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Category: Daily News

Uber and Lyft Ordered to Classify Drivers as Employees

On May 5, 2020, the Attorney General of California, joined by the City Attorneys of Los Angeles, San Diego, and San Francisco, filed a lawsuit on behalf of the People of the State California seeking injunctive relief, restitution, and penalties against Defendants Uber Technologies and Lyft.

The complaint asserts that Uber and Lyft have misclassified their ride-hailing drivers as independent contractors rather than employees in violation of Assembly Bill 5 , which took effect on January 1, 2020. That statute is intended to ensure that all workers who meet its criteria receive the basic rights and protections guaranteed to employees under California law.

On June 25, the People moved for a preliminary injunction enjoining Defendants from classifying their drivers as independent contractors, and from violating any provisions of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission with regard to their drivers.

Defendants opposed the motion. They also filed three additional motions: a motion to stay the litigation; a demurrer and motion to strike the complaint; and a motion to compel arbitration.

Defendants sought to stay the litigation until the Ninth Circuit rules on Uber’s pending constitutional challenge to A.B. 5; until the November 2020 election, when the voters will consider Proposition 22, an initiative sponsored by Uber and Lyft that would exempt them from the requirements of A.B. 5; or until the final disposition of numerous lawsuits and arbitrations in which similar claims have been raised.

On August 10, the Court ruled on these pending motions after first declaring that “Defendants are not entitled to an indefinite postponement of their day of reckoning. Their threshold motions are groundless.” The case went downhill for the Uber and Lyft from there.

A footnote also proclaimed that the “Court gives no weight to Defendants’ surveys regarding how many of their drivers wish to become employees or remain self-employed. A. B. 5 may be unpopular among some of Defendants’ drivers, but a lawsuit is not a popularity contest. Nor, as Defendants and some amici curiae argue, is it this Court’ s role to decide whether A.B. S ‘s effects on drivers will outweigh its benefits. Policy judgments underlying a statute are left to the Legislature; the judiciary does not pass on the wisdom of legislation.” (

At the conclusion of the 34 page ruling, it was ordered that “During the pendency of this action, Defendants Uber Technologies, Inc. and Lyft, Inc. are hereby enjoined and restrained from classifying their Drivers as independent contractors in violation of Labor Code section 2570.3 .”

“Defendants are further enjoined and restrained from violating any provisions of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission with regard to their Drivers.”

This injunction was stayed for a period of 10 days to allow the two companies an opportunity to appeal. Thereafter, “it shall remain in effect through and including the trial of this matter or upon further order of this Court.”

Uber said it planned to file an immediate emergency appeal to block the ruling from going into effect.

Construction Worker Faces Fraud Charges for False Statement

Meliton Hernandez Martinez Jr., 23, was arraigned at the Merced County Superior Court on multiple felony counts of insurance fraud and a misdemeanor count of filing a false police report, after allegedly instigating a physical altercation resulting in stab wounds to his abdomen and arm.

An investigation by the Department of Insurance revealed Martinez was on an approved mid-morning work break while employed with a construction company.

During the break, surveillance footage and witness statements revealed that Martinez made inappropriate gestures to a female in a parking lot and was then confronted by the female’s boyfriend, a former U.S. Marine, who asked Martinez to be respectful.

Surveillance footage revealed Martinez began punching the boyfriend in the face multiple times, without provocation. As a result, Martinez was stabbed in the abdomen and the arm, which was later determined to be self-defense by local law enforcement.

After being airlifted to a local hospital, Martinez filed a workers’ compensation claim with his employer and provided false statements in regards to the incident.

Advantage Workers’ Compensation Insurance Company later denied all medical bills in relation to the claim after discovering Martinez was the initial physical aggressor, and toxicology results revealed Martinez was under the influence of alcohol and cannabis at the time of the altercation.

The Merced County District Attorney’s Office is prosecuting this case.

