Category: Daily News

Former California State Senator Ronald S. Calderon was sentenced to 3½ years in federal prison after pleading guilty to a federal corruption charge and admitting that he accepted tens of thousands of dollars in bribes in exchange for performing official acts as a legislator.

Ron Calderon pleaded guilty in June to one count of mail fraud through the deprivation of honest services. In a plea agreement filed in this case, Ron Calderon admitted accepting bribe payments from the owner of a Long Beach hospital who wanted a law to remain in effect so he could continue to reap tens of millions of dollars in illicit profits from a health care fraud scheme. Ron Calderon also admitted taking bribes from undercover FBI agents who were posing as independent filmmakers who wanted changes to California’s Film Tax Credit program.

Ron Calderon’s brother, Thomas M. Calderon, 62, also of Montebello, a former member of the California State Assembly who became a political consultant, was sentenced last month to 10 months in custody for his conviction on a money laundering charge for allowing bribe money earmarked for his brother to be funneled through his company.

The Calderon family was a political dynasty for decades in California. A third brother, former Assemblyman Charles Calderon, was not implicated in the corruption scandal. Ronald Calderon’s nephew Ian Calderon is a state assemblyman and the last family member in state elected office. He was not alleged to have any part in the scheme.

Ron Calderon admitted participating in a bribery scheme involving two areas of legislation and the hiring of a staffer who was also an undercover FBI agent.

In the first part of the bribery scheme, Ron Calderon took bribes from Michael Drobot, the former owner of Pacific Hospital in Long Beach, which was a major provider of spinal surgeries that were often paid by workers’ compensation programs. The spinal surgeries are at the center of a massive healthcare fraud scheme that Drobot orchestrated and to which he previously pleaded guilty. Ron Calderon was not charged in the healthcare fraud scheme that led to well over $500 million in fraudulent billings. Drobot, who was described in court papers filed by prosecutors as “a greedy fraudster robbing taxpayer-funded federal programs,” was a client of Tom Calderon’s political consulting firm.

California law known as the “spinal pass-through” legislation allowed a hospital to pass on to insurance companies the full cost it had paid for medical hardware it used during spinal surgeries. As Drobot admitted in court, his hospital exploited this law, typically by using hardware that had been purchased at highly-inflated prices from companies that Drobot controlled and passing this cost along to insurance providers.

Drobot bribed Ron Calderon so that he would use his public office to preserve this law that helped Drobot maintain a long-running and lucrative healthcare fraud scheme, which included Ron Calderon asking a fellow senator to introduce legislation favorable to Drobot and attempting to recruit other senators to support Drobot. The payments from Drobot came in the form of summer employment for Ron Calderon’s son, who was hired as a summer file clerk at Pacific Hospital and received a total of $30,000 over the course of three years, despite the son doing little actual work at the hospital.

In a sentencing memorandum filed with the court, prosecutors write that Ron Calderon “sold his vote not just to help pay for the expenses of living beyond his means, but for the more banal and predictable aims of corruption – fancy luxuries, fancy parties, and fancy people.”

The memorandum further argues that a significant term of imprisonment was necessary to send a message to other political officials and the electorate because, without such a sentence, “the trust already eroded by individual detections of corrupt politicians will spread like cancer and threaten the fundamentals of a trusted democracy. It is not hyperbole to insist that nothing less is at stake in defendant’s sentencing.”

His attorney Mark Geragos suggested during the court hearing that his client should serve no time in prison. He alleged that the government had entrapped Calderon and raised the former lawmaker’s poor health. The former state senator’s legacy has been ruined by his guilty plea in the case, he added. “This is going to be the opening paragraph of his obituary, unfortunately,” Geragos told Judge Snyder.

When Snyder rebuffed Geragos’ appeal and said Calderon needed to spend some amount of time behind bars, Geragos switched tactics, asking her to consider a two-year sentence.

Striking a defiant tone throughout, Calderon, 59, refused to admit any wrongdoing or to apologize.”My goal was always to do the right thing for California,” he said. “At no point did I intend to break the law.”

