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DOJ and Kaiser Permanente Affiliates Resolve Fraud Case for $556M

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Affiliates of Kaiser Permanente, an integrated healthcare consortium headquartered in Oakland, California, have agreed to pay $556 million to resolve allegations that they violated the False Claims Act by submitting invalid diagnosis codes for their Medicare Advantage Plan enrollees in order to receive higher payments from the government.

The settling Kaiser Permanente affiliates are Kaiser Foundation Health Plan Inc.; Kaiser Foundation Health Plan of Colorado; The Permanente Medical Group Inc.; Southern California Permanente Medical Group; and Colorado Permanente Medical Group P.C. (collectively Kaiser).

The United States has intervened in six complaints pending in Northern California federal court, alleging that members of the Kaiser Permanente consortium violated the False Claims Act by submitting inaccurate diagnosis codes for its Medicare Advantage Plan enrollees in order to receive higher reimbursements.

Under the Medicare Advantage (MA) Program, also known as Medicare Part C, Medicare beneficiaries may opt out of traditional Medicare and enroll in private health plans offered by insurance companies known as Medicare Advantage Organizations, or MAOs. The Centers for Medicare & Medicaid Services (CMS) pays the MAOs a fixed monthly amount for each Medicare beneficiary enrolled in their plans. CMS adjusts these monthly payments to account for various “risk” factors that affect expected health expenditures for the beneficiary.

In general, CMS pays MAOs more for sicker beneficiaries expected to incur higher healthcare costs and less for healthier beneficiaries expected to incur lower costs. To make these “risk adjustments,” CMS collects medical diagnosis codes from the MAOs. The diagnoses must be supported by the medical record of a face-to-face visit between a patient and a provider, and for outpatient visits, must have required or affected patient care, treatment, or management at the visit.

Kaiser owns and operates MAOs that offer MA plans to beneficiaries across the country. In a complaint filed in the Northern District of California in October 2021, the United States alleged that Kaiser engaged in a scheme in California and Colorado to improperly increase its risk adjustment payments. Specifically, the United States alleged that Kaiser systematically pressured its physicians to alter medical records after patient visits to add diagnoses that the physicians had not considered or addressed at those visits, in violation of CMS rules.

The settlement announced today resolves allegations that, from 2009 to 2018, Kaiser engaged in a scheme to increase its Medicare reimbursements by pressuring physicians to add diagnoses after patient visits through “addenda” to patients’ medical records. The United States alleged that Kaiser developed various mechanisms to mine a patient’s past medical history to identify potential diagnoses that had not been submitted to CMS for risk adjustment. Kaiser then sent “queries” to its providers urging them to add these diagnoses to medical records via addenda, often months and sometimes over a year after visits. In many instances, the United States alleged, the diagnoses added by the providers had nothing to do with the patient visit in question, in violation of CMS requirements.

The United States further alleged that Kaiser set aggressive physician- and facility-specific goals for adding risk adjustment diagnoses. It alleged that Kaiser singled out underperforming physicians and facilities and emphasized that the failure to add diagnoses cost money for Kaiser, the facilities, and the physicians themselves. It also alleged that Kaiser linked physician and facility financial bonuses and incentives to meeting risk adjustment diagnosis goals.

The United States alleged that Kaiser knew that its addenda practices were widespread and unlawful. Kaiser ignored numerous red flags and internal warnings that it was violating CMS rules, including concerns raised by its own physicians that these were false claims and audits by its own compliance office identifying the issue of inappropriate addenda.

The civil settlement includes the resolution of certain claims brought in lawsuits under the qui tam or whistleblower provisions of the False Claims Act by Ronda Osinek and James M. Taylor, M.D., former employees of Kaiser. Under those provisions, private parties are permitted to sue on behalf of the United States and receive a portion of any recovery. The qui tam cases are captioned United States ex rel. Osinek v. Kaiser Permanente, et al., No. 3:13-cv-03891 (N.D. Cal.) and United States ex rel. Taylor v. Kaiser Permanente, et al., No. 3:21-cv-03894 (N.D. Cal.). The relator share of the recovery will be $95 million.

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorneys’ Offices for the Northern District of California and the District of Colorado, with assistance from HHS-OIG, HHS-Office of Audit Services, and the FBI.

