Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Court of Appeal Affirms Worker’s Fraud Conviction Based on Sub Rosa. Guidelines Specified for Severability of Unconscionable Arbitration Provisions. Biopharmaceutical Company Resolves Kickback Case for $5.5 Million. Santa Paula Doctor Pleads Guilty to $3 Million Fraud. DaVita Dialysis to Pay $34M to Resolve Allegations of Illegal Kickbacks. Riverside Chiropractor Agrees to Pay $180K to Resolve Fraud Allegations. DOI Calls for WCIRB Study of Workers’ Compensation Silicosis Claims. Ransomware Takes LA Superior Court 36 Office Internal Systems Down.
Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: SIBTF Has Burden of Proof For L.C. 4753 Benefit Reductions. SCOTUS Rules Insurers May Participate in Insured Bankruptcy Proceedings. $500 Million Severance Pay Lawsuit Against Elon Musk Dismissed. S.F. Zen Center Worker Meets ADA Discrimination Ministerial Exception. Privette Doctrine Applies to Injury Working Inside Jet Tank. Guardant Health, Inc. Agrees to Pay $914K to Resolve FCA Charges. Federal Judiciary Has Systemic Sexual Harassment Protection Failures.
Doctors Face Another Medicare Pay Cut – 2.8% in 2025.
The Infectious Diseases Society of America (IDSA) is a community of over 13,000 physicians, scientists and public health experts who specialize in infectious diseases. Its purpose is to improve the health of individuals, communities and society by promoting excellence in patient care, education, research, public health and prevention relating to infectious diseases.
The Society just announced the recipients of its Antimicrobial Stewardship Centers of Excellence designation. The eight awarded institutions have created stewardship programs led by infectious diseases-trained physicians and pharmacists that advance science in antimicrobial resistance.
The institutions recently awarded the CoE designation (two of them in California) are:
– – University of Southern California (USC) Norris Cancer Hospital, Los Angeles, CA
– – Keck Hospital of USC (University of Southern California), Los Angeles, CA
– – Baptist Health, Jacksonville, FL
– – Children’s Hospital New Orleans, New Orleans, LA
– – John D. VA Medical Center, Detroit, MI
– – Lake Cumberland Regional Hospital, Somerset, KY
– – Ocean University Medical Center, Brick Township, NJ 08724
– – University of Toledo Medical Center Toledo, OH 43614
The institutions also have achieved standards aligned with evidence-based national guidelines, such as the IDSA-Society for Healthcare Epidemiology of America guidelines and the Centers for Disease Control and Prevention’s Core Elements. A total of 187 programs nationwide have received the designation since the program’s launch in 2017.
“Solving the next public health emergency starts with addressing the threat of antimicrobial resistance at every level,” said Steven K. Schmitt, MD, FIDSA, president of IDSA. “These eight institutions are working to counter the growing problem of resistance, one of the greatest threats facing our future. By honoring them, we are building a community fighting antimicrobial resistance.”
A recently published CDC fact sheet analyzes the threat of Antimicrobial Resistance (AMR) in the U.S. and the impact COVID-19 had on health care facilities. CDC says the number of reported clinical cases of C. auris increased nearly five-fold from 2019 to 2022. Additionally, CDC shows that six bacterial antimicrobial-resistant hospital-onset infections increased by a combined 20% during the COVID-19 pandemic compared to the pre-pandemic period, peaking in 2021 and remaining above pre-pandemic levels in 2022.
“Fighting antimicrobial resistance remains a priority for IDSA as we continue to support legislative efforts to strengthen the U.S. response to antimicrobial resistance by advocating for passage of the Pioneering Antimicrobial Subscriptions to End Upsurging Resistance (PASTEUR) Act,” Dr. Schmitt said.
The core criteria for the CoE program place emphasis on an institution’s ability to implement stewardship protocols by integrating best practices to slow the emergence of resistance, optimize the treatment of infections, reduce adverse events associated with antibiotic use and to address other challenging areas related to antimicrobial stewardship. A panel of IDSA member experts in antimicrobial stewardship, including ID-trained physicians and ID-trained pharmacists, evaluate CoE applications against high-level criteria established by IDSA leadership for determining merit.
