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Suspension of SCIF Attorney for Failing Cybersecurity Tests Affirmed

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Sylvia Bedrossian worked as a staff attorney for the State Compensation Insurance Fund (the Fund) beginning in 2004, eventually rising to attorney IV, a position responsible for litigating workers’ compensation cases involving confidential and sensitive information. Like all Fund employees, Bedrossian was required to complete annual cybersecurity training, and the Fund periodically sent randomized, simulated “phishing” test emails to its roughly 4,000 employees to assess their security awareness; clicking a link, replying, or opening an attachment in one of these test emails counted as a failure, and repeated failures could lead to discipline.

Between December 2021 and December 2022, Bedrossian failed three separate phishing tests, opening emails on her Fund-issued phone and clicking links in messages that purported to come from a non-Fund address requesting login credentials, from state vehicle registration, and from a WeWork account invitation the Fund did not actually use. After her first failure, the Fund required her to attend one-on-one remedial training with a security analyst; according to the administrative law judge’s later factual findings, Bedrossian was “accusatory and condescending” toward the analyst during that session, question her employment status and access to private information, and cut the session short, later sending an email accusing the Fund’s security department of trying to entrap employees. After her second and third failures, the Fund issued a notice of adverse action suspending Bedrossian without pay for five days, citing both the repeated test failures and her conduct toward the analyst as grounds for discipline under Government Code section 19572.

Bedrossian appealed her suspension to the State Personnel Board (SPB), which held an investigatory hearing before an administrative law judge (ALJ) at which both Bedrossian and the security analyst testified. The ALJ found Bedrossian not credible and the analyst credible, resolving the key factual disputes in the Fund’s favor, and concluded the Fund had proven multiple statutory grounds for discipline — inexcusable neglect of duty, discourteous treatment of another employee, willful disobedience, and other conduct discrediting the employer — while dismissing separate incompetency and insubordination charges the Fund had also alleged. Applying the factors for assessing an appropriate penalty set out in Skelly v. State Personnel Board, the ALJ found the five-day suspension appropriate, and the SPB adopted that recommendation.

Bedrossian then petitioned the Los Angeles County Superior Court for a writ of administrative mandamus, arguing the SPB acted without or in excess of its jurisdiction, denied her a fair hearing, and abused its discretion. The trial court determined that because state law did not require the SPB to hold a hearing on a suspension of five days or less, review under Code of Civil Procedure section 1094.5 was unavailable, and instead reviewed the petition as an ordinary writ of mandate under section 1085. The court found Bedrossian had forfeited several arguments — based on free speech, federal phishing law, wire fraud, the state’s larceny statute, and entrapment — by failing to raise them before the SPB, addressed those arguments on the merits anyway, and rejected them, and otherwise found no basis to disturb the SPB’s decision. The court denied the petition.

In the unpublished case of Bedrossian v. California State Personnel Board, No. B349445 (Cal. Ct. App., 2d Dist., Div. 1, July 2026) — the Court of Appeal affirmed the trial court’s order denying Bedrossian’s petition for writ of mandate. This opinion is marked “NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS” and, under California Rules of Court, rule 8.1115(a), may not be cited or relied upon by courts or parties except in the limited circumstances that rule allows.

Writing for a unanimous panel, Presiding Justice Rothschild first confirmed the trial court had applied the correct standard of review. Because the SPB was not legally required to hold a hearing on a suspension of five days or less under Government Code section 19576, administrative mandamus under Code of Civil Procedure section 1094.5 was unavailable, and the trial court correctly proceeded under the traditional mandamus standard of section 1085, which permits relief only where a petitioner clearly establishes a right to have discretion exercised in a particular manner, citing Taylor v. State Personnel Board (1980) 101 Cal.App.3d 498 and Coelho v. State Personnel Bd. (1989) 209 Cal.App.3d 968.

On the sufficiency of the evidence, the panel held Bedrossian forfeited any substantial-evidence challenge by failing to cite the record or explain why the evidence supporting the SPB’s findings was inadequate, offering only her own contrary factual assertions instead. On the merits of her argument that her conduct caused no harm to public service, the panel applied the framework from Skelly v. State Personnel Board (1975) 15 Cal.3d 194, which identifies harm, or risk of harm, to the public service as a key factor in assessing whether discipline is excessive. The court held it did not need to decide whether actual harm occurred, because repeated clicking on phishing test emails containing recognizable red flags was likely, if repeated, to compromise data the Fund has a fiduciary duty to protect, and because Bedrossian’s discourteous treatment of the security analyst independently harmed the Fund’s public service interests, citing Caveness v. State Personnel Board (1980) 113 Cal.App.3d 617, which held that discourtesy toward a supervisor or coworker injures the working relationship and is itself harmful to public service.

Finally, the panel agreed that Bedrossian forfeited her free speech, entrapment, wire fraud, and larceny arguments by not raising them before the SPB in the first instance, since an administrative agency must be given the opportunity to decide the issues before a party may raise them in later judicial review. The panel rejected Bedrossian’s argument that her February 2022 email accusing Fund staff of entrapment, which was in the administrative record, was itself sufficient to preserve an entrapment defense, holding that a litigant must explicitly raise a legal theory before the agency to avoid forfeiting it, rather than relying on an evidentiary exhibit that touches on the same subject. Finding no error in the trial court’s judgment, the panel affirmed and awarded the Fund its costs on appeal.

