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New Employer Burdens for OBBBA Tips/Overtime Pay Taxation

One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, as Public Law 119-21, among other provisions, introduces two key provisions of immediate concern to employers, “No Tax on Tips” (Sec. 70201) and “No Tax on Overtime” (Sec. 70202) – effective for tax years 2025 through 2028.

The IRS has released FS-2025-03 with interim guidance on the changes, but more detailed guidance is expected in the coming months.

Employers face new administrative and reporting burdens to support employees claiming these deductions. Failure to comply could result in penalties for inaccurate information returns or withholding errors. By acting promptly, employers can minimize disruptions and avoid penalties (e.g., up to $270 per inaccurate W-2). The following are just some of the concerns and solutions voiced by the business community and their advisors so far, since passage of OBBBA.

Employers, particularly in industries like hospitality, retail, construction, and manufacturing, should prepare for increased administrative complexity. The provisions are retroactive to January 1, 2025, but the IRS has promised transition relief for 2025 to ease the burden.

The IRS will publish a list of qualifying tipped occupations by October 2, 2025. Review this to confirm employee eligibility. Expect updated withholding tables, forms (e.g., potential new boxes on W-2 for tips/occupation or overtime), and publications (e.g., Pub. 15 for withholding). The IRS has indicated further guidance on reporting and anti-abuse rules is forthcoming. For 2025, use a “reasonable method” (to be specified by the IRS) to approximate and separately account for tips and overtime if full tracking isn’t feasible.

Integrate software updates to track and report tips (including occupation) and qualified overtime separately. This may require new fields in payroll systems for FLSA overtime premiums. Review employee classifications under FLSA to ensure accurate overtime qualification – misclassification could lead to disputes or audits. Adjust for the expanded FICA tip credit if in beauty services; calculate and claim it on Form 8846 to offset payroll taxes.

Employers must now separately report the total amount of cash tips (including charged tips and tip-sharing arrangements) and the recipient’s occupation on information returns (e.g., Form W-2 for employees or Form 1099 for non-employees) filed with the IRS or Social Security Administration (SSA). This must also be included on statements furnished to workers. Only “qualified tips” (voluntary payments from customers, not mandatory service charges or negotiated fees) in occupations customarily receiving tips qualify.

The law extends the existing FICA tip credit (under IRC Section 45B) to beauty service establishments (e.g., barbering, hair care, nail care, esthetics, and spa treatments), previously limited to food and beverage industries. This allows eligible employers to claim a credit for their share of Social Security taxes paid on employee cash tips.

Employers should maintain detailed records of tips to prevent reclassification abuse (e.g., labeling wages as tips). The IRS may issue regulations to address potential misuse.

Note that these provisions do not affect state taxes or overtime laws (e.g., California’s daily overtime rules), so maintain separate compliance with unique state tax and payroll laws. The provisions expire after 2028, so plan for potential reversions in reporting and withholding.

Also note that these tips and suggestions are taken from various information sources across the country, and may or may not accurately reflect the new employer obligations as they interpreted by the accounting and tax law industry. This report is not provided as a substitute for legal or accounting advice. It should only be considered as topics of interest that need further inquiry by employers should they have concern about any one of these tips.

Stanford Announces New AI Tool That Boosts Routine Ultrasound

Prostate biopsies are usually performed under ultrasound guidance and involve collecting 12 to 16 samples. However, these biopsy samples provide only limited glimpses into a much larger and more complex landscape. The scattered samples provide limited insight, leading to a miss rate of up to 52 percent of clinically significant cancers.

Effective prostate cancer treatment relies on early detection of cancer before it has spread outside the prostate. To help improve the success rate of finding prostate cancers during routine biopsy, Mirabela Rusu, PhD, Assistant Professor, Stanford Medicine Department of Radiology (IBIIS division), developed an artificial intelligence tool called ProCUSNet that analyzes the ultrasound images already acquired during the biopsy procedure.

The ProCUSNet model was trained on over 2,200 prostate cancer patients, using 3D volumes reconstructed from 2D B-mode images captured during routine transrectal ultrasound procedures. Unlike previous research that required raw or investigational imaging, this approach focused on real-world data already available in clinical settings.

