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Gig Workers File Second Challenge to Proposition 22

Gig workers and labor unions on Thursday continued their challenge to California’s Proposition 22, filing a lawsuit in a lower court as urged by the state Supreme Court, which last week rejected a request for an expedited review of the case.

The plaintiffs, who filed the lawsuit in January, say the measure, which 58% of the state’s voters passed in November and exempts companies like Uber Technologies Inc. and Lyft Inc. from a law that would require them to treat their drivers as employees, is unconstitutional.

Among other things, they say Prop. 22 precludes gig workers’ inclusion in the workers’ comp system and keeps them from collective bargaining.

The new lawsuit, which they filed in Alameda County Superior Court, states “Because the Legislature has ‘plenary power, unlimited by any provision of this Constitution’ to address workers’ compensation, including occupational safety,an initiative statute cannot limit the Legislature’s authority in this area.”

The lawsuit also says Prop. 22 is too broad because ballot measures are supposed to focus on only one issue: “[It] also attempts to impose other restrictions that are not substantively addressed in the measure.”

The plaintiffs include the SEIU California and the national SEIU, individual drivers and a ride-hailing customer.

“I’m joining together with my fellow ride-share drivers to continue our fight against Prop. 22 because we know that in a democracy, corporations shouldn’t get the final say in determining our laws,” said Saori Okawa, one of the plaintiffs, in a statement.

In a news release, the plaintiffs mentioned other constitutional challenges to state ballot measures and acknowledged that those efforts took a long time.

“In the case of Prop. 187 – which denied undocumented immigrants access to basic education and healthcare – it took nearly five years, multiple appeals, the end of Gov. Pete Wilson’s administration and the passage of federal legislation for the initiative to be struck down,” the plaintiffs said. “It took almost seven years for Prop. 8 – which denied marriage equality to same-sex couples – to make its way to the United States Supreme Court, where it was struck down in 2015.”

Biden Picks Julie Su – Head of CA Labor Agency as Labor Deputy

President Joe Biden nominated Julie Su, the head of California’s labor agency, on Wednesday as the deputy U.S. secretary of labor, potentially putting another Californian in a top administration job and focusing a brighter spotlight on the state’s ongoing unemployment fraud scandal.

If confirmed by the Senate, Su would be tasked with helping to lead a sprawling department that oversees laws that regulate worker standards and pay, workplace safety, workers’ compensation, unions, family and medical leave and more. She would work in partnership with Boston Mayor Marty Walsh, Biden’s nominee for labor secretary, if he is confirmed.

Julie A. Su is currently the Secretary of the California Labor and Workforce Development Agency. Governor Gavin Newsom appointed Su in January of 2019 to serve as his cabinet advisor on labor issues and employment programs for workers and businesses throughout California.

Secretary Su oversees the state departments and boards that enforce labor laws, including minimum wage and occupational safety standards, provide state disability and unemployment insurance benefits, fund workforce training and apprenticeship programs, combat wage theft, protect injured workers, and arbitrate public sector contract disputes.

Su is a nationally recognized expert on workers’ rights and civil rights who has dedicated her distinguished legal career to advancing justice on behalf of poor and disenfranchised communities, and is a past recipient of a MacArthur Foundation “Genius” grant.

As California Labor Commissioner from 2011 through 2018, Su enforced the state’s labor laws to ensure a fair and just workplace for both employees and employers. A report on her tenure released in May 2013 found that her leadership has resulted in a renaissance in enforcement activity and record-setting results. In 2014, she launched the first “Wage Theft is a Crime” multi-media, multilingual statewide campaign to reach out to low-wage workers and their employers to help them understand their rights and feel safe speaking up about labor law abuses.

Prior to her appointment as California Labor Commissioner, Su was the Litigation Director at Asian Americans Advancing Justice-Los Angeles, the nation’s largest non-profit civil rights organization devoted to issues affecting the Asian American community. In her 17 years as a civil rights lawyer, Su brought landmark lawsuits resulting in millions of dollars for low-wage workers and policy changes in California and the United States protecting immigrant victims of crime and human trafficking. In 1995, she was the lead attorney for Thai garment workers who were trafficked into the United States and forced to sew behind barbed wire and under armed guard in an apartment complex in El Monte, California. Su is known for pioneering a multi-strategy approach that combines successful impact litigation with multiracial organizing, community education, policy reform, coalition building, and media work.