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CWCI Reports Substantial Unexplained Increase in CT Claims

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The share of California’s workers’ compensation claims identified as Cumulative Trauma (CT) nearly doubled between 2018 and 2025, with the sharpest growth occurring after 2021, according to a new California Workers’ Compensation Institute (CWCI) study. The study found that the increase was widespread, extending beyond regions and industries that historically accounted for the largest share of CT claims, but traditional factors such as population and employment growth, overall claim volume and changes in worker tenure explain relatively little of the increase, raising questions about what is driving the continued growth of CT claims.

The study uses data from CWCI’s Industry Research Information System (IRIS) to examine CT claim trends statewide and evaluate factors that may help explain the increase. It found that CT claims rose from about 1 in 11 California workers’ compensation claims in 2018 to 1 in 6 in 2025, with most of the increase coming after the first two years of the COVID-19 pandemic. Other key findings from the study include:

– – Growth was widespread. CT rates increased across every region, industry, body-part category and worker-tenure group examined. Los Angeles continued to have the highest CT rate, but some of the largest increases were in regions where CT claims historically were less common, including the Bay Area and Central Valley.
– – CT claims became less geographically concentrated. CT claim volume in the Central Valley increased 136% between 2018 and 2025, while in the Inland Empire/Orange County region it increased 98%. Los Angeles, despite having the highest CT rate in both years, had the smallest increase in CT claim volume at 25%.
– – Traditional workforce factors explain little of the growth. CT claims increased in regions with both expanding and contracting labor markets. Population and employment trends, declining overall claim volume and changes in worker tenure did not account for a significant share of the statewide increase.
– – Multiple filings contributed to the growth but more workers filing CTs was the primary driver. 87% of the increase in the CT rate analyzed at the individual-worker level was attributable to more workers filing at least one CT claim; 13% was associated with an increase in the average number of CT claims per worker.
– – The types of body-part claims shifted. While rising CT rates within body-part categories accounted for most of the increase, the mix of claims shifted toward categories with relatively high CT rates. The largest increases were in Soft Tissue, Other Facial Soft Tissue and Mental Disorder claims.
– – Applicant attorney representation shifted geographically. Southern California applicant attorneys increasingly represented claimants in CT cases involving Northern California employers, with their share increasing from 23% in 2019 to 79% in 2025. This expansion coincided with the widespread adoption of remote and virtual hearings during the pandemic, which reduced practical barriers to representing workers and litigating cases across the state. At the same time, the share of CT cases involving Northern California employers that were filed in Southern California venues increased from 15% to 38%.

The study identifies several areas for future research, including how the geographic expansion of applicant attorney representation, changes in law firm concentration, and attorney business practices may be related to the growth of CT claims. CWCI says further analysis of these factors will help stakeholders better understand the evolving CT litigation landscape in California.

Overall, the study documents a substantial, widespread increase in CT claims that cannot be fully explained by population and employment growth, overall claim frequency, or changes in workforce composition, suggesting that broader structural changes within the system merit closer examination as CT claims continue to grow. CWCI has published its study as a Report to the Industry, California Cumulative Trauma Claims: 2018–2025: Trends and Factors Associated with Growth which is available for free at www.cwci.org.

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California Laws Might Not Protect Remote Workers in Other States

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Pejman Saberin worked remotely from his home in Utah as an engineer for Alation, Inc., a data analysis and software company doing business in California, from September 2021 until his termination in October 2023. While returning from vacation, Saberin was arrested in Florida; his sister emailed Alation requesting additional time off, stating he had been injured in an accident, but Alation learned of the actual arrest through its own research. After Saberin was released from detention around October 24, 2023, Alation terminated his employment. The criminal case against him was dismissed in March 2024. Saberin sued in San Mateo County Superior Court, alleging Alation’s consideration of his arrest violated Government Code section 12952 and Labor Code section 432.7, both of which restrict an employer’s use of an arrest that did not result in conviction.

The parties stipulated to resolve the dispute through binding arbitration under two employment documents Saberin had signed, one of which stated it was “governed by the laws of the State of California” and required arbitration of employment-related claims “PURSUANT TO CALIFORNIA LAW.” Alation moved before the arbitrator to have California law declared inapplicable on extraterritoriality grounds, since Saberin worked exclusively from Utah and the termination decision was made by two Alation executives, Daniel Rose and Christos Mousouris, while they were both physically in Illinois (though Mousouris normally worked remotely from California). A third Alation employee, Liz Laber, who worked from California, provided “input” to that decision. The arbitrator agreed with Alation, reasoning that applying California law to a worker with no connection to the state, terminated by decision-makers acting entirely outside it, would produce an “absurd result.” Because the parties then stipulated they could identify no other state’s law that would support Saberin’s claims, the arbitrator entered an award requiring Saberin to take nothing.

Saberin petitioned the San Mateo County Superior Court to vacate the arbitration award under Code of Civil Procedure section 1286.2, subdivision (a)(4), arguing the arbitrator exceeded his powers by applying the wrong extraterritoriality test and by failing to conduct a statute-specific analysis of section 12952 and Labor Code section 432.7. The trial court denied the petition, finding the arbitrator had adequately considered Saberin’s connections to California and correctly applied the framework from Ward v. United Airlines, Inc., and that Saberin had not shown a violation of any statutory right sufficient to justify disturbing the award.

