Category: Daily News

Ethics legislation to shine a light on insurance industry influence over decision-making at the Department of Insurance was killed by the Assembly Insurance Committee when members refused to give the bill a vote.

AB 2323 (Levine) would have required the Insurance Commissioner and top-level appointees to publicly disclose meetings and communications with the insurance industry and others seeking to influence Department actions within seven days, and post these reports on the Department website quarterly.

The bill was presented in committee and Assemblymember Wood moved for a vote, but no other committee member seconded the motion. Without a second, the bill did not get a vote.

Another Department of Insurance ethics bill, AB 1783 (Levine), will be heard in the Assembly Elections committee next week. It would amend the Political Reform Act to require individuals hired to represent companies seeking mergers before the Department register as lobbyists and disclose how much they are paid.

The ethics bills follow revelations of a pay-to-play scandal involving campaign contributions and meetings between Insurance Commissioner Ricardo Lara and insurance company representatives seeking to influence Department enforcement actions and a merger.

A Consumer Watchdog investigation in 2019 found that Insurance Commissioner Ricardo Lara took $54,000 in campaign contributions from individuals linked to two insurance companies with matters before the agency. One of them, Applied Underwriters, was being investigated by the Department for overcharging businesses for workers compensation insurance. The Commissioner subsequently intervened in proceedings involving the company, reversing Administrative Law Judge decisions.

Commissioner Lara later admitted that he had met with the President of Applied Underwriters prior to intervening in the proceedings, and, critically, that intervention in the proceedings was discussed, as well as the status of a merger that also required the Commissioner’s approval.

Additionally, throughout the course of a Public Records Act request and ensuing lawsuit that followed the revelations, Consumer Watchdog discovered that other officials at the CDI had undisclosed conversations with representatives of the insurance company, including lobbyists who were secretly promised a $2 million success fee for influencing the merger.

Writing in support of this bill, the Consumer Federation of California believes that “giving the public reasonable access to information about conversations or discussions had by their elected leaders ensures that they can be properly held accountable.”

A coalition of insurance trade groups opposes this bill on several grounds, but the coalition’s primary argument focuses on concerns that this bill is likely to discourage communications between CDI and the industry it regulates.

Although communications between CDI and the industry it regulates currently occur regularly, industry is concerned that publishing the fact of these communications online will have a chilling effect on both sides’ willingness to engage in them. Frequent, constructive conversations between regulators and their licensees are beneficial; these types of communications can resolve potential problems before they occur or stop them shortly after they start. Thus, to the extent the opposition’s fears about this bill’s impact prove accurate, this bill could result in unintended, negative consequences.

“It’s anti-democratic and demonstrates the insurance industry’s capture of the Assembly Insurance Committee that members refused to even allow a vote on a transparency bill that would have shone light on industry influence at the Department of Insurance,” said Carmen Balber, executive director of Consumer Watchdog.

Insurance companies have made $1.5 million in campaign contributions to members of the Assembly Insurance Committee over the last four years, including $231,000 to Committee Chair Tom Daly.

Tashay Lenzy worked as a barista at a Ralphs grocery store in Los Angeles, California. In September 2016, she fell and injured her knee when she was struck by the door of a service elevator in the store where she worked as a coffee barista.

She filed an application for adjudication of her workers’ compensation claim with the Workers’ Compensation Appeals Board in which she listed “Ralphs” as her employer. She settled her claim for a lump sum payment of $50,000. The compromise and release identified Kroger as her employer. The order approving the compromise and release identified the defendant as “The Kroger Company, dba Ralphs Grocery Co.”

While Lenzy’s workers’ compensation claim was still pending, she commenced a civil action for negligence against Ralphs and Thyssenkrupp Elevator Corporation.

Ralphs moved for summary judgment claiming the case was barred by the workers’ compensation exclusive remedy rule. The trial court denied plaintiff’s evidentiary objections and granted Ralphs’ motion for summary judgment.

The summary judgment was affirmed by the Court of Appeal in the unpublished case of Lenzy v Ralphs Grocery Company, (April 2022) B308069.

On appeal, Lenzy contends Ralphs did not carry its initial burden to establish two facts required for summary judgment based on the workers’ compensation exclusive remedy rule: (1) that Ralphs (not just Kroger) was plaintiff’s employer, and (2) that Ralphs (not just Kroger) carried workers’ compensation insurance or possessed a certificate of self-insurance.