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

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Interstate Commerce Not Required for FAA Arbitration Clause

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West Coast Dental Administrative Services, LLC, a Delaware corporation, manages a network of dental facilities throughout California. The company provides administrative and support services to affiliated dental practices and professional corporations via support services agreements. It sources materials from outside California and, at the time relevant to this case, maintained offices and employees in both California and Washington until January 2022, with differences in employee benefits outlined in its handbook.

West Coast Dental hired Sinedou S. Tuufuli as a collector and customer service representative. Tuufuli electronically signed an arbitration agreement that stipulated that any disputes related to her employment or termination would be resolved through final and binding arbitration. It explicitly stated that the agreement “shall be governed by the Federal Arbitration Act and, to the extent permitted by such Act, the laws of the State of California.”

In April 2023, Tuufuli filed a lawsuit against West Coast Dental, asserting eight individual and class claims for violations of various provisions of the California Labor Code and Business and Professions Code. These claims alleged labor-related issues, such as unfair compensation and working conditions, on behalf of herself and a class of similarly situated employees.

West Coast Dental filed a motion to compel arbitration of Tuufuli’s individual claims and to dismiss her class claims. In support, the company’s human resources manager submitted a declaration affirming its Delaware incorporation, former offices in Washington, and sourcing of out-of-state materials. West Coast Dental also provided a copy of the employee handbook given to Tuufuli, which detailed interstate operations and benefits differences. Tuufuli opposed the motion, arguing that the Federal Arbitration Act (FAA) did not apply because there was no evidence of interstate commerce involvement or contemplation thereof, and that West Coast Dental operated exclusively in California. Tuufuli worked exclusively in California and testified that she rarely interacted with individuals or entities outside the state in performing her duties.

The trial court granted West Coast Dental’s motion. It determined that the FAA governed the agreement, relying on the evidence of West Coast Dental’s interstate activities (e.g., Delaware incorporation, Washington offices, and out-of-state sourcing) as well as the explicit provision in the agreement stating it was governed by the FAA. Finally, the court dismissed Tuufuli’s class claims, citing the agreement’s express prohibition on class arbitration or litigation.

Tuufuli appealed, challenging only the trial court’s finding that the FAA applied to the arbitration agreement. She did not contest the agreement’s validity or the dismissal of class claims on other grounds.

The Court of Appeal affirmed the trial court’s order compelling arbitration of Tuufuli’s individual claims and dismissing her class claims in the published case of Tuufuli v West Coast Dental Administrative Services, LLC -B338584.PDF (January 2026).

The appellate court agreed with the trial court that the FAA applied, but primarily because the parties had explicitly agreed to it in the arbitration agreement’s governing law provision. It rejected Tuufuli’s argument that parties cannot contractually invoke the FAA without proving interstate commerce involvement, emphasizing that arbitration under the FAA is a matter of consent, not coercion, and parties are generally free to structure their agreements as they see fit (citing Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University (1989) 489 U.S. 468, 479).

The court distinguished the U.S. Supreme Court’s decision in Allied-Bruce Terminix Cos. v. Dobson (1995) 513 U.S. 265, which held that the FAA applies to contracts that in fact involve interstate commerce, even if not contemplated by the parties. The appellate court clarified that Allied-Bruce did not prohibit parties from voluntarily electing FAA governance; it merely addressed the scope of “involving commerce” under 9 U.S.C. § 2. Similarly, the court rejected Tuufuli’s analogy to 9 U.S.C. § 1, which expressly exempts transportation workers’ contracts from the FAA regardless of agreement. Section 2, by contrast, contains no such exemption for non-interstate contracts and simply enforces arbitration provisions in contracts involving commerce (or, by extension, where parties consent to FAA application).

Given this consent-based reasoning, the appellate court declined to address whether the agreement independently involved interstate commerce based on West Coast Dental’s operations.

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Employers Face New “Know Your Rights” Handout February Deadline

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A new California law, SB 294, effective January 1, 2026, established the Workplace Know Your Rights Act. The Act requires an employer, on or before February 1, 2026, and annually thereafter, to provide a stand-alone written notice to each current employee of specified workers’ rights. The Act also requires the employer to provide the written notice to each new employee upon hire and to provide the written notice annually to an employee’s authorized representative, if any.

