Category: Daily News

Pharmaceutical company Gilead Sciences, based in Foster City, California, has agreed to pay $97 million to resolve claims that it violated the False Claims Act by illegally using a foundation, Caring Voice Coalition, as a conduit to pay the Medicare co-pays for its own drug, Letairis.

When a Medicare beneficiary obtains a prescription drug covered by Medicare Part D, the beneficiary may be required to make a partial payment, which may take the form of a co-payment, co-insurance, or deductible. Congress included co-pay requirements in these programs, in part, to encourage market forces to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs. The Anti-Kickback Statute prohibits pharmaceutical companies from offering or paying, directly or indirectly, any remuneration – which includes money or any other thing of value – to induce Medicare patients to purchase the companies’ drugs.

The government alleged that Gilead used Caring Voice Coalition, which claimed 501(c)(3) status for tax purposes, as a conduit to pay the co-pay obligations of thousands of Medicare patients taking Letairis, which is approved to treat pulmonary arterial hypertension. According to the government’s allegations, Gilead used CVC to cover the patients’ co-pays in order to induce those patients’ purchases of Letairis. Gilead knew that the prices it set for Letairis otherwise could have posed a barrier to those purchases.

Gilead routinely obtained data from CVC detailing how many Letairis patients CVC had assisted, how much CVC had spent on those patients, and how much CVC expected to spend on those patients in the future. Gilead allegedly received this information through funding requests, telephone calls, and written reports.

Gilead then used this information to budget for future payments to CVC to cover the co-pays of patients taking Letairis, but not of patients taking other manufacturers’ similar drugs. The government alleged that Gilead engaged in this practice even though it knew it should not receive or use data concerning CVC’s expenditures on co-pays for Letairis. The government also alleged that, to generate revenue from Medicare, Gilead referred Medicare patients to CVC, which resulted in claims to Medicare to cover the cost of Letairis.

“Like its competitors, Actelion and United Therapeutics, Gilead used data from CVC that it knew it should not have, and effectively set up a proprietary fund within CVC to cover the co-pays of just its own drug,” said United States Attorney Andrew E. Lelling. “Such conduct not only violates the anti-kickback statute, it also undermines the Medicare program’s co-pay structure, which Congress created as a safeguard against inflated drug prices. During the period covered by today’s settlement, Gilead raised the price of Letairis by over seven times the rate of overall inflation in the United States.”

To date, the Department of Justice has collected over $1 billion from eleven pharmaceutical companies (United Therapeutics, Pfizer, Actelion, Jazz, Lundbeck, Alexion, Astellas, Amgen, Sanofi, Novartis, and Gilead) that allegedly used third-party foundations as kickback vehicles. The Department also has reached settlements with four foundations (Patient Access Network Foundation, Chronic Disease Fund, The Assistance Fund, and Patient Services, Inc.) and a pharmacy (Advanced Care Scripts, Inc.) that allegedly conspired or coordinated with pharmaceutical companies on these kickback schemes.

Cal/OSHA has cited six Bay Area employers including hospitals, skilled nursing facilities and a police department for failing to protect their employees from COVID-19. The employers listed below were cited for various health and safety violations including some classified as serious, with proposed penalties ranging from $2,060 to $32,000.

The employers were cited for not protecting workers from exposure to COVID-19 because they did not take steps to update their workplace safety plans to properly address hazards related to the virus.

Several occupational safety and health standards, including Cal/OSHA’s Bloodborne Pathogens Standard adopted in 1992 and the Aerosol Transmissible Diseases (ATD) standard adopted in 2009, address worker protections such as proper respiratory protection when exposure to airborne diseases including COVID-19 may occur in a health care setting.

The ATD standard applies to hospital workers and emergency medical services, as well as workers in skilled nursing facilities, biological laboratories, workers performing cleaning and decontamination, and public safety employees who may be exposed to infectious disease hazards. The employers cited allegedly failed to comply with the ATD standard.

