Menu Close

Category: Daily News

CWCI Study Shows SB 863 Cost Reductions Bottomed Out by 2015

A new California Workers’ Compensation Institute study finds that average paid losses on California workers’ compensation lost-time claims fell immediately after legislative reforms (SB 863) took effect a decade ago, but then gradually increased up until the pandemic hit.

Currently, average paid losses on claims at all valuation points within 60 months of injury are above their post-reform lows, with only the most developed data on older claims — 72-month data on accident year (AY) 2016 claims — still showing declines in loss payments in the wake of the 2012 reforms.

Using data from CWCI’s Claims Monitoring Application on nearly 570,000 indemnity claims for injuries that occurred during the 10-year span ending in December 2022, the study tracks average paid losses at 6, 12, 24, 36, 48, 60 and 72 months post injury, breaking out the results by accident year to identify growth trends.

In addition to average total losses, the study notes the average medical and indemnity payments at each level of development and compares the loss payments for claims from 5 key industry sectors and from different regions of the state.

Average total paid losses within the first year of injury fell immediately after the 2012 reforms took effect but bottomed out in AY 2014 and started to trend up in AY 2015, continuing to increase through AY 2020. Average 24-month loss payments bottomed out in AY 2016, then trended up through AY 2019, the latest year for which 24-month data are available.

For the first time in 7 years, the 6- and 12-month average paid losses fell slightly in AY 2021 (the second year of the pandemic) while the 6-month payments on AY 2022 claims edged up slightly, so average total losses in the initial months after injury have changed little since the pandemic began.

Unlike the 6-, 12- and 24-month data, there are no COVID claims in the 36-, 48-, 60- and 72-month results as data at those levels of development is not available beyond AY 2019 and the pandemic began in AY 2020. More developed data on older claims show average total losses declined through AY 2016, but beginning with AY 2017 claims, paid losses at 36, 48, and 60 months began to rise, so the 72-month trendline, which now runs through AY 2016, is the only one that is still declining from the post-SB 863 level.

A review of average 24-month paid medical losses shows they declined from AY 2013 through AY 2016, but between AY 2017 and AY 2020 they jumped by 16.6%, which helped fuel the increase in the 24-month total loss trend. Much of that increase occurred in AY 2019 (+4.5%) and AY 2020 (+6.2%), and notably, 24-month data on claims from both those years included payments for medical services delivered during the pandemic.

Temporary disability comprises most of the indemnity paid in the first 2 years after a job injury, and despite some year-to-year fluctuations, the average indemnity paid at 6 months increased 40.6% from AY 2013 to AY 2022, the average indemnity paid at 12 months rose 27.7% from AY 2013 to AY 2021; and the average indemnity paid at 24 months fluctuated from AY 2013 to AY 2017 but increased for AY 2018, AY 2019, and AY 2020 claims, resulting in a 22.7% net increase between AY 2013 and AY 2020.

In the first few years after SB 863 took effect, the 36-month trendline for indemnity payments tracked with those at the shorter development periods, first fluctuating in a narrow range then gradually trending up to a peak in AY 2019. Average indemnity payments at the longer-term valuations, which are more affected by PD, were flatter, with a net increase of 3.4% in the 48-month payments from AY 2013 to AY 2018; a net decrease of 1.3% in the 60-month payments from AY 2013 to AY 2017; and a net decrease of 1.8% in the 72-month payments between AY 2013 and AY 2016.

The Institute study also examines differences in 24-month total loss trends for AY 2013 to AY 2022 indemnity claims from 5 industry sectors (construction; health care; clerical; food service; and agriculture); and for claims from injured workers living in 7 distinct regions of the state (San Diego, the Inland Empire/Orange County; Los Angeles County; the Central Coast; the Central Valley, the Bay Area, and the North Counties/Sierras), as well as for claims from out-of-state workers.

CWCI has published its study in a Research Update report, “California Workers’ Compensation Claims Monitoring: Medical & Indemnity Development, AY 2013 – AY 2022.

3M Resolves Defective Military Earplug Cases for $6 Billion

The 3M earplug litigation represents the largest mass tort in U.S. history. There have been more than 300,000 claims in which veterans accuse 3M and Aearo Technologies, a company acquired by 3M in 2008, of producing faulty earplugs that failed to protect their hearing from noise damage when they received them from the U.S. military.

3M manufactured, marketed and sold its Combat Arms Earplugs, Version 2 (CAEv2) from 1999 to 2015,with an alleged design defect which hampered their effectiveness.