Assemblymember Chris Holden’s Assembly Bill 236 would give state regulators authority to fine insurers if their lists of in-network doctors, hospitals, mental health workers, labs and imaging centers aren’t up-to-date and accurate.
According to the author, “despite California having one of the nation’s strongest laws on health plan provider directories, compliance is at an unbelievable low. Recent studies have found that some health plans have inaccuracy rates as high as 80%, and major plans like Anthem and Kaiser have inaccurate information for 20%-38% of providers.”
“These inaccuracies in provider referral lists are often referred to as ‘ghost networks’ because the referrals simply do not exist. As a result, consumers bear the responsibility of sorting through these grossly inaccurate lists, sifting through directories in an effort to find care, calling provider after provider, only to be told the provider is no longer in-network, no longer accepting new patients, or even no longer in practice.”
“This is especially harmful to those already suffering from health care inequity, such as those with limited English proficiency and persons with disabilities. Ghost networks contribute to inequity in health care by leaving Californians to fend for themselves in their most vulnerable time”.
The bill tackling what are disparagingly called “ghost networks” has so far passed the Assembly and the Senate Health Committees with only Republicans in opposition, and despite the lobbying powerhouses representing California doctors and insurers fighting the bill every step of the way.
Doctors and insurers blame each other for problems in the directories, but they argue the bill is unnecessary, burdensome on them and that laws on the books already address the problem.
Combined, the groups have given at least $4.7 million to California legislators since 2015, according to the Digital Democracy database.
CalMatters reports that along with opposition from influential lobbyists for doctors and insurers, the measure also received a lukewarm response from the state agency that would enforce the bill if it becomes law.
As the Legislature and Gov. Gavin Newsom sought to address a $30 billion budget deficit this year, the Department of Managed Health Care estimated that the bill would cost $12 million to bring on “additional staff.” According to the bill’s analysis, the new employees are needed to develop regulations, forms and to monitor “provider directory accuracy.”
The estimate of $12 million is the equivalent of 80 employees each making $150,000 a year – figures that could alarm Newsom’s budget team and the lawmakers who dole out cash to state agencies on the Senate Appropriations Committee, where the bill will be considered in the coming weeks.
Holden’s bill would require an insurer’s provider directory to be at least 60% accurate by this time next year and 95% accurate by July 1, 2028. The insurers would face fines up to $10,000 for every 1,000 enrolled customers each year if they didn’t hit the benchmarks. Kaiser, for instance, says it provides care to 9.4 million Californians.
The bill also says patients who mistakenly use an out-of-network doctor due to inaccurate information from provider lists cannot be charged out-of-network rates.
Under the federal Consolidated Appropriations Act (CAA) of 2021, “No Surprises Act,” providers and health care facilities must generally refund enrollees amounts paid in excess of in-network cost-sharing amounts with interest, if the enrollee has inadvertently received out-of-network care due to inaccurate provider directory information, and if the provider or facility billed the enrollee for an amount in excess of in-network cost-sharing amounts, and the enrollee paid the bill.
In addition, providers and health care facilities must maintain business processes to submit provider directory information at specified times to support plan and issuers in maintaining accurate, up to date provider directories. Contract provisions can require a provider to be removed at the time of the contract termination, and the plan to bear financial responsibility for providing inaccurate network status information to an enrollee.
Sheila Murphy was employed by the County of Sonoma on January 20, 2019. On that day she was hiking through tall grass while checking trail cameras. That evening she found a tick embedded on her right hip. She later developed a rash and became concerned that she might have contracted Lyme Disease, and so presented at Kaiser in Santa Rosa where her primary care physician prescribed antibiotics.
On March 19, 2019 she visited Kaiser Occupational Medicine department. At that time, it was the opinion of the Dr. Yee that it was unlikely that she had Lyme Disease. Nevertheless, it appears that an antibody test, referred to as the “ELISA” test by Dr. Leonard, was performed. The result of that test was negative.
