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Author: WorkCompAcademy

President Proposes Changes to Federal Comp System

President Barack Obama’s 2014 budget proposal sent to Congress on Wednesday calls for reforms to two federal workers compensation programs: the Federal Employees’ Compensation Act and the Defense Base Act.

According to the story on the Business Insurance website, the White House is proposing to act on longstanding recommendations by the Government Accountability Office and other federal organizations by converting retirement-age FECA beneficiaries to a “retirement annuity-level benefit.” FECA currently creates an incentive for federal employees injured on the job to continue receiving its benefits beyond their retirement age, according to the budget proposal.

“In addition, while state workers compensation systems have waiting periods for benefits to discourage less serious claims, FECA has a three-day waiting period for non-postal employees that is imposed too late in the claims process to be effective,” the proposal states.

The proposed changes also would impose a new up-front waiting period for FECA benefits and give the U.S. Department of Labor “additional tools to reduce improper payments.” The budget proposal does not provide specifics, but the FECA changes would save more than $500 million over 10 years, it says.

The president’s proposal also would replace the current Defense Base Act program with a governmentwide benefit fund that would bill individual federal agencies for their workers comp insurance costs. The DBA provides benefits for contract overseas workers on U.S. military bases and for workers on overseas public works projects.Under the DBA’s current structure, federal agencies pay for their insurance through a “patchwork” of individual contracts, and its costs now exceed benefits paid “by a significant margin,” according to the budget proposal. The proposal points out that the DBA’s caseload increased by nearly 2,600% from 2002 to 2011, with more than 11,600 claims filed in 2011.

Cal Chamber of Commerce Adds Pending Bills to Job Killer List

Each year the California Chamber of Commerce releases a list of “job killer” bills to identify legislation that it claims will decimate economic and job growth in California. The CalChamber will track the bills throughout the rest of the legislative session and work to educate legislators about the serious consequences these bills will have on the state. The List for 2013 now shows several proposed legislative changes that pertain to workers’ compensation and other workplace issues.

SB 626 (Beall; D-San Jose) Massive Workers’ Compensation Cost Increase – Unravels many of the employer cost-saving provisions in last year’s workers’ compensation reform package and results in employers paying nearly $1 billion in benefit increases to injured workers without an expectation that the increases will be fully offset by system savings.

AB 1138 (Chau; D-Alhambra) Massive Exposure to Civil Penalties and Liability – Inappropriately increases civil cases and civil penalties on employers by permitting civil action against those employers who fail to conspicuously post a list of every employee covered under an employer’s workers’ compensation insurance policy and to retain this list for five years.

SB 761 (DeSaulnier; D-Concord) Paid Family Leave Protection – Creates a new burden on small businesses and additional opportunities for frivolous litigation by transforming the paid family leave program, which is used as a wage replacement for an employee who is taking a separate leave of absence, into an additional paid protected leave.

AB 5 (Ammiano; D-San Francisco) Increased Exposure to Frivolous Litigation – Imposes costly and unreasonable mandates on employers that could jeopardize the health and safety of others by creating a new protected classification of employees and customers who are or are perceived to be homeless, low income, suffering from a mental disability, or physical disability, and establishing a private right of action for such individuals that includes statutory damages, punitive damages, and attorney’s fees.

AB 10 (Alejo; D-Salinas) Automatic Minimum Wage Increase – Unfairly increases California employers’ cost of doing business by raising the minimum wage $1.25 over the next three years and thereafter indexing the minimum wage based on inflation, which fails to take into account the current economic status of the state or other fees and costs employers are required to pay.

SB 404 (Jackson; D-Santa Barbara) Expansion of Discrimination Litigation – Makes it virtually impossible for employers to manage their employees and exposes them to a higher risk of litigation by expanding the Fair Employment and Housing Act to include a protected classification for any person who is, perceived, or associated with a family caregiver.

AB 1164 (Lowenthal; D-Long Beach) Inappropriate Wage Liens – Creates a dangerous and unfair precedent in the wage and hour arena by allowing employees to file liens on an employer’s personal property or real property where the work was performed, based on an alleged but unproven wage claim, that will take priority over other existing liens.

The CalChamber will continue to add legislation to the “job killer” list throughout the year as bills are amended or new language is introduced.

