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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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GLP-1 Meds (Ozempic/Wegovy) and Orthopedic Surgery Risk

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Glucagon-like peptide-1 receptor agonists (GLP-1 RAs) — including semaglutide (Ozempic, Wegovy), tirzepatide (Mounjaro), liraglutide, and dulaglutide — have become one of the most widely prescribed drug classes in the United States. Originally developed for type 2 diabetes, they now carry FDA approval for obesity and weight-related comorbidities. With over 40% of U.S. adults classified as obese per CDC data, and with obesity being a well-documented risk factor for complications in joint replacement and spine surgery, GLP-1 RAs are increasingly relevant to the injured worker population. More than half of patients undergoing total knee and hip arthroplasty meet criteria for obesity or morbid obesity, making preoperative weight management a frontline concern for orthopedic surgeons treating industrial injuries.

Perioperative Risks: Aspiration and Gastric Motility

GLP-1 medications slow gastric emptying — a therapeutic feature for appetite control that becomes a serious anesthetic hazard. The American Society of Anesthesiologists (ASA) has issued guidance recommending that patients on **daily-dose** GLP-1 therapy withhold the medication on the day of elective surgery, and patients on **weekly-dose** formulations withhold it for a full week prior. If a patient on GLP-1 therapy presents with gastrointestinal symptoms on the day of surgery, the ASA recommends either postponing surgery or proceeding with “[full stomach precautions](https://journals.lww.com/jbjsjournal/fulltext/2025/08200/glp_1_receptor_agonists_in_orthopaedic_surgery_.17.aspx).” Research presented at the American Academy of Orthopaedic Surgeons (AAOS) 2025 annual meeting in San Diego suggested an even more conservative window — stopping GLP-1s **14 days** before surgery to adequately reduce aspiration risk. Aspiration complications can include bronchial spasms, pneumonia, and death. In the trauma setting, where surgery cannot be delayed, surgeons should use point-of-care gastric ultrasound and full stomach precautions at the surgeon’s discretion.

Bone Healing and Fusion Concerns

This is where the evidence becomes most consequential for workers’ compensation claims involving spine and fracture surgery.

Spine Surgery: A systematic review and meta-analysis published in the *North American Spine Society Journal (December 2025) pooled data from 13 retrospective cohort studies and found that GLP-1 RA use was associated with a **reduced risk of pseudarthrosis** (failure of bone fusion), with no consistent increase in infection, wound healing complications, cerebrospinal fluid leak, or thromboembolic events. However, the authors cautioned that heterogeneity across studies was notable and causality cannot be inferred. Contradicting these pooled findings, a [study on posterior cervical spine surgery published in *The Spine Journal (September 2025) found that patients on GLP-1 medications had a 4.79 times higher risk of non-union and a 2.12 times higher risk of dysphagia compared to controls. The discrepancy likely reflects differences in surgical approach, patient nutrition status, and GLP-1 exposure timing.

Lower Extremity Fractures: A large retrospective cohort study with two-year follow-up found that perioperative GLP-1 RA use was associated with a modestly higher risk of nonunion following lower extremity fracture fixation, though without increased wound complications. Importantly, GLP-1 use was linked to reduced cardiac arrest and one-year mortality — suggesting that the systemic cardiovascular benefits may outweigh the localized bone healing concern for many patients.

Joint Replacement:  Results are mixed. For total shoulder arthroplasty, patients on GLP-1 RAs showed no increase in length of stay or complications. For total knee arthroplasty, semaglutide was associated with decreased periprosthetic joint infection, sepsis, and readmissions — but also with increased acute kidney injury, pneumonia, myocardial infarction, and hypoglycemic events. Total hip arthroplasty data showed similar infection and readmission benefits without the same medical complication increase.

