Author: WorkCompAcademy

Encino Hospital engaged SRCC Associates to manage and operate Serenity Recovery Center (Serenity) at the hospital, under the hospital’s direction and control, to provide acute (i.e., short-term) drug and alcohol detoxification services.

In 2016 Mary Lynn Rapier filed this qui tam action on behalf of the People of the State of California, alleging violations of the Insurance Fraud Prevention Act (IFPA) against Encino Hospital and other defendants. California Department of Insurance (CDI) elected to intervene and take over prosecution of the action.

CDI filed the operative second amended complaint, which was eventually pared down to allege a cause of action for “illegal patient steering,” in violation of subdivision (a) of Insurance Code section 1871.7, and a cause of action for “submission of false claims” in violation of subdivision (b) of that section. CDI alleged the causes of action against six defendants: Encino Hospital, Prime Healthcare Services, Inc., and Prime Healthcare Foundation, Inc. and SRCC Associates, its principal, Jonathan Lasko, and JNL Management, LLC (collectively.

The CDI alleged that although Encino Hospital was properly licensed as a general acute care hospital, it could not legally operate a medical detoxification facility because it had no separate license as a chemical dependency recovery hospital. The CDI alleged that in billing for detox services for which they had no proper license, defendants knowingly submitted at least 1,858 fraudulent insurance claims, requiring an award of damages of at least $57,678,436 before trebling. And that that Serenity employed a referring party to funnel patients to its program in exchange for Serenity discharging acute-care patients to chronic-care facilities affiliated with the referring party.

After a bench trial, the trial court found that CDI’s fraud theory was unsupported by any evidence of a false statement or omission, specific intent to defraud, materiality, or reliance. On the contrary, the undisputed evidence was that all defendants intended to follow the law, consulted attorneys when unsure about what to do, and relied on a lack of information from any agency, including CDI, that their practices were improper, even after the allegations in this case were made public.

The court found that CDI’s claims, “including the CDI itself, constituted a vast overreach as to parties, theories, and scope. Thus the trial court found in favor of the defendants, and the Court of Appeal Affirmed in the published case of State of Cal. v. Encino Hospital Medical Center – B303196 (January 2023)

On appeal, CDI contend the trial court erred by interpreting the IFPA as applying only to fraudulent claims as opposed to simply false claims, and by interpreting subdivision (a) of section 1871.1 as requiring a cash exchange as opposed to an exchange of any item or service of value. CDI further contends the trial court erred in denying it a jury trial.

The IFPA, originally enacted in 1993, consists of eight articles concerning insurance fraud. The Court of Appeal reviewed amendments to the Act since then, and the legislative intent. Although the former law allowed actions arising from any workers’ compensation claim even if the claim was not fraudulent, according to the Senate Committee on Criminal Procedure, section 1871.7 as amended in 1995 required proof that a claim was illegal and fraudulent. Section 1871.7 was amended again in 1999, by adding the last sentence to subdivision (b), which provided for the first time that penalties are to be assessed for each fraudulent claim presented to an insurer, instead of for each violation of subdivision (a).

Here, CDI alleged that Encino Hospital misrepresented to insurers that it was properly licensed to provide detox services when it was not. The trial court found no evidence suggesting that defendants presented a false claim to any insurer. The Court of Appeal agreed and said “no authority of which we are aware or to which we have been directed obligates Encino Hospital to hold any license other than its license as a general acute care hospital.“

Because Encino Hospital needed no separate license or approval, and no evidence showed it concealed any provider, the CDI’s cause of action for false claims fails for lack of a predicate. The Court concluded by saying “We therefore need not decide whether the IFPA requires a showing of scienter or materiality.”

CDI demanded a jury trial but failed to deposit jury fees. The trial court therefore granted Prime’s motion to strike the demand for a jury trial, finding that jury fees were not timely paid, and in any event CDI’s causes of action were not subject to jury trial.

On this issue the Court of Appeal concluded that on the merits, CDI was not entitled to a jury trial on its claims. “The IFPA affords no explicit right to a jury trial on causes of action it creates.”

Sedgwick and the Disability Management Employer Coalition (DMEC), announced the release of “Long COVID: Assessing and Managing Workforce Impact.” This first-of-its-kind white paper is the product of months of information gathering and analysis by leading disability, clinical, research, insurance, government, and other workplace experts. It also includes the results of a 2022 DMEC Pulse Survey on current employer practices to accommodate and assist employees with long COVID.

DMEC, the Disability Management Employer Coalition is a non-profit organization that provides educational resources to employers in the areas of disability, absence, health, and productivity. The primary goal of DMEC is to assist employers in developing cost-saving programs, encouraging responsive market products, and returning employees to productive employment.