Cal/OSHA claims the Santa Rosa Police Department failed to implement required screening and referral procedures for persons exhibiting COVID-19 symptoms during the month of March 2020, and failed to report to Cal/OSHA multiple serious illnesses suffered by employees who contracted COVID-19. An employee died from COVID-19 after being exposed by another employee who had exhibited signs and symptoms of COVID-19. Cal/OSHA did not learn of the fatality until two weeks after the death.

Cal/OSHA determined that the Gateway Care & Rehabilitation Center skilled nursing facility in Hayward exposed nurses and housekeeping workers to COVID-19 when it failed to follow requirements for providing necessary personal protective equipment.

Sutter Bay Hospitals’ CPMC Davies Campus did not ensure their health care workers in the administrative medical offices and security guards in the emergency department wore respiratory protection. In one incident, a suspect COVID-19 patient underwent a medical procedure in the operating room while medical staff did not have N95 masks or other proper protection.

Cal/OSHA inspectors determined that the Santa Clara Valley Medical Center’s hospital on South Bascom failed to provide effective training for its employees. The Santa Clara Valley Medical Center on North Jackson Avenue was also cited for failing to provide clear communication to their health care workers who were deployed to two skilled nursing facilities. The workers were exposed to COVID-19 suspect and confirmed patients at the Ridge Post-Acute and Canyon Springs Post-Acute facilities. Neither of the skilled nursing facilities trained the deployed health care workers.

Cal/OSHA has created guidance for many industries in multiple languages including videos, daily checklists and detailed guidelines on how to protect workers from the virus. This guidance provides a roadmap for employers on their existing obligations to protect workers from COVID-19.

This illustrative case of Brooks v. Corecivic of Tennessee arises in the employment context, and asks whether the workplace conditions inside a detention facility were so unsafe and unhealthy that Plaintiff, Erica Brooks, had no reasonable alternative except to resign, resulting in her wrongful constructive termination from her employment.

Her employer Corecivic, is a private operator of correctional facilities with contracts for services with United States Immigration and Customs Enforcement and the United States Marshals Service. She worked for them as a Detention Officer at the Otay Mesa Detention Center (“OMDC”) starting February 3, 2019, and worked in that capacity until her resignation on April 12, 2020.

In her lawsuit against the employer she alleges that her employer “failed to adequately respond to the COVID-19 pandemic,” and lists several examples. And claims they support her lawsuit for wrongful constructive termination in violation of public policy, as well as claims for negligent supervision and intentional infliction of emotional distress. She brings her claims to federal court based on diversity jurisdiction, and thus California law applies.

The employer moved to dismiss the Complaint. It argues Brooks has not plead facts supporting the elements of wrongful constructive termination or negligent supervision, and that the negligent supervision and intentional infliction claims are barred by workers compensation exclusivity.

The court ruled that Plaintiff may state a constructive discharge claim based on an alleged failure to maintain a safe work environment. And the Court rejected Defendant’s argument that Plaintiff has failed to allege facts sufficient to show a constructive discharge.

The court went on to say that “Although pandemics themselves are generally uncommon events, that does not mean Defendant’s response to the pandemic falls outside the risk inherent in the employment relationship. On the contrary, one would expect employers to have some type of protocol in place to deal with this kind of catastrophic event. This is especially so considering Defendant is engaged in the operation and management of detention facilities, which are particularly susceptible to the spread of infectious diseases, such as COVID-19.”

Because the obligation to provide a safe and healthy workplace is inextricably part of the compensation bargain, Plaintiff’s negligent supervision and intentional infliction of emotional distress claims are barred by workers’ compensation exclusivity. Accordingly, the Court grants the motion to dismiss these claims.

Specifically, the Court granted the motion as to Plaintiff’s claims for negligent supervision and intentional infliction of emotional distress, and denied the motion as to Plaintiff’s wrongful constructive termination claims.

Contreras Curiel Corporation owns and operates a restaurant, Karina’s Mexican Seafood. The restaurant employed Raeanne Angelina Cruz as a server. After working an evening shift, Cruz was fatally injured in a single-car rollover accident.