Man Arrested for Selling Fake COVID Medication

A man and his company have been charged with violating the Federal Food, Drug, and Cosmetic Act (FDCA) by selling a drug claiming to treat COVID-19.

Matthew Ryncarz, and his company, Fusion Health and Vitality, LLC d/b/a/ Pharm Origins, are accused of selling a misbranded drug called “Immune Shot” that they falsely claimed would lower consumer’s risk of contracting COVID-19 by nearly 50 percent, said Bobby L. Christine, U.S. Attorney for the Southern District of Georgia.

In March 2020, during the midst of the global COVID-19 public health crisis, Ryncarz, through his company, Pharm Origins, created a website and began selling “Immune Shot” for $19 a bottle. Among other things, the website represented that “YOU will learn in JUST MINUTES… how to LOWER your risk of COVID-19 by nearly 50%.”

Further, to sell “Immune Shot,” Ryncarz and Pharm Origins targeted individuals, ages 50 and older, with heavy-handed sales pitches, such as “The NEXT FIVE MINUTES could save your life,” “We are offering you the exclusive price of only $19 per bottle because we know that Immune Shot could be the most important formula in the WORLD right now due to the new pandemic,” “Immune Shot is Not a Luxury, It is a Necessity Right Now,” “Point Blank, if YOU Leave, YOU are at Risk,” and “Is Your Life Worth $19? Seriously, Is It?”

Ryncarz and Pharm Origins sold “Immune Shot” to consumers in the Southern District of Georgia and outside of the state of Georgia. The defendants were charged by way of an Information, filed in the U.S. District Court for the Southern District of Georgia. The Information alleges that “Immune Shot” was a misbranded drug within the meaning of 21 U.S.C. § 352(a)(1), in that it bore false and misleading labeling.

U.S. Attorney Christine expressed appreciation to investigators in the U.S. Attorney’s Office, and to David A. Frank, Senior Litigation Counsel with the Department of Justice’s Consumer Protection Branch, Lynn M. Marshall, Associate Chief Counsel for Enforcement, Office of the Chief Counsel, FDA, and to the FBI for their assistance in this prosecution.

“The FBI and our law enforcement partners will not allow anyone to take advantage of our citizens’ fears during a pandemic like COVID-19,” said Chris Hacker, Special Agent in Charge of FBI Atlanta. “It is especially concerning because this alleged scheme targeted citizens who are most vulnerable to the virus.”

Please report COVID-19 fraud to the National Center for Disaster Fraud’s National Hotline at (866) 720-5721, or go to

Conference Call Public Hearing Set for MTUS Update

The Division of Workers’ Compensation (DWC) has issued a notice of conference call public hearing for a proposed evidence-based update to the Medical Treatment Utilization Schedule (MTUS), which can be found at California Code of Regulations, title 8, section 9792.24.6.

The conference call public hearing is scheduled for Thursday, September 10, at 10 a.m. and members of the public may attend by calling 866-390-1828 and using access code 5497535#. Members of the public may review and comment on the proposed updates no later than September 10.

The proposed evidence-based update to the MTUS incorporate by reference the latest published guideline from American College of Occupational and Environmental Medicine (ACOEM) for the following:

Antiemetics Guideline (ACOEM March 27, 2020)

An antiemetic is a drug that is effective against vomiting and nausea. Antiemetics are typically used to treat motion sickness and the side effects of opioid analgesics, general anaesthetics, and chemotherapy directed against cancer. They may be used for severe cases of gastroenteritis, especially if the patient is dehydrated.

The proposed evidence-based update to the MTUS regulations are exempt from Labor Code sections 5307.3 and 5307.4 and the rulemaking provisions of the Administrative Procedure Act.

However, DWC is required under Labor Code section 5307.27 to have a 30-day public comment period, hold a public hearing, respond to all the comments received during the public comment period and publish the order adopting the update online.

Surgical Specialties Fees Reduced in 2021 Medicare Fee Schedule

The Centers for Medicare & Medicaid Services announced the proposed calendar year 2021 updates for the Medicare Physician Fee Schedule. The Official Medical Fee Schedule for the California worker’s compensation system correlates with Medicare fees. Hence the announced changes will have implications in the workers’ compensation industry.

