Author: WorkCompAcademy

On April 19, 2023, Beverly Community Hospital Association, et al. (a Nonprofit Public Benefit Corporation) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. While under protection of the bankruptcy court, it struggled to avoid closure while hoping to find a buyer.

The hospital secured $13 million in financing to keep operating as it searched for a buyer. Hospital officials said rising costs outpacing government reimbursement rates were to blame for the situation.

More than 90 percent of Beverly’s patients rely on government programs such as Medi-Cal and Medicare. Dealing with the COVID-19 pandemic and the rising cost of labor left the hospital in the red since 2020.

Beverly had unsuccessfully attempted to merge with three systems. Hospital officials blamed the failed mergers on the review process by the California attorney general, according to a Los Angeles Times report.

Fortunately, last week the California Attorney General announced his conditional approval of the sale of Beverly Community Hospital to nonprofit American Healthcare Systems (AHS). Beverly provides critical medical services, including low-cost Medicare and Medi-Cal services, to the community of Montebello in Los Angeles County.

When the hospital filed for bankruptcy earlier this year, it led to a disruption in services such as pediatric care, gynecology, maternity services, and wound care. To help restore these essential services for patients, the California Department of Justice (DOJ) reported that it has for weeks worked actively with AHS and Beverly to put together a successful sale agreement with strong conditions that AHS has committed to fulfilling.

Under California law, the Attorney General has a statutory duty to review all non-profit healthcare facility transactions, including those that go through bankruptcy court. In his review of the potential sale of Beverly,

Under the Attorney General’s conditions, approved by the bankruptcy court, AHS has committed to:

– –  Using commercially reasonable efforts to maintain all of Beverly’s current services, including an emergency room, accompanying medical surgical unit, cardiology, diagnostic imaging, laboratory services, and intensive care unit.
– –  Ensuring continued access to Medi-Cal and Medicare for eligible patients. Over 75% of the patients served by Beverly are Medicare or Medi-Cal beneficiaries.
– –  Using commercially reasonable efforts to reinstate services closed during bankruptcy including, obstetrics, gynecological, and maternity services, pediatrics, breast center, and wound and hyperbaric care.
– –  Providing charity care and a notice of financial assistance policy.
– –  Providing language access and deaf and hearing-impaired interpreter services.
– –  Maintaining a Community Board, including to comment on compliance with conditions in the Annual Report to the Attorney General.
– –  Maintaining medical staff in good standing and ensuring compliance with state staffing levels.

For further details of the approved agreement please download a copy of the Attorney General’s conditional approval.

DOJ’s Healthcare Rights and Access Section (HRA) works proactively to increase and protect the affordability, accessibility, and quality of healthcare in California. HRA’s attorneys monitor and contribute to various areas of the Attorney General’s healthcare work, including nonprofit healthcare transactions; consumer rights; anticompetitive consolidation in the healthcare market; anticompetitive drug pricing; privacy issues; civil rights, such as reproductive rights and LGBTQ healthcare-related rights; and public health work on tobacco, e-cigarettes, and other products.

The California Supreme Court has approved a new rule of professional conduct, rule 8.3 of the California Rules of Professional Conduct, that requires California attorneys to report any lawyer who commits a criminal act, engages in fraud, misappropriates funds or property, or engages in conduct involving “dishonesty, deceit, and reckless or intentional misrepresentations.”

The new “Rule 8.3 Reporting Professional Misconduct” will go into effect August 1, and reads as follows:

– – (a) A lawyer shall, without undue delay, inform the State Bar, or a tribunal* with jurisdiction to investigate or act upon such misconduct, when the lawyer knows* of credible evidence that another lawyer has committed a criminal act or has engaged in conduct involving dishonesty, fraud,* deceit, or reckless or intentional misrepresentation or misappropriation of funds or property that raises a substantial* question as to that lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects.

– – (b) Except as required by paragraph (a), a lawyer may, but is not required to, report to the State Bar a violation of these Rules or the State Bar Act.

– – (c) For purposes of this rule, “criminal act” as used in paragraph (a) excludes conduct that would be a criminal act in another state, United States territory, or foreign jurisdiction, but would not be a criminal act in California.

