Category: Daily News

California Agricultural Network, Inc. (“CAN”) is a non-profit, mutual benefit California corporation with its principal place of business in Ontario, California. It is a collective of growers who have pooled their resources to successfully form a self-insured group.

A Self-Insured Group (SIG) is an alternative to traditional insurance, granting California members (employers) greater control over their workers’ compensation spend. CAN was formed in 2004 as a SIG for agricultural employers. Under CAN’s bylaws, all members must be self-insured employers within the agricultural industry, or provide support or services to the agricultural industry

According to a lawsuit filed in Ventura County Superior Court, because “CAN’s members share responsibility for all other members’ workers’ compensation liabilities, the manner in which each member discharges its duties has a direct pecuniary effect on every other member. The members each repose trust and confidence in every other member to discharge their duties responsibly and in good faith. Thus, by becoming a member of a SIG such as CAN, members take on legal duties to every other member, including fiduciary duties.”

The lawsuit alleges that Houweling Nurseries Oxnard, INC. (“HNOI”), became a member of CAN in 2006 and remained a member until September 2021. HNOI operated a tomato farm in Camarillo, California. In 2021, HNOI underwent a name change to its present name, Longvine California , Inc. Another defendant in the lawsuit is Casey Houweling who resides in British Columbia Canada.

CAN alleges that by March 2021, all of Casey Houweling’s interest in HNOI and/or its holding companies was transferred to Longvine and/or companies which Longvine owned or controlled, and that these transactions were “concealed” from CAN. And Defendants, “They also failed to report the transactions to the Office of Self-Insurance Plans.

California law, specifically 8 Cal.Code Regs. § 1 5203. 8, requires self-insured employers to report to OSIP any transactions which result in a material change in the form of business structure or ownership from the time the employer first obtained its Consent to Self-Insure.

Plaintiffs say that under CAN’s bylaws, membership in the group is non-transferrable. The Defendants were required to report the structural/ownership changes in HNOI to CAN so that CAN and its members could evaluate whether the restructured organization was suitable to remain a self-insured member of CAN.

According to the allegations “HNOI, indeed, no longer had the financial strength or suitable management to remain a CAN member. By September 2021, in fact, it could no longer remain in business, and sold its Camarillo facility to a marijuana grower.”

Plaintiffs go on to say that HNOI ended up laying off all of its staff. Further, HNOI and its owners, failed to undertake even minimal steps to prevent or minimize post-termination claims by laid off workers, a foreseeable and often avoidable consequence of any business shutdown. More than 100 laid off employees filed workers’ compensation claims against HNOI after being laid off.

Allegedly HNOI had by then ceased its membership in CANSIG, but CAN was left responsible to pay the post-termination claims of its injured workers. CAN remains liable as a matter of law for all of those claims, which are continuing to develop and will increase in cost as time passes.

Plaintiffs say that Casey Houweling in the meantime, having left CAN and its members responsible for millions of dollars in unpaid workers’ compensation claims, took advantage of HNOI’s closure by starting a new company, Houweling’s Camarillo, Inc., hiring back the same employees whom he and his co-defendants laid off, and continuing HNOl’s former tomato growing operations on the exact same site that had been farmed by HNOI. In so doing, “Casey Houweling engaged in egregious self-dealing, in contravention to all of his 9 legal and fiduciary duties to CAN and its members.”

CAN therefore seeks damages in its lawsuit against several defendants for losses caused by various theories of liability that left the insurance network “holding the bag” for more than $3 million in workers’ compensation claims.

According to a report on this suit by Pacific Coast Business Times, the Houweling’s Tomatoes property in Camarillo was sold in September 2021 to Glass House Group, a publicly traded cannabis company with other greenhouses in Santa Barbara County. Glass House paid around $93 million and has converted part of the space into cannabis greenhouses. There were 486 employees in August 2021, after Glass House agreed to buy the property.

They report that for now, Glass House has split the Camarillo facility into cannabis and tomatoes, and has said that if cannabis becomes legal at the federal level, it will devote all 5.5 million square feet to cannabis.

Forbes reports that Glass House is one of the fastest-growing, vertically integrated cannabis companies in the U.S., with cultivation, processing, distribution and retail operations in California, where voters legalized recreational marijuana in 2016.

Last May, Glass House reported that it has begun marijuana cultivation operations at its new 5.5 million square foot greenhouse in Southern California after receiving approval to open the facility from state and local regulators. The company received licenses from the California Department of Cannabis Control and Ventura County on March 11 and began cultivation operations at the massive facility the same day with the transfer of thousands of young plants from an existing site in Santa Barbara.