Su has taught at UCLA Law School and Northeastern Law School. She is a graduate of Stanford University and Harvard Law School and began her career with a Skadden Fellowship. Su is the daughter of Chinese immigrants and speaks Mandarin and Spanish

DWC Updates OMFS Practitioner Services Fees

The Division of Workers’ Compensation (DWC) has posted an order adjusting the Physician and Non-Physician Practitioner Services section of the Official Medical Fee Schedule (OMFS) to conform to relevant 2021 changes in the Medicare payment system as required by Labor Code section 5307.1. The Administrative Director update order adopting the OMFS adjustments is effective for services rendered on or after March 1, 2021. Some of the significant changes include the following.

– Revisions relating to Evaluation and Management (E&M) services for office visits for new and established patients

– – 1995 and 1997 Evaluation and Management Documentation Guidelines are no longer used
– – American Medical Association’s Current Procedural Terminology (CPT) E&M office visit code descriptors and guidelines have been revised
– – Level of E&M office visit service is reported using either level of medical decision making or total time
– -First level new patient office visit code CPT 99201 has been eliminated

Medicare Prolonged Service Code HCPCS G2212 is adopted for use in place of CPT code 99417 for prolonged E&M service provided on the date of service where the level of service is selected based upon time
– – Updated relative value units
– – Updated conversion factors
– – Updated Table A – anesthesia conversion factors adjusted for Geographic Practice Cost Index
– – Updated telehealth list

The Order, effective for services rendered on or after March 1, 2021, and related documents can be found at the DWC OMFS physician fee schedule webpage.

February 8, 2021 – News Podcast

Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Supreme Court Denies Union Effort to Invalidate Prop 22. 132a Not Released by Civil Settlement Without WCAB Approval. EHR Vendor Resolves Kickback Case for $18M. Last Physician Sentenced in $154M Surgical Fraud Case. Claimant Faces Fraud Charges for False History of Prior Injuries. Cal/OSHA Data Significantly Undercounting COVID-19. Cal/OSHA Cites Two State Prisons and Others for COVID Issues. California Legislators Seek “Reboot” of Failing EDD. Hearing on COVID-19 MTUS Canceled Pending ACOEM Updates. Congress Investigating Meatpackers for High COVID Deaths.

Brentwood Pharmacist Guilty in $4.5M Kickback Scheme

A West Los Angeles pharmacy and its owner pleaded guilty to federal criminal charges stemming from a scheme in which millions of dollars in reimbursements for compounded drugs were generated through the payment of illegal kickbacks for patient referrals and by fraudulently paying patients’ copayments.

41 year old Navid Vahedi, who lives in Brentwood, pleaded guilty to one count of conspiracy to commit health care fraud and payment of illegal remunerations. Vahedi also entered a guilty plea to the felony offense on behalf of his business, Fusion Rx Compounding Pharmacy.

Vahedi and Fusion Rx admitted routing millions of dollars in kickback payments through the businesses of two marketers to steer prescriptions for compounded drugs to Fusion Rx. As part of the scheme, Vahedi and the two marketers provided physicians with preprinted prescription script pads that offered “check-the-box” options on the form to maximize the amount of insurance reimbursement for the compounded drugs.

From May 2014 to at least February 2016, Fusion Rx received approximately $14 million in reimbursements on its claims for compounded drug prescriptions.

As part of its contracts with various insurance networks, Fusion Rx was obligated to collect copayments from patients. Because the copayments might discourage patients from requesting expensive and potentially unnecessary compounded drug prescriptions, Fusion Rx did not collect copayments with any regularity and, in other instances, it provided gift cards to patients to offset the amount of the copayments, according to court documents.

