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9th Circuit Strikes Down Most of California’s Dialysis Law – AB 290

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Chronic kidney disease affects over 35.5 million Americans, and roughly 800,000 suffer from end-stage renal disease (ESRD), which requires either a kidney transplant or regular dialysis. More than 80% of ESRD patients are unemployed and lack employer-sponsored insurance. Private insurers reimburse dialysis providers at rates well above Medicare, creating an incentive for providers to keep patients on private plans.

The American Kidney Fund (AKF), a nonprofit charity, runs a Health Insurance Premium Program (HIPP) that helps ESRD patients pay insurance premiums regardless of whether they choose public or private coverage. AKF’s largest donors are dialysis giants DaVita and Fresenius Medical Care, which together account for an estimated 80% of AKF’s funding. When HIPP recipients carry private insurance, these providers benefit from higher reimbursement rates.

In 2019, California enacted Assembly Bill 290 to address what the legislature viewed as providers exploiting the Affordable Care Act’s preexisting-condition rules. AB 290 contained five key provisions: a Reimbursement Cap tying provider payments to Medicare rates if the provider donated to a charity like AKF; a Patient Disclosure Requirement forcing AKF to reveal assisted patients’ names to insurers; a Financial Assistance Restriction barring AKF from conditioning aid on treatment eligibility; a Coverage Disclosure Requirement mandating that AKF inform patients of all available insurance options; and a Safe Harbor Provision giving AKF until July 1, 2020, to request an updated federal advisory opinion.

AKF warned it would shut down California operations if AB 290 took effect. AKF, the providers, and individual patients sued.

The United States District Court Central District of California granted partial summary judgment to each side. It struck down the Anti-Steering Provision, the Patient Disclosure Requirement, and the Financial Assistance Restriction as unconstitutional, but upheld the Reimbursement Cap, the Coverage Disclosure Requirement, and the Safe Harbor Provision. The court also found the unconstitutional provisions severable from the rest of the statute.

The panel affirmed in part and reversed in part, ultimately invalidating most of AB 290 in the published case of Fresenius Medical Care Orange County, LLC v. Bonta, Nos. 24-3654, 24-3655, 24-3700 (9th Cir. Apr. 7, 2026)

Reimbursement Cap — Reversed (unconstitutional). The court held that capping reimbursement only for providers who donate to charities like AKF burdens the First Amendment right to expressive association, triggering exacting scrutiny under Americans for Prosperity Foundation v. Bonta, 594 U.S. 595 (2021). California demonstrated a sufficiently important interest in preventing distortion of insurance risk pools, but the Cap failed narrow tailoring. The state could have directly regulated reimbursement rates for ESRD patients without conditioning the cap on charitable donations. The provision was also overbroad, sweeping in any healthcare provider making any donation.

Patient Disclosure Requirement — Affirmed (unconstitutional). Because California’s sole justification for this provision was enforcing the now-unconstitutional Reimbursement Cap, the requirement lacked any surviving governmental interest and violated the First Amendment.

Financial Assistance Restriction — Affirmed (unconstitutional). The court agreed the restriction burdened AKF’s right to choose its own beneficiaries. While California has a substantial interest in protecting vulnerable populations from abusive practices, see Washington v. Glucksberg, 521 U.S. 702, 731 (1997), the restriction’s broad text eliminated AKF’s ability to determine its patient population, far exceeding what narrow tailoring permits.

Coverage Disclosure Requirement — Affirmed as constitutional but not severable. Under Zauderer v. Office of Disciplinary Counsel of the Supreme Court of Ohio, 471 U.S. 626 (1985), the requirement to inform patients of all coverage options compels only factual, uncontroversial information reasonably related to preventing consumer deception. However, the court found this provision failed volitional severability: since 90% of affected patients already carry public insurance, a standalone disclosure mandate — especially without the Anti-Steering Provision — could actually push patients toward private coverage, defeating the legislature’s purpose.

Safe Harbor Provision — Moot. The deadline for AKF to request an updated advisory opinion (July 1, 2020) passed without action, rendering the issue nonjusticiable.

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Bone-Anchored Prosthetics Gain Ground With New Research

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Workplace amputations, while less common than sprains, strains, and fractures, generate some of the most complex and expensive claims in the system. They frequently involve catastrophic injury designations, lifetime medical benefits, permanent total disability determinations, and extensive vocational rehabilitation. The prosthetic device itself is often one of the largest recurring cost items in the claim, as socket prostheses require periodic replacement, refitting, and repair throughout the injured worker’s lifetime.

