Author: WorkCompAcademy

The State Bar of California’s Board of Trustees Chair Ruben Duran announced that the State Bar is investigating attorneys Mark John Geragos and Brian Stephen Kabateck in connection with the Armenian Genocide insurance settlement funds from which dispersals were made in the U.S. and France.

Courthouse News added facts to this investigation. Geragos is best known as a criminal defense lawyer, having represented such celebrity clients as Michael Jackson, Winona Ryder, Chris Brown and Jussie Smollet. Kabateck is a plaintiff’s attorney, having represented a number of surviving families of victims in the Lion Air Flight 610 crash of 2018, and Los Angeles ratepayers in the Department of Water and Power billing scandal. He is also a former president of the LA County Bar Association. Both lawyers are Armenian Americans.

Kabateck, Geragos and a third Armenian American lawyer, Vartkes Yeghiayan, filed two class actions against insurance companies on behalf of families of victims of the Armenian genocide over unpaid life insurance claims. The suits were both for a combined $37.5 million. But as the Los Angeles Times laid out in a lengthy investigation published this past March, numerous victims’ descendants, as well as churches, never got the money they were owed.

Before he died in 2017, Yeghiayan claimed Geragos and Kabateck “had splurged on first-class travel and treated the descendants’ money as ‘petty cash,'” according to the Times.

Geragos and Kabeteck, meanwhile, have blamed others for the misappropriated funds, including Yeghiayan, whom they sued in 2011. In a letter to the Times after the investigation was published, Kabateck wrote, “I have always been deeply saddened that Mr. Yeghiayan and his co-conspirators took money from the decedents of victims of the Armenian genocide, and that is why I worked so hard to reveal their actions and help hold them accountable.”

The State Bar announcement was made pursuant to California Business and Professions Code section 6086.1(b)(2), which authorizes the State Bar’s Board Chair, when warranted for protection of the public and after notice to the licensee, to issue an announcement confirming the fact of an investigation, clarifying the procedural aspects and current status of the investigation, and defending the right of the licensee to a fair hearing. Details of the investigation must remain confidential to comply with statutory limitations on disclosure.

A State Bar investigation seeks to determine whether there is a basis for filing a Notice of Disciplinary Charges. An attorney who is the subject of an investigation has a right to a fair hearing and must be presumed innocent of any misconduct warranting discipline until any charges that might be brought have been proven in a proceeding before the State Bar Court.

“The State Bar is charged with protecting the public,” said Ruben Duran, Board Chair. “Confidence in our ability to do so has unfortunately been shaken in recent times by the Girardi matter and what it represents. Restoring and maintaining the public’s trust in the disciplinary apparatus of this agency is imperative. To that end, it is important to emphasize that the State Bar investigates possible misconduct wherever it might occur. The status of attorneys, or the size of their practice, cannot and will not impact our decisions to investigate misconduct. I want to stress that in and of itself this announcement is not an indication of any misconduct by the attorneys being investigated. Lastly, the State Bar expresses gratitude to the LA Times for its excellent reporting on the distribution of Armenian Genocide settlement funds.”

The State Bar of California is still reeling from the Tom Girardi scandal, in which it was badly implicated. Girardi, another prominent plaintiff’s attorney – and famously married to “Real Housewives of Beverly Hills” star Erika Jayne – has been accused of stealing tens of millions of dollars from his clients, including some families of the Lion Air crash. A Times investigation found that Girardi was, for decades, able to avoid discipline and hide his misdeeds, in part by befriending judges and key figures in the bar association.

In a phone interview, Geragos said he was infuriated by the announcement. “They’re waiving confidentiality on an investigation they haven’t done, in a matter that’s been investigated three times in the last 12 years by both inside and outside counsel,” he said.

In a written statement, Kabateck said: “The undisputed facts are and will always be that an independent third-party appointed, approved, and overseen by the Ccurt (like in any class action) distributed the settlement funds to the class members. Neither Mr. Kabateck nor Mr. Geragos were involved in any decision relating to individual payments to victims, nor were they able to decide, review or influence claims made by class members. We have fully cooperated with multiple prior investigations and inquiries conducted by the state bar and others (all of whom found no wrongdoing).”

Less than half of the 139,000 licenses physicians in California are actively engaged in providing patient care. Of this number, only 32% are primary care physicians. The distribution of physicians also varies greatly by region with the San Joaquin Valley, Inland Empire and rural areas suffering the greatest shortages.

While a number of initiatives, including loan forgiveness and expanded residency programs, have focused on improving this situation. But it is not expected that there will be enough interested primary care physicians to meet the need for healthcare in California.

