Author: WorkCompAcademy

Edward Younan began working in the food truck business in 1975 as a driver. He and his wife eventually owned between 50 and 60 trucks. Younan acquired Avalon Foods, Inc, a food truck commissary, in 1999.

Food trucks are required to park at a “certified commissary,” such as Avalon, and Avalon charges its customers for “housing space” (i.e., a parking spot), electricity, security, and ice. At the time of trial, Avalon owned only “maybe a couple” food trucks, which were not usually on the road, but served as spares.

Jorge GuzmanJr. began working on food trucks in approximately 1992. He was the driver and cashier. His job duties included “driv[ing to] the stops where they go, sell[ing] food, . . . tak[ing] the money, get[ting] change” and “driv[ing] to the next stop.”

At the time of the accident, Guzman drove a food truck owned by Philma Alvarez. Philma parked her trucks at Avalon during the relevant time period.

On January 11, 2014, after the truck completed its business at one of its stops, the cook on the truck asked Guzman to retrieve a table from outside. When Guzman stepped outside, a car hit him, resulting in serious injuries.

Following the accident, Guzman filed a civil complaint against Philma and Hector Chavez. Guzman later named Avalon and Younan as defendants. The operative complaint alleged that, on January 11, 2014, while Guzman was employed by “defendants,” “[t]he employee manager negligently instructed [Guzman] to retrieve a serving table in a manner that subjected [Guzman] to extreme danger of, and resulted in, [Guzman] being struck by a car and severely injured.”

Guzman brought the lawsuit under Labor Code section 3706, which permits an injured employee to file a civil complaint for damages against an employer who “fails to secure the payment of compensation” to the injured employee. Avalon and Younan answered the complaint, and, as relevant here, asserted no employment relationship existed between them and Guzman.

At the close of plaintiff’s case-in-chief, defendants orally moved for nonsuit and the court took the motion “under advisement”. On October 24, 2019, the jury returned a verdict finding both Younan and Avalon were Guzman’s employers at the time of the accident. Phase 2 of the trial was for damages, and a second jury awarded Guzman $8,245,034.00. Following trial, Avalon and Younan moved for JNOV and a new trial, and the trial court denied the JNOV, and granted a new trial on allocation of damages between defendants.

The Court of Appeal reversed the order denying Avalon and Younan’s JNOV motion, and direct the trial court to enter judgment in favor of Avalon and Younan in the unpublished case of Guzman v Younan -B317573 (February 2024).

During trial, Guzman repeatedly and unambiguously testified he worked exclusively for Philma at the time of the accident. For example, in response to defendants’ counsel’s question, “But you stopped ” at least your testimony is you stopped working for [Younan] in 2013 and worked exclusively with Philma, is that not correct?” Guzman replied that was correct. Guzman testified that, before the accident, in 2013, he worked for Younan doing the “same thing I did with Philma.”

When Guzman worked for Philma at the end of 2013 through the time of his injury in 2014, Philma told Guzman what to do and where to go. If the truck broke down, or Guzman was sick and he could not work, he called Philma. Neither Avalon nor Younan paid Guzman when he worked for Philma, and he never reported to anyone at Avalon while working for Philma. Guzman further testified that he did not wear a uniform when he worked for Philma, but when he worked for Younan he was required to wear a shirt Younan provided him.

The Court of Appeal concluded that “the record contains no evidence that Guzman was employed by Avalon or Younan on the date of the accident; rather, the evidence merely demonstrates that Guzman may have driven a truck for Avalon and Younan at some point in 2013, before the accident occurred.”

Taylor Capito received treatment in the emergency room of San Jose Healthcare System LP dba Regional Medical Center San Jose on two occasions. Regional is a major hospital in San Jose with an emergency room.

Regional initially billed Capito $41,016 for her two visits, including two “`Level 4′ Evaluation and Management Services Fee” charges of $3,780. Regional thereafter reduced Capito’s total bill to $8,855.38, after deducting adjustments and discounts.

Capito alleges she did not receive advance notice that Regional would charge the EMS fee in addition to each item of service and treatment provided by the hospital. Capito claims that had she been informed that she would be charged the EMS fee before incurring treatment, she would have left Regional and sought less expensive treatment elsewhere.
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Capito filed a complaint against  on behalf of herself and all others similarly situated in June 2020, under the Consumer Legal Remedies Act (CLRA), which she amended shortly thereafter, challenging Regional’s “unfair, deceptive, and unlawful practice of charging [an EMS fee] without any notification of its intention to charge a prospective emergency room patient such a Fee for the patient’s emergency room visit.”