New research presented at the 2026 Annual Meeting of the American Academy of Orthopaedic Surgeons (AAOS) in New Orleans is reshaping the conversation around prosthetic limb technology for amputees — and the implications for catastrophic workers’ compensation claims are substantial.

Three studies from Hospital for Special Surgery (HSS), the nation’s top-ranked orthopedic hospital, presented findings on osseointegration, a surgical procedure in which a metal implant is anchored directly into the residual bone of an amputee, allowing a prosthetic limb to attach to the skeleton itself rather than to a traditional socket worn over the stump. The research challenges longstanding clinical assumptions about who should receive this procedure and when.

For decades, the standard rehabilitation path after a limb amputation has been a socket-mounted prosthesis — an external cup that fits over the residual limb and connects to the artificial leg or arm. The socket approach is familiar, widely available, and covered by most insurers. But it is also plagued by well-documented problems. Studies indicate that up to three-quarters of lower-extremity amputees experience skin ulcers, excessive perspiration, poor fit, or pain where the residual limb meets the socket. Frequent refitting is common. The size and shape of the residual limb can fluctuate significantly in the first 12 to 18 months after surgery, leading to misalignment, balance problems, and falls. Many amputees eventually reduce how often they wear their prosthesis — or stop using it altogether.

Osseointegration eliminates the socket entirely. A biocompatible titanium implant is surgically inserted into the residual bone — most commonly the femur (above-knee amputation) or tibia (below-knee amputation). Over time, the bone grows into the implant’s surface, creating a permanent mechanical bond. The external prosthetic limb then clicks directly onto the implant through a small opening in the skin.

Osseointegration is not new — the concept dates to the 1940s, and the first prosthetic applications were developed in Sweden decades ago. What is new is the pace at which the clinical evidence base is expanding, the range of patients being treated, and the emergence of custom 3D-printed implants that can accommodate more complex anatomies. With HSS, the University of Colorado Limb Restoration Program, and other leading centers actively publishing outcomes data, the procedure is moving from niche to mainstream orthopedic practice.

The clinical advantages are significant. Patients with osseointegrated prosthetics report improved stability, better energy transfer during walking, and dramatically improved proprioception — the body’s sense of where a limb is in space. Because the prosthesis connects directly to bone, vibrations from ground contact travel through the skeleton, giving the user a degree of sensory feedback that socket prostheses cannot provide. Patients describe being able to feel the ground beneath them again.

HSS has performed more osseointegration surgeries than any other hospital in the United States — over 300 since 2017 — and its surgeons were the first in the country to use the procedure for below-knee amputations.

The three AAOS 2026 presentations each addressed a different question:

Femur vs. tibia outcomes. The first study compared safety and functional outcomes between patients who received osseointegration at the femur level and those who received it at the tibia level. Previously, there was limited published data comparing the two. The researchers found that both groups achieved significant improvements in patient-reported outcomes and prosthetic use, with comparable safety profiles. This finding broadens the pool of candidates who may benefit from the procedure.

Timing of the procedure. The second study examined whether osseointegration should be performed at the same time as the initial amputation or reserved for patients who have already tried and failed with a socket prosthesis. Conventional clinical practice has generally required amputees to attempt socket-based rehabilitation first. The HSS researchers found that patients who underwent simultaneous amputation and osseointegration achieved mobility and quality-of-life gains comparable to those who had osseointegration after an existing amputation, with no significant difference in complications. The lead researcher stated that the findings support offering osseointegration at the time of amputation for well-informed patients who prefer to bypass the socket trial — a meaningful departure from the current standard of care.

Custom 3D-printed implants. The third study reviewed early outcomes using custom-made, 3D-printed osseointegration implants for patients whose anatomy does not fit standard implant configurations. The custom implants avoided a complication known as intraoperative distal chip fracture, which can occur with off-the-shelf implants, and showed no loosening. Short-term functional outcomes were comparable to standard implants.

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March 30, 2026 – News Podcast

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Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: 9th Circuit Rejects Application of California Arbitration Law. Anti-SLAPP Motion Denial Affirmed in University Retaliation Case. Express Language in Arbitration Agreement Required for Use of FAA. Repayment Funds May be Required if Class Settlement Revoked. Man Indicted for $90M Medical Equipment Medicare Advantage Fraud. SoCal Woman to Serve 3 Years for Diagnostic and Hospice Fraud. Sutter Facilities to Pay $3.2 Million to Resolve Alleged CSA Violations. Lumbar Subcutaneous Adipose Classification MRI For Fusion Risk.