The current version takes approximately 10 seconds to analyze a 3D ultrasound volume and was developed using data from a specific ultrasound system. Broader validation across different devices and practice settings will be necessary. Future studies will also explore faster integration, prospective clinical trials, and adaptation to other ultrasound modalities.

Dr. Rusu said “What makes ProCUSNet unique is its ability to localize areas of cancer on standard ultrasound images using deep learning. We’re not asking clinicians to change how they perform biopsies. Instead, we’re enhancing the value of the data they already collect with a tool that’s fast and practical for use in the real world.”

The findings, recently published in European Urology Oncology, show that ProCUSNet can help clinicians detect high-grade prostate cancers. The algorithm was able to detect 82% of clinically significant cancers and identify 44% more lesions than human readers interpreting the same ultrasound images.

The researchers also showed that ProCUSNet was also able to detect cancers missed by standard systematic biopsy. Among patients who went on to have surgery, nearly 30% had high-grade tumors that were not captured through conventional sampling. ProCUSNet successfully flagged many of these otherwise undetected lesions.

The potential clinical impact of this approach is substantial. As the majority of prostate biopsies worldwide continue to rely solely on conventional ultrasound, tools such as ProCUSNet may offer a practical means to improve diagnostic precision and consistency.

Cal. Supreme Ct. Adds More Arbitration Agreement Exception Rules

Skyler A. Womack was a dependent adult with physical and developmental disabilities. In January 2020, he was admitted as an inpatient at a 24-hour skilled nursing facility called Asistencia Villa Rehabilitation and Care Center in Redlands, then operated by Silverscreen Healthcare, Inc. Skyler died on October 29, 2020, while still residing at Asistencia.

Following his death, Skyler’s parents and heirs, plaintiffs Jonie A. Holland and Wayne D. Womack, filed suit against Silverscreen. Plaintiffs’ complaint asserted four causes of action: (1) dependent adult abuse under the Elder Abuse and Dependent Adult Civil Protection Act, Welfare and Institutions Code, section 15600 et seq. (Elder Abuse Act); (2) negligence; (3) violation of residents’ rights under Health and Safety Code, section 1430, subdivision (b); and (4) wrongful death.

Plaintiffs alleged that Silverscreen failed to protect Skyler from “multiple falls with injury, and infections which caused him pain and suffering and were substantial factors in his untimely demise.” Plaintiffs also alleged that Silverscreen failed to “employ an adequate number of qualified personnel to carry out all of the functions of the facility”; failed to “keep[] its facility in good repair at all times”; failed to “correct deficiencies issued by the State of California’s Department of Public Health”; and failed to “provid[e] [Skyler] with good nutrition and necessary fluids for hydration.”

On admission to Asistencia, Skyler had signed a “Resident-Facility Arbitration Agreement.” The agreement provided for arbitration of malpractice claims, adhering to statutory language and formatting requirements for medical services contracts covering disputes as to the “professional negligence of a health care provider.” (§ 1295(a).) It stated that “any dispute as to medical malpractice, that is as to whether any medical services rendered under this contract were unnecessary or unauthorized or were improperly, negligently or incompetently rendered, will be determined by submission to arbitration.” (Quoting § 1295(a).) The agreement further provided — in its own language — that the agreement was “binding on all parties, including the Resident’s representatives, executors, family members, and heirs.”

Based on this agreement and the Supreme Court decision in Ruiz v. Podolsky (2010) 50 Cal.4th 838 (Ruiz), Silverscreen filed a motion to compel arbitration of each of the four causes of action asserted in the complaint. Plaintiffs opposed the petition. They argued that Ruiz did not apply because their wrongful death claim was based on Silverscreen’s “neglect,” as that term is defined under the Elder Abuse Act, and not its “professional negligence.”

The trial court granted Silverscreen’s motion to compel arbitration of the three survivor claims but denied the motion as to plaintiffs’ individual claim for wrongful death. Following the lead of the Court of Appeal in Avila v. Southern California Specialty Care, Inc. (2018) 20 Cal.App.5th 835, 843 (Avila), the trial court explained that although “[t]he complaint includes allegations that could be categorized as professional negligence as well as elder abuse,” plaintiffs “ ‘chose to plead a cause of action under the [Elder Abuse Act], and they did so successfully. The fact that they could have also pleaded a claim for medical malpractice, had they wished to do so, is irrelevant. Accordingly, . . . plaintiffs’ claim is not one within the ambit of section 1295, and therefore, Ruiz’s holding does not apply.’ ” (Quoting Avila, at p. 843.)