The two organizations convened a group of the nation’s employers, researchers, clinicians, and others to develop a pathway forward. The mission of the long COVID think tank was to share answers to difficult questions and recommend effective solutions and strategies to help employees with long COVID remain on the job, return to work in an effective and productive capacity, or access leave if they are unable to work.The think tank’s work encompassed:

– – Exploring the current and future problems long COVID presents to employers and employees
– – Developing a consensus definition for long COVID to guide employers’ actions
– – Identifying long COVID’s symptoms and phases (to support benefit design strategies)
– – Summarizing the most credible research on the prevalence and impact of long COVID
– – Assessing stay-at-work (SAW) and return-to-work (RTW) challenges
– – Highlighting emerging best practices and steps for employers and absence management professionals to consider

“This is the first comprehensive examination of how organizations are accommodating employees with long COVID,” said Bryon Bass, senior vice president, workforce absence and disability practice leader at Sedgwick. “The white paper outlines what employers can do to improve results for employees and their organizations and how to better prepare for viruses, mental and behavioral health challenges, and other developments that require effective employee accommodations.”

COVID-19 has claimed the lives of millions of people, disrupted economic activity, and imposed large financial costs on governments, employers, and other organizations. While the COVID-19 pandemic may be over, the endemic phase has just begun. This includes the millions of employees who have or will have long COVID, the difficult-to-diagnose and often debilitating illness that induces long-term symptoms and impedes work and productivity.

Long COVID – the term used to describe the disease when symptoms last beyond five weeks – has affected millions of U.S. workers. Many have experienced significant, long-term health-related changes that affect their jobs, families, and futures. And that, in turn, impacts a wide range of U.S. employers and industries.

“Long COVID has been described as ‘our next national health disaster’ and the ‘pandemic after the pandemic,” reports the Kaiser Family Foundation. While estimates vary on how many people in the U.S. suffer from long COVID, the General Accounting Office (GAO) puts the number at 23 million.

The conclusions of experts form Walmart, Johns Hopkins University, The Hartford, and other leading organizations convened by DMEC and Sedgwick are sobering. Long COVID is costly to employers and employees.

For example, Nomi Health who recently analyzed 20 million claims filed for COVID-19, long COVID, and diabetes found a 421% increase in in-patient hospital spending within the first six months following an initial COVID-19 diagnosis. There is also no question that long COVID cuts deeply into employee productivity. The Centers for Disease Control and Prevention (CDC) found that one in four adults with long COVID reported significant limitations on day-to-day activities.

Employers’ efforts to accommodate employees with long COVID have revealed significant shortcomings in programs and processes used to accommodate all manner of disability and impaired work situations, including those caused by influenza and other viruses and mental and behavioral health challenges. According to the latest DMEC Pulse Survey, only 10% of respondents have an existing program to assist employees with long COVID. Most employers lack formal, best practice stay-at-work and return-to-work programs.

Long COVID: Assessing and Managing Workforce Impact includes lists of accommodations employers should consider as they help those with long COVID return to work and stay at work. The white paper recommends flexibility, creativity, and the need to educate managers about long COVID symptoms and accommodations.

Jesus Gomez was employed by Adanna Car Wash Corporation located on Crenshaw Blvd, in Gardena California. He filed a wage claim against his employer with the California Labor Commissioner.

After a hearing, the Labor Commissioner awarded Gomez $23,915.59 for overtime earnings, meal period premium pay, rest period premium pay, liquidated damages, interest, and waiting time penalties.

Under Labor Code section 98.2, subdivision (a), a party to a Labor Commissioner proceeding may seek review “of an order, decision, or award by filing an appeal to the superior court, where the appeal shall be heard de novo.” Under subdivision (b) of the statute, if the employer is the appealing party, the employer must post a bond.

Adanna filed with the Los Angeles County superior court a document entitled “Department of Industrial Relations Notice of Appeal De Novo” and a “Notice of Posting Bond Re Department of Industrial Relations Notice of Appeal De Novo.” However Adanna had attached a copy of its Labor Code section 2055 car wash bond rather than a specific bond required section 98.2.

Gomez moved to dismiss the appeal because Adanna “failed to deposit/post an undertaking, which is a jurisdictional prerequisite for [its] appeal under Labor Code section 98.2(b).” In opposition, Adanna argued that the section 2055 bond satisfied the section 98.2 undertaking because the former was intended to benefit car wash employees and Gomez was a car wash employee.