After an audit raised concerns that Fusion Rx’s failure to collect copayments would be discovered, Vahedi directed Fusion Rx funds to be used to purchase American Express gift cards, which were then used to make copayments for certain prescriptions without the patients’ knowledge. Fusion Rx then submitted claims on these prescriptions to various insurance providers, falsely representing that patients had paid the required copayments.

A sentencing hearing is scheduled for  June 28, at which time Vahedi will face a statutory maximum sentence of five years in federal prison. Both defendants have agreed to pay restitution related to the copayment reimbursement part of the scheme, which is estimated to be $4,405,926.

In addition to his obligation under the plea agreement to pay restitution, Vahedi also agreed to forfeit $1,338,511.

Under the terms of the plea agreements, Fusion Rx has also agreed to pay a fine sufficient to divest itself of all its remaining assets, Vahedi has agreed to have his pharmacist license revoked, and both Vahedi and Fusion Rx will be excluded from federal health care programs such as Medicare and Medicaid going forward.

The two marketers involved in the scheme – Joshua Pearson, 41, of St. George, Utah, and Joseph Kieffer, 40, of West Los Angeles – previously pleaded guilty in this case and are scheduled to be sentenced by on May 24 and June 28.

Bakersfield Nurse Assistant Faces 24 WC Fraud Felonies

The Kern County District Attorney announced the filing and arraignment of a major felony case alleging 24 felony counts related to alleged worker’s compensation fraud.

According to a probable cause declaration obtained by, Ava McLean failed to disclose and denied prior injuries she suffered when she filed her worker’s compensation claims. Those alleged injuries, which she said prevented her from working, didn’t stop her from dancing, wearing high heels, ziplining and horseback riding.

Additionally, the declaration says, McLean altered medical records and submitted them to her insurance company. She deflected questions from a District Attorney’s office investigator, the document says, by talking about her son’s ailments and saying she now has a brain tumor.

Doctors who examined her over the years noted she showed “narcotic-seeking symptoms.” Between November 2016 and October 2019, McLean had been prescribed or asked multiple doctors to prescribe her pain medications 25 times.

McLean was in vehicle crashes in 2012 and 2017. She initially did not report any injuries following the 2017 accident. But later said she suffered a strained neck, and later still said there were injuries to her feet that would require surgery. McLean filed worker’s compensation claims in both crashes.

Earlier in 2017, months before the crash, McLean had surgery on both ankles and feet to correct her “flat feet,” the declaration says. Implants were placed in both feet, the hardware put in her right foot became displaced and she had post-op problems requiring medical leave from work and opioids for pain into August 2017.

When McLean made the claim regarding the 2017 crash, she failed to inform her insurance of any prior injuries to her feet or neck, the declaration says.

In April 2018, Bakersfield Heart Hospital gave her a final written warning, letting her know she would be fired for any further disciplinary actions, for and expired Basic Life Support Certification, wearing acrylic nails and insubordination.

The next month McLean reported she was experiencing foot and ankle pain, according to the filing. There was no mention of this injury happening at work. The following day, May 16, 2018, she reported neck pain to her doctor – making no mention of foot or ankle pain – and said she had injured herself at work.

McLean told her employer the same day that she had suffered two injuries, one to her back, the other to her ankle, while working at Bakersfield Heart Hospital, according to the filing. She was taken off work and didn’t return, and a co-worker contradicted McLean’s version of events in how she suffered the alleged injuries.

During examinations over the following days – and even when questioned multiple times the next year – McLean denied making any prior worker’s compensation claims, ongoing treatment or prior injuries, the filing says.

It was in 2018 that McLean posted a video on social media of her dancing, horseback riding and engaging in other physical activities with friends, the declaration says. Surveillance video taken of her showed she had no difficulty walking up or down stairs.

McLean pleaded not guilty to the 24 felony charges.

WCJ Rejects Mesa Pharmacy Challenge to L.C. 4615 Stay

On May 22, 2006, Mesa Pharmacy filed Articles of Incorporation. A year later, Pharmacy Development Corporation sprang into existence. Both use the same pharmacy permit number PHY50766 doing business as Mesa Pharmacy VII in Irvine California.