In the published case of Saberin v. Alation, Inc., No. A174549 (Cal. Ct. App., 1st Dist., Div. 5, July 2026) — the Court of Appeal affirmed the trial court’s order denying Saberin’s petition to vacate the arbitration award. The Opinion commences by noting “The growth in remote work spurred by the pandemic is well- documented. We now confront one of the many issues created by that growth: When do California’s employment laws protect remote workers who are terminated by employers with their “principal offices” in California?”

Reaching the merits, the panel first held the choice-of-law provision in Saberin’s Inventions Agreement did not resolve the case, since a contractual incorporation of California law presumptively incorporates California’s own presumption against extraterritorial application of its statutes, citing the federal district court’s reasoning in O’Connor v. Uber Technologies, Inc. (2014) 58 F.Supp.3d 989. The court then applied the statute-specific framework required by Ward v. United Airlines, Inc. (2020) 9 Cal.5th 732, which held courts must examine each statute’s text, purpose, and legislative history to determine what California connections suffice to trigger it, rather than applying a single all-purpose test. Neither Government Code section 12952 nor Labor Code section 432.7 specifies its own geographic reach in its text, but the panel found both statutes’ legislative history showed the Legislature intended to protect workers and applicants in California and to regulate employer conduct occurring in California. Because Saberin never worked in California, was arrested outside California, and reported to a supervisor working from Washington state, the statutes’ worker-protection purpose was not implicated; the only remaining question was whether Alation’s conduct — the termination decision itself — occurred in California.

On that question, the panel held it did not. The decision-makers, Rose and Mousouris, made the termination decision while both were physically in Illinois, and the panel declined to treat Laber’s undefined “input” from California, which the arbitrator found to be a “tenuous thread,” as sufficient to establish that the unlawful conduct occurred in-state; the court deferred to the arbitrator’s factual finding on that point under Moncharsh. The panel likewise rejected the argument that Mousouris’s status as a California-based remote employee was enough, distinguishing Campbell v. Arco Marine, Inc. (1996) 42 Cal.App.4th 1850 and a case addressing employers “shuttling” decision-makers out of state specifically to dodge California law, since nothing suggested Alation’s Illinois meeting was arranged for that purpose or that Saberin himself had any connection to California to begin with. The panel found this result consistent with, not contrary to, a FEHA regulation stating that out-of-state employees are unprotected unless the unlawful conduct occurred in California or was “ratified” by California-based decision-makers, since nothing showed Laber ratified or substantively participated in the termination decision.

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9th Circuit Declines to Compel Arbitration of ERISA Claim

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Cathy Pover is a participant in The Capital Retirement Savings Plan, a defined-contribution retirement plan sponsored by her former employer, The Capital Group Companies, Inc., a global asset manager. Participants direct their own investments from a menu of options Capital Group provides, and Capital Group collects a transaction fee from the funds included on that menu. In 2020, the Plan’s Administrative Committee amended the Plan to add an arbitration requirement covering any claim relating to the Plan, along with a waiver barring participants from bringing any “class, collective or representative” claim; the waiver separately provided that if it were ever found unenforceable, any class, collective, or representative claim would instead proceed in court rather than arbitration.

Pover sued Capital Group and its Plan fiduciaries “in a representative capacity on behalf of the Plan,” alleging the company breached its duties of prudence and loyalty by retaining a set of underperforming mutual funds on the Plan’s investment menu because those funds generated substantial fee income, rather than replacing them with better-performing alternatives. She sought plan-wide relief under the Employee Retirement Income Security Act of 1974 (ERISA; 29 U.S.C. §1001 et seq.), including an order requiring the fiduciaries to restore the Plan’s losses, disgorgement, removal of the breaching fiduciaries, and reformation of the Plan’s investment lineup.

Capital Group moved to compel arbitration under the Federal Arbitration Act (FAA; 9 U.S.C. §2). Pover opposed, arguing the Plan’s representative-action waiver was unenforceable under the judicially created “effective-vindication doctrine,” because it prevented her from bringing the plan-wide claim ERISA’s enforcement provisions specifically authorize. The United States District Court for the Central District of California agreed, holding the waiver impermissibly stripped Pover of her substantive right to sue on the Plan’s behalf, and that the waiver’s own terms made it non-severable from the arbitration requirement for any claim later found to fall within it. The court denied Capital Group’s motion to compel arbitration, and Capital Group appealed.

In the published case of Pover v. The Capital Group Companies, Inc., No. 24-5298 (9th Cir., July 2026) — the Ninth Circuit affirmed the district court’s order denying Capital Group’s motion to compel arbitration.

Writing for the majority, Judge Forrest explained that ERISA gives plan participants a cause of action, under 29 U.S.C. §1132(a)(2) (ERISA §502(a)(2)), to enforce the duties 29 U.S.C. §1109(a) (ERISA §409) imposes on plan fiduciaries, and that the Supreme Court has twice confirmed such claims are brought “in a representative capacity on behalf of the plan as a whole,” first for defined-benefit plans in Massachusetts Mutual Life Ins. Co. v. Russell (1985) 473 U.S. 134, and later for defined-contribution plans like Pover’s in LaRue v. DeWolff, Boberg & Associates, Inc. (2008) 552 U.S. 248. Under the effective-vindication doctrine, arbitration agreements that operate as a prospective waiver of a party’s right to pursue statutory remedies are unenforceable on public policy grounds, citing American Express Co. v. Italian Colors Restaurant (2013) 570 U.S. 228 and Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639.