Nutritional and Muscle Mass Implications

Rapid weight loss from GLP-1 medications — often 10–15% of body mass over 6 to 12 months — can deplete lean muscle along with fat, particularly in patients over 60 or those not performing resistance training. This sarcopenic effect directly undermines postoperative rehabilitation. Muscle mass and function are essential for ambulation after joint replacement and spine surgery, and insufficient protein intake increases the risk of delayed wound healing and infection. For workers’ compensation cases, this creates a practical question: is the injured worker’s nutritional status adequate to support surgical healing? Providers should document total weight loss, duration of GLP-1 use, and whether the patient is supplementing with protein or creatine.

Practical Takeaways for Workers’ Compensation Stakeholders

– – Treating physicians and QMEs should document GLP-1 medication use, duration, total weight loss, and nutritional supplementation in every surgical evaluation for an injured worker.
– – Utilization review organizations should flag GLP-1 use when evaluating requests for spine fusion, fracture fixation, or joint replacement — and ensure preoperative nutrition optimization is addressed in the treatment plan.
– – Claims administrators should be aware that GLP-1-related complications (non-union, revision surgery, aspiration events) may extend claim duration and costs, but that the medications also reduce systemic risks like infection and mortality.
– – The standard hold period** before elective surgery remains debated: the ASA recommends 7 days for weekly formulations, while AAOS research suggests 14 days may be safer. Surgeons and anesthesiologists should coordinate on a case-by-case basis.

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IHSS Worker Pleads Guilty to Workers’ Comp Fraud

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IHSS (In-Home Supportive Services) is a California program providing in-home care to eligible aged, blind, or disabled individuals, primarily funded by the state with federal matching. Fraud typically involves providers claiming hours not worked, recipients overstating needs, collusion between providers and recipients, identity theft, or billing for unprovided services. Common charges include grand theft, false claims, and welfare fraud under California Penal Code sections.

The California Department of Social Services (CDSS) tracks program integrity through annual reports. Fraud complaints and investigations occur, but criminal prosecutions and convictions represent a small fraction of cases, as many are resolved administratively (e.g., overpayment recovery, service reductions, or terminations). Provider fraud accounts for the vast majority (~80-83%) of investigated cases.

Recent news (as of 2026) shows ongoing but limited high-profile IHSS-specific convictions reported publicly; one 2026 LA County DA case involved an IHSS caregiver convicted after surveillance showed physical capabilities contradicting claimed needs.

The Special Investigative Unit of RJN Investigations, Inc. was recently notified by the Los Angeles County District Attorney’s Office of their successful prosecution in the case of People of The State of California v M. Lopez based upon a documented fraud referral.

In this case, the claimant was employed as a caretaker of the California Department of Social Services – I.H.S.S. At the time of the claimant’s deposition, he appeared wearing a back support and ambulating with the aid of a cane.

Proactively, the Senior Claims Examiner authorized the RJN SIU Department to perform RUSH surveillance. During the ongoing surveillance, extensive video evidence was obtained depicting the claimant ambulating freely without any noticeable signs of artificial support or noticeable restrictions. The video evidence was subsequently provided to the QME for review and comment. In his QME report, it stated in part the following:

“Overall, review of the subrosa video footage demonstrates a degree of inconsistency between what Mr. Lopez reported and exhibited at the time of the PQME examination, and what he was visualized performing during the video segments…My reporting on this case has changed as a result of this additional information and my revised reporting follows below…”

In compliance with the regulations set forth by the California Department of Insurance Fraud Division, the RJN SIU formally filed this case with their office as well as with the Los Angeles County District Attorney’s Office.

Felony charges were then issued against the claimant, and a preliminary criminal hearing was set. The claimant failed to appear for the hearing and as a result, a felony bench warrant was issued for his arrest.

The claimant subsequently had formal interactions with law enforcement and their check of NCIC revealed his felony warrant where he was promptly arrested. After several criminal hearings, the claimant entered into a plea bargain agreement entailing formal probation and having to pay restitution in the amount of $ 43,263.00.

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House Committee Launches Investigation of SoCal Hospice Fraud

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Following alarming reports that California officials failed to properly safeguard federal funds, House Committee on Oversight and Government Reform Committee Chairman James Comer (R-Ky.) and Oversight Committee Republicans launched an investigation into rampant taxpayer fraud in California’s hospice programs.