The press release began by highlighting changes the Trump administration was making to expand permanently the telehealth benefits that Medicare beneficiaries have begun receiving during the COVID-19 pandemic, and then discussed changes it was making to the fee schedule — specifically to the paperwork requirements for evaluation and management (E/M) codes that doctors use to bill for office visits.

“The Trump administration has taken steps to eliminate burdensome billing and coding requirements for Evaluation and Management visits that make up 20% of the spending under the Physician Fee Schedule,” the release noted. “These billing and documentation requirements for E/M codes were established 20 years ago and have been subject to longstanding criticism from clinicians that they do not reflect current care practices and needs.”

“After extensive stakeholder collaboration with the American Medical Association and others, simplified coding and billing requirements for E/M visits will go into effect January 1, 2021, saving clinicians 2.3 million hours per year in burden reduction,” CMS said. “As a result of this change, clinicians will be able to make better use of their time and restore the doctor-patient relationship by spending less time on documenting visits and more time on treating their patients.”

The proposed rule lists (on p. 897) the estimated impacts of the rule’s payment changes for each specialty, which included losers as well as winners.

Three specialties fare the best: endocrinology, with a 17% increase; rheumatology, with a 16% increase; and hematology/oncology, with a 14% increase. At the bottom are nurse anesthetists and radiologists, both with an 11% decrease; chiropractors, with a 10% decrease; and interventional radiology, pathology, physical and occupational therapy, and cardiac surgery, all with a 9% decrease.

Surgical specialties in general took some of the biggest hits, with cuts in every category ranging from 5% to 9%.

The proposed rule also lists the fee schedule’s final conversion factor — the amount that Medicare’s relative value units (RVUs) are multiplied by to arrive at a reimbursement for a particular service or procedure under Medicare’s fee-for-service system. Due to budget neutrality changes required by law, the proposed 2021 conversion factor is $32.26, a decrease of $3.83 from the 2020 conversion factor of $36.09, CMS said.

And not everyone is happy with these changes. “Under the proposal, neurosurgeons face overall payment cuts of at least 7% at a time when the nation’s healthcare system is already stressed by the COVID-19 pandemic,” said a joint statement from the American Association of Neurological Surgeons (AANS) and the Congress of Neurological Surgeons (CNS). “The reductions are primarily driven by new Medicare payment policies for office and outpatient visits that CMS will implement on January 1, 2021. Drastic cuts caused by changes to these visit codes … will undermine patient access to neurosurgical care.”

Safeway Store Janitors Protest Limited COVID-19 Safety Gear

Citing the risk of contracting COVID-19 at their workplaces, Palo Alto Online reports that a group of janitors who clean Safeway stores across the Bay Area protested in Palo Alto on Thursday to demand safeguards for their health and financial security.

About 80-100 people showed up for an “Essential Workers Caravan” to show support for the contract employees, said Jane Martin, an organizer for Service Employees International Union, United Services Workers West (SEIU-USWW), which represents the janitors at the center of Thursday’s action. The workers, many of whom are Latino, are in some cases supporting family members who have lost their jobs due to the economic shutdown, she said.

Ten janitors contracted to work in northern California Safeway stores have tested positive of COVID-19, according to the union, which represents more than 20,000 janitors statewide.

When the clients come into the stores, everything is clean because of us,” janitor Jesus Barrios said in Spanish. Barrios, who lives and works in Contra Costa County, took part in the protest with his daughters, Guadalupe and Susana.

“We are essential workers and we run the risk of contracting the virus. We deserve higher wages because we are at high risk,” he said.

The caravan began at a parking lot along West Bayshore Road, near U.S. Highway 101, and drove to the Midtown Safeway on Middlefield Road, where the procession circled around the parking lot. Many participants decorated their cars and tied balloons to their vehicles.

