A Burbank man has pleaded guilty to evading the payment of more than $11.2 million in federal taxes by using a shill to illegally collect Medicare reimbursement payments made to his blood-testing company, and to fraudulently obtaining nearly $100,000 in taxpayer-funded COVID-19 business relief, the Justice Department announced today.

Armen Muradyan, 60, pleaded guilty to one count of conspiracy to commit health care fraud, one count of wire fraud, and one count of tax evasion.

According to his plea agreement, Muradyan owned and operated a Burbank-based blood testing laboratory called Genex Laboratories Inc. Medicare and bank records show that Medicare paid millions of dollars in reimbursements to Genex for blood testing. The reimbursements were wired to bank accounts in the name of an individual identified in court documents as “L.S.” – Muradyan’s long-time friend to whom Muradyan had offered to pay $2,000 per month to pretend to be Genex’s owner.

Muradyan told L.S. that he needed him to submit Medicare enrollment papers to Medicare on Genex’s behalf because Medicare had banned Muradyan from submitting claims.

L.S. and Muradyan opened bank accounts for Genex in L.S.’s name, but which Muradyan controlled. L.S. neither owned nor operated Genex and visited the company’s Burbank office to collect his $2,000 monthly payment and to sometimes sign documents at Muradyan’s direction. Muradyan used the proceeds from the health care fraud conspiracy to pay the mortgage on a property he owned.

For the tax years of 2015 through 2020, Muradyan instructed L.S. to report Genex’s financial activity on L.S.’s personal income tax returns using documents that L.S. provided to his own tax preparer. The documents purportedly showed that Genex had minimal net profit or was operating at a loss, meaning the company had little or no income tax liability.

For the same period, Muradyan submitted income tax returns that reported none of Genex’s financial activity as his own and that he averaged an income of $40,000 per year. In fact, Muradyan personally received and used millions of dollars in Medicare reimbursements to support his own expensive lifestyle. Muradyan also did not file tax returns for the years 2021 through 2023.

In total, Muradyan’s unreported federal taxable income was approximately $23,915,762, resulting in a total federal income tax due and owing by him of approximately $11,236,357.

In July 2020, Muradyan wired a false and fraudulent application for an Economic Injury Disaster Loan (EIDL) that was funded by federal taxpayers. On the application, Muradyan falsely stated that GenMed employed multiple people and generated $800,000 in income for the year 2019. In fact, Muradyan knew GenMed employed no one and generated zero income for that year. The U.S. Small Business Administration (SBA) wired $99,900 to a bank account Muradyan controlled. He then used the money for personal expenses not permitted under the terms of the EIDL. Muradyan admitted he acted with the intent to deceive and cheat the SBA.

United States District Judge John A. Kronstadt scheduled a December 11 sentencing hearing, at which time Muradyan will face a statutory maximum sentence of 20 years in federal prison for the wire fraud count, up to 10 years in federal prison for the health care fraud conspiracy count, and up to five years in federal prison for the tax evasion count. Muradyan remains free on $2.6 million bond.

IRS Criminal Investigation, the FBI, and the United States Department of Health and Human Services Office of Inspector General investigated this matter.

Assistant United States Attorney Mark Aveis of the Major Frauds Section and Trial Attorney Mahana K. Weidler of the Department of Justice’s Tax Division are prosecuting this case.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at (866) 720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

Former Tesla HR execs Linda Peloquin, Adam Chow, Tiara Paulino, Sharnique Martin, Gregory Vass and Ozell Murray just filed a lawsuit against Tesla Inc., in the United States District Court for the Northern District of California Case 3:25-cv-06690-AMO. The lawsuit concerns the automaker’s Fremont, California, facility that has been at the center of several previous discrimination lawsuits.

These former Tesla HR professionals alleged that they were either fired or effectively forced to resign after attempting to surface other employees’ race discrimination and retaliation complaints at the company’s Fremont, California, plant.  

According to the Peloquin complaint, one of Tesla’s HR managers, Nicole Burgers, was a “common denominator” in the various claims made by the plaintiffs. They alleged that the manager, the overall HR manager for the entire Fremont facility, “had an irrational fixation on fostering the delusion that the environment and culture at Tesla is one of tolerance and innovation, rather than racism and retaliation.”

Allegations continue to say that “Much of Tesla’s workplace toxicity stems from its rapid sales growth and manufacturing demand, and the breakneck pace at which it hired employees to work in its plants and overall operation. Since its introduction in 2020, Tesla’s “Model Y,” for instance, has become the Company’s top-selling vehicle line – and, by most estimates, one of the top-selling electric vehicles in the world. Thus, there was, and remains, constant pressure to keep the Model Y’s sales trajectory high.”