In a letter to California Governor Gavin Newsom, the lawmakers emphasized that the Newsom administration has been aware of state audit reports of hospice fraud for at least four years but has failed to prevent or detect it and has enabled hospice providers to defraud the American taxpayer and exploit vulnerable patients. The Oversight Committee is now requesting documents and communications regarding California’s oversight and internal controls to detect and prevent fraud for its federally funded hospice programs.

“Recent reporting has revealed alarming evidence of fraudulent activity in California’s hospice programs, including agencies overbilling Medicare and fraudulently enrolling beneficiaries without their knowledge. In California, your administration’s Departments of Public Health, Social Services and Health Care Services all have a role in overseeing federally funded hospice programs.  The Committee is concerned your administration does not have sufficient internal controls to prevent and detect fraud and is not conducting proper oversight of these hospice programs. As a result, Americans across the country are paying for California’s rampant hospice fraud and vulnerable patients are being exploited. California has a well-documented history of fraud in its hospice programs. Your administration has been aware of credible reports of hospice fraud for at least four years. Despite these red flags, it appears California has enabled hospice providers to defraud the American taxpayer and exploit vulnerable patients,” wrote the Republican lawmakers.

The Committee’s investigation into Minnesota’s federally funded social service programs exposed widespread failures by state agencies to conduct oversight and prevent fraud, with similar schemes now appearing in California’s hospice programs. According to a March 29, 2022, report from the California State Auditor, Los Angeles County has seen a 1,500 percent increase in hospice providers since 2010, with providers overbilling Medicare by at least $105 million in a single year. In addition, a whistleblower reported that California has minimal safeguards to prevent fraudsters from obtaining hospice licenses, including allowing individuals living abroad to secure them, and described schemes in which fraudsters recruit seniors. The Centers for Medicare and Medicaid Services recently estimated that Los Angeles County alonerepresents $3.5 billion in hospice fraud, and that 18 percent of all hospice billing in the United States comes from this single county.

“Last year, California Attorney General Rob Bonta called hospice fraud in California, specifically in Los Angeles County, ‘an epidemic.’ The March 2022 audit report highlighted several red flags and key warning signs of fraud: many providers are listed at the same address; very low patient counts compared with the rest of the State; patients listed as terminally ill were later discharged alive; excessive billing for services that may not have been provided; and staff were shared across multiple hospice providers. The Committee is requesting documents and communications regarding California’s oversight and internal controls to detect and prevent fraud for its federally funded hospice programs,” continued the Republican lawmakers.

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9th Circuit Rejects Application of California Arbitration Law

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Kara Sandler worked for Modernizing Medicine, Inc. (ModMed), a Delaware corporation. Her employment contract required that any employment-related disputes be resolved through binding arbitration under the Federal Arbitration Act, following the procedures of the California Arbitration Act. The contract further specified that arbitration would be administered by JAMS (Judicial Arbitration & Mediation Services, Inc.), whose rules provide that an arbitrator — not a court — must decide threshold questions about the validity and enforceability of the arbitration agreement itself. The contract also contained a generic severability clause stating that if “a court or other body of competent jurisdiction” found any provision invalid, the offending provision would be enforced to the maximum extent permissible and the remainder of the agreement would survive.

Sandler filed suit against ModMed in the Southern District of California, asserting state and federal claims of age and disability discrimination. ModMed moved to compel arbitration. Sandler opposed the motion, arguing the arbitration agreement was unconscionable.

The district court denied ModMed’s motion. While it acknowledged that the incorporation of JAMS rules constituted a delegation of validity questions to the arbitrator, the court relied on several California state-court decisions to conclude that the severability clause undermined that delegation. The court’s reasoning was that because the severability clause referenced “a court,” the parties may not have clearly intended for an arbitrator to be the one deciding whether the arbitration agreement was enforceable. Having claimed authority to decide the question itself, the district court then ruled the arbitration agreement unconscionable and refused to sever the offending provisions.

