Author: WorkCompAcademy

West Coast Dental Administrative Services, LLC, a Delaware corporation, manages a network of dental facilities throughout California. The company provides administrative and support services to affiliated dental practices and professional corporations via support services agreements. It sources materials from outside California and, at the time relevant to this case, maintained offices and employees in both California and Washington until January 2022, with differences in employee benefits outlined in its handbook.

West Coast Dental hired Sinedou S. Tuufuli as a collector and customer service representative. Tuufuli electronically signed an arbitration agreement that stipulated that any disputes related to her employment or termination would be resolved through final and binding arbitration. It explicitly stated that the agreement “shall be governed by the Federal Arbitration Act and, to the extent permitted by such Act, the laws of the State of California.”

In April 2023, Tuufuli filed a lawsuit against West Coast Dental, asserting eight individual and class claims for violations of various provisions of the California Labor Code and Business and Professions Code. These claims alleged labor-related issues, such as unfair compensation and working conditions, on behalf of herself and a class of similarly situated employees.

West Coast Dental filed a motion to compel arbitration of Tuufuli’s individual claims and to dismiss her class claims. In support, the company’s human resources manager submitted a declaration affirming its Delaware incorporation, former offices in Washington, and sourcing of out-of-state materials. West Coast Dental also provided a copy of the employee handbook given to Tuufuli, which detailed interstate operations and benefits differences. Tuufuli opposed the motion, arguing that the Federal Arbitration Act (FAA) did not apply because there was no evidence of interstate commerce involvement or contemplation thereof, and that West Coast Dental operated exclusively in California. Tuufuli worked exclusively in California and testified that she rarely interacted with individuals or entities outside the state in performing her duties.

The trial court granted West Coast Dental’s motion. It determined that the FAA governed the agreement, relying on the evidence of West Coast Dental’s interstate activities (e.g., Delaware incorporation, Washington offices, and out-of-state sourcing) as well as the explicit provision in the agreement stating it was governed by the FAA. Finally, the court dismissed Tuufuli’s class claims, citing the agreement’s express prohibition on class arbitration or litigation.

Tuufuli appealed, challenging only the trial court’s finding that the FAA applied to the arbitration agreement. She did not contest the agreement’s validity or the dismissal of class claims on other grounds.

The Court of Appeal affirmed the trial court’s order compelling arbitration of Tuufuli’s individual claims and dismissing her class claims in the published case of Tuufuli v West Coast Dental Administrative Services, LLC -B338584.PDF (January 2026).

The appellate court agreed with the trial court that the FAA applied, but primarily because the parties had explicitly agreed to it in the arbitration agreement’s governing law provision. It rejected Tuufuli’s argument that parties cannot contractually invoke the FAA without proving interstate commerce involvement, emphasizing that arbitration under the FAA is a matter of consent, not coercion, and parties are generally free to structure their agreements as they see fit (citing Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University (1989) 489 U.S. 468, 479).

The court distinguished the U.S. Supreme Court’s decision in Allied-Bruce Terminix Cos. v. Dobson (1995) 513 U.S. 265, which held that the FAA applies to contracts that in fact involve interstate commerce, even if not contemplated by the parties. The appellate court clarified that Allied-Bruce did not prohibit parties from voluntarily electing FAA governance; it merely addressed the scope of “involving commerce” under 9 U.S.C. § 2. Similarly, the court rejected Tuufuli’s analogy to 9 U.S.C. § 1, which expressly exempts transportation workers’ contracts from the FAA regardless of agreement. Section 2, by contrast, contains no such exemption for non-interstate contracts and simply enforces arbitration provisions in contracts involving commerce (or, by extension, where parties consent to FAA application).

Given this consent-based reasoning, the appellate court declined to address whether the agreement independently involved interstate commerce based on West Coast Dental’s operations.

California’s Insurance Frauds Prevention Act (IFPA) Insurance Code § 1871-1871.10 provides tools to address insurance fraud, but it distinguishes between specific types of fraud:

Section 1871.4 is limited exclusively to workers’ compensation fraud. It criminalizes making knowingly false or fraudulent statements or representations to obtain, deny, or influence workers’ compensation benefits, as defined under Labor Code section 3200 (which covers employee injuries arising out of employment).