The superior court granted Gomez’s motion and dismissed the appeal. The Court of Appeal affirmed in the published case of Adanna Car Wash Corp. v. Gomez – B313649 (January 2023).

This appeal addresses the relationship between two statutory surety bonds required under different sections of the Labor Code. There are two types of bonds in play here – a section 98.2 appeal bond and a section 2055 car wash bond.

“The appeal bond is forfeited to the employee where the employer’s appeal fails or is withdrawn, and the employer does not timely pay the award. (§ 98.2, subd. (b).)”

“In contrast, a $150,000 car wash bond is a prerequisite to operating a car wash in California. (§ 2055.) On its face, section 2055 makes clear a car wash bond has nothing to do with litigation or appellate proceedings. It is condition that must be satisfied before the car wash employer may obtain a license or permit:”

The Court went on to say “Adanna’s sleight-of-hand attempt to substitute a car wash bond for an appeal bond runs afoul of a rule that applies to bonds in general. Code of Civil Procedure section 995.140, subdivision (b) expressly distinguishes between a licensing bond and one furnished in connection with litigation.”

The Legislative history supports the analysis that the posting of a section 98.2 bond is essential to protect employees in Labor Commissioner appeals filed by employers.

Prior to 2000, section 98.2 did not require employers seeking appellate review of Labor Commissioner awards to post a bond. In that year, the Legislature amended section 98.2 to include the appeal bond requirement to ensure that workers are paid if they prevail at the de novo appeal in cases where employers “disappear or declare bankruptcy” during the appeal.

According to the legislative analysis when the appeal bond was being considered, there was evidence that “unscrupulous employers, particularly those in the underground economy, were filing ‘frivolous’ appeals of [Labor Commissioner] decisions with the superior court in an effort to drag out litigation and hide assets so that workers would not be able to collect on judgments, even if ultimately successful on appeal.”

Thus the Court concluded that “a section 2055 car wash bond is not an appeal bond under section 98.2 subdivision (b).”

In a landmark NLRB decision, the Board broadly expanded the monetary award that may be given to prevailing workers in unfair labor practice disputes. Prior to the new Thryv, Inc. and International Brotherhood of Electrical Workers, Local 1269 – (20-CA-251105) December 2022 decision, monetary damages had been limited to “back pay.” This limit has been expanded by the NLRB to award monetary damages to include “make whole” relief.

To make the employee “whole,”examples of additional forms of relief may include “consequential damages” such as increases in insurance premiums, co-pays, coinsurance, deductibles, and other out-of-pocket expenses, extra medical expenses, expenses incurred in connection with a search for other work, credit card debt interest and late fees on credit card debt, penalties suffered by employees who are forced to make early withdrawals from retirement accounts; and increased transportation or childcare costs.

In this case the California employer, Thryv, Inc., operates a marketing agency engaged in the business of selling Yellow Pages advertising, as well its eponymous product “Thryv,” an application for small businesses. While all parties agree that Yellow Pages advertising has increasingly declined since the advent of the Internet, Thryv still generates annual revenues in excess of $1.1 billion, with print and electronic advertising accounting for 88 percent of that amount.

The Union represents a unit of employees that includes the Thryv outside sales force, which in turn consists of three subsets of “premise” representatives, so named because they go to customer premises to solicit advertising sales.

Around mid-July of 2019, Thryv began implementing its proposal to lay off all of its New Business Advisors in the Northern California Region.

The Assistant Vice President of Labor Relations emailed the Union stating that Thryv “will administer a force adjustment” and lay off the six New Business Advisors in the Northern California Region effective September 20. The email stated, “[i]f the Union desires to exercise its right to meet and discuss the Company’s plan within the 30-day period, please contact [Labor Relations Manager] Ralph Vitales to arrange such discussions.”

The Union and Thryv met several times to discuss the layoff of the New Business Advisors, but failed to arrive at an agreement. And Thryv then unilaterally implemented its layoff decision just nine days after the first bargaining session.  While the trial judge did not find this to be unlawful, the NLRB reversed, and found that Thryv “violated Section 8(a)(5) and (1) by unilaterally laying off six New Business Advisors” without responding to the union request for additional documentation it needed to evaluate the offers made by Thryv.

In concluding the appeal, the NLRB next turned to the issue of “the proper remedy.” It went on to conclude “that it is necessary for the Board to revisit and clarify our existing practice of ordering relief that ensures affected employees are made whole for the consequences of a respondent’s unlawful conduct.”

Previously, the Board had issued a Notice and Invitation to File Briefs, which sought briefing on whether the Board should include, as part of its make-whole remedy, “relief for consequential damages.”

