Category: Daily News

This case concerns the reach of the Federal Arbitration Act’s (FAA) exemption for transportation workers. While the FAA generally requires courts to enforce private arbitration agreements, Section 1 (9 U.S.C. § 1) provides that “nothing” in the statute may be used to compel arbitration in disputes involving the “contracts of employment” of “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”

Flowers Foods, Inc. — one of the nation’s largest producers of packaged baked goods, with bakeries in 19 states — distributes its products in part through franchisees who buy distribution rights for specific geographic territories. Angelo Brock is one such franchisee serving the Denver area. He picks up Flowers’s products from a warehouse in Colorado and delivers them to local stores entirely within the state, never crossing state lines and never interacting with vehicles that do.

In 2022, Brock sued Flowers in federal district court, alleging the company had underpaid him and other distributors in violation of federal and state law. Brock had signed a distribution agreement promising to arbitrate any disputes, so Flowers moved to compel arbitration.

The federal district court denied Flowers’s motion to compel arbitration. The Tenth Circuit Court of Appeals affirmed the district court in Brock v. Flowers Foods, Inc. (10th Cir. 2024) 121 F.4th 753, resting its decision on Section 1. It reasoned that Brock belonged to a class of workers engaged in interstate commerce, so the court lacked authority to compel arbitration. Although the court acknowledged Brock neither crossed state lines himself nor interacted directly with those who did, it held those facts were “not dispositive.” What mattered was that Brock’s intrastate route formed a constituent part of the interstate journey of Flowers’s goods from out-of-state bakeries to their retail destinations.

Flowers petitioned the United States Supreme Court for certiorari on a single question: whether a worker can qualify under the Section 1 exemption if he never crosses state lines and never interacts with vehicles that do. The Supreme Court granted review.

The Supreme Court affirmed the Tenth Circuit’s judgment in a unanimous opinion delivered by Justice Gorsuch in Flowers Foods, Inc. v. Brock, No. 24-935 (May 2026). It held that a worker who transports goods on an intrastate leg of an interstate journey can qualify for the Section 1 exemption without crossing state lines or interacting with vehicles that do. The Supreme Court rejected Flowers’s proposed bright-line rule — that a worker must either cross state lines or interact with a vehicle that does — on three grounds.

Statutory text. When the FAA was enacted in 1925, to “engage” meant to take part in, be employed in, or be involved in something, and “interstate commerce” was understood to include transporting goods “between points in one state and points in another state.” That definition encompasses intrastate activity: a continuous carriage may begin in one state and end in another even though much of the journey occurs within a single state. Nothing in those terms requires crossing state lines or touching a border-crossing vehicle. The Court illustrated the point with a hypothetical involving three drivers relaying a shipment across a state border — under Flowers’s rule, only the driver who physically crossed the line would be covered, even though each played a direct and necessary part in moving the goods between states.

Historical precedent. The Court drew on a line of older cases interpreting the meaning of being “engaged in commerce between the States.” In The Daniel Ball (1871) 77 U.S. (10 Wall.) 557, the Court held that a steamer operating entirely within Michigan was engaged in interstate commerce because it carried goods destined for, or arriving from, other states; the use of several independent agencies, some operating entirely within one state, did not change the character of the transaction. The Court cited similar authority in Rearick v. Pennsylvania (1906) 203 U.S. 507, Rhodes v. Iowa (1898) 170 U.S. 412, and Norfolk & Western Railroad Co. v. Pennsylvania (1890) 136 U.S. 114.

Consistency with recent precedent. The Court placed the case as the fourth in a recent line broadly construing Section 1: New Prime Inc. v. Oliveira (2019) 586 U.S. 105 (the exemption covers independent contractors, not just employees); Southwest Airlines Co. v. Saxon (2022) 596 U.S. 450 (a cargo loader qualified despite not flying planes or crossing state lines); and Bissonnette v. LePage Bakeries Park St., LLC (2024) 601 U.S. 246 (a worker need not be in the “transportation industry” so long as the work plays a direct and necessary role in the flow of goods across borders). The Court reaffirmed that “engaged in” interstate commerce requires a direct, necessary, and active role, but held that such participation can occur without crossing state lines.