The notice shall contain a description of workers’ rights in the following areas:

(1) The right to workers’ compensation benefits, including disability pay and medical care for work-related injuries or illness, as well as the contact information for the Division of Workers’ Compensation.
(2) The right to notice of inspection by immigration agencies pursuant to subdivision (a) of Section 90.2.
(3) Protection against unfair immigration-related practices against a person exercising protected rights.
(4) The right to organize a union or engage in concerted activity in the workplace.
(5) Constitutional rights when interacting with law enforcement at the workplace, including an employee’s right under the Fourth Amendment to the United States Constitution to be free from unreasonable searches and seizures and rights under the Fifth Amendment to the United States Constitution to due process and against self-incrimination.

The notice shall also contain both of the following:

(1) A description of new legal developments pertaining to laws enforced by the Labor and Workforce Development Agency that the Labor Commissioner deems material and necessary. The Labor Commissioner shall include a list of those developments, if any, in the template notice described in paragraph (a) of Section 1554.
(2) A list, developed by the Labor Commissioner, of the enforcement agencies that may enforce the underlying rights in the notice. The Labor Commissioner shall include this list in the template notice described in paragraph (a) of Section 1554.

An employer is required to keep records of compliance with the requirements of this section for three years, including the date that each written notice is provided or sent.

The Labor Commissioner is required to develop a template notice that an employer may use to comply with the requirements of Labor Code § 1553. On or before January 1, 2026, the Labor Commissioner shall post the template notice on its internet website so that it is accessible to an employer. The Labor Commissioner shall post an updated template notice annually thereafter. The template notice shall be written in plain terminology that is easily understood by a worker. The Labor Commissioner shall make the template notice available in different languages, including English, Spanish, Chinese, Tagalog, Vietnamese, Korean, Hindi, Urdu, and Punjabi. The Labor Commissioner may also provide the template notice in additional languages.

More information about this new law is available on the Labor Commissioner’s website on the Required Posters and Notices page.

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Court Draws Major Distinction Between IFPA Comp & Lability Fraud

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California’s Insurance Frauds Prevention Act (IFPA) Insurance Code § 1871-1871.10 provides tools to address insurance fraud, but it distinguishes between specific types of fraud:

Section 1871.4 is limited exclusively to workers’ compensation fraud. It criminalizes making knowingly false or fraudulent statements or representations to obtain, deny, or influence workers’ compensation benefits, as defined under Labor Code section 3200 (which covers employee injuries arising out of employment).

Section 1871.7, in contrast, is a broader qui tam provision allowing private relators (like Jerilyn Henggeler below to sue on behalf of the state for general insurance fraud. It incorporates violations of Penal Code sections 549 (soliciting or referring business for fraudulent claims), 550 (presenting false claims or concealing facts to defraud insurers), and 551 (fraudulent auto insurance claims).

In October 2009, Omar Dauod was involved in a car accident while driving at high speed, colliding with another vehicle exiting a private community without fully stopping. The other driver’s insurer, Farmers Insurance, paid Omar $100,000 after arbitration determined fault. Omar and his wife Gina, represented by attorney James Ballidis of the Law Offices of Allen, Flatt, Ballidis & Leslie, then pursued an underinsured motorist claim against their own insurer, Geico, seeking $400,000 – the policy limit. After arbitration in 2013 awarded them that amount, the Dauods sued Geico in December 2014 for breach of contract, bad faith, and emotional distress, alleging Geico’s delays caused emotional harm, loss of two homes, and Omar’s business losses as a real estate developer. Ballidis testified at the trial supporting these claims, though he did not represent them in court. A jury awarded Omar $22.9 million.

Jerilyn Henggeler, a former neighbor and social acquaintance of the Dauods, learned of the verdict over a year later through news reports. Appalled, she believed the claims were fraudulent based on personal knowledge: she had observed Omar uninjured and active post-accident, knew he was a real estate salesman – not a developer – and learned from tenants that home losses stemmed from pocketing rent, not injuries. Henggeler’s research into public records, including Colorado business filings, bankruptcies, lawsuits, property titles, and licenses, contradicted Omar’s and Ballidis’s representations about Omar’s businesses, properties, and licenses. She also identified forged documents submitted to Geico, such as a letter purportedly from Omar’s brother-in-law and a nonexistent entity’s escrow agreement.

