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Supreme Ct Sends City of Salinas Case Back for Ct. of Appeal Review

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Lance D. Miraco, a former City of Salinas police officer, filed a workers’ compensation claim in December 2020 alleging cumulative injury through the end of 2013 to his back and right leg, along with gastritis, reflux, insomnia, and hypertensive cardiac disease. After trial, the workers’ compensation judge (WCJ) found industrial injury but ruled the heart claim time-barred under Labor Code § 5405, fixing the cardiac date of injury under § 5412 in June 2013.

Miraco filed a timely petition for reconsideration at the Salinas district office on October 16, 2023. Under the version of Labor Code § 5909 then in effect, a petition was deemed denied unless the Workers’ Compensation Appeals Board (WCAB) acted within 60 days of filing — here, by December 15, 2023. The petition was scanned into the EAMS system, but the district office did not transmit the case to the Board until January 12, 2024, apparently after Miraco’s counsel’s office called to check on it. According to Miraco, Board staff said a new decision timeline would run once the file arrived. On March 12, 2024, the Board invoked Shipley v. Workers’ Comp. Appeals Bd. (1992) 7 Cal.App.4th 1104, treated its deadline as tolled until it received the file, granted reconsideration, and found the cardiac claim was not time-barred.

The City and its claims administrator, CorVel, petitioned for a writ of review. In a published opinion filed August 20, 2025, City of Salinas v. Workers’ Comp. Appeals Bd. (2025) 113 Cal.App.5th 801, No. H052062, the Sixth Appellate District affirmed the Board. The panel agreed with Zurich American Ins. Co. v. Workers’ Comp. Appeals Bd. (2023) 97 Cal.App.5th 1213 and the First District’s opinion in Mayor v. Workers’ Comp. Appeals Bd. (2024) 104 Cal.App.5th 1297 that the 60-day deadline is mandatory and that late action exceeds the Board’s jurisdiction. But it went further, holding that the deadline does not touch the Board’s fundamental jurisdiction, so equitable tolling remained available in a narrow class of cases. Applying the three-part test of Saint Francis Memorial Hospital v. State Dept. of Public Health (2020) 9 Cal.5th 710 — timely notice, lack of prejudice, and reasonable, good-faith conduct — the court found tolling justified because Miraco acted diligently and was misled by an administrative delay he did not cause. The court also declined the Board’s request to wait for the Supreme Court’s pending decision in Mayor.

The California Supreme Court granted the City’s petition for review on November 19, 2025, and deferred briefing pending its decision in Mayor (S287261), the lead case on the same question.

In a minute order in the case of City of Salinas v. Workers’ Compensation Appeals Board (Miraco), No. S293212 (October 2026), the California Supreme Court transferred the matter back to the Sixth Appellate District with directions to vacate its 2025 decision and reconsider the cause in light of Mayor v. Workers’ Comp. Appeals Bd. and Ross Valley Sanitation Dist. (2026) 20 Cal.5th 874. The order, a minute order issued Wednesday, October 21, 2026, under California Rules of Court, rule 8.528(d), states that under the court’s Administrative Order 2021-04-21 and the comment to rule 8.1115(e)(3), the Court of Appeal’s published opinion is now “depublished” or “not citable.”

The Sixth District’s opinion can no longer be cited as authority, and the Court of Appeal must decide the City’s challenge anew. The Supreme Court did not rule on the merits of Miraco’s cardiac claim.

A grant-and-transfer order carries no written reasoning of its own; the controlling analysis is in Mayor, decided unanimously on August 24, 2026, in an opinion by Justice Evans. There, the Board had granted an employer’s reconsideration petition 144 days after filing, again citing an administrative irregularity and Shipley.

Mayor actually agreed with Salinas on one point: the § 5909 deadline does not implicate the Board’s fundamental jurisdiction. But the high court rejected the step that decided Salinas. Equitable tolling, the court explained, excuses litigants from filing deadlines such as statutes of limitations. The Board is neither a party nor a litigant, and § 5909 is not a statute of limitations but a deadline for the adjudicator itself to act. The court said it knew of no precedent applying tolling to a decisional deadline imposed on an adjudicative body, and found that self-tolling conflicts with the statute’s evident purpose of keeping reconsideration petitions from languishing. It also held that a writ of mandate in the Court of Appeal is a proper way for an affected party to enforce § 5909.

The court recast Shipley as a due-process decision rather than a tolling decision, and disapproved it to the extent it suggests every party has a due-process right to Board review after the deadline passes. Mayor expressly named City of Salinas as an example of the Board routinely invoking Shipley to work around its own systemic file-transfer failures. The court left open that narrow due-process circumstances might still permit late action, but said it is the adversely affected petitioner — not the Board — who must assert that claim, and that mere expiration of the deadline is not enough.

On remand, the Sixth District therefore cannot rest on equitable tolling. Absent a due-process showing of the kind Mayor left open — and Miraco’s account of assurances from Board staff may prompt that argument — his petition would appear to have been denied by operation of law in December 2023, leaving the WCJ’s time-bar finding intact. How the Court of Appeal resolves that question remains to be seen.