The group is calling on Safeway to add $2 to contracted janitors’ hourly wage, which Martin called “hazard pay.” That amount is currently offered to janitors who have been directly hired by the supermarket chain rather than by contract.

The added compensation would recognize the dangers janitors face at their workplaces, where the employees often work night shifts after the grocery stores close to disinfect surfaces and clean bathrooms before customers return the following day, she said.

Most janitors are paid $16.20 an hour, a rate that will be renegotiated later this year, according to SEIU-USWW bargaining director Mark Sharwood. Most also benefit from paid family health coverage, up to 50 cents an hour in pension benefits, five days of paid sick leave, six paid holidays, four weeks of paid vacation and paid funeral leave.

Contracted janitors are also looking to receive adequate supplies of personal protective equipment, said Martin, who recalled speaking to a janitor who said his store supplies workers with face masks but at times faces a shortage of gloves.

The group also made calls for the passage of the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act), a $3 trillion federal package that would issue a second round of stimulus checks and extend a $600 weekly payment for the unemployed. The legislation gained the House’s approval in May and awaits a vote from the U.S. Senate.

Thursday’s protest ended at the Stanford Oval to raise awareness of the university’s contracted janitors who have stopped receiving compensation since mid-June due to the shutdown. In April, the university announced it would continue pay and benefits for contracted service workers through June 15 amid pressure from the campus community.

AbbVie Resolves CDI Insurance Fraud Act Claim for $24M

The California Department of Insurance announced a settlement agreement with AbbVie Inc. to resolve a lawsuit alleging violations of the California Insurance Frauds Prevention Act involving the marketing of blockbuster prescription drug HUMIRA.

AbbVie agreed to reform its HUMIRA marketing practices in California, including disclosing that registered nurses employed as “Ambassadors” to interact with patients about HUMIRA are actually paid by the company, not a medical provider, and reforming how HUMIRA is marketed to health care providers.

In addition, as provided for in the Act, AbbVie has also paid a combined $24 million to the State of California and the whistleblower who brought the case to the Department’s attention.

In October 2016, the Department began an investigation into AbbVie after recieving a whistleblower case filed by a registered nurse who was employed as an AbbVie Ambassador in Florida.

After its investigation, the Department intervened in that case and filed a Superseding Complaint alleging that whistleblower violated California’s Insurance Frauds Prevention Act. Among other things, the Department alleged that AbbVie violated the Act by unlawfully providing free and valuable professional goods and services to physicians to induce and reward AbbVie prescriptions.

The Department alleged that Nurse Ambassadors interfered with the flow of doctor-patient communications and did not directly answer questions pertaining to AbbVie marketing activities constituted kickbacks in violation of the Act, including, for example, the provision of meals and drinks to providers outside the context of speakers programs.

While AbbVie continues to deny the allegations, as a part of the settlement, AbbVie agreed to reforms, including:

— Ambassadors will disclose to patients that they are provided by AbbVie and do not work under the direction of the patient’s health care provider.
— The company will implement a policy modification prohibiting HUMIRA sales representatives from inviting HUMIRA prescribing health care providers to offsite business meals, except as part of the AbbVie speaker programs.
— AbbVie will provide patients with the U.S. FDA-approved HUMIRA medication guide and Ambassadors will direct patients to the medication guide and their health care provider regarding side effects and safety risk.
— The company will provide guidance and training that Ambassadors shall not have patient-specific discussions with providers who prescribe AbbVie.
— AbbVie employees will be prohibited from describing Ambassadors to health care providers as “extensions of their offices” and from providing to providers any contact information for Ambassadors who interact with HUMIRA patients.
— AbbVie employees and Ambassadors will not actively participate in conversations between patients and insurance companies.

The complete list of AbbVie’s business practice reforms can be found in the settlement.

Liberty Mutual Reports $320M Q2 Loss from COVID-19

Liberty Mutual Holdings Co. reported a $320 million net loss in the second quarter of 2020 compared with a $397 million profit in the same period last year largely due to event cancellation losses from COVID-19, natural catastrophes and civil unrest, the insurer reported Thursday.