Henggeler filed a qui tam action under Insurance Code section 1871.7 on behalf of the State of California, alleging the Dauods, Ballidis, and the Law Firm defrauded Geico through false claims and testimony. The second amended complaint included four causes: three under section 1871.4 (workers’ compensation fraud statutes) for false statements, and one under section 1871.7 incorporating Penal Code violations for presenting fraudulent claims and concealing facts. The Dauods and Ballidis/Law Firm demurred, arguing the court lacked jurisdiction under the public disclosure bar (section 1871.7, subd. (h)(2)(A)), as Henggeler’s claims relied on public information from news, court files, and records.

The trial court sustained the demurrers without leave to amend, ruling it lacked jurisdiction due to the public disclosure bar. It found Henggeler’s claims were based on publicly disclosed information: she learned of the verdict from news media, incorporated trial testimony from Omar and Ballidis, and used public records like court files and Colorado documents.

The Court of Appeal reversed in the partially published case of People ex rel. Henggeler v. Dauod -G064064 (January 2026) and remanding with directions to sustain demurrers on the first three causes (workers’ compensation fraud statutes) but overrule on the fourth based upon Penal Code violation. This distinction was based upon balancing qui tam policy goals. By narrowly interpreting the bar to exclude reliance on neutral public information, the court preserved Henggeler’s suit as original, promoting IFPA’s anti-fraud aims. Dismissing workers’ compensation claims aligned with statutory limits, ensuring only valid insurance fraud allegations proceeded. This first-impression ruling clarified the bar’s scope, certifying partial publication to guide future cases.

The appellate court concluded that the trial court misinterpreted the public disclosure bar. It clarified the bar applies only to qui tam suits based on publicly disclosed “allegations” of fraud or specific fraudulent “transactions,” not mere “information” even if related to fraud.

Drawing from legislative history of the IFPA, CFCA, and federal False Claims Act, the court noted the bar’s purpose: to prevent parasitic suits copying public fraud allegations while encouraging original whistleblowers. Congress and California rejected broader bars prohibiting use of public “information” or “evidence,” opting for narrow limits on “allegations or transactions.”

Henggeler’s complaint used public records (e.g., business filings, bankruptcies) and trial testimony as evidence to prove fraud, not as pre-existing fraud allegations. Testimony from Omar and Ballidis supported their claims against Geico, not accusations of fraud. No prior public disclosure alleged Respondents’ fraud; Henggeler’s firsthand knowledge and research formed the basis.

The court upheld demurrers on the first three causes under section 1871.4, as they pertained to workers’ compensation fraud without relevant allegations. It rejected other defenses: no prefiling under Civil Code section 1714.10 was needed due to Ballidis’s independent duty not to defraud nonclients like Geico; collateral estoppel failed for lack of privity between the state/Henggeler and Geico.

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Public Self-Insured Comp Claims Fell, But Losses Hit New Highs

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For the third consecutive year, both the number and frequency of work injury claims reported by California’s public self-insured employers declined last year, even as total paid and incurred workers’ compensation losses continued to rise, according to a new California Workers’ Compensation Institute (CWCI) review of data compiled by the state Office of Self-Insurance Plans (OSIP).

OSIP’s summary of public self-insured claims experience, issued two weeks ago, provides preliminary workers’ comp claims data for fiscal year (FY) 2024/25, covering the 12 months ending June 30, 2025, and updated data on claims reported over the prior four years. The summary includes claims reported by cities and counties, school, fire, transit, utility and special districts, and joint powers authorities.

Public self-insured entities reported that they covered nearly 2.26 million California workers in FY 2024/25, a 3.3 percent increase from the prior year, while total wages and salaries for the public self-insured workforce rose to $189.2 billion, up 8.6 percent year over year. Despite the growth in the workforce, the number of public self-insured claims in the initial report edged down slightly to 117,190, a decline of 0.8 percent from the total noted in the FY 2023/24 first reports. After adjusting for the change in the workforce, CWCI calculated an overall claim frequency rate of 5.2 claims per 100 public self-insured employees (2.4 medical-only and 2.8 indemnity claims per 100 employees). This marked the third consecutive annual decline and tied the 10-year low recorded in FY 2019/20.

While claim volume and frequency fell, public self-insured claim costs continued to rise. Total paid losses at first report for FY 2024/25 claims increased to $594.9 million, up 7.6 percent from the prior year, which exceeded the previous record set during the pandemic-era surge in FY 2021/22. The average paid amount per claim rose to $5,076, which was an 8.4 percent increase year over year and nearly 68 percent higher than the 10-year low recorded in the first reports for FY 2015/16 claims.