Healthgrades named the 50 recipients of its 2023 Specialty Excellence Awards Oct. 25, including the top hospitals for surgical care.

Using 2019-2021 Medicare Provider Analysis and Review data, Healthgrades analyzed risk-adjusted mortality and complication rates for 15 of the most common in-hospital surgical procedures, including cardiac, vascular, joint replacement, prostate, spine and gastrointestinal surgeries.

And nine of California Hospitals were on the list of 50 national hospitals to received an Award.

– – Eisenhower Medical Center(Rancho Mirage, Calif.)
– – Kaiser Permanente San Jose Medical Center
– – Kaiser Permanente San Leandro Medical Center
– – Kaiser Permanente Woodland Hills Medical Center
– – Los Robles Regional Medical Center (Thousand Oaks)
– – Palomar Medical Center Escondido
– – Providence Saint John’s Health Center (Santa Monica)
– – Redlands Community Hospital
– – Scripps Green Hospital (La Jolla)

To help consumers evaluate and compare hospital performance specific to specialty areas, Healthgrades communicates performance in two ways – through ratings and awards.

To measure performance, Healthgrades used Medicare inpatient data from the Medicare Provider Analysis and Review (MedPAR) file purchased from the Centers for Medicare and Medicaid Services (CMS) for years 2019 through 2021. For Appendectomy and Bariatric Surgery, Healthgrades used inpatient data provided by 16 states that provide all-payer data for years 2018 through 2020 (one year behind MedPAR data years).

Patient outcomes data for 33 conditions or procedures were analyzed for virtually every hospital in the country, with the exception of Appendectomy and Bariatric Surgery for which hospitals in 16 all-payer states were assessed.

The first and most fundamental way that Healthgrades communicates performance is through star ratings. Star ratings are an evaluation of the hospital’s actual performance as compared to the predicted performance for that hospital based on a specific risk-adjustment model applied to that hospital.

Shiekh Shoes, LLC hired Britani Davis as a sales associate in August 2018. As part of her “new hire” paperwork, Davis and Shiekh signed an agreement “to resolve any and all disputes or claims each may have against the other which relate in any manner whatsoever as to Employee’s employment . . . by binding arbitration” and to “waive their right to commence, be a party to, or class member of, any court action.”

Davis’s employment at Shiekh would prove to be short, however, as she resigned from the position a mere three months after being hired. According to Davis, she was subjected to ongoing, sexually explicit, and demeaning comments, unwanted touching, and indecent exposure from her co-worker, Danilo Ensuncho, as well as other harassing conduct from Shiekh customers.

On March 25, 2019, Davis filed a complaint against Shiekh and Ensuncho for various causes of action including sexual harassment. On July 8, Shiekh, represented by counsel, answered Davis’s complaint, asserting the arbitration agreement as an affirmative defense.

On July 30, Shiekh filed a case management statement, in which it requested a non-jury trial, estimated a trial between five to seven days, and noted that the case would be ready for trial “within 12 months of the date of the filing of the complaint.” Shiekh also anticipated conducting written discovery, depositions, and expert discovery, and filing motions. Additionally, Shiekh noted its willingness to participate in a settlement conference, neutral evaluation, or binding private arbitration.

On August 14, the court scheduled a jury trial for July 20, 2020. On January 13, 2020, Shiekh filed a substitution of attorney, listing itself as its new attorney. On June 30, Davis sought to continue the trial date, Shiekh filed no opposition. The court granted the motion and continued the trial date to September 28, 2020.

On August 24, seven months after being unrepresented by counsel, Shiekh filed a substitution of attorney designating its new attorney. On October 5, 2020 – about 17 months after Shiekh was served with the complaint and seven months before the new trial date – Shiekh moved to compel arbitration and to stay the action pursuant to both the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) and California Arbitration Act (CAA) (Code Civ. Proc., § 1280 et seq.).

The court, denied the motion. The Court of Appeal affirmed in the published case of Davis v. Shiekh Shoes, LLC – A161961 (October 2022).

After the parties completed briefing, the United States Supreme Court issued its decision in Morgan v. Sundance, Inc. (2022) 142 S.Ct. 1708 (Morgan), holding that under the FAA, courts may not condition a determination of waiver on prejudice. In light of this, we directed the parties to submit supplemental briefs on the applicability of the FAA and Morgan, if any, to the issues raised in the appeal. Both parties submitted briefs accordingly.

Courts have recognized that where the FAA applies, whether a party has waived a right to arbitrate is a matter of federal, not state, law. The Supreme Court in Morgan remarked that “outside the arbitration context, a federal court assessing waiver does not generally ask about prejudice,” and generally, that “court[s] focus[ ] on the actions of the person who held the right,” rather than the “effects of those actions on the opposing party.”