Applying that framework, the panel held Pover’s claims were necessarily representative in nature, since a section 502(a)(2) claim always proceeds on the plan’s behalf regardless of whether the underlying injury is felt plan-wide or within an individual account. Following its recent decision in Platt v. Sodexo, S.A. (2025) 148 F.4th 709, which held a similarly worded waiver of “any purported class or representative proceeding” unenforceable, the majority found no meaningful difference between that language and the Capital Group Plan’s bar on claims brought on a “class, collective or representative basis.” The majority separately rejected Capital Group’s argument, based on LaRue, that a defined-contribution plan participant may only recover losses to her individual account in arbitration while equitable plan-wide relief remains off the table; the court held LaRue does not permit “slic[ing] and dic[ing]” a participant’s plan-wide and individual-account injuries in that manner, aligning itself with the Second and Sixth Circuits’ rejection of the same argument. Because the Plan’s own waiver provision specified that any representative claim found unenforceable in arbitration must instead proceed in court, the panel held the district court correctly declined to sever the waiver from the arbitration clause and correctly denied the motion to compel.

Judge VanDyke dissented on two independent grounds. First, on the merits, he argued the majority misapplied Platt by failing to analyze the Plan’s specific language, contending that under ordinary rules of interpretation the phrase “class, collective or representative” should be read to bar only collective-style representative suits (akin to class actions), not the distinct “principal-agent” style of representative suit — like a section 502(a)(2) claim brought on a plan’s behalf — that the Supreme Court described in Viking River Cruises. Second, and more fundamentally, Judge VanDyke argued the panel should never have reached the merits at all, because the Plan’s incorporation of the American Arbitration Association’s rules constituted clear and unmistakable evidence that the parties delegated threshold arbitrability questions, including effective-vindication defenses, to the arbitrator rather than the courts. He would have excused Capital Group’s failure to raise that delegation argument in the district court under the court’s recognized exceptions to forfeiture, since the question was purely legal and the record was fully developed, and would have sent the case to arbitration on that basis.

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Demise of Opioid Era Now Followed by New Generation of Pain Drugs

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For most of the last three decades, American medicine leaned hard on opioids to treat pain, from post-surgical recovery to chronic back and joint conditions, until the human cost of that reliance became impossible to ignore. Widespread prescribing that began in earnest in the 1990s, encouraged in part by since-discredited assurances that the drugs carried low addiction risk, fed a public health crisis that federal data now tie to roughly 85,000 new cases of opioid use disorder every year and hundreds of thousands of overdose deaths over the past two decades. Yet for all the resulting scrutiny, litigation, and prescribing restrictions, medicine was left with a genuine problem it could not simply regulate away: pain itself, still real, still common, and for a long stretch of time still lacking any new pharmaceutical alternative. The FDA had not approved a fundamentally new class of pain medicine in more than twenty years, leaving physicians and patients caught between undertreated pain on one side and opioid risk on the other.

That drought is now breaking, and the pace of change has accelerated markedly over the past eighteen months. Vertex Pharmaceuticals’ January 2025 approval of Journavx, the first non-opioid oral pain signal inhibitor, proved a genuinely new mechanism could work and clear the FDA — and it appears to have set off a wave of capital, competition, and clinical momentum across the pharmaceutical industry that shows no sign of slowing. The story below surveys where that momentum stands today: an established leader still scaling up commercially, a widening field of challengers racing to refine and improve on its approach, and companies pursuing entirely different paths, from gene therapy to modified opioid-receptor chemistry, all aimed at the same goal of giving pain sufferers real relief without the addiction risk that defined the last generation of pain medicine.

Pacira BioSciences announced July 27, 2026 that it has moved its most advanced pipeline candidate, PCRX-201, onto a scalable, U.S.-based commercial manufacturing process and enrolled the first patient in Part B of its Phase 2 ASCEND study — a milestone the company says de-risks the path toward a possible late-stage registrational trial. PCRX-201 (enekinragene inzadenovec) is a locally administered gene therapy for osteoarthritis of the knee, built on Pacira’s proprietary high-capacity adenovirus vector platform, and it has already earned Regenerative Medicine Advanced Therapy designation from the FDA and Advanced Therapy Medicinal Product status from European regulators based on Phase 1 data showing durable pain and function improvements through three years. The two-part ASCEND trial will ultimately enroll roughly 135 knee osteoarthritis patients, with topline data from Part A expected by year-end 2026.

Pacira frames its whole non-opioid portfolio — which already includes the commercially available local anesthetic EXPAREL, the intra-articular injection ZILRETTA for knee osteoarthritis, and iovera°, a drug-free cold-based nerve-blocking device — as part of that same mission, alongside PCRX-201’s earlier-stage gene therapy approach.

The field’s biggest recent milestone belongs to Vertex Pharmaceuticals, whose drug Journavx (suzetrigine) became, in January 2025, the first new class of pain medicine approved by the FDA in more than two decades and the first approved non-opioid oral “pain signal inhibitor.” Journavx works by selectively blocking NaV1.8, a sodium channel expressed almost exclusively on peripheral pain-sensing neurons rather than in the brain, which Vertex says avoids opioids’ addictive potential entirely. Commercial uptake has been slower than some analysts hoped — Vertex reported roughly $29 million in first-quarter 2026 Journavx sales, below expectations — but the company says prescription volume is expected to more than triple in 2026 versus 2025 as insurance coverage widens, and in March 2026 it presented Phase 4 data showing more than 90% of surgical patients using Journavx as part of multimodal pain control remained entirely opioid-free through recovery. Vertex is also testing suzetrigine in diabetic peripheral neuropathy, with two Phase 3 studies expected to complete enrollment by the end of 2026, though the company’s attempt to follow up with a next-generation compound, VX-993, hit a setback in mid-2025 when a trial of VX-993 failed to outperform placebo; Vertex continues a separate Phase 2 study of VX-993 in diabetic neuropathic pain.