Because the Workers’ Compensation Act intends comprehensive coverage of injuries in employment,it defines employment broadly in terms of service to an employer and includes a general presumption that any person in service to another is a covered employee. (§§ 3351, 5705, subd. (a) . . . .) (S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, 354.

The Court of Appeal resolved these issues by concluding that “Plaintiff’s suggestion that Kroger’s involvement in the resolution of her workers’ compensation claim raises doubts as to the identity of her employer misses the mark because the exclusive remedy rule applies even if she was an employee of both Ralphs and its parent company.

“As to insurance, Ralphs’ initial summary judgment burden was satisfied by plaintiff’s statement that Ralphs was insured in her application for adjudication of her workers’ compensation claim and the order approving her workers’ compensation settlement that identified the defendant as Kroger doing business as Ralphs”

Allen Levrault claimed to have incurred continuous trauma injuries while employed as a professional baseball player for various teams. His paying history within the CT period was stipulated to be the Milwaukee Brewers June 10, 1996 to February 1, 2002 – – Oakland Athletics February 1, 2002 to October 15, 2002 – – Miami Marlins December 12, 2002 to October 15, 2003  – – and the Seattle Mariners April 14, 2004 to May 18, 2004.  Levrault resolved his claim with the Brewers by way of Compromise and Release for the sum of $3,000.

The WCJ concluded that there was no subject-matter jurisdiction over the Seattle Mariners, and that applicant cannot recover against the Miami Marlins based upon the reciprocity provisions of former Labor Code section 3600.5(b).

Reconsideration was granted in the panel decision of Levrault v Mariners, Marlins et. al. (April 2022) ADJ8763377.

Applicant contends that the WCJ erred in finding reciprocity under section 3600.5(b), because Florida’s reciprocity statute was not in effect at the time of his employment with the Marlins, and also that the WCJ should have admitted medical records submitted after the Mandatory Settlement Conference.

Labor code 3600.5 limits the general principles of WCAB jurisdiction in specific circumstances. Because applicant’s claim was filed prior to September 15, 2013, the relevant subdivision here is former section 3600.5(b).

Because Florida passed its reciprocity statute in 2011, after applicant’s injurious exposure but prior to the filing of his California compensation claim, the parties’ disagreement focuses on whether former section 3600.5(b)’s reciprocity requirements must be satisfied at the time of the injurious exposure, or whether it is sufficient that reciprocity exists at the time a claim is filed.

Here, the plain language of former section 3600.5(b) requires that the conditions for application of the exemption – including the reciprocity provisions of subdivision (b)(1)(A) & (B) – apply “while such employee is temporarily within this state doing work for his or her employer[.]” (former § 3600.5(b)(1), emphasis added.)

Accordingly, the exemption is not applicable to applicant’s claim.This result is in accord with past panel decisions such as in Roberts v. Tampa Bay Lightning (2016) ADJ9065158, 2016 Cal. Wrk. Comp. P.D. LEXIS 404.

Turning to the jurisdiction issue, the WCJ made clear that even if subdivision (b) of section 3600.5 does not apply to applicant’s claim, she would have found the claim barred by Federal Insurance Co. v. Workers’ Comp. Appeals Bd. (Johnson) (2013) 221 Cal.App.4th 1116, because applicant’s employment with the Marlins did not constitute a significant connection or nexus with the State of California.

Here, applicant testified – and defendants do not contest – that he was regularly employed in California during 1998 and 2002 while playing for the Ports and the River Cats, minor league affiliates of the Brewers and the Athletics respectively.

This constitutes a sufficient relationship between applicant’s injuries and the State of California to satisfy the Johnson due process requirement of a significant nexus between applicant’s injuries and this state.

Turning to the issue of the admissibility of post MSC medical reports. the WCJ, the most important reason she decided to find these reports inadmissible was a belief that applicant’s attorney had misled the court about applicant’s ability to appear for the original July 2017 trial date; the WCJ continued the matter as a result of representations from applicant’s attorney that applicant could not travel to California for trial because of his recent surgery, but applicant did in fact travel to California during that very period to obtain the post-surgery QME reports in question.

In resolving this issue the panel stated “Although we sympathize with the WCJ’s frustration at what appears to have been at the very minimum extremely questionable representations from applicant’s counsel, we disagree that the remedy here was to refuse to admit medical evidence that appears undoubtedly relevant to assessing applicant’s level of disability. If the WCJ believed that applicant’s attorney had misled the court in order to obtain a continuance of the trial under false pretenses, the remedy for that was sanctions against applicant’s attorney, pursuant to section 5813.”