The California Supreme Court has not yet addressed Morgan. Thus, it has not spoken on whether prejudice remains a “critical” consideration in the waiver inquiry under California law, as it held prior to Morgan.

Even if the trial court may have improperly conditioned its waiver determination on a showing of prejudice, its decision may still be affirmed so long as any other correct legal reason exists to sustain it.

Shiekh’s lengthy delay in moving to compel arbitration cannot be squared with an intent to arbitrate. By the time Shiekh filed its motion, 17 months had elapsed since it was served with the complaint. This length of time, in the court’s view, was significant, as reflected in its comments at the hearing on Shiekh’s motion: “[T]his issue of waiver comes up at least once a month in this calendar. And I gotta tell you . . . [¶] . . . [¶] . . . I’ve never seen [a delay] that’s as long as seventeen months . . . .”

The Court of Appeal concluded by noting “In light of Shiekh’s nearly one-and-a-half-year delay in moving to compel arbitration, request for trial, active participation in discovery, acquiescence to the trial and discovery schedule, and court appearances, the trial court had ample evidence from which to conclude Shiekh’s actions were inconsistent with an intent to arbitrate.”

Deloitte is the largest professional services network by revenue and number of professionals in the world and is considered one of the Big Four accounting firms along with EY (Ernest & Young), KPMG and PricewaterhouseCoopers (PWC). The company secured multi-million dollar deals in California and seven other states, based on promises of powerful anti-fraud technology and secure, scalable telecoms infrastructure.

In a presentation to the Kansas Department of Labor, in which it claimed to have prevented $100 billion in pandemic unemployment fraud, Deloitte touted “advanced AI-driven fraud detection,” as well as “identity proofing” to help “prevent unauthorized activity,” technologies that had been deployed across U.S. states for over a decade.

With its claims of being able to modernize and secure unemployment systems, according to the follow up report by Forbes, Deloitte was seen as the obvious choice to help states with the incoming tidal wave of Covid benefits applications for the $650 billion pot of pandemic welfare funds. “Deloitte was the only company that had a production-ready PUA system available,” said Kimberly Hall, director of the Ohio Department of Job and Family Services, in written testimony in May 2020.

For contracts in California, Colorado, Illinois, New Mexico, New York, Ohio,Virginia and Wisconsin, Deloitte either deployed tailored uFACTS systems or upgraded legacy infrastructure, and built up attached teleservices centers.

Those deals – worth at least a combined $370 million – contributed to Deloitte’s record $50 billion and $60 billion yearly revenues in 2021 and 2022. According to local government data, in states where Deloitte was either asked to help prevent fraud or ran the benefits system, there was as much as $21.2 billion in fraud. uFACTS systems alone saw up to $3.2 billion.

But in Ohio, as the price of the Deloitte contract spiraled, according to Forbes, so did the cost of the fraud. Starting at an initial $10 million in 2020, the Deloitte deal jumped to $122 million as of October 2022. Meanwhile, at least $166 million in fraudulent applications was paid out through the Deloitte system in the state fiscal year between July 2020 and June 2021, according to figures the state auditor provided to Forbes. But this data is incomplete: It does not take into account figures from the 2022 fiscal year, which are still being tallied, nor the $1.2 billion in benefits payments that have been flagged as potentially fraudulent and are still being adjudicated.

Despite Deloitte’s claims of advanced anti-fraud detection, the breach of the uFACTS system in Ohio was rudimentary and brazen, according to the search warrant reviewed by Forbes. One of the accused’s customers, in an interview with a Labor Department investigator, said the suspect was advertising her ability to remove fraud flags on Instagram, the warrant said. The suspect also successfully claimed unemployment under her own name, even though she was working for both the Ohio Department of Job and Family Services and the U.S. Postal Service at the time. Deloitte and its subcontractor Randstad, which was the direct employer of the suspect, did not detect her alleged crimes, which were first reported by an anonymous tipster.

In October last year, Brandi Hawkins, a teleservices representative with access to the Michigan unemployment system, was convicted of approving hundreds of fraudulent claims that led to the loss of $3.8 million in government funds. Deloitte noted in its report that Hawkins was able to remove fraud flags on the Michigan benefits database for weeks after her termination.

