Author: WorkCompAcademy

Blue Cross and Blue Shield of Oklahoma (“BCBSOK”) have filed a civil Racketeering (RICO) action against South Coast Behavioral Health LLC (“SCBH”), Excellence Recovery LLC (“Excellence Recovery”), Everything in Excellence Recovery LLC (“EIE”), Rad Life Recovery, LLC, (“Rad Life”), and individuals involved with those companies, that are California addiction treatment centers mostly located in Orange County. The lawsuit was filed in the United States District Court Central District of California (case 2:24-cv-10683-MWC-AJR).

According to the allegations of the complaint, “Since at least 2020, BCBSOK and hundreds of individuals suffering from Substance Use Disorder (“SUD”) have been victimized by California-based SUD treatment providers and their co-conspirators.”

“California and Oklahoma are separated by over 1,000 miles and multiple states. There are hundreds, if not thousands, of SUD treatment providers between them. And yet, in the last few years alone, thousands of alleged Oklahoma residents have been trafficked across the country to California under the guise of obtaining SUD treatment. The one thing they have in common is that they are members of BCBSOK health benefit plans, most of them having been enrolled right before their arrival in California.”

“This surprising migration is not a result of quality treatment. Rather, it is driven by an army of fraudsters that have overrun certain parts of California’s SUD treatment industry to prey upon alleged Oklahoma residents, many of whom are members of Native American tribes.”

Oklahoma, according to many sources has the fifth highest rate of SUD in the country, at 16.1% of its population.”The combination of a state plan offering robust out-of-state benefits and a large population in need of treatment provided a perfect target for profiteers like Defendants.”

“These SUD providers employ a range of fraudulent tactics. They hire “body brokers” to hunt down potential patients in exchange for kickbacks. Body brokers work with insurance agents to fraudulently enroll individuals in insurance plans. Once enrolled, patients are shipped across the country to receive “treatment,” the main goal of which is to enrich the providers, body brokers, insurance agents, and the others involved in the schemes. There are unlawful kickbacks at every level. In fact, many patients themselves receive cash, free “treatment,” and housing, which unlawfully influences their choice of providers and induces them to stay under the control of a particular provider so that their insurance can continue to be billed. It is becoming exceedingly difficult for good, quality, providers to operate in an industry awash in kickbacks and de facto bribes.”

“When insurance payments run out, the SUD providers kick patients to the curb, leaving these vulnerable individuals to fend for themselves thousands of miles from their homes. Often, these individuals are given no notice of their impending evictions and suddenly find themselves on the streets with no money to afford housing or the necessities of daily life, much less an expensive trip back home. Putting these already-vulnerable individuals in such desperate circumstances only heightens the chances for relapse.”

Plaintiffs go on to allege “the defendants here are among the worst perpetrators of these tactics. Collectively, they have caused BCBSOK plans alone to make over $36 million in wrongful payments.” Last month, Blue Cross and Blue Shield of Oklahoma told the Southern California News Group that it will stop paying for all addiction treatment in California on Jan. 1, with a few exceptions.

Young and associates are being sued by insurer Aetna in a fraud case that echoes this one. Young has countersued Aetna, saying the insurer is just trying to avoid paying what’s owed.

It all echoes the battle between Health Net and now-defunct Sovereign Health that began in 2016. Health Net won big, with $45 million in damages and interest against Sovereign.

Taylor Capito received treatment in the emergency room of San Jose Healthcare System LP dba Regional Medical Center San Jose on two occasions. Regional is a major hospital in San Jose with an emergency room.

Capito filed a class action complaint against Regional under the Consumer Legal Remedies Act (CLRA), challenging Regional’s “unfair, deceptive, and unlawful practice of charging [an EMS fee] without any notification of its intention to charge a prospective emergency room patient such a Fee for the patient’s emergency room visit.”

Regional demurred and moved to strike the class allegations. In doing so, it briefed the legislative history behind the Payers’ Bill of Rights (Health & Saf. Code, § 1339.50 et seq.) and other federal and state regulations governing its pricing disclosures.The trial court sustained the demurrer and dismissed the case.

And the Court of Appeal affirmed the dismissal in the unpublished case of Capito v. San Jose Healthcare System, LP – H049022, – H049646 (April 2023).