Calderon added that he was unemployed and tens of thousands of dollars in debt. He said he was not only banned from running for public office again but had been stripped of his real estate license and had been unable to get a job. His wife, he said, would likely have to declare bankruptcy and sell their house.

Judge Snyder was unmoved. “I did not really hear Sen. Calderon accept responsibility or apologize,” she said. “It was really about himself.”

An Orange County Sheriff’s Department (OCSD) deputy was arrested on charges for committing insurance fraud by failing to disclose his true physical abilities and activities to his health care providers and lying under oath.

Nicholas Zappas, 36, who lives in Laguna Niguel, is charged with 11 felony counts of insurance fraud and seven felony counts of perjury under oath. If convicted, Zappas faces a maximum sentence of 16 years in state prison. The defendant was arrested by Orange County District Attorney (OCDA) Investigators, and his arraignment date and time is yet to be determined.

At the time of the alleged crimes, Zappas was employed as an Orange County Sheriffs Department deputy for approximately 14 years.

On April 2, 2015, while working Harbor Patrol and engaged in a boat rescue, Zappas claimed he tripped over a fire hose falling on his back. He filed a workers’ compensation insurance claim for injuries to his left shoulder, left side of his neck, and lower back. He was placed on work restrictions of no lifting, pushing or pulling of greater than 10 pounds by a medical doctor due to his complaint of pain. The OCSD accommodated the work restrictions and Zappas was assigned to dispatch.

However, between May 2015 and November 2015,Zappas is accused of engaging in CrossFit, which is a high-impact exercise with varied functional movements. He allegedly lifted substantial weights in excess of 200 pounds, doing box jumps, burpees, squats, and other activities that were contrary to the limitations imposed by the doctor based on his description of his pain, symptoms and limitations. Zappas appeared on video while engaging in CrossFit. Thus he is accused of failing to disclose that he was participating in CrossFit to his medical physicians.

In May 2015, the County discovered that Zappas was engaging in CrossFit, and it was reported to OCDA Bureau of Investigations, who investigated this case.

On Dec. 1, 2015, while under oath during his deposition, Zappas allegedly denied lifting anything over 20 pounds since the date of his injury and claimed that he could not lift anything heavy, could not do squats, and could not run.

Between January 2016 and May 2016, Zappas is accused of continuing to engage in CrossFit and not disclosing his abilities to his medical physicians.

Deputy District Attorney Pamela Leitao of the Insurance Fraud Unit is prosecuting this case.

Newly adopted AB 2883 provides that all business workers’ comp insurance policies will be required to cover certain officers and directors of private corporations and working members of partnerships and limited liability companies that may have been previously excluded from coverage beginning on Jan. 1, 2017.

Unfortunately, AB 2883 did not include any language exempting in-force policies or delaying its effective date so as not to impact in-force policies.

And the Insurance Journal reports that John Norwood, with lobbying firm Norwood & Associates, said not only does AB 2883 present implementation problems for insurers, it presents an errors and omissions issue for insurance agents and brokers, especially with those entities that today do not purchase a workers’ comp policy because only the owners are involved in the business.

“Literally everybody in the industry responsible for legislative issues missed the application issue relative to this bill, yours truly included in that list, and the same with all legislative and committee staff until after the governor signed the bill into law,” Norwood said. “There may be an opportunity to address the application issue early next legislative session but some coverage will be afforded to individuals with in-force policies if and until a fix-it bill can be passed through both houses of the Legislature and signed by the governor.

According to Insurance Commissioner Jones, the Department of Industrial Relations, the American Insurers Association, and the Association of California Insurance Companies, all agree that this change in law applies to in-force policies.

Prior to the passage of the law, officers, directors and working partners were not required to be covered under the business’s workers’ comp policy unless they opted to be covered and were not listed on a limiting and restricting endorsement.

Going forward officers, directors and partners are required to be covered under the employer’s workers’ comp policy unless they meet a narrower definition of excluded employee. Under this narrower definition, officers, directors, and partners can only opt out of coverage by signing a waiver under penalty of perjury and filing the waiver with their employer’s insurer.

Insurance companies are required to identify and provide notice to each employer that may have employees that were previously excluded from coverage and are affected by the new law, and they are required to report the premium and loss experience associated of those who have not chosen to opt of the coverage.