The Court of Appeal reversed. (Holland v. Silverscreen Healthcare, Inc. (2024) 101 Cal.App.5th 1125 (Holland).) The Court of Appeal acknowledged several appellate cases, including Avila, in which courts refused to compel arbitration of wrongful death claims predicated on allegations of neglect by nursing homes and similar residential care facilities. (Holland, supra, 101 Cal.App.5th at p. 1134). The Court of Appeal agreed with these cases insofar as they “confined Ruiz’s holding to wrongful death claims predicated on medical malpractice or professional negligence,” but it disagreed with the cases to the extent they might suggest that plaintiffs’ claim here falls outside Ruiz. (Holland, at p. 1134; see id. at pp. 1134–1135.).

The California Supreme Court reversed the Court of Appeal in the case of Holland v. Silverscreen Healthcare, Inc. -S285429.PDF (August 2025).

In Ruiz the Supreme Court identified an exception for certain wrongful death claims based on medical malpractice. If a patient agreed to arbitrate medical malpractice disputes in compliance with the arbitration provision of the Medical Injury Compensation Reform Act (MICRA) (codified as Code Civ. Proc., § 1295), the patient-provider agreement may bind the patient’s heirs in a wrongful death action, even if the heirs themselves never agreed to arbitration. (Ruiz, at pp. 849–850.).

The question before the Supreme Court here concerns the application of Ruiz in a recurring context. Plaintiffs sued a 24-hour skilled nursing facility, alleging that the facility’s neglect caused their son’s death. Before his death, plaintiffs’ son had signed an agreement to arbitrate medical malpractice disputes against the facility. Parting company with appellate courts that had taken different approaches to the issue, the Court of Appeal in this case held that the patient-provider agreement binds plaintiffs because their wrongful death claim based on the nursing facility’s neglect is necessarily a claim about the manner in which a health care provider rendered its professional services.

The Supreme Court concluded that “the Court of Appeal’s decision in this case extends Ruiz past statutory bounds. Ruiz does not apply to every type of wrongful death claim that might be brought against a health care provider – particularly a provider that, like the skilled nursing facility in this case, provides both medical care and day-to-day custodial care of dependent adults. Under Ruiz, plaintiffs’ claim must be submitted to arbitration only if they are raising a dispute about medical malpractice as that term is defined in MICRA’s arbitration provision – that is, a dispute “ ‘as to whether any medical services . . . were improperly, negligently or incompetently rendered.’ ” (Code Civ. Proc., § 1295, subd. (a) (§ 1295(a)).) Ruiz does not require plaintiffs to arbitrate their disputes about a facility’s neglect of a resident’s basic welfare and safety needs.”

“To the extent the plaintiffs’ complaint in this case fails to detail whether they are alleging deficiencies in the nursing facility’s rendering of medical services or instead in its provision of custodial care, we conclude that they should be permitted to amend their complaint to specify.”

“We reverse the judgment of the Court of Appeal and remand for further proceedings.”

New Law Allows DIR to Issue Citations to Recover Worker Tip Theft

Governor Gavin Newsom signed SB 648 into law, and, as a non-urgency measure, takes effect on January 1, 2026. SB 648 primarily amends Section 351 of the California Labor Code, reaffirming and expanding enforcement of employee gratuity pay (tips) protections.

Under prior law, employers were already prohibited from taking, collecting, or deducting tips from employees’ wages, but enforcement relied heavily on private lawsuits or limited administrative actions. This left workers vulnerable to “tip theft,” where employers might withhold or misappropriate tips, particularly in industries like hospitality and service.

The bill’s purpose, as outlined in its legislative digest, is to strengthen protections by empowering the state’s Labor Commissioner (through the Division of Labor Standards Enforcement, or DLSE) to more actively investigate and penalize violations. This enhances compliance, deters misconduct, and provides a more accessible enforcement mechanism for workers without requiring them to pursue costly civil litigation.