One of the top recommendations from the California Health Workforce Commission, representing thought leaders from business, health, employment, labor and government, after it spent a year looking at how to improve California’s ability to meet workforce demands, was to allow full practice authority for Nurse Practitioners.

The California Legislature responded in 2020 by passing AB 890.

A Nurse Practitioner (NP) is a registered nurse (RN) who has additionally earned a postgraduate nursing degree, such as a Master’s or Doctorate degree, and obtained a certificate from a certifying body.

At the state level, the Board of Registered Nursing (BRN) sets the educational standards for NP certification. According to the BRN, an NP is an advanced practice RN who meets BRN education and certification requirements and possesses additional advanced practice educational preparation and skills in physical diagnosis, psycho-social assessment, and management of health-illness needs in primary or acute care.

As a result of their additional training, NPs tend to perform additional functions through standardized procedures than non-advanced practice RNs. NPs also have specific authorization to furnish controlled substances and medical devices under standardized procedures, except that standardized procedures for Schedules II and III must include patient-specific protocols approved by a treating or supervising physician.

The passage of AB 890 ultimately added Business and Professions code section 2837.103 and 2837.104, which provided for Nurse Practitioners who were suitably trained and certified, to perform certain standardized procedures without physician supervision. The new law could not have effect until the BRN provided suitable regulations.

Taking AB 890 a step further toward implementation, this September the California Board of Registered Nursing (BRN) released a Notice of Proposed Action to the California Code of Regulations.by adding sections 1482.3 and 1482.4.

From the standpoint of California worker’s compensation claims, the implementation of this new law will in essence relieve shortages of physicians elsewhere, presumably adding services available for injured workers, and lowering costs for care. It is possible that the labor code could be later amended to define if and how NPs can directly be involved in care.

The Board has not scheduled a public hearing on this proposed action. The Board will, however, hold a hearing if it receives a written request for a public hearing from any interested person, or his or her authorized representative, no later than 15 days prior to the close of the written comment period.

Charges have been dropped against three people accused of defrauding the state’s compensation insurance fund to save more than $127,000 in workers’ compensation insurance premiums.

El Dorado Superior Court Judge Mark Ralphs dismissed the charges on Tuesday during the fourth week of a jury trial.

According to the report by MSN, the ruling came after last-minute evidence surfaced that showed the defendants were acting on the professional advice of a Roseville insurance agency. A representative of the insurance agency advised the defendants in an email that a carpentry company qualified as a new business and thus lower insurance rates from the State Compensation Insurance Fund.

“In light of this new evidence, the People do not believe we can prove the case beyond a reasonable doubt against the defendants,” stated a Sept. 20 memo by El Dorado County Deputy District Attorney Joddie Jenson asking the judge to drop the case.

Troy Williams, 49 of Angel Camp, John Allison, 63, of Rocklin, and Nanci Morman, 68, of Somerset, were charged last May with multiple counts of insurance fraud after a joint investigation by the California Department of Insurance and the El Dorado County District Attorney’s Office.

“This has been a nightmare for me,” said Williams, who suffers from brain cancer. He said the investigation started back in 2018 and has caused constant anxiety while dealing with his medical issues.

Before this month’s trial, Williams said he was offered a plea deal of paying a $127,000 fine and no jail time if he agreed to plead guilty to misdemeanor charges. Otherwise, he faced a multi-year prison term if found guilty. “I am adamant that I am not going to let my own government try to blackmail me into saying I did something I didn’t do,” Williams said in an interview. While he won’t be paying a fine, his legal bills have cost more than $125,000, he said.

Authorities had contended that Williams, the owner of Archer Building Co. in El Dorado Hills, had conspired with John Allison back in 2016 to move his employees to a new company, Allison Development in Roseville, in order to save on worker’s compensation rates.

During a 4-year period, from 2016 to 2020, the three defendants were alleged to have saved more than $127,000 in insurance premiums.

Allison had been a senior employee of Williams at Archer Building Co. Archer had seen its worker compensation rates spiral because of several accidents on construction sites. Morman was the bookkeeper for both companies.

The three defendants had insisted the movement of employees from Archer to Allison wasn’t to save on workers’ compensation rates but to keep several dozen Archer workers including Allison employed in case of Williams death.

Williams in the interview said his business partner Jay Young had died in 2016 and that he was receiving chemotherapy that prevented him from managing his business adequately. He said he also wanted to reduce his workload and not have any direct employees. So. Williams said he continued his business without direct employees, relying on subcontracted workers from Allison Development.

The Department of Insurance and The El Dorado County District Attorney had contended until this week it was all a ploy between the three individuals to save on their workers’ compensation premiums.