As gamemaker Activision Blizzard is embroiled in controversy and legal backlash, the situation surrounding one of the industry’s biggest companies continues to unfold.

The company is currently in the middle of a discrimination lawsuit filed by the state of California, and that case has now taken an unexpected turn. A lawyer for the state of California has announced that she is resigning from her position, citing interference from governor Gavin Newsom as the reason.

The story in the Wall Street Journal claims Newsom’s office fired a lawyer involved in the workplace-misconduct lawsuit against videogame company Activision Blizzard Inc., prompting a second attorney to quit in protest, according to a lawyer representing both attorneys.

The California Department of Fair Employment and Housing Chief Counsel Janette Wipper was told by Mr. Newsom’s office on March 29 that she was being fired, according to a statement from Alexis Ronickher, Ms. Wipper’s attorney. Ms. Wipper’s last day at the department was Wednesday and she is evaluating her legal avenues, including a claim under the California Whistleblower Protection Act, the statement said.

Bloomberg reported Melanie Proctor, assistant chief counsel with California’s Department of Fair Employment and Housing, told staff in a Tuesday email she was resigning in protest over the firing of Janette Wipper, the department’s chief counsel who worked on the Activision lawsuit. Proctor also said Newsom’s office asked for “advance notice” on elements of the litigation.

“As we continued to win in state court, this interference increased, mimicking the interests of Activision’s counsel,” the email said, according to Bloomberg.

Newsom’s spokeswoman Erin Mellon said claims of interference by the governor’s office “are categorically false.”  No other details about Newsom’s alleged interference have been made public. Activision spokesman Rich George did not immediately respond to an email Thursday.

However in a related story, Politico reports that a board member for Activision donated $100,000 to a campaign to stop the 2021 recall of Gov. Gavin Newsom, according to state records

Casey Wasserman, CEO of the Wasserman Media Group, is a director at Activision Blizzard, according to the company’s website, and sits on the board of directors and the board’s nominating and corporate governance committee. Just weeks after the California DFEH filed the July suit against the company, alleging rampant sexual harassment and discrimination against women, Wasserman donated $100,000 to the Stop the Republican Recall of Governor Newsom campaign, according to campaign finance records.

The Activision suit – filed in July 2021 in Los Angeles – comes after two years of investigation conducted by the DFEH. It accuses the “Call of Duty” maker of fostering a “pervasive frat boy” culture where women are paid less for the same jobs that men perform, regularly face sexual harassment, and are targeted for reporting issues. In particular, the suit claims that female employees face “constant sexual harassment,” from “having to continually fend off unwanted sexual comments” to “being groped.” When employees report issues to human resources and management, the suit says, no action is taken.

Activision has refuted many of the suit’s claims and said it has cooperated with the DFEH’s investigation.

Within a couple months of the California agency filing its original suit, the US Equal Employment Opportunity Commission filed its own lawsuit against Activision Blizzard, and agreed to settle it the same day. In March, the company agreed to an $18 million settlement with the federal Equal Employment Opportunity Commission over similar harassment and discrimination allegations.

The DFEH objected to the settlement and its small $18 million fund set up for “eligible claimants.” Among the reasons for the objection were that the settlement involved anyone receiving a portion of that $18 million to sign a waiver giving up their right to collect any other restitution over wrongdoings by Activision.

The DFEH also objected to the settlement arguing that it essentially ordered tampering of evidence relevant to its own case. The original proposed settlement required Activision Blizzard to “remove from the personnel files of each Eligible Claimant any references to the allegations related to sexual harassment, pregnancy discrimination, and/or related retaliation” and reclassify the terminations of anyone fired in retaliation as voluntary resignations.

In return, the federal EEOC accused the state agency of ethics violations because two of the DFEH attorneys looking to give Activision Blizzard more than a slap on the wrist previously had senior roles in the EEOC and led the investigation that resulted in its own lawsuit.

In January 2022, Microsoft announced intentions to buy Activision for an estimated $68.7 billion in an all-cash deal. The Seattle computing giant is expected to inherit the DFEH lawsuit should the deal pass regulation and close later this year.

