Author: WorkCompAcademy

The recently ousted head of Aviron Pictures, William Sadleir, 66, of Beverly Hills, was arrested on federal fraud charges that allege he applied for $1.7 million in loans under the Paycheck Protection Program (PPP), falsely certified that the money would be used to finance the operations of other Aviron entities, and then used some of the relief funds for his personal expenses.

A criminal complaint that accuses him of fraudulently filing bank loan applications that sought more than $1.7 million dollars in forgivable PPP loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Sadleir allegedly obtained the forgivable loans by falsely representing that the funds would be used to support payroll expenses, when, in fact, Sadleir intended to use and did use a significant portion of the funds for personal and non-business-related expenses.

Sadleir has been charged with wire fraud, bank fraud, making false statements to a financial institution, and making false statements to the Small Business Administration.

Sadleir caused applications for PPP loans to be submitted to JPMorgan Chase on behalf of Aviron Group, LLC; Aviron Licensing, LLC; and Aviron Releasing, LLC dba Regatta. The bank approved the loans, and Sadleir received more than $1.7 million. “[I]mmediately upon receiving the funds a significant amount was diverted to Sadleir’s personal accounts and used for personal expenses,” the complaint alleges.

Sadleir was terminated from Aviron Pictures in late 2019, and people associated with the film production company told investigators that Sadleir currently had no role in Aviron Pictures or the related entities, according to the affidavit, which notes that Aviron Group, Aviron Licensing and Aviron Releasing are not engaged in any ongoing operations.

Authorities have linked Sadleir to the three PPP loan applications made on behalf of the three Aviron entities. All three applications claimed each company had 33 employees and monthly payroll expenses of well over $200,000. On April 30, JPMorgan Chase approved the loan applications, and the next day money was wired to nearly empty JPMorgan Chase bank accounts associated with the three entities.

Within days, nearly $1 million of the PPP loan money was transferred into Sadleir’s personal account at JPMorgan Chase, the affidavit alleges. Investigators have determined that some of this money was used to pay personal expenses, including payments to Sadleir’s and his wife’s American Express cards. One payment allegedly made with PPP loan proceeds – a $40,000 payment on Sadleir’s car loan – was reversed and JPChase Morgan froze the accounts associated with the alleged scheme.

The four charges alleged in the criminal complaint collectively carry a maximum statutory penalty of 82 years in federal prison.

Barbara Justice was a workers’ compensation claims adjuster for the County of Santa Clara. She fell at work in 2011 and injured her left knee. She later developed problems in her right knee, which was found to be a compensable consequence of the injury to her left knee. In 2012, Justice had total knee replacement surgery on the right knee. In 2013, she had total knee replacement surgery on her left knee.

The AME testified that a 2012 X-ray of her knees showed “marked osteoarthritis” of the knees. An MRI conducted in 2012, showed that she had suffered a medial and lateral meniscal tear as a result of the fall at work and also revealed significant preexisting degeneration, all of which predated the fall at work: an “old” tear of the anterior cruciate ligament, “marked loss of articular cartilage in the medial compartment,” “moderate loss of articular cartilage in the lateral compartment,” and “moderate loss in the patellofemoral joint.” There was also scar tissue on both knees indicating that Justice had undergone a “significant open procedure” at some point in the past.

The agreed medical examiner thought the permanent disability should be apportioned 50/50,

The workers’ compensation judge then stated that prior to the decision in Hikida v. Workers’ Comp. Appeals Bd. (2017) 12 Cal.App.5th 1249 (Hikida), he would have issued a decision awarding permanent disability with 50% apportionment based upon the AME’s opinion. However, Hikida precluded apportionment in this case because the ratings were based upon having total knee replacements. Since both were the result of medical care, he awarded permanent disability of 48 percent without apportionment.

The WCAB denied reconsideration (except to correct a clerical error). However the Court of Appeal reversed in the Published opinion of County of Santa Clara v WCAB and Barbara Justice.

The Court of Appeal found the case of City of Petaluma v. Workers’ Comp. Appeals Bd. (2018) 29 Cal.App.5th 1175, 1181-1182 to be instructive. In that case, police officer Aaron Lindh was engaged in a canine training exercise when he took blows to the left side of his head . He first suffered severe headaches, and weeks later “suddenly lost most of the vision in his left eye.” The QME said that Lindh had a congenital abnormality that caused poor blood circulation in his left eye. Without the injury, he most likely would have retained a lot of his vision in that eye. But that it was unlikely Lindh would have suffered a vision loss if he had not had the ‘underlying condition.Thus, the examiner apportioned 85 percent of the permanent disability to the preexisting condition, and 15 percent to the industrial injury.

As in Petaluma, the injured worker in the instant case had an extensive preexisting pathology that when combined with an industrial injury, led to permanent disability. The preexisting pathology was well documented. “The workers’ compensation judge and the Board believed that Hikida dictated a different result. Not so.” … “, the Hikida court’s conclusion that there should be no apportionment makes sense only because the medical treatment in Hikida resulted in a new compensable consequential injury, namely CRPS, which was entirely the result of the industrial medical treatment.”

Please join Bernadette M. O’Brien, Esq., SPHR, of Floyd Skeren Manukian Langevin, along with Senior Partners John B. Floyd, Esq. and Amanda A. Manukian, Esq., this Friday for an updated COVID-19 Webinar. The presentation will featuring special guest speakers, Dr. Nachman Brautbar, M.D., medical expert, practicing physician and Managing Partner of Ford & Wallach, Scott Ford Esq., for important updated information on workers’ compensation and COVID-19.

