liberally construed his notice of appeal and briefs as challenging both the entry of default and the default judgment. That also disposed of the bureau’s contention that reversing only the judgment would be an “idle act” because the underlying default would still stand.
On the merits, the court reviewed the denial of relief for abuse of discretion. It acknowledged the strong policy, stated in Elston v. City of Turlock (1985) 38 Cal.3d 227, that doubts under section 473 are resolved in favor of the party seeking relief and that only very slight evidence is required. But the court emphasized that the policy has limits. The test, under Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, is whether a reasonably prudent person in similar circumstances might have made the same error, and California courts have long held that the press of business is not excusable neglect. Elston itself observed that a litigant who was simply busy with other matters would not qualify. The court also relied on Bellm v. Bellia (1984) 150 Cal.App.3d 1036, which upheld denial of relief to a defendant overwhelmed by holiday-season sales orders.
The court analyzed the statutory and equitable requests together because both turned on the same question: why Halajian failed to answer in 2022. Equitable relief requires satisfying the “stringent three-pronged test” described in Rappleyea v. Campbell (1994) 8 Cal.4th 975 and Pittman v. Beck Park Apartments Ltd. (2018) 20 Cal.App.5th 1009: a meritorious defense, a satisfactory excuse for not defending in the first place, and diligence in seeking relief. Under Manson, Iver & York v. Black (2009) 176 Cal.App.4th 36, relief for extrinsic mistake or fraud is unavailable where the moving party’s own negligence allowed the mistake to occur. Across his motions, Halajian offered only his work schedule, and his equitable motion merely pointed back to the justification he had already given. The trial court acted within its discretion in rejecting it.
The court distinguished the cases Halajian relied on. Olivera v. Grace (1942) 19 Cal.2d 570 involved a litigant left mentally incapacitated by a head injury, a condition the opposing party exploited. Rappleyea involved a clerk’s miscommunication about a filing fee after a timely response. Gamet v. Blanchard (2001) 91 Cal.App.4th 1276 involved a disabled, out-of-state litigant whose attorney withdrew and who received confusing orders from the court. Halajian, by contrast, was validly served under Code of Civil Procedure section 415.20, which permits service at a private commercial mailbox, as recognized in Sweeting v. Murat (2013) 221 Cal.App.4th 507. He never disputed service and apparently took no action until August 2022.
Halajian’s reliance on Zamora and Minick v. City of Petaluma (2016) 3 Cal.App.5th 15 for the idea that failing to pick up his mail was an understandable mistake also failed. Both cases involved errors by counsel—a clerical mistake in one and an attorney’s serious illness in the other—raised within about a week. Section 473 distinguishes attorney fault from a client’s own negligence, and Halajian’s default resulted from his own conduct.
Finally, the court rejected Halajian’s remaining arguments. Self-represented litigants are held to the same procedural rules as attorneys, citing County of Orange v. Smith (2005) 132 Cal.App.4th 1434. His challenges to the insurer’s corporate structure and the bureau’s standing to sue on its behalf were summarily rejected as without merit, and due process arguments raised for the first time in his reply brief were not considered. - SB574 - California is First State to Pass AI Rules for Lawyerson October 27, 2026 at 8:00 AM
California has become the first state to regulate lawyers’ use of generative artificial intelligence by statute. Gov. Gavin Newsom signed Senate Bill 574 on September 30, 2026, and its new rules take effect January 1, 2027. The law bars attorneys from handing the practice of law over to AI tools. It also requires lawyers to verify AI output and to personally verify every citation in a court filing, to disclose AI use to the court, and to keep confidential client information out of AI systems that are not access-restricted. Arbitrators face new limits as well.
SB 574, authored by Sen. Thomas Umberg (D-Santa Ana), was one of 13 AI-related bills the Governor signed the same day. The Governor’s announcement described the measure as keeping lawyers responsible for practicing law by barring them from fully turning over core legal work, such as drafting briefs or exercising legal judgment, to AI. The bill responds to a steady stream of court decisions sanctioning lawyers for filing briefs with fabricated, AI-generated case citations.
The core duties appear in a new Business and Professions Code section 6068.1, which is part of the State Bar Act and applies to all California-licensed attorneys, including in-house counsel. The section provides that an attorney may use generative AI to assist in the practice of law but may not delegate the practice of law to it. Existing duties of competence and diligence are expressly preserved.
On confidentiality, attorneys may not enter confidential, personal identifying, or other nonpublic information into a generative AI system unless access to it is limited to the attorney and people the attorney has authorized who are themselves obligated to protect the information. The law defines personal identifying information broadly to include dates of birth, Social Security and driver’s license numbers, addresses and phone numbers of parties and witnesses, medical or psychiatric information, financial information, account numbers, and sealed or otherwise confidential material. In practical terms, commentators read this as keeping client data out of public, consumer-grade AI tools.
Attorneys using AI must also take reasonable steps to verify the accuracy of its output, including all case and statutory citations, and must correct any erroneous or “hallucinated” output in material they use. That verification duty is not limited to litigation. Finally, attorneys must disclose their use of generative AI to the court for all documents submitted to the court, and must consider whether to disclose AI use in content they provide to the public. The law defines generative AI as a system that can generate derived synthetic content that emulates its training data. That definition covers drafting and research tools but not conventional search engines, predictive analytics, or automated data processing.
Separately, the bill amends Code of Civil Procedure section 128.7, California’s counterpart to federal Rule 11. As amended, any brief, pleading, motion, or other paper filed in any California court may not contain citations that a responsible attorney has not personally verified. That requirement applies whether or not AI supplied the citation, and regardless of where the attorney is licensed. Violations are enforced through section 128.7’s existing sanctions procedures. These include a 21-day safe-harbor period to withdraw or correct a challenged paper, sanctions limited to what is needed to deter repetition, and joint responsibility of the law firm for violations by its partners, associates, and employees absent exceptional circumstances.
A new Code of Civil Procedure section 1282.1 bars arbitrators from delegating any part of their decision-making to a generative AI tool. It also bars them from relying on AI-generated information outside the record without first making appropriate disclosures to the parties and, where practical, letting the parties comment. The bill also amends Business and Professions Code section 6173, which concerns State Bar oversight of alternative dispute resolution providers. A new Code of Civil Procedure section 180 directs the Judicial Council to consider whether to update its nonbinding judicial administration standard on judges’ use of generative AI. The Assembly committee analysis of the bill describes its purpose as codifying safeguards for those receiving legal services.
Law firm commentary has broadly agreed that the law codifies duties lawyers already had, while adding statutory teeth and leaving several key terms undefined. The most frequently flagged gap is that the statute never defines what it means to “delegate” the practice of law. The law does not resolve how attorney-client privilege and work-product protection apply to AI-generated material. It further suggests that the arbitrator provisions may be stricter than the American Arbitration Association’s rules for AI-led arbitration, under which an AI drafts a preliminary award for a human arbitrator to review.
King & Spalding flags two drafting questions. First, read literally, the disclosure clause could require an attorney who used AI for anything to say so in every court filing. The firm suggests the better reading limits disclosure to AI use in preparing the particular document. Second, the statute does not say which attorney is “responsible” for verifying citations when several lawyers work on a filing. The firm adds that handing the check to a second AI tool is unlikely to satisfy the personal-verification requirement. It advises companies to make sure their outside-counsel billing guidelines do not discourage the required checks, and to configure internal AI tools to protect confidential information. The Metropolitan News-Enterprise characterized the law as codifying warnings already issued by courts and the State Bar.