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L.A. Takedown Charges 15 in $2B Health Insurance Fraud Schemes

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Federal prosecutors in Los Angeles have charged 15 defendants, six of them medical professionals, in a series of health care fraud cases that together involve about $2 billion in allegedly fraudulent claims to public and private health plans. The centerpiece is a sober-home scheme that the Justice Department describes as the largest substance abuse treatment fraud case it has ever prosecuted, with more than $1.6 billion billed to private insurers. The charges were announced on October 22, 2026, by the U.S. Attorney’s Office for the Central District of California.

Eight defendants were arrested on the day of the announcement, most of them making initial appearances in federal court in downtown Los Angeles and three in federal courts in Texas and Illinois. The investigations were carried out by the FBI, IRS Criminal Investigation, the Drug Enforcement Administration, the HHS Office of Inspector General, the U.S. Marshals Service and, in one case, the California Department of Justice. Prosecutors from the U.S. Attorney’s Office worked alongside trial attorneys from the Justice Department’s National Fraud Enforcement Division, which the department created in April 2026.

The largest case, United States v. Young, charges Nathan Young and his father, David Young, both of Los Angeles, along with Honey Phipps and Cody Phipps of Greenville, Texas. According to the indictment, the Youngs controlled dozens of purported treatment companies in the Los Angeles area and elsewhere and used “body brokers,” including the Phippses, to recruit homeless people and attendees of recovery support groups from around the country. Prosecutors allege the group targeted people whose insurance policies paid the most generous reimbursements, and in many cases fraudulently enrolled them in new policies for which they were not eligible. Recruits were allegedly lured with free flights, cash, housing, cars, gift cards and drugs.

The indictment describes a two-tier system in which “premium” patients with high-paying coverage received hotel stays and private apartments, while others were placed in crowded, unsanitary housing. Prosecutors allege patients were cycled through the facilities to keep billing regardless of medical need, were sometimes sedated or physically prevented from leaving, were coached to fake symptoms to qualify for detox, and in some instances were encouraged to use drugs or alcohol to become eligible for treatment. The billed “therapy” allegedly consisted largely of Zoom sessions with more than 100 attendees, where patients needed only to turn on their cameras. The four defendants face conspiracy, health care fraud and wire fraud charges, along with counts under the Eliminating Kickbacks in Recovery Act (18 U.S.C. § 220), a 2018 law that criminalizes kickbacks for referrals to recovery homes, treatment facilities and laboratories and, unlike the Medicare-focused anti-kickback law, reaches private insurance. A related defendant, Nicholas Moore of North Myrtle Beach, North Carolina, who served as an area manager and nominal owner of several of the Youngs’ facilities, has pleaded guilty to conspiracy and admitted helping submit $199 million in fraudulent claims to insurers.

A second case targets alleged patient harm. Dr. Harold Tabaie, an Anaheim cardiothoracic surgeon, and his business partner Hany Malek, a Tarzana chiropractor, are charged with billing Medicare roughly $135 million for medically unnecessary atherectomies, an invasive procedure that uses a bladed catheter to clear plaque from arteries. The indictment alleges that Malek posed as a medical doctor to diagnose arterial disease, that Tabaie performed procedures on patients without such disease, and that the clinics billed under other providers’ names to hide Tabaie’s unusually high volume. Prosecutors also allege kickbacks to patients in the form of free rides, groceries, gift cards and utility payments. According to the release, the case was flagged by data analytics showing Tabaie was an extreme national outlier for atherectomy billing. Malek separately faces bank fraud charges tied to an allegedly fraudulent Paycheck Protection Program loan.

Three hospice cases account for more than $138 million in alleged Medicare billings. Geoffrey Jimenez of Los Angeles is charged by complaint with enrolling non-terminal seniors, recruited at community centers, in his Transitions Hospice; prosecutors say the company’s non-death discharge rate of about 85 percent was more than four times the national average, and that Jimenez controlled more than a dozen other hospices that billed over $107 million. Dr. Richard Keech, an 83-year-old Torrance physician and hospice medical director, is charged with signing false certifications of terminal illness that caused more than $10 million in claims. Armani Raffi of Van Nuys is charged with running four interconnected Sherman Oaks hospices that allegedly billed about $21 million, with marketers paid $1,500 to $1,800 per referral.

The remaining cases involve kickbacks and drug fraud. Two physicians, Hassan Badday of Los Angeles and Robby Ayoub of Huntington Beach, are charged in separate indictments with taking per-patient kickbacks to sign genetic testing orders billed to Medicare by a Houston laboratory, in violation of the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)). Thomas Mladinich of Newport Beach, who according to the release has entered a plea agreement, is charged with taking $150,000 to $250,000 in kickbacks for steering addicted patients to a rehab facility that billed private insurance and required a 21-day stay before recruiters were paid; many patients allegedly left on exactly day 21. Christina Mareik of Whittier, first charged by complaint in June 2026, has now been indicted in a roughly $270 million Medi-Cal pharmacy scheme that allegedly exploited the program’s temporary suspension of prior-authorization requirements during a payment-system transition. Finally, Walnut physician Dejun Wang is charged with selling prescription drug samples, including Ozempic, Mounjaro and Rybelsus, to San Gabriel Valley pharmacies that repackaged and dispensed them.