3M announced that it has reached an agreement with the court-appointed negotiating plaintiffs’ counsel to resolve the Combat Arms Earplug litigation against Aearo Technologies (Aearo) and 3M. The settlement comes after 3M failed to move the lawsuits into bankruptcy court in hope of limiting its liability.

Under the agreement, 3M will contribute a total amount of $6.0 billion between 2023 and 2029, which is structured under the agreement to include $5.0 billion in cash and $1.0 billion in 3M common stock.

This settlement is a tremendous outcome for veterans of Iraq and Afghanistan who put their lives on the line for our freedom,” said Duane Sarmiento, the Veterans of Foreign Wars (VFW) national commander. “For those who came home with hearing damage due to 3M’s faulty earplugs, this is not only compensation, it’s a statement that their sacrifices won’t be ignored.”

Last summer, Aearo Technologies filed for bankruptcy as a separate company, accepting responsibility for all the liability claims. The move was intended to give Aearo leverage in bankruptcy court to reach a settlement with the plaintiffs. 3M said it would pay for any settlement Aearo reached.

U.S. Bankruptcy Court Judge Jeffrey Graham in Indianapolis dismissed Aearo’s bankruptcy filing in June. The judge said Aearo did not qualify for bankruptcy protections as a distressed company since it had 3M’s promise to pay for a settlement. Aearo plans to appeal the ruling, as reported in The Wall Street Journal.

In February, VFW filed an Amicus Curiae brief to the Seventh Circuit Court of Appeals in support of claimants seeking relief from 3M for defective ear protection. 3M had tried to shift the blame to its subsidiary Aearo Technologies, who it said was responsible for the defective earplugs and who had filed Chapter 11 bankruptcy, to avoid paying claimants. The bankruptcy appeal is being held in abeyance pending finalization of the settlement.

This agreement, reached through the mediation process that 3M has previously disclosed, is structured to promote participation by claimants and is intended to resolve all claims associated with the Combat Arms Earplug products.

The agreement includes all claims in the multi-district litigation in Florida and in the coordinated state court action in Minnesota, as well as potential future claims. The Florida and Minnesota courts are entering orders to support implementation of the agreement.

3M also added to its announcement that this “agreement is not an admission of liability. The products at issue in this litigation are safe and effective when used properly. 3M is prepared to continue to defend itself in the litigation if certain agreed terms of the settlement agreement are not fulfilled.”

Aearo and 3M are actively engaged in insurance recovery activities to offset a portion of the settlement payments, and Aearo initiated insurance recovery litigation against its carriers in June related to the litigation.

According to Fox Business News, the settlement amount is significantly less than the $10 billion to $15 billion that some analysts predicted the case would cost the company. Still, the settlement will impact financial results. 3M will record a $4.2 million pre-tax charge in the third quarter, which “represents the $5.3 billion pre-tax present value of contributions under the agreement net of 3M’s existing accrual of approximately $1.1 billion related to this matter,” the company detailed.

More information about the settlement is available at

Costly Healthcare Presumption of AOE/COE Law Failed – This Year

National Nurses United, with nearly 225,000 members nationwide, is the largest union and professional association of registered nurses in U.S. history.

In 2009, California Nurses Association/National Nurses Organizing Committee played a lead role in bringing state nursing associations across the nation together into one national organization, National Nurses United (NNU). At its founding convention, NNU adopted a call for action to counter what it called “the national assault by the healthcare industry on patient care conditions and standards for nurses,” and to promote a unified vision of collective action for nurses.

This legislative year, nurses across California were instrumental in the introduction of A.B. 1156, authored by Assemblymember Mia Bonta (D-Oakland) and sponsored by California Nurses Association (CNA). The organization held a press conference about the proposed law on April 5 at the Kaiser Permanente Oakland Medical Center.

This bill would define “injury,” for a hospital employee who provides direct patient care in an acute care hospital, to include infectious diseases, cancer, musculoskeletal injuries, post-traumatic stress disorder, and respiratory diseases. The bill would include the 2019 novel coronavirus disease (COVID-19) from SARS-CoV-2 and its variants, among other conditions, in the definitions of infectious and respiratory diseases. The bill would create rebuttable presumptions that these injuries that develop or manifest in a hospital employee who provides direct patient care in an acute care hospital arose out of and in the course of the employment. The bill would extend these presumptions for specified time periods after the hospital employee’s termination of employment.

Fortunately for California employers, A.B. 1156 was last found In the Assembly Insurance Committee as of March 2023. It failed deadline the deadline to move from policy committee to fiscal committee as of April 28, 2023. Thus the measure did not proceed to be passed by the Legislature in the current session, but technically is still alive for 2024 consideration.