The Ninth Circuit reversed. The panel in the published case of Sandler v. Modernizing Medicine, Inc. No. 24-6623 (March 2026) and took issue with the district court’s reliance on California state-court opinions, and held that the district court misapplied federal law and should never have reached the unconscionability question at all.

The court began with settled precedent: when parties incorporate JAMS (or AAA) rules into an arbitration agreement, that incorporation constitutes “clear and unmistakable” evidence of an intent to delegate questions of arbitrability to the arbitrator. The panel cited Patrick v. Running Warehouse, LLC, 93 F.4th 468, 481 (9th Cir. 2024), and Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015), as controlling authority on that point.

The central question was whether a generic severability clause mentioning “a court” introduced enough ambiguity to negate that otherwise clear delegation. The Ninth Circuit held it did not. The panel reasoned that the two clauses can coexist: the delegation clause sends disputes — including validity disputes — to the arbitrator, while the severability clause merely provides a contingency mechanism if a court were to interpret the contract for any reason. The court emphasized the “cardinal principle of contract construction” from Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 63 (1995), that contract clauses should be read as consistent with one another rather than in conflict. Letting the severability clause swallow the delegation clause would render the latter superfluous, a result disfavored under Trident Center v. Connecticut General Life Insurance Co., 847 F.2d 564, 566 (9th Cir. 1988).

The panel also took issue with the district court’s reliance on California state-court opinions. Whether parties clearly and unmistakably intended to delegate arbitrability is a question of federal law under the FAA, as established in Brennan, 796 F.3d at 1129, and First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). Any state rule that uses a severability clause to negate an otherwise clear delegation would be preempted by the FAA, under the reasoning of Kindred Nursing Centers Limited Partnership v. Clark, 581 U.S. 246, 251 (2017), and AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). The Fifth and Sixth Circuits have reached the same conclusion. See Arnold v. Homeaway, Inc., 890 F.3d 546, 552 (5th Cir. 2018); Blanton v. Domino’s Pizza Franchising LLC, 962 F.3d 842, 846–47 (6th Cir. 2020).

The Ninth Circuit vacated the unconscionability ruling, reversed the denial of the motion to compel, and remanded with instructions to grant the motion and stay the case pending arbitration.

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Sutter Facilities to Pay $3.2 Million to Resolve Alleged CSA Violations

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Sutter Medical Center, Sacramento, and Sutter Fairfield Surgery Center have agreed to pay $3.2 million to resolve allegations that they failed to effectively guard against theft and diversion of controlled substances, U.S. Attorney Eric Grant announced. This settlement relates to allegations of the entities’ collective commission of at least 628 violations of recordkeeping and security requirements under the Controlled Substances Act (CSA).

The United States contends that these two Sutter-affiliated entities violated the CSA by, among other violations, failing to: notify the Drug Enforcement Administration (DEA) of theft or loss, keep accurate records of controlled substances, complete biennial inventories, maintain complete controlled substance order records, and provide effective controls against diversion. The investigation was initiated following the death of a pediatric anesthesiologist.

“We remain steadfast in our commitment to hold health care providers accountable for failing to effectively guard against the diversion of potentially dangerous controlled substances,” said U.S. Attorney Grant. “Our community deserves the right to place its trust in health care providers that dispense controlled substances and to know that they adhere to and apply the right safeguards to ensure safety around those products.”

“DEA registrants play a critical role in protecting the public and that responsibility starts with strict compliance to the Code of Federal Regulations,” said DEA Special Agent in Charge, Bob P. Beris of the San Francisco Field Division. “If a company chooses to ignore these obligations, it puts communities at risk and undermines the safeguards designed to keep the public safe. DEA holds registrants accountable and in turn, expects them to keep the public safe.”

The DEA conducted the investigation. Assistant U.S. Attorney David Thiess assisted in completing the resolution on behalf of the United States.