The Young case is a reminder that private commercial coverage, not just Medicare and Medi-Cal, is a primary target of patient-brokering schemes, and that recruiters may manipulate enrollment to steer people into the richest-paying policies. The Tabaie case also illustrates the growing role of outlier analytics in detecting fraud; Assistant Attorney General Colin M. McDonald warned providers that “the data will lead us to you.” Officials’ loss figures vary somewhat: the release headline cites $2 billion, while a statement attributed to FBI Director Kash Patel puts losses at $1.8 billion. The earlier June 2026 Los Angeles takedown, linked above, also included a federal workers’ compensation fraud case against an Orange County psychiatrist.

All of these charges are allegations. As the Justice Department notes, indictments, complaints and informations are not evidence of guilt, and every defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt. Victims in the Tabaie matter can find case information on the department’s victim notification page, and more on the national strike force program is available from the Health Care Fraud Unit.

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Physicians’ Liens Fail for Lack of Causation Substantial Evidence

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Ann Lindley worked as an administrator for Golden State Manor/Tao Tai Homes. In 2017 she filed several workers’ compensation claims. Among them were specific injury claims for September 1, 2016 and October 1, 2016 involving her right arm, left foot, leg, and ankle, and a cumulative trauma claim for January 1, 2003 through October 17, 2016. In stipulations, the cumulative claim was described as covering her neck, arms, wrists, back, legs, and other orthopedic body parts. The claims involved several carriers, including Oak River Insurance Company (administered by Berkshire Hathaway HomeState Companies) and AIG Claims Services.

Lindley never obtained an award on these claims. She resolved them, along with two related claims, through compromise and release agreements approved in 2020 and 2021. The 2021 settlement cited a good faith dispute over liability. That left the liens of two physicians who had treated her: Edwin Haronian, M.D., whose lien was for $11,188.97, and Jonathan Kohan, M.D., a secondary treating physician in pain management.

Two orthopedic panel qualified medical evaluators (PQMEs) had examined Lindley. Dr. Schaffzin reviewed more than 7,500 pages of records. Both he and Dr. Halbrecht took detailed histories and concluded that her complaints were not industrial. Both attributed her right elbow and related upper extremity conditions to a July 18, 2007 motor vehicle accident and the elbow surgery that followed. Dr. Halbrecht described the 2007 accident as occurring while Lindley worked for a different employer.

The lien claims went to trial on June 16, 2022, on a single issue: whether Lindley sustained an injury arising out of and in the course of employment (AOE/COE). Testimony was not taken, and the matter was submitted on the documentary record. In a July 6, 2022 decision, the workers’ compensation judge (WCJ) found no industrial injury on any of the claimed dates or during the cumulative period. The WCJ found the PQME reports more reliable and concluded that the reports of Drs. Haronian and Kohan were not substantial medical evidence. Both liens were ordered to take nothing and dismissed with prejudice. Dr. Haronian petitioned for reconsideration, which the Board granted to allow further study.

In the WCAB panel decision of Lindley v. Golden State Manor/Tao Tai Homes, Nos. ADJ10895246, ADJ10895160, ADJ10629441 (October 2026), the Workers’ Compensation Appeals Board affirmed the WCJ’s decision. That left in place the findings that Lindley sustained no industrial injury and that the lien claimants – Drs. Haronian and Kohan – take nothing. Commissioner Jose H. Razo wrote the opinion. Deputy Commissioner Patricia A. Garcia and Commissioner Joseph V. Capurro concurred.

The Board started with the burden of proof. An applicant must prove industrial causation by a preponderance of the evidence under Labor Code sections 3202.5 and 3600. Citing South Coast Framing, Inc. v. Workers’ Comp. Appeals Bd. (2015) 61 Cal.4th 291, the panel addressed the standard for proving industrial causation. A lien claimant litigating its right to payment “stands in the shoes” of the employee, and under Labor Code § 5705 and the Board’s en banc decision in Kunz v. Patterson Floor Coverings, Inc. (2002) 67 Cal.Comp.Cases 1588, it must prove every element of its claim, including injury AOE/COE. Because Lindley settled without a finding of industrial injury, Drs. Haronian and Kohan had to establish industrial causation themselves.

The Board then applied the familiar standard for substantial medical evidence. A medical report does not qualify if it rests on an inadequate history or examination, an incorrect legal theory, or speculation, or if it fails to explain its reasoning. The panel cited E.L. Yeager Construction v. Workers’ Comp. Appeals Bd. (Gatten) (2006) 145 Cal.App.4th 922, Braewood Convalescent Hospital v. Workers’ Comp. Appeals Bd. (Bolton) (1983) 34 Cal.3d 159, and Kaiser Foundation Hospitals v. Workers’ Comp. Appeals Bd. (Martin) (1985) 39 Cal.3d 57. It also cited Rosas v. Workers’ Comp. Appeals Bd. (1993) 16 Cal.App.4th 1692 and Kyle v. Workers’ Comp. Appeals Bd. (1987) 195 Cal.App.3d 614 for related principles governing the Board’s review of medical evidence.