– – (d) This rule does not require or authorize disclosure of information gained by a lawyer while participating in a substance use or mental health program, or require disclosure of information protected by Business and Professions Code section 6068, subdivision (e) and rules 1.6 and 1.8.2; mediation confidentiality; the lawyer-client privilege; other applicable privileges; or by other rules or laws, including information that is confidential under Business and Professions Code section 6234.

The new rule has a “Comment” section that follows the rule itself, with ten items of clarification about this new rule. For example, the last of the comments provides the following information:

– – Comment [10) Communications to the State Bar relating to lawyer misconduct are “privileged, and no lawsuit predicated thereon may be instituted against any person.” (Bus. & Prof. Code,§ 6094.) However, lawyers may be subject to criminal penalties for false and malicious reports or complaints filed with the State Bar or be subject to discipline or other penalties by offering false statements or false evidence to a tribunal.* (See rule 3.3(a); Bus. & Prof. Code,§§ 6043.5, subd. (a), 6068, subd. (d).)

The new rule follows several other directives from the court for the State Bar, including on noticing about attorney suspensions; updating its conflict of interest code for the Board of Trustees; and to develop new rules requiring candidates for the Board of Trustees and State Bar Court be screened for potential conflicts of interest.

Much of this new State Bar activity seems to be the aftermath of the scandal following investigations of the organizations mishandling of ethics complaints against attorneys for several decades, including many that were filed against now disgraced plaintiff personal injury lawyer Tom Girardi, once among the most successful and powerful plaintiff’s attorneys in the country.

A redacted version of the corruption probe was publicly released by the State Bar earlier this year. For years, Girardi faced accusations that he’d stolen money from clients and other lawyers. He was forced into bankruptcy in 2021, disbarred in 2022, and was finally indicted by two different federal grand juries, one in California and one in Illinois, on charges of embezzling more than $18 million of his clients’ money.

On May 6, 2020, Robert Kuciemba began working for defendant Victory Woodworks, Inc. at a construction site in San Francisco. About two months later, without taking COVID-19 precautions required by the county’s health order, Victory transferred a group of workers to the San Francisco site from another location where they may have been exposed to the virus.

After being required to work in close contact with these new workers, Robert became infected with COVID and allegedly carried the virus home and transmitted it to his wife, Corby, either directly or through her contact with his clothing and personal effects. Corby was hospitalized for several weeks and, at one point, was kept alive on a respirator.

The Kuciembas sued Victory in superior court. Corby asserted claims for negligence, negligence per se, premises liability, and public nuisance. Robert asserted a claim for loss of consortium. Victory removed the case to federal court and moved to dismiss.

The federal district court granted a motion to dismiss without leave to amend. A timely appeal was filed in the 9th Circuit Court of Appeals.

After briefing concluded, the California Court of Appeal decided See’s Candies, Inc. v. Superior Court, 288 Cal. Rptr. 3d 66 (Cal. Ct. App. 2021). Faced with essentially identical facts to those here, the Court of Appeal largely agreed with the Kuciembas’  arguments, and held that the derivative injury rule does not bar claims brought by an employee’s spouse against an employer for injuries arising from a workplace COVID-19 infection.

The 9th Circuit Court of Appeals noted that See’s Candies – although instructive – does not eliminate the need for clear guidance from California’s highest court. “In addition, no controlling precedent resolves whether Victory owed Mrs. Kuciemba a duty of care.”

Thus the 9th Circuit panel certified to the Supreme Court of California the following questions: (1) If an employee contracts COVID-19 at the workplace and brings the virus home to a spouse, does the California Workers’ Compensation Act (WCA; Lab. Code, § 3200 et seq.) bar the spouse’s negligence claim against the employer? (2) Does an employer owe a duty of care under California law to prevent the spread of COVID-19 to employees’ household members?

And yesterday, the California Supreme Court answered both questions in the case of Kuciemba v. Victory Woodworks, Inc. –S274191 (July 2023).

The answer to the first question is no. Exclusivity provisions of the WCA do not bar a nonemployee’s recovery for injuries that are not legally dependent upon an injury suffered by the employee.

In general, workers’ compensation benefits provide the exclusive remedy for third party claims if the asserted claims are “collateral to or derivative of” the employee’s workplace injury. This aspect of workers’ compensation law is sometimes called the derivative injury doctrine.