The California Chamber of Commerce, and a number of other business organizations opposed A.B. 1156. It pointed out that in 2019, SB 567 (Caballero) included presumptions for a very similar, more narrow list of illnesses and injuries. The Senate Committee on Labor, Public Employment and Retirement issued an analysis concluding that there was no evidence supporting the need for this presumption. It also warned that “the creation of presumptive injuries is an exceptional deviation that uncomfortably exists within the space of the normal operation of the California workers’ compensation system,” and to not limit them “would essentially consume and undermine the entire system”.

Two of the most recent iterations of this bill, SB 893 (Caballero) and SB 567 (Caballero) received 0 and 1 Aye votes in committee, respectively. SB 213 (Cortese) did not receive a motion in Assembly Insurance last year.

In 2014, AB 2616 (Skinner), the only version to make it to the Governor’s desk, was vetoed by Governor Edmund G. Brown, Jr. In his veto message he stated, “This bill would create a first of its kind private employer workers’ compensation presumption for a specific staph infection — methicillin-resistant Staphylococcus aureus (MRSA) — for certain hospital employees. California’s no-fault system of worker’s compensation insurance requires that claims must be ‘liberally construed’ to extend benefits to injured workers whenever possible. The determination that an illness is work-related should be decided by the rules of that system and on the specific facts of each employee’s situation. While I am aware that statutory presumptions have steadily expanded for certain public employees, I am not inclined to further this trend or to introduce it into the private sector.”

New Law Facilitates Physicians and Dentists from Mexico Program

In 2002 the Mexico Pilot Program, was established in California by AB 1045. It was designed to bring physicians and dentists from Mexico with rural experience, who speak the language, understand the culture, and know how to apply this knowledge in serving the large Latino communities in rural areas who have limited or no access to primary health care services.

Proponents of the measure were concerned about addressing primary care physician and dentist shortages while maintaining a high quality of care.

The bill authorized up to 30 licensed physicians specializing in family practice, internal medicine, pediatrics, and obstetrics and gynecology and up to 30 licensed dentists from Mexico to practice medicine or dentistry in California for up to three years, and required the individuals to meet certain requirements related to training and education.

The bill specified that any funding necessary for the implementation of the program, including the evaluation and oversight functions, was to be secured from nonprofit philanthropic entities and further stated that implementation of the program could not move forward unless appropriate funding was secured from nonprofit philanthropic entities.

The Medical Board of California (MBC) received the necessary philanthropic funding in 2018 to initiate the program and began taking the necessary steps for implementation. As of April 2019, MBC began accepting applications for the Mexico Pilot Program. MBC received the required funding commitments necessary for program implementation in December 2020. MBC reports that as of September 2022, MBC had issued 21 licenses to qualified Mexico Pilot Program applicants.

The Board anticipates approving a cohort of eight additional applicants (for a total of 30, the maximum under the law) in spring 2023.

Mexico Pilot Program physicians are authorized to practice in the following MBC-approved community health clinics: Clinica de Salud del Valle de Salinas in Monterey County; San Benito Health Foundation in San Benito County; Altura Centers for Health in Tulare County and; AltaMed Health Services Corporation.

In August 2022, the Center for Reducing Health Disparities (CRHD) at the University of California, Davis released its first annual progress report of the Mexico Pilot Program.

The Medical Board of California and the Dental Board of California requires a licensee, at the time of issuance of a license, to provide specified federal taxpayer information, including the applicant’s social security number or individual taxpayer identification number. The licensing board is prohibited from processing an application for an initial license unless the applicant provides that information where requested on the application.

Governor Newsom has signed A.B. 1395 into law. For purposes of the Pilot Program, the boards are now authorized to issue a 3-year nonrenewable license to an applicant who has not provided an individual taxpayer identification number or social security number if the applicant meets specified conditions. The applicant would be required to immediately seek an appropriate 3-year visa and social security number from the federal government within 14 days of being issued the medical license and immediately provide the medical board with their social security number within 10 days of issuance of that card by the federal government. The bill would prohibit the applicant from engaging in the practice of medicine until the board determines that these conditions have been met.

There was no opposition to this new law shown in the Legislative History.

Dismissed Felony Results in City Worker Losing PERS Retirement

Elaine Estrada, was a former employee of the City of La Habra Heights. On April 28, 2016, the Los Angeles County District Attorney’s Office filed a felony complaint against Estrada that charged her with one count of misappropriation of public funds in violation of Penal Code section 424, subdivision (a), (count 1), and one count of embezzlement by a public officer in violation of Penal Code section 504 (count 2).