There was a difference in opinion between the applicant’s initial treating doctors, affiliated with Kaiser, and the applicant’s subsequent treating doctor, Dr. Gitlin. The Kaiser doctors felt that applicant did not contract Lyme disease and Dr. Gitlin believed that she did, and diagnosed the disease by symptomology alone.
Applicant’s Kaiser physicians performed the ELISA test and applicant tested negative for Lyme disease. Notwithstanding these findings, the Western Blot test was requested by Dr. Gitlin and performed. The result of that testing, however, “also support[ed] the conclusion that applicant did not contract Lyme disease.” Applicant therefore tested negative on both counts.
Given this divide, the parties retained Dr. Leonard as the panel QME. Dr. Leonard reviewed literature concerning diagnosis of Lyme disease and found that there was a two-step process which consisted of an ELISA test, which, if positive for findings of Lyme disease, required completion of a second test, called the Western Blot test. “[W]ith a negative ELISA” it was understood that “further testing is not necessary.”
Based upon the above referenced test results, an evaluation of the applicant, and a review of the complete medical record, the QME found no injury AOE/COE. Within his reports and during his deposition, the QME explained the basis for his opinions and explained his reasoning for the findings. The QME ultimately issued a total of three reports.
August 9, 2022 Findings and Order by the WCJ found that applicant, while working as a park aide for defendant, “did not contract Lyme disease as a result of a tick bite on January 20, 2019.” The WCJ’s decision was based upon the findings of the panel Qualified Medical Evaluator (QME), Dr. Thomas Leonard.
Reconsideration was denied in the panel decision of Murphy v County of Sonoma/Regional Parks Division – ADJ13607768-1 (July 2024).
Applicant makes several arguments. First, applicant argues that Dr. Leonard does not have the requisite experience to be considered an expert on the diagnosis of Lyme Disease.
In response the WCJ in his Report said the “court disagrees. Although the doctor states that he has seen only 10 cases in his career, the undersigned has never seen a Lyme Disease case in 22 years of workers comp practice and on the bench.” “Ten cases seems like a significant number, enough to establish sufficient expertise for a Qualified Medical Evaluator.”
Finally, the applicant noted that “Dr. Leonard and the trial judge placed considerable weight on the two tests applicant took for Lyme disease, the ELISA and the Western Blot, both of which were negative for Lyme disease.”
To this the WCJ responded that the “reason for this considerable weight is that Lyme Disease is caused by bacteria, which, if it is present in the body, elicits an immune response. The presence of the bacteria causes human body to manufacture antibodies which are detectable in the blood. If the bacteria are present, antibodies will appear. If the antibodies do not appear, the bacteria is not present, and the individual does not have Lyme Disease.”
And he went on to say “the workers’ compensation system is ill equipped to address unusual, even ground breaking, medical situations. The workers’ compensation system deals with “reasonable medical probability” and evidence based peer reviewed medical consensus. In the present case, this means looking at the generally accepted methods of diagnosing Lyme Disease. In this case that compels a finding that the applicant does not have Lyme Disease.”
In denying the Petition for Reconsideration the WCAB panel said “Having reviewed the trial record we see no evidence which is inconsistent with the QME’s opinions, and we see no support for applicant’s argument that the QME reports are not substantial evidence. We also see no evidence of bias, speculation, or inexperience on the part of the QME, as asserted by applicant. We therefore agree with the WCJ that the reports from QME are substantial medical evidence.”
The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) has released its 2024 State of the System report. This report highlights key metrics of the California workers’ compensation system, including the latest trends on rates, market characteristics and profitability.
This annual report is developed to provide workers’ compensation professionals with a comprehensive view of California’s workers’ compensation system based on the latest available information.
Top take-aways from the report include:
– – The California workers’ compensation system has been relatively stable in the post-pandemic era. Premium levels increased by 1 percent in 2023 and are forecast to increase modestly in 2024, while decreases in average insurer charged rates are moderating.