The Insurance Journal reports that Blake Longo, with Pasadena-based AJLongo Insurance Brokers, shot an email to his clients and business associates on Monday warning them of the changes. Longo said he’s already been talking to some of his clients about it. “They’re not happy about the change,” Longo said. “They don’t believe it adds any benefit to them and that it will certainly add extra costs.”

Longo said the changes will also make life tougher on brokers like him, because it will be brokers who businesses will first turn to if the new rules affect them.”You are delivering the bad news and you’re delivering the additional premium,” he said. “That does not bring smiles to people’s faces.”

According to Norwood, the bill was originally worded to be a bill authorizing a study on paperless systems for the approval of treatment requests in the workers’ comp system. However, that language was gutted and amended to address the issue of exemptions for officers and directors of corporations, partnerships and LLCs.

The bill’s new language was added because some insureds were allegedly abusing the exemption process under current law by listing everyone in their organization as an officer or director to avoid purchasing workers’ comp, Norwood explained.

The biggest issue with AB 2883 is that it applies to all workers’ comp insurance policies that will be in effect on or after Jan. 1, 2017, including those policies in force any time after the first of the year. Katie Pettibone, AIA’s vice president for state affairs, said her group is working with CDI and DIR to help address this.

“Publicly the bill was supposed apply to new policies and renewals after the effective date of January 1, 2017, thus there was no opposition,” Pettibone said. “However, there was ambiguity in the drafting and it appears the bill is going to be broader than just policies written after Jan. 1 or renewals ” it will be applicable to in-force policies. Stakeholders have been working with the California Department of Insurance and Department of Industrial Relations to help address this unintended effect.”

The California Insurance Commissioner issued a decision regarding the WCIRB’s January 1, 2017 Regulatory Filing which was submitted to the California Department of Insurance (CDI) on June 28, 2016 and subject to a public comment period that ended on September 28, 2016. In the Decision, the Commissioner approved all of the WCIRB’s proposed changes effective January 1, 2017 to the California Workers’ Compensation Uniform Statistical Reporting Plan – 1995 (USRP), Miscellaneous Regulations for the Recording and Reporting of Data – 1995 (Miscellaneous Regulations), and California Workers’ Compensation Experience Rating Plan – 1995 (ERP) with one exception.

A number of clarifying changes to Classifications 5474(1)/5482(1), 5506, 6218(2)/6220(2), 5507 and 8227 were not approved due to a pending appeal before the CDI Administrative Hearing Bureau.

The proposed amendments would define first aid claims and require that they be included in insurer reporting. First aid claims have been a longstanding concern because some insurers do not report first aid claims as currently required under the USRP, which, according to the CDI, gives their policyholders an unfair advantage in the market.

The current regulations do not specifically mention first aid claims; thus, some insurers have interpreted the regulations to mean that they need not report medical payments for first aid claims. However, the USRP does not provide any exceptions that would enable insurers to refrain from reporting any medical loss, including first aid medical losses. The confusion may stem from the fact that first aid claims are treated differently than indemnity claims under the Labor Code in the workers’ compensation system. The proposed amendments clarify the existing obligations to report all claims and will enhance the WCIRB’s ability to properly account for first aid claims when determining appropriate statewide experience modifications.

The WCIRB’s planned study regarding whether to exempt a certain amount of medical loss from the reporting requirements may or may not come to fruition in 2019; thus, there is no basis to conclude that the market will benefit from delaying implementation. Also, the WCIRB’s inability to quantify the extent to which insurers underreport claims underscores the immediate need for the implementation of these amendments, which will clarify the regulations to all insurers and policyholders and foster the proper reporting of all claims, in furtherance of a fair and equitable system.

All the proposed amendments to the ERP including the WCIRB’s proposed 2017 rating values to be used in the computation of 2017 experience modifications in accordance with the variable split experience rating formula adopted by the Commissioner in 2015 to be effective January 1, 2017. The approved 2017 experience rating eligibility threshold is $10,100. (View the approved revised tables.)