As to both counts, it was alleged that, between April 1, 2007 and July 31, 2009, Estrada removed payroll deductions, and as a result, did not pay the required employee share for dependents covered on her plan. The City did not discover the alleged conduct until an audit in 2012 because Estrada was responsible for the payroll and timekeeping of all City employees.

Estrada pled no contest to a felony that arose out of the performance of her official duties. Under the terms of Estrada’s plea agreement, the conviction was later reduced to a misdemeanor under Penal Code section 17 and then dismissed under Penal Code section 1203.4.

Government Code section 7522.72 provides that if a public employee is convicted of a felony for conduct arising out of or in the performance of his or her official duties, the employee forfeits certain accrued retirement benefits, which “shall remain forfeited notwithstanding any reduction in sentence or expungement of the conviction.” Thus California Public Employees’ Retirement System (CalPERS) determined that Estrada forfeited a portion of her retirement benefits as a result of her felony conviction.

Estrada appealed the forfeiture action. The ALJ found CalPERS was correct in its determination that Estrada was convicted of a felony arising out of her official duties as an employee of the City. As a result, the ALJ concluded that Estrada forfeited her right to retirement benefits for the period from September 1, 2007, the earliest date of the commission of the felony, through June 28, 2017, the date of her felony conviction.

On August 6, 2019, after the ALJ issued the proposed decision but before the Board adopted it, Estrada returned to criminal court. Following an off the-record conference with Estrada’s counsel and a deputy district attorney, the court stated that it was granting a request to issue a nunc pro tunc order. The court then found “nunc pro tunc that on June 28th, 2017, the defendant pleaded to the felony but was not convicted.” The court further found that “on January 3rd, 2018, the defendant was convicted of a misdemeanor and sentenced to a misdemeanor.” At the request of Estrada’s counsel, the court added that “[t]he record will so reflect that the defendant did not suffer a felony conviction in this case.”

Estrada filed a petition for writ of administrative mandate in Los Angeles County Superior Court seeking an order directing CalPERS to set aside its forfeiture decision and to reinstate her retirement benefits. Estrada argued that she was entitled to retain her retirement benefits because she was convicted of a misdemeanor, not a felony, and the criminal case against her was dismissed. The trial court denied Estrada’s petition.

The Court of Appeal affirmed the denial in the published case of Estrada v. Public Employees’ Retirement System -B317848 (September 2023).

On Appeal Estrada contends that her retirement benefits were not subject to forfeiture under section 7522.72 because she withdrew her plea to the felony and entered a new plea to a misdemeanor, and the criminal case was later dismissed. The Court of Appeal Disagreed.

Under the plain language of section 7522.72, a public employee’s accrued retirement benefits are subject to forfeiture upon his or her conviction of a job-related felony. While section 7522.72 does not define the terms “convicted” or “conviction,” the general rule in California is that ” ‘[a] plea of guilty constitutes a conviction.’ ” (People v. Banks (1959) 53 Cal.2d 370, 390 – 391; accord, People v. Laino (2004) 32 Cal.4th 878, 895.) “A guilty plea ‘admits every element of the crime charged’ [citation] and ‘is the “legal equivalent” of a “verdict” [citation] and is “tantamount” to a “finding” [citations]’ ” (People v. Wallace (2004) 33 Cal.4th 738, 749.)

This interpretation of section 7522.72 is also consistent with the legislative purpose of statute. … section 7522.72 is part of PEPRA (of the California Public Employees’ Pension Reform Act of 2013) , which was enacted to close loopholes and to curb abusive practices that existed in California’s public pension system.”

“Our conclusion in this case is further supported by Danser v. Public Employees’ Retirement System (2015) 240 Cal.App.4th 885, in which the Court of Appeal considered section 75526, a benefit forfeiture statute applicable to judges.”

The order denying the petition for writ of administrative mandate was affirmed

FTC Pushback Over Private Equity Firm’s Medical Practice Buyouts

The Federal Trade Commission sued U.S. Anesthesia Partners, Inc. (USAP), the dominant provider of anesthesia services in Texas, and private equity firm Welsh, Carson, Anderson & Stowe, alleging the two executed a multi-year anticompetitive scheme to consolidate anesthesiology practices in Texas, drive up the price of anesthesia services provided to Texas patients, and boost their own profits.