The net loss was the result of significant impacts from the COVID-19 pandemic and consequent economic downturn as well as above average catastrophe losses, said David H. Long, Liberty Mutual Chairman and Chief Executive Officer.

The largest driver of the COVID-19 impact was event cancellation product line, which contributed approximately 9 points,” said Dennis Langwell, executive vice president and president of Liberty’s global risk solutions segment, on the earnings call. He attributed about $100 million to property-related losses and expected litigation costs and about $260 million to contingent lines event cancellation.

Incurred losses for COVID-19 amounted to $529 million in the quarter, with roughly half of these losses related to event cancellation. Based on our size and industry footprint, these losses fall within its expectations for an event of this magnitude.

The insurer has “seen some losses come in but not a lot” for coronavirus-related workers compensation losses, Mr. Langwell said.

But this isn’t over – we don’t know how workers compensation will play out for additional exposures in subsequent periods,” he said. “We expect the impact of COVID-19 coupled with the low interest rate environment – to be a catalyst for more meaningful rate increase in workers compensation going forward.”

Mr. Langwell said the insurer applied exclusions for pandemics to event cancelation policies beginning in January 2020 and estimates that it could see about $50 million related to additional event cancelations in 2021.

Catastrophe losses of $878 million were up $384 million from the prior year quarter and resulted primarily from a high frequency of severe storm activity and include $147 million of losses related to civil unrest.

On the investment side, realized gains from the sale of fixed maturities were more than offset by losses in its partnership portfolio, which are booked on a quarter lag. Liberty Mutual’s investment income declined to $144 million in the second quarter from $1.37 billion in the same quarter in 2019, according to the insurer’s financial analysis.

Liberty Mutual reported revenue of $10.17 billion for the second quarter, a 5.7% dip in from the same quarter 2019.

In the global retail markets segment, which includes personal and small U.S. business lines, net written premium declined 5.7% in the second quarter 2020 to $6.86 million, but the combined ratio held almost steady at 98.9%.

Indictments Say 10 ChiroMed Operatives Ran “Sham” Clinics

Law enforcement authorities arrested four defendants charged in two federal grand jury indictments alleging a narcotics trafficking ring that sold illegal opioid prescriptions for cash through a series of sham medical clinics.

Those charged in the indictments include Dr. John Michael Korzelius, 68, a.k.a. “Dr. K,” of Camarillo, who worked at a Santa Ana pain management clinic where he allegedly wrote medically unnecessary prescriptions to “patients” who paid cash. Over the course of two years, Korzelius and other medical professionals working under his guidance, prescribed approximately 439,090 pills of 30mg oxycodone – the highest dose of short-acting oxycodone available, and the dose most popular for the drug-abusing population, according to court documents.

The charges in this matter are the result of an investigation by agents with the DEA and IRS Criminal Investigation into ChiroMed, which operated a group of chiropractic, medical and wellness clinics in Los Angeles, Orange and San Bernardino counties. Korzelius, along with other medical professionals, including physician’s assistants, allegedly met with fraudulent patients and provided them with unnecessary prescriptions for drugs, including oxycodone.

ChiroMed operated clinics across Southern California, including Santa Ana, Fontana, Westwood, Long Beach, Huntington Park, Wilmington, Redondo Beach, and Inglewood.

The two grand jury indictments charge 10 defendants with a variety of narcotics-related offenses, including conspiracy to distribute controlled substances, possession with intent to distribute oxycodone, distribution of fentanyl, and money laundering.