Facebook Video Leads to Conviction of Corrections Officer

Sacramento County District Attorney Jan Scully said on her Facebook page that Ryan Patrick Wenker, 35, was convicted of making a false statement to fraudulently obtain compensation.

After Wenker claimed that he was hurt, Facebook posts and video surfaced, along with his standings in a bike race that took place May 12, 2010 in Prairie City, according to documents that were part of an investigation done by the Department of Corrections. The bike race took place two days after he filed a claim alleging an injury to his back, according to the documents.The DA’s office says a video posted online shows that Wenker is shooting video of mountain biking, using a helmet camera while riding behind others.

Scully reported that “Ryan Wenker was convicted of misdemeanor making a false statement to fraudulently obtain compensation. He filed a workers’ comp claim while employed with the Dept. of Corrections as a corrections officer. He alleged he injured his back at work. Photos and bike race standings posted on Wenker’s Facebook page show that he participated in a mountain bike race while collecting disability – see video. Wenker is wearing a camera attached to his helmet.”

A spokeswoman for the DA’s office said that Wenker was ordered to serve 45 days in the Sacramento County Jail, and ordered to pay $5,000 in restitution to the Department of Corrections.

Exclusive Remedy Shields LAUSD Principal From Employee Battery Claim

Elvira Mendez worked for the Los Angeles Unified School District at Encino Elementary School until she was laid off in November 2010 as a result of budget reductions. She was an office technician assigned to special education services. In August 2010, Marcia Koff became the Encino Elementary School principal.

During a meeting in August or early September 2010, Koff told Mendez and other staff members that, to protect student privacy, parents should not be allowed to view staff computer screens. On September 15, 2010, Koff saw Mendez talking to a parent at her desk behind the counter dividing the walkway from the desk area. Koff told the parent to move to the counter. The parent attempted to explain the subject of her conversation with Mendez, but Koff insisted that she move away from Mendez’s desk. Koff then pulled Mendez out of her chair by her shoulders, grabbed her left arm, and dragged her to the counter. Mendez felt a sharp pain in her upper left arm. During the incident, Koff told Mendez: “I told you not to speak to parents so close to your workstation.” Ten minutes later, after Mendez had returned to her desk, Koff put her hands on Mendez’s shoulders and whispered into her ear: “I don’t want you to speak to parents next to your desk. That is one of the many complaints from the district.”

Based on this incident, Mendez filed a police report against Koff the next day. She contacted her union representative about it on September 20, and complained in writing to Local District Superintendent Linda del Cueto on September 28. In the first week of October 2010, Mendez refused to proceed with the workers compensation claim the LAUSD had filed on her behalf. Also in the first week of October, Koff was asked to respond to Mendez’s complaint against her during a meeting with LAUSD directors Lisa Gaboudian and Dea Tramble. Koff was interviewed by police about the incident at the end of October 2010. No criminal charges were filed against her.

By letter dated October 15, 2010, the Personnel Commission notified Mendez of her layoff effective November 30, 2010. An office technician displaced from another school took over Mendez’s position, and her duties in special education were assigned to another office technician who transferred from a different school. A total of 1161 office technicians were laid off as a result of the RIF process.

In March 2011, Mendez sued Koff for assault and battery and the LAUSD for wrongful termination under Labor Code section 1102.5, subdivision (b). The trial court entered summary judgment in favor of the employer and Koff, and Mendez appealed the dismissal of her case. The Court of Appeal affirmed the dismissal in the unpublished opinion in Elvira Mendez v Los Angeles Unified School District.

The Court of Appeal noted that workers’ compensation is the exclusive remedy for injuries caused by the tortious conduct of co-workers acting within the scope of their employment. (Lab. Code, § 3601, subd. (a); Torres v. Parkhouse Tire Service, Inc. (2001) 26 Cal.4th 995, 1002 (Torres).) An exception exists for injuries caused by a co-worker’s “willful and unprovoked physical act of aggression.” (Lab. Code, § 3601, subd. (a)(1).) This exception requires that the co-worker acted with a specific intent to injure. (Torres, supra, 26 Cal.4th at p. 1005.)