Topics Include:

— An employment law update on issues pertained of COVID-19 provided by Ms. O’Brien;
— Update on the work comp presumption and the impact on California COVID-19 claims;
— Workers’ compensation case scenarios;
— DOL’s enforcement of paid sick leave laws;
— Reopening guidance and requirements;
— Pros and Cons of “Immunity Certificates”; and
— Common questions

Friday, May 29, 2020 from 10:00 am until 12:00 pm (PST).  Webinar is free. Please register online

Contact:  Rebecca.zandovskis@floydskerenlaw.com for assistance.

Bernadette M. O’Brien is a Partner at Floyd Skeren Manukian Langevin, LLP, and an SPHR/SHRM-SCP certified Human Resources Consultant.

Ms. O’Brien is author of the LexisNexis publication Labor and Employment in California: A Guide to Employment Laws, Regulations and Practices, co-author of California Leave Law: A Practical Guide for Employers, and co-author of California Unemployment Insurance and Disability Compensation Programs.

An initiative that would overturn provisions of AB 5 applying to app-based transportation and delivery drivers has qualified for the November ballot in California. The “Protect App-Based Drivers and Services Act” was written in response to last year’s passage of AB 5. If passed by the voters, the initiative would add Chapter 10.5 (commencing with Section 7448) to Division 3 of the Business and Professions Code with approximately 18 pages of new law.

On August 30, 2019, three companies – DoorDash, Lyft, and Uber – each placed $30 million into campaign accounts to fund the ballot initiative campaign. Subsequently Instacart (Maplebear, Inc.) and Postmates Inc. contributed $10 million each to the effort.

Backers of the initiative say it would allow app-based drivers to gain additional income by working a few hours a week on schedules they determine as independent contractors. The official ballot title will be “Changes Employment Classification Rules for App-based Transportation and Delivery Drivers. Initiative Statute.”

The ballot measure would enact labor and wage policies specific to app-based drivers and companies, including a net earnings floor based on 120 percent of the state’s or municipality’s minimum wage and 30 cents per mile; a limit to the hours permitted to work during a 24-hour period; healthcare subsidies; occupational accident insurance; and accidental death insurance. The ballot measure would also require the companies to develop anti-discrimination and sexual harassment policies.

Opponents, led by the California Labor Federation, say passage of the initiative would remove protections for app-based drivers, such as paid sick and family leave, health insurance and workers’ compensation. The Coalition to Protect Riders and Drivers, Sponsored by the California Labor Federation, AFL-CIO contributed $690 thousand to defeat the initiative.

If approved by voters, the initiative would require companies with independent contractor drivers to provide specified alternative benefits, including minimum compensation and health care subsidies based on engaged driving time, vehicle insurance, safety training and sexual harassment policies.

The initiative would also restrict local regulation of app-based drivers, criminalize impersonation of such drivers and require background checks. Interestingly, the last sentence of the proposed law provides that “this Act shall be liberally construed in order to effectuate its purposes.“

The initiative needed at least 685,534 projected valid signatures to become eligible by random sampling. It exceeded that threshold Friday, Secretary of State Alex Padilla announced.

The COVID-19 pandemic and resultant stay-at-home orders are significantly impacting California’s economic, health care and workers’ compensation systems. Many COVID-19 workers’ compensation claims have already been filed. However, at this time, it is unclear what proportion of the illnesses and deaths resulting from the virus will ultimately be determined to be work-related.

On May 6, 2020, the Governor issued Executive Order N-62-20 (Order) providing for a rebuttable presumption of compensability for all workers directed by their employer to work outside the home. Key provisions of the Order include:

— Rebuttable presumption of compensability applied to workers contracting COVID-19 who worked outside of their home or residence at the employer’s direction within 14 days prior to diagnosis
— Presumption limited to dates of injury from March 19, 2020 to July 5, 2020
— Requires a positive test for COVID-19 or a diagnosis of COVID-19 by a licensed physician that is confirmed by a positive test within 30 days
— Temporary disability must be certified by a physician and can be offset by COVID-19 related sick leave
— Elimination of death benefits for workers with no dependents that are usually paid to the state

The WCIRB has evaluated the potential workers’ compensation claims cost arising from COVID-19 claims under the Order. While some of the workers who are directed to work outside their home during this period have filed or would file a compensable workers’ compensation claim in the absence of a rebuttable presumption, we had no basis to estimate this proportion and, as a result, made no estimate of the incremental impact of the Order. Also, since an actual positive test or diagnosis of COVID-19 is required for the Order to apply, our cost estimates exclude any potential costs for workers who are quarantined, but have not been diagnosed with COVID-19. Finally, our estimates reflect the potential cost impact arising from COVID-19 diagnoses during the time the Order applies and do not reflect costs for potential extensions of the Order or future legislation.

The cost estimates in this Research Brief are based on WCIRB data including unit statistical reports, aggregate financial data calls and medical transaction data.  The WCIRB estimates that the cost of COVID-19 claims filed by workers subject to the Order ranges from $0.6 billion to $2.0 billion with a mid-range estimate of $1.2 billion. This mid-range estimate comprises 7% of the $18.3 billion estimated annual cost of workers’ compensation claims in the system prior to the pandemic.