However, there are conflicting opinions on this issue in other California courts. In another case, Joshua Naranjo filed a class action lawsuit against the Doctors Medical Center of Modesto Inc., seeking similar relief, however his case resulted in a conflicting opinion. In Naranjo v. Doctors Medical Center of Modesto (2023) 90 Cal.App.5th 1193, a published decision of the Fifth Appellate District in which the court had ruled that the hospital was required to further disclose the EMS fee prior to treating ER patients.

The California Supreme Court agreed to hear the Capito case, and it resolved the conflicting decisions in the case of Capito v. San Jose Healthcare System, LP -S280018 (December 2024)

The question here is whether hospitals have a duty, beyond what is required by the relevant statutory and regulatory scheme, to notify emergency room patients that they will be charged EMS fees.

“Hospitals do not have a duty under the UCL or CLRA, beyond their obligations under the relevant statutory and regulatory scheme, to disclose EMS fees prior to treating emergency room patients. Requiring such disclosure would alter the careful balance of competing interests, including price transparency and provision of emergency care without regard to cost, reflected in the multifaceted scheme developed by state and federal authorities. Capito has not sufficiently alleged facts showing that the lack of such disclosure is “unlawful, unfair or fraudulent” on any theory she presents under the UCL or CLRA.”

Accordingly, the California Supreme Court affirmed the Court of Appeal’s judgment in favor of Regional.

Harold Winston is “an African-American male” with “over 30 years of service” with the County of Los Angeles. Winston worked in the Department of Treasurer and Tax Collector as the supervising deputy public conservator administrator in the public administration branch.

Winston sued his employer L.A. County alleging race-based discrimination, retaliation, and failure to maintain a discrimination free environment under the California Fair Employment and Housing Act (FEHA) (Gov. Code, § 12900 et seq.) and whistleblower retaliation in violation of Labor Code section 1102.5.

While Winston’s case was pending, Labor Code section 1102.5 was amended, effective January 1, 2021, to add a provision – subdivision (j) – authorizing courts to award reasonable attorney fees to whistleblower plaintiffs who prevail against their employer under section 1102.5.

Trial began on November 17, 2021. On November 24, 2021, the jury returned a verdict on the three causes of action submitted to them. It found in favor of L.A. County and against Winston on the causes of action for retaliation under FEHA and failure to prevent discrimination/ harassment under FEHA. The jury found in Winston’s favor on his cause of action for whistleblower retaliation under section 1102.5. It awarded him damages totaling $257,000.

After the jury found in Winston’s favor on his retaliation claim under section 1102.5, Winston filed a motion for attorney fees and requested $1,854,465 as the prevailing party based on section 1102.5’s recently enacted subdivision (j).

The trial court denied the motion, ruling that the fee provision does not apply to Winston’s case because it was not in effect in 2019 when the complaint was filed and because it found no legislative intent supporting retroactive application.

The Court of Appeal reversed in the published case of Winston v. County of Los Angeles – B323392 (December 2024).

On appeal, Winston argued section 1102.5, subdivision (j) applies to his case “because [his] case was still in action at the time the provision became effective.” He contends the trial court erroneously denied his motion based on “no legislative intent demonstrating retroactive application of [the statute].” The Court of Appeal agreed with Winston and reversed.

The law invoked here, section 1102.5, is “California’s general whistleblower statute.” When Winston filed this case, section 1102.5 did not include a one-way fee-shifting provision “authoriz[ing] an award of attorney fees to a worker who prevails on a claim of retaliation for blowing the whistle on workplace legal violations.” The California Legislature amended the law by passing Assembly Bill No. 1947, which allows discretionary recovery of reasonable attorney fees to a prevailing whistleblower plaintiff.

Effective January 1, 2021, section 1102.5, subdivision (j) provides: “The court is authorized to award reasonable attorney’s fees to a plaintiff who brings a successful action for a violation of these provisions.” (§ 1102.5, subd. (j).)

Under California law, the general rule is that absent a clear, contrary indication of legislative intent, courts interpret statutes to apply prospectively. However, “the California Supreme Court and many, many Courts of Appeal have treated legislation affecting the recovery of costs, including attorney fees, as addressing a ‘procedural’ matter that is ‘prospective’ in character and thus not at odds with the general presumption against retroactivity.” (USS-Posco Industries v. Case (2016) 244 Cal.App.4th 197, 217-218)

“Neither party points to a California decision directly addressing the issue of whether section 1102.5, subdivision (j) applies to cases pending at the amendment’s effective date and we have found none.”