Measured against that standard, Dr. Haronian’s October 2020 report fell short. The panel agreed with the WCJ that it did not fully review Lindley’s medical history. In particular, it did not discuss her prior injuries, including the 2007 car accident and resulting elbow surgery, and it appeared to include no review of records from before 2017. The report also did not explain why Dr. Haronian disagreed with the PQMEs. Dr. Kohan’s report likewise lacked a complete history and analysis and did not address causation for the cervical spine, right shoulder, left ankle, or right elbow.

By contrast, the panel found that both PQMEs had completed full evaluations, reviewed extensive records, taken detailed histories, and explained their conclusions. Their reports were therefore substantial medical evidence supporting the finding of no industrial injury. Dr. Haronian had argued that the PQMEs’ apportionment discussions, histories, and examinations were inadequate and had asked, in the alternative, for new PQME reports. Having found the PQME reports sufficient, the Board left the WCJ’s decision in place without ordering further development of the record.

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Newsom Signs Three New Workplace A.I. Laws for 2027

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California employers will face three new sets of laws on artificial intelligence in the workplace beginning in 2027. Governor Gavin Newsom signed the bills on September 30, 2026. One requires human review before AI-driven discipline or termination. Another bans AI tools that read employees’ emotions or nervous-system activity. The third requires employers to say so in their layoff notices when AI or automation is behind a mass layoff. The bills were part of a package of 13 AI measures announced in a Governor’s press release that described several as first-in-the-nation worker protections. “AI should expand opportunity — not come at the expense of workers and families,” Newsom said in the release.

SB 947, by Senator Jerry McNerney (D-Pleasanton) and sponsored by the California Federation of Labor Unions, dubbed the “No Robo Bosses Act of 2026,” is a narrower version of SB 7, which Newsom vetoed in October 2025. In his veto message on SB 7, the Governor called its notice requirements “unfocused” and its restrictions “overly broad.” The new bill drops SB 7’s advance notice requirement for applicants and employees and concentrates on discipline and termination decisions. Its core requirements take effect July 1, 2027, according to several law firm analyses.

The law applies to “automated decision systems,” which it defines broadly as computational processes using machine learning, statistical modeling, data analytics, or AI that produce a score, classification, or recommendation used to assist or replace human discretionary decisions. Routine tools such as spam filters, firewalls, and calculators are excluded. Employers may not rely solely on such a system to discipline or fire an employee. When an employer primarily relies on a system’s output, a human must investigate and corroborate it. The employer may not act on output that cannot be corroborated or is inaccurate, incomplete, or misleading. The employer must then give the employee a written, plain-language notice stating that it relied on the system, that a person corroborated the output, and that the employee may request a description of the data analyzed. The law also bars using these systems to infer protected characteristics, to undermine compliance with workplace laws, or to retaliate against workers for exercising their rights.

The Labor Commissioner and public prosecutors enforce the law, with a $500 civil penalty per violation. Injunctive relief, punitive damages, and attorney fees are available in civil actions. Commentators note that the law creates no express private right of action, but they expect plaintiffs to seek the penalties through the Private Attorneys General Act (PAGA). Employees covered by a collective bargaining agreement that clearly waives the law and provides its own protection from algorithmic management are exempt. Independent contractors, who were covered in earlier drafts, are not.

McNerney said in a statement that “AI must remain a tool controlled by humans.” Management-side firms, while generally describing the laws as narrower than earlier proposals, have flagged undefined terms and the risk of PAGA exposure.

AB 1883, by Assemblymember Isaac Bryan (D-Los Angeles), takes effect January 1, 2027. It prohibits employers from using a “workplace surveillance tool” that incorporates AI to recognize, infer, or predict an employee’s emotional state, or to collect “neural data.” That term covers information from measuring activity of the central or peripheral nervous system, such as readings from an EEG headband, but not data merely inferred from other sources. A workplace surveillance tool is any system or device that collects data about employees’ activities, communications, biometrics, or behavior by means other than direct human observation. Examples include video, audio, time-tracking, and geolocation tools. According to Fisher Phillips, the ban could reach AI sentiment analysis of employee emails, chats, or call transcripts, and it applies even if the employer never uses the data for an employment decision.

The law covers private employers of every size and public employers, as well as labor contractors and their client employers. It does not prohibit using a surveillance tool “to ensure safety,” and commentators disagree about how broadly that exception reaches. A narrow exemption applies to certain federally required defense, aerospace, and national security work. Enforcement mirrors SB 947: the Labor Commissioner and public prosecutors may act, with penalties of up to $500 per violation and the possibility of injunctive relief and punitive damages. There is no express private right of action. Job applicants and independent contractors are not covered. A companion bill signed the same day, AB 1331, separately restricts workplace surveillance in bathrooms and similar private areas.

SB 951, by Senator Eloise Gomez Reyes (D-Colton), amends the California WARN Act, effective January 1, 2027. The Cal-WARN Act already requires covered establishments, those with 75 or more employees in the preceding 12 months, to give 60 days’ notice of a mass layoff, relocation, or termination. Under SB 951, when the action is caused “in whole or in substantial part” by AI or other automated technology, the notice must carry the statement “This notice is for a technology displacement” at the top. It must also identify the number of affected workers, their occupations and work locations, the job functions the technology will perform, and the type of technology involved.