– – Claim frequency changes in 2022 and 2023 are modest and consistent with pre-pandemic trends. The share of indemnity claims involving permanent disability has declined, but there are signs that the share of indemnity claims involving cumulative trauma is increasing.
– – The Los Angeles (LA)/Long Beach region has the highest claim frequency, about one-quarter above the statewide average, while the Peninsula/Silicon Valley region has the lowest frequency, more than one-quarter below the statewide average.
– – Among the factors driving higher claim frequency in Southern California is a higher proportion of CT claims and litigated claims.
– – Average indemnity costs continue to increase, primarily driven by increasing average wage levels. Average medical costs are also increasing, driven by claims remaining open longer post-pandemic and inflationary updates to medical fee schedules. Average allocated loss adjustment expense costs rose sharply in 2022 and 2023, driven by increased litigation across the state.
– – California continues to experience longer average claim duration compared to other states, driven by slower claim reporting and higher frictional costs, particularly medical-legal costs.
– – The projected accident year combined ratio increased by 2 points to 111 percent in 2023, the fourth consecutive year of a combined ratio above 100 percent. Combined ratios in California continue to be above those for the rest of the country.
– – In 2022 and 2023, payroll growth exceeded the impact of continued moderate insurer rate decreases, resulting in premium growth. Forecast continued growth in employer payrolls in 2024 is estimated to result in a modest premium increase.
– – In the WCIRB’s most recent filing, the WCIRB proposed an average increase of 0.9% in advisory pure premium rates, while the Insurance Commissioner approved an average decrease of 2.1%.
– – California has by far the highest permanent partial disability (PPD) claim frequency in the country, almost three times the countrywide median.
– – California’s high frequency of PPD claims is not driven by a more hazardous industrial mix or the number of very severe injuries, which are comparable to those from other lower-frequency states.
– – PPD claim frequency is significantly higher in the LA Basin area than in the rest of the state.
To access the report and supplementary data, visit the Research Studies and Reports: State of the System page on the WCIRB website. The page includes videos featuring WCIRB actuaries and industry experts discussing report highlights and how California workers’ compensation cost drivers compare to national benchmarks.
Twanda Bailey began working at the District Attorney’s Office in 2001 as a clerk in the records department. The office promoted her in 2011 to an investigative assistant position. Bailey worked alongside Saras Larkin, another investigative assistant. The two sat next to each other in the records room. Bailey is African-American. Larkin is Fijian/East Indian.
On January 22, 2015, while in the records room, Larkin told Bailey that she saw a mouse run under Bailey’s desk. Bailey was startled and jumped out of her chair. Larkin walked up to Bailey and quietly said, “You [N-words] is so scary.” Immediately following this incident, Bailey left her office and told three coworkers what Larkin had said. Bailey was crying and upset. Although Bailey was offended by Larkin’s use of the racial slur, she did not immediately complain to human resources because she feared harassment and retaliation.
This fear was based on Bailey’s understanding that other employees had been harassed and discriminated against following incidents with Larkin. Specifically, Bailey understood that Larkin was best friends with the office’s department personnel officer, Evette Taylor-Monachino, and that Larkin’s actions against other African-American women, Davonne Mark and Sydney Fisher, caused them to be reassigned or to separate from the District Attorney’s Office. In a declaration, Mark attested to the close friendship between Taylor-Monachino and Larkin. Mark had worked in the records room with Bailey and Larkin but stated that she was reassigned after Larkin made false accusations against her.
Nontheless, information about the event was relayed to Sheila Arcelona, the assistant chief of finance and administration. Arcelona and Taylor-Monachino met with Bailey on January 29. Bailey reiterated that Larkin had used an offensive racial slur and confirmed that this was the only time she had heard Larkin use such language. Arcelona informed Bailey that “management would address the issue” and that Bailey should report any inappropriate behavior directly to management.
Arcelona and Taylor-Monachino then met with Larkin, who “did not admit to making the alleged remark.” Arcelona counseled Larkin on the city’s “Harassment-Free Workplace Policy” and informed her that use of the alleged language was “unacceptable.”
