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Pacific Hospital of Long Beach Owner Pleads Guilty to Massive Comp Fraud

The former owner of a Long Beach hospital, whom prosecutors allege paid bribes to state Sen. Ron Calderon, pleaded guilty Friday to charges connected to a massive workers’ compensation scheme that cheated taxpayers out of hundreds of millions of dollars.

The Press Telegram reports that Michael D. Drobot, 69, of Corona Del Mar, was charged by the U.S. Attorney’s Office with orchestrating a conspiracy from 1997 to 2013 in which tens of millions of dollars in illegal kickbacks were paid to doctors, chiropractors, marketers and others who referred patients to the former Pacific Hospital for spinal surgery. “The co-conspirators lined their pockets by ripping off insurance companies to the tune of hundreds of millions of dollars,” state Insurance Commissioner Dave Jones said in a statement.

Prosecutors said that Drobot paid $28,000 in bribes to Calderon, D-Montebello, to support legislation delaying or limiting changes in workers’ compensation laws that would have directly affected Drobot’s scheme. The hospital submitted more than $500 million in fraudulent bills between 2008 and last year. Much of the total was paid by the California workers’ compensation system, according to the U.S. Attorney’s Office.

Eric Weirich, deputy commissioner of the enforcement branch of the California Department of Insurance, said in a joint press conference with the U.S. Attorney’s Office that the scheme involved more than 150 insurance companies and is the largest such case in state history. “I assure you, this is the first in many cases to come,” Weirich said.

As part of his deal, Drobot agreed to plead guilty to two counts: conspiracy and payment of kickbacks in connection with a federal health care program. He could be sentenced to 10 years in federal prison. Drobot’s attorneys, Janet I. Levine and Jeffrey H. Rutherford of the Los Angeles office of Crowell and Moring, issued a statement Friday saying Drobot “acknowledged and accepts responsibility for his actions. He is providing information to assist the government in its expanding investigations.” According to a plea agreement, Drobot offered to pay a kickback of $15,000 per lumbar fusion surgery and $10,000 per cervical fusion surgery directed to his hospital. In some cases, patients lived dozens or hundreds of miles from Pacific Hospital, and closer to other qualified medical facilities. To finance the kickbacks, Drobot inflated the price of implantable devices used during spinal surgeries, knowing that under California law, “medical hardware was considered a ‘pass-through’ cost that could be billed at no more than $250 over what Pacific Hospital paid for the hardware,” the plea agreement stated. Prosecutors said Calderon arranged meetings between Drobot and other public officials and helped Drobot’s attempt to keep the pass-through law in effect. SB 863, which closed the loophole, became law on Jan. 1 last year.

Pacific Hospital was sold to Santa Fe Springs-based College Health Enterprises in early October. The facility is now named College Medical Center Long Beach and is managed by American Family Care Hospital Management Inc., which is part of Molina Healthcare. Molina spokeswoman Sunny Yu said her company has not been approached by investigators probing Drobot or others who may be involved in the case. The hospital’s senior management team does not include anyone who worked there when it was still called Pacific Hospital, nor does the hospital currently perform spinal surgeries, Yu said. “There is nothing that carried over,” she said. “We’re not even the same business anymore.”

The State Compensation Insurance Fund, a provider of workers’ compensation insurance, also has a pending civil suit against Pacific Hospital, which it filed in June. The hospital, Drobot and his son, Michael Drobot Jr., are named among the defendants. Officials from the State Fund said Friday they do not know how the criminal proceedings will affect their case, which is expected to go to trial in February 2015. ““We’re reviewing everything in light of the plea agreement,” said Jennifer Vargen, spokeswoman with the State Fund.

An attorney representing Michael Drobot Jr. acknowledged that investigators looked at his client’s activities, but have not charged or indicted the younger Drobot. “The only thing I want to emphasize is that Mr. Drobot Jr. had nothing to do with the indictments or pleas,” said attorney Drew Pomerance of the Woodland Hills-based law firm of Roxborough, Pomerance, Nye and Adreani.

Study Says Healthcare Providers Easy Target for Hackers

While doctors have sworn to do no harm, the same doesn’t seem to be true for the equipment or the networks they use to administer care. According to a new report from the SANS research organization and Norse, medical providers are already succumbing to cyberattacks in droves. The study found 49,917 unique malicious events from the healthcare providers they profiled, and don’t worry: it gets worse. The report found that many networked medical devices were easily taken over by hackers. These included radiology imaging software, video conference systems, digital video systems, call contact software, and security systems. Even devices that were meant to help shield organizations, like VPNs, firewalls, and routers, were being hijacked.