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

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March 23, 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: LA City College Owes Damages for Blind Students Inadequate Accommodations. Companies Allegedly Sell EHR Data to Mass Tort Plaintiff Lawyers. Janitorial Company Arbitration Clause Passes Unconscionability Tests. Fraud Crackdowns Announced From Whitehouse to Los Angeles. Two LAPD Officers Arrested for Unemployment Insurance Fraud. Carmichael Man Charged for Making Threats Against a Judge. EEOC Rescinds 2024 Enforcement Guidance on Workplace Harassment. FDA Gives “Breakthrough” Status to AI Chatbot for Surgical Recovery.

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Anti-SLAPP Motion Denial Affirmed in University Retaliation Case

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Hyewon Pechkis and Joseph Pechkis, a married couple, were tenured physics professors at California State University, Chico (Chico State). Hyewon alleged she was subjected to harassment and discrimination by the department chair based on his perceived bias against women and Hyewon’s Korean ancestry and national origin. The chair allegedly confronted Hyewon aggressively enough to cause her to fear for her physical safety, and she was eventually diagnosed with chronic post-traumatic stress disorder, major depressive disorder, and generalized anxiety disorder stemming from the hostile working environment. The couple raised their concerns with the dean of the College of Natural Sciences, but Chico State took no action to address the chair’s behavior.

With no relief forthcoming, the Pechkises accepted employment offers at California Polytechnic State University (Cal Poly), 400 miles away, effectively giving up their tenured positions at Chico State. Shortly after they announced their planned departure, Chico State Vice Provost Mahalley Allen emailed Hyewon claiming the university had “serious concerns” about a potential Family Educational Rights and Privacy Act (FERPA) violation related to old blog postings Hyewon had written in Korean, which the complaint alleged were based on inaccurate translations. The complaint further alleged that Allen contacted Cal Poly to inform them of the unresolved FERPA investigation in what plaintiffs characterized as an attempt to sabotage their transfer. A Chico State dean also allegedly caused unnecessary delays in transferring plaintiffs’ lab equipment to Cal Poly. Despite these efforts, Cal Poly continued to extend employment offers to both professors.

In December 2024, the Pechkises filed suit against the Trustees of the California State University asserting six causes of action: discrimination, retaliation under the California Fair Employment and Housing Act (Gov. Code, § 12900 et seq.), failure to engage in the interactive process, hostile working environment, failure to prevent discrimination and harassment, and whistleblower retaliation.

In March 2025, defendant filed an anti-SLAPP motion under Code of Civil Procedure section 425.16 seeking to strike the second cause of action (FEHA retaliation) and the sixth cause of action (whistleblower retaliation). The Butte County Superior Court denied the motion. The court found that defendant had satisfied the first prong of the anti-SLAPP analysis — that the challenged claims arose from protected activity — because the FERPA investigation constituted an “official proceeding authorized by law.” However, the court then found that plaintiffs demonstrated a likelihood of success on the merits, concluding that their discrimination complaints were protected activity and that Chico State’s constructive discharge of their tenured employment qualified as an adverse employment action. Defendant appealed.

The Third District affirmed the denial but on different grounds than the trial court in the published case of Pechkis v. Trustees of the California State University, No. C103742 (March 2026),holding that defendant failed to carry its burden on the first prong of the anti-SLAPP analysis in the first place.

The court applied the framework established in Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995, 1009, which requires a defendant bringing an anti-SLAPP motion to “identify what acts each challenged claim rests on and to show how those acts are protected under a statutorily defined category of protected activity” through a claim-by-claim elemental analysis. The court found that defendant had instead employed the kind of broad “gravamen” approach that the Supreme Court disapproved of in Bonni — essentially arguing that because the retaliation causes of action were based “in part” on communications between Chico State employees and Cal Poly, both causes of action should be stricken in their entirety. Citing Park v. Nazari (2023) 93 Cal.App.5th 1099, 1108–1109, the court held that when a defendant seeks to strike entire causes of action without identifying specific claims within them that rest on protected activity, the defendant fails to carry its first-step burden so long as the causes of action contain at least one claim that does not arise from protected conduct.