Vertex’s approval and commercial rollout have visibly reshaped the competitive landscape, drawing new entrants and capital into the same NaV1.8 mechanism and adjacent sodium-channel targets. Latigo Biotherapeutics, a Thousand Oaks, California biotech that raised a $150 million Series B in 2025, filed for a Nasdaq IPO in July 2026 built around two oral NaV1.8 inhibitors: LTG-001, in Phase 2 development for acute pain (including a positive, statistically significant pivotal-track trial in patients undergoing abdominoplasty) with Phase 3 bunionectomy and safety trials planned for the second half of 2026, and LTG-305, an earlier-stage candidate for chronic pain now in Phase 1. Latigo’s own securities filings name a lengthening list of rivals working the same general territory, including Vertex, Eli Lilly (partnered with NaV1.7-focused biotech SiteOne Therapeutics), Grünenthal, and Merck, along with companies pursuing adjacent ion-channel targets such as NaV1.7 (Xenon Pharmaceuticals) and Kv7 potassium channels (Biohaven, Xenon). SiteOne itself, beyond its Lilly-partnered NaV1.7 program, is also developing NaV1.8 candidates and a topical NaV1.7-targeted treatment for ocular surface pain, illustrating how far the sodium-channel approach has spread beyond Vertex’s original compound.

A different mechanism is advancing at Tris Pharma, which in July 2026 launched a dedicated subsidiary, Adneuris Therapeutics, to carry its lead candidate cebranopadol toward an FDA new drug application expected later this year. Cebranopadol is a “dual-NMR agonist,” acting on both the nociceptin/orphanin FQ peptide (NOP) receptor and the traditional mu-opioid peptide (MOP) receptor — meaning it is not a non-opioid drug in the strict sense Journavx and the NaV1.8 inhibitors are, since it still engages opioid receptor pathways, but the company says the added NOP activity is designed to preserve strong analgesia while reducing misuse potential, respiratory depression, and dependence risk relative to a pure MOP agonist like oxycodone. Tris reported positive results from two Phase 3 trials (branded ALLEVIATE) in acute pain, plus a human abuse-potential study comparing cebranopadol against opioids, and the FDA has granted the drug Fast Track designation specifically for chronic low back pain. The National Institute on Drug Abuse has separately awarded Tris a five-year, $16.6 million grant to study cebranopadol’s potential to treat opioid and substance use disorders directly. Adneuris has already begun building out international commercial rights, signing a licensing deal with China’s Zhejiang Conba Pharmaceutical worth an upfront $17.5 million plus more than $100 million in potential milestones.

Each approach carries different regulatory and reimbursement hurdles — a genuinely non-opioid mechanism like NaV1.8 inhibition faces a comparatively lower bar for demonstrating reduced abuse liability, while a compound like cebranopadol will need to build its safety case relative to opioids directly. But for insurers and employers, the practical takeaway is the same across all of them: multiple, mechanistically distinct alternatives to opioids are now advancing through late-stage trials or early commercialization at once, with real implications for post-surgical and workplace-injury pain management formularies before the end of this decade.

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High Gas Prices Drive Comp Mileage Rate to 76¢ on July 1

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The Division of Workers’ Compensation (DWC) has announced that the mileage reimbursement rate for medical and medical-legal travel expenses has increased by 3.5 cents to 76 cents per mile, effective July 1, 2026.

California Labor Code §4600(e)(2), in conjunction with Government Code §19820 and DPA regulations, requires claims administrators to reimburse injured workers for medical mileage at the rate adopted by the Department of Personnel Administration (DPA) for non-represented (excluded) state employees, which is tied to the IRS published mileage rate.

The IRS normally adjusts the standard mileage rate each fall for the next calendar year based on an annual study of the fixed and variable costs of operating an automobile, but the IRS Commissioner just announced that in recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2026.

The new rate must be paid for travel on or after July 1, 2026, regardless of the date of injury. Labor Code section 4600, Government Code section 19820 and the California Department of Human Resources regulations establish the mileage reimbursement rate for medical and medical-legal travel and tie it to the rate established by the Internal Revenue Service (IRS).

IRS bulletin IR-2026-29, issued July 13, 2026, announced the rate increase. Mid-year mileage rate increases are rare, but are now becoming more common. There was was one in 2011 and another in 2022.

But there have been multiple mileage rate changes with January effective dates over the past decade, so the DWC has downloadable mileage-expense forms that show the applicable rates based on the travel date.

The California Department of Industrial Relations’ Division of Workers’ Compensation monitors the administration of workers’ compensation claims and provides administrative and judicial services to help resolve disputes related to claims for workers’ compensation benefits.