In a statement, El Dorado County District Attorney Vern Pierson said defense attorneys for the three individuals did not disclose the email from the insurance broker. Pierson maintained that defense attorneys had the email in their possession the entire time this case was pending, despite repeated requests and an order from the court to provide discovery of their files.  “If they had disclosed this information earlier, we would not have filed charges,” he said. “If they had disclosed this information prior to trial, we would have dismissed.”

But Travis Owens, the lead attorney for the three charged individuals, said he had not seen the email until last week. He said the prosecutor’s office and state fraud investigators had done “an inadequate investigation.” Owens said the email from insurance broker Chad Watts that Allison Development could file for workers’ compensation insurance as a new business, which resulted in lower rates than Archer was paying, was only discovered by bookkeeper Morman in her files in the last few days.

Both officials of Pierson’s office and Owens said that Watts had previously been interviewed as part of their due diligence. But that the prior interviews had not turned up the information or the email that Watts had given the three defendants his professional advice that ended up resulting in lower insurance premiums for Allison Development.

Governor Newsom signed AB 1783, a law inspired by a $2 million bounty that was to be paid to influence the California insurance commissioner, Ricardo Lara, in a transaction involving Applied Underwriters proposed sale. The new law expands California’s lobbying laws to limit this practice.

Companies and interest groups spend hundreds of millions of dollars each year to lobby lawmakers and the governor on issues related to proposed laws and regulations. Most of the money is subject to strict lobbying disclosure rules, including that the people paid to lobby register with the state and that the companies that pay them file regular public disclosures.

An investigation by The Sacramento Bee, however, revealed that loopholes allowed some companies to pay bounties called “success fees” to influence some decisions by state officials without having to report them.

A lawsuit by former California lawmakers Fabian Núñez and Rusty Areias revealed one such payment and provided details on how they work. Nothing in California law required public disclosure of such an incentive. It came to light only because of this publicly accessible civil lawsuit.

The former lawmakers who left public service for private consulting say they were hired by a workers compensation company to convince the Department of Insurance to allow an acquisition deal to proceed. If they succeeded, they say they were promised a $2 million bounty fee.

In their lawsuit, Areias and Núñez’s former firm Mercury say Applied Underwriters and two men seeking to acquire parts of the company hired the former lawmakers in 2019 to help close out the acquisition deal.

Núñez and Areias were tasked with helping the company either secure approval from the California Department of Insurance for the deal or get the department to agree to let the company re-domicile its subsidiary. If they succeeded, they would get $1 million, according to a written contract submitted as evidence in court filings. If they did not, they would not be paid, and the CEO of Applied Underwriters would lose a $50 million deposit he had made contingent on the acquisition deal receiving regulatory approval, according to the lawsuit.

In the suit, they allege that the company and the men they are suing later upped the success fee to $2 million.

Applied Underwriters argued in court filings it does not owe Núñez and Areias money because they did not meet the terms in their contract.

Under existing law, lobbyists are prohibited from charging success fees for achieving a desired outcome for their clients. But because Núñez and Areias’ work wasn’t technically lobbying, they were able to negotiate a bounty fee and would not have to disclose it to the public. Once this was discovered, the scandal attracted much media attention, and more litigation under the Freedom of Information Act by Consumer Watchdog. And ultimately to AB 1783 which claims to limit or put restrictions on this practice.

The Political Reform Act of 1974 was created by California voters when they approved Proposition 9, in 1974. Existing provisions of the PRA impose requirements on lobbyists and lobbyist employers involved in administrative actions, and generally define “administrative action” to mean, among other things, the proposal, drafting, development, consideration, amendment, enactment, or defeat by any state agency of any rule, regulation, or other action in any ratemaking or quasi-legislative proceeding.

Bob Stern, who co-wrote the California lobbying laws approved by voters in 1974, said he doesn’t know how often consultants in Sacramento charge success fees to influence decisions like the one before the state Department of Insurance because there’s no required disclosure.

The new law created by AB 1783 expands the definition of “administrative action” under the Political Reform Act of 1974 to include any decision or approval by the Insurance Commissioner or the Director of the Department of Managed Health Care under these provisions. Both are required to approve certain transactions involving insurers and health care service plans, respectively. The changes in the law appear in Section 82002 of the Government Code.

Numerous legislative attempts were unsuccessfully made over the years to close these loopholes.

One of then, AB 1200 (Gordon) of 2016, would have provided that communicating with state governmental officials in order to influence state governmental procurement, as defined, could result in a person being considered a “lobbyist” under the PRA. It was vetoed by Governor Brown. In his veto message, he stated “[g]iven that the laws regulating state procurement are voluminous and already contain ample opportunity for public scrutiny, I don’t believe this bill is necessary.”