Capito claimed that Regional charged the EMS fee simply for seeking care in the emergency room – describing it as designed to cover overhead’ type expenses of operating an emergency room without correlating the fee to the individual items of treatment and service that a patient received, and that the EMS fee “invariably comes as a complete surprise to unsuspecting emergency room patients.”

Regional demurred and moved to strike the class allegations. In doing so, it briefed the legislative history behind the Payers’ Bill of Rights (Health & Saf. Code, § 1339.50 et seq.) and other federal and state regulations governing its pricing disclosures.The trial court sustained the demurrer and dismissed the case. And the Court of Appeal affirmed the dismissal in the unpublished case of Capito v. San Jose Healthcare System, LP – H049022, – H049646 (April 2023).

In another case, Joshua Naranjo filed a class action lawsuit against the Doctors Medical Center of Modesto Inc., seeking declaratory and injunctive relief, and alleging violations of the unfair competition law (UCL) and the Consumer Legal Remedies Act (CLRA) in connection with Medical Center’s emergency room billing practices. The Medical Center charged Naranjo a total of $12,889.93 before any discounts or adjustments were applied. The gross charge included a “Level 4” EMS Fee in the amount of $8,833.35. The trial court dismissed his case, however the Court of Appeal reversed and reinstated his class action against the Medical Center.

On July 26, the California Supreme Court granted review in the two different cases in which appellate courts had addressed the same issue and come to different conclusions. The first is Naranjo v. Doctors Medical Center of Modesto (2023) 90 Cal.App.5th 1193, a published decision of the Fifth Appellate District in which the court had ruled that the hospital was required to further disclose the EMS fee prior to treating ER patients. The second case is Capito v. San Jose Healthcare System, an unpublished decision of the Sixth Appellate District holding that no additional disclosure was required.

This month the California Attorney General filed an Amicus Brief in Capito urging the California Supreme Court to reverse the Court of Appeal. He urges the Supreme Court to “ensure that lower courts have clear guidance in deciding cases alleging fraudulent practices, and to adopt a standard definition of unfairness under the Unfair Competition Law, as the current lack of clarity inhibits effective enforcement and creates confusion.”

The California Hospital Association points out that for “over a decade, at least 15 different class action lawsuits have been filed against California hospitals for failing to disclose their facility fees before patients were treated.”

“These lawsuits were brought even though each hospital had fully complied with both state and federal pricing transparency laws by disclosing the EMS fee in their chargemaster. While some of these lawsuits were settled or dismissed by the plaintiff after losing important rulings, other cases are on appeal or proceeding to trial.”  

The California Hosptial Association has filed as amicus in both Captio and Narango.

Detectives with the California Department of Insurance arrested Gina Marie Gregori of Lafayette, for allegedly underreporting payroll and ripping off insurers to the tune of $32 million. Gregori was charged with multiple counts of worker’s compensation insurance fraud and associated thefts. The complaint alleged the white-collar criminal enhancement pursuant to Penal Code section 186.11 and named as criminal defendants several of Gregori’s companies, including Apex Janitorial Solutions.

The department’s investigation revealed Gregori was keeping two sets of books, using a payroll processing service to report to Employment Development Department and pay her employees, and keeping a fraudulent set of books that she provided to insurers and insurance auditors, which showed a significantly lower payroll amount.

The People moved for appointment of a receiver to manage and preserve Gregori’s assets pursuant to Penal Code section 186.11. The court granted the motion and issued an order appointing the Receiver, identifying the assets subject to the receivership, and specifying the Receiver’s powers.

Among other things, the Receiver was authorized to take possession of, collect income from, and otherwise operate, manage, preserve, and control Gregori’s properties. The order also authorized the Receiver to request court approval and confirmation of all fees and expenses incurred by the receivership in executing its duties. The court “reserve[d] jurisdiction to allocate the receivership costs of administration as between the parties.”

One of the real properties in the receivership estate was located on Dolores Street in San Francisco and owned by Gregori’s former romantic partner, Richard Bertero,with whom Gregori had commingled funds. Bertero used the Dolores Street property as collateral for a loan from Avalon Funding Corporation.

Later, Bertero filed for Chapter 11 bankruptcy; the Dolores Street property became part of the bankruptcy estate. The bankruptcy court released the Dolores Street property from the automatic bankruptcy stay to allow foreclosing lenders to sell it. When both Avalon and the Receiver made claims to the surplus proceeds from that sale, the trial court ordered the surplus turned over to it to resolve the priority of their claims. Relying on section 186.11, the court ordered that the bulk of the surplus be used to pay the Receiver’s fees and expenses incurred in administering the receivership estate which was roughly $148,000.