Along with Korzelius, the indictments charge:

— Justin Douglas Cozart, 42, of Woodland Hills, who operated and supervised the ChiroMed medical clinics;
— Damoon Joe Navarchi, 33, of Woodland Hills, who assisted Cozart in operating the clinics;
— Xavier Muduki Mabale, 42, of Anaheim, who is accused of recruiting sham patients to obtain fraudulent oxycodone prescriptions from the medical clinics;
— Mayra Barrios, 37, of Yorba Linda, who allegedly oversaw the day-to-day management of the medical clinics, including the issuance of fraudulent oxycodone prescriptions to sham patients;
— Harrison Maruje Mureithi, 42, of Norco, who allegedly coordinated the purchase, collection, packaging, and shipment of oxycodone to buyers on the East Coast;
— Duncan Muthoni Wanjohi, 23, of Anaheim, who allegedly assisted Mureithi in the buying and shipping of narcotics;
— Pierre Delva, Jr., 33, a.k.a. “ig Head,” of Medford, Massachusetts, who allegedly provided financing to Mureithi to purchase bulk quantities of oxycodone; and
— Louise W. Mureithi, 69, of Anaheim, Harrison Mureithi’s mother, who allegedly received packages of cash sent to her son for oxycodone;
— Majid Nojavan, 42, of Laguna Niguel, charged in a spinoff case from the primary investigation, who allegedly advertised oxycodone for sale on Craigslist, sold fentanyl to an undercover police officer, and escorted the undercover police office to an Inglewood medical clinic to obtain a fraudulent oxycodone prescription.

As a result of a two-year investigation into the fraudulent medical clinics, DEA agents seized 20,737 oxycodone pills, and $177,610 in cash. Law enforcement intercepted a mailed parcel contained a teddy bear stuffed with two bags of oxycodone pills.

If convicted of the charges, the defendants each would face a statutory maximum sentences of at least 20 years in federal prison.

DOL Accuses Uber and Lyft of Wage Theft

The Labor Commissioner’s Office has filed separate lawsuits against transportation companies Uber and Lyft for committing wage theft by misclassifying employees as independent contractors. Uber and Lyft have misclassified their drivers, which has deprived these workers of a host of legal protections in violation of California labor law, the lawsuits say.

The goal of the lawsuits is to enforce California labor laws and to ensure that drivers are not misclassified as independent contractors.

In 2018, the California Supreme Court’s Dynamex ruling established the “ABC test” for determining whether a worker is an employee under various California labor laws. Assembly Bill 5, which went into effect on January 1, 2020, extended the ABC test to additional California labor laws. Under the ABC test, workers are considered employees unless they are free from control from the hiring entity, perform work outside of the hiring entity’s usual business, and engage in an independently established trade or occupation.

The lawsuits seek to recover amounts owed to all of Uber’s and Lyft’s drivers, including the nearly 5,000 drivers who have filed claims for owed wages with the Labor Commissioner’s Office. Moreover, the lawsuits seek recovery for a wider range of statutory violations and damages than those asserted in individual wage claims and other lawsuits.

The lawsuits allege that by misclassifying workers, Uber and Lyft failed to meet their obligations as employers as required by California labor law – including to pay drivers at least minimum wage for all hours worked, to pay overtime compensation, to provide paid rest periods, to reimburse drivers for the cost of all equipment and supplies needed to perform their work and for work-related personal vehicle mileage. The suits also allege the companies failed to provide paid sick leave, to provide accurate itemized wage deduction statements, to timely pay all wages owed during and upon separation of employment, and to provide notice of employment-related information required by law.

The lawsuits, filed in Alameda County Superior Court, ask the court to order Uber and Lyft to stop misclassifying their employees and provide the protections available to all employees under the Labor Code. The suits also seek the recovery of unpaid wages, penalties and interest as well as civil penalties and any costs and reasonable attorneys’ fees incurred by the Labor Commissioner’s Office.  

The Labor Commissioner’s Office estimates that Uber and Lyft each employ more than 100,000 drivers. Amounts collected by the Labor Commissioner for unpaid wages, liquidated damages owed to workers, penalties owed to workers, and reimbursement of business expenses owed to workers, will be distributed to all drivers who worked for Uber or Lyft during the time period covered by this lawsuit, not just to those drivers who filed individual claims with the Labor Commissioner.