“Yet, as a consequence of this desire to produce vehicles at such a rapid pace, the Company has failed to cultivate a healthy working environment at the Fremont facility, and instead fostered one that is beset with racism, sexism, cronyism, and outright physical violence.”

Plaintiffs claim “even employees that had been terminated for instances of workplace violence were loopholed back in via temp agencies. That meant, then, that oftentimes the employee who had been previously victimized had to actually resume working with their attacker and tormentor.”

“In fact, that Senior Security Manager himself was attacked and suffered a serious injury when he attempted to stop a loopholed employee – one who had been returned to work after being terminated for cause – after that employee came back aboard and attacked another worker.”

At some point plaintiffs allege that Tesla “turned its ire on the HR professionals that had merely investigated and substantiated the bases of the complaints. So, oddly, in most instances it was the HR official that wound up being penalized and pushed out for substantiating the alleged wrongdoing rather than the wrongdoer themselves. Consequently, a dizzying number of HR professionals – the Plaintiffs here: Peloquin, Chow, Paulino, Martin, and Vass, among them – have either been outright fired for substantiating complaints of discrimination and retaliation, or resigned because they saw a termination coming and did not want that type of disciplinary stain on their job history.

Details of the complaint allege “A common denominator in many of these terminations is a HR Manager named Nicole Burgers. By all accounts, Burgers has had an irrational fixation on fostering the delusion that the environment and culture at Tesla is one of tolerance and innovation, rather than racism and retaliation. By all accounts, given that Burgers was the overall HR manager for the entire Fremont facility, she believed that she would be held accountable for further instances of racism and misconduct at the Fremont location – particularly in light of the pending State, Federal, and private litigation against the Company. Thus, rather than undertake to change the culture and environment that fostered those types of instances of racism, Burgers instead undertook to weed out the HR professionals beneath her that merely investigated and substantiated the occurrence of that type of depravity.”

Page 24 of the 159 page complaint continues to provide details by writing “Karen Draper was one of the first dominos to fall in what became a long line of retaliatory terminations by Burgers and her Texas-based counterparts – Allie Arebalo, Bert Somsin, Jenifer Romero, and Leah Allen – or, instances where other HR professionals simply resigned under protest because they knew Burgers had begun to target them.

Elon Musk’s social media company, X Corp, has reached a tentative settlement in a lawsuit filed by former employees who claimed they were owed $500 million in severance pay.

The lawsuit, filed as a proposed class action in the U.S. District Court for the Northern District of California (Case No. 23-03461, McMillian et al. v. Musk et al.), was initiated in July 2023 by former Twitter employees Courtney McMillian (former head of total rewards, overseeing employee benefits) and Ronald Cooper (former operations manager).

They alleged that Twitter’s 2019 severance plan, established under the company’s previous ownership, entitled laid-off employees to substantial payouts: two months of base pay plus one week for each year of service for most workers, and up to six months for senior employees like McMillian.

Following Elon Musk’s $44 billion acquisition of Twitter in October 2022 and the subsequent rebranding to X, approximately 6,000 employees were terminated as part of cost-cutting measures. The plaintiffs claimed that X Corp. violated this plan by offering at most one month of severance pay, with many receiving nothing, resulting in an estimated $500 million in owed benefits.

On July 9, 2024, U.S. District Judge Trina L. Thompson dismissed the case without prejudice. The core of her ruling centered on the inapplicability of the federal Employee Retirement Income Security Act (ERISA), which governs employee benefit plans and provides federal jurisdiction for such disputes. Judge Thompson determined that Twitter’s severance arrangement did not qualify as an ERISA-governed plan because it lacked an “ongoing administrative scheme.

However, Judge Thompson allowed the plaintiffs the opportunity to amend their complaint to pursue alternative claims not reliant on ERISA, such as potential state law breach-of-contract allegations.

The plaintiffs appealed the dismissal to the U.S. Court of Appeals for the Ninth Circuit (Case No. 24-5045, McMillian v. Musk) shortly after the district court’s decision. In their appeal, the former employees argued that Twitter’s severance policy did indeed qualify as an ERISA plan because it involved ongoing benefit payments, even if administered without individualized discretion. They received support from the U.S. Department of Labor, which filed an amicus brief endorsing this view, emphasizing that ERISA coverage applies to plans paying benefits on a continuing basis regardless of administrative complexity.

In response, Musk and X Corp. filed a brief on January 9, 2025, urging the Ninth Circuit to affirm the dismissal. Their key arguments included:

– – No formal ERISA plan existed, as the employees failed to produce official plan documents (e.g., summary plan descriptions) or evidence of widespread communications to workers about the severance terms prior to Musk’s acquisition.
– – References to a “severance matrix” (a confidential document allegedly taken by McMillian) and general corporate statements at most indicated offers of simple lump-sum payments, which do not constitute an ERISA-governed scheme requiring ongoing administration.
– – This lack of a qualifying plan was “fatal” to the class action, as it undermined the basis for federal jurisdiction.