The WCIRB is in the process of updating the USRP, Miscellaneous Regulations and ERP. Once complete, these documents will be posted to the Publications and Filings page of the WCIRB website. In the interim, the WCIRB has prepared the2017 Quick Reference Guide summarizing the approved changes to the Commissioner’s regulations.

The Decision pertains only to the WCIRB’s Regulatory Filing and does not include amendments to advisory pure premium rates. Changes to advisory pure premium rates were proposed in the WCIRB’s amended January 1, 2017 Pure Premium Rate Filing submitted on October 3, 2016.

A Los Angeles County Sheriff’s Deputy (identified as John Doe) and the Association for Los Angeles Deputy Sheriffs (ALADS) filed a complaint against the County of Los Angeles and other parties alleging that the defendants unlawfully accessed Doe’s medical information, and later discriminated and retaliated against him for asserting his right to keep that information confidential.

Doe has been a Sheriff’s Deputy since 1997. In 2009, he suffered a work-related injury to his back for which a physician prescribed narcotic pain medication. Doe became physically dependent on the medication. He received workers’ compensation benefits for both the back injury and his dependency. He entered a drug dependency treatment program. He completed the program successfully in June and was released to return to full time, unrestricted duty. From June 2011 until February 2012, Doe worked full time as a deputy sheriff. He had back surgery in February, then took a leave of absence until July 6, 2012.

In May 2012, while on leave, Doe filled several prescriptions he obtained from different physicians for pain medications. In August 2012, the County’s workers’ compensation administrator noticed that the number of prescriptions was “unusual” and informed the sheriff’s department about the prescriptions. When confronted Doe stated that he had decided to quit taking the medication and destroyed the remaining pills. The last time he took narcotic pain medication was in June 2012.

From August 6, 2012 until June 13, 2013, Doe worked full time without restrictions or problems. The sheriff’s department nevertheless placed him on a performance mentoring program. Doe was required to attend quarterly performance reviews and submit to drug tests. From August 2012 until June 2013, Doe provided the required information and passed all drug tests.

On December 6, 2012, someone in the sheriff’s department accessed Doe’s records within the County’s Prescription Medication Drug Database (PMDD) for the purpose of discovering the medications Doe had been prescribed. Employees of the County and the sheriff’s department reviewed the information. Doe had not authorized access or review, and did not learn of it until November 2013.

Later, five supervisors attempted to get Doe to authorize access to his prescription information, telling him that it would “save [his] job.” And three sheriff’s department officers asked him to voluntarily submit to a psychological fitness for duty evaluation. Doe declined both requests. Later he was “ordered to engage in a fitness for duty psychological re-evaluation.” The defendants were allegedly aware that Doe would be required to release this information as part of the fitness for duty evaluation.

Doe consented to the evaluation, but refused to authorize the release of his medical records. The psychologist was therefore unable to conduct the evaluation. The next day Doe was ordered to take a medical leave of absence. He complied, even though he was ready, willing, and able to perform his duties. He has been on leave of absence since that time.

Doe filed a civil complaint against the County alleged nine causes of action involving invasion of privacy and retaliation. The defendants filed a special motion to strike the complaint under Code of Civil Procedure section 425.16, commonly referred to as an anti-SLAPP motion. The trial court granted the motion, dismissed the case and awarded $10,230 in attorneys’ fees to the defendants. The Court of Appeal reversed in the unpublished case of Assn. for Los Angeles Deputy Sheriffs v. County of Los Angeles.

Resolving an anti-SLAPP motion involves a two-part inquiry. First, the defendants must make a prima facie showing that the challenged cause of action arises from activity protected by the anti-SLAPP statute. If the defendants satisfy their burden of showing that the cause of action arises from protected activity, the burden shifts to the plaintiffs to make a prima facie showing of facts demonstrating a probability of prevailing on their claim.

The Court of Appeal determined that the plaintiff’s causes of action do not arise from activity protected under the anti-SLAPP statute, the trial court erred in granting defendants’ special motion to strike the complaint and in awarding defendants’ their attorneys’ fees. The order granting the defendants’ special motion to strike the complaint and the award of attorneys’ fees were reversed and his case will proceed.