The rationale stems from ongoing concerns about wage theft in tipped industries, aiming to ensure tips remain the sole property of employees and are not used to offset employer costs like credit card fees. According to the Legislative Analyst “some of the lowest paid workers are at risk of having their livelihoods stolen by unscrupulous employers through various violations of law including by taking their tips.”

“According to a 2008 study which surveyed 4,387 workers in low-wage industries in the three largest U.S. cities – Chicago, Los Angeles, and New York City, 12 percent of tipped workers in the sample experienced “tip stealing” during the previous work week.”

Unlike under federal regulations, in California an employer cannot use an employee’s tips as a credit towards its obligation to pay the minimum wage. California law requires that employees receive the minimum wage plus any tips left for them by patrons of the employer’s business.

Although existing law directs the Department of Industrial Relations to enforce the provisions of existing law regarding gratuities, the Labor Commissioner lacks citation authority to recover gratuities taken or withheld from workers. The only option available to the Labor Commissioner to recover stolen gratuities is through filing of an action in court.

Given the limited resources available at the Labor Commissioner’s office, granting the LC the ability to issue citations to recover owed gratuities would go a long way in helping workers. This bill would do just that by authorizing the Labor Commissioner to investigate and issue a citation or file a civil action for gratuities taken or withheld in violation of existing law.

SB 648 was supported by the California Federation of Labor Unions, AFL-CIO. There was no opposition noted in Legislative Analyst,s report.

WCAB En Banc Concludes Electronic Testimony be Readily Permitted

Tyson Perez filed an Application for Adjudication of Claim on August 24, 2022, alleging a cumulative trauma injury while working as a professional baseball player for the Houston Astros from June 1, 2011, to June 25, 2022. He later filed an Amended Application joining the Chicago Dogs as a party defendant.

The Chicago Dogs and its carrier, Liberty Mutual, filed a Declaration of Readiness to Proceed seeking adjudication on the sole issue of personal jurisdiction. The matter was set for a trial on personal jurisdiction over the Chicago Dogs at the Mandatory Settlement Conference on May 23, 2024. The Pre-Trial statement listed the applicant, Tyson Perez, and also Trish Zuro, the Chief Operating Officer of the Chicago Dogs as witnesses, among other individuals. On June 11, 2024, the undersigned served all parties with an affidavit from Trish Zuro.

At trial, the Chicago Dogs offered a witness statement into evidence. Counsel for the Applicant and Co-Defendant, Houston Astros, objected to the witness statement of Trish Zuro because it was not served before the close of discovery and because admitting the written statement into evidence would deprive the parties of their due process to cross-examine the witness.

The applicant attorney and co-defendant objected to the testimony and the admission of the affidavit at the Trial date, and after 8 months when the affidavit was previously served to the parties and more than 8 months when the parties were notified on the Pre-Trial Conference statement that Ms. Zuro was listed as a witness. The witness was to rebut the applicant’s contentions of minimum contacts of the team with California.The WCJ denied Chicago Dogs’ request to permit witness Trish Zuro to testify by telephone.

The Findings and Order, dated May 13, 2025, found that the California Workers’ Compensation Appeals Board may exercise personal jurisdiction over the Chicago Dogs for the Applicant’s alleged cumulative trauma injury claim.

The WCJ did not permit Trish Zuro to testify by telephone because the Chicago Dogs did not file a petition before the trial, showing good cause for why she should be allowed to testify remotely. Per CCR 10618(a), “If a witness intends to testify electronically, a petition showing good cause shall be filed pursuant to rule 10510 by the witness or by the party offering the witness’s testimony before the hearing, and shall identify the witness and contain the witness’s full legal name, mailing address, email address, and telephone number. There was no such petition requesting remote appearance filed in this matter.

Chicago Dogs filed a Petition for Reconsideration, appealing the trial court’s decision not to allow the witness statement into evidence and not allow the witness to testify remotely. Reconsideration was granted in the En Banc decision of Tyson Perez v Chicago Dogs -ADJ16597333 (August 2025).

