Author: WorkCompAcademy

In May 2018, Thomas Lim began his employment with the City of Downey as a police officer. His probationary period ran for 18 months. During this probationary period, Lim was an at-will employee, and City could release him from employment for any legal reason upon giving him two weeks’ notice prior to the end of the period. After Lim’s probation concluded, City could terminate his employment only for good cause.

On December 8, 2018, Lim responded to a traffic collision as part of his official duties. As he investigated the accident, a car struck and injured him. Lim’s personal doctor at Kaiser Permanente provided a list of work restrictions, effective through January 25, 2019. The doctor observed that if the work restrictions could not be accommodated, Lim should be considered temporarily totally disabled. City could not accommodate the work restrictions and placed Lim on temporary total disability leave.

In late March 2019, City’s human resources director James McQueen received information suggesting that Lim might be engaging in physical activities associated with a basketball league while on temporary total disability leave. McQueen contacted City’s workers’ compensation third party administrator, AdminSure, and agreed to their recommendation to investigate Lim for possible fraud. AdminSure hired RJN Investigations (RJN) to conduct a sub rosa investigation.

While on disability leave, Lim engaged in physical activity that violated his work restrictions and then made sworn statements in a workers’ compensation deposition denying such physical activity. After Lim was cleared to return to work, and while he was still a probationary at-will employee, City terminated Lim’s employment because it believed he had engaged in workers’ compensation fraud.

Lim sued City under the Fair Employment and Housing Act (FEHA; Gov. Code, § 12900 et seq.) for disability discrimination, retaliation, failure to accommodate, failure to engage in the interactive process, and failure to prevent discrimination or retaliation.

City moved for summary judgment, arguing it had a legitimate reason to fire Lim because it believed he had engaged in fraud. City further argued Lim could not prove at least one element of each of his causes of action. The trial court granted the motion.

The Court of Appeal affirmed in the unpublished case of Lim v. City of Downey -B326822 (June 2024).

Lim does not directly dispute that City could terminate him for any legal reason during his probationary period, including suspected fraud. Instead, he argues he demonstrated a triable issue of material fact as to pretext because (a) City’s explanation was unworthy of credence, (b) his job performance was satisfactory, (c) City’s investigation was inadequate, (d) City decided to discharge him soon after he went out on disability leave (temporal proximity), and (e) City targeted him when it “raced to terminate [him] in November 2019 before the end of his probation.”

Lim argues City’s proffered reasons for discharging him are not valid because he was not required to use crutches. But this argument that crutches were not part of Lim’s work restrictions does not demonstrate that City’s reason for discharging Lim was unworthy of credence.

“The issue is not whether crutches were required but Lim’s inconsistent use of them and the contexts in which he chose to use and not to use crutches. Lim chose to use crutches on May 22, 2019, when he visited his employer, even though he had been observed not using them previously during a sub rosa investigation.”

“Notably, while at the police station, Lim not only used crutches, but also moved at such a slow pace that motion-activated cameras failed to capture his entire path. From the comparative visual evidence of Lim’s ease of movement in other contexts versus Lim’s plodding path at the police station, Chief Milligan could reasonably conclude that not only had Lim exaggerated the degree of his debilitation, but also that the investigators’ observations were credible. Indeed, Lim offers no explanation why he chose to use crutches during his May 22, 2019 visit to the police station.”

An Inland Empire pharmacist has been charged with using his Montclair pharmacy to submit more than $300 million in fraudulent Medi-Cal claims for prescription medications that were medically unnecessary, often not provided to patients, and were obtained through the payment of tens of millions of dollars in illegal kickbacks, the Justice Department announced today.

Kyrollos Mekail, 36, of Moreno Valley, is charged with two counts of health care fraud. He is expected to be arraigned in the coming weeks in United States District Court. The charges filed in federal court are part of the Department of Justice’s 2024 National Health Care Fraud Enforcement Action.

According to court documents, Mekail is a licensed California pharmacist who owns, operates, and is the pharmacist-in-charge of the Montclair-based Monte VP LLC, which does business as Monte Vista Pharmacy. Monte Vista Pharmacy is a provider under Medi-Cal, a California health care benefit program.

In early 2022, Medi-Cal suspended its requirement that health care providers obtain prior authorization before providing certain health care services or medications as a condition of reimbursement. The suspension of the prior authorization requirements was part of an ongoing transition of Medi-Cal’s prescription drug program to a new payment system.