The Court acknowledged that its older precedents interpreted the Constitution’s Commerce Clause rather than Section 1, and clarified that the two are not coterminous — Section 1 reaches only transportation workers, a narrower category. (See Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105.) Still, cases using language identical or close to Section 1’s offered probative evidence of the statute’s original meaning.

Finally, the Court noted that Flowers had hinted at other reasons Brock might not qualify — that Flowers contracts with an independently operated company Brock owns, and that Brock takes title to the goods before reselling them, facts some lower courts have found relevant. But because Flowers staked its entire case on the cross-or-tag rule and did not ask the Court to decide the significance of those other facts, the Court declined to address them and confined its holding to rejecting the bright-line rule Flowers proposed.

The Arizona Attorney General Kris Mayes filed an 83 page lawsuit against MultiPlan and several large health insurers, alleging they quietly built and operated a system that slashed payments to doctors and hospitals — and left Arizonans having to pay more for out-of-network care.

The lawsuit alleges that for years, MultiPlan and insurers Aetna, Cigna, UnitedHealthcare, Humana, Elevance, Molina, Centene, and Health Care Service Corp. relied on a shared algorithm to decide how much to pay for out-of-network care, which relied in part on their collective sharing of confidential, competitively sensitive claims payment information with and through MultiPlan.

Instead of competing or setting payments independently, they allegedly used the same formula and the same data, and delegated payment negotiation decisions to MultiPlan, resulting in extremely low payments across the industry that continued to decrease over time.

This lawsuit targets what the State characterizes as a decade-long buyer’s cartel in the out-of-network healthcare market. The suit draws a direct line to the 2009 Ingenix settlements — in which UnitedHealth Group and co-defendants paid hundreds of millions of dollars for similar algorithmic manipulation of UCR rates — and alleges that MultiPlan “picked up where Ingenix left off.”

Since at least 2015, MultiPlan (operating its “Data iSight” platform) allegedly recruited the nation’s largest commercial insurers into a coordinated arrangement to suppress out-of-network reimbursement rates. The mechanics of the alleged conspiracy are allegedly straightforward:

– –  Insurers fed proprietary claims and pricing data into MultiPlan’s centralized database — information that, in a competitive market, would be closely guarded competitive intelligence.
– –  MultiPlan’s algorithm used this pooled data to reprice every out-of-network claim by CPT code, producing a single fixed rate regardless of geography, provider quality, or market conditions.
– –  Every insurer in the arrangement followed MultiPlan’s pricing output rather than setting reimbursements independently, effectively eliminating price competition among buyers.
– –  Each artificially low payment was fed back into the algorithm, creating a self-reinforcing downward ratchet on reimbursement rates year over year.
– –  MultiPlan’s fee was calculated as a percentage of “savings” generated — meaning its financial incentive was structurally aligned with paying providers as little as possible.
– –  The complaint notes that MultiPlan’s CEO publicly touted a “record quarterly achievement” in Q3 2024 — a $6.4 billion reduction in payments to healthcare providers.
– –  The State alleges that 81% of the out-of-network commercial market is covered by MultiPlan client-payors, giving providers no practical alternative but to accept suppressed rates or forgo those patients entirely.

The complaint identifies three classes of victims:

– –  Providers: Systematically underpaid at rates a 2020 New York State Comptroller study found to be 1.5 to 49 times below UCR rates for 35% of analyzed service codes; rural providers and mental health clinics are described as particularly impacted.
– –  Patients: PPO enrollees who paid higher premiums specifically for out-of-network flexibility were left with unexpected balance bills when insurers reimbursed at suppressed algorithmic rates. The State alleges the scheme was not disclosed to consumers.
– –  Employers and Self-Funded Plans: Employers offering PPO plans and administering self-funded plans through MultiPlan-participating insurers were also subjected to the artificially managed pricing structure.

The lawsuit is based upon two alleged Causes of Action.  Count I — Arizona Uniform State Antitrust Act (A.R.S. § 44-1402): The complaint alleges a per se illegal horizontal conspiracy among competing buyers to fix prices. The relevant market is defined as out-of-network healthcare services covered by commercial and self-funded plans (excluding No Surprises Act-covered emergency services). Civil penalties up to $150,000 per violation are available. Count II — Arizona Consumer Fraud Act (A.R.S. § 44-1522): Insurers allegedly misrepresented the value and nature of PPO coverage by marketing “flexibility” and “freedom” in provider choice while concealing that a third-party algorithm — not the insurer — was determining provider payment rates. Civil penalties up to $10,000 per willful violation apply.