Section 1871.7, in contrast, is a broader qui tam provision allowing private relators (like Jerilyn Henggeler below to sue on behalf of the state for general insurance fraud. It incorporates violations of Penal Code sections 549 (soliciting or referring business for fraudulent claims), 550 (presenting false claims or concealing facts to defraud insurers), and 551 (fraudulent auto insurance claims).

In October 2009, Omar Dauod was involved in a car accident while driving at high speed, colliding with another vehicle exiting a private community without fully stopping. The other driver’s insurer, Farmers Insurance, paid Omar $100,000 after arbitration determined fault. Omar and his wife Gina, represented by attorney James Ballidis of the Law Offices of Allen, Flatt, Ballidis & Leslie, then pursued an underinsured motorist claim against their own insurer, Geico, seeking $400,000 – the policy limit. After arbitration in 2013 awarded them that amount, the Dauods sued Geico in December 2014 for breach of contract, bad faith, and emotional distress, alleging Geico’s delays caused emotional harm, loss of two homes, and Omar’s business losses as a real estate developer. Ballidis testified at the trial supporting these claims, though he did not represent them in court. A jury awarded Omar $22.9 million.

Jerilyn Henggeler, a former neighbor and social acquaintance of the Dauods, learned of the verdict over a year later through news reports. Appalled, she believed the claims were fraudulent based on personal knowledge: she had observed Omar uninjured and active post-accident, knew he was a real estate salesman – not a developer – and learned from tenants that home losses stemmed from pocketing rent, not injuries. Henggeler’s research into public records, including Colorado business filings, bankruptcies, lawsuits, property titles, and licenses, contradicted Omar’s and Ballidis’s representations about Omar’s businesses, properties, and licenses. She also identified forged documents submitted to Geico, such as a letter purportedly from Omar’s brother-in-law and a nonexistent entity’s escrow agreement.

Henggeler filed a qui tam action under Insurance Code section 1871.7 on behalf of the State of California, alleging the Dauods, Ballidis, and the Law Firm defrauded Geico through false claims and testimony. The second amended complaint included four causes: three under section 1871.4 (workers’ compensation fraud statutes) for false statements, and one under section 1871.7 incorporating Penal Code violations for presenting fraudulent claims and concealing facts. The Dauods and Ballidis/Law Firm demurred, arguing the court lacked jurisdiction under the public disclosure bar (section 1871.7, subd. (h)(2)(A)), as Henggeler’s claims relied on public information from news, court files, and records.

The trial court sustained the demurrers without leave to amend, ruling it lacked jurisdiction due to the public disclosure bar. It found Henggeler’s claims were based on publicly disclosed information: she learned of the verdict from news media, incorporated trial testimony from Omar and Ballidis, and used public records like court files and Colorado documents.

The Court of Appeal reversed in the partially published case of People ex rel. Henggeler v. Dauod -G064064 (January 2026) and remanding with directions to sustain demurrers on the first three causes (workers’ compensation fraud statutes) but overrule on the fourth based upon Penal Code violation. This distinction was based upon balancing qui tam policy goals. By narrowly interpreting the bar to exclude reliance on neutral public information, the court preserved Henggeler’s suit as original, promoting IFPA’s anti-fraud aims. Dismissing workers’ compensation claims aligned with statutory limits, ensuring only valid insurance fraud allegations proceeded. This first-impression ruling clarified the bar’s scope, certifying partial publication to guide future cases.

The appellate court concluded that the trial court misinterpreted the public disclosure bar. It clarified the bar applies only to qui tam suits based on publicly disclosed “allegations” of fraud or specific fraudulent “transactions,” not mere “information” even if related to fraud.

Drawing from legislative history of the IFPA, CFCA, and federal False Claims Act, the court noted the bar’s purpose: to prevent parasitic suits copying public fraud allegations while encouraging original whistleblowers. Congress and California rejected broader bars prohibiting use of public “information” or “evidence,” opting for narrow limits on “allegations or transactions.”