The FTC’s complaint, filed in federal district court, alleges that USAP and Welsh Carson, which created USAP, engaged in a three-part strategy to consolidate and monopolize the anesthesiology market in Texas. First, they executed a roll-up scheme, systematically buying up nearly every large anesthesia practice in Texas to create a single dominant provider with the power to demand higher prices. Second, USAP and Welsh Carson further drove up anesthesia prices through price-setting agreements with remaining independent practices. Third, USAP sidelined a significant competitor by striking a deal to keep it out of USAP’s territory.

The FTC alleges that USAP’s multi-pronged anticompetitive strategy and resulting dominance has cost Texans tens of millions of dollars more each year in anesthesia services than before USAP was created.

“Private equity firm Welsh Carson spearheaded a roll-up strategy and created USAP to buy out nearly every large anesthesiology practice in Texas. Along with a set of unlawful agreements to set prices and allocate markets, these tactics enabled USAP and Welsh Carson to raise prices for anesthesia services-raking in tens of millions of extra dollars for these executives at the expense of Texas patients and businesses,” said FTC Chair Lina M. Khan. “The FTC will continue to scrutinize and challenge serial acquisitions, roll-ups, and other stealth consolidation schemes that unlawfully undermine fair competition and harm the American public.”

As the FTC’s complaint states, New York-based Welsh Carson created USAP in 2012 after observing that anesthesiology in Texas was made up of small practices competing against one another, which allowed insurers to negotiate lower prices for themselves, for their clients, and ultimately for patients. Welsh Carson saw a chance to profit by eliminating this competition.

Since its creation, USAP has acquired more than a dozen anesthesiology practices in Texas. As it bought each one, the FTC says, USAP raised the acquired group’s rates to USAP’s higher rates – resulting in a substantial mark-up for the same doctors as before. This roll-up strategy has made it the dominant provider of anesthesia services in Texas and in many of the state’s metropolitan areas, including Houston and Dallas. USAP’s size and prices now dwarf those of its rivals.

The FTC’s complaint also alleges that USAP sought to further drive-up prices by:

– – Entering or maintaining price-setting arrangements: USAP entered into or maintained arrangements that allowed USAP to charge its own market-leading prices for services that were provided by independent anesthesia groups at key hospitals in Houston and Dallas.

– – Forming a market allocation arrangement: USAP and Welsh Carson secured a promise from another large anesthesia services provider to stay out of USAP’s territory.

The FTC alleges that USAP and Welsh Carson’s conduct amounts to unlawful monopolization, unlawful acquisitions, a conspiracy to monopolize, unfair methods of competition, and unlawful restraints of trade. Such conduct violates the FTC Act and the Clayton Act.

The FTC is seeking equitable relief necessary to remedy the impact of USAP and Welsh Carson’s anticompetitive conduct and to prevent the recurrence of such conduct.

The Commission vote to authorize staff to file for a permanent injunction and other equitable relief in the U.S. District Court for the Southern District of Texas was 3-0.

Allstate’s Argument to Avoid Hospital Lien was “Disingenuous”

In December 2017 the Long Beach Memorial Medical Center treated Vernon Barnes for injuries he received in a car accident. Afterward Barnes submitted a personal injury claim to Allstate, which insured the driver Barnes claimed was at fault in the accident. The Medical Center informed Allstate by letter that Barnes had incurred $116,714.67 in expenses for his treatment at the Medical Center and that the Medical Center was asserting a lien for that amount under the Hospital Lien Act (HLA).

Under the Hospital Lien Act (HLA) (Civ. Code, §§ 3045.1-3045.6), “when a hospital provides care for a patient, the hospital has a statutory lien against any . . . settlement received by the patient from a third person responsible for his or her injuries, or the third person’s insurer, if the hospital has notified the third person or insurer of the lien.” (Mercy Hospital & Medical Center v. Farmers Ins. Group of Companies (1997) 15 Cal.4th 213, 215 (Mercy Hospital).) The HLA prohibits an insurer from paying a patient without paying the hospital the amount of its lien, or as much as can be satisfied from 50 percent of the patient’s recovery from the tortfeasor or insurer.

In February 2020 Barnes and Allstate settled his claim for $300,000. The settlement agreement provided Allstate would pay this amount by sending Barnes’s attorneys three checks: one made payable to Medicare for $24,230.93, one made payable to Barnes and his attorneys for $159,054.40, and one made payable to Barnes and the Medical Center for $116,714.67, the amount of the lien. The settlement agreement also provided Barnes and his attorneys would indemnify, defend, and hold harmless Allstate and its insured against claims by the Medical Center or anyone else with a statutory right of recovery against Allstate and its insured.