The issue was the interpretation and application of WCAB Rule 10817(a), which states in relevant part that: “If a witness intends to testify electronically, a petition showing good cause shall be filed pursuant to rule 10510 by the witness or by the party offering the witness’s testimony before the hearing, and shall identify the witness and contain the witness’s full legal name . . . .” (Cal. Code Regs., tit. 8, § 10817(a).)

“As a matter of due process, all parties to a workers’ compensation proceeding retain the fundamental right to due process and a fair hearing under both the California and United States Constitutions. (Rucker v. Workers’ Comp. Appeals Bd. (2000) 82 Cal.App.4th 151, 157-158 [65 Cal.Comp.Cases 805].”

A fair hearing includes, but is not limited to, the opportunity to call and cross-examine witnesses; introduce and inspect exhibits; and to offer evidence in rebuttal.

In 1890, the California Supreme Court opined: “The principal purpose of vesting the court with the discretionary power to correct ‘a mistake in any other respect’ is to enable it to mold and direct its proceedings so as to dispose of cases upon their substantial merits, when it can be done without injustice to either party, whether the obstruction to such a disposition of cases be a mistake of fact or a mistake as to the law, although it may be that the court should require a stronger showing to justify relief from the effect of a mistake of law than of a mistake of fact.” (Ward v. Clay (1890) 82 Cal.502, 23 P.50, 1890 Cal. LEXIS 591.

“Therefore, based on these principles, interpretation of our rules must necessarily incorporate California’s public policy in favor of adjudication of claims on their merits, rather than on the technical sufficiency of the pleadings.”

Thus the WCAB concluded “Therefore, based on these principles, interpretation of our rules must necessarily incorporate California’s public policy in favor of adjudication of claims on their merits, rather than on the technical sufficiency of the pleadings.”

Thus the WCAB concluded that “In considering the application of WCAB Rule 10817(c), we preliminarily conclude that a request on the record for electronic witness testimony at the beginning of the hearing, with an opportunity for any party to respond, satisfies the petition requirement and is sufficient to adjudicate the issue of electronic testimony. Moreover, we preliminarily conclude that the due process right to a fair hearing and a determination based on the merits is good cause to allow the electronic testimony of the witness. Therefore, when a witness is unable to appear in person, as a matter of due process, a request to testify electronically should be readily permitted.”

“Accordingly, we grant defendant’s Petition for Reconsideration, and order that a final decision after reconsideration is deferred pending further review of the merits of the Petition for Reconsideration and further consideration of the entire record in light of the applicable statutory and decisional law.”

Federal Rule 702 Helps Monsanto Defend Roundup Cancer Case

Federal Rule of Evidence 702 was first adopted in 1975 as part of the original enactment of the Federal Rules of Evidence. Beginning in 1993 the Rule was interpreted by the U.S. Supreme Court in three landmark decisions that are now know as the “Daubert Trilogy.” The Rule requires a high level of scrutiny of scientific evidence in a “Daubert” hearing before a federal trial commences.

This Daubert standard is mandatory in all federal trial courts. And approximately 42 states have adopted the Daubert standard or a substantially similar standard for the admissibility of expert testimony in their state courts, either fully or with modifications. California state courts have not. Instead, California uses the “Fry” standard which is far more lenient. And in California experts who rely on controversial science in forming an opinion may testify, and the controversy applies for the “weight” of the evidence rather than admissibility, compared to the Daubert standard which makes controversial scientific evidence inadmissible.

Large corporate defendants who are sued in California may be entitled to remove the case to federal court under some circumstances such as diversity jurisdiction. Often, their reason for doing so it to take advantage of the mandated use of Rule 702.

This new published 9th Circuit Court of Appeals decision in Favor of Monsanto in one of its “Roundup” toxic injury cases is a clear example of why employers may move to have California state cases removed to federal courts when they meet the requirements to do so.

From 1990 to 2015, Peter Engilis, Jr. routinely hand- sprayed Roundup several times per month at each of his three homes in Florida. In 2014, he was diagnosed with a blood cancer known as chronic lymphocytic leukemia (CLL), which is a type of non-Hodgkin’s lymphoma (NHL).