According to the article in PC Magazine, the report found that medical devices and software are becoming a favorite target of hackers for launching other attacks — either on the same network or on other targets. From the report: “Once compromised, these networks are not only vulnerable to breaches, but also available to be used for attacks such as phishing, DDoS and fraudulent activities launched against other networks and victims.” “One of the biggest reasons we see the infrastructure for hospitals being used as launching platforms for other cybercrime and hacks is because a lot of these devices are dumb devices,” said Norse CTO and co-founder Tommy Stiansen. “They’re not desktops or servers, but they’re all running Linux.” We’ve already seen how some devices, particularly networked video cameras can be used to gain a foothold on a victim’s network and cause all kinds of mayhem.

Despite their capabilities, medical equipment and surveillance cameras aren’t considered part of the security architecture, explained CEO and co-founder Sam Glines. “A document that was discovered by our crawlers for a major hospital had the same user name and password for everything,” he said. This included life-saving devices like dialysis equipment. Remember that the Internet is still on track to kill you by 2014.

As if to demonstrate the scope of the problem, Stiansen mentioned that they first became interested in this project when they observed credit card information being transmitted by medical devices. “If someone leaves the door open, hackers will come,” said Stiansen. In addition to unsecured devices and software used by hospitals is an even bigger problem: stolen medical data. Healthcare providers at all levels have extremely valuable personal data at their disposal, and it’s that information that attackers are desperate to get their hands on.The reason, explained Stiansen, is simple: “You can conduct more fraud with it then you could with credit card data.” An attacker can quickly monetize medical data, he explained, through avenues like Medicare or prescription fraud. In addition to medical information, the intellectual property and billing information stored by healthcare providers is also at risk.

Beyond the obvious impact on individuals caused by having your data stolen, the report also points out that this fraud drives the price of healthcare even higher. The report cites a Ponemon repot from last year which estimated the cost of insruance and medical fraud at around $12 billion. Obviously, health care organizations need to get serious about securing their networks and devices, even at a basic level. “Consider everything with an IP address to be a critical endpoint,” said Glines, who went on to say that stronger password protocols for everything from medical devices to firewalls would improve the situation.

New legislation might also encourage better behavior. Glines pointed to European Union laws that fine companies a percentage of their revenue when a breach occurs or a loss of data takes place. Though HIPAA is intended to provide protection, Norse maintined that compliance simply did not equate security. But there’s a role for regular people, too. Stiansen encouraged patients to question their healthcare provider about cybersecurity. Glines agreed saying, “consumers are the ones who have the most to lose. They have the right to ask how their records are maintained and what sort of security procedures are in place.”

DWC Announces Changes to OMFS

The Division of Workers’ Compensation (DWC) has posted an order adjusting the Physician Services and Non-Physician Practitioner Services section of the Official Medical Fee Schedule to conform to changes made to the Medi-Cal Rates database effective for services on or after February 15, 2014.

Medi-Cal updates its rates file on the 15th of every month, and posts it on the 16th. DWC will be issuing an Administrative Director’s Order every month to adopt the updated Medi-Cal rates file for services effective on or after the 15th of the month. Future routine monthly Administrative Director Orders to adopt the Medi-Cal rates file will be issued without a newsline notification.

Please consult the website for the relevant Medi-Cal rates file by date of service. The order adopting the adjustment, the updated regulations, and the table can be found on the DWC website.

Glendale Residents Convicted in $20 Million “Prescription Harvesting” Fraud

A 49-year-old local woman was found guilty Tuesday for her role in an elaborate $20-million healthcare fraud scheme that officials say involved Manor Medical Imaging Clinic in south Glendale and pharmacies in and around the San Gabriel Valley. This is the first case in the nation alleging an organized scheme to defraud government health care programs through fraudulent claims for anti-psychotic medications, a type of scheme that investigators say is on the increase around the nation. Court documents outline a conspiracy in which Manor operated a bogus clinic authorized to make claims to Medicare, employed a doctor to write prescriptions, and had close relationships with pharmacies and a fraudulent drug wholesale company that was used to funnel prescription drugs back to the pharmacies participating in the scheme.