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Ventura Contractor Charged with Workers’ Compensation Fraud

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The Ventura County District Attorney’s Office announced that Jonah Abraham Slatky (DOB 04/19/72), of Somis, has been charged with six counts of felony workers’ compensation insurance premium fraud, with an alleged loss of approximately $519,000 in premiums not paid. (Superior Court. Case: 2024010769)

The complaint further alleges a special enhancement for losses exceeding $100,000, as well as aggravating factors including that the crime involved both attempted and actual taking, and was carried out with planning, sophistication, or professionalism.

Slatky was the owner of Grand Custom, a rough framing construction business. The charges stem from a six-year period between July 2019 and July 2025, during which Slatky is alleged to have intentionally underreported employee payroll to his workers’ compensation insurance carrier to significantly reduce premium costs.

He faces 6 counts of violation of Insurance Code 11880(a) – Insurance fraud Special allegations include PC 186.11(a)(1) – Excessive loss over $100,000, CRC 4.421(a)(9) – The crime involved an attempted and actual taking, CRC 4.421(a)(8) – The manner in which the crime was carried out indicates planning, sophistication, or professionalism. Each count represents a separate policy year in which Slatky allegedly reported having zero employees and zero payroll.

The investigation revealed evidence that Slatky employed multiple workers on construction projects while paying them in cash, despite reporting no employees to his insurer. Financial records showed millions of dollars in business been used for payroll.

If convicted, Slatky faces a maximum sentence of six years and four months in state prison. The enhancement, if found true, makes a prison sentence mandatory.

Slatky was arraigned on March 27, 2026, where he pled not guilty to all charges and was released on his own recognizance. As a condition of release, he is prohibited from operating a business unless it is properly insured with workers’ compensation coverage.

Slatky is scheduled for an early disposition conference on April 30, 2026, at 1:30 p.m. in courtroom 12 of the Ventura County Court.

The case was investigated by the Ventura County District Attorney’s Office Bureau of Investigation and is being prosecuted by Senior Deputy District Attorney Joann Roth.
  

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Federal Crackdown Nets Eight in $50M+ Health Care Fraud Schemes

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Federal authorities arrested eight defendants last week in a sweeping enforcement action targeting health care fraud across Southern California and beyond. The cases, coordinated with the Vice President’s Task Force to Eliminate Fraud, involved more than $50 million in fraudulent billing — with sham hospice companies at the center of most charges.

The Hospice Schemes

Five separate cases targeted operators of fraudulent hospice care facilities. The common playbook: enroll Medicare beneficiaries who weren’t terminally ill, bill Medicare for services that were unnecessary or never provided, and pay kickbacks to recruiters and patients to keep the pipeline flowing.

The largest hospice case involves Nita Palma, a thrice-convicted health care fraudster who allegedly opened three new hospice companies while out on bond awaiting trial for a previous hospice fraud case. She and her husband, Adolfo Catbagan, are charged with billing Medicare at least $4.8 million through those companies, with Catbagan serving as the nominal owner to evade Palma’s exclusion from Medicare.

Other hospice defendants include Lolita Minerd, a vocational nurse whose company had an 85% non-death discharge rate — nearly five times the national average — and billed Medicare over $9.1 million; psychologist Gladwin Gill and his wife Amelou, who allegedly laundered over $4 million in fraudulent proceeds through personal expenses; Evelyn Tindimobuna, charged with billing $3.8 million for sham hospice services; and Ivan Lauritzen, whose company’s live discharge rate exceeded 75% and who allegedly forged a physician’s signature on enrollment forms.

Union Health Plan Fraud

Three additional cases targeted a longshore workers’ union health plan. In the largest, four defendants are charged with submitting $19 million in false claims for chiropractic and physical therapy services through a network of wellness centers. Separately, Idaho chiropractor Gregory Cartmell allegedly billed $9.1 million under a co-conspirator’s credentials after being terminated from the plan. And Sonia Griffen is charged with submitting $4.9 million in fraudulent claims through her wellness center after it, too, was barred from the plan.