The Employment Development Department must publish summaries of these notices and a quarterly statewide summary of technology-driven displacement. By January 1, 2028, it must also report to the Legislature on AI’s effects on hiring. Existing Cal-WARN remedies, back pay and benefits and a civil penalty of up to $500 per day, are unchanged. The amendments build on SB 617, which expanded required notice content as of January 1, 2026.

The new statutes add to obligations employers already face under the Civil Rights Council’s regulations on automated-decision systems under the Fair Employment and Housing Act. Employers will also face the California Privacy Protection Agency’s rules on automated decisionmaking technology, which begin to apply to significant employment decisions in 2027.

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October 19, 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: No Medi-Cal Clawback of Unused Managed Care Payments From Estates. California Fair Chance Act Violation Requires Proof of Harm. No FEHA Claim for City Retiree Health Benefits Minimum Age Rule. Grocery Chain Manager Convicted in Fraud and Wage Theft Case. EEOC Seeks End to 2012 Criminal Records Employer Guidance. WCIRB Reports Combined Ratio Hits 127%, Highest in 20+ Years. Healthcare AI Pays Off in Claims and Billing, Not Yet at the Bedside. Minimally Invasive Knee Procedure Eases Arthritis Pain for a Year.

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Non-Opioid Pain Injection Beats Exparel in Phase 3 Trial

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The first few days after orthopedic surgery are when many injured workers receive their first opioid prescription, and research has long linked early opioid exposure in workers’ compensation claims to longer disability and higher claim costs. That makes any treatment that controls post-surgical pain without opioids worth watching for adjusters, utilization reviewers and attorneys.

On October 19, 2026, TLC BioSciences, a company based in Taipei and South San Francisco, announced positive topline results from a pivotal Phase 3 trial of TLC590, an injectable, extended-release local anesthetic. In patients recovering from bunion surgery, a single dose reduced pain and opioid use compared with both a placebo and Exparel, the long-acting local anesthetic that is now the market leader in this category.

A local anesthetic numbs the tissue where it is injected. Surgeons commonly infiltrate the surgical site with one at the end of an operation, but standard formulations wear off within hours, which is often when patients reach for opioids. Extended-release products are designed to stretch that numbing effect across the first several days, the period of most intense post-surgical pain.

TLC590 uses ropivacaine, a widely used anesthetic, packaged in the company’s proprietary liposomes, tiny fat-based particles that form a depot at the injection site and release the drug slowly. Exparel, made by Pacira BioSciences, uses a similar liposomal approach with a different drug, bupivacaine. TLC has long pointed to earlier research finding that ropivacaine carries less cardiovascular and central nervous system toxicity than bupivacaine, though the new announcement makes no safety comparison beyond reporting similar side-effect profiles. The product has been in development for years; TLC began human trials in hernia repair patients in 2018 and moved to bunion surgery with a Phase 2 study in 2019.

The Phase 3 trial, registered as NCT07222748, enrolled 304 adults at U.S. sites who underwent bunionectomy, a surgery to correct a bony deformity at the base of the big toe that involves cutting and fixing bone. Patients were randomly assigned in equal numbers to TLC590 (100 patients), Exparel (102) or saline placebo (102), with neither patients nor investigators knowing which they received. Bunion surgery is a standard testing ground for post-surgical pain drugs because it is reliably painful and fairly uniform from patient to patient.

According to the company, TLC590 met the trial’s primary goal, significantly reducing cumulative pain with movement over the first 72 hours compared with placebo (p=0.0024), and patients also used significantly fewer rescue opioids during that period (p=0.0109). In the head-to-head comparison, TLC590 was statistically superior to Exparel on both cumulative pain (p=0.0202) and opioid consumption (p=0.0177). The company reported that the pain advantage over both comparators held through 168 hours, or seven days. It described TLC590 as generally well tolerated, with a safety profile similar to placebo and Exparel and no drug-related serious adverse events.

TLC chief executive George Yeh called the results a potential “paradigm shift in postsurgical care,” and a trial investigator said the data suggest pain control through the first postoperative week with less reliance on opioids. The company said it will complete the full analysis and prepare a New Drug Application to the U.S. Food and Drug Administration.

Several cautions apply. These are topline results announced by the drug’s maker in a press release; they have not been peer reviewed or published, and the release reports p-values without the actual pain scores or opioid amounts in each group, so the size of the advantage cannot yet be judged. Statistical significance is not the same as a difference patients would notice. The study covered one procedure in relatively healthy adults, and the eligibility criteria excluded patients with positive urine drug screens, a group that is not rare among injured workers with chronic pain. TLC590 is not approved, and any FDA label would initially be tied to the evidence submitted.

TLC590 joins a broader push toward non-opioid pain control that already includes Exparel and Vertex’s oral drug Journavx (suzetrigine). The next milestones are publication of the full trial data, the FDA submission and review, and results in other surgical models; the company has run a separate Phase 2 study that includes total knee replacement. Pricing will matter as much as performance for payers. Claims professionals should treat the current results as promising but preliminary, and look for peer-reviewed data on opioid reduction, function and return to work before treating this or any extended-release anesthetic as a cost saver.