In November 2019, Engilis filed a lawsuit against Roundup manufacturer Monsanto in the Middle District of Florida, invoking the court’s diversity jurisdiction and asserting claims under Florida state law that were premised on the allegation that exposure to Roundup caused him to develop CLL. The case was subsequently transferred to a multidistrict litigation proceeding in the Northern District of California, in which thousands of cancer victims have alleged that Roundup caused their NHL.

In a “toxic tort claim for physical injuries,” a plaintiff must “show that he was exposed to chemicals that could have caused the physical injuries he complains about (general causation), and that his exposure did in fact result in those injuries (specific causation).” Golden v. CH2M Hill Hanford Grp., 528 F.3d 681, 683 (9th Cir. 2008).

To demonstrate that Roundup caused Engilis’s cancer, Engilis relied on the expert opinion of board-certified oncologist Dr. Andrew Schneider. Dr. Schneider submitted an expert report offering opinions on both general causation and specific causation.

Monsanto moved to exclude Dr. Schneider’s opinion. At the hearing on the motion to exclude, Monsanto’s counsel extensively cross-examined Dr. Schneider about his basis for ruling out Engilis’s obesity as a potential cause of Engilis’s cancer. In response, Dr. Schneider sought to defend his assertion that Engilis was not obese. But after conceding that he had not examined Engilis and could not say whether Engilis was obese or not, Dr. Schneider testified that, regardless of whether Engilis was obese, he did not view obesity as a potential cause of NHL. During follow-on questioning, he stated that although some medical literature reports an association between obesity and the development of NHL, his clinical experience led him to believe that obesity does not contribute to NHL.

After the hearing, the district court issued an order excluding Dr. Schneider’s specific causation opinion. The 9th Circuit Court of Appeals affirmed in the published case of Engilis et al v Monsanto 3:19-cv-07859- VC (August 2025).

The admissibility of expert testimony is controlled by Federal Rule of Evidence 702. That Rule provides that, “before admitting expert testimony, the district court must perform a gatekeeping role to ensure that the [proffered] testimony is both relevant and reliable.” The parties parties dispute the significance of the 2023 amendment to Rule 702 and the effect of that amendment on existing precedent.

Thus the Court of Appeals reviewed the current precedent starting with the “Daubert Trilogy” which refers to three landmark U.S. Supreme Court cases that established the modern standard for admitting scientific expert testimony in federal courts. These cases clarified the admissibility of expert evidence under the Federal Rules of Evidence, particularly Rule 702, replacing the earlier Frye standard. In 2000, Rule 702 was amended for the first time to codify the holdings of the Daubert trilogy, and to resolve conflicts that had arisen within the courts about the meaning of that trilogy.

The Rule was amended again in December 2023 to expressly require a proponent of expert testimony to “clarify and emphasize” that proffered expert testimony must meet the admissibility requirements of Rule 702 by a preponderance of the evidence. Before the amendment, “many courts” had erroneously held “that the critical questions of the sufficiency of an expert’s basis, and the application of the expert’s methodology, are questions of weight and not admissibility.”

Here, the district court properly concluded that Engilis failed to establish by a preponderance of the evidence that Dr. Schneider’s conclusion was based on sufficient facts or data.

Spine Device Company CEO Sentenced for False Statements to CMS

SpineFrontier, Inc., founded in 2006 by Dr. Kingsley R. Chin, is a Massachusetts-based medical device company. SpineFrontier faced a multi-year investigation by the U.S. Department of Justice (DOJ) starting in 2016, initiated by whistleblower allegations under the False Claims Act. The civil case, settled in November 2023, alleged that SpineFrontier paid kickbacks to spine surgeons consulting with the company.

SpineFrontier products, such as doughnut-shaped plastic cages, titanium screws, and other spinal implants, are used by spine surgeons across the United States, including in surgeries reimbursed by federal health care programs like Medicare and Medicaid, which are active in California.

In addition to the civil cases, in 2021, SpineFrontier, Dr. Chin, and CFO Aditya Humad were indicted on criminal charges including conspiracy to violate the Anti-Kickback Statute and money laundering.

Dr. Chin pleaded guilty in May 2025 to one count of making false statements to the Centers for Medicare & Medicaid Services (CMS) under the Physician Payment Sunshine Act. The false statements involved misreporting a $4,750 payment to a surgeon as “consulting” fees, despite no actual consulting work being performed.