Nurista Grigoryan, a Glendale resident, allegedly fraudulently used an American doctor’s name and license number when she saw homeless patients at Manor Medical Imaging Clinic in the 200 block of North Central Avenue, according to a statement from the U.S. Attorney’s Office. Grigoryan, who reportedly only holds an Armenian medical license, allegedly filled out phony prescriptions, which were already signed by physician Kenneth Johnson. He was reportedly paid for allowing his name to be used for the bogus prescriptions.

U.S. District Judge S. James Otero described the defendants as having “preyed upon the poor [and] used them as pawns,” according to the statement. Johnson, 47, of Ladera Heights and Artak Ovsepian, 32, of Tujunga were also convicted in the fraud scheme.

The plot involved so-called “prescription harvesting,” in which the clinic and other San Gabriel Valley pharmacies allegedly re-billed government healthcare programs repeatedly for expensive anti-psychotic medications, according to a federal criminal complaint. The clinic’s operators funneled prescription drugs back to participating pharmacies and black-market wholesalers, where the drugs were relabeled, repackaged and dispensed again, according to the criminal complaint.

The anti-psychotic medications that are the subject of the fraudulent prescriptions alleged in this case include Abilify, Seroquel and Zyprexa. Ninety-pill bottles of these drugs can bring a pharmacy reimbursements of up to $2,800, which is why there is a wholesale black market for these products where the drugs can be purchased for as little as several hundred dollars.The primary pharmacy involved in the case, Huntington Pharmacy in San Marino, saw a huge spike in claims to Medi-Cal – going from just under $45,000 in 2009 to nearly $1.5 million in 2010 – and the vast majority of claims were the result of prescriptions written by Manor’s in-house doctor, according to the criminal complaint, which alleges that the owners of Huntington Pharmacy were receiving kickbacks and “structuring” cash deposits totaling hundreds of thousands of dollars into their personal and business accounts.

During the three-week trial, federal prosecutors presented evidence showing how patients’ files were doctored to show that they needed medication and they were treated. Employees at the clinic reportedly used stolen identities to create thousands of prescriptions, according to the criminal complaint. They also recruited veterans, low-income seniors and Medicare and Medi-Cal beneficiaries to bill the government for illegitimate services and prescriptions.

Grigoryan and Ovsepian are scheduled to be sentenced on June 9. Johnson is expected to be sentenced on June 30. They face a mandatory two-year sentence for identity theft, but Grigoryan and Johnson also face the maximum sentence of 30 years in federal prison.

The investigation in this case, which was called Operation “Psyched Out,” was conducted by the San Marino Police Department; the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; the United States Food and Drug Administration, Office of Criminal Investigations; IRS – Criminal Investigation; the United States Department of Health and Human Services, Office of the Inspector General; U.S. Immigration and Customs Enforcement; the Glendale Police Department, Organized Crime Team; and the California Department of Health Care Services, Audits and Investigations Branch.

Carslbad Company Gets FDA Clearance for Spine Implant

Artificial disc replacement (ADR), or total disc replacement (TDR), is a type of arthroplasty. It is a surgical procedure in which degenerated intervertebral discs in the spinal column are replaced with artificial devices in the lumbar (lower) or cervical (upper) spine. The procedure is used to treat chronic, severe low back pain and cervical pain resulting from degenerative disc disease. Artificial disc replacement has been developed as an alternative to spinal fusion, with the goal of pain reduction or elimination, while still allowing motion throughout the spine. Another possible benefit is the prevention of premature breakdown in adjacent levels of the spine, a potential risk in fusion surgeries.

Two artificial discs have been approved by the FDA for use in the US: the Charite, manufactured by DePuy for use in the lumbar spine; and the ProDisc, manufactured by Synthes for use in the lumbar spine and cervical spine. They are FDA approved for one-level applications, after clinical trials were said to show patient improvement in motion and pain equivalent to spinal fusion. Two-level disc replacement surgery is considered experimental in the United States, but has been performed in Europe for many years. While these two discs have received FDA approval, some insurance companies in the United States do not cover the surgery, still classifying it as experimental. Effective August 14, 2007, the Centers for Medicare and Medicaid Services (CMS) will not cover Lumbar Artificial Disc Replacement (LADR) for patients over the age of 60, on a national basis. Individual localities regulate the use of the procedure in patients 60 and under. There are several class-action lawsuits pending against the Charite Artificial Disc, and reports of complications with the Pro Disc Artificial Disc implant when used in certain surgical situations.