From May 2022 to March 2023, Mekail and his co-schemers allegedly exploited Medi-Cal’s prior authorization suspension by billing Medi-Cal tens of millions of dollars per month for dispensing high-reimbursement, non-contracted, generic drugs through Monte Vista Pharmacy. Some prescription medications purportedly were to treat pain and also included Folite tablets, a vitamin available over the counter.

Normally, these high-cost reimbursement medications would have required prior authorization under Medi-Cal’s old payment system. The information alleges the medication involved in this scheme was medically unnecessary, frequently was not dispensed to patients, and procured by kickbacks.  

In less than one year, Monte Vista Pharmacy billed Medi-Cal approximately $306,521,392 for the medications, of which Medi-Cal paid Monte Vista Pharmacy approximately $204,032,151, according to court documents.

Mekail allegedly paid two co-schemers more than $36 million of the fraudulently obtained Medi-Cal proceeds as kickbacks for referring the prescriptions. He allegedly disguised these kickbacks as payments for “consulting services.”

An information is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

If convicted of all charges, Mekail would face a statutory maximum sentence of 10 years in federal prison for each count of health care fraud.

The United States Department of Health and Human Services Office of Inspector General (HHS-OIG), the FBI, and the California Department of Justice are investigating this matter.

Assistant United States Attorney Roger A. Hsieh of the Major Frauds Section and Assistant Chief Niall M. O’Donnell and Trial Attorney Siobhan M. Namazi of the U.S. Department of Justice, Criminal Division, Fraud Section are prosecuting this case. Assistant United States Attorney James E. Dochterman of the Asset Forfeiture and Recovery Section is handling asset forfeiture matters in this case.

Former licensed insurance agent Brett E. Lovett, 53, of Camarillo was sentenced to 16 years and eight months in jail after being found guilty, after a 9 week jury trial, of 29 felony counts including grand theft, elder abuse, money laundering, and burglary.

Translated into real time, that comes to about four years, according to Casey Nelson, who prosecuted the case and argued Lovett should get 28 years. The probation report – citing the utter financial ruin Lovett visited upon his elderly victims – many of whom he met through Carpinteria’s Kingdom Hall of Jehovah’s Witnesses – argued for 26 years. Ultimately, the judge imposed a lighter sentence, citing Lovett’s lack of prior criminal charges.

A 15-month California Department of Insurance investigation found he defrauded at least nine victims, including senior citizens, of close to $1.2 million.

Lovett was arrested in October 2017 after the Department’s investigation revealed that between 2011 and 2016, he defrauded at least nine victims. Several of his victims were senior citizens whom he met and befriended at a place of worship in Carpinteria. Other victims sought legal advice from Lovett through his legal aid information business.

Victims entrusted Lovett with their money for proposed investments that never existed, or for financial management purposes. Lovett then misappropriated the money for his own personal use and to repay some of his victims — sometimes using his Power of Attorney and Promissory Notes to embezzle funds from victims.

Lovett has a history of embezzling money from members of the places of worship he attends.

In 2007, doing business as Northwest Asset Fund, he was ordered to pay more than $675,900 in restitution, fines and sanctions by the U.S. Commodity Futures Trading Commission (CFTC). Lovett never paid the fines or restitution.

The CFTC entered a permanent injunction against Lovett, who never registered with the CFTC. Between October 2002 and August 2005, Lovett fraudulently solicited money from individuals, purportedly to trade commodity futures, through false promises of high returns from a low-risk investment.

Lovett’s license to transact insurance expired in May 2000. He was not acting as an insurance agent during this time, but he was giving financial advice which he was not licensed to give.

The Santa Barbara County District Attorney’s Office prosecuted this case

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In 2014, San Marcos Unified School District awarded Lusardi Construction Company a contract to construct the San Marcos K-8 School Project. Lusardi subcontracted with Pro Works to install the iron reinforcing work for the Project..

In 2015, Division of Labor Standards Enforcement (DLSE) opened an investigation into a complaint that Pro Works violated former Labor Code section 1777.5 by failing to: (1) provide contract award information; (2) request dispatch of apprentices from applicable apprentice committees; (3) employ registered apprentices in compliance with a required apprentice to journeyperson ratio; and (4) make certain required training fund contributions to an approved apprenticeship program.

Deputy Labor Commissioner Kari Anderson served several documents on Lusardi and Pro Works including a “notice of investigation” and a request that the forward certain listed documents. The entities responded differently to Anderson’s documents request.