Unlike Hawkins, an unnamed suspect in an Ohio case also claimed to be able to get fraudulent applications approved in other states where she didn’t have direct access to the system, investigators said. According to the government, she was particularly successful in California, where Deloitte had deals worth a total of $88 million with the Employment Development Department (EDD) for Covid-19 benefits. In late 2020, the suspect’s customers had fraudulent applications approved in California, totalling over $50,000 in payouts from the West Coast state, Labor Department officers claimed. The same customers had already had fraud flags on applications in Ohio removed and been given a payout, according to the warrant, showing it was possible to file claims in multiple states under the same name and receive insurance checks.

Along with complaints that millions of calls to Deloitte-supported centers in California were going unanswered, assemblyman David Chiu told local media in March 2021, “Deloitte has continued to underperform.” The call centers, he added, were a “mess.”  In January 2021, in an assessment of the EDD’s work on Covid-19 benefits, the state auditor slammed the agency for failing to act promptly to prevent as much as $10.4 billion in potentially fraudulent unemployment payments. It highlighted an estimated $810 million paid out to incarcerated individuals who were ineligible for payouts. By October last year, the EDD’s own estimate for total lost to fraud stood at $20 billion.

Other states weren’t even able to put a figure on the amount of fraud perpetrated through their systems. In a similar deployment to Ohio, Illinois spent $14.3 million for a uFACTS setup and another $42.7 million to prop up attached call centers, according to government contract records. But the deployment was “inadequate” as it didn’t collect accurate data on PUA claims, according to state auditor Frank Mautino. He told Forbes, “We know that there was a large amount of fraud,” but it will have to wait until next year’s audit to get the requisite data to put a dollar amount on the criminal activity.

Deloitte’s woes with its Covid benefits contracts go right back to the early days of the pandemic. In May 2020, a mistake by Deloitte led to personal information of as many as 240,000 unemployment insurance applicants in Colorado, Illinois and Ohio leaking on government benefits websites. The company settled a class action suit over the breach for $4.95 million in 2021.

RxInformer just published an article “The Triple Threat of Tobacco Use on Employer, Clinical, and Medication Complexity“ which shows the effects tobacco use has on skeletal injuries, and thus may potentially be an avenue to explore apportionment of permanent disability, since California Labor Code section 4663 mandates that apportionment of permanent disability shall be based on causation. The report is well documented with references to academic and scientific literature.

Recognized as a patient risk factor within workers’ compensation healthcare, tobacco use, including cigarette smoking, has specific impacts on employee and injured worker patient populations.

– – Smoking has detrimental impacts to worker productivity, including both absenteeism and presenteeism factors.
– – Rates of tobacco use are higher among blue collar occupations, with the highest prevalence of cigarette smoking in construction, mining and manufacturing.
– – The average additional cost associated with employing a smoker are estimated at more than $7000 annually.
– – Tobacco use increases fracture risk, slows healing, and is linked to increased risk for post-surgical complications that increase morbidity, mortality, and healthcare interventions.
– – Tobacco smoke can negatively interact with a number of medications prescribed in workers’ compensation.

Tobacco use deteriorates the health and function of all major body systems and is linked to multiple clinical detriments relevant to injury and recovery. Cigarette smoking is known to delay wound healing due to the damage it inflicts on blood vessels, blood flowing to wounds, and decreased oxygen levels in blood.

Smoking also erodes the entire musculoskeletal system, degrading bone density and leaving individuals at higher risk for fractures, slower healing, and nonunion. The authors cite Hernigou J & Schuind F. Tobacco and bone fractures. Bone Joint Res. 2019;8:255-65 as authority for this claim.

Notable is the established connection between tobacco use and post-surgical complications. The trauma of surgical intervention triggers a natural inflammatory response in the body that enables tissue recovery and helps to fight infection. The negative impacts of tobacco on cardiovascular function, pulmonary function and tissue healing are shown to interfere with this process, lending itself to higher rates of significant postsurgical complications. Here the authors cite Sorensen LT. Wound healing and infection in surgery. The clinical impact of smoking and smoking cessation: a systematic review and meta-analysis. Arch Surg. 2012;147(4):373-83 and Turan A, Mascha EJ, Roberman D, et al. Smoking and perioperative outcomes. Anesthesiology. 2011;114(4):837-46 as medical literature on this issue.

Tobacco smoke can negatively interact with certain medications by impacting how the body absorbs, metabolizes, distributes and excretes them. This can mean reducing or, in rare cases, enhancing the effectiveness of the medication. It can also mean increasing the risk of adverse effects.

Some of the potentially impacted prescribed within workers’ compensation include, but are not limited to Benzodiazepines, Opioids, Tricyclic antidepressants, Alprazolam, Cyclobenzaprine, Naproxen and others. See the publication by the American Academy of Family Physicians. Drug interactions with tobacco smoke for a more complete list.