Artificial disc surgery is still relatively new in the United States, but has been used in Europe for more than 15 years. Now, a Carlsbad California company Aurora Spine Corporation announced that it has received U.S. Food and Drug Administration (FDA) 510(k) clearance for sterile-packed titanium plasma spray coated (TiNano) spinal fusion implants. “This FDA clearance is a major achievement for Aurora Spine. These intervertebral implants are developed to support the entire spine from cervical to lumbar and to accommodate the company’s ZIP -Minimally Invasive Interspinous Fusion System portfolio as well as other fusion products on the market,” said Trent J. Northcutt, President and Chief Executive Officer of the company.

TiNano is Aurora Spine’s unique Titanium Plasma Spray coating on PEEK Interbody implants allowing for bone ingrowth due to its porous structure. TiNano-coated implants provide the advantages of all implant materials, bone-titanium osseo-integration from the titanium coating, as well as the modulus and post-op imaging advantages of PEEK fusion implants. “Patient safety is the most important goal for Aurora Spine and that is the reason for every TiNano coated interbody implant being sterile packed,” said Laszlo Garamszegi, Chief Technology Officer of the company. The FDA clearance includes several interbody fusion devices, including configurations for Anterior Cervical (ACIF), Anterior Lumbar (ALIF), Posterior Lumbar (PLIF), Transforaminal Lumbar (TLIF) and Direct Lateral (DLIF) interbody spacers.

A statement issued by The American Association of Orthopaedic Surgeons (AAOS) recommends caution in using the new devices, as the studies behind their approval were not designed to show their superiority, only that they produced results equivalent to existing treatments. The data shows that artificial disc replacement patients, when compared to spinal fusion patients, have a shorter recuperation period following surgery, but research also shows that spinal fusion patients show no better outcomes than patients undergoing physical therapy. The AAOS also states that disc replacement requires a high level of technical skill for accurate placement, and has a significant level of risk if revision surgery is needed. Members of AAOS and the American Association of Neurological Surgeons joined together as the Association for Ethics in Spine Surgery, formed to raise awareness of the ties between physicians and device manufacturers.

WCAB Panel Reverses Case Law on Application of OMFS to Denied Cases

Sergio Rodriguez was employed by Hagemann Meat Company and claims to have sustained an industrial injury while lifting a 70-pound box. of chicken to his low back, and in the form of left inguinal hernia and femoral entrapment neuropathy. The carrier initially denied the injury. .

The WCJ found an injury causing 6% permanent disability with no apportionment, and found that Dr. Keller was applicant’s primary treating physician and that the Permanente Medical Group/Kaiser Foundation Hospitals (Kaiser) had provided treatment reasonable and necessary to cure or relieve applicant; from the effects of his industrial injury. The WCJ awarded benefits and ordered defendant to pay Kaiser’s lien. Kaiser claimed an outstanding balance of.for $3,050.52. In the Opinion on Decision, he wrote: “As this was a denied case at the time [Kaiser’s] services were provided, Kaiser is not limited to the official fee schedule, only their usual and customary fee.”

Defendant filed a Petition for Reconsideration which did not contest that Kaiser is entitled to payment for medical services it provided to applicant but argues that Kaiser cannot.recover more than the amount set by the OMFS. The WCAB agreed and reversed in the case ofRodriguez v Hagemann Meat Company and Zenith Insurance Co.

Previously, several writ denied decisions have held that a medical provider is not limited to the OMFS when the injured employee’s claim has been denied. (CNA Insurance Companies v. Workers’ Comp. Appeals Bd. (Valdez) (1997) 62 Cal.Comp.Cases 1145, 1146 (writ den.) (Valdez); Southern California Edison Co. v. Workers’ Comp. Appeals Ed (Wells) (1999) 65 Cal.Comp.Cases 100 (writ den.).) This line of cases originated with Federal Mogul Corp. v. Workmen’s Comp. Appeals Bd. (Whitworth) (1973) 38 Cal.Comp.Cases 584 (writ den.) (Whitworth), in which the applicant self-procured treatment after the defendant’s insurer did not accept the claim. The Whitworth decision held that the treating surgeon was entitled to the billed amount of his services rather than the amount set by the Official Minimum Fee Schedule, absent evidence that the billed charges were excessive.