Anderson issued a “Penalty Review” summarizing her findings. She concluded that in February 2015, Pro Works violated the statutes and regulations relating to apprenticeships by failing to submit compliant DAS 140 and 142 forms and other required information. Anderson found that Pro Works “failed to hire any apprentices.” She also concluded Pro Works had a “history” of apprentice violations, and specifically listed their dates and descriptions. Anderson concluded the penalty should be assessed based on Pro Works’s failure to comply with four out of the five factors set forth in former Labor Code section 1777.7, subdivision (f). Penalties were assessed in the amount of $30,800, consisting of $200 per each of 154 days of section 1777.5 violations.

Lusardi timely filed a request for review of Anderson’s decision with the Director. Before the review hearing started, the hearing officer ruled the 2014 version of the relevant Labor Code provisions and regulations would apply, based on the Project’s bid advertisement date. He also ruled regarding the burden of proof that “DLSE will have to come forward with sufficient evidence to provide prima facie support for the penalty assessment.” If this is done, “Lusardi will have . . . the burden of proof set forth in [California Code of Regulations, title 8, section] 232.50[, subdivision] (b).”

On the first day of the hearing, Lusardi’s counsel initially stated three of its representatives as well as Senior Deputy Labor Commissioner Michael Nagtalon who had reviewed and approved the “Penalty Review” would be called to testify. But Nagtalon was not available. DLSE’s sole witness, Anderson, was the only person who testified that day.

On the second and last day of the hearing, Lusardi’s counsel sought the testimony of Nagtalon, who was under subpoena. DLSE’s counsel explained Nagtalon was unavailable as he was outside of the country, but he offered to produce Nagtalon for a rescheduled hearing. However, Lusardi elected not to request a continuance to obtain Nagtalon’s testimony or to put on its case. Instead, its counsel stated, “Lusardi will rest without presenting any further evidence and will not move any of Lusardi’s exhibits into evidence in this matter.” Counsel explained: “We are not going to present any evidence because we feel very strongly the Labor Commissioner has failed to meet its burden in this matter.”

Lusardi’s administrative appeal was unsuccessful and the Director affirmed the hearing officer’s findings, concluding DLSE met its burden to present evidence showing prima facie support for the penalty assessment, including that Lusardi knew of Pro Works’s violations and was liable for the penalties. Lusardi filed a petition for writ of administrative mandamus under Code of Civil Procedure section 1094.5, which the superior court denied. The Court of Appeal affirmed the Director in the published case of Lusardi Construction Co. v. Dept. of Industrial Relations – D081704 (June 2024.)

On appeal, among other issues Lusardi contended the court erroneously adopted the Director’s “interpretation and unprecedented application of the two prongs of [former] Labor Code section 1777.7, subdivision (d)(1)-(4).”

Former section 1777.7, subdivision (d) provided: “If a subcontractor is found to have violated Section 1777.5, the prime contractor of the project is not liable for any penalties under subdivision (a), unless the prime contractor had knowledge of the subcontractor’s failure to comply with the provisions of Section 1777.5 (and the second prong in this case) or unless the prime contractor fails to comply with any of the following requirements” and four additional requirements are listed in this law.

The superior court denied Lusardi’s writ petition, interpreting former section 1777.7 subdivision (d) in the disjunctive: “Based on the plain language of the statute, the [c]ourt believes that the Legislature intended for the [Director] to have the burden of establishing that petitioner had knowledge of the subcontractor’s failure to comply with [former section] 1777.5 or that petitioner failed to comply with any [of] the requirements set forth in [former section 1777.7 subdivision] (d)(1)-(4). [¶] . . . [¶] The Director focused on the first prong of [former section] 1777.7[,subdivision] (d), and made a finding that Lusardi had knowledge of the subcontractor’s apprentice violations.”

The Court of Appeal noted that “Statutory construction is a question of law we decide de novo. [Citation.] Our primary objective in interpreting a statute is to determine and give effect to the underlying legislative intent. [Citation.] ”

In interpreting the disjunctive parts of former section 1777.7, subdivision (d), The Court turned to one court’s discussion of the challenges in interpreting the conjunction “or”: “The fact is that there is nothing very plain about the use of the connective “or” in legal drafting.’ [Citation.] “Sometimes it joins alternatives; sometimes it doesn’t. Sometimes or means and; sometimes it doesn’t[ ].” [Citation.] “Additionally, if ‘or’ is a disjunctive connector, sometimes it connects words in the inclusive sense (i.e., A or B, or both); other times, it connects words in the exclusive sense (i.e., A or B, but not both). [Citation.] Thus, the potential ambiguity created by ‘or’ is not one dimensional.”