Later in February 2020 Allstate sent Barnes’s attorneys a check for $116,714.67 made payable to Barnes and the Medical Center. That check, however, was never deposited, and by March 2021 it had expired. At that time Allstate sent Barnes’s attorneys a second check for the same amount made payable to the same parties (the March 2021 check). To Allstate’s knowledge, that check was never cashed.

In May 2021 the Medical Center filed this action against Allstate, asserting a single cause of action for violating the HLA. The Medical Center alleged that Allstate, having received written notice of the Medical Center’s lien regarding Barnes’s medical treatment, violated the HLA by paying Barnes to settle his personal injury claim without paying the Medical Center the amount of its lien.

Allstate filed a motion for summary judgment which the the trial court granted, ruling Allstate’s two-payee check, which was never cashed, satisfied its obligation under the HLA. The Court of Appeal reached the opposite conclusion and reversed in the published case of Long Beach Memorial Medical Center v. Allstate Ins. Co. -B321876 (September 2023).

Allstate argues that giving Barnes’s attorneys a check for $116,714.67 made payable to Barnes and the Medical Center constituted a payment to the Medical Center for the amount of its lien. As in the trial court, Allstate declines to specify which check made payable to the Medical Center as co-payee—the February 2020 check or the March 2021 check—Allstate claims satisfied its payment obligation to the Medical Center.

Citing Crystaplex Plastics, Ltd. v. Redevelopment Agency (2000) 77 Cal.App.4th 990 (Crystaplex), Allstate argues the check(s) in question constituted payment to the Medical Center because a “check issued to multiple payees, delivered to one payee, is delivery of a check.”

However “Allstate may have constructively delivered the check(s) to the Medical Center does not mean Allstate made a ‘payment’ to the Medical Center.

On the contrary, as a general rule – a check of itself is not payment until cashed . . . .(Hale v. Bohannon (1952) 38 Cal.2d 458, 467; accord, Cornwell v. Bank of America (1990) 224 Cal.App.3d 995, 1000; see Navrides v. Zurich Ins. Co. (1971) 5 Cal.3d 698, 706 [a “check is never a payment of the debt for which it is given until the check itself is paid or otherwise discharged’”]; Hale, at p. 467 [the “mere giving of a check does not constitute payment’”]; Mendiondo v. Greitman (1949) 93 Cal.App.2d 765, 767 [same]; Art Frost of Glendale v. Hooper (1955) 130 Cal.App.2d Supp. 903, 906 [“[u]ntil the check involved here was cashed, . . . the obligation of the drawer remained in existence”]; Bas s v. Olson (9th Cir. 1967) 378 F.2d 818, 820 [“under governing California law, mere possession of an uncashed check is not equivalent to payment,” and therefore, “prior to the actual presentation of the check at the bank,” the defendant, who physically possessed the check,”was never ‘paid’”].)

The Court of Appeal then concluded that there “is no evidence either check Allstate made out to the Medical Center as a co-payee was ever cashed. In fact, it appears undisputed that neither was.”

And Allstate’s argument the Medical Center suffered no harm because it could ‘resolve’ its lien with Barnes seems disingenuous: The obvious point of including Barnes as co-payee was to empower him to negotiate keeping some portion of the amount of the Medical Center’s lien for himself.

Palm Springs Pharmacy Resolves Fraud Claim for $925K

The California Attorney General announced a $925,000 settlement agreement with LASR Enterprises, a Southern California pharmacy accused of defrauding California’s Medicaid program, Medi-Cal.

The agreement resolves allegations that the Palm Springs-based pharmacy and its owners unlawfully sought and received reimbursement from Medi-Cal for drugs that it over-dispensed, or that it dispensed drugs without receiving a valid prescription.

The California Department of Justice’s Division of Medi-Cal Fraud and Elder Abuse (DMFEA) investigated the case and negotiated the settlement, which recovers more than five times the amount lost by Medi-Cal.

DMFEA began its investigation in this case after being alerted by the California Department of Health Care Services to LASR’s pattern of allegedly unlawful billing. Investigators found that between January 2015 and December 2017, LASR and its owners sought and received a total of $155,709 in reimbursement from Medi-Cal for drugs dispensed without a valid prescription, and a total of $22,177 in reimbursement for drugs that were over-dispensed per an authorized prescription. Their actions allegedly violated the California False Claims Act.

