Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: SCOTUS Overturns Washington State Workers’ Compensation Law. Supervisors’ Diverse Practices Do Not Rule Out PAGA Class Actions. Lodi Orthopedic Surgeon Convicted for Fraud After 2 Week Jury Trial. EDD Announces Recovering $1.1B in Fraudulent Benefits. NCCI Publishes COVID-19 National Presumptions Update Insight Report. Google/Amazon Spending Billions Developing Healthcare Technology. WCRI Study Finds Telemedicine Utilization Will Remain High. Samuel Hale LLC Announces $50M Captive with Arch Insurance. 
The Worker Adjustment and Retraining Notification Act of 1988 (the “WARN Act” –29 U.S.C. §§ 2101 to 2109 ) is a US federal labor law which requires most employers with 100 or more employees to provide 60 calendar-day advance notification of plant closings and mass layoffs of employees, as defined in the Act.
The advance notice is intended to give workers and their families transition time to adjust to the prospective loss of employment, to seek and to obtain other employment, and, if necessary, to enter skill training or retraining programs that will allow these workers to successfully compete in the job market.
In addition to the WARN Act, which is a federal law, several states have enacted similar acts that require advance notice or severance payments to employees facing job loss from a mass layoff or plant closing.
For example, California requires advance notice for plant closings, layoffs, and relocations of 50 or more employees regardless of percentage of workforce, that is, without the federal “one-third” rule for mass layoffs of fewer than 500 employees. Also, the California law applies to employers with 75 or more employees, counting both full-time and part-time employees.
A comparison of the key provisions of the Federal and California requirements can be seen in the Overview published by the Employment Development Department.
Employers who violate § 2102 of the federal WARN act are required to provide aggrieved employees “back pay for each day of violation.” The employer may avoid this liability by proving that it qualifies for the Act’s “faltering company” exemption, or that the closing or layoff resulted from “unforeseen business circumstances” or a “natural disaster.”
And a case of first impression from the Fifth Circuit Court of Appeals determined that the economic impact of COVID-19 did not qualify as a “natural disaster” exemption. Although California is in the 9th Circuit, and the case is not controlling law, it is still illustrative on how courts might view the issue.
In Easom v. US Well Services, Inc., No. 21-20202 (June 15, 2022) a class action complaint was filed by former employees against US Well Services, Inc. for allegedly violating the WARN Act by terminating them without advance notice.
US Well argued that COVID-19 was a natural disaster under the WARN Act, and consequently, that it was exempt. The district court certified two questions for interlocutory appeal: (1) Does COVID-19 qualify as a natural disaster under the WARN Act’s natural-disaster exception?; (2) Does the WARN Act’s natural-disaster exception incorporate but-for or proximate causation?
The Fifth Circuit Court of Appeals held that the COVID-19 pandemic is not a natural disaster under the WARN Act and that the natural-disaster exception incorporates proximate causation.
However the case has yet to determine if the drilling company can avoid liability under WARN’s “unforeseeable business circumstances” exception defense, since that issue was not yet an issue on appeal. The answer to that may or may not be forthcoming as litigation progresses.
This case thus far is controlling law, on the two issues decided, for employers in Louisiana, Mississippi, and Texas (the Fifth Circuit Court of Appeals jurisdiction) however it is only persuasive law in other jurisdictions such as the Ninth Circuit which covers California.
Nonetheless it is important to keep this decision in mind as employers navigate through employment law related business decisions.
Under the Medicare Secondary Payer (MSP) law, first enacted in 1980 and updated many times since then, Medicare may not pay claims when another payment is available or reasonably expected to be available.
But, if payment (from a workers’ compensation litigated claim, for example) is not available, Medicare may pay the beneficiary’s claim and later recover from the settling parties once a case is resolved through a settlement or judgment. If the “primary plan” refuses to repay, the government can sue to collect.
In 1986, a problem arose – how would the government know when a group health insurer refused to repay the government, thus forcing the government to pay a Medicare secondary payer claim? To address this issue, Congress added a “private cause of action” – 42 U.S.C. § 1395y (b)(3)(A).- to the Medicare Secondary Payer (MSP) allowing anyone who incurred “damages” to bring a double damage lawsuit against the insurer and allowing the person suing to keep the money (rather than return it to the Medicare Trust Fund).