The State of Arizona seeks: (a) full restitution to harmed patients, providers, and employers; (b) disgorgement of defendants’ ill-gotten gains; (c) a permanent injunction barring participation in the MultiPlan arrangement and requiring each defendant to independently establish its own out-of-network rate methodology; (d) civil penalties under both statutes; and (e) attorneys’ fees and investigation costs. A jury trial has been demanded on all triable issues.

The complaint references MultiPlan’s nationwide operations and notes that the same tool produces identical suppression in every state. Other state attorneys general may follow Arizona’s lead, particularly given the AG’s explicit reference to the Ingenix settlements as a template.

This is a wage-and-hour class action that, as the court itself observed, has outlasted nearly every comparable case in California history — the original complaint was filed 19 years ago, and the matter has already generated multiple interlocutory appeals and writ proceedings, including review by the California Supreme Court (North American Title Co. v. Superior Court (2024) 17 Cal.5th 155).

Roughly 700 escrow officers and escrow-related employees of North American Title Company (now known as Lennar Title, Inc., referred to as “NATC”) sued over alleged failure to pay overtime and provide meal and rest breaks. The employees were divided into two certified classes: a “Nonexempt” class alleging they were pressured to work “off the clock,” and an “Exempt” class of roughly 400 employees alleging they had been misclassified as exempt and were therefore owed overtime. The escrow officers held a wide variety of job titles, worked in more than 80 offices across 23 counties, and earned compensation that frequently included substantial incentive pay — some class members earned well over $250,000 in a year.

The central legal question was whether class members spent more than half their workday on duties qualifying as “exempt work” under California’s quantitative test for the relevant Labor Code exemptions.

Before trial, both classes dismissed their statutory Labor Code claims and proceeded solely under the Unfair Competition Law (UCL). The case was tried in two bifurcated phases. In the first phase (the so-called “liability phase,” tried in 2015), the court limited each side to roughly 100 witnesses to prove or refute the claims of all 700 class members. Following that phase, the court ruled against NATC on its exemption defenses on a classwide basis, decertified the Nonexempt class, and — critically — appointed a referee to conduct a second phase to determine UCL restitution for the Exempt class. The court did this without the parties’ consent and over NATC’s strenuous objections.

The reference proceedings stretched on for years and included live testimony from more than 230 individual class members. The trial court then adopted nearly all of the referee’s findings and ultimately entered a judgment of roughly $43.5 million against NATC (more than half of which was prejudgment interest). Judgment was entered against NATC and for the Exempt class, but in NATC’s favor against two named plaintiffs, Kimberly Baker and Carolyn Cortina (the original plaintiff), who had not testified at trial. Both sides appealed.

The Fifth District reversed for the most part in the partially published case of Cortina v. North Am. Title Co. -F085389 (May 2026). It affirmed the judgment only as to codefendant North American Services, LLC (which prevailed below) and as to one individual plaintiff, Janet Doran. In all other respects the judgment was reversed, the case was ordered decertified as a class action, and the matter was remanded for retrial of the named plaintiffs’ individual claims (with leave for the trial court to entertain a new certification motion as to the Exempt class). On the plaintiffs’ cross-appeal, the court also reversed the judgment that had gone against Baker and Cortina, allowing them to pursue their claims on retrial. The court identified two independent grounds compelling reversal.

First, the nonconsensual reference was unauthorized. Under the California Constitution (Cal. Const., art. VI, §§ 21, 22) and Code of Civil Procedure section 638, a court may refer a matter to a referee without the parties’ consent only in narrowly limited circumstances. (People v. Superior Court (Laff) (2001) 25 Cal.4th 703.) The court held that delegating years of restitution proceedings — including testimony from 230-plus class members on contested liability-type issues — fell outside those limited categories. It described a nonconsensual reference of this scope and magnitude as not merely rare but apparently unprecedented in California law, and concluded this error alone required reversal.