John Garbino became involved with Mesa in late 2011 or 2012. There is a contract between his wholly owned company, Trestles Pain Management, to market Mesa’s pharmaceutical services to doctors. Those doctors would then submit prescriptions to Mesa for fulfillment.

According to the facts found by the WCJ, “Mesa went from a company barely squeaking by to an entity raking in hundreds of millions of dollars essentially overnight.

Mesa provided expensive compounded medications to injured workers and has been a major lien claimant with millions of dollars of liens that are currently outstanding and unpaid.

Garbino was ultimately charged by federal authorities and convicted of Medicare fraud, preventing him from participating in the Workers’ Compensation System. His association with Mesa Pharmacy was examined by the DWC and found to be sufficient to place Mesa on the list of suspended providers under Labor Code §4615.

Mesa Pharmacy challenged that decision, claiming that Garbino never held a position with Mesa that would subject them to the suspension.

A trial followed on the issue of “whether John Garbino, who was convicted of Medicare fraud, was a 10% or greater owner, a director, an officer, or had de facto control of the Lien Claimant, Mesa Pharmacy.”

After taking extensive testimony and documentary evidence, the WCJ found that Garbino had de facto control of Mesa Pharmacy in the WCAB case of Melvin Garcia Galdames v Vinyl Technology.

The WCJ reasoned in part that “In order to be considered a corporation with an existence separate and apart from those who ran it, there were simple steps that had to be taken.”

Mesa had to have a board of directors. On paper it did – but the people listed on those papers weren’t aware of it or admitted to being figureheads. Garbino ended up listed as an owner of Mesa with the Arizona Pharmacy Board. And while that doesn’t prove he was an actual owner, it does show that no one was paying attention to who was being asserted by the corporation as having ownership interest in legal filings in other states. That creates a strong inference that there was no actual corporate structure at Mesa, they just made it up with whatever names seemed to be the best fit at the time.”

Mesa Board of Directors had to keep regular accounts of their dealings…. People allegedly serving on the board couldn’t recall having meetings outside of an occasional vague memory. This court ordered Mesa to produce the corporate minutes. They could not, or would not, do so.

The court can, and does, look to whether the facts demonstrate that there was a person behind the curtain pulling on the strings. Garbino showed up, turned on the music, and Kurtz and the others waltzed into the pile of cash that stood to be made. He told them what to do and how to do it. He connected them with financers. He supplied the pool of doctors to write the prescriptions Mesa would fill. He made them rich on paper. He was the catalyst that catapulted Mesa from a corner drug store to being in reach of nationwide chain status. Mesa’s two-bit cast of grifters with a reasonably intelligent front-man found a real crook to teach them to do business. Now they have to live with the taint of his wrong-doings.”

Floyd Skeren Manukian Langevin, LLP Hearing Representative John Castro participated in this trial.

DWC Extends QME Emergency Regs 36.7 and 46.2

The Division of Workers’ Compensation (DWC) has issued a Notice of Emergency Regulation Re-Adoption to extend current measures that allow workers’ compensation claims to move forward during COVID-19 restrictions.

Emergency regulations § 46.2 and § 36.7 are set to expire on March 12, 2021. This re-adoption would extend the emergency regulations for up to an additional 210 days in accordance with Executive Orders N-40-20 and N-66-20. After this re-adoption, DWC can seek one final re-adoption.

Re-adopting the emergency regulations will continue to help employers and injured workers move workers’ compensation claims toward a resolution and avoid undue delay. These regulations provide for how a medical-legal evaluation can occur and alternatives for service of required forms for a medical-legal evaluation and report.

The regulations concern how medical-legal evaluations and payment for those evaluations can occur during this emergency period. Also provided in the regulations are alternative forms of service for required forms related to medical-legal evaluations and reports.

– – QME Regulation 36.7 specifies how and under what circumstances the parties may serve documents electronically.

– – QME Regulation 46.2 specifies how and under what circumstances QME, AME and other evaluations may be conducted by telehealth.