The authors point out “Appeals Board panel decisions, including writ denied decisions, are not binding on other panels.” and further noted that “More importantly, the statutory basis for the Whitworth decision has changed in the ‘intervening years” and .thus chose to re-evaluate this issue.

That minimum fee schedule has since been replaced with an Official Medical Fee Schedule which establishes reasonable maximum fees. (Lab. Code, § 5307.1.) Administrative Rule 9792(c) now sets forth the specific circumstances under which a medical provider may recover more than the amount under the OMFS. “A medical provider or a licensed health c,are facility may be paid a fee in excess of the reasonable maximum fees [under the OMFS] if the fee is reasonable, accompanied by itemization, and justified by an explanation of extraordinary circumstances related to the unusual nature of the services rendered; however, in no event shall a physician charge in excess of his or her usual fee.” (Cal. Code Regs., tit. 8, § 9792(c).)

Consistent with the general principle that lien claimants have the burden of demonstrating the reasonableness of the amounts charged, a lien claimant seeking to establish that it should receive payment at its usual and customary rate, above the level set by the OMFS, must present evidence sufficient to satisfy the requirements of Rule 9792(c). In this case they did not.

Commissioner Frank Brass dissented. He concluded that “These policy considerations still hold true today. Nothing in the changes to Labor Code section 5307.1 suggests that the Legislature intended to alter existing law in order to allow defendants the advantage of the OMFS even when they deny claims for injuries that are later determined to be compensable.”

Insurance Broker Arrested for Padding Work Comp Premiums

An insurance salesman was arrested on allegations he stole $30,000 from a San Rafael nonprofit by fraudulently claiming an extra broker’s fee. Russell Joseph Sage, 39, of Sacramento is scheduled to be arraigned Thursday in Marin Superior Court, said Chief Deputy District Attorney Barry Borden. Sage is charged with felony theft by false pretenses.

The alleged victim is Center Point Inc., which provides substance abuse rehabilitation and other services. In 2012, Sage sold the nonprofit a $500,000 workers’ compensation policy. A broker’s fee was included in the structure of the policy, but Sage sent Center Point separate invoices for a commission, according to an affidavit by Deputy District Attorney Tom McCallister, a financial crimes prosecutor in Marin. Center Point paid Sage in two checks of $15,000 each, McCallister said.

Sage was arrested Monday in Yolo County, where he was serving a jail sentence in a different insurance fraud and money laundering case, according to Jonathan Raven, a Yolo County prosecutor. Raven remained in custody Tuesday at Marin County Jail in lieu of $30,000 bail. Sage surrendered his professional licenses last year, according to the California Department of Insurance website. The website reflects a long history of disciplinary issues. On or about April 29, 2004, in Case No. 2:03CR00552-01, in the United States District Court, Eastern District of California, Sacramento, the Department claimed he was convicted of theft of government property, a violation of Title 18, Section 641 of the United States Code, a misdemeanor.

Center Point officials did not respond to a call seeking comment Tuesday.

Tenants Complain About WCAB Santa Barbara Satellite Office

On January 13, the Division of Workers’ Compensation began operations at a satellite to the Oxnard District Office, located at 411 East Canon Perdido in Santa Barbara. The Santa Barbara satellite was opened in order to continue service to the population formerly served by the Goleta District Office, which was closed last December in an effort to consolidate and conserve State resources.

While the Santa Barbara satellite was welcomed for making DWC service locally accessible, the Division has been made aware that the current space cannot accommodate the volume of users. The size of the lobby, hearing room and available parking is particularly insufficient for all parties on conference days, and the crowding is negatively impacting other tenants in the facility. An increase in tenant complaints over the last few weeks have made it clear that the Division must take immediate measures to reduce its impact on the shared facility space. Therefore, beginning on Monday, March 3 all conferences that would have taken place in Santa Barbara will be scheduled on Mondays in Oxnard. The Oxnard District Office, located approximately 38 miles to the south of Santa Barbara, has ample room for all case participants in a typical conference calendar. Recognizing that some applicants may have difficulty travelling to Oxnard, the Division encourages use of Court Call in lieu of personal appearance for attorneys who represent applicants in the Santa Barbara area. DWC will also explore alternatives for unrepresented injured workers, which may include a telephone appearance option to be facilitated by DWC’s Information and Assistance staff.