Henggeler’s complaint used public records (e.g., business filings, bankruptcies) and trial testimony as evidence to prove fraud, not as pre-existing fraud allegations. Testimony from Omar and Ballidis supported their claims against Geico, not accusations of fraud. No prior public disclosure alleged Respondents’ fraud; Henggeler’s firsthand knowledge and research formed the basis.

The court upheld demurrers on the first three causes under section 1871.4, as they pertained to workers’ compensation fraud without relevant allegations. It rejected other defenses: no prefiling under Civil Code section 1714.10 was needed due to Ballidis’s independent duty not to defraud nonclients like Geico; collateral estoppel failed for lack of privity between the state/Henggeler and Geico.

Gregg Rader sustained industrial injury to the psyche and in the form of emotional stress while employed by Ticketmaster Corporation. On November 19, 2011, a WCJ approved the parties’ Stipulations with Request for Award and awarded 100 percent permanent and total disability. Applicant’s attorney requested a fee of $39,444.71, based on applicant’s life expectancy. The WCJ approved the attorney fee request and ordered that the amount of attorney fees be commuted from weekly indemnity payments by uniform weekly reduction. Accordingly, while applicant’s nominal weekly permanent disability rate was $336.00, defendant reduced each payment by $50.40, yielding a net weekly payment of $285.60.

Applicant filed a Petition Amend the Award, and argued that the amount commuted from his permanent disability award has been fully satisfied, and that his weekly permanent disability indemnity should return to the nominal rate of $336.00 without reduction for additional attorney fees. Applicant’s calculations begin with the gross amount of attorney’s fees of $39,444.71, divided by the weekly commutation amount of $50.40. Applicant adds the resulting 782.63 weeks to the initial date of payment of June 6, 2008, resulting in the date of June 5, 2023 as “the date when the commutation of attorneys fees stops.”

Applicant further contends that he is entitled to statutory interest per Labor Code § 5800 on any sums improperly withheld and to penalties pursuant to section 5814 and attorney’s fees pursuant to section 5814.5 for defendant’s unreasonable delay in the payment of the disputed benefits.

Defendant’s Answer responds that applicant’s Award is silent as to the end date of commutation and any inference otherwise is improper. SCIF further contends that the WCAB lacks jurisdiction to alter or amend the Award at this juncture pursuant to section 5804.

The WCJ found that the Workers’ Compensation Appeals Board (WCAB) lacks jurisdiction to amend the applicant’s prior Award of permanent disability, and that applicant has not proven that additional indemnity payments are due beyond what is specified in the Award.

The WCAB granted reconsideration in the Significant Panel Decision of Gregg Rader v Ticketmaster -ADJ7138762 (January 2026) and substitute new Findings of Fact that the WCAB retains ongoing jurisdiction over the award of attorney’s fees pursuant to section 5803, and that because defendant has taken credit from applicant’s weekly payment of permanent indemnity in an amount equivalent to the dollar amount of commuted attorney’s fees, applicant is thereafter entitled to the full amount of his award without further reduction for attorney’s fees.

The panel noted that WCAB maintains exclusive jurisdiction pursuant to the California Constitution and Labor Code § 5300 to adjudicate workers’ compensation disputes.” (Dennis v. State of California (2020) 85 Cal.Comp.Cases 28 [2020 Cal. Wrk. Comp. LEXIS 1] (Appeals Board en banc).) The Appeals Board has continuing jurisdiction over all its orders, decisions, and awards made and entered. (Lab. Code, § 5803.) The Appeals Board may rescind, alter, or amend any order, decision, or award, for good cause.