Mendez argues that whether Koff acted with an intent to injure her when she dragged her to the counter presents a triable issue of fact. The Court of Appeal disagreed. In Torres, supra, 26 Cal.4th 995, the California Supreme Court explained: “Flare-ups, frustrations, and disagreements among employees are commonplace in the workplace and may lead to ‘physical act[s] of aggression.’ [Citations.] ‘”In bringing [people] together, work brings [personal] qualities together, causes frictions between them, creates occasions for lapses into carelessness, and for fun-making and emotional flareup. . . . These expressions of human nature are incidents inseparable from working together. They involve risks of injury and these risks are inherent in the working environment.” [Citations.]’” (Id. at p. 1009.) Because “willful acts, including aggressive physical acts, may be considered within the scope of employment,” the intent to injure requires something more. (Ibid., citing Johns-Manville Products Corp. v. Superior Court (1980) 27 Cal.3d 465, 476 [trend toward allowing actions against employer who “‘acts deliberately for the purpose of injuring the employee’”].)

Viewed in the light most favorable to Mendez, the facts do not support a reasonable inference that Koff acted with the specific intent to physically injure Mendez.

Employer Wage Theft is First State Premium Fraud Case

A San Diego grand jury indictment has been returned charging two defendants with a total of 21 felony counts in an ongoing payroll scheme at a College Area restaurant that violated minimum wage laws and California theft laws. Over a two-year period, the defendants hired more than 20 servers and cooks, many of them college students, to work at State Street Grill but refused to pay them after a week of work or offered them a wage that amounted to less than $5 per hour.

This is believed to be the first case in California where wages stolen from employees that were then not reported to the insurance company as payroll is being used as the basis to charge premium fraud.

David Dadon, 61, and his son Barry Dadon, 27, have both been charged with workers’ compensation premium fraud, payroll tax evasion, sales tax evasion and grand theft of labor from 23 victims. David Dadon was also indicted on one count of the fraudulent removal of property under a lease and two counts of attempted extortion. If convicted of all the charges, David Dadon faces up to 21 years in prison and Barry Dadon faces up to 18 years and possible restitution to the victims.

The case was originally referred to the DA’s Insurance Fraud Division from the California Labor Commissioner, whose Criminal Investigation Unit launched an investigation of State Street Grill, located at 5131 College Avenue in San Diego. The investigation revealed wages earned but not received by at least 23 individuals. As many as 50 potential additional victims are being encouraged to come forward. The DA’s Office worked closely with the Labor Commission to investigate the case. The Labor Commissioner’s office, also known as the Division of Labor Standards Enforcement (DLSE), is the state agency charged with labor law enforcement in California.

The men advertised on Craigslist for immediate placement of server and cook positions. They would offer the applicant the position if they accepted to work without pay for the first seven days. This was considered to be the “training period.” If, after the first seven days of unpaid work, the Dadons were satisfied by the employees’ performance, they indicated the workers would be “put on the schedule” and paid wages. In desperate need of income, many accepted the offer. The trainees described working in excess of 40 hours per week (many 50 to 60) and were never paid. In addition, the Dadons took some of the tips the workers earned.

Employees who were hired after the training period continued to work 50 to 60 hours per week and were fired if they refused to accept a $400 semi-monthly salary. Based on the number of hours worked many employees were working for less than five dollars per hour.

Orthomed Lien Claim Dismissed Over Activation Fee Issue

Applicant Eliezer Figueroa , a machine operator, injured his back, neck and psyche. His claim was resolved in 2011 by a Findings, Award and Order. On July 30, 2012, a lien claimant, (not Orthomed), filed a Declaration of Readiness to Proceed requesting a lien conference.

The lien conference was set for January 9, 2013, at 8:30 a.m. Orthomed did not appear at the conference. Because Orthomed did not submit proof of prior timely payment of the lien activation fee, and because the WCJ reviewed the record and determined that the lien activation fee had not in fact been paid, the WCJ dismissed Orthomed’s lien with prejudice, without first issuing a notice of intention.

On reconsideration, Orthomed argued that the activation fee is not payable where the defendant has not served supporting documents, thus depriving them of the opportunity to resolve the lien. Orthomed also contends that “the new lien regulations lacks [sic] latitude in allowing certain circumstances that are not just black and white.” The WCAB in the significant panel decision of Eliezer Figueroa v B.C. Doering Co., Employers Compensation Insurance Co. sustained the dismissal of Orthomed’s lien.