The settlement negotiated by DMFEA amounts to a total of $925,000 and recovers over five times the damages to the Medi-Cal program. Of the total settlement, California will receive $555,000 and the United States will receive $370,000, as Medi-Cal is funded jointly by state and federal governments.

DMFEA receives 75% of its funding from HHS under a grant award totaling $53,792,132 for federal fiscal year 2022-2023. The remaining 25% is funded by the State of California. The federal fiscal year is defined as through September 30, 2023.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

SCIF Alleges it was “Intentionally Mislead” by Dept of Insurance

In 2017, A-Brite Blind and Drapery Cleaning initiated an action with the Department’s administrative hearing bureau against State Compensation Insurance Fund regarding State Fund’s policy premiums.

Following an evidentiary hearing, an administrative law judge issued a proposed decision to the Commissioner, who declined to adopt it.

Instead, the Commissioner issued his own decision and order on November 16, 2018 , finding that State Fund violated the Insurance Code by, among other things, including an unlawful rating tier modifier during the 2015 and 2016 policy periods. The Commissioner further designated the A-Brite order as precedential under Government Code section 11425.60, subdivision (b).

State Fund filed a motion for reconsideration, which was deemed denied when the Commissioner failed to respond.

On January 28, 2019, more than a month before the deadline for State Fund to challenge the A-Brite order in the trial court by petition for writ of mandate (Cal. Code Regs., tit. 10, § 2509.76, subd. (a)), State Fund’s general counsel sent a letter to the Department, asking the Commissioner to “rescind the designation of the [A-Brite] Decision as precedential,” as the decision contained “clear errors of facts and law.”

In response to the letter, the Department’s attorney, Bryant Henley, contacted State Fund to discuss settlement. State Fund and the Department ultimately signed a settlement agreement which said “State Fund agrees, further, not to file a Writ Petition challenging, in whole or in part, the A-Brite Order. The Department agrees to remove the precedential designation from the A-Brite Order, rendering the decision non-precedential.”

On March 15, 2019, State Fund’s deadline for filing a writ petition challenging the A-Brite order expired.

Ten days later, after noting “several legal and factual issues in common” between the A-Brite matter and another administrative action brought against State Fund, an ALJ for the Department took official notice of the A-Brite order, the A-Brite settlement agreement, and various other A-Brite documents in In the Matter of the Appeal of Sessions Payroll Management, Inc. (File: AHB-WCA-18-47, July 18, 2019) (the Sessions matter).

The ALJ also ordered the parties to brief whether the “doctrines of exhaustion of judicial remedies and collateral estoppel preclude relitigation of factual and/or legal issues decided by the Commissioner in A-Brite.” After reviewing the briefs, the ALJ disagreed with State Fund, instead adopting Sessions’s position that both doctrines applied and issuing an order finding that State Fund was precluded from relitigating the factual and legal issues decided in A-Brite.

On June 10, 2019, State Fund filed a petition for a peremptory writ of administrative mandate challenging the merits of the 2018 A-Brite order. Aware that the petition was filed after the limitations period had run, State Fund alleged that equitable estoppel and equitable tolling applied to render the petition timely. Among other things SCIF alleged “that the Commissioner intentionally misled State Fund by representing that the settlement agreement would preclude any use of the A-Brite order in subsequent proceedings.”

On November 19, 2020, in response to State Fund’s effort to reopen the A-Brite matter by filing this writ, the ALJ in Sessions issued an order vacating its ruling finding the A-Brite order preclusive in that case, as the A-Brite order was no longer final for purposes of collateral estoppel and judicial exhaustion.

The same day, the Department filed a motion for summary judgment in the trial court, arguing that State Fund’s petition was time-barred as a matter of law. The court granted the motion, finding that neither equitable estoppel nor equitable tolling applied to extend the period of limitations.

In doing so, it found that the settlement agreement only required the Department to “de-designate” the A-Brite order as precedent under the applicable Government Code section, and it did not preclude the Department from binding State Fund to the A-Brite order through other means, such as nonmutual offensive collateral estoppel.

The Court of Appeal affirmed the trial court dismissal in the unpublished decision of State Compensation Ins. Fund v. Dept. of Insurance -C093897 (September 2023).

A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful. (Civ. Code, § 1636.).

The “Department’s interpretation suggests that State Fund agreed not to pursue the writ, while also agreeing to be bound by the A-Brite order with respect to every company raising the same issues in all future administrative actions against State Fund.This reading of the agreement would render the contract largely illusory, granting no benefit to State Fund.”