Immigration Medical Fraud

In a standalone case, Young Joo Ko was charged with running a scheme exploiting the green card medical exam process — preparing required immigration health forms without actual physician examinations.

The defendants face penalties ranging from 10 to 20 years in federal prison depending on the charges. All are presumed innocent until proven guilty.

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Collateral Estoppel Cannot be Used to Invalidate Arbitration Agreements

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Aya Healthcare Services is a travel-nursing agency that pairs nurses with hospitals. As a condition of employment, each nurse signs an arbitration agreement requiring that any employment-related disputes be resolved through arbitration rather than in court. The agreements also contain a delegation clause providing that an arbitrator — not a court — will decide any challenge to the validity of the arbitration agreement itself.

Four former Aya employees — Laura O’Dell, Holly Zimmerman, Lauren Miller, and Hannah Bailey — filed a putative class action against Aya, alleging that the company reduced their pay mid-contract. Their claims included breach of contract, fraudulent inducement, state wage-and-hour violations, and violations of the Fair Labor Standards Act. Aya moved to compel arbitration, and the district court granted that motion. The four cases were sent to separate arbitrations, where each arbitrator first had to decide whether the underlying arbitration agreement was enforceable. The results were split down the middle: two arbitrators found the agreements unconscionable due to one-sided fee and venue provisions, while the other two found the agreements valid, reasoning that a savings clause cured any unconscionability.

Meanwhile, 255 additional plaintiffs opted into the case under the FLSA’s collective-action provision, 29 U.S.C. § 216(b). Aya moved to compel each of these new plaintiffs to arbitrate under their own individual agreements.

Rather than send the 255 opt-in plaintiffs to individual arbitrations, the district court — now presided over by a different judge — raised the issue of collateral estoppel on its own initiative. After briefing, the court applied the doctrine of non-mutual offensive collateral estoppel: it gave preclusive effect to the two arbitral awards that had found the agreements unconscionable, while declining to credit the two awards that had upheld the agreements, reasoning that those favorable awards were not as “reasoned” or “thorough.” The practical result was sweeping — all 255 separate arbitration agreements were declared unenforceable without any of those employees ever going to arbitration.

The Ninth Circuit Court of Appeals reversed in the published case of O’Dell et al. v. Aya Healthcare Services, Inc., No. 25-1528 (9th Cir. April 2026). Writing for the panel, Judge Tung held that non-mutual offensive collateral estoppel cannot be used to preclude enforcement of arbitration agreements under the Federal Arbitration Act.

The panel grounded its reasoning in the text and structure of the FAA, along with a line of Supreme Court precedent warning against judicial devices that undermine arbitration.

First, the court looked to Section 2 of the FAA, which provides that arbitration agreements “shall be valid, irrevocable, and enforceable” except on grounds that exist for the revocation of any contract — such as fraud, duress, or unconscionability. The panel concluded that non-mutual offensive issue preclusion is not a “generally applicable contract defense” and does not constitute a “revocation” of a contract within the meaning of the statute. It is a procedural doctrine about relitigation, not a doctrine about defects in contract formation.

Second, the court emphasized that Sections 3, 4, and 10 of the FAA envision a scheme in which agreements are enforced according to their terms, arbitrations proceed without interference, and awards are confirmed unless the process was tainted by fraud or corruption. Nowhere in that framework, the court found, did Congress contemplate that a non-mutual preclusion doctrine could derail an arbitration the parties had agreed to undertake.

Third, the panel held that applying the doctrine violated the FAA’s foundational principle that arbitration rests on consent. As the Supreme Court has stated, arbitration “is a matter of consent, not coercion.” Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 681 (2010). Binding Aya and 255 employees to the conclusions of arbitrators in separate proceedings involving different parties rendered their own mutual consent meaningless.

Finally, the court observed that the district court’s approach effectively created a binding bellwether class action without any of the procedural safeguards that class certification requires — including adequate representation. Under the district court’s logic, a single arbitral award could foreclose hundreds or thousands of individually negotiated arbitration agreements. The panel found this result “fundamentally at war” with the FAA, echoing Stolt-Nielsen, 559 U.S. at 684, and consistent with the Supreme Court’s holdings in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), Epic Systems Corp. v. Lewis, 584 U.S. 497 (2018), and Lamps Plus, Inc. v. Varela, 587 U.S. 176 (2019). The panel also rejected the plaintiffs’ argument that Section 13 of the FAA — which gives confirmed arbitral awards the force of a court judgment — authorized the use of non-mutual preclusion, noting that incorporating a doctrine of non-mutuality that did not exist when the FAA was enacted in 1925 would effectively cause “the act to destroy itself.”