Medical costs were the primary driver of the increase. Average medical payments in the initial reports rose 13.1 percent to $2,154, the third consecutive double-digit increase and a 10-year high. Average indemnity payments increased 5.3 percent to $2,922, continuing a long-term upward trend that has seen indemnity costs climb nearly 87 percent over the past decade.

First report incurred losses (paid amounts plus reserves for future payments) were also up last year, totaling more than $1.78 billion, 5.8 percent more than in FY 2023/24. The average incurred loss per claim in the initial reports increased 6.6 percent to $15,225, as average incurred medical rose 7.6 percent to $7,733, while average incurred indemnity rose 5.7 percent to $7,492.

CWCI notes that first report data offer an early snapshot of new claims and will continue to develop over time. More mature data on older claims confirm ongoing growth in both paid and incurred losses. OSIP’s FY 2024/25 summary of public self-insured data, as well as historical reports dating back to FY 2000/01 are available on the California Department of Industrial Relations website here.

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Commutation of Attorney Fees in Lifetime Award Ends After Full Payment

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Gregg Rader sustained industrial injury to the psyche and in the form of emotional stress while employed by Ticketmaster Corporation. On November 19, 2011, a WCJ approved the parties’ Stipulations with Request for Award and awarded 100 percent permanent and total disability. Applicant’s attorney requested a fee of $39,444.71, based on applicant’s life expectancy. The WCJ approved the attorney fee request and ordered that the amount of attorney fees be commuted from weekly indemnity payments by uniform weekly reduction. Accordingly, while applicant’s nominal weekly permanent disability rate was $336.00, defendant reduced each payment by $50.40, yielding a net weekly payment of $285.60.

Applicant filed a Petition Amend the Award, and argued that the amount commuted from his permanent disability award has been fully satisfied, and that his weekly permanent disability indemnity should return to the nominal rate of $336.00 without reduction for additional attorney fees. Applicant’s calculations begin with the gross amount of attorney’s fees of $39,444.71, divided by the weekly commutation amount of $50.40. Applicant adds the resulting 782.63 weeks to the initial date of payment of June 6, 2008, resulting in the date of June 5, 2023 as “the date when the commutation of attorneys fees stops.”

Applicant further contends that he is entitled to statutory interest per Labor Code § 5800 on any sums improperly withheld and to penalties pursuant to section 5814 and attorney’s fees pursuant to section 5814.5 for defendant’s unreasonable delay in the payment of the disputed benefits.

Defendant’s Answer responds that applicant’s Award is silent as to the end date of commutation and any inference otherwise is improper. SCIF further contends that the WCAB lacks jurisdiction to alter or amend the Award at this juncture pursuant to section 5804.

The WCJ found that the Workers’ Compensation Appeals Board (WCAB) lacks jurisdiction to amend the applicant’s prior Award of permanent disability, and that applicant has not proven that additional indemnity payments are due beyond what is specified in the Award.

The WCAB granted reconsideration in the Significant Panel Decision of Gregg Rader v Ticketmaster -ADJ7138762 (January 2026) and substitute new Findings of Fact that the WCAB retains ongoing jurisdiction over the award of attorney’s fees pursuant to section 5803, and that because defendant has taken credit from applicant’s weekly payment of permanent indemnity in an amount equivalent to the dollar amount of commuted attorney’s fees, applicant is thereafter entitled to the full amount of his award without further reduction for attorney’s fees.

The panel noted that WCAB maintains exclusive jurisdiction pursuant to the California Constitution and Labor Code § 5300 to adjudicate workers’ compensation disputes.” (Dennis v. State of California (2020) 85 Cal.Comp.Cases 28 [2020 Cal. Wrk. Comp. LEXIS 1] (Appeals Board en banc).) The Appeals Board has continuing jurisdiction over all its orders, decisions, and awards made and entered. (Lab. Code, § 5803.) The Appeals Board may rescind, alter, or amend any order, decision, or award, for good cause.

However, section 5804 provides that “[n]o award of compensation shall be rescinded, altered, or amended after five years from the date of the injury.” As explained by our Supreme Court, the WCAB “is empowered with continuing jurisdictional authority over all of its orders, decisions and awards … However, this power is not unlimited … The WCAB’s authority under section 5803 to enforce its awards, including ancillary proceedings involving commutation, penalty assessment and the like, is not to be confused with its limited jurisdiction to alter prior awards by benefit augmentation at a later date. The latter action is subject to the provisions of sections 5410 and 5804.” (Nickelsberg v. Workers’ Comp. Appeals Bd. (1991) 54 Cal.3d 288, 297 [56 Cal.Comp.Cases 476].)