The Court of Appeal concluded that “the court did not err in interpreting former section 1777.7, subdivision (d). The statute’s plain language provides two inclusive and alternative ways for imposing liability on a prime contractor for penalties resulting from the subcontractor’s violations of former section 1777.5. Specifically, first, the prime contractor is not liable for the penalties ‘unless [it] had knowledge of the subcontractor’s failure to comply’ with the statute; or, second, it is not liable for the penalties ‘unless the prime contractor fails to comply with any of the’ requirements set forth in the remainder of section (d).”

On June 20 the Occupational Safety and Health Standards Board approved an indoor heat standard to protect indoor workers from heat illness. The new regulation will require indoor workplaces to be cooled below 87 degrees Fahrenheit if feasible when employees are present, and below 82 degrees if feasible in places where workers wear protective clothing that restricts heat removal or work in high radiant heat areas.

Back in March, CalMatters reported that the rule was expected to be finally voted into place by the Occupational Safety and Health Standards Board at a meeting in San Diego. But state officials ordered that it be pulled from the agenda after Gov. Gavin Newsom’s administration suddenly withdrew a required stamp of approval, saying it learned the rule would cost state prisons much more money than anticipated.

For state government, the standards board last year estimated the Department of Corrections would need to pay less than $1 million in the rule’s first year and less than $500,000 annually after that to comply. About half of the state’s 1,500 correctional institutions are either already climate controlled or located in areas that won’t be hot enough to trigger the heat rule, the Department of Industrial Relations stated. That was after finance officials told the department in 2021 that it underestimated prison costs; the department said its updated analysis resulted in double the cost to the state.

But State Department of Finance spokesperson H.D. Palmer told CalMatters the finance department received more updated information in recent weeks that costs to the corrections department would be in the billions of dollars instead. He could not explain what could account for such a drastic difference in estimates in just one year, saying “we’ve been trying to get an understanding of that.”

Then on April 18, Cal/OSHA said it planed to pass rules this summer, except for workers at prisons.

As planned, the Occupational Safety and Health Standards Board, on June 20, 2024, approved California Code of Regulations, Title 8, section 3396, “Heat Illness Prevention in Indoor Places of Employment.” The Office of Administrative Law (OAL) has 30 working days to review and approve or deny the proposal. The Standards Board requested that the regulation take effect immediately after OAL approval.

Local and state correctional facilities as well as emergency operations directly involved in the protection of life or property are exempted from the proposed regulation for indoor heat. Cal/OSHA is in the process of developing an industry-specific regulation for local and state correctional facilities to protect their workers from indoor heat hazards. In the interim, for these exempted employers, Cal/OSHA will continue investigating potential indoor heat violations under existing regulations such as the Injury and Illness Prevention Program (Title 8, Section 3203) and Water Supply (Title 8, Section 3363).

Cal/OSHA’s Heat Illness Prevention in Indoor Places of Employment regulation applies to most indoor workplaces, such as restaurants, warehouses, and manufacturing facilities. For indoor workplaces where the temperature reaches 87 degrees Fahrenheit, employers must take steps to protect workers from heat illness. Some of the requirements include providing water, rest, cool-down areas, methods for cooling down the work areas under certain conditions, and training.

Employers may be covered under both the indoor and outdoor regulations if they have both indoor and outdoor workplaces. See the Comparison Chart of Indoor and Outdoor Heat Illness Prevention Standards.

The Occupational Safety and Health Standards Board, a seven-member body appointed by the Governor, is the standards-setting agency within the Cal/OSHA program. The Standards Board’s objective is to adopt reasonable and enforceable standards that are at least as effective as federal standards. The Standards Board also has the responsibility to grant or deny applications for variances from adopted standards and respond to petitions for new or revised standards.

There are more resources for employers and workers on Cal/OSHA’s Heat Illness Prevention web page and the 99calor.org informational website, as well as a Heat Illness Prevention online tool. The advisory includes a toll free number for workers who have questions about heat illness prevention in indoor and outdoor places of employment can speak with a Cal/OSHA representative, 1-833-579-0927, and information on how to file confidential complaints with Cal/OSHA district offices about workplace safety and health hazards.