If a beneficiary is injured and another entity is required to cover their healthcare expenses – such as in a tort case, workers’ compensation claim or auto insurance payment – the impacted individual’s medical care and coverage may be negatively impacted for years to come.
Whether or not the provision made sense when enacted in 1986, Congress changed the MSP statute in 2007 (in Section 111 of the MMSEA) and rendered the “Private Cause of Action” theoretically moot by specifically requiring that any entity paying a settlement, judgment, or award to report the payment to Medicare which then shares this information with Medicare Advantage and Part D plans.
Section 111 requires insurers to electronically report certain settlements and claims to CMS involving Medicare beneficiaries, subject to a potential penalty of up to a $1,000 per day, per claimant.
As a result, the Medicare Advocacy Recovery Coalition (MARC) says there are no longer cases where only private parties, and not the government, are aware of primary plan non-payment, and there is no purpose to empower private collection efforts.
MARC was formed in September of 2008 by a group of industry leaders who saw a critical need to improve the MSP system. It has now been instrumental in creating a proposed solution, the Repair Abuse in MSP Payments (RAMP) Act – H.R. 8063, which has been introduced by Representatives Brad Schneider (D-IL) and Gus Bilirakis (R-FL) in Congress to repeal the MSP “Private Cause of Action” provision.
MARC successfully advocated for the passage of the Strengthening Medicare and Repaying Taxpayers Act (SMART Act) (P.L. No: 112-242) back in 2012 and, more recently, the Provide Accurate Information Directly Act (PAID Act) (P.L. No. 116-215) in 2020.
The proposed RAMP Act will now face a number of legislative hurdles that will likely take months, if not years, to overcome before it can become law. One might think that with MARC support, and in light of its successful track record, that the RAMP Act has a decent chance of passage.
Signed into law in September 2018, Assembly Bill 5, has generated outrage from a wide range of Californians, from musicians to therapists to truckers and freelance journalists. The new law codified the more expansive ABC test previously set forth in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 416 P.3d 1 (Cal. 2018), for ascertaining whether workers are classified as employees or independent contractors.
AB5 and its subsequent amendments, now codified in Labor Code 2778 requires businesses to classify more workers as employees entitled to benefits like sick leave and overtime pay. But some workers affected by AB 5 say it’s caused them nothing but grief and anxiety.
Thus, the American Society of Journalists and Authors and the National Press Photographers Association filed a federal lawsuit challenging the new law on First Amendment and Equal Protection grounds, The Society of Journalists and Authors (ASJA)is the nation’s largest professional organization of independent nonfiction writers. Its membership consists of more than 1,100 freelance writers.
The National Press Photographers Association (NPPA) is an American professional association made up of still photographers, television videographers, editors, and students in the journalism field. It was founded in 1946. As of 2017, NPPA had total membership at just over 6,000.
The lawsuit was dismissed by the trial court.. In a 3-0 ruling, the Ninth U.S. Circuit Court of Appeals in San Francisco in October 2021 said the California law regulates economic activity and does not interfere with freedom of speech or the press in the published case of ASJA v Bonta
The panel acknowledged that although the ABC classification may indeed impose greater costs on hiring entities, which in turn could mean fewer overall job opportunities for certain workers, but such an indirect impact on speech does not necessarily rise to the level of a First Amendment violation.
Addressing the Equal Protection challenge, the panel held that the legislature’s occupational distinctions were rationally related to a legitimate state purpose.
The Plaintiffs in that case file a Petition for Writ of Certiorari with the United States Supreme Court on February 22, 2022, hoping to overturn the decision of the 9th Circuit Court of Appeal
The Supreme Court, however, denied review without comment Monday of the appeal by the two organizations. For this reason the dismissal of their base by a federal judge and the approval of that dismissal by an appellate court has no further avenues in the judicial system.
“The court’s decision to not hear our appeal is a loss for the thousands of freelancers who have built thriving careers through the freedom and flexibility that independent contracting provides,” said Jim Manley of the Pacific Legal Foundation, who represented the American Society of Journalists and Authors and the National Press Photographers Association.