Thus, in contrast to the limitations imposed by the statute on the Appeals Board to augment previously awarded benefits or to set aside an entire award, the Appeals Board continues to have jurisdiction after five years to enforce its awards. (Barnes v. Workers’ Comp. Appeals Bd. (2000) 23 Cal.4th 679, 687 [65 Cal.Comp.Cases 780].) That is, the WCAB’s jurisdiction to enforce an award extends beyond section 5804’s five-year limitations period because an order ascertaining and fixing the exact amount of liability does not rescind, alter or amend any prior award in violation of section 5804. (Id.)

In Garcia v. Industrial Acci. Com. (1958) 162 Cal.App.2d 761, the Court of Appeal concluded that the “award of compensation to the employee is not altered or amended within the intended meaning of sections 5803 and 5804 by the allowance of the attorneys’ lien after the five- year period.” (Id. at p. 767.)

In Garcia, new attorneys substituted in more than five years after the date of injury to assist the injured worker in resisting a petition to reopen the case by defendant Subsequent Injuries Fund (now Subsequent Injuries Benefits Trust Fund). (Id. at pp. 762-763.) The Garcia court reasoned, “[t]he imposition of the attorneys’ lien after the five-year period would only amount to a reallocation or redistribution of the funds to be paid under the original award of compensation, i.e., the award of compensation is the same, only its payments are ultimately redirected by the imposition of a charge upon the award as security for the reasonable fee allowed 5 by the commission for legal services performed on behalf of the employee by his attorneys.” (Id. at p. 767, italics added.) Thus, the court determined that the underlying award of compensation remained the same even if a lien for attorney’s fees was allowed. (Id. at p. 767.)

Pursuant to the above authorities, the Appeals Board retains the jurisdiction under section 5803 to make collateral changes to an award so long as the merits of the basic decision determining the worker’s right to benefits are not altered, and the amount of benefits remains unchanged.

The panel concluded that the lateral commutation of attorney’s fees from an award of lifetime benefits is limited to the specified amount of attorney’s fees approved by the WCJ or the Appeals Board in the first instance. Once defendant has deducted an aggregate amount commensurate with the specified commuted attorney’s fees, no further deduction from applicant’s weekly indemnity payment is appropriate or permissible.”

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Doctor Sentenced to Serve 9 Years and License Revoked

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Khursheed Haider, 50, of Roseville, was sentenced by U.S. District Judge Dena M. Coggins to 9 years in prison for distribution of child sexual abuse material, U.S. Attorney Eric Grant announced. Khursheed Haider was a 2000 graduate of the Hamdard College of Medicine & Dentistry located in Karachi, Pakistan.

The California Medical Board reflects that the Physician and Surgeon license belonging to Khursheed Haider is currently revoked following his plea of guilty in this case.

According to court documents, Haider, a Sacramento Area pulmonologist, used an application called Wire to post, distribute, and request videos and images of prepubescent boys and girls being sexually abused. After a search warrant was executed, agents discovered more than 600 images and videos of prepubescent child sexual abuse material on Haider’s electronic devices.

Haider was charged in a two-count indictment with a Count 1 One violation of Title 18 United States Code, Section 2252(a)(2), Distribution of Child Pornography, and a Count Two violation of Title 18 United States Code, Section 2252(l)(4)(B), 3 Possession of Child Pornography. Both criminal counts were charged as felonies. On or about 4 June 18, 2025, pursuant to a plea agreement. He pled guilty to Count One,

Haider admitted in his Plea Agreement that on or about October 30, 2023, he shared a 45-second long mp4 video of a minor child being sexually abused by an adult male in an on-line group dedicated to sharing images of child sexual abuse. Haider admitted he was aware that the child depicted in the video was a minor and that he knowingly distributed the video.

In addition, Haider admitted that he also shared additional videos and content that showed sexual abuse of other minor children and babies. According to the factual basis, the Federal Bureau of Investigation conducted a forensic review of Haider’s electronic devices and found more than 600 images and videos of child sexual abuse material. Haider signed the factual basis on June 18, 2025, and acknowledged that the contents of the factual basis was accurate.