Section 4903.06, effective January 1, 2013, provides that with certain exceptions “[a]ny lien filed pursuant to subdivision (b) of Section 4903 prior to January 1, 2013, and any cost that was filed as a lien prior to January 1, 2013, shall be subject to a lien activation fee.” (Lab. Code, § 4903.06(a).) The lien activation fee is $100. (Lab. Code, § 4903.06(a)(1).) A lien claimant that files a DOR must include proof of payment of the fee with the DOR. (Lab. Code, § 4903.06(a)(2).): In relevant part, section 4903.06 further provides: “All lien claimants that did not file the declaration of readiness to proceed and that remain a lien claimant at the time of a lien conference shall submit proof of payment of the activation fee at the lien conference. If the fee has not been paid or no proof of payment is available, the lien shall be dismissed with prejudice.” (Lab. Code, 4903.06(a)(4).)

Administrative Director Rule 10208(a) (Cal. Code Regs., tit. 8, § 10208(a)), which is an emergency regulation that became operative January 1, 2013, provides in relevant part: “Any lien filed pursuant to Labor Code section 4903(b) filed prior to January 1, 2013, and any cost filed as a lien prior to January 1, 2013, shall be subject to a lien activation fee in the sum of one hundred dollars ($100.00), payable to the Division of Workers’ Compensation prior to filing a Declaration of Readiness to Proceed for a lien conference by that party, prior to appearing at a lien conference for a case, or on or before January 1, 2014, whichever occurs first.”

The WCAB interpreted the payment “at the lien conference” language of section 4903.06(a)(4) and the payment “prior to appearing at a lien conference” language of emergency Rule 10208(a) to mean that a lien activation fee must be paid prior to the commencement of a lien conference, which is the time that the conference is scheduled to begin, not the time when the case is actually called. Any payment made after the noticed hearing time is not timely. Therefore, the lien of Orthomed was correctly dismissed with prejudice.

The Appeals Board panel held that, where a lien claim falls within the lien activation fee requirements of Labor Code section 4903.06: (1) the lien activation fee must be paid prior to the commencement of a lien conference, which is the time that the conference is scheduled to begin, not the time when the case is actually called; (2) if the lien claimant fails to pay the lien activation fee prior to the commencement of a lien conference and/or fails to provide proof of payment at the conference, its lien must be dismissed with prejudice; (3) a breach of a defendant’s duty to serve required documents or to engage in settlement negotiations does not excuse a lien claimant’s obligation to pay the lien activation fee; and (4) a notice of intention is not required prior to dismissing a lien with prejudice for failure to pay the lien activation fee or failure to present proof of payment of the lien activation fee at a lien conference.

Owner of Security Company Faces Fraud Charges

The owner of a private security company hired to patrol Oldtown Salinas and help clean up the homeless problem is now facing prison time for tax evasion and insurance fraud.

The report on says that Monterey County prosecutors charged Anthony Vincent with four felony and two misdemeanor counts of not providing workers comp insurance to employees, and failing to pay employee taxes. Vincent is the owner of ESA International, a Salinas-based private security company. They were hired by the Salinas Oldtown Association 18 months ago to patrol downtown.

The director of the association, Amit Pandya, was surprised by the allegations against Vincent. Pandya said Vincent’s company has been a good partner and helped crack down on crime. The company is paid $200 a month to patrol the area, but the director says the partnership will be reconsidered when the association has it’s next regular meeting Thursday. One possibility is to terminate the contract with ESA International. The current contract is set to expire at the end of June.

Vincent’s attorney says his client was advised by his accountant to hire his security guards as independent contractors to avoid paying worker’s comp. But that’s against the law.

Vincent will be arraigned April 30. A conviction on all counts could mean 12 years in prison.

Federal Search Warrant Served at Pacific Hospital of Long Beach

FBI and IRS agents arrived at Pacific Hospital of Long Beach last week to serve a warrant as part of an investigation involving possible fraud against the institution. According to the Press-Telegram, the warrant was served at 8AM on Friday and agents were reportedly looking through computer files

The Long Beach Post says that FBI spokesperson Laura Emiller confirmed that a search warrant was served for possible allegations of fraud at Pacific Hospital of Long Beach, but she was unable to provide further details, noting that the search was sealed by the court. Though the nature of the possible allegations are still unclear, agencies that are also involved in the investigation include the IRS, California Department of Labor, California Department of Insurance, USPS Inspector General’s Office and the DCIS.