Although Taylor-Monachino was the HR representative charged with reporting incidents of workplace harassment to the city’s Department of Human Resources (DHR), she did not file a formal complaint as city policy required. Bailey claimed that that Taylor-Monachino’s conduct towards her had changed after March 23. As a result, Bailey felt she needed to avoid walking past Taylor-Monachino’s office, which was next to the records room where Bailey worked.
On December 30, Bailey filed suit against the City for racial discrimination, racial harassment, retaliation, and failure to prevent discrimination in violation of FEHA. The City moved for summary judgment and the trial court granted that motion and concluded that no trier of fact could find severe or pervasive racial harassment based on being “called a ‘[N-word]’ by a co-worker on one occasion.” In an unpublished opinion, the Court of Appeal affirmed the trial court’s grant of summary judgment. (Bailey v. San Francisco District Attorney’s Office (Sept. 16, 2020, A153520) [nonpub. opn.], as mod. on denial of rehg. Oct. 6, 2020) The California Supreme Court granted review.
The California Supreme Court reversed the judgment of the Court of Appeal in the case of Bailey v. S.F. Dist. Attorney’s Office -S265223 (July 2024)
To prevail on a claim that a workplace is racially hostile under FEHA, an employee must show she was subjected to harassing conduct that was (1) unwelcome; (2) because of race; and (3) sufficiently severe or pervasive to alter the conditions of her employment and create an abusive work environment.. The parties did not dispute that Larkin’s conduct was unwelcome and because of race. The case therefore considered its severity and the City’s liability.
The standard for workplace harassment claims strikes a “middle path between making actionable any conduct that is merely offensive and requiring the conduct to cause a tangible psychological injury.” (Harris v. Forklift Systems, Inc. (1993) 510 U.S. 17, 21 (Harris).) The United States Supreme Court has held: “Conduct that is not severe or pervasive enough to create an objectively hostile or abusive work environment – an environment that a reasonable person would find hostile or abusive – is beyond Title VII’s purview.”
The Court also noted that the “same standard applies to FEHA. (See Aguilar v. Avis Rent A Car System, Inc. (1999) 21 Cal.4th 121, 130 (plur. opn. of George, C. J.) ; Miller v. Department of Corrections (2005) 36 Cal.4th 446, 462.)” Whether a work environment is reasonably perceived as hostile or abusive “is not, and by its nature cannot be, a mathematically precise test.” (Harris, supra, 510 U.S. at p. 22.) “The working environment must be evaluated in light of the totality of the circumstances.”
The City argued that “[a] single race-based comment by a coworker – even when involving a categorically offensive and impermissible term – over a fourteen year period” can be considered neither “pervasive” nor “severe.” Bailey responded that, under prevailing FEHA principles and standards, the Court of Appeal’s holding “that a co-worker’s, as opposed to a supervisor’s, one-time infliction of [a] slur is categorically non-actionable under FEHA . . . is neither compelled nor warranted.” The California Supreme Court agreed with Bailey that “that the Court of Appeal placed undue emphasis on the speaker’s status as a coworker.” Instead it said the “objective severity of harassment should be judged from the perspective of a reasonable person in the plaintiff’s position.”
“This standard allows that ‘an isolated incident of harassment, if extremely serious, can create a hostile work environment.‘ (Boyer-Liberto v. Fontainebleau Corp. (4th Cir. 2015) 786 F.3d 264, at p. 268, citing Faragher v. Boca Raton (1998) 524 U.S. 775 at p. 788; see U.S. Equal Employment Opportunity Commission, Section 15: Race & Color Discrimination (Apr. 19, 2006) 15-VII Equal Opportunity for Job Success, p. 15-37 (EEOC Compliance Manual) [‘a single, extremely serious incident of harassment may be sufficient to constitute a Title VII violation’]; ibid. [‘The more severe the harassment, the less pervasive it needs to be, and vice versa’].).”