The Santa Barbara satellite will continue to be used for a limited number of trials and expedited hearings held on Tuesdays, Wednesdays and Thursdays. There will be no hearings scheduled on Fridays, which are termed a “dark day,” set aside for judges to work on their decisions. The Information and Assistance Office in Santa Barbara will stay open five days a week.

DWC is actively pursuing a more spacious satellite location in the greater Santa Barbara area, as to remain accessible to those who had frequented the Goleta District Office. “The Division remains committed to serving the County of Santa Barbara,” affirmed Christine Baker, Director of Industrial Relations. “In the meantime, we appreciate the community’s patience while we continue to seek a sustainable presence in the area.”

NSA Surveillance Targets Law Firm Communications

Many industries, including the workers’ compensation claims process involves communications with law firms on a daily basis. The sanctity of the privacy of communications between lawyers and their clients has always been highly protected in every state and at the federal level – at least until now. The New York Times reports that the list of those caught up in the global surveillance net cast by the National Security Agency and its overseas partners now includes American lawyers.

A top-secret document, obtained by the former N.S.A. contractor Edward J. Snowden, shows that an American law firm was monitored while representing a foreign government in trade disputes with the United States. The disclosure offers a rare glimpse of a specific instance in which Americans were ensnared by the eavesdroppers, and is of particular interest because lawyers in the United States with clients overseas have expressed growing concern that their confidential communications could be compromised by such surveillance.

The government of Indonesia had retained the law firm for help in trade talks, according to the February 2013 document. It reports that the N.S.A.’s Australian counterpart, the Australian Signals Directorate, notified the agency that it was conducting surveillance of the talks, including communications between Indonesian officials and the American law firm, and offered to share the information. The Australians told officials at an N.S.A. liaison office in Canberra, Australia, that “information covered by attorney-client privilege may be included” in the intelligence gathering, according to the document, a monthly bulletin from the Canberra office. The law firm was not identified, but Mayer Brown, a Chicago-based firm with a global practice, was then advising the Indonesian government on trade issues. On behalf of the Australians, the liaison officials asked the N.S.A. general counsel’s office for guidance about the spying. The bulletin notes only that the counsel’s office “provided clear guidance” and that the Australian agency “has been able to continue to cover the talks, providing highly useful intelligence for interested US customers.”

The N.S.A. declined to answer questions about the reported surveillance, including whether information involving the American law firm was shared with United States trade officials or negotiators. Duane Layton, a Mayer Brown lawyer involved in the trade talks, said he did not have any evidence that he or his firm had been under scrutiny by Australian or American intelligence agencies. “I always wonder if someone is listening, because you would have to be an idiot not to wonder in this day and age,” he said in an interview. “But I’ve never really thought I was being spied on.”

The 2013 N.S.A. bulletin did not identify which trade case was being monitored by Australian intelligence, but Indonesia has been embroiled in several disputes with the United States in recent years. One involves clove cigarettes, an Indonesian export. The Indonesian government has protested to the World Trade Organization a United States ban on their sale, arguing that similar menthol cigarettes have not been subject to the same restrictions under American anti-smoking laws. The trade organization, ruling that the United States prohibition violated international trade laws, referred the case to arbitration to determine potential remedies for Indonesia. Another dispute involved Indonesia’s exports of shrimp, which the United States claimed were being sold at below-market prices.The Indonesian government retained Mayer Brown to help in the cases concerning cigarettes and shrimp, said Ni Made Ayu Marthini, attaché for trade and industry at the Indonesian Embassy in Washington. She said no American law firm had been formally retained yet to help in a third case, involving horticultural and animal products.

Mr. Layton, a lawyer in the Washington office of Mayer Brown, said that since 2010 he had led a team from the firm in the clove cigarette dispute. He said Matthew McConkey, another lawyer in the firm’s Washington office, had taken the lead on the shrimp issue until the United States dropped its claims in August. Both cases were underway a year ago when the Australians reported that their surveillance included an American law firm. Mr. Layton said that if his emails and calls with Indonesian officials had been monitored, the spies would have been bored. “None of this stuff is very sexy,” he said. “It’s just run of the mill.”