The Legislature passed a law, which became effective on January 1, 2022, requiring the California State Auditor’s Office to conduct an audit of the State Bar’s attorney complaint and discipline process. The Legislature included this requirement in the law because the State Bar did not take action against Los Angeles lawyer Tomas Girardi, husband of “Real Housewives of Beverly Hills” star Erika Jayne, for misconduct until recently, despite repeated allegations of this attorney’s misconduct over decades.

The prequel to the State Auditor’s report that was just published, was a Los Angeles Times investigation that documented how the now-disgraced attorney Tom Girardi cultivated close relationships with the agency and kept an unblemished law license despite over 100 lawsuits against him or his firm – with many alleging misappropriation of client money. Along with his family and employees, Girardi contributed more than $7.3 million to political candidates.

In months of interviews and reviews of documents, the Times found that Girardi cultivated close relationships with bar officials that at times appeared improper. Agency staffers received annual invitations to a Las Vegas legal conference, where Girardi hosted over-the-top parties at the Wynn casino featuring Jay Leno and other celebrity entertainers.

While under investigation for misconduct in 2010, Girardi bankrolled a lavish retirement bash for the chief justice of the state Supreme Court, which oversees the bar, even booking crooner Paul Anka to perform, according to news reports, court records and interviews with attendees.

He forged a particularly tight relationship with a bar investigator named Tom Layton. Over the decade and a half Layton worked at the bar, Girardi routinely treated him to pricey meals at the Jonathan Club, Morton’s and the Palm, according to Layton’s sworn testimony. The investigator rode on Girardi’s private jet and two of his children got jobs at Girardi Keese, according to the testimony and an online resume.

Another prequel was the audit by the State Bar of the Girardi situation, which it announced in June 2021. The public outcry over Girardi’s long history of complaints prompted the State Bar to conduct its own special disciplinary audit.

The announcement admitted that “The audit, commissioned by Interim Chief Trial Counsel Melanie Lawrence, revealed mistakes made in some investigations over the many decades of Mr. Girardi’s career going back some 40 years and spanning the tenure of many Chief Trial Counsels. In particular, the audit identified significant issues regarding the Office of Chief Trial Counsel’s investigation and evaluation of high-dollar, high-volume trust accounts.

Nearly a year later, the California State Auditor in its April 14, 2022 report elaborates on the Girardi case, and embellishes the issue with many more examples that go beyond accusations against Girardi, to outline a broken disciplinary process.

Among the cases the auditor’s report highlighted is an attorney who accumulated 165 complaints from 2014 to 2021 and has never been disciplined. In another case, the state bar did not analyze the attorney’s bank records until the agency received more than 10 complaints in two years. Bank records then showed the attorney misappropriated $41,000 from several clients.

The state bar closed 87 complaints against an attorney later convicted in federal court for money laundering through client trust accounts, closing some of these cases through nonpublic measures. Others, called de minimis closings, were done without ever contacting attorney because the agency considered the amount of money involved relatively small.

The State Auditor said that “Our audit of the state bar found that it failed to effectively deter or prevent some attorneys from repeatedly violating professional standards,” said acting State Auditor Michael Tilden in the report. And that the “state bar is not appropriately assessing how conflicts of interest pose a risk that staff will close cases inappropriately.”

And the written response by the Bar to the State Auditor’s report does not dispute the troubling findings. It said “Given the Board’s intense focus on the discipline system, and our understanding of the gravity of the deficiencies that the Girardi matter laid bare, some of the findings in your recent report are profoundly eye-opening and troubling.“

The chair of the State Bar’s board of trustees, Ruben Duran, said in an interview that he was troubled by the audit’s findings, calling its conclusions “some of the hardest-hitting discoveries” that the State Auditor has ever made about the agency.

Assemblymember Mark Stone (D-Scotts Valley), who is chair of the Assembly’s Judiciary Committee, said the audit was “profoundly eye-opening.”

In reviewing the Auditor’s report, the Los Angeles Times said that Girardi was once a top plaintiffs’ attorney and Democratic powerbroker. His downfall in December 2020 was in part triggered by a judge finding that he had misappropriated millions from families of those killed in an Indonesian plane crash. But after the collapse of his Wilshire Boulevard law firm, scores of clients came forward saying they were swindled by Girardi and The Times documented a trail of misconduct allegations going back decades.

Earlier this month, a Chicago law firm accused Girardi and other lawyers at his defunct firm of running “the largest criminal racketeering enterprise in the history of plaintiffs’ law,” pocketing millions from clients, vendors and fellow attorneys.