The court identified several allegations of potentially unprotected conduct underlying the challenged causes of action that defendant never addressed. Both causes of action alleged retaliation through constructive discharge — an adverse employment action that courts have recognized as unprotected activity. The court noted that defendant itself effectively conceded constructive discharge was central to these causes of action by making it the sole focus of its second-prong argument, yet defendant never explained how constructive discharge constituted protected activity under the first prong. Similarly, the causes of action alleged retaliation through the initiation of a sham FERPA investigation, and the court observed that under Laker v. Board of Trustees of California State University (2019) 32 Cal.App.5th 745, 773, claims based on the fact of an investigation or its outcome — as opposed to investigation-related speech — are not subject to the anti-SLAPP statute.

The court also rejected defendant’s assumption that because the FERPA investigation qualified as an “official proceeding authorized by law,” all acts associated with it were shielded by anti-SLAPP protection. The statute protects only “written or oral statement[s]” made in connection with such proceedings, not every act undertaken within them. Quoting the Supreme Court’s warning in Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1067, the court cautioned that conflating discriminatory decisions with investigation-related speech in the anti-SLAPP analysis could render the statute “fatal for most harassment, discrimination and retaliation actions against public employers.”

The court acknowledged that individual allegations within the two causes of action might still be protected conduct susceptible to a more targeted anti-SLAPP motion but declined to perform that analysis on defendant’s behalf, concluding that defendant had “wholly failed to ‘propose where to make the incisions.’ “

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SoCal Woman to Serve 3 Years for Diagnostic and Hospice Fraud

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A woman from the Larchmont area of Los Angeles was sentenced to 35 months in federal prison for defrauding Medicare out of more than $14 million by submitting fraudulent claims for hospice care and diagnostic testing services that were either unnecessary or not provided at all.

Sophia Shaklian, 38, was sentenced by United States District Judge Stanley Blumenfeld Jr., who also ordered her to pay $14,103,043 in restitution. Shaklian pleaded guilty in November 2025 to one count of health care fraud.

From March 2019 to August 2024, Shaklian and her co-schemers – often using aliases – used multiple bogus hospice and diagnostic testing providers enrolled with Medicare and submitted fraudulent claims on behalf of companies she owned.

These businesses included a Shaklian-owned hospice company – the Pasadena-based Chateau d’Lumina Hospice and Palliative Care – and several diagnostic testing companies: Saint Gorge Radiology in Sylmar; Hope Diagnostics in North Hollywood; Direct Imaging & Diagnostics and Lab One – both based in Hollywood; and Labtech and Lifescan Diagnostics in Claremont.    

Shaklian and her co-schemers used the information of Medicare beneficiaries, and checked beneficiaries’ Medicare eligibility to knowingly and willfully submit fraudulent claims to Medicare on behalf of beneficiaries who did not need the services, had never received the services, and were not familiar with the fraudulent hospice and diagnostic testing providers, with the intent to defraud Medicare into reimbursing the sham providers for those claimed services.

For example, Shaklian and her co-schemers knowingly and willfully submitted a false and fraudulent claim for $2,000 in November 2022 to Medicare for diagnostic testing purportedly provided to an individual.

Shaklian admitted in her plea agreement that fraudulent claims were submitted on behalf of the sham providers, some by herself and others by her co-schemers during and in furtherance of the above scheme. Because Shaklian was involved in the billing and was familiar with the amounts Medicare paid to the fraudulent providers on the types of claims submitted during this scheme, she caused a loss of at least $14,103,043 to Medicare.

Co-defendant Alex Alexsanian, 48, a.k.a. “Samvel” and “Samo,” of Burbank, pleaded guilty on January 20 to one count of conspiracy to launder monetary instruments. He will face a statutory maximum sentence of 20 years in federal prison at his April 28 sentencing hearing.

The United States Department of Health and Human Services Office of the Inspector General and the FBI are investigating this matter. Assistant United States Attorney Kevin B. Reidy of the Major Frauds Section is prosecuting this case.