Most attorney-client conversations do not get special protections under American law from N.S.A. eavesdropping. Amid growing concerns about surveillance and hacking, the American Bar Association in 2012 revised its ethics rules to explicitly require lawyers to “make reasonable efforts” to protect confidential information from unauthorized disclosure to outsiders.Last year, the Supreme Court, in a 5-to-4 decision, rebuffed a legal challenge to a 2008 law allowing warrantless wiretapping that was brought in part by lawyers with foreign clients they believed were likely targets of N.S.A. monitoring. The lawyers contended that the law raised risks that required them to take costly measures, like traveling overseas to meet clients, to protect sensitive communications. But the Supreme Court dismissed their fears as “speculative.” Maybe it is not so speculative anymore.

LA Officials Say “Obscenely Ridiculous” Employment Law Will Cost $26 Million Payout for No-Nap Rule

Los .Angeles. officials wanted to make absolutely sure the city’s trash truck drivers would not get caught sleeping in their trucks – a sight sure to enrage taxpayers or possibly attract a TV news camera. So they laid down a set of break time rules prohibiting naps and placing other restrictions on where and how drivers could have lunch. But the Los Angeles Times reports these rules have the city facing a $26-million legal payout, most of it for more than 1,000 trash truck drivers who said they were improperly barred from catching a few winks during their 30-minute meal breaks. The City Council, meeting behind closed doors, moved ahead Wednesday with the payout, designed to end an 8-year-old class-action lawsuit. The drivers would receive an average of $15,000 each in back pay, according to Matthew Taylor, their attorney. He argued that they effectively were required to remain “on duty” – but not paid – during nine years of meal breaks.

Taylor said the no-napping rule created dangers on the road involving heavy city garbage rigs. “It’s a hazard to the public if you have commercial truck drivers who are fatigued and are not allowed to take a nap during their breaks,” he said. In addition to banning naps, the Bureau of Sanitation also prohibited drivers from congregating in large groups or traveling to locations away from their pickup routes during lunch breaks. Those rules were abandoned last summer.

City lawyers warned council members that they might have to pay as much as $40 million if the court battle over the drivers’ work rules continued. A Superior Court judge and a state appeals court panel have already sided with the drivers. “The city does impose duties during meal periods: the duties to stay awake and to avoid congregating,” trial court Judge John Shepard Wiley Jr. ruled in 2011. “The drivers are thus subject to the city’s control during their meal periods.”

Some lawmakers expressed outrage at the rulings, saying the work rules had a legitimate purpose. “I just am appalled that a court can take it upon themselves to assert that we have to retroactively pay [workers] for lunch breaks that were in fact taken by our employees,” said Councilman Paul Krekorian, who added that the city’s unions signed off on the work rules. Krekorian, who heads the council’s Budget and Finance Committee, would not discuss Wednesday’s closed-session deliberations. But three other officials familiar with the lawsuit, who asked to remain anonymous because they were discussing a confidential legal matter, told The Times the council voted to go ahead with the $26-million settlement. Those sources said the only opposing votes were cast by council members Joe Buscaino and Mitchell Englander. Both declined to comment.

City officials said the contested work rules were intended to guard the public image of the trash collection service and enhance safety. By limiting the number of workers who could gather in one spot for a meal, the city kept large numbers of oversized trash trucks from being parked together in a single neighborhood or in restaurant parking lots, said Enrique Zaldivar, who runs the sanitation bureau. The no-sleeping rule, Zaldivar said, was imposed to ensure members of the public would not see trash truck drivers asleep in or near their vehicles.”It’s impossible for the general public to know whether a driver is on duty or not while sleeping, he said. “So we felt it was prudent to not have any sleeping occur when the driver is in public view, or during any time that could be construed as on duty.”

The work rule dispute dates back to 2006, when trash truck driver Jose Gravina filed a lawsuit alleging he was routinely denied meal breaks owed after five hours of work. Gravina had been disciplined for napping during his meal break, his lawyer said. Gravina’s case received class-action status in 2011, the year he retired. After losing at the trial court level, city lawyers appealed, arguing state meal break regulations do not apply to employees of cities like Los Angeles, which operate under voter-approved charters. An appeals court also sided with the drivers, saying issues of vehicle and public safety trumped any local governance concerns. Councilman Mike Bonin called the court rulings in the case “obscenely ridiculous,” saying the image of a city employee in uniform in a city vehicle sleeping would be “an affront” to his constituents. Krekorian said the public would also draw the wrong conclusions upon seeing multiple trash trucks parked outside a restaurant. “It looks as though they’re not tending to their duties,” he said.