Given the number of agencies involved, it appears that the incident being investigated is larger in scope than the self-reported employee fraud discovered by the hospital in 2009, which was investigated by local law enforcement and the California Department of Public Health

In 2010, the hospital was fined $225,000 for a self-reported fraud incident in which an employee had obtained patients’ personal information–including names and social security numbers–and used it to open fraudulent telephone service accounts. Even though the employee was terminated from the hospital in 2009 and the hospital worked closely with law enforcement on the case, Pacific Hospital was fined by the California Department of Public Health, which alleged that the facility “failed to prevent unauthorized access.”

“Our hospital takes patient safety very seriously and has done nothing wrong,” a statement from Pacific Hospital public relations director Laura Salas said at the time. “At Pacific Hospital of Long Beach, we work diligently to serve our community by continually monitoring and improving patient safety programs and are proud of our ability to keep patient information safe from access by unauthorized persons.”

It is not known if that case is related to the current search warrant. Pacific Hospital has yet to return calls for comment.

Arrests Made in Forged Insurance Certificates Case

The California Department of Insurance (CDI) arrested Robinson Yang, 44, Roland Yang, 43, and Sotheany “Teny” Hul, 42, of Diamond Bar on multiple counts of theft, fraud and forgery. The three suspects are accused of producing and selling hundreds of false certificates of insurance for workers’ compensation insurance. All three were booked between March 22 and April 3, 2013 and are being held pending bail hearings.

In April 2009, the CDI Fraud Division and the Employee Development Department (EDD) began investigating Optima Staffing for defrauding their clients by producing and selling hundreds of false certificates of insurance. RJC Insurance Brokerage and Optima Staffing were allegedly selling forged certificates of insurance for workers’ compensation insurance coverage.

According to detectives, the suspects facilitate the theft by establishing three payroll service companies, Optima Staffing, United Employer Services (UES) and National Employer Services (NES), in the effort to provide a legitimate facade for their fraudulent scheme.

In addition to the insurance fraud and forged certificates of insurance, Optima also allegedly evaded income and unemployment insurance taxes. In addition to the failure to pay taxes, EDD also discovered that Robinson Yang was collecting unemployment benefits while being compensated by the Optima, UES and NES.

The four-year investigation involved hundreds of victims in 19 states and losses exceeding $700,000

DIR Posts Updated Guidebook for Injured Workers

The Department of Industrial Relations is pleased to announce the recent release of “Workers’ Compensation in California: A Guidebook for Injured Workers.”

“This fourth edition of the injured workers’ guidebook helps workers and others understand the sometimes complicated process of workers’ compensation,” said DIR Director Christine Baker. “The guidebook has been updated to reflect the latest changes to California’s workers’ compensation system.”

The guidebook gives an overview of the California workers’ compensation system. It is meant to help workers with job injuries understand their basic legal rights, the steps to take to request workers’ compensation benefits, and where to seek further information and help if necessary. Also included are references to important laws and regulations and a glossary.

The fourth edition includes important changes since 2006 in the following areas:

  • Pre-designation of one’s treating physician or a medical group
  • Treatment under the medical treatment utilization schedule (MTUS) adopted by the Division of Workers’ Compensation (DWC)
  • Independent medical review (IMR) to resolve disputes over denial of treatment
  • Extension of time limits on receiving temporary disability (TD) benefits
  • Return-to-work procedures
  • Permanent disability (PD) benefits
  • Supplemental job displacement benefits (SJDB)

The guidebook is available online in English, with a Spanish translation available soon. Because the workers’ compensation system is undergoing many changes with the implementation of Senate Bill 863, workers using the guidebook are urged to check updates posted at the DIR’s Division of Workers’ Compensation website. Injured workers may also obtain a printed copy at a local DWC district office.

The California Department of Industrial Relations enforces the state’s labor laws to improve the workplaces of over 18 million wage earners and their employers. Its mission is to improve working conditions for California’s wage earners, and to advance opportunities for profitable employment in California. DIR administers and enforces laws governing wages, hours and breaks, overtime, retaliation, workplace safety and health, medical care and other benefits for injured workers, and apprenticeship training programs.