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July 27, 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: Appellate Court Reverses WCAB and Approves Policy Cancellation. Statute of Limitations Applies After Carriers Unequivocal Claim Denial. California Overhauls Subsequent Injuries Benefits Trust Fund. Rand Reports on SB 1160 Effectiveness on UR and Medical Treatment. CMS Begins Auditing Carrier Section 111 Records. Glenmark Pharmaceuticals Resolves Price Fixing Case for $29.6M. FBI’s Most Wanted Healthcare Fraudster List Fugitive Arrested. Generative AI Tools Are Reshaping Insurance Fraud Risks.

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SoCal Attorney Disbarred and Pleads Guilty to Theft of Client Funds

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A disbarred Manhattan Beach solo practitioner has pleaded guilty to felony theft after prosecutors say he spent hundreds of thousands of dollars belonging to his own clients at the gambling tables — capping a case that State Bar disciplinary officials had already called an “unrelenting” pattern of deceit. The Los Angeles County District Attorney’s Office announced that Sergio Valdovinos Ramirez, 36, pleaded guilty July 20, 2026 to three felony counts of grand theft by embezzlement and one felony count of writing checks against insufficient funds, along with a special allegation that his crimes caused losses of $100,000 or more.

Under his plea agreement, Valdovinos Ramirez must pay $50,000 before his September 21 sentencing in Department 123 of the Foltz Criminal Justice Center and owes at least $310,000 in total restitution; prosecutors say he is expected to receive a two-year state prison sentence. “The defendant duped and deceived his clients of funds that were earmarked for them only to blow hundreds of thousands of dollars of these funds gambling,” District Attorney Nathan Hochman said, adding that the case was “a house of cards” that collapsed once law enforcement and the State Bar caught on. The case, prosecuted by Deputy District Attorneys Daniel Akemon and Holly Harpham of the office’s Justice System Integrity Division, was investigated jointly by the California State Bar, the Manhattan Beach Police Department, and the DA’s own Bureau of Investigation.

The criminal case traces conduct between 2019 and 2023, years before Valdovinos Ramirez, admitted to the California bar in 2017, was disbarred. According to contemporaneous reporting, one client, Lisa Mendez, said she paid him roughly $4,350 in fees in 2019 before he fabricated a settlement in her case and handed her checks worth more than $150,000 drawn on accounts with near-zero balances. Other former clients reported similar patterns: thousands of dollars paid up front, work never performed to their satisfaction, and refunds attempted only through checks that bounced because the underlying accounts held little or no money. Investigators found that Valdovinos Ramirez routinely deposited client funds into personal or non-trust accounts before spending portions of the money on personal expenses, including gambling.

The criminal case followed directly from a State Bar Court disciplinary proceeding that, if anything, paints an even starker picture. In a June 2024 opinion, the State Bar Court’s Review Department upheld a hearing judge’s finding that Valdovinos Ramirez was culpable on all 19 counts of misconduct charged across five separate client matters, including moral turpitude for misappropriation and misrepresentation, writing checks against insufficient funds, failing to deposit client funds into a trust account as required by rule 1.15(a) of the Rules of Professional Conduct, and failing to keep a client reasonably informed of significant case developments. The Review Department found his misappropriation of client funds “unrelenting,” noting that he would often deplete his bank accounts of entrusted funds almost as soon as he received them.

Individual allegations detailed in State Bar filings, as reported by the Metropolitan News-Enterprise, describe a pattern extending well beyond simple neglect. One client paid Valdovinos Ramirez $73,965 in advance fees to handle a conservatorship matter; the State Bar Court found he misappropriated the entire amount. Another client hired him to pursue an employment discrimination case, but Valdovinos Ramirez never actually filed suit, instead giving his client a fabricated case number and later falsely claiming the case had settled for $58,000 — a claim he backed up with checks written against accounts that could not cover them. Perhaps most strikingly, Valdovinos Ramirez attempted to excuse his delays, both with clients and in his own disciplinary proceedings, by claiming he was undergoing treatment for terminal cancer under a Dr. Stephen Chang at City of Hope. An investigation by the State Bar’s Office of Chief Trial Counsel found no such treatment had occurred and that no doctor by that name worked at the cancer center at all. Then-Chief Trial Counsel George Cardona said disbarment was “entirely appropriate,” noting that Valdovinos Ramirez “showed no remorse and lied about a life-threatening illness” rather than take responsibility.

The California Supreme Court formally ordered Valdovinos Ramirez disbarred effective October 2024, adopting the State Bar’s recommendation along with an order that he pay restitution to five former clients, plus 10% annual interest, and $5,000 in monetary sanctions to the State Bar itself.

For clients of any California attorney who experiences theft or comparable dishonest conduct, the State Bar’s Client Security Fund offers a separate, non-adversarial avenue for partial recovery, independent of any restitution ordered in a criminal or disciplinary case. The fund, financed entirely through mandatory annual assessments on active California attorneys, can reimburse up to $100,000 per claim for losses caused by an attorney’s theft, misappropriation, or comparable dishonest conduct, including a failure to refund fees for work never performed. It does not cover ordinary malpractice or negligence, and applicants generally must file within four years of discovering the loss. Given the number of former clients implicated in the Valdovinos Ramirez matter, the fund may end up bearing a meaningful share of the loss the criminal restitution order does not ultimately recover.

This summary is provided for general informational purposes only. Statements attributed to prosecutors, State Bar officials, and news reporting reflect their own characterizations of the underlying conduct; a criminal defendant’s guilty plea establishes the specific counts admitted but does not itself resolve every disputed factual allegation referenced in related civil or disciplinary proceedings.