Money laundering charges were dismissed in December 2024, and all criminal charges against Dr. Chin and SpineFrontier were dismissed by May 2025, except for a guilty plea to one count of false statements to CMS.

Dr. Kingsley R. Chin was sentenced on August 7th by U.S. District Court Judge Indira Talwani to one year of supervised release with the first six months to be served in home confinement. He was also ordered to pay a fine of $9,500, in addition to $40,000 he personally agreed to pay as part of a related civil settlement, and $855,000 his wholly-owned company, KICVentures, agreed to pay as part of the same settlement.

KICVentures is a private equity firm led by Dr. Kingsley R. Chin. It focuses on advancing outpatient spine surgery through the Less Exposure Spine Surgery (LESS) philosophy. The firm manages a portfolio of spine technology companies aimed at improving patient outcomes and empowering physician-led innovation.

Pursuant to the Physician Payment Sunshine Act, device manufacturers, like SpineFrontier, are required to report any payments or transfers of value to physicians, including spine surgeons. CMS maintains a database, via the Open Payments website, which makes all such payments or transfers of value publicly accessible.

SpineFrontier offered surgeons the opportunity to engage in purported consulting on product development. Specifically, Chin directed his employees to report the payment of fees paid to a surgeon as consulting fees that were not compensation for actual consulting work.

Chin caused his employees to report a payment of $4,750 on Jan. 19, 2016, to the surgeon as a “consulting” payment, even though Chin knew that the surgeon had not performed actual consulting work for the payment. He also knew that he and SpineFrontier were required to accurately report any payments or transfers of value to the surgeon.

United States Attorney Leah B. Foley; Roberto Coviello, Special Agent in Charge of the U.S. Department of Health & Human Services’ Office of the Inspector General; Ted E. Docks, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; Christopher Algieri, Special Agent in Charge of the Veterans Affairs Office of Inspector General, Northeast Field Office; and Ketty Larco-Ward, Inspector in Charge of the U.S. Postal Inspection Service’s Boston Division made the announcement today. Assistant U.S. Attorneys Abraham R. George, Christopher R. Looney and Mackenzie A. Queenin prosecuted the case.

Kidnapping Charges Added to LAPD Officer Facing Insurance Fraud

Eric Benjamin “Ben” Halem, 37, of Porter Ranch, a former full-time Los Angeles Police Department officer and current LAPD reserve officer, and his brother, Jacob Halem, 32, of Tarzana, were arraigned in May 2025 on felony insurance fraud charges following an investigation by the California Department of Insurance. The investigation found the brothers allegedly filed a fraudulent auto insurance claim in an attempt to obtain benefits they were not entitled to receive.

The Department of Insurance began its investigation after receiving a fraud referral alleging Eric Halem falsely reported a crash involving his 2020 Bentley Continental GT, stating his brother Jacob Halem had borrowed the vehicle and was involved in a solo-collision on January 5, 2023. However, the investigation revealed that the luxury vehicle had actually been rented out through Eric Halem’s exotic car rental company, Drive LA, and crashed by the renter three days earlier.

Upon learning that the rental driver’s claim had been denied, Eric Halem allegedly filed a fraudulent claim with his insurance company on his personal policy, misrepresenting the accident details. He claimed that his brother, Jacob Halem, had been driving the vehicle at the time of the crash.

On August 11, 2025 the Los Angeles District Attorney announced that felony charges have been filed against Halem and three other men in connection with a violent home invasion and kidnapping for ransom in Koreatown last December.

Also charged in the case are Luis Banuelos (dob 5/25/97) of Jurupa Valley in Riverside County, Pierre Louis (dob 12/8/98) of Attleboro, Mass. and Mishael Mann (dob 7/31/05) of Los Angeles. Each defendant faces counts of kidnapping for ransom, first-degree residential robbery, and home invasion robbery in concert. Mann and Halem are being held on no bail, and Louis and Banuelos are each being held on $1.3 million bail.

On Dec. 28, 2024, at approximately 2:30 a.m., Halem and Mann allegedly entered an apartment in Koreatown, where they handcuffed two victims, transferred money from the victims’ cryptocurrency account, and stole cash and jewelry before fleeing. Banuelos and Louis are accused of serving as getaway drivers who waited outside the location.