“We conclude the statute authorizes an award of attorney fees to Winston because his action was pending when section 1102.5, subdivision (j), became effective. For that reason, we reverse.”

McKinsey & Company Inc., a global management consulting firm based in New York, has agreed to pay $650 million to resolve a criminal and civil investigation into the firm’s consulting work with opioids manufacturer Purdue Pharma L.P. The resolution pertains to McKinsey’s advice to Purdue concerning the sales and marketing of Purdue’s extended-release opioid drug, OxyContin, including a 2013 engagement in which McKinsey advised on steps to “turbocharge” sales of OxyContin.

This resolution marks the first time a management consulting firm has been held criminally responsible for advice resulting in the commission of a crime by a client and reflects the Justice Department’s ongoing efforts to hold actors accountable for their roles in the opioid crisis. The resolution is also the largest civil recovery for such conduct.

Additionally, a former McKinsey senior partner who worked on Purdue matters has been charged with obstruction of justice in federal court in Abingdon, Virginia. Martin E. Elling, 60, a U.S. citizen currently residing in Bangkok, Thailand, has been charged with one count of knowingly destroying records, documents and tangible objects with the intent to impede, obstruct and influence the investigation and proper administration of a matter within the jurisdiction of the Justice Department. Elling has agreed to plead guilty and is expected to appear in federal court in Abingdon to enter his plea and for sentencing at later dates.

As part of the government’s resolution with McKinsey, the company has entered into a five-year deferred prosecution agreement (DPA) in connection with a criminal Information filed in U.S. District Court for the Western District of Virginia against McKinsey’s U.S. subsidiary (McKinsey & Company Inc. United States. The information charges McKinsey U.S. with one felony count of knowingly destroying records, documents and tangible objects with the intent to impede, obstruct, and influence the investigation and proper administration of a matter within the jurisdiction of the Justice Department; and one misdemeanor count of knowingly and intentionally conspiring with Purdue and others to aid and abet the misbranding of prescription drugs, held for sale after shipment in interstate commerce, without valid prescriptions.

McKinsey has agreed to pay a penalty of over $231 million, a forfeiture amount of over $93 million (reflecting all money it was paid by Purdue from 2004 to 2019) and a payment of $2 million to the Virginia Medicaid Fraud Control Unit to resolve the criminal allegations. McKinsey also has entered into a civil settlement agreement in which it will pay over $323 million to resolve its liability under the False Claims Act for allegedly providing advice to Purdue Pharma L.P. that caused the submission of false and fraudulent claims to federal healthcare programs for medically unnecessary prescriptions of OxyContin, as well as allegedly failing to disclose to the U.S. Food and Drug Administration (FDA) conflicts of interest arising from McKinsey US’s concurrent work for Purdue and the FDA. This brings the total payments under the global resolution to $650 million.

Today’s filing includes a 71-page Agreed Statement of Facts, which provides a detailed account of McKinsey’s work with Purdue relating to OxyContin. As part of the resolution, McKinsey has agreed to implement a significant compliance program, including a system of policies and procedures designed to identify and assess high-risk client engagements. As part of this compliance program, McKinsey will implement new document retention procedures and training for all partners, officers and employees who provide or implement advice to clients. This compliance program is in addition to the provisions negotiated between McKinsey and the Department in a concurrent resolution with McKinsey & Company Africa that was announced on Thursday, Dec. 5.

McKinsey has also agreed that it will not do any work related to the marketing, sale, promotion or distribution of controlled substances during the five-year term of the DPA. The resolution requires McKinsey’s Managing Partner to certify, on an annual basis, the firm’s compliance with its obligations under the DPA and federal law.

“For the first time in history, the Justice Department is holding a management consulting firm and one of its senior executives criminally responsible for the sales and marketing advice it gave resulting in the commission of crime by a client,” said U.S. Attorney Christopher R. Kavanaugh for the Western District of Virginia. “This ground-breaking resolution demonstrates the Justice Department’s ongoing commitment to hold accountable those companies and individuals who profited from our Nation’s opioid crisis.”