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Instacart to Pay $5M to Settle DOJ, EEOC Claims

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Maplebear Inc., the San Francisco company that does business as Instacart, has agreed to pay up to $5 million to resolve federal allegations that its recruitment for green card sponsorship favored foreign workers on temporary visas over U.S. workers. The Justice Department’s Civil Rights Division and the U.S. Equal Employment Opportunity Commission (EEOC) announced the joint settlement in an October 20, 2026 press release. Instacart has not admitted wrongdoing.

The case involves the Permanent Labor Certification, or PERM, process, the first step for many employers sponsoring a foreign worker for permanent residence. Before the Department of Labor will certify that no qualified U.S. worker is available for a position, the employer must test the labor market by advertising the job and considering U.S. applicants under 20 C.F.R. § 656.17. According to the Justice Department, Instacart required applicants for jobs advertised through PERM to mail in paper applications, even though its standard recruitment process accepted applications electronically. The department said that requirement burdened U.S. workers and that many who did apply were not considered in a timely way. The EEOC said its own investigation turned up similar evidence.

The agencies alleged that the practice amounted to citizenship status discrimination under the anti-discrimination provision of the Immigration and Nationality Act, 8 U.S.C. § 1324b, and to national origin discrimination against American workers under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2. The government characterized the preference for visa holders as intentional. Those are the agencies’ allegations; the matter was resolved by agreement, and no court has made findings.

Under the settlement summary, Instacart will establish a fund of up to $4 million to compensate people who applied for its PERM positions, or were deterred from applying, between December 2023 and February 2026. A claims administrator will contact eligible claimants and decide eligibility for back pay and compensatory damages. The company will also pay a $1 million civil penalty to the United States. Instacart must post PERM positions on its public careers website and accept electronic applications, revise its PERM-related policies, and train personnel annually on the anti-discrimination rules. It must also appoint a monitor to oversee its PERM program and submit compliance reports. The summary does not state how long the monitoring and reporting obligations last. Workers who believe they were affected can email Instacart@eeoc.gov so the agencies can pass their information to the administrator.

An Instacart spokesperson told Fox News Digital that “we maintain that our practices complied with all applicable laws and regulations.” The spokesperson said the company was pleased to resolve the matter.

Assistant Attorney General Harmeet K. Dhillon said in the release that the division “will not stop fighting for U.S. workers until there is a fair playing field.” EEOC Chair Andrea Lucas said that discrimination based on American national origin “has no place in our economy.”

The Justice Department said the agreement is the fifteenth reached since it relaunched its Protecting U.S. Workers Initiative in 2025. It said the initiative has produced more than $34 million in back pay and more than $16 million in civil penalties since its original launch. The Instacart allegations closely track those in an August 2026 settlement with OpenAI and its subsidiary Statsig. In that case, the companies agreed to a $1.2 million civil penalty and a $2 million back pay fund over allegations that they kept PERM postings off their careers site, required paper applications, and advertised the jobs on late-night radio.

For the EEOC, the release describes the Instacart deal as its fourth public settlement since 2025 involving discrimination against workers because they are American. It also says five such lawsuits are pending in federal court under Project Firewall. The Department of Labor launched that initiative in September 2025 to investigate H-1B program abuse, and the EEOC has since joined it. In November 2025, the EEOC issued technical assistance stating that favoring foreign or visa-holding workers over Americans can violate Title VII. Commentators have tracked a growing number of EEOC actions on this theory, including settlements with an agricultural employer and a Guam hospitality company, according to Today’s General Counsel.

For employers that sponsor foreign workers, the settlement is the latest sign that PERM recruitment is getting close scrutiny from two agencies at once, under both immigration and Title VII law. Steps that diverge from an employer’s normal hiring process can draw allegations of intentional discrimination, as the Instacart and OpenAI cases show. Examples include requiring paper or mailed applications, keeping postings off the company’s own careers page, or running ads in hard-to-find outlets. For employers and their employment practices liability carriers, the combination of a back pay fund, a civil penalty, and an outside monitor is worth noting. Policies commonly exclude fines and penalties, so coverage for a resolution of this kind depends on the specific policy wording.

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Public Money for Materials Triggers Prevailing Wages on Project

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The California Attorney General has concluded that when a private nonprofit uses public money only to buy construction materials, the project generally becomes a “public work.” The nonprofit must then pay prevailing wages to the workers it hires, even if their wages come entirely from private funds. The conclusion appears in Opinion No. 26-201, issued October 13, 2026, and marked for publication in the official reports. Formal Attorney General opinions are advisory and do not bind the courts. California courts, however, generally treat them as entitled to considerable weight, see Freedom Newspapers, Inc. v. Orange County Employees Retirement System (1993) 6 Cal.4th 821, 829.

The request came from San Joaquin County Counsel Edward J. Kiernan, who posed a hypothetical. A county gives a nonprofit public funds to purchase flooring for a construction project. The nonprofit’s own workers install the flooring, and their wages are paid from non-public sources. The public money pays for materials only, not labor.

