Category: Daily News

Alki David Productions, Inc. (ADP) is an entertainment and media company owned by its principal, Alkiviades David. ADP initially produced internet programming, but in 2014 it began focusing on hologram technology, by which images are projected onto a screen and reflected for audience viewing.

Karl Zirpel was employed by ADP from 2013 to 2017. During his employment, Zirpel became heavily involved in hologram production. He learned the technology, how to install the equipment, and how to stage productions that ADP created for television shows, concerts, and museums. Zirpel became ADP’s vice president of operations in March 2014. His annual salary at the time ADT terminated his employment was $72,800.

In September 2017, Zirpel began working at a church on Hollywood Boulevard that ADP was converting into a theater for hologram productions. Zirpel was responsible for installing production equipment used to create the hologram.

Zirpel was at the theater on September 25, 2017, when four different Los Angeles City inspectors arrived. He learned of approximately 20 code violations, including plumbing and electrical violations.

Zirpel was concerned about the plumbing and electrical work in relation to the hologram equipment he was to install. Projection equipment weighing 700 pounds would be installed in the ceiling directly over the audience. Zirpel was concerned about the integrity of the ceiling and the floor and whether the equipment could fall on the theater attendees.

ADP had scheduled a private, invitation-only special event at the theater for celebrities and potential investors to take place on September 28, 2017 After the inspectors finished their September 25, 2017 walk throughs, Zirpel asked two of the inspectors whether ADP could obtain approval of the completed work before the event. Both inspectors told Zirpel that approvals would be impossible given their respective schedules and the amount of work to be done at the theater.

Zirpel and David had conversations about safety concerns, with Zirpel suggesting that the event be postponed. David “immediately blew up,” and told Zirpel to shut up and “go with the program,” Zirpel kept repeating what they were doing was not safe. David went into a “fit of rage,” yelled in Zirpel’s face, and using numerous obscenities as he fired Zirpel. One of the comments made by David revealed that Zirpel was gay.

Zirpel found the situation “traumatic,” because he “wasn’t out to a lot of people,” including many with whom Zirpel worked in a very masculine construction environment. Zirpel had also trusted David, one of the few people who knew Zirpel was gay.

Zirpel sued David and alleged his termination constituted retaliation under Labor Code section 1102.5, subdivision (b), for disclosing to ADP information Zirpel reasonably believed evidenced a violation of a statute, rule, or regulation, and under Labor Code section 232.5, subdivision (c) for disclosing information about the employer’s working conditions.

A jury found ADP liable for whistleblower retaliation under Labor Code section 232.5, which prohibits an employer from discharging an employee who discloses information about the employer’s working conditions, and section 1102.5, subdivisions (b) and (c), which prohibits an employer from retaliating against an employee who refuses to participate in an activity that would violate the law or who discloses information the employee reasonably believes would disclose a violation of law. The jury awarded Zirpel $7,068,717 in damages (consisting of $368,717 in economic damages, $700,000 in non-economic damages, and $6 million in punitive damages).

David appealed. The Court of Appeal affirmed the judgment in the published case of Zirpel v. Alki David Productions, Inc -B317334 (July, 2023).

One of David’s contentions on appeal was that the punitive damages award should be reversed because it was unconstitutionally excessive.

The Court of Appeal noted that of the guideposts for determining the constitutionality of a punitive damages award, reprehensibility is the most important factor. In the case of State Farm Mut. Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408, 419) the United States Supreme Court has instructed courts to determine the reprehensibility of a defendant’s conduct by considering whether “the harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the conduct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident.” (Ibid.) A reviewing court must consider the totality of the circumstances when determining the reprehensibility of a defendant’s conduct. (Ibid.)

“There is substantial evidence of reprehensible conduct on the part of ADP and its principal, David. David and Zirpel’s superiors ignored Zirpel’s repeated disclosures of potentially hazardous conditions at the theater, evincing a disregard of the health and safety of others. Conscious disregard of the safety of others can also constitute malice for purposes of a punitive damages award.”

Despicable conduct is conduct that is so “base, vile or contemptible” that it would be despised and looked down upon by ordinary people. (Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1228.) There is substantial evidence David acted with malice when terminating Zirpel’s employment. When Zirpel voiced his concerns regarding workplace safety, David yelled and screamed obscenities at Zirpel in front of his coworkers.

After telling Zirpel he was fired, David followed Zirpel out of the theater building and continued to scream at him. The totality of the circumstances here supports a finding of reprehensible conduct.

The implementation of privacy rights in California began In 1972, when California voters amended the California Constitution to include the right of privacy among the “inalienable” rights of all people.

Since California voters approved the constitutional right of privacy, the California Legislature has adopted specific mechanisms to safeguard Californians’ privacy, including the Online Privacy Protection Act, the Privacy Rights for California Minors in the Digital World Act, and Shine the Light, but consumers had no right to learn what personal information a business had collected about them and how they used it or to direct businesses not to sell the consumer’s personal information.