Second, the first phase of trial violated the controlling principles of Duran v. U.S. Bank National Assn. (2014) 59 Cal.4th. Duran requires that statistical sampling used to establish classwide liability rest on a scientifically valid methodology — expert-determined sample size, an acceptable margin of error, and randomly selected witnesses. Here, plaintiffs sought to prove the Exempt class’s claims through testimony from only about 15 percent of one cohort (roughly 24 of 156 “Branch Managers”) offered as “representative,” without meeting any of Duran’s methodological requirements. Because some class members (such as Branch Managers) indisputably performed exempt work, the absence of valid common proof meant the trier of fact had no reliable basis to extrapolate to a classwide judgment. (Marlo v. United Parcel Service, Inc. (C.D. Cal. 2008) 251 F.R.D. 476.) The court also faulted the trial court for rejecting NATC’s affirmative defenses wholesale based on misinterpretations of law and for barring NATC from questioning second-phase witnesses on its exemption defenses.

Under Duran, “decertification must be ordered whenever a trial plan proves unworkable,” and the court held the unworkability of the plan was apparent by the end of the first phase. Combined with the prejudicial errors, this warranted not only reversal but decertification by the appellate court itself.

Finally, on the cross-appeal, the court held the judgment against Baker and Cortina could not stand once the broader judgment was reversed, and remanded so they too could litigate their individual claims on retrial. Notably, the opinion was certified for publication except for Part III (the cross-appeal discussion).

Michelle Paknad, a former employee of Intuitive Surgical, Inc., filed suit against the company and two former supervisors after she was fired, alleging sexual harassment, gender discrimination, and unlawful retaliation. While still employed, Paknad had lodged two formal internal complaints, which Intuitive responded to by retaining outside attorney Andrea Kelly Smethurst to conduct independent investigations. Smethurst interviewed witnesses, reviewed documents, and produced two detailed reports — each organized into five parts covering Paknad’s allegations, witnesses and documents reviewed, summaries of witness interviews, factual findings, and legal conclusions with recommendations to management. Intuitive shared only a summary of findings with Paknad and withheld the underlying reports entirely.

In defending against Paknad’s lawsuit, Intuitive asserted an “avoidable consequences” affirmative defense, touting the investigations as thorough and independent. Intuitive’s interrogatory responses stated that it had “thoroughly investigated every allegation that plaintiff presented by hiring an independent, outside investigator to conduct two investigations, interview numerous witnesses, and reviewed a large volume of documentary evidence.”

When Paknad moved to compel production of the Smethurst reports and investigative materials, the trial court initially denied the motion, finding the materials shielded by attorney-client privilege and attorney work product protection.

That ruling led to the first round of appellate review (Paknad v. Superior Court, May 20, 2024, H050711 (Paknad I)), in which the Court of Appeal found that Intuitive had waived both privileges by placing the scope and adequacy of the investigations at issue, and directed the trial court to grant Paknad’s motion — subject to in camera review to determine whether any narrow protection survived.

On remand, the trial court reviewed Intuitive’s proposed redactions in camera and accepted them. Intuitive had redacted all of Part IV (Smethurst’s factual findings) and substantial portions of Part V (Smethurst’s conclusions and legal recommendations), reasoning that every redacted passage reflected attorney mental impressions, conclusions, or legal theories, rendering them absolutely protected core work product under California Code of Civil Procedure section 2018.030, subdivision (a). The court granted the motion to compel only as to the unredacted remainder — effectively stripping out all of Smethurst’s factual determinations before turning over the reports.

The Court of Appeal denied Paknad’s second petition for writ of mandate, however ruled upon it after remand from the Supreme Court. In the published case of Paknad v. Superior Court  (Paknad II) -H052652 (April 2026), the Court of Appeal directed the trial court to vacate its August 27, 2024 order, conduct a further in camera review, and order disclosure of all materials within the scope of Intuitive’s waiver.

The Court of Appeal held that the trial court had asked the wrong question. Rather than asking whether the redacted materials constituted core work product, the court was required to ask whether those materials fell within the scope of Intuitive’s waiver — a distinct inquiry that the trial court never performed.

The appellate court clarified that Paknad I had found waiver of both the attorney-client privilege and core attorney work product protection, following two controlling authorities. In Wellpoint Health Networks, Inc. v. Superior Court (1997) 59 Cal.App.4th 110, the court held that an employer who defends an employment lawsuit by relying on the thoroughness and propriety of its internal investigation waives both the attorney-client privilege and the work product doctrine as to that investigation. In People v. Superior Court (Jones) (2021) 12 Cal.5th 348, the California Supreme Court confirmed that even core work product is subject to waiver when the holder voluntarily places the protected material at issue — there, a prosecutor who relied on an undisclosed juror rating system to justify peremptory challenges waived work product protection as to that system.