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Skilled Nursing Facility Chain Resolves Understaffing Case for $15M

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A San Diego-based nursing home chain has agreed to pay $15 million to settle a California Attorney General’s lawsuit accusing it of chronically understaffing its facilities while pocketing tens of millions of dollars in Medi-Cal payments meant to fund patient care. Attorney General Rob Bonta announced the settlement July 28, 2026 with Sweetwater Care Resource, LLC and its affiliated skilled nursing facilities, resolving a case his office’s Division of Medi-Cal Fraud and Elder Abuse (DMFEA) filed just over a year earlier.

Under the deal, Sweetwater will pay $12.5 million in penalties and costs, plus a further $2.5 million earmarked for staffing improvements, and will operate under an independent compliance monitor across all 17 of its California skilled nursing facilities for the next three years. “Our elders deserve care that is safe, dignified, and consistently held to the highest standards,” Bonta said, adding that his office would “continue to hold accountable those who put profits over patients.” The settlement resolves a civil complaint brought under California’s Unfair Competition Law, which exposed Sweetwater to potential penalties of up to $2,500 per violation — doubled where the victim was a senior citizen or a person with a disability — across the more than 14,000 understaffing instances the state’s investigation identified.

The case dates to June 2025, when Bonta’s office filed its original lawsuit against what was then a 19-facility chain (two fewer facilities are covered by this week’s settlement, suggesting Sweetwater’s California footprint has shrunk somewhat since filing). That complaint, and the DMFEA investigation behind it, described conditions considerably more disturbing than the understaffing statistics alone convey. According to the state, Sweetwater facilities were staffed below California’s legal minimum — 3.5 direct care hours per resident per day, at least 2.4 of which must come from certified nursing assistants — in more than 14,126 separate instances between 2021 and 2024.

The state alleged that understaffing directly caused preventable harm: patients with fractured bones went days without medical assessment; a patient with head trauma left a facility without staff noticing; falls went unwitnessed; patients were left in soiled diapers overnight because too few staff were available or willing to help; and at least one patient developed a pressure injury severe enough that the underlying hip bone became visible. The state’s original complaint further alleged that Sweetwater’s own internal weekly staffing reports put facility and corporate leadership on notice of the shortfalls, and that the company continued the practice anyway while extracting more than $31 million in “profit” or “management fees” rather than directing that money toward legally required staffing levels.

Sweetwater describes itself, on its own website, as a regional operator specializing in nursing-facility “turnaround opportunities,” founded in December 2017 and operating skilled nursing facilities across California, Colorado, and Montana. Within California, its footprint includes a cluster of Central Valley facilities — among them Evergreen Care Center in Fresno, Rolling Hills Care Center in Selma, and Fowler Care Center in Fowler — alongside its San Diego County holdings. The company did not respond to a reporter’s request for comment on the settlement, according to FOX40’s coverage of the announcement, and the company has not issued its own public statement addressing the underlying allegations as of this writing.

The settlement’s injunctive terms are notable for their duration and scope: rather than a one-time fine alone, all 17 remaining Sweetwater facilities in California will operate under an outside compliance monitor for three years, a structural remedy the DMFEA has increasingly favored in chronic-understaffing cases as a way to verify ongoing compliance rather than relying solely on after-the-fact penalties. The proposed final judgment filed with the settlement lays out the monitor’s authority and reporting obligations in more detail than the press release itself.

The case is also a reminder of how California funds elder-abuse and Medi-Cal fraud enforcement: DMFEA operates on a federal-state matching structure, with the U.S. Department of Health and Human Services covering 75% of the unit’s budget ($77.65 million for federal fiscal year 2026) and the state covering the remaining 25% (roughly $25.9 million), a funding split that has made DMFEA’s caseload a recurring point of interest for both federal and state health care fraud policy. The office continues to solicit tips on suspected Medi-Cal fraud or elder abuse through its online reporting portal, which the AG’s office credited, in part, with helping build the case against Sweetwater in the first place.

This summary is provided for general informational purposes only. Allegations described in the state’s complaint and press materials reflect the government’s characterization of the evidence; a civil settlement resolves the litigation but does not constitute an adjudicated finding that each specific allegation is true, and Sweetwater has not been reported to have admitted wrongdoing as part of the settlement.

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No Need to Exhaust Underlying Coverage to Sue Excess Insurers

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Saul Fox and Dexter Paine co-founded investment firm Fox Paine & Company, LLC (FPC). In 2006, after Paine launched a third investment fund, Fox Paine Management III, LLC, without Fox’s full participation, the relationship between the two collapsed. In August 2007, Fox and related entities (the Fox Parties) sued Paine and related entities (the Paine Parties) in Delaware, alleging Paine poached FPC employees and misrepresented that Fox had authorized various actions; the Paine Parties countersued, and years of litigation followed. That dispute triggered claims under a tower of insurance policies covering FPC and affiliated individuals: a $10 million primary policy from Houston Casualty Company (HCC), a $10 million first-layer excess policy from Twin City Fire Insurance Company, a $10 million second-layer excess policy from St. Paul Mercury Insurance Company, a $10 million third-layer excess policy from Twin City, and a $10 million fourth-layer excess policy from Liberty Mutual Insurance Company — a $50 million tower in which each excess policy attaches only once the insurance beneath it is exhausted.