Cruz left behind a young son, who filed this lawsuit against Contreras Curiel for wrongful death. He alleged Cruz became grossly intoxicated during her shift at the restaurant, based on its practice of allowing and encouraging servers to drink alcohol with restaurant customers.

Contreras Curiel moved for summary judgment on the grounds that his claims were barred by workers’ compensation exclusivity. The trial court denied the motion.

Contreras Curiel petitioned the Court of Appeal for a writ of mandate directing the trial court to vacate its order denying the motion and enter an order granting it. It relies on the same grounds as in the trial court.

The Court of Appeal granted the petition in the unpublished case of Contreras Curiel Corp. v. Superior Court.

Workers’ compensation exclusivity is founded on a presumed compensation bargain, pursuant to which the employer assumes liability for industrial personal injury or death without regard to fault in exchange for limitations on the amount of that liability. The employee is afforded relatively swift and certain payment of benefits to cure or relieve the effects of industrial injury without having to prove fault but, in exchange, gives up the wider range of damages potentially available in tort.

Exclusivity will not apply where an employer engages in conduct that is outside its proper role as an employer or that has a questionable relationship to the worker’s employment.

Such conduct includes certain intentional torts and criminal acts, as well as causes of action whose motive element violates a fundamental public policy of this state.

The evidence, viewed in the light most favorable to her son shows that Contreras Curiel allowed and encouraged its servers to consume alcohol with customers during their shifts.

While this conduct may have been reckless and appears to violate state alcoholic beverage regulations, it is akin to other conduct that creates or exacerbates workplace hazards.

It is not the type of intentional tort or criminal act that removes an employer’s conduct from the scope of workers’ compensation exclusivity. Nor do the claims incorporate a motive element that violates a fundamental public policy of this state, such as racial or gender discrimination.

Gov. Gavin Newsom signed a new workers’ compensation presumption law Thursday, that will expand access to workers’ compensation for front-line workers affected by the coronavirus pandemic, and those who encounter an “outbreak” in the workplace.

Senate Bill 1159 creates a rebuttable presumption of infection for people like grocery store employees, health care workers, firefighters and law enforcement officers who believe they contracted the coronavirus at work. The new law also creates a presumption of infection whenever there is a workplace outbreak over a two-week span of time.

SB 1159 is effect immediately as an urgency statute and will remain in effect through Jan. 1, 2023.

SB 1159 imposes an onerous administrative burden on California employers, and their workers’ compensation claim administrators.

The third category of presumptions – the outbreak group (L.C. 3212.88) – works administratively by requiring every employer in the state with five or more employees to report information about any employee who tests positive for COVID-19, to their workers’ compensation claims administrator within three days.

The workers’ compensation claim administrator must use this information to keep a count on COVID-19 testing at each site location, and when the criteria of 4 or more (or 4% of the workforce) in 14 days is met, apply the presumption to the “outbreak group” of cases reported during that 14 day window.

There is a $10,000 penalty for failure to meet the three day reporting requirement or to provide a fraudulent report.

This new law applies “retroactively” to pending claims, which means that employers and claim administrators have to go back in time and collect this data from millions of California employers of more than 5 people immediately. They have 30 calendar days to report on the retroactive claims now that the bill has been signed.

In terms of the employers of first responder employees (L.C. 3212.87 the second group), although L.C. 3212.87 does not have a specific reporting requirement, those                             .

While for example a peace officer is not in the third “outbreak group” they may work side-by-side with non first responders.

It would appear reasonable that counting positive tests of first responders who work in the same setting as non-first responders would be an obligation in terms of applying the presumption standard to the outbreak group.

Newsom also signed a new law that will require employers to report coronavirus outbreaks to their local public health department within 48 hours and to employees who may have been exposed within one business day.

Assembly Bill 685 also gives the California Division of Occupational Safety and Health (Cal/OSHA) the authority to close a worksite or place of employment that is actively exposing workers to the risk of contracting the virus.

AB 685 will also remain in effect through Jan. 1, 2023.