However, a family member’s claim for her own independent injury, not legally dependent on the employee’s injury, is not barred, even if both injuries were caused by the same negligent conduct of the employer. “Determining the scope of workers’ compensation exclusivity can be analytically challenging.”

The answer to the second question, however, is also no. Although it is foreseeable that an employer’s negligence in permitting workplace spread of COVID-19 will cause members of employees’ households to contract the disease, recognizing a duty of care to nonemployees in this context would impose an intolerable burden on employers and society in contravention of public policy.

“These and other policy considerations lead us to conclude that employers do not owe a tort-based duty to nonemployees to prevent the spread of COVID-19.”

Coinbase operates an online platform on which users can buy and sell cryptocurrencies and government-issued currencies. When creating a Coinbase account, individuals agree to the terms in Coinbase’s User Agreement that contains an arbitration provision, which directs that disputes arising under the agreement be resolved through binding arbitration.

Abraham Bielski filed a putative class action on behalf of Coinbase users in the U. S. District Court for the Northern District of California. alleging that Coinbase failed to replace funds fraudulently taken from the users’ accounts.

Because Coinbase’s User Agreement provides for dispute resolution through binding arbitration, Coinbase filed a motion to compel arbitration. The District Court denied the motion.

Coinbase then filed an interlocutory appeal to the Ninth Circuit under the Federal Arbitration Act, 9 U. S. C. §16(a), which authorizes an interlocutory appeal from the denial of a motion to compel arbitration. Coinbase also moved to stay District Court proceedings pending resolution of the arbitrability issue on appeal. The District Court declined to stay its proceedings. After receiving Coinbase’s motion for a stay, the Ninth Circuit likewise declined to stay the District Court’s proceedings.

The Ninth Circuit followed its precedent, under which an appeal from the denial of a motion to compel arbitration does not automatically stay district court proceedings. See Britton v. Co-op Banking Group, 916 F. 2d 1405, 1412 (1990).

By contrast, however, most other Courts of Appeals to address the question have held that a district court must stay its proceedings while the interlocutory appeal on the question of arbitrability is ongoing. E.g., Bradford-Scott Data Corp. v. Physician Computer Network, Inc., 128 F. 3d 504, 506 (CA7 1997).

To resolve that disagreement among the Courts of Appeals, the Supreme Court of the United States granted certiorari. 598 U. S. ___ (2022), and ruled in favor of Coinbase when it held that a district court must stay its proceedings while an interlocutory appeal on the question of arbitrability is ongoing in the case of Coinbase Inc., v Bielski – 22-105_5536 (June 2023).

Section 16(a) does not say whether district court proceedings must be stayed pending resolution of an interlocutory appeal.

But the Opinion noted that “Congress enacted the provision against a clear background principle prescribed by this Court’s precedents: An appeal, including an interlocutory appeal, ‘divests the district court of its control over those aspects of the case involved in the appeal. Griggs v. Provident Consumer Discount Co., 459 U. S. 56, 58.”

“The Griggs principle resolves this case.Because the question on appeal is whether the case belongs in arbitration or instead in the district court, the entire case is essentially ‘involved in the appeal,’ id., at 58, and Griggs dictates that the district court stay its proceedings while the interlocutory appeal on arbitrability is ongoing. Most courts of appeals to address this question, as well as leading treatises, agree with that conclusion.”

“Congress’s longstanding practice reflects the Griggs rule. Given Griggs, when Congress wants to authorize an interlocutory appeal and to automatically stay the district court proceedings during that appeal, Congress ordinarily need not say anything about a stay.”

“By contrast, when Congress wants to authorize an interlocutory appeal, but not to automatically stay district court proceedings pending that appeal, Congress typically says so. Since the creation of the modern courts of appeals system in 1891, Congress has enacted multiple statutory ‘nonstay’ provisions.

Martin Mariano, an employee of L & S Framing Inc., was working on a residential house under construction when he fell from the unprotected second floor stairwell onto the concrete ground floor below, sustaining serious injuries.

Ronald Aruejo, a senior safety engineer for the Cal/OSHA, issued plaintiff L & S Framing Inc., three general citations and one serious accident-related citation. Only the serious accident-related citation is at issue in this appeal.