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Court of Appeal to Decide Limits on Corporate Practice of Medicine

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The California Attorney General filed an amicus brief in Art Center Holdings, Inc., et al. v. WCE CA Art, et al., a case before the California Second District Court of Appeal, B338625. The case involves a dispute between a physician who owned a medical practice and a private equity-backed management services organization (MSO).

The dispute arises from a “friendly PC” (professional corporation) model arrangement common in healthcare, where a physician-owned professional corporation (PC) contracts with a management services organization (MSO) for administrative and non-clinical support.

The case involves WCE, a management services organization (MSO). Under a management services agreement, WCE provided management and administrative services to the Southern California Reproductive Center (SCRC), a California professional corporation providing women’s health, reproductive, and fertility services.

In 2019, the physicians and their affiliated companies sold a 51 percent stake in their fertility practice to WCE in exchange for immediate cash and deferred/contingent consideration. WCE and its affiliates were to provide non-clinical services in exchange for fixed percentage fees.

After BC Partners acquired WCE in 2020, disputes arose. The plaintiffs alleged that WCE mismanaged the practice — under-collecting accounts receivable, causing staff departures, and underinvesting in equipment. They further alleged the MSO asked the PC to terminate some physicians, and when it refused, WCE terminated the Consulting Agreement as a pretext to change ownership of the PC.

The plaintiffs moved for the appointment of a receiver. The trial court found that WCE had engaged in the unlicensed corporate practice of medicine by exercising undue control over SCRC. The court reasoned that because WCE had the contractual ability to remove Dr. Surrey from his position whenever they disagreed with his clinical decisions, WCE effectively had undue control over the physician-owner — it could replace any doctor-owner at will with one more compliant with its wishes.

The heart of the case concerns whether specific contractual mechanisms in the “friendly PC/MSO” structure violated California’s longstanding corporate practice of medicine (CPOM) doctrine. This doctrine (rooted in the Medical Practice Act, Business and Professions Code §§ 2000 et seq., Corporations Code §§ 13400 et seq., and related provisions) prohibits unlicensed corporations and non-physicians from directly or indirectly practicing medicine, owning medical practices, or exercising undue control over licensed physicians’ clinical judgment, including decisions on hiring, firing, disciplining, or retaining physicians based on clinical matters. MSOs may provide administrative support but cannot control clinical operations or create “captive” PCs where nominal physician ownership masks corporate dominance.

The AG frames this structure as a “captive PC” — one where the physician is the nominal owner on paper, but the MSO holds effective control through contractual leverage. The AG describes this as part of a broader pattern in which private equity-backed MSOs use continuity agreements, assignable options, and stock transfer agreements to maintain de facto ownership and control of medical practices while technically complying with the requirement that only licensed physicians own PCs.

The AG concludes that the trial court correctly held that these captive PC arrangements violate California’s CPOM laws, and urges the Court of Appeal to affirm that legal standard rather than adopting the more permissive frameworks proposed by either party.

According to a May 2024 California Health Care Foundation report, private equity investment into health care totaled about $83 billion nationally and $20 billion in California in 2021. While the majority of overall private equity dollars has been directed at biotechnology and pharmaceuticals in recent years, private equity acquisitions of health care service providers (such as clinics, hospitals, and nursing homes) make up a significant portion of all private equity health care deals.

In California, acquisitions of providers totaled $4.31 billion dollars between 2019 and 2023, and represented roughly a third of all deals. Available data, while limited, show that private equity has gained a small but meaningful ownership foothold among certain kinds of providers.

Private equity firms now own approximately 8% of all private hospitals in the U.S. and approximately 6% of private hospitals in California. Higher charges, which are often passed along to patients, have been documented in clinics, hospitals, and nursing homes. Twenty-seven studies reviewed found 12 with a harmful impact on quality of care, nine found a mixed impact, and three found a neutral impact.

One rigorous study found that private equity acquisitions led to an 11% higher mortality rate during short-term nursing home stays.

This appellate case will scrutinize the “friendly PC” model commonly used by private equity firms to invest in physician practices. The case was part of a broader wave of scrutiny in California that ultimately led to the passage of SB 351 in October 2025, which codified prohibitions on the corporate practice of medicine and restricted private equity groups from interfering with physicians’ clinical decision-making.