Attorney General Rob Bonta’s office, in a filing defending the state law, told the court that AB5 “does not regulate speech or differentiate between speakers based on their message.”
In a separate case, the Supreme Court rejected an appeal last October by trucking companies challenging the classification of truck owner-operators as employees under AB5. An appeal by another trucking group is still pending before the high court.
The ride-hailing companies Uber and Lyft won an exemption from AB5 in November 2020 when state voters approved Proposition 22, allowing them to classify their drivers as contractors, after a campaign in which the companies spent more than $200 million.
But an Alameda County judge struck down Prop. 22 last August, saying the measure interfered with the Legislature’s authority under the state constitution to regulate workers’ compensation and also addressed multiple subjects, violating another constitutional standard. The case is now awaiting review by a state appellate court.
W. R. Berkley Corporation is a commercial lines property & casualty insurance holding company organized in Delaware and based in Greenwich, Connecticut. It was founded in 1967 and has grown from a small investment management firm into one of the largest commercial lines property and casualty insurers in the United States. It is listed on the New York Stock Exchange, become a Fortune 500 company, joined the S&P 500, and seen gross written premiums exceed $10 billion.
The company now operates commercial insurance businesses in the United Kingdom, Continental Europe, South America, Canada, Mexico, Scandinavia, Asia and Australia and reinsurance businesses in the United States, United Kingdom, Continental Europe, Australia, the Asia-Pacific region and South Africa. The company is ranked 397th on the Fortune 500.
And there is new company activity here in California.
W. R. Berkley just announced the formation of Berkley Enterprise Risk Solutions, which will focus on providing workers’ compensation insurance to large businesses headquartered in California.
Wayne Bryan has been named president of the new business, and Hale Johnston has been appointed chief operating officer. The appointments are effective immediately.
W. Robert Berkley, Jr., president and chief executive officer of W. R. Berkley Corporation, commented, “Berkley Enterprise Risk Solutions will offer specialized workers’ compensation solutions to California-based clients with sophisticated risk management capabilities and interests. We are pleased to be expanding our expertise to this segment of the market with dedicated capabilities and expertise. Wayne and Hale both have extensive backgrounds and a wealth of knowledge in the large account California workers’ compensation space. We are confident that they will provide outstanding leadership to their new team as they deliver exceptional solutions to the market. We are excited to welcome them to Berkley.”
Mr. Bryan brings nearly 35 years of California workers’ compensation experience to Berkley. Most recently, he led the enterprise large account business unit for a western-based, super-regional commercial insurance company and leading provider of workers’ compensation and commercial insurance solutions. Mr. Bryan holds a Bachelor of Arts degree from the University of San Francisco.
During his more than 30-year career in insurance, Mr. Johnston has held various executive and leadership positions in the insurance industry and has implemented new technology platforms, consolidated operations and introduced new streams of revenue. He has served on the Board of Governors for the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) and as chairman of the Board of Directors for the California Workers’ Compensation Institute (CWCI). He is a graduate of William Jewell College in Liberty, Missouri.
An accountant who enabled the owner of a corrupt Long Beach hospital to pay more than $40 million in illegal kickbacks to doctors in exchange for them referring thousands of spinal surgery patients was sentenced to 15 months in federal prison for a tax offense related to the scheme.
George William Hammer, 69, of Palm Desert, was sentenced by United States District Judge Josephine L. Staton, who also ordered Hammer to pay an $8,000 fine and forfeit $500,000 in proceeds from the scheme.
Hammer pleaded guilty in August 2018 to one count of filing a false tax return.
Hammer was the financial officer for various companies controlled by Michael D. Drobot, who owned Pacific Hospital in Long Beach.
Drobot conspired with doctors, chiropractors, and marketers to pay kickbacks in return for the referral of thousands of patients to Pacific Hospital for spinal surgeries and other medical services paid for primarily through the California workers’ compensation system.
During its final five years, the scheme resulted in the submission of more than $500 million in bills for kickback tainted surgeries. To date, 22 defendants have been convicted for participating in the kickback scheme.
Beginning in 1997, Hammer supported the kickback scheme by facilitating payments to individuals receiving bribes and kickbacks pursuant to sham contracts that were used to conceal the illicit payments. Hammer falsified tax returns by characterizing the bribes as legitimate business expenses.