“Today’s sentence holds Khursheed Haider accountable for his proliferation of child sexual abuse material, each instance of which retraumatizes the victims shown in such material,” said U.S. Attorney Grant. “My office is committed to investigating and prosecuting individuals who traffic in this abusive material, including those in positions of trust like Haider.”

“Khursheed Haider was known to many as a trusted physician and family man,” said FBI Sacramento Special Agent in Charge Sid Patel. “However, he was a predator behind that facade who actively shared material depicting the horrific sexual abuse of infants and toddlers. The FBI works tirelessly to identify and apprehend individuals who consume and distribute child sexual abuse material to stop the ongoing victimization of our nation’s most vulnerable and innocent victims.”

This case was the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorney Jason Hitt prosecuted the case.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims.

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Superior Court Judge Resigns & Pleads Guilty to Defrauding SIBTF

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An Orange County Superior Court judge was federally charged on January 7 with defrauding California’s workers’ compensation program. Israel Claustro, 50, was charged via information with one count of mail fraud, a crime that carries a statutory maximum sentence of 20 years in federal prison. Claustro signed a plea agreement in which he agreed to plead guilty to the felony charge. Claustro is expected to make his initial appearance on January 12 in United States District Court in Santa Ana.

Claustro has agreed to resign from his position as an Orange County Superior Court judge.

According to the plea agreement, Claustro – who was an Orange County prosecutor at the time of the fraud – operated Liberty Medical Group Inc., a Rancho Cucamonga-based medical corporation, despite being neither a physician nor a medical professional as required under California law.

One of Liberty’s employees was Dr. Kevin Tien Do, 60, of Pasadena, a physician who had served a one-year federal prison sentence after being convicted in 2003 of felony health care fraud. Because of this conviction, in October 2018, Do was suspended from participating in the California’s workers’ compensation program. Claustro was aware of Do’s prior criminal conviction and suspension from California’s workers’ compensation program.

According to the plea agreement, Claustro admitted that he defrauded California’s Subsequent Injuries Benefits Trust Fund (SIBTF), a special fund administered by California’s workers’ compensation program to provide additional compensation to injured workers who already had a disability or impairment at the time of a subsequent injury.

Specifically, Claustro paid Do more than $300,000 for preparing medical evaluations, medical record reviews, and med-legal reports after Do’s suspension. Claustro caused Liberty to mail these reports to California’s SIBTF, concealing that they were prepared by Do by listing other doctors’ names on the billing forms and reports. Based on these fraudulent submitted reports, Liberty received hundreds of thousands of dollars from SIBTF.

The loss amount from Claustro’s participation in this scheme is approximately $38,670 – the amount SIBTF paid to Liberty based on reports Claustro knew Do had drafted after his suspension from SIBTF.

In connection with this scheme, Do pleaded guilty in January 2025 to one count of conspiracy to commit mail fraud and one count of subscribing to a false tax return. Do is expected to be sentenced in the coming months.

“Judge Claustro violated the law for his personal financial benefit,” said First Assistant United States Attorney Bill Essayli. “We will not hesitate to prosecute anyone – judges included – who defraud public benefits intended to help those in need.”

The FBI, IRS Criminal Investigation, and the California Department of Insurance are investigating this matter.Former Special Assistant United States Attorney Stephanie Orrick of the Orange County Office prosecuted this case.

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Proposed New Law Takes Aim at Insurance Company Conduct

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The California Insurance Commissioner and newly-appointed Senate Insurance Committee Chair Steve Padilla announced Senate Bill 876, a comprehensive legislative reform to speed up disaster recovery for homeowners and renters through improved insurance coverage and expanded consumer protections. They are proposing legislation directly responding to wildfire disaster survivors’ call for swifter claims payments and an end to delays and runarounds by insurance companies.

The Department of Insurance said that “The payment of insurance claims from insurance companies for the Los Angeles wildfires is already the fastest on record, with $22.4 billion distributed since January 2025, along with $6 billion in federal, state, local, and private donations committed.

According to the DOI press release the “Disaster Recovery Reform Act, authored by Senator Padilla, aims to cut red tape, improve payouts, and end delays and runarounds by insurance companies.”