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Lien Dismissal for Failure to File Declaration Under § 4903.05(c)

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Corinne Leshen sustained an industrial injury on June 16, 2009, while employed by the State of California Highway Patrol, resulting in hypertension, arteriosclerosis, and hypertensive cardiovascular disease. Southland Spine & Rehabilitation Medical Center provided medical treatment services and filed a lien for reimbursement on January 7, 2011, under Labor Code § 4903(b). Because the lien predated January 1, 2013, Southland paid a $100 activation fee under § 4903.06 on December 16, 2015. It later filed a declaration under § 4903.8(d) on October 16, 2018. The underlying case settled on April 9, 2019, via stipulations with request for award at 50% permanent disability.

Critically, Southland never filed the supplemental lien declaration required by Labor Code § 4903.05(c)(2), which set a deadline of July 1, 2017 (extended to July 3, 2017, because July 1 fell on a weekend) for all medical treatment liens filed before January 1, 2017.

The matter came on for lien trial on October 28, 2025, with jurisdiction and the declaration requirement as the issues in dispute. On December 18, 2025, the WCJ issued findings that Southland had failed to timely file the required declaration by July 3, 2017, resulting in dismissal of the lien by operation of law under § 4903.05(c)(3). The WCJ reasoned that § 4903.05(c)(2) unambiguously applied to all liens filed before January 1, 2017, for medical treatment expenses under § 4903(b), regardless of whether those liens were subject to a filing fee or an activation fee.

The WCAB panel denied Southland’s petition for reconsideration and affirmed the WCJ’s dismissal of the lien in the panel decision of Leshen v. State of California Highway Patrol, ADJ6925586 (March, 2026)

Southland argued that because its 2011 lien was subject to the activation fee under § 4903.06 rather than the filing fee under § 4903.05, the declaration requirement of § 4903.05(c) did not reach its lien. The Board rejected this reading.

Drawing on the panel decision in Montelongo v. Gelson’s Market (February 11, 2022, ADJ2193346) [2022 Cal. Wrk. Comp. P.D. LEXIS 41], the Board traced the legislative history of SB 1160 (2016), which added the declaration requirement to § 4903.05(c). The Legislature expressly described the declaration as an “anti-fraud” measure intended to apply to “all lien claimants,” requiring each to identify the specific statutory basis authorizing its lien. SB 1160’s floor analyses made clear that the requirement extended to pre-existing liens, with a compliance deadline of July 1, 2017.

The Board further noted that the filing fee under § 4903.05 and the activation fee under § 4903.06 serve the same fundamental purpose — deterring frivolous liens — citing Angelotti Chiropractic v. Baker (9th Cir. 2015) 791 F.3d 1075 [80 Cal. Comp. Cases 672]. Drawing a distinction between the two fee types to exempt older liens from the declaration requirement would undermine the Legislature’s anti-fraud intent.

The Board also acknowledged Southland’s argument that DWC Newslines had led it to believe its pre-2013 lien was exempt from the declaration requirement. However, relying on Hernandez v. Henkel Loctite Corp. (2018) 83 Cal. Comp. Cases 698, 702 [2018 Cal. Wrk. Comp. LEXIS 23] (Appeals Board en banc), the Board reiterated that DWC Newslines provide only informal guidance and do not carry regulatory authority, which rests with the Appeals Board under Labor Code §§ 5307 and 111.

Because no declaration was filed by the July 3, 2017 deadline, the lien was dismissed with prejudice by operation of law, and the Board concluded it retained no jurisdiction over the claim. The petition for reconsideration was denied.

Other panel decisions reaching the same conclusion include Carrillo v. Troon Golf Management (January 13, 2025, ADJ4642758) and Cornejo v. Sears Holding Corp. (March 11, 2025, ADJ7580462) [2025 Cal. Wrk. Comp. P.D. LEXIS 65].

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New Recognized Holidays List in Prevailing Wage Determinations

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All workers employed on public works projects in California must be paid the prevailing wage determined by the Director of the Department of Industrial Relations (DIR), CA according to the type of work and location of the project. In essence, prevailing wage is the pay rate that reflects the going compensation for similar work in a given area — these rates are often based on pay rates from local union agreements for similar jobs and are usually higher than the minimum wage.