The California Supreme Court when on to say in this Opinion “We join the chorus of other courts in acknowledging the odious and injurious nature of the N-word in particular, as well as other unambiguous racial epithets.” “Far from ‘a mere offensive utterance” (Harris, supra, 510 U.S. at p. 23), this slur may be intrinsically ‘humiliating’ depending on the totality of the circumstances (ibid.).”
“We therefore reverse the judgment of the Court of Appeal and remand the cause to that court for further proceedings consistent with this opinion.”
The Insurance Commissioner announced an agreement to modernize the California FAIR Plan Association, the state’s “insurer of last resort,” as part of his ongoing efforts to stabilize the California insurance market and address the insurance crisis. The move is part of his Sustainable Insurance Strategy, the largest insurance reform since voters passed Proposition 103 in 1988.
While the FAIR Plan expansion creates a negative feedback loop. When the FAIR Plan takes on more customers, it causes traditional insurance companies to withdraw from certain areas, further increasing dependence on the FAIR Plan. A recent news story called the growing FAIR Plan a “hidden crisis” because, partially due to fear of possible major assessments by the FAIR Plan, several insurance companies are further withdrawing from the California market by pausing writing new policies or reducing their market share in at-risk areas. This cycle can ultimately weaken the FAIR Plan’s financial stability and limit consumer choice.
The Commissioner’s agreement with the FAIR Plan is targeted at homeowners and condo associations that need expanded coverage, as well as farms, builders, and businesses with multiple buildings in the same location. this will help “break the cycle” by strengthening the FAIR Plan as he pursues other reforms to safeguard the integrity of the insurance market while holding true to the spirit and intent of Prop. 103.
Specifically, the FAIR Plan has agreed in a binding legal stipulation to issue a new Plan of Operation within 30 days that will implement the plan to offer homeowners, consumers, and business owners:
– – Expanded Coverage: Establishing a new “high-value” commercial coverage option with limits up to $20 million per building, along with past increases for residential policies.
– – Financial Stability: Creating a sound financial formula to protect policyholders in extreme loss scenarios.
– – Improved Transparency: Requiring increased public reporting on FAIR Plan activity and customer service metrics.
What others are saying:
Consumer Watchdog was not that happy. “Commissioner Lara’s proposal would relieve insurance companies of their responsibility for covering the largest claims under the California FAIR Plan, which insurers control. All California property insurance policyholders would be required to pay with an added surcharge on their insurance bills – a surcharge that could reach hundreds or potentially thousands of dollars.”
“The California Farm Bureau applauds Commissioner Lara’s efforts to modernize the FAIR Plan. Our farmers and ranchers have been disproportionately affected by the limitations of the current system, especially in high-risk wildfire areas,” said California Farm Bureau President Shannon Douglass. “The increased coverage limits and enhanced financial stability measures will provide much-needed security for our agricultural community, ensuring that farms can recover and thrive after disasters.”
“The modernization of the FAIR Plan is a significant and much-needed step forward. As an organization representing community associations, we have long faced challenges in securing adequate insurance coverage due to outdated limits and lack of options,” said Kieran Purcell, Chair of the Community Associations Institute – California Legislative Action Committee.
“The California Building Industry Association fully supports the modernization of the FAIR Plan. For builders and developers, securing adequate insurance coverage has been a persistent challenge throughout the state, particularly in high-risk areas,” said Dan Dunmoyer, President and CEO of the California Building Industry Association.
“The California Association of REALTORS® (C.A.R.) supports the Commissioner’s work to update the FAIR Plan,” said C.A.R. President Melanie Barker. “REALTORS® work every day with clients struggling to get the insurance they need, and the actions of the Insurance Commissioner to increase access to insurance coverage options is vital.”
Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Small Claims Case Bars Injured Worker’s Later Claims Against Employer. Microsoft Resolves California Leave Discrimination Claim for $14.4M. Proposed Heat Injury and Illness Prevention Rule to Face Legal Challenges. CWCI Reports Private Self-Insureds Have Fewer Claims But Higher Losses. FTC Releases Interim Staff Report Criticizing Prescription Drug Middlemen. DWC Schedules Next QME Exams for October 4 and 10, 2024. NCCI Labor Market Insights Report Shows Solid Employment Growth.