To facilitate that missing right, the legislature passed a landmark data privacy law in 2018, the California Consumer Privacy Act of 2018 (CCPA) into law. It gives consumers more control over the personal information that businesses collect about them.

In November of 2020, California voters approved Proposition 24, also known as the California Privacy Rights Act, (CPRA), which amended the CCPA and added new additional privacy protections that began on January 1, 2023.

The California Privacy Rights Act (Amended by the CPRA) established a new agency, the California Privacy Protection Agency (CPPA) to implement and enforce the law. The CPPA is governed by a five-member Board. One board seat is currently vacant.

The Act’s enforcement provision as it applies to the Agency appears in section 1798.185, subdivision (d) of the Civil Code. The timeline for adopting final regulations was July 1, 2022.

Businesses that are subject to the CCPA are those that meet the complex criteria established by this law, including the definitions specified in Civil Code 1798.140(d) and other sections of the law and regulations. These businesses have several responsibilities, including responding to consumer requests to exercise these rights and giving consumers certain notices explaining their privacy practices.

However on June 30, 2023, the California Superior Court issued a decision blocking the California Privacy Protection Agency (“CPPA” or the “Agency”) from enforcing new regulations governing the collection and use of consumer data until March 2024.

On March 29, 2023, the Agency’s first set of regulations under the Act were approved by the Office of Administrative Law (OAL) in twelve of the fifteen areas contemplated by Section 1798.185. The Agency concedes in the action brought by the Chamber of Commerce that it has not yet finalized regulations regarding the three remaining areas–cybersecurity audits, risk assessments, and automated decision-making technology – as contemplated by Section 1798.185. Regulations will not be finalized in these areas until sometime after July 1, 2023.

The June 30, 2023 disposition of the Court in the Chamber of Commerce Action was “Enforcement of any final Agency regulation implemented pursuant to Subdivision (d) will be stayed for a period of 12 months from the date that individual regulation becomes final, as described above. The Court declines to mandate any specific date by which the Agency must finalize regulations. This ruling is intended to apply to the mandatory areas of regulation contemplated by Section 1798.185, subdivision (a). Consistent with the plain language of Section 1798.185, subdivision (d), regulations previously passed pursuant to the CCPA will remain in full force and effect until superseding regulations passed by the Agency become enforceable in accordance with the Court’s Order.”

In reaching its decision, the court found that the text of the CPRA “indicates the voters intended there to be a gap between the passing of final regulations and enforcement of those regulations.” If the CPPA were to begin enforcing the regulations on July 1, 2023, about three months after it adopted the final regulations, businesses subject to the CPRA would have “no time to come into compliance,” which “would not be in keeping with the voters’ intent.” Accordingly, the court concluded that the CPPA “may begin enforcing those regulations that became final on March 29, 2023 on March 29, 2024.“

Nonetheless, on July 14, 2023, the California Attorney General announced an investigative sweep, through inquiry letters sent to large California employers requesting information on the companies’ compliance with the California Consumer Privacy Act (CCPA) with respect to the personal information of employees and job applicants.

The Attorney General announced that he “is committed to the robust enforcement of the CCPA. And as an example, he noted that in August 2022, he announced a settlement with Sephora resolving allegations that it failed to disclose to consumers that it was selling their personal information and failed to process opt-out requests via user-enabled global privacy controls in violation of the CCPA.

Moreover, he has conducted several investigative sweeps, most recently of popular mobile applications compliance with consumer opt-out requests.

The California Attorney General in partnership with the U.S. Department of Justice, announced a settlement with the owner of one of California’s largest chains of pain management clinics over allegations that he defrauded Medi-Cal and Medicare of millions of dollars.

Dr. Francis Lagattuta and his business, Lags Spine & Sportscare Medical Centers Inc (Lags Medical Clinics), which ran more than 20 facilities in California’s Central Valley and Central Coast, carried out medically unnecessary tests and procedures on thousands of patients, and billed Medi-Cal and Medicare for these services over the course of more than five years.

The settlement totals nearly $11.4 million. The funds were allocated in proportion to losses faced due to the alleged fraud scheme. The United States will receive around $8.5 million, California will receive over $2.7 million, and Oregon will receive over $130,000. Dr. Lagattuta will also be barred for five years from serving any Medi-Cal beneficiaries, billing for services to any Medi-Cal beneficiary, or receiving reimbursement for any services provided to any Medi-Cal beneficiary.

The settlement amount of $11,388,887 is based on Lagattuta’s and Lags Medical’s ability to pay and includes proceeds from Lagattuta’s sale of a remotely operated underwater vehicle.