“Here, the plain language of the contract controls, and does not support the narrow reading advanced by the Department. … State Fund agreed to be bound by the order with respect to A-Brite. It did not agree to be bound by the A-Brite order with respect to any other party. ” … “The contractual language supports State Fund’s interpretation.

However the Court went on to say “While we agree with State Fund’s interpretation of the settlement agreement, we conclude that State Fund fails to raise a question of material fact as to whether equitable estoppel or equitable tolling applies in this case.

A defendant may be estopped from asserting the statute of limitations as a defense if four elements are present:: (1) the party to be estopped must be apprised of the facts; (2) he [or she] must intend that his [or her] conduct shall be acted upon, or must so act that the party asserting the estoppel had a right to believe it was so intended; (3) the other party must be ignorant of the true state of facts; and (4) he [or she] must rely upon the conduct to his [or her] injury. (Honeywell v. Workers’ Comp. Appeals Bd. (2005) 35 Cal.4th 24, 37, quoting City of Long Beach v. Mansell (1970) 3 Cal.3d 462, 489.).

“Here, the doctrine is inapplicable to the facts before us. There is no misrepresentation, or nondisclosure of facts, which caused State Fund to refrain from filing the writ.” The dispute was over interpretation of the agreement.

However, State Fund is not necessarily without further remedy. It still may challenge the ALJ’s application of collateral estoppel in Sessions if that order is reinstated.

Exclusive Remedy Bars Death Claim for Employer’s First Aid

Timoteo Alejandro Martinez Ildefonso worked at a Whole Foods store in Venice, California. While on a 15-minute break, he left the store and was hit by a pickup truck while using a crosswalk at a nearby intersection. The driver stopped, spoke with him, then returned to the car and drove away.

Ildefonso walked back to the store where he told his supervisors that he was injured and wanted to go home. A store employee later drove him home. He died a few hours later.

An administrative law judge and the California Workers’ Compensation Appeals Board determined that the decedent’s injuries arose out of his employment and occurred in the course of that employment.

The decedent was survived by his wife, Martha Eve Jimenez, and three children. Plaintiffs filed this wrongful death action against several parties including the decedent’s employer, Mrs. Gooch’s. Plaintiffs rely on two narrow exceptions to the general principle that workers’ compensation is the exclusive remedy for workplace injury: dual capacity and fraudulent concealment (Lab. Code, § 3602, subd. (b)(2)).

As to the dual capacity exception, plaintiffs allege that in addition to its role as the decedent’s employer, Mrs. Gooch’s acted as an emergency first aid responder after the decedent was injured in the crosswalk. In that capacity, Mrs. Gooch’s caused a second injury for which it is liable.

As to the fraudulent concealment exception, plaintiffs allege that store employees knew the decedent was injured but failed to disclose to him that his injury was connected to his employment. Plaintiffs allege that if the other employees had both disclosed that the injury was work related and treated it as such, they would have called an ambulance and instructed the decedent to wait to receive an examination by a paramedic.

Mrs. Gooch’s demurred The court found neither exception applied and sustained the demurrer without leave to amend. The Court of Appeal affirmed the dismissal in the published case of Jimenez v. Mrs. Gooch’s Natural Food Markets, Inc. -B322732 (September 2023).

Plaintiffs attempt to analogize the present case to the California Supreme Court decision in Duprey v. Shane (1952) 39 Cal.2d 781 and similar cases in which an injured employee was allowed to pursue a medical malpractice claim against an employer who was also a treating medical professional.

But this case is plainly distinguishable from those cases because plaintiffs do not allege that either Mrs. Gooch’s or the store employees who rendered first-aid assistance were medical professionals. Instead, plaintiffs apparently seek to expand the dual capacity doctrine to include a negligent undertaking theory. Plaintiffs cite no case holding that a negligent undertaking theory is viable in these circumstances nor do they offer any legal support for their suggestion that we expand the scope of the dual capacity exception.”

The fraudulent concealment exception is found in Labor Code section 3602, subdivision (b)(2). To withstand a demurrer, an employee must “in general terms” plead facts that if found true by the trier of fact, establish the existence of three essential elements: (1) the employer knew that the plaintiff had suffered a work-related injury; (2) the employer concealed that knowledge from the plaintiff; and (3) the injury was aggravated as a result of such concealment.

However, the opinion concluded that “[t]he exception does not apply where the employee was aware of the injury at all times.This point is fatal to plaintiffs’ argument. The complaint does not allege that the decedent was unaware of his injury.” (Silas v. Arden (2012) 213 Cal.App.4th 75, 91.)