Author: WorkCompAcademy

The California Attorney General and the Department of Insurance announced charges have been filed against 12 individuals in Southern California, for their alleged involvement in a disability fraud scheme. They face over 110 felony counts including conspiracy, insurance fraud, and grand theft, for their alleged involvement in a disability fraud scheme.

The lead suspects, a husband and wife from Rancho Cucamonga, allegedly defrauded the Covid-19 Relief Program and applied, through fake employers, for supplemental short-term disability policies offered by private insurance carriers, such as Aflac, Allstate, Colonia and Combined.

The Department of Insurance opened an investigation in April of 2020 after receiving several suspected fraud referrals from multiple insurance carriers claiming numerous individuals applied for disability insurance policies using fraudulent information or filed fraudulent disability claims using fraudulent information.

Department detectives conducted numerous search warrants and interviews and determined the alleged ringleaders used ‘shell’ companies to apply for short-term group disability policies offered by private insurance carriers and through the COVID-19 Relief Program.

They would then recruit individuals to be fictitious employees and would file fraudulent disability claims under those fictitious employees.

This alleged fraud scheme resulted in a loss of approximately $458,732 to the insurance carriers. The ringleaders collected most of the profit from the scheme and would give those they recruited a percentage of the proceeds for their participation.

Suspects were arrested throughout the state on Thursday, April 6, 2023, and Friday, April 7, 2023.

“These suspects allegedly used false companies and fictitious employees to take advantage of a system designed to help injured workers,” said Insurance Commissioner Ricardo Lara. “These types of schemes negatively impact consumers and businesses through higher costs. We will continue to work with our law enforcement partners to protect consumers and combat insurance fraud.”

“Crimes against a program like the state’s short-term disability fund, which is designed to provide relief to injured Californians by providing them with financial assistance during trying times, will not be tolerated,” said Attorney General Rob Bonta. “Those who steal from these programs are stealing from the families who rely on them. My office will vigorously pursue anyone who commits fraud against these critical programs.”

The Office of the Attorney General is prosecuting the case.

Coast Restaurant Group, Inc. operates the Cedar Creek Inn, a restaurant in North Orange County, which offers a variety of fine food, an extensive wine list and craft beer, and live musical performances from Tuesday through Saturday.

It obtained business interruption insurance from AmGUARD Insurance Company, covering the period from March 30, 2019 to March 30, 2021. Business interruption insurance “protects against the loss of income and other losses caused by an interruption to the normal operations of the business.”

On March 17, 2020, the Orange County health officer issued an order that, among other things, “prohibited restaurants from serving food on their premises and prohibited all gatherings of people.” The next day, the county health officer issued an amended health order and guidance requiring “[a]ll restaurants and other business establishments that serve food shall close all onsite [sic] dining.”

The Restaurant submitted a claim for its business income loss. The was denied by AmGUARD Insurance Company.

Coast Restaurant Group subsequently filed a lawsuit against their carrier. The First Amended Complant (FAC) asserted that the restaurant “did not lose any business income as a result of virus contamination,” but rather its “losses of business income were caused by, and a direct result of, government stay-at-home orders in California.” The Restaurant attached a copy of the insurance policy and also attached the governmental orders restricting on-site gatherings at restaurants to its FAC.

The carrier demurred to the FAC. contending that the insurance policy does not cover “losses arising from the COVID-19 virus, including government[al] directives issued in response to the virus.”

Separately, respondent contended that appellant did not allege any “direct physical loss or damage to” the covered property because governmental orders limiting the use of respondent’s property do not amount to “direct physical loss of or damage to property.” Respondent further asserted the “Ordinance or Law” exclusion precludes coverage for “losses arising from government-imposed use restrictions.”

The trial court sustained the demurrer without leave to amend. The Court of Appeal affirmed in the published case of Coast Restaurant Group, Inc. v. AmGUARD Insurance Company – G061040 (April 2023).

In essence, the Court of Appeal concluded that Coast Restaurant has shown there is potential coverage under the policy, but AmGUARD Insurance Company has shown that an exclusion in the policy applies to preclude coverage as a matter of law.

While physical alteration to covered property could trigger coverage under a “physical loss or damage” insuring provision, that is not the only possible trigger for coverage. Deprivation or dispossession also would trigger coverage, even if the property has not been physically altered.

However, under the ordinance or law exclusion, “loss or damage caused directly or indirectly by . . . enforcement of any ordinance or law . . . [that regulates] the construction, use or repair of any property” are not covered.

The governmental orders at issue clearly regulate the use of covered property by prohibiting on-site dining. Accordingly, the ordinance or law exclusion would apply to preclude coverage.

In the alternative, the virus exclusion applies to deny Coast Restaurant Group coverage for its business income loss. The policy does not cover “loss or damage caused directly or indirectly by” “[a]ny virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.”

Thus the Court of Appeal concluded that, at a minimum, COVID-19 triggered the governmental orders and it “indirectly” caused appellant’s business income loss. The virus exclusion thus applies here.