However, section 5804 provides that “[n]o award of compensation shall be rescinded, altered, or amended after five years from the date of the injury.” As explained by our Supreme Court, the WCAB “is empowered with continuing jurisdictional authority over all of its orders, decisions and awards … However, this power is not unlimited … The WCAB’s authority under section 5803 to enforce its awards, including ancillary proceedings involving commutation, penalty assessment and the like, is not to be confused with its limited jurisdiction to alter prior awards by benefit augmentation at a later date. The latter action is subject to the provisions of sections 5410 and 5804.” (Nickelsberg v. Workers’ Comp. Appeals Bd. (1991) 54 Cal.3d 288, 297 [56 Cal.Comp.Cases 476].)

Thus, in contrast to the limitations imposed by the statute on the Appeals Board to augment previously awarded benefits or to set aside an entire award, the Appeals Board continues to have jurisdiction after five years to enforce its awards. (Barnes v. Workers’ Comp. Appeals Bd. (2000) 23 Cal.4th 679, 687 [65 Cal.Comp.Cases 780].) That is, the WCAB’s jurisdiction to enforce an award extends beyond section 5804’s five-year limitations period because an order ascertaining and fixing the exact amount of liability does not rescind, alter or amend any prior award in violation of section 5804. (Id.)

In Garcia v. Industrial Acci. Com. (1958) 162 Cal.App.2d 761, the Court of Appeal concluded that the “award of compensation to the employee is not altered or amended within the intended meaning of sections 5803 and 5804 by the allowance of the attorneys’ lien after the five- year period.” (Id. at p. 767.)

In Garcia, new attorneys substituted in more than five years after the date of injury to assist the injured worker in resisting a petition to reopen the case by defendant Subsequent Injuries Fund (now Subsequent Injuries Benefits Trust Fund). (Id. at pp. 762-763.) The Garcia court reasoned, “[t]he imposition of the attorneys’ lien after the five-year period would only amount to a reallocation or redistribution of the funds to be paid under the original award of compensation, i.e., the award of compensation is the same, only its payments are ultimately redirected by the imposition of a charge upon the award as security for the reasonable fee allowed 5 by the commission for legal services performed on behalf of the employee by his attorneys.” (Id. at p. 767, italics added.) Thus, the court determined that the underlying award of compensation remained the same even if a lien for attorney’s fees was allowed. (Id. at p. 767.)

Pursuant to the above authorities, the Appeals Board retains the jurisdiction under section 5803 to make collateral changes to an award so long as the merits of the basic decision determining the worker’s right to benefits are not altered, and the amount of benefits remains unchanged.

The panel concluded that the lateral commutation of attorney’s fees from an award of lifetime benefits is limited to the specified amount of attorney’s fees approved by the WCJ or the Appeals Board in the first instance. Once defendant has deducted an aggregate amount commensurate with the specified commuted attorney’s fees, no further deduction from applicant’s weekly indemnity payment is appropriate or permissible.”

An Orange County Superior Court judge was federally charged on January 7 with defrauding California’s workers’ compensation program. Israel Claustro, 50, was charged via information with one count of mail fraud, a crime that carries a statutory maximum sentence of 20 years in federal prison. Claustro signed a plea agreement in which he agreed to plead guilty to the felony charge. Claustro is expected to make his initial appearance on January 12 in United States District Court in Santa Ana.

Claustro has agreed to resign from his position as an Orange County Superior Court judge.

According to the plea agreement, Claustro – who was an Orange County prosecutor at the time of the fraud – operated Liberty Medical Group Inc., a Rancho Cucamonga-based medical corporation, despite being neither a physician nor a medical professional as required under California law.

One of Liberty’s employees was Dr. Kevin Tien Do, 60, of Pasadena, a physician who had served a one-year federal prison sentence after being convicted in 2003 of felony health care fraud. Because of this conviction, in October 2018, Do was suspended from participating in the California’s workers’ compensation program. Claustro was aware of Do’s prior criminal conviction and suspension from California’s workers’ compensation program.

According to the plea agreement, Claustro admitted that he defrauded California’s Subsequent Injuries Benefits Trust Fund (SIBTF), a special fund administered by California’s workers’ compensation program to provide additional compensation to injured workers who already had a disability or impairment at the time of a subsequent injury.