August 4, 2025 – News Podcast


Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Fraud in Federal Employment Law Case Supports Terminating Sanction. Consumer Watchdog’s DOI FAIR Plan Challenge Case May Proceed. AG Resolves Janitorial Misclassification Case for $2M. Fresno Man to Serve 7.5 Years for Opioid Prescription Fraud. Former Palmdale Insurance Agent Charged With $1.8M Fraud. CHSWC Releases California Janitor Workload Study Report. Alzheimer’s Association Now Favors Blood Tests for Diagnosis. Vizient Projects Cost Pressures Across Healthcare Supply Chain.

Cal Supreme Court Improves Arbitration Rules for Employers

Dana Hohenshelt sued his employer, Golden State Foods Corporation, in Los Angeles County Superior Court in November 2020. Hohenshelt alleged discriminatory retaliation, failure to prevent harassment, and Labor Code violations stemming from his reports of workplace sexual harassment and subsequent termination in April 2020.

Hohenshelt had signed a pre-dispute arbitration agreement governed by the Federal Arbitration Act (FAA), requiring binding arbitration for employment claims. Golden State was responsible for paying arbitration fees and costs.

The trial court compelled arbitration in August 2021 via JAMS. Arbitration proceeded for about a year. In July and August 2022, the arbitrator issued invoices totaling over $44,000 to Golden State, due upon receipt. Golden State paid late (after 30 days), citing inadvertence due to the arbitrator’s unavailability notice and counsel’s paternity leave.

Hohenshelt moved to withdraw from arbitration and lift the court stay under California Code of Civil Procedure § 1281.98 (part of the California Arbitration Act, or CAA), claiming Golden State’s late payment constituted a material breach. The trial court denied the motion, interpreting the statute to allow payment within 30 days of a later deadline set by the arbitrator.

The Court of Appeal (Second District, Division Eight) reversed, holding the payment was untimely and § 1281.98 was not preempted by the Federal Arbitration Act. It directed the trial court to lift the stay..

The California Supreme Court reversed the Court of Appeal decision in the published case of Hohenshelt v. Superior Court -S284498 (August 2025).

Under California law, employer must pay arbitration fees “within 30 days after the due date” (invoices are due upon receipt unless parties agree otherwise). Late payment constitutes a “material breach,” default, and waiver of the right to compel arbitration. The employee may withdraw or continue arbitration (if the provider agrees). The breaching party must pay the other’s reasonable expenses (mandatory); courts may impose additional sanctions unless justified.

The Legislature enacted section 1281.98 in 2019 (Senate Bill 707) to deter employers/companies from strategically delaying arbitrations by withholding fees, affirming federal cases like Brown v. Dillard’s, Inc. (9th Cir. 2005) and Sink v. Aden Enterprises, Inc. (9th Cir. 2003), which treated willful nonpayment as material breach.

The FAA requires arbitration agreements to be enforced like other contracts (no special rules disfavoring arbitration). Section 1281.98’s default 30-day rule (modifiable by parties) promotes arbitration’s goals of speed and efficiency without deviating from general contract law (e.g., time can be “of the essence” in urgent contexts; willful breaches discharge duties).

The Supreme Court rejected prior appellate interpretations treating section 1281.98 as a “bright-line” rule automatically forfeiting arbitration rights for any late payment (e.g., regardless of inadvertence). For example Gallo v. Wood Ranch USA, Inc. (2022) interpreting section 1281.98 rigidly.

Instead, it harmonized the statute with longstanding contract law principles (Civ. Code §§ 3275, 1511; Code Civ. Proc. § 473(b)), which allow relief from forfeiture for non-willful, non-fraudulent, or non-grossly negligent breaches if the breaching party compensates the other. The Legislature aimed to deter strategic nonpayment (per legislative history and cases like Brown and Sink), not penalize good-faith errors. This avoids preemption concerns by aligning with general contract defenses.

The Supreme Court reversed the Court of Appeal’s directive to lift the stay and remanded for the trial court to assess if Golden State’s delay was excusable (e.g., good faith mistake) and if Hohenshelt suffered compensable harm.