California’s prevailing wage law requires that all workers employed on public works be paid the prevailing rate of per diem wages (Labor Code § 1771). Labor Code § 1720, subdivision (a)(1), defines public works as construction, alteration, demolition, installation, or repair work done under contract and “paid for in whole or in part out of public funds.” The county counsel noted that the ordinary reading of “work” might not reach a purchase of materials, though materials could also be viewed as part of the cost of construction.

The question was whether a nonprofit that accepts and uses public funds to buy materials must pay prevailing wages to the workers it hires onto the project, when those workers are paid with other, non-public money. Under Busker v. Wabtec Corp. (2021) 11 Cal.5th 1147, coverage under § 1720(a)(1) requires (1) construction, (2) done under contract, (3) paid for at least in part with public funds. Only the third element was in question.

In the formal opinion of the California Attorney General, Opinion No. 26-201 (October 2026), to be published in the Opinions of the California Attorney General, the Attorney General concluded that, as a general rule, the answer is yes. The hypothetical would involve a public work, and nothing suggested it fell within an exception such as the de minimis subsidy exception. The prevailing wage law would therefore cover the workers hired by the nonprofit. Deputy Attorney General Ryan B. McCarroll prepared the opinion.

The opinion acknowledged support for the county’s narrower reading. “Work” typically means labor, and the Supreme Court in City of Long Beach v. Department of Industrial Relations (2004) 34 Cal.4th 942 held that public funds earmarked for preconstruction work did not, at the time, trigger coverage. A 1987 opinion of the U.S. Justice Department’s Office of Legal Counsel (11 Op. O.L.C. 92) had also read a federal prevailing wage provision, 42 U.S.C. § 5310, as not reaching federal money spent only on materials. The opinion noted, however, that the federal opinion construed different statutory language, and that Congress has since used broader, project-based wording in several statutes.

The opinion then reasoned that installing flooring cannot happen until the flooring is bought. Because § 1720(a)(1) requires payment only “in part” from public funds, buying the materials arguably pays for part of the installation work itself.

More decisive, in the Attorney General’s view, was the Legislature’s 2001 amendment adding § 1720(b), which defines “paid for in whole or in part out of public funds” to include direct and indirect subsidies. These include a payment of money “to or on behalf of” the contractor or developer, a transfer of an asset for less than fair market price, and the public payment of costs normally required to carry out the contract. Courts have read these provisions broadly, as in Cinema West, LLC v. Baker (2017) 13 Cal.App.5th 194 and Hensel Phelps Construction Co. v. San Diego Unified Port Dist. (2011) 197 Cal.App.4th 1020. The opinion concluded that a county payment for flooring fits comfortably within this definition. Drawing on the constitutional bar on gifts of public funds (Cal. Const., art. XVI, § 6) by way of comparison, the opinion added that the county’s payment would serve no public purpose apart from helping the nonprofit build the project.

The opinion also relied on the narrow de minimis exception in § 1720(c)(3), which, after a 2020 amendment, applies only when public funding is both under $600,000 and under 2 percent of total project cost. The $600,000 cap does not apply to projects made up entirely of single-family dwellings. Allowing agencies to earmark money for materials would let them sidestep those limits. Citing federal labor statistics, the opinion noted that materials regularly exceed 2 percent of construction costs.

The conclusion is consistent with recent positions of the Department of Industrial Relations. In its October 2024 EnergIIZE coverage determination, the DIR Director found that electric vehicle charger installations were partly publicly funded even though the state grants excluded installation costs. The opinion also cites a June 1, 2026 letter from DIR’s Chief Counsel reaching the same result on the county’s hypothetical. The opinion pointed to appellate decisions rejecting efforts to “carve up” projects into public and private pieces to avoid coverage, including Azusa Land Partners v. Department of Industrial Relations (2010) 191 Cal.App.4th 1, Oxbow Carbon & Minerals, LLC v. Department of Industrial Relations (2011) 194 Cal.App.4th 538, and Lusardi Construction Co. v. Aubry (1992) 1 Cal.4th 976. Quoting Azusa, it noted that once a project is a public work, the entire project is subject to the prevailing wage law.

The opinion is limited to the hypothetical presented. It answers the question “as a general rule” and does not address other exemptions in § 1720 that could apply on different facts.

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California DOI Adds Optional Pre-Filing Rate Review Process

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California insurers can now have the Department of Insurance (CDI) review a proposed rate change before they formally file it. If they then file a qualifying application, they get a faster, more predictable approval process. The new Comprehensiveness Review regulation, announced by Insurance Commissioner Ricardo Lara on October 19, 2026, applies to personal and commercial lines rate changes. Under it, the department’s view of the permissible rate range, and the full record of the review, will be available for public inspection.

According to the final regulation and filing documents, the rule (CDI file REG-2025-00024) adopts new sections 2644.29 and 2648.2.2 and amends sections 2648.2 and 2648.4 of Title 10 of the California Code of Regulations. The Office of Administrative Law (OAL) accepted it as a “file and print” action, and it was filed with the Secretary of State and took effect on October 15, 2026. OAL’s notice states that the action is exempt from the Administrative Procedure Act under Government Code § 11340.9, subdivision (g). OAL was therefore asked only to file and publish it, not to review it under the act’s usual rulemaking standards.