“Through his role at the Drobot-controlled entities, [Hammer] ensured that doctors were paid more than $40 million….in kickbacks,” prosecutors argued in a sentencing memorandum. “The scheme was too complex for Drobot to do alone. It could not have been accomplished without complicit executives like [Hammer] who furthered the scheme.”
Hammer was a salaried employee and did not directly profit from the kickbacks and bribes.
In January 2018, Drobot was sentenced to five years in federal prison for his crimes in this matter and awaits a March 2023 sentencing hearing after pleading guilty to three criminal charges for violating a court forfeiture order in the Pacific Hospital case by illegally selling his luxury cars.
The FBI, IRS Criminal Investigation, the California Department of Insurance, and the United States Postal Service Office of Inspector General investigated this matter.
Assistant United States Attorneys Joseph T. McNally and Billy Joe McLain of the Violent and Organized Crime Section and Assistant United States Attorney Victor Rodgers of the Asset Forfeiture Section prosecuted this case.
The U.S. Department of Labor announced a funding opportunity for $11.7 million in Susan Harwood Training Grants to support the delivery of training and education to help workers and employers identify and prevent workplace safety and health hazards.
Administered by the department’s Occupational Safety and Health Administration, the grants will target disadvantaged, underserved, low-income, and other hard-to-reach, at-risk workers and employers. The grants are available to non-profit organizations, including community-based, faith-based, grassroots organizations, employer associations, labor unions, joint labor/management associations, Indian tribes, and public/state colleges and universities.
Applicants may apply in the following categories:
– – Targeted Topic Training: Support educational programs that identify and prevent workplace hazards and require applicants to conduct training on OSHA-designated workplace safety and health hazards.
– – Training and Educational Materials Development: Support the development of quality classroom-ready training and educational materials that identify and prevent workplace hazards.
– – Capacity Building: Allow organizations to develop a new training program to assess needs and formulate a plan for moving forward to a full-scale safety and health education program, expanding their capacity to provide occupational safety and health training, education, and related assistance to workers and employers.
Submit applications no later than 11:59 p.m. EDT on Aug. 1, 2022. Applicants must register with www.grants.gov and the System of Award Management to apply.
The grants honor the legacy and work of Dr. Susan Harwood who, during in her 17 years with OSHA, developed workplace safety guidelines for benzene, formaldehyde, bloodborne pathogens and lead in the construction industry. Harwood was also primary author of OSHA’s cotton dust standard which virtually eliminated byssinosis – a lung disease that causes asthma-like symptoms – among textile workers.
Pacific Bell is a telecommunications corporation providing voice, video, data, internet and professional services to businesses, consumers, and government agencies. It has branches around the world, including in California.
Dave Meza filed a consolidated class action lawsuit against Pacific Bell. He alleged Pacific Bell violated California law by failing to provide lawful meal and rest periods and failing to provide lawful itemized wage statements among other Labor Code violations.
Meza appealed four trial court orders: (1) an order denying class certification to five meal and rest period classes (the class certification order); (2) an order granting summary adjudication of Meza’s claim relating to wage statements under section 226, subdivision (a)(9) (the wage statement order); (3) an order striking Meza’s claim under section 226, subdivision (a)(6) (the order to strike); and (4) an order granting summary adjudication of Meza’s claim under the Labor Code Private Attorneys General Act of 2004 (PAGA) (§ 2698 et seq.) (the PAGA order).
The Court of Appeal ruled on these four issues in the partially published case of Meza v Pacific Bell Telephone Company, B317199 (June 2022)
The court said that the orders were appealable under the “death knell doctrine,” which allows immediate appeals of certain interlocutory orders that resolve all representative claims but leave individual claims intact.
The court of appeal concluded that the trial court erred in refusing to certify the meal and rest period classes based on its conclusion that common issues do not predominate.
The trial court order denying class certification dealt with an often-litigated class certification issue: whether supervisors’ diverse practices with respect to uniform written policies makes class certification inappropriate. The trial court held that individualized issues predominated because the managers’ declarations indicated that “the actual management practices of [Pacific Bell]’s supervisors result[ed] in a diverse application of the company’s Premises Technician Guidelines.”