In it’s amicus brief, the U.S. Chamber of Commerce pointed out that ” By its terms, Section 10(c) identifies “back pay” as the only monetary relief that the Board can award to employees who suffer harm from an unfair labor practice. On finding that a person has committed an unfair labor practice, the Board “shall issue . . . an order requiring such person to cease and desist from such unfair labor practice, and to take such affirmative action including reinstatement of employees with or without back pay, as will effectuate the policies of [the Act]” 29 U.S.C. § 160(c). That language has been present e unchanged since the Wagner Act’s adoption in 1935.”

Despite arguments by amicus to the contrary, the Board concluded that “in all cases in which our standard remedy would include an order for make- whole relief, the Board will expressly order that the respondent compensate affected employees for all direct or foreseeable pecuniary harms suffered as a result of the respondent’s unfair labor practice.”

In rejecting the argument of the Chamber of Commerce (and several other amicus briefs) the Board supported their ruling by noting “The Supreme Court has held that our authority to fashion such a remedy “is a broad discretionary one.” NLRB v. J. H. Rutter-Rex Manufacturing, 396 U.S. 258, 262-63 (1969), and several other case decisions.

“Make-whole relief” is more fully realized when it consistently compensates affected employees for all direct or foreseeable pecuniary harms that result from a respondent’s unfair labor practice.

Where, as here, employees have been laid off in violation of the Act or been the targets of other unfair labor practices, they may be forced to incur significant financial costs, such as out-of-pocket medical expenses, credit card debt, or other costs simply in order to make ends meet. We cannot fairly say that employees have been made whole until they are fully compensated for these kinds of pecuniary harms if the harms were direct or foreseeable consequences of the respondent’s unfair labor practice. The Board has a “statutory obligation to provide meaningful, make-whole relief for losses incurred by discriminatees . . . . ”

KCRA-TV is a television station in Sacramento,affiliated with NBC. It is owned by Hearst Television.

For months, KCRA 3 Investigates producer Dave Manoucheri and Photographer Victor Nieto traveled across California and interviewed people in other states as part of an unprecedented documentary project that revealed a wave of failures at California’s Employment Development Department, or EDD. With nearly 15 hours of interviews from 17 people – and dozens of hours of news footage – the documentary tells the story of what is being called the worst fraud in California history.

And the documentary seems to have triggered a federal investigation of the EDD. On Friday, James Comer, head of the Committee on Oversight and Accountability sent two letters, one to Nancy Farias, head of the EDD, and one to Martin Walsh, head of the U.S. Department of Labor.

The letters both cite KCRA and the documentary “Easy Money: Fraud Fortune and Failures” in the need for an investigation of fraud against the California unemployment system.

From 2020 onward, the department had seen massive numbers of fraudulent applications for unemployment and for the CARES Act era program “Pandemic Unemployment Assistance” (PUA). That program would allow freelancers and gig workers to apply for lost wages, something they had never been eligible for before.

During the pandemic, EDD had a massive number of both legitimate and illegitimate applications for money. In an effort to get money out the door, the leadership at EDD and in the administration lifted fraud controls and allowed people to back-date their claims, assuming that they could catch fraud on the back end. However, EDD had no back-end fraud prevention mechanisms.

The letter quotes the head of California Labor and Workforce at the time, Julie Su, as saying “there is no sugar coating the reality, California did not have sufficient security measures in place to prevent this level of fraud,” something she said during a press call highlighted by Easy Money.

Su would go on to become a deputy secretary of labor in the Biden administration.

Comer, a Republican Congressman from Kentucky, took over the Committee on Oversight and Accountability with the changeover in the House of Representatives, now controlled by a Republican majority.”Despite the unexpected and unprecedented nature of the coronavirus pandemic, California’s problems cannot be blamed on COVID alone,” Comer wrote in the letter to Nancy Farias

As part of their investigation, the committee is asking for:

  “1. All processes and procedures related to the disbursement of unemployment insurance benefits during the pandemic, including policies and procedures intended to ensure payments are made to the proper individual, and to ensure that the individual is a qualified recipient of unemployment insurance;
  2. All documents and communications between employees of the California EDD and employees of the U.S. Department of Labor regarding the state’s UI benefit program;
  3. All documents and communications related to efforts to prevent payment of fraudulent UI claims;
  4. All documents and communications related to efforts to recoup UI claims paid improperly; and
  5. All documents and communications related to identifying the total number of improperly paid UI benefits and documents sufficient to show whether those funds remain in the United States or were transferred to entities outside the United States.”

They are asking for similar information from the U.S. Department of Labor. The documents are requested no later than Jan. 27. The committee is holding its hearing into the matter on Feb. 1.