Kenneth Harlan was employed by Affordable Plumbing and Rooter for six or seven months until he was injured on August 3, 2010 while performing plumbing work at a new construction project, in Torrance California. He was injured while capping a sewage pipe that was placed in a three foot trench. He was paid in cash, depending on the type of job.

Hiroshi Tange was the homeowner who owned the property in Torrance, and had a homeowners policy of insurance with Farmers at the time of this injury.

During the first day of trial, Affordable was shown to have a Contractor’s License but was uninsured for workers’ compensation. With this additional information the case was set for second day of trial.

Hiroshi Tange, the homeowner testified that he had no recollection of seeing applicant work at the property at any time. He did not hire a plumbing contractor. The plumbing work was done by his brother-in-law, a handyman, who was not a licensed contractor, and a tile setter. The handyman did most of the plumbing under the house. The homeowner could not recall who dug the trench and laid the pipe to the sewer which was being capped by applicant.

The WCJ found that Harlen was an employee of the homeowner, Hiroshi Tang, at the time of the injury. Farmers Insurance and Hiroshi Tange petitioned for Reconsideration which was denied for the reasons stated in the WCJ’s report, which was adopt and incorporated in the panel decision of Harlan v Affordable Plumbing – ADJ7507358 (April 2023)

In his Report the WCJ noted that the type of work being performed (Plumbing) requires a license in good standing in California (Business and Professions Code Section 7000 et. seq.).

A contractor’s license is suspended, as a matter of law, at the time of hire of an employee in the absence of compensation insurance (Labor Code Section 3700; Business and Professions Code Section 7125.2).

The burden of proof on an issue lies with the party having the affirmative of the issue (Labor Code Sec. 5705). The applicant has the affirmative on the issue of employment and must prove the elements by a preponderance of the evidence.

Labor Code Section 2750.5 provides in pertinent part as follows: “There is a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required pursuant to Chapter 9 (commencing Section 7000) of Division 3 of the Business and Professions Code, or who is performing such services for a person who is required is an employee rather than an independent contractor…”

The WCJ noted that “Applicant’s testimony is more plausible than that of the homeowner on several points. … None of the work being done on the construction site was performed by contractors who were insured for workers’ compensation. … Review of this record shows that the testimony of the applicant has a greater likelihood of truth than that of the homeowner.”

Thus the WCJ concluded that “Affordable was doing work which required an active license. The license was suspended due to the lack of workers’ compensation insurance. As an employee of the unlicensed contractor Harlan is presumed to be the employee of the person or persons who benefitted by his labor and has control over the project” citing (Laeng v. Workmen’s Comp. Appeals Bd. (1972) 6 Cal. 3d 774 37 CCC 185).

The WCAB panel agreed with this conclusion stating “We have given the WCJ’s credibility determination great weight because the WCJ had the opportunity to observe the demeanor of the witnesses. (Garza v. Workmen’s Comp. Appeals Bd. (1970) 3 Cal.3d 312, 318-319 [35 Cal.Comp.Cases 500].) Furthermore, we conclude there is no evidence of considerable substantiality that would warrant rejecting the WCJ’s credibility determination(s).”

Michael Ramrakha was employed as a correctional officer by the California Department of Corrections and Rehabilitation. He filed three applications for adjudication of claims. Benefits were paid in all three cases that involved internal medical injury issue. Two of the cases were specific injuries, and the third a continuous trauma.

Defendant requested to take credit for $13,835.88 that was paid from ADJ4508242 to ADJ1415534 and $13,997.37 paid from from ADJ4508242 to ADJ8919366.1

The main issue for this WCJ to decide in this matter was whether or not SCIF was entitled to take credit for overpayments from one industrial injury claim for permanent disability in another claim for permanent disability. In both cases, the WCJ denied to allow credit.

Reconsideration was granted in one of the two cases in the joint panel decision of Ramrakha v State of California Department of Corrections – ADJ8919366-ADJ4508242-ADJ1415534 (March 2023)

In her Opinion on Decision and in her Report, the WCJ faults defendant for failing to file a petition for credit pursuantWCAB Rule 10555(a). (Cal. Code Regs., tit. 8, § 10555(a).)

Subdivision (a) of the rule states: “When a dispute arises as to a credit for any payments or overpayments of benefits pursuant to Labor Code section 4909, any petition for credit shall include: (1) A description of the payments made by the employer; (2) A description of the benefits against which the employer seeks a credit; and (3) The amount of the claimed credit.”

The WCAB panel noted that SCIF did provide to applicant’s attorney a petition for credit that complied with Rule 10555(a), albeit not until the day of trial on January 15, 2020. It concluded however that the better practice is to submit a petition for credit “when [as soon as] a dispute arises as to a credit for any payments or overpayments of benefits pursuant to Labor Code section 4909.”

However, the rule includes nothing that authorizes or requires disallowance of credit for failure to comply with the rule’s requirements regarding the content of “any petition for credit.”