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Repayment Funds May be Required if Class Settlement Revoked

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Jessica Garcia worked for The Merchant of Tennis, Inc. (Merchant), a California corporation operating in San Bernardino County, from July through December 2019. In May 2022, she filed a third amended consolidated class action complaint on behalf of herself and other employees, alleging various wage-and-hour violations under the California Labor Code and other federal and state employment laws.

While Garcia’s motion for class certification was pending in 2024, Merchant pulled approximately 954 current and former employees into mandatory meetings with management and asked them to sign individual settlement agreements releasing their wage and hour claims in exchange for cash payments averaging roughly $918 each — over $875,000 in total. Garcia had not signed an agreement, but the vast majority of putative class members had.

In November 2024, Garcia moved to invalidate the settlements, arguing Merchant obtained them through fraud and coercion. The trial court found that Merchant had made “false and misleading” representations to secure the agreements: it gave workers unfounded claims about the low recovery rates in class actions, falsely stated that certain claims had been dismissed, described the releases as limited when they actually covered all claims, marked communications “confidential” to discourage sharing with class counsel, and misleadingly suggested that arbitration agreements barred participation in the lawsuit without disclosing that only 40 percent of workers had such agreements. The court concluded the 954 individual settlement agreements were voidable and ordered a curative notice giving workers 45 days to revoke their agreements and join the class action.

The parties then fought over what the curative notice should say about repayment. Merchant wanted the notice to warn workers that if they revoked their settlements and Merchant ultimately prevailed, they could be required to return the money. Garcia argued that including such language would discourage low-wage workers from joining the suit and that any repayment issue could be addressed later through an offset against recovery.

The San Bernardino County Superior Court sided with Garcia. Finding no binding California authority on point, the court followed two federal cases — Marino v. CACafe, Inc. (N.D. Cal. Apr. 28, 2017) 2017 WL 1540717 and McClellan v. Midwest Machining, Inc. (6th Cir. 2018) 900 F.3d 297 — and ruled that the curative notice would inform workers they would not be required to return any payment, though the amount received might be treated as an offset against any future recovery. The court rejected Merchant’s argument that California’s rescission statutes (Civ. Code, §§ 1689, 1691) required immediate repayment, calling that position “simplistic legal analysis” that ignored the complexity of the employer-employee relationship and the court’s duty to prevent abuses undermining the administration of justice. The court stayed its order to allow Merchant to seek appellate review.

The Court of Appeal granted Merchant’s petition for writ of mandate in a 2–1 decision, directing the trial court to vacate its February 28, 2025 order and reconsider the curative notice in the published case of The Merchant of Tennis, Inc. v. Superior Court  No. E085766 (March 2026).

The majority (Acting Presiding Justice Miller, joined by Justice Codrington) held that California’s rescission statutes govern the situation and require the curative notice to inform workers that repayment of settlement funds may be required at the conclusion of litigation. The court acknowledged that under Civil Code section 1693, repayment need not be immediate and can be delayed until judgment without substantial prejudice to the other party.

But the majority concluded that neither section 1692 nor section 1693 authorizes a trial court to forgive repayment entirely at the outset of litigation. The court read section 1692 — which permits a court to “in its judgment adjust the equities between the parties” — as contemplating equitable adjustments at the time of final judgment, not at the beginning of a case. The majority found the federal authorities relied on by the trial court unpersuasive, noting that Marino provided no analysis of California rescission law, and McClellan addressed a narrow exception for federal Title VII and Equal Pay Act claims brought by an individual plaintiff, not a California wage-and-hour class action.

However, the court stopped short of requiring immediate repayment, holding that the curative notice should inform class members that if they choose to rescind, they could be responsible for repayment at the conclusion of litigation under Civil Code sections 1689, 1691, and 1693, while the trial court retains discretion to adjust equities under section 1692 at the time of judgment.

Justice Raphael dissented, arguing that the majority’s reading of the rescission statutes was too rigid and that section 1692 grants trial courts broad equitable authority to fashion remedies — including excusing repayment — at any stage of a proceeding, not only at final judgment.

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