Applying those principles, the court held that Intuitive’s waiver extended to: (1) all of Smethurst’s factual findings about Paknad’s allegations of discrimination, harassment, or retaliation; and (2) any information in the reports or investigative materials bearing on the scope or adequacy of Smethurst’s investigations. The factual findings were directly relevant to both prongs — they revealed how Smethurst weighed evidence and assessed witness credibility, and they were essential for Paknad to evaluate Intuitive’s repeated claim that the investigations were independent and objective. Because Intuitive put Smethurst’s independence at issue, Paknad was entitled to access the findings to assess whether bias infected the process.

The court rejected Intuitive’s argument that the redacted findings were shielded because they reflected legal judgment and experience, reasoning that having voluntarily commissioned and then weaponized those findings in its defense, Intuitive could not simultaneously disclaim their investigative character to preserve them from disclosure.

On remand, the court directed that further in camera review focus not on whether materials constitute core work product, but solely on whether they fall within the scope of what Intuitive placed at issue — and any such material must be disclosed to Paknad regardless of its work product character.

Hospital for Special Surgery (HSS) in New York City — ranked the number one orthopedic hospital in the United States for 16 consecutive years by U.S. News & World Report — is deploying a technology that could fundamentally change how orthopedic surgical decisions are made, documented, and disputed in workers’ compensation cases. The tool is called a “digital twin,” and it is moving from the research lab into everyday clinical practice.

A digital twin is a virtual replica of a patient’s own anatomy, built from advanced 3D MRI imaging and powered by physics-based computational modeling. In orthopedics, this means a surgeon can create a detailed, patient-specific computer model of an injured knee — including bones, cartilage surfaces, ligaments, and the mechanical relationships between them — and then run simulations on that model before operating.

The surgeon can test different surgical approaches on the virtual knee: tighten or loosen virtual ligaments, reposition virtual implant components, simulate how the joint will behave under load after various types of repair — all without touching the actual patient. The goal, as HSS Digital Twin Program Director Dr. Andrew Pearle has described it, is to move orthopedics beyond one-size-fits-all surgical planning toward truly individualized treatment based on each patient’s unique anatomy and biomechanics.

HSS received a $10 million gift in November 2025 from Lauren and Robert Steers to develop the HSS Digital Twin Platform into a four-year clinical program. The institution’s stated goal is that within four years, every patient who comes to HSS with a relevant clinical problem will receive a digital twin of their knee. The multidisciplinary team includes orthopedic surgeons, radiologists, biomechanical engineers, and artificial intelligence specialists.

The platform is already being applied to clinical cases. One of the initial applications has been evaluating patients who need ACL revision surgery — a repeat procedure after a prior ACL repair has failed. In these complex cases, surgeons must determine whether the patient would also benefit from a slope-reducing tibial osteotomy, a procedure that reshapes the angle of the shinbone to reduce the mechanical forces that contributed to the original graft failure.

Traditionally, this determination has relied on the surgeon’s clinical judgment, standard imaging, and experience. With the digital twin, the surgical team can simulate both options — revision alone versus revision plus osteotomy — on the patient’s own virtual anatomy and compare the predicted biomechanical outcomes before making a recommendation.

The platform also integrates additional data beyond imaging: patient gender, activity level, the type of physical demands the patient faces (including occupational demands), and neuromuscular control information. As HSS researchers have described it, the more data fed into the twin, the more precise and personalized the insights become.

HSS is not working alone. The institution is collaborating with other medical centers and organizations to scale the platform, and the underlying technologies — computational modeling, physics-based simulation, AI-enhanced imaging analysis — are advancing rapidly across the orthopedic field. Medscape reported in April 2026 that the platform represents a new frontier in precision orthopedic care that may extend beyond surgical planning into injury prevention.

The trajectory is clear: orthopedic surgery is moving from population-based decision-making toward individualized, simulation-driven planning. For workers’ comp, that means the medical evidence supporting — or challenging — surgical recommendations in injury claims is about to become significantly more sophisticated. Adjusters, attorneys, utilization review teams, and medical evaluators who understand what a digital twin is, what data it produces, and what its limitations are will be better positioned to handle the claims that follow.