The California Supreme Court ruled last week that app-based ride-hailing and delivery services like Uber and Lyft can continue treating their drivers as independent contractors rather than employees. The unanimous decision by the state’s top court is a big win for tech giants.
In 2019, the Legislature enacted Assembly Bill No. 5 to address what it claimed was the misclassification of workers as independent contractors. Assembly Bill 5 took effect in January 2020. In October 2020, the Court of Appeal in People v. Uber Technologies, Inc. (2020) 56 Cal.App.5th 266, 273, prohibited Uber and Lyft from misclassifying their drivers as independent contractors under Assembly Bill 5.
In November 2020, Protect App-Based Drivers and Services supported Davis White and Keith Yandell in placing Proposition 22 on the general election ballot. Proposition 22 states that its purposes are to “protect the basic legal right of Californians to choose to work as independent contractors with rideshare and delivery network companies,” “protect the individual right of every app-based rideshare and delivery driver to have the flexibility to set their own hours for when, where, and how they work,” and “require rideshare and delivery network companies to offer new protections and benefits for app-based rideshare and delivery drivers, including minimum compensation levels, insurance to cover on-the-job injuries, automobile accident insurance, health care subsidies for qualifying drivers, protection against harassment and discrimination, and mandatory contractual rights and appeal processes.”
Proposition 22 passed with the support of 58.6 percent of the voters and enacted sections 7448 to 7467 of the Business and Professions Code.
Shortly afterwards, Hector Castellanos, Joseph Delgado, Saori Okawa, Michael Robinson, Service Employees International Union California State Council, and Service Employees International Union filed a petition for writ of mandate seeking a declaration that Proposition 22 is invalid because it violates the California Constitution.
The trial court granted the petition, ruling that the proposition (1) is invalid in its entirety because it intrudes on the Legislature’s exclusive authority to create workers’ compensation laws; (2) is invalid to the extent that it limits the Legislature’s authority to enact legislation that would not constitute an amendment to Proposition 22, and (3) is invalid in its entirety because it violates the single-subject rule for initiative statutes.
Proposition 22’s proponents and the state appealed, arguing the trial court was mistaken on all three points.
The Court of Appeal in a divided opinion agreed that Proposition 22 does not intrude on the Legislature’s workers’ compensation authority or violate the single-subject rule. But it concluded that the initiative’s definition of what constitutes an amendment violates separation of powers principles. Because the unconstitutional provisions can be severed from the rest of the initiative, it affirmed the judgment insofar as it declares those provisions invalid and to the extent the trial court retained jurisdiction to consider an award of attorney’s fees, and otherwise reversed in the published case of Castellanos v. State of California – A163655 (March 2023).
The California Supreme Court agreed to review the case limited to the issue to be argued and briefed as follows: “Does Business and Professions Code section 7451, which was enacted by Proposition 22 (the ‘Protect App-Based Drivers and Services Act’), conflict with article XIV, section 4 of the California Constitution and therefore require that Proposition 22, by its own terms, be deemed invalid in its entirety?”
The California Supreme Court affirmed the judgment of the Court of Appeal insofar as it held that Business and Professions Code section 7451 does not conflict with article XIV, section 4 of the California Constitution in the case of Castellanos et al. v. State of California et al. – S279622 (July 2024).
Under section 7465, the Legislature may amend provisions of Proposition 22 other than section 7451 as long as such an amendment “is consistent with, and furthers the purpose of, this chapter” and obtains a seven-eighths majority vote in each house of the Legislature. Plaintiffs and the Attorney General contend that section 7465’s supermajority requirement may conflict with article XIV, section 4 of the California Constitution
“We reserve these issues until we are presented with an actual challenge to an act of the Legislature providing workers’ compensation to app-based drivers. To resolve the question presented, it suffices to conclude that section 7451 does not itself restrict the Legislature’s authority to enact workers’ compensation legislation or otherwise conflict with article XIV, section 4.”