DWC will file the re-adoption of the emergency regulations with the state’s Office of Administrative Law (OAL) on February 16, 2021.

For information on the OAL procedure, and to learn how you may comment on the emergency regulations, go to the OAL’s website.

Upon OAL approval and filing with the Secretary of State, a notice will be posted on the DWC website.

Long Beach Supermarkets Close Over City “Hero” Pay Law

Two grocery stores in Southern California will shutter in April in response to a local “hero pay” measure requiring a $4-an-hour increase for grocery workers during the pandemic.

Kroger, which owns more than a dozen grocery chains, announced this week that it would close a pair of Long Beach stores – a Ralphs and a Food 4 Less – specifically citing the ordinance the city’s mayor signed into law late last month. The city was the first in the state to introduce a measure requiring some grocery retailers to give workers a temporary hourly pay bump during the pandemic.

“The irreparable harm that will come to employees and local citizens is a direct result of the City of Long Beach’s attempt to pick winners and losers,” the company said in a statement, calling it “deeply unfortunate.”

The report in the Washington Post says that Kroger’s move to close the stores comes amid growing momentum for similar hazard pay policies in cities across the state, as well as elsewhere in the country. Officials in two other cities – the Oakland City Council and the Los Angeles City Council – voted unanimously on Tuesday to mandate temporary $5-per-hour pay increases for some grocery workers.

The Long Beach policy is in place for 120 days and includes groceries that sell at least 70 percent food products and employ more than 300 people nationally with at least 15 employees per store. Under those terms, it may exclude retailers like Target and Walmart.

Long Beach Councilwoman Mary Zendejas, who sponsored the measure, said she was “incredibly disappointed” in Kroger’s move to close stores.

“It really saddens me that they’d rather take away 200 jobs instead of doing the right thing, which is paying hazard pay for these local grocery store workers who risk their lives every day they come in and who are putting their lives on the line every second they’re working,” she told The Washington Post.

She said the closures will also have an impact on the communities they serve, noting that Food 4 Less serves many low-income residents in the area.

Experts and groups on both sides of the hazard pay debate are worried Kroger’s decision could signal a broader response.

Molly Kinder, a fellow at the Brookings Institution who studies front-line workers, said it was notable that Kroger is closing two stores in the first city in California to introduce such a mandate.

“I have to interpret that this statement is meant to signal that more Krogers could close if this is expanded,” Kinder said, adding it seemed to “send a message that mandates could come with consequences.”

Ronald Fong, president of the California Grocers Association trade group, which filed a lawsuit over the Long Beach ordinance, said the group tried to warn the city about “unintended consequences” of the measure.

“When a city tries to enact what is a 30 percent raise for grocery store workers, it is impossible to be able to absorb that without doing one of three things,” Fong told The Post. “Raising prices and passing it along to our customers, closing stores because they will no longer be profitable with that kind of labor expense or reducing hours and cutting shifts.”

The group announced Wednesday that it would also file lawsuits against Oakland and the city of Montebello to challenge similar $5-an-hour hazard pay measures.

DWC Opens Registration for Educational Conference

The California Division of Workers’ Compensation announced dates for its 28th annual educational conference.

The conference will take place on a virtual platform from March 24-26, 2021.

Sessions will also be available to view on demand through April 9, 2021 for registered participants.

This annual event is the largest workers’ compensation training in the state and allows claims administrators, attorneys, medical providers, return-to-work specialists, employers, human resources and others to learn firsthand about the most recent developments in the system, including any new laws or requirements.

Speakers from the Division of Workers’ Compensation and the private sector will address topics pertinent to claims administrators, medical providers, attorneys, rehabilitation counselors and others involved in workers’ compensation.

DWC has applied for continuing educational credits by attorney, rehabilitation counselor, case manager, disability management, human resource and qualified medical examiner certifying organizations among others.

Organizations who would like to become sponsors of the DWC conference can do so by going to the IWCF Website.

Attendee, exhibitor, and sponsor registration may be found at the DWC Educational Conference Webpage.