Under Proposition 103, codified at Insurance Code § 1861.05, most property and casualty rate changes must be approved by the commissioner before use. The new section 2644.29 creates an optional step in front of that process. An insurer begins a comprehensiveness review by giving CDI’s Rate Regulation Branch everything it believes the commissioner would require for a complete rate application. An insurer may start a review for any one line of insurance no more than once every 180 days, though it can run reviews on different lines at the same time.

The branch first decides whether the submittal is sufficient to analyze. If it is, the branch issues an “affirmative evaluation of sufficiency” setting the maximum and minimum earned premium that would be permissible if the submittal were filed as a formal application. That range is the rate indication CDI’s announcement referred to. The branch must generally issue it within 90 days of the review’s start. The insurer then has 10 days to either revise its submittal to a rate within the range or withdraw. If the revised submittal contains everything needed for approval, the branch issues an “affirmative evaluation of comprehensiveness,” generally within 17 days. If something is missing, the branch issues one request for clarification, and the review ends if the insurer’s cure falls short. The branch may extend these deadlines by up to 60 days in total, in increments of no more than 30 days, with a written explanation of the deficiencies.

All submittals, determinations, requests, and other communications must be made through the industry’s electronic filing system, SERFF. The regulation provides that all information given to the department during a review is available for public inspection through SERFF. In its announcement, CDI said it would also publicly release the rate savings its staff projects, which it called unprecedented. Lara said in the release that “every dollar Californians pay for insurance should be justified.”

The payoff for insurers comes in new section 2648.2.2. An insurer that receives an affirmative evaluation of comprehensiveness, and files a formal application within 16 days that simply incorporates its reviewed submittal, gets an “inference of comprehensiveness.” The department’s usual 30-day completeness review under section 2648.2 is skipped. Public notice must issue within 10 days of filing, and the application must be approved no sooner than 47 days and no later than 60 days after notice. The 60-day deadline does not apply if a timely petition for a hearing is filed and either the commissioner grants it or the requested change exceeds 7 percent for personal lines or 15 percent for commercial lines. Those thresholds mirror the statutory triggers for a hearing on request under § 1861.05(c). The inference can be lost if facts unknown to CDI staff later show the submittal was incomplete.

Several categories are excluded. A submittal may not include specialty insurance rates, auto class plan revisions, or models used for segmentation, underwriting, or risk scoring. Catastrophe models projecting aggregate losses are allowed only when the model already has a valid pre-application determination under section 2648.5 or is used solely for earthquake, fire following earthquake, flood, or terrorism coverage. The commissioner may reject a submittal if the insurer has a formal application pending on the same line, if it contains an excluded item, or for good cause.

The regulation’s treatment of public participation differs somewhat from CDI’s framing. The department’s announcement said the regulation continues the intervenor process, under which consumer representatives may challenge rate requests and seek compensation under Insurance Code § 1861.10. The text of section 2644.29, however, states that a comprehensiveness review is not a “proceeding” for any purpose under Proposition 103. It also provides that CDI’s intervenor participation and compensation rules do not apply to the review itself. Intervenors can still petition for a hearing once a formal application is noticed, but the pre-filing review, where the rate range is set, takes place without them. CDI contrasts the public rate indications with intervenor negotiations it says previously occurred behind closed doors.

That distinction may draw attention given recent history. CDI’s separate intervenor regulation, in effect since August 2026, tightened standards for intervenor participation and compensation. Consumer Watchdog and a coalition of consumer groups opposed that rule. As of this writing, we found no public statement from consumer groups or insurer trade associations on the comprehensiveness review. Insurance Journal reported that the American Property Casualty Insurance Association had been contacted for comment.

The rule also tightens the department’s existing Complete Rate Application requirements, first proposed in 2024. Under the amendments to sections 2648.2 and 2648.4, an application is not complete, and the statutory review clock does not start, until the insurer also delivers “reconciled data.” That data must be reconciled consistently with applicable Actuarial Standards of Practice. The change builds on the data reconciliation tool CDI introduced in its August 2024 Bulletin 2024-7. The regulation is part of Lara’s Sustainable Insurance Strategy. CDI cites as authority Insurance Code sections 1861.01 and 1861.07 and 20th Century Ins. Co. v. Garamendi (1994) 8 Cal.4th 216.

For carriers, including those writing commercial coverage for employers, the trade-off is speed and certainty against early public disclosure. A carrier that accepts CDI’s range up front can expect approval within a fixed window. In exchange, the department’s view of its rate need, and how far it differs from the carrier’s original request, becomes part of the public record.

This summary is for general informational purposes only; readers should consult the full regulation text and CDI’s statement of reasons for complete details.

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October 12, 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: Civil Litigation Limited While Employer Negligence a WCAB Issue. School District Ordered to Classify Temporary Teacher as Permanent. Court Sets Rules for Use of Strict Liability in FEHA Cases. Right to Avoid Arbitration Waived in Sexual Harassment Claims. Psychologist’s License Probation for WC Fraud Conviction Upheld. SIBTF Overhaul Leads Short List of 2026 Legislative Changes. Blue Cross Says AI Coding Added $942 Million to Hospital Bills. From “Job Killers” to “Cost Drivers” – CalChamber’s Legislative Reports.

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