The subsequent citation itself set forth the following: “[T]he employer did not provide the exposed sides of a stairway with temporary railings and toe board as prescribed in Section 1620. As a result, an employee was seriously injured when he fell from the exposed side of the stairway and landed approximately 11 feet below onto a concrete floor.” The citation cited section 1626, subdivision (a)(5), which is a section that does not exist. Plaintiff appealed the citation.

A hearing before an ALJ followed. The hearing occurred over four days, November 14 and 15, 2017, and September 5 and 6, 2018. On the first day of the hearing, the ALJ granted the Cal/OSHA’s request to amend the citation to refer to section 1626, subdivision (b)(5) which provides that “Unprotected sides and edges of stairway landings shall be provided with railings.” rather than nonexistent subdivision (a)(5), which according to Ronald Aruejo was a typographical error.

During the trial much of the testimony involved describing the correct characterization of the stairway within the meaning of various subsections of section 1626. At one pont the ALJ denied the Division’s mid-hearing request to amend the citation to allege a violation of section 1632, subdivision (b)(1) which requires that “Floor, roof and skylight openings shall be guarded by either temporary railings and toeboards or by covers.” And later denied the Division’s post-hearing motion to amend to allege violation of section 1626, subdivision (a)(2), which provides that ” Railings and toeboards meeting the requirements of Article 16 of these safety orders shall be installed around stairwells” and concluded the Division failed to prove the alleged violation of section 1626, subdivision (b)(5).

The Division filed a petition for reconsideration with the California Occupational Safety and Health Appeals Board which concluded the ALJ improperly denied the two requests to amend and upheld the citation based on violation of both section 1632, subdivision (b)(1) and 1626, subdivision (a)(2).

L & S Framing Inc.,filed a petition for a writ of mandate in the trial court and the trial court denied the petition. L & S Framing Inc., then filed an appeal with th California Court of Appeal which affirmed the trial court in the unpublished case of L & S Framing Inc., v Cal/SOSHA – C096386 (June 2023).

On appeal the employer asserts the trial court erred in permitting the Appeals Board to amend the citation, and asserts the Appeals Board ultimately found a violation based on two regulations that were not correctly pled.

In rejecting this assertion, the Court of Appeal noted that the Labor Code provides that the “rules of practice and procedure adopted by the appeals board shall be consistent with,” among other things, Government Code section 11507. which provides, in part: “At any time before the matter is submitted for decision, the agency may file, or permit the filing of, an amended or supplemental accusation . . . .” Thus, Government Code section 11507 contemplates amendments to accusations, and, pursuant to Labor Code section 6603, the rules of practice adopted by the Appeals Board shall be consistent with that provision.

Section 371.2, a rule of practice and procedure adopted by the appeals board, expressly addresses amendments of a citation or appeal. Among other things, it provides that a “request for an amendment that does not cause prejudice to any party may be made by a party or the Appeals Board at any time.”

“[A]mendments to pleadings in the administrative hearing context are liberally allowed.” (Calstrip Steel Corporation (Cal. OSHA, June 30, 2017, Nos. 12-R3D6-1998, 1999) 2017 CA OSHA App.Bd. Lexis 66 at p. *15.)

The employer also argued the issue of “did the location from which Mariano fell constitute a stairwell within the meaning of section 1626, subdivision (a)(2) and/or a floor opening within the meaning of section 1632, subdivision (b)(1).” Or is 1716.2, subdivision (f) the applicable regulation. That regulation requires fall protection “around all unprotected sides or edges” for work performed on floors that will later be enclosed by framed exterior walls, but only when the work is performed more than 15 feet above the floor level below. The fall here was less than 11 feet to the concrete floor below.

The Appeals Board concluded that, when plaintiff’s workers removed the railing, they “create[ed] a hole or empty space from which people or things could fall through.” The Appeals Board continued: “Mariano fell through the opening, which was unguarded and unprotected contrary to section 1632, subdivision (b)(1)’s mandate.”

Thus the Court of Appeal concluded the Appeals Board’s construction and interpretation of section 1632, subdivision (b)(1) comports with the plain meaning of the terms used in that provision. In the particular context of workplace health and safety here at issue, our high court has reviewed the statutory structure and – noting that the relevant provisions “speak in the broadest possible terms” – has concluded that “the terms of the legislation are to be given a liberal interpretation for the purpose of achieving a safe working environment.”