The Court of Appeal Affirmed in the unpublished case of People v. Gregori -A164081 (February 2024)

On appeal, Avalon argues that the Receiver had no valid claim to the surplus; that the court erred by applying section 186.11 rather than the nonjudicial foreclosure statute, Civil Code section 2924k; that the court lacked jurisdiction over the surplus; and that the court misapplied section 186.11. The Receiver argues that the trial court had jurisdiction over the surplus as part of the receivership estate and that the court properly exercised its discretion by finding that section 186.11 authorized it to pay the Receiver before paying Avalon.

Penal Code section 186.11, the “Freeze and Seize’ statute, authorizes a trial court to appoint a receiver to preserve the assets of a criminal defendant subject to an “aggravated white collar crime enhancement’ because the defendant was “charged with having committed two or more related felonies involving fraud . . ., a pattern of related felony conduct, and the taking of more than $100,000.”

The court’s goal in the pendent receivership proceedings is to prevent defendants from “dissipat[ing] or secreting [their] assets or property” while the criminal proceedings are pending, and then to use “those assets to pay restitution to victims if the People secure a conviction.”

Subdivision (b) of Civil Code section 2924j specifies that “[n]othing in this section shall preclude any person from pursuing other remedies or claims as to surplus proceeds.” Thus the trial court did not abuse its discretion in declining to adhere to the claim priorities in Civil Code section 2924k.

The trial court’s interpretation of section 186.11 to permit compensation to the Receiver was not an abuse of discretion or contrary to law. The court reviewed the plain language of section 186.11, harmonized the language of the statute to give force and effect to its distinct provisions, and interpreted it to further the policy interests embodied therein.

A California pharmaceutical company has agreed to pay $750,000 to resolve allegations that it violated the False Claims Act by causing the submission of claims for certain opioids in violation of the federal Anti-Kickback Statute.

From Dec. 1, 2015, through Aug. 31, 2016, Sentynl Therapeutics Inc., of Solana Beach, California, a specialty pharmaceutical company, marketed and sold prescription opioids Abstral and Levorphanol Tartrate (Levorphanol).

The settlement resolves allegations that, during the relevant time period, Sentynl knowingly caused the submission of claims for Abstral and Levorphanol medications to Medicare in violation of the federal Anti-Kickback Statute.

These allegedly false claims resulted from Sentynl’s alleged indirect payment of kickbacks to a physician. Specifically, the United States contends that Sentynl hired the girlfriend of a physician who was a top prescriber of Transmucosal Immediate Release Fentanyl (TIRF) medications to act as a sales representative in South Florida – the same region in which the physician practiced.

Sentynl hired, employed, and made salary and bonus payments to the physician’s girlfriend to induce the physician to prescribe its Abstral and Levorphanol medications.

“Pharmaceutical companies that sold opioids are being held accountable for improper inducements offered to prescribers,” FBI – Newark Special Agent in Charge James E. Dennehy said. The Newark FBI and our law enforcement partners will continue our pursuit of those who continue to believe the rules don’t apply to them.”

“Pharmaceutical companies are not exempt from their responsibilities to operate within the confines of the law,” Special Agent in Charge Cheryl Ortiz of the Drug Enforcement Administration’s New Jersey Field Division said. “We are glad our diversion investigators were able to assist efforts to bring this matter to a resolution.”

“Some violations of the Anti-Kickback Statute, like those alleged here, can induce physicians’ imprudent prescribing of controlled substances,” stated Special Agent in Charge Naomi Gruchacz with the U.S. Department of Health and Human Services Office of Inspector General. “Individuals and entities that participate in the federal health care system are required to obey the laws meant to preserve the integrity of program funds and the provision of appropriate, quality services to patients.”

U.S. Attorney Sellinger credited special agents of the FBI, under the direction of Special Agent in Charge James E. Dennehy in Newark; investigators of the U.S. Drug Enforcement Administration (DEA), under the direction of Special Agent in Charge Cheryl Ortiz; special agents of the U.S. Department of Health and Human Services Office of Inspector General, under the direction of Special Agent in Charge Naomi Gruchacz, with the investigation leading to the settlement.

The government is represented by Assistant U.S. Attorney Susan J. Pappy of the U.S. Attorney’s Office, District of New Jersey’s Health Care Fraud Unit and Robert L. Toll of the Office’s Opioid Abuse Prevention and Enforcement Unit, and Trial Attorney Douglas J. Rosenthal of the Department of Justice’s Civil Division, Commercial Litigation Branch (Fraud Section).

The government’s pursuit of this matter illustrates its efforts to combat healthcare fraud. One of the strongest tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).

The claims resolved by the settlement are allegations only and there has been no determination of liability.