The settlement resolves allegations that, from 2018 to 2021, Lagattuta and Lags Medical performed medically unnecessary surgeries to implant spinal cord stimulators, which is an invasive surgery of last resort for the treatment of chronic pain. Lagattuta paid a psychiatrist to state to Medicare and Medicaid insurers that the psychiatrist had performed a necessary psychological evaluation on each patient prior to receiving the surgery and that the patient did not have any preexisting psychological or active substance abuse disorders that would adversely affect their response to the surgery. But Lagattuta and Lags Medical knew that the psychiatrist did not perform in-person psychological evaluations of any patients and ignored indications that many patients suffered from psychological or substance use disorders before receiving spinal cord stimulation surgery.

Lagattuta and Lags Medical also allegedly performed medically unnecessary skin biopsies to test patients for small fiber neuropathy. As part of the settlement, Lagattuta and Lags Medical acknowledged that Lagattuta created what he named an “Artificial Intelligence Team” of non-provider staff who were required to order at least 150 skin biopsies per week for patients without the consent of the patients’ treating providers at Lags Medical. Each biopsy order stated that the patient had identical symptoms of small fiber neuropathy, yet those symptoms were generally inconsistent with those patients’ actual symptoms. Lagattuta and Lags Medical also acknowledged as part of this settlement that, if a patient refused a skin biopsy, Lags Medical told the patient that they would reduce their opioid medication and instructed the patient’s provider to immediately taper the patient’s medication

Finally, the settlement resolves allegations that Lagattuta and Lags Medical performed medically unnecessary definitive urine drug testing, which identifies the concentration of specific medications, illicit substances, and metabolites in urine samples. Blanket orders of urine drug testing – identical orders for all patients without regtard to each patient’s individualized medical necessity for the test – are not covered by Medicare. Lagattuta and Lags Medical acknowledged that they made identical orders of urine drug tests for all patients to be tested every four months and ordered the maximum number of drug panels for each patient, using Healthcare Common Procedure Coding System Code G0483. Lags Medical’s CEO stated to Lagattuta that performing urine drug tests on all their patients “[s]hould be a big money maker” and called it “Operation GO483!” When a new consultant for Lags Medical told Lagattuta that it was “medically unnecessary but also wasteful” to order the maximum number of drug panels for each patient, Lagattuta directed a Lags Medical executive not to contact the consultant “because she might report us. For anything.”

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Steven Capeder, Lags Medical’s former operations director and marketing director. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States and California ex rel. Steven Capeder v. Francis P. Lagattuta, M.D., Lagz Corporation, Spine & Pain Treatment Medical Center of Santa Barbara, Inc., and LAGS Spine & Sportscare Medical Centers, Inc., No. 2:18-cv-2928 KJM KJN (E.D. Cal.).

As part of the settlement Capeder will receive approximately $2.1 million whistleblower fee.

On May 19, 2021, he California Department of Health Care Services (DHCS) temporarily suspended select Lags Medical Centers locations from participation in the Medi-Cal program because of an ongoing investigation by the California Department of Justice (DOJ), Division of Medi-Cal Fraud and Elder Abuse, involving allegations of fraudulent billing and potential patient harm.

On May 25, 2021, DHCS learned that Lags Medical Centers voluntarily closed 29 California locations even though DHCS only suspended seven National Provider Identifier numbers associated with up to 17 locations, potentially impacting about 20,000 beneficiaries access to pain management care.

The Los Angeles Times published a comprehensive report on the abrupt closure of the Lags Clinics.

The County of Santa Clara operates a health care service plan called Valley Health Plan, which is licensed and regulated by the Department of Managed Health Care (DMHC) under the Knox-Keene Act. The Knox-Keene Act applies to private and public entities that operate health care service plans.

State and federal laws require hospitals and other medical providers to provide emergency medical services regardless of the patient’s insurance status or ability to pay. If the patient is enrolled in a health care service plan, the Knox-Keene Act requires the plan to reimburse the medical provider for providing such emergency care. If no contract exists between the plan and medical provider, the plan must pay the “reasonable and customary value” of the emergency care provided.

In 2016 and 2017, the Doctors Medical Center of Modesto, Inc., and Doctors Hospital of Manteca, Inc., provided emergency medical services to three patients enrolled in Valley Health Plan. The two Hospitals are licensed acute care hospitals in the Central Valley, but did not have a contract with the County governing the rates payable for medical services provided to Valley Health Plan enrollees.

The Hospitals submitted to the County claims for reimbursement totaling approximately $144,000 for the services provided. The County paid the Hospitals approximately $28,500. The Hospitals challenged the reimbursement decisions by submitting written administrative appeals, which the County denied.

The Hospitals then sued the County for the remaining amounts based on the Knox-Keene Act’s reimbursement provision. The trial court found that the Hospitals could state a quantum meruit claim against the County. On petition for writ of mandate, the Court of Appeal disagreed, holding that the County is immune from suit under the Government Claims Act and that no exception to immunity applies.