– – Requiring a “disaster recovery plan” from insurers for handling claims and meeting timelines – reviewed by the Department in advance and put into effect in an emergency situation.
– – Doubling penalties during a declared emergency for violations of insurance fair claims practices and settlement law.
– – Requiring insurance companies pay restitution directly to policyholders when they violate the law.
– – Addressing delays resulting from the assigning of multiple adjusters by requiring insurance company status reports to policyholders within 5 days anytime a new adjuster is assigned.
– – Improving recovery by expanding policy limits for Additional Living Expenses by 100% in a declared disaster.
– – Expanding up-front payments by requiring Actual Cash Value and structure replacement cost be paid quickly following a total loss, with interest payable if late.
– – Providing adequate recovery funds by requiring a mandatory offer of extended and guaranteed replacement cost coverage when writing a policy, and regular updated replacement cost estimates for new business and renewals.
– – Safer rebuilding by applying mandatory building code upgrade coverage at the time of rebuild – not at the time of loss – to account for updated rules.

The DOI said that this “legislation builds on major legislative reforms that Commissioner Lara sponsored last year after the Los Angeles wildfires. These newly enacted laws establish a wildfire safety grant mitigation program, expand insurance discounts, speed up claim payouts for wildfire survivors, extend non-renewal moratorium protections to businesses, strengthen the financial stability of the FAIR Plan, and modernize outdated insurance laws to improve transparency and accountability.”

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S.F. City Official to Serve 3 Years for $600K Work Comp Fund Theft

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Stanley Ellicott has been sentenced to a term of three years in State Prison after pleading guilty and being convicted of seven felony counts of public corruption in connection to a complex scheme that defrauded the city of San Francisco of more than $627,000 directly from the Department of Human Resources’ Division of Workers’ Compensation, and another case where he aided and abetted public corruption.  Ellicott was remanded into custody and is currently in San Francisco County Jail, awaiting transfer to the California Department of Corrections and Rehabilitation’s custody in State Prison.

Ellicott pled guilty and was convicted of two counts of misappropriation of public moneys, grand theft, financial conflict of interest, presentation of fraudulent claim, money laundering, and aiding and abetting a financial conflict of interest in a government contract. His guilty plea and conviction settled two fraud cases he was facing.

Ellicott was born and raised in Maine. He earned a Bachelor of Arts degree from Wheaton College and a Master of Public Policy from the University of California, Berkeley’s Goldman School of Public Policy. Prior to his roles with the City and County of San Francisco, where he began working on and off in 2012, Ellicott was employed as an associate analyst at Moody’s.

Over a four-and-a-half-year period from May of 2019 to January of 2024, Ellicott stole $627,118.86 from the City, where he previously served as the Assistant Director of Finance and Technology for the Human Resources Department, Workers’ Compensation Division. One of his responsibilities was to oversee “the financial integrity of the Workers’ Compensation Division.”

Ellicott enlisted a friend to register a fake business in Illinois called “IAG Services” and open a bank account for the business, which she gave full control of to Ellicott.  Ellicott then added this fake business as a vendor in the workers’ compensation system and over time billed more than 600 actual City workers’ compensation claims with charges for auditing services.

Department archives show no evidence any auditing services were ever performed.  Because the City is self-insured for workers’ compensation purposes, payments to doctors, employees, and vendors related to workers’ compensation claims come directly from the City’s coffers.

All the City payments to “IAG Services” were deposited into the account set up by Ellicott’s friend, then the money was systematically transferred into Ellicott’s personal checking accounts in a pattern to appear like they were payroll payments. In total, he transferred more than $488,000 from IAG’s account into accounts belonging to him.

The website for the Illinois business “IAG Services” created in Oakland – where Ellicott lives – and IAG emails sent to Ellicott’s work address that appear to be created by him. On several occasions, Ellicott emailed his subordinates and directed them to process payments to IAG that he had approved, enlisting their unknowing and unwitting assistance in his fraud.

Ellicott also pled guilty to and was convicted in a separate case for his role in a scheme to misappropriate grant funds awarded through the City’s Community Challenge Grant Program.

The cases against Ellicott were prosecuted by Assistant District Attorney Erin Loback, with assistance from District Attorney Investigator Mike Reilly, paralegal Chloe Mosqueda and the entire Public Integrity Task Force.

Investigators were able to locate and freeze all of the stolen funds before he was arrested. The stolen $627,118.86 back to the City’s Worker’s Compensation Fund.”

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