Specifically, Claustro paid Do more than $300,000 for preparing medical evaluations, medical record reviews, and med-legal reports after Do’s suspension. Claustro caused Liberty to mail these reports to California’s SIBTF, concealing that they were prepared by Do by listing other doctors’ names on the billing forms and reports. Based on these fraudulent submitted reports, Liberty received hundreds of thousands of dollars from SIBTF.

The loss amount from Claustro’s participation in this scheme is approximately $38,670 – the amount SIBTF paid to Liberty based on reports Claustro knew Do had drafted after his suspension from SIBTF.

In connection with this scheme, Do pleaded guilty in January 2025 to one count of conspiracy to commit mail fraud and one count of subscribing to a false tax return. Do is expected to be sentenced in the coming months.

“Judge Claustro violated the law for his personal financial benefit,” said First Assistant United States Attorney Bill Essayli. “We will not hesitate to prosecute anyone – judges included – who defraud public benefits intended to help those in need.”

The FBI, IRS Criminal Investigation, and the California Department of Insurance are investigating this matter.Former Special Assistant United States Attorney Stephanie Orrick of the Orange County Office prosecuted this case.

Stanley Ellicott has been sentenced to a term of three years in State Prison after pleading guilty and being convicted of seven felony counts of public corruption in connection to a complex scheme that defrauded the city of San Francisco of more than $627,000 directly from the Department of Human Resources’ Division of Workers’ Compensation, and another case where he aided and abetted public corruption.  Ellicott was remanded into custody and is currently in San Francisco County Jail, awaiting transfer to the California Department of Corrections and Rehabilitation’s custody in State Prison.

Ellicott pled guilty and was convicted of two counts of misappropriation of public moneys, grand theft, financial conflict of interest, presentation of fraudulent claim, money laundering, and aiding and abetting a financial conflict of interest in a government contract. His guilty plea and conviction settled two fraud cases he was facing.

Ellicott was born and raised in Maine. He earned a Bachelor of Arts degree from Wheaton College and a Master of Public Policy from the University of California, Berkeley’s Goldman School of Public Policy. Prior to his roles with the City and County of San Francisco, where he began working on and off in 2012, Ellicott was employed as an associate analyst at Moody’s.

Over a four-and-a-half-year period from May of 2019 to January of 2024, Ellicott stole $627,118.86 from the City, where he previously served as the Assistant Director of Finance and Technology for the Human Resources Department, Workers’ Compensation Division. One of his responsibilities was to oversee “the financial integrity of the Workers’ Compensation Division.”

Ellicott enlisted a friend to register a fake business in Illinois called “IAG Services” and open a bank account for the business, which she gave full control of to Ellicott.  Ellicott then added this fake business as a vendor in the workers’ compensation system and over time billed more than 600 actual City workers’ compensation claims with charges for auditing services.

Department archives show no evidence any auditing services were ever performed.  Because the City is self-insured for workers’ compensation purposes, payments to doctors, employees, and vendors related to workers’ compensation claims come directly from the City’s coffers.

All the City payments to “IAG Services” were deposited into the account set up by Ellicott’s friend, then the money was systematically transferred into Ellicott’s personal checking accounts in a pattern to appear like they were payroll payments. In total, he transferred more than $488,000 from IAG’s account into accounts belonging to him.

The website for the Illinois business “IAG Services” created in Oakland – where Ellicott lives – and IAG emails sent to Ellicott’s work address that appear to be created by him. On several occasions, Ellicott emailed his subordinates and directed them to process payments to IAG that he had approved, enlisting their unknowing and unwitting assistance in his fraud.

Ellicott also pled guilty to and was convicted in a separate case for his role in a scheme to misappropriate grant funds awarded through the City’s Community Challenge Grant Program.

The cases against Ellicott were prosecuted by Assistant District Attorney Erin Loback, with assistance from District Attorney Investigator Mike Reilly, paralegal Chloe Mosqueda and the entire Public Integrity Task Force.

Investigators were able to locate and freeze all of the stolen funds before he was arrested. The stolen $627,118.86 back to the City’s Worker’s Compensation Fund.”