The California Supreme Court case of Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004 dealt with the issue of uniform corporate policies as a basis for class certification. The progeny of Brinker has dealt more directly with the question of class certification based on uniform policies that are allegedly applied by corporate managers in different ways. This has proved to be a tricky issue for the courts.
In general, cases following Brinker “have concluded . . . that when a court is considering the issue of class certification and is assessing whether common issues predominate over individual issues, the court must ‘focus on the policy itself’ and address whether the plaintiff’s theory as to the illegality of the policy can be resolved on a classwide basis.”
The trial court did not apply the proper legal framework when it denied class certification. Meza’s theory of liability is that the written guidelines for premises technicians were for the benefit of Pacific Bell and exerted substantial control over the premises technicians during their meal and rest periods in violation of the law.
Although the trial court acknowledged that “the policies are undisputed,” it concluded that the disparate manner in which employees experienced the policy through different managers rendered the claims unsuitable for class treatment.
However, “the employer’s liability arises by adopting a uniform policy that violates the wage and hour laws.” The “fact that individual inquiry might be necessary to determine whether individual employees were able to take breaks despite the defendant’s allegedly unlawful policy . . . is not a proper basis for denying certification.”
With respect to the other issues, the court affirmed the wage statement order and the PAGA order. In the published portion of the opinion, it explain that the trial court correctly granted summary adjudication of Meza’s wage statement claim because Pacific Bell’s wage statements do not violate the Labor Code. The trial court also correctly granted summary adjudication of the PAGA claim because it was barred by claim preclusion in light of the settlement and dismissal of a previous PAGA lawsuit. However Meza’s appeal of the order to strike was dismissed because Meza did not include it in his notice of appeal.
Although COVID-19 cases in the U.S. have plateaued, it is commonly anticipated that the utilization of telemedicine will remain at levels higher than pre-pandemic.
Multiple legislative actions at the federal and state level are being debated in order to streamline the process of delivering medical services via telemedicine and regulate the reimbursement for telemedicine services.
For these reasons, the utilization and prices of medical services delivered via telemedicine remain important measures to monitor in workers’ compensation.
A new WCRI FlashReport focuses on two types of medical services with the most prevalent use of telemedicine: evaluation and management (E&M) and physical medicine services.
It investigates the patterns of telemedicine utilization among these services in workers’ compensation during the first five quarters of the pandemic (primarily March 2020 -June 2021) across 28 states. It also examines the actual prices paid for the most frequent services delivered via telemedicine versus in person across the study states.
Research Questions:
– – What shares of E&M and physical medicine services were delivered to workers with injuries via telemedicine during the first year and a quarter of the pandemic (March 2020–June 2021)? Did the prevalence of telemedicine use vary across the study states?
– – How did prices paid for telemedicine compare with the prices paid for in-person services? Were there interstate variations in these price comparisons?
– – What percentage of non-COVID-19 claims received telemedicine services? Did this metric vary by state and over time? Did this metric vary by claim maturity?
– – Was telemedicine used for initial services only, or was it used for continuous treatment?
Was the time elapsed from injury to treatment shorter or longer for telemedicine, compared with in-person services?
– – Did telemedicine utilization patterns vary across medical conditions?
This report is based on a sample of workers’ compensation claims for private sector workers and local public employees (e.g., police and firefighters) from 28 states including . The states are Arizona, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin. These study states represent 79 percent of the workers’ compensation benefits paid nationwide.
Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: SCOTUS Enforces California Employee Arbitration Agreements. Federal Rules Shortens Time to File Koby Bryant Subrogation. Comp Carriers Prevail in Alleged Claimant Data “Hacking” Claim. Northridge Physician to Serve Time & Pay $9.5M Restitution for Fraud. Owner of Limousine Company Arraigned for Payroll Fraud. Cal/OSHA Proposes Workplace Violence Prevention Plan Expansion. Single-Payer Healthcare Proposals Consider Including Workers’ Comp.
Comp Treatment Faces Shortages of Physicians, Drugs, and Supplies. CalFire Fire Fighters Struggle with Increasing Fatigue PTSD & Suicide. Bay Area Telemedicine Startup Faces FTC Congressional Scrutiny.