Thus the panel concluded that “defendant’s alleged failure to timely comply with WCAB Rule 10555(a) is not a basis for disallowing its claim for credit.“

But the panel went on to say that the “WCJ is correct that the determination of whether to allow defendant credit for benefits voluntarily paid in error, pursuant to Labor Code section 4909, is within the WCAB’s discretionary authority. The Board may consider a weighing of the equities between the parties, as well as whether the applicant’s compensation award will be seriously impaired if credit is allowed.”

“In this case, there is no evidence that applicant improperly collected undue compensation without notifying defendant of the possibility that excess payments were being made. On the other hand, defendant was in control of the manner in which it paid permanent disability indemnity benefits, so the extent to which defendant’s actions resulted in significant overpayment of permanent disability indemnity is defendant’s responsibility.”

“Nevertheless, the balance of equities between the parties is not the only factor to be considered. The purpose of Labor Code section 4909 must be considered as well. The statute was intended to encourage employers to make voluntary payments to injured employees and, in appropriate circumstances, to obtain a subsequent reduction in the amount of workers’ compensation benefits determined to be due the employee. (Appleby v. Workers’ Comp. Appeals Bd. (1994) 27 Cal.App.4th 184, 191 [59 Cal.Comp.Cases 520].)”

Defendant’s payment of permanent disability indemnity for the two specific injuries was consistent with the intent of section 4909: to encourage employers to voluntarily pay compensation and, where appropriate, to obtain a subsequent reduction of compensation ultimately determined to be due the employee. Accordingly, we will amend the WCJ’s decisions to allow defendant credit in ADJ1415534 for permanent disability indemnity paid in ADJ4508242.”

However the panel affirmed the WCJ’s denial of credit for permanent disability indemnity owed by defendant on the cumulative trauma in ADJ8919366, noting that defendant’s “administration of benefits in the cumulative trauma case has resulted in defendant claiming a credit of almost $14,000.00 on a permanent disability award of $67,907.50, which represents an approximately 20 percent curtailment of applicant’s permanent disability indemnity benefits.”

“Although defendant voluntarily paid benefits on the cumulative trauma claim and eventually claimed credit as envisioned by section 4909, defendant did so in a manner and under circumstances that resulted in a material impairment of applicant’s permanent disability award in ADJ8919366. (See State Comp. Ins. Fund v. Workers’ Comp. Appeals Bd. (Dunehew) (2011) 76 Cal.Comp.Cases 1251 (writ den.) [allowing defendant credit for compensation paid for 2003 injury would be destructive of purpose of permanent disability award for 2007 injury].)”

National Nurses United, with nearly 225,000 members nationwide, is the largest union and professional association of registered nurses in U.S. history.

In 2009, California Nurses Association/National Nurses Organizing Committee played a lead role in bringing state nursing associations across the nation together into one national organization, National Nurses United (NNU). At its founding convention, NNU adopted a call for action to counter what it called “the national assault by the healthcare industry on patient care conditions and standards for nurses,” and to promote a unified vision of collective action for nurses.

This month, nurses across California are applauding the introduction of A.B. 1156, authored by Assemblymember Mia Bonta (D-Oakland) and sponsored by California Nurses Association (CNA). The organization held a press conference about the proposed law on April 5 at the Kaiser Permanente Oakland Medical Center.

If passed, the presumptive eligibility bill would automatically provide workers’ compensation to nurses and other health care workers for a variety of injuries and illnesses. The association says that amidst a staffing crisis in the nursing profession, this legislation would help increase the retention of skilled nurses in California hospitals.

“Our workers’ compensation system is currently set up to delay and deny the healing that nurses need after we are injured and sickened on the job,” said Valerie Delgado, an RN at Kaiser Permanente Oakland Medical Center’s Covid-19 unit. “This not only hurts nurses, but also reduces the quality of patient care because it reduces the number of healthy and skilled nurses in hospitals.”

“Our frontline health care workers face a clear gender gap in presumptive access to worker’s compensation, simply because they are in a female-dominated profession,” explained Assemblymember Bonta (D-Oakland). “Simply put, there are certain injuries and illnesses that are presumed to be work-related for firefighters and police officers, allowing the employee to more easily access benefits, covering medical and other expenses resulting from the employee being unable to work. Our healthcare heroes deserve the same presumption.”

“Nurse’s on-the-job injuries – MRSA [Methicillin-resistant staphylococcus aureus], respiratory diseases, and physical injuries – are not presumed to be related to the job,” said Bonta. “A.B. 1156will change that and ensure that nurses are treated with the same respect, dignity, and care they deserve and show patients every single day.”

If passed in its current form, A.B 1156 would define “injury,” for a hospital employee who provides direct patient care in an acute care hospital, to include infectious diseases, cancer, musculoskeletal injuries, post-traumatic stress disorder, and respiratory diseases.

The bill would include the 2019 novel coronavirus disease (COVID-19) from SARS-CoV-2 and its variants, among other conditions, in the definitions of infectious and respiratory diseases.

The bill would create rebuttable presumptions that these injuries that develop or manifest in a hospital employee who provides direct patient care in an acute care hospital arose out of and in the course of the employment. The bill would extend these presumptions for specified time periods after the hospital employee’s termination of employment.