The requirement applies to all employees working on projects when the total cost of the public works project exceeds $1,000. LMCC This is a much lower threshold than the federal requirement of $2,000, meaning more projects in California are subject to prevailing wage laws. There are limited exemptions: if an awarding body has a labor compliance program, prevailing wages are not required for construction projects of $25,000 or less, or for alteration, demolition, repair, or maintenance work of $15,000 or less.

Both prime contractors (hired directly by a public agency) and subcontractors must comply with prevailing wage laws.

Under California prevailing wage law, workers receive different wage rates for working on legally recognized holidays. All crafts recognize New Year’s Day, Memorial Day, July 4th, Thanksgiving Day, and Christmas. Beyond those five universal holidays, not all crafts recognize Veterans Day, Martin Luther King Day, or the day after Thanksgiving — which holidays apply depends on the specific trade classification and its applicable wage determination.

As of January 1, 2026, Diwali, known as “Diwali.” (the 15th day of the month of Kartik in the Hindu lunar calendar) was added to Government Code Section 6700 as a holiday.  AB 2156 redesignated March 31 from “Cesar Chavez Day” to “Farmworkers Day,” and was filed with the Secretary of State on March 26, 2026, taking effect immediately as an urgency statute. Thus the list of holidays specified by Government Code Section 6700 has been changed accordingly.

Diwali, often called the “Festival of Lights,” is one of the most widely celebrated festivals in Hinduism, Jainism, Sikhism, and some Buddhist traditions. It symbolizes the triumph of light over darkness, good over evil, and knowledge over ignorance. Celebrations typically span five days and include lighting oil lamps (diyas) and candles, fireworks, prayer and worship (particularly of Lakshmi, the goddess of prosperity), feasting, and exchanging gifts with family and friends. It’s observed by over a billion people worldwide, making it one of the largest religious celebrations in the world.

For crafts whose prevailing wage determination is based on a CBA, these changes may have no immediate impact — those crafts follow whatever holidays are recognized in their specific CBA. The CBA holiday list doesn’t automatically update just because Section 6700 changed.

For crafts whose prevailing wage determination is not CBA-based, the Section 6700 list is the governing holiday schedule. For those classifications, Diwali and Farmworkers Day (March 31) are now recognized prevailing wage holidays. That means if workers in those non-CBA classifications perform work on those days, they’d be entitled to the applicable holiday pay rate (typically double time, depending on the determination).

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Commission Censures and Bars Former Orange County Judge

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Former Judge Israel Claustro served on the Orange County Superior Court from 2022 until his resignation on January 12, 2026. His departure from the bench was precipitated by federal criminal charges.

On January 7, 2026, the U.S. Department of Justice filed charges against Claustro in U.S. v. Israel Claustro, No. 8:26-cr-00001-FWS (C.D. Cal.), for his role — before he became a judge — in a scheme to defraud the California Subsequent Injuries Benefits Trust Fund. The fraud did not involve his practice of law.

Five days later, on January 12, 2026, Claustro pleaded guilty to one felony count of mail fraud and agreed to immediately resign from the bench. He had not yet been sentenced as of the date of the stipulation.

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 Commission also found that Claustro had executed his guilty plea agreement on December 8, 2025, yet failed to promptly report the criminal charges to the Commission on Judicial Performance as required by Canon 3D(3) of the Code of Judicial Ethics.

Claustro and his counsel, Paul S. Meyer, entered into a Stipulation for Discipline by Consent with Commission Director-Chief Counsel Gregory Dresser under Commission Rule 116.5. Under the stipulation, Claustro admitted that the facts were true, accepted the legal conclusions, and waived any right to further proceedings — including formal proceedings before the Commission and review by the California Supreme Court.

The Commission imposed a public censure and bar. Under Article VI, Section 18, subdivision (d) of the California Constitution, the Commission has authority to censure a judge for conduct prejudicial to the administration of justice that brings the judicial office into disrepute.

The Commission concluded that Claustro’s prebench felony fraud — a crime of moral turpitude — met that standard. Consistent with precedent, commission of a felony alone is a sufficient basis for censure and bar, regardless of the underlying facts of the crime. *See Censure and Bar of Former Judge Ronald C. Kline* (2006) p. 3; Cal. Const., art. VI, § 18, subd. (d); *Broadman v. Commission on Judicial Performance* (1998) 18 Cal.4th 1079, 1111–1112.

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