The California Supreme Court disagreed with the Court of Appeal and reversed in the case of County of Santa Clara v Superior Court – S274927 (July 2023)

The case called upon the California Supreme Court to determine how the Government Claims Act should be interpreted and whether a litigant may circumvent sovereign immunity with a common law claim founded on equitable principles. The Supreme Court concluded that the Government Claims Act does not bar the Hospitals’ action against the County.

Hospitals and other medical providers are required by law to provide emergency medical services without regard to the patient’s insurance status or ability to pay. (42 U.S.C. § 1395dd(b); Health & Saf. Code, § 1317, subds. (a) & (b).)

If the patient is enrolled in a health care service plan, by statute the plan must reimburse the medical provider for providing such emergency care under the Knox-Keene Health Care Service Plan Act of 1975. (Health & Saf. Code, § 1340 et seq.

If the plan does not have a contract with the medical provider addressing the reimbursement rate, the plan must pay the provider the “reasonable and customary value” of the emergency care provided. (Cal. Code Regs., tit. 28, § 1300.71, subd. (a)(3)(B).) If the plan fails to pay the reasonable and customary value of such services, the medical provider may sue the plan directly for reimbursement under a quantum meruit theory. (Prospect Medical Group, Inc. v. Northridge Emergency Medical Group (2009) 45 Cal.4th 497, 506 (Prospect Medical Group); Bell v. Blue Cross of California (2005) 131 Cal.App.4th 211, 216–217 (Bell).)

The Supreme Court concluded that “the immunity provisions of the Government Claims Act are directed toward tort claims; they do not foreclose liability based on contract or the right to obtain relief other than money or damages. (Gov. Code, § 814.)”

“The Hospitals have not alleged a conventional common law tort claim seeking money damages. Instead, they have alleged an implied-in-law contract claim based on the reimbursement provision of the Knox-Keene Act, and seek only to compel the County to comply with its statutory duty. Accordingly, the County is not immune from suit under the circumstances and the Hospitals’ claim may proceed.”

Healthcare spending is still on the rise, according to a new analysis from the Health Care Cost Institute (HCCI). Median per person healthcare spending increased by 24 percent from 2017 through 2021, HCCI’s latest Healthy Marketplace Index shows.

But healthcare spending varied significantly depending on where people lived. For example, patients in metropolitan areas with the highest utilization rates paid nearly three times more for healthcare services that year compared to their neighbors in metropolitan areas with the lowest utilization rates.

Rising medical prices impacted healthcare spending, with overall spending growth reflecting a 9 percent increase in prices, on average, and 14 percent increase in service use, on average.

The American Medical Association (AMA) reports health spending in the U.S. increased by 2.7% in 2021 to $4.3 trillion or $12,914 per capita. This growth rate is substantially lower than 2020 (10.3% percent). This substantial deceleration in spending can be attributed to the decline in pandemic-related government expenditures offsetting increased utilization of medical goods and services that rebounded due to delayed care and pent-up demand from 2020.

Although physician services was the second largest category of health spending, prior to the pandemic, spending on physician services generally grew more slowly than spending in the other large categories of personal health care. Physician spending grew by an average of 3.8% per year between 2009 and 2019 while hospital services (4.5%) and clinical services (6.6%) had higher growth rates.

In 2020, spending on physician services grew 7.0%, a substantially higher growth rate compared to previous years. This acceleration was driven by spending on federal relief programs (classified as “other federal programs” in the following chart). Spending growth decreased to 5.1% in 2021 as the decline in pandemic-related government expenditures offset the rebound in utilization of medical goods and services.

A Health Affairs study from May 2022 found that vertical consolidation – for example, health systems buying physician practices – resulted in a 12 percent increase in primary care physician prices and a 6 percent increase in specialist prices. Research has also shown similar price increases when markets experience horizontal consolidation, which is when hospitals merge or acquire other hospitals.

Hospital markets tended to be less concentrated in larger metropolitan areas, such as San Franciso, New York City, and Philadelphia. Meanwhile, according to HCCI’s analysis, the most concentrated areas were metropolitan areas with populations of less than 350,000 in 2021. The most concentrated areas included Johnson City, Tennessee, Kingsport, Tennessee, and Wilmington, North Carolina.

HCCI notes that a potential factor in market consolidation is the degree to which patients from one metropolitan area seek care in a neighboring region.

Healthcare spending is only expected to rise, with the latest healthcare spending projections from federal actuaries estimating healthcare to account for nearly 20 percent of gross domestic product (GDP) by 2031.

HCCI’s Healthy Marketplace Index provides interactive reports in which readers can compare prices and hospital market concentration across metropolitan areas.