According to the operative complaint, the Paine Parties came to control the insurance claim: HCC paid the Paine Parties its full $10 million primary limit without notifying the Fox Parties, and Twin City and St. Paul later settled with the Paine Parties for a combined $9 million (roughly $6 million allocated to Twin City’s first-layer policy and $3 million to St. Paul’s), again without telling the Fox Parties, who allege they learned of these developments only years later through a third-party docket alert. Plaintiffs Fox, FPC, and related entities sued Twin City, St. Paul, and Liberty Mutual for breach of contract, declaratory relief, breach of the implied covenant of good faith and fair dealing, and aiding and abetting breach of fiduciary duty, alleging they — not the Paine Parties — held the only legitimate claim to the excess coverage and had incurred more than $43 million in covered loss and interest defending the Delaware litigation and its aftermath.

All three excess insurers demurred to the operative complaint, arguing plaintiffs’ claims against the higher-layer policies failed because plaintiffs could not allege the underlying insurance had actually been exhausted. The San Francisco County Superior Court found plaintiffs had adequately alleged exhaustion of the primary HCC policy, allowing claims against Twin City’s first-excess-layer policy to proceed, but concluded exhaustion had not occurred as to St. Paul’s policy, Twin City’s third-layer policy, or Liberty Mutual’s policy, since only $6 million of Twin City’s $10 million first layer had been paid out. On that basis, the court sustained the demurrers of St. Paul and Liberty Mutual (and Twin City’s demurrer as to its third-layer policy) without further leave to amend, resulting in a judgment of dismissal as to those insurers.

The California Supreme Court granted review to examine (Fox Paine & Co., LLC v. Liberty Mutual Ins. Co. (2024) 104 Cal.App.5th 1034), a Court of Appeal published opinion, that agreed with the trial court, and held that the absence of actual exhaustion defeated any “actual controversy” under Code of Civil Procedure section 1060, treating the case as materially identical to Qualcomm, Inc. v. Certain Underwriters at Lloyd’s, London (2008) 161 Cal.App.4th 184.

In the case of Fox Paine & Company, LLC v. Twin City Fire Insurance Company, No. S287404 (Cal. Sup. Ct., July 2026) — the California Supreme Court reversed the judgment of the Court of Appeal and remanded the cause for further proceedings.

The Supreme Court disagreed with the Court of Appeal, holding that a lack of actual exhaustion does not categorically defeat an actual controversy regarding coverage under an excess policy. Applying the ripeness framework from Pacific Legal Foundation v. California Coastal Commission (1982) 33 Cal.3d 158, the Court explained that insurance coverage disputes routinely involve future contingencies, and that courts should ask whether it is practically or reasonably likely that a contingency will occur rather than treating any unresolved contingency as fatal. Because plaintiffs alleged a loss, identified the specific policy provisions covering it, and alleged they had submitted virtually all their invoices without reimbursement, the Court found the dispute concrete enough to support declaratory relief, and held that requiring insureds to litigate excess policies one layer at a time — suing, winning, executing, and then suing the next insurer up the tower — would impose serious and unnecessary hardship.

The Court did impose a real pleading requirement going forward: a plaintiff seeking a declaration of coverage under an excess policy must adequately allege that its covered losses are sufficient to reach that policy’s attachment point, and courts must not credit complaints that impermissibly commingle covered loss with other amounts, such as prejudgment interest, that do not themselves contribute to exhaustion. Applying that standard, the Court faulted plaintiffs’ own allegation of “$43,000,000 in covered Loss and recoverable interest” for blending two different things, but remanded for the Court of Appeal to determine in the first instance how much of that figure, if any, can reasonably be read as covered loss alone, and whether a reasonable-likelihood standard should apply given the record’s uncertainties. In reaching this holding, the Court disapproved two prior Court of Appeal decisions, Ludgate Ins. Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592 and Lockheed Martin Corp. v. Continental Ins. Co. (2005) 134 Cal.App.4th 187, to the extent they could be read as excusing insureds from pleading any covered loss at all.

Turning to the bad faith claims, the Court also held that an insured suing an excess insurer for tortious breach of the implied covenant of good faith and fair dealing likewise need not allege prior exhaustion of all underlying insurance. The Court of Appeal had relied on Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1 for the proposition that there can be no bad faith claim absent actual coverage. The Supreme Court explained that Waller addressed whether coverage would ever be due, not when coverage attaches, and that an excess insurer’s implied duty not to injure its insured’s right to policy benefits exists from the inception of the policy, not only once exhaustion occurs. It is enough, the Court held, for an insured to allege facts showing that coverage under the excess policy will attach — or would attach but for the insurer’s own bad-faith conduct — and that the insurer’s misconduct impaired the insured’s recovery of benefits owed. The Court declined to address whether plaintiffs’ specific allegations of misconduct were adequate, leaving that question for the Court of Appeal on remand.

Finally, the Court rejected the Court of Appeal’s separate holding that declaratory relief was “not necessary or proper” under Code of Civil Procedure section 1061 even if an actual controversy existed, including that court’s concerns about entangling excess insurers in litigation whose outcome depended on unresolved claims against Twin City and about upsetting excess insurers’ settled expectations. The Court found these rationales gave undue weight to speculative future defenses and were outweighed by the hardship serial litigation would impose on insureds, particularly in disputes involving “follow form” excess policies that adopt the primary policy’s terms, where requiring multiple courts to separately interpret identical language invites inconsistent rulings. Having rejected each ground the Court of Appeal relied on, the Supreme Court reversed and remanded the case for further proceedings consistent with its opinion.

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