Oral arguments were scheduled for September 17, 2025, in San Francisco.

However, as of August 21, 2025, the parties reached a tentative settlement agreement, the financial terms of which were not disclosed. In a joint court filing, both sides requested a postponement of the hearing to finalize the deal, which would resolve the class action and compensate the affected former employees. The Ninth Circuit granted the delay on August 22, 2025, effectively pausing the appeal process. This settlement does not impact other ongoing related lawsuits, such as those in Delaware and California courts involving different claims or plaintiffs.

In summary, the appeal remains unresolved on the merits due to the impending settlement, marking a potential end to this specific dispute without a full appellate ruling on the ERISA question.

Other related lawsuits, including one by former executives like ex-CEO Parag Agrawal, remain pending. This settlement aims to resolve the dispute over severance pay for the affected former employees.

A new study from the Workers Compensation Research Institute (WCRI) examines the key factors associated with high-cost workers’ compensation claims involving back and shoulder injuries, where medical expenses exceed $65,000 within 36 months of injury.

“In a previous WCRI study, we identified factors that increase the likelihood of high medical payments by looking at all injury types together,” said Sebastian Negrusa, WCRI’s vice president of research. “This new study refines that analysis by focusing on back and shoulder injuries to better understand what contributes to higher claim costs.”

The study looks at four back conditions (neurologic back pain; disc disorders; degenerative back conditions; and sprains, strains, and non-specific pain) and three shoulder injuries (rotator cuff disorders, frozen shoulders, and shoulder osteoarthritis).

Key questions the study explores include the following:

– – How prevalent are high-cost claims for these injuries, and how do they compare in terms of medical costs and duration of temporary disability
– – What characterizes high-cost claims versus other claims within each injury category?
– – What factors are associated with elevated medical payments?
– – How do degenerative conditions and comorbidities influence treatment choices and affect costs?

The analysis is based on about 194,000 workers’ compensation claims with more than seven days of lost time, from 32 states. These claims involve injuries that occurred between October 1, 2015, and March 31, 2019, with detailed treatment and billing data tracked for up to 36 months after the injury, through March 31, 2022.

The full report, Patterns and Trends of High-Cost Claims Involving Back and Shoulder Injuries, is authored by Dongchun Wang, Kathryn L. Mueller, and Randall D. Lea. It is available to WCRI members and can be purchased by nonmembers at www.wcrinet.org.

Laurance Iloff lived and worked in an unincorporated area of Humboldt County known as Bridgeville, on property owned by Bridgeville Properties, Inc. and managed by Cynthia LaPaille.

Iloff’s employers rented out the property, which includes small houses, cabins, and other structures. For several years, Iloff performed maintenance on Bridgeville’s structures, grounds, and water system, and LaPaille provided him instructions, directions, and approvals in relation to this work. Under an informal arrangement, Iloff’s employers allowed him to live rent-free in one of the houses but did not provide him any other benefits or compensation for his services.

After his employers terminated this arrangement, Iloff filed claims against them with the Labor Commissioner, initiating a process for adjudicating wage claims informally known as “the Berman process.” The employers argued that Iloff was an independent contractor, but the Labor Commissioner determined that he was an employee and as such, was entitled to unpaid wages, liquidated damages, penalties, and interest.

The employers appealed, seeking de novo review of the Labor Commissioner’s ruling in the superior court. In response, Iloff — now represented by an attorney from the Labor Commissioner’s office — filed a notice of claims. In this notice, Iloff reasserted the wage claims he had raised before the Labor Commissioner and added new claims, including a claim for penalties under the Paid Sick Leave law.

Following a bench trial, the superior court found that Iloff was an employee. Applying the framework set out in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903, the court reasoned that Iloff was properly classified as an employee, rather than an independent contractor, because he was not “free from [the employers’] control and direction” and he performed work that was within the “usual course” of their business. (Id. at p. 964.) The court ruled that Iloff was entitled to unpaid wages, penalties, and interest.

On the two issues addressed by the California Supreme Court in this case, the superior court ruled in favor of the employers. First, the court ruled that Iloff was not entitled to liquidated damages because his employers had acted in “good faith” in not paying him and had “reasonable grounds for believing” they were complying with the law governing minimum wages. (§ 1194.2, subd. (b).) The court based this ruling on its findings that the employers and Iloff intended and expected Iloff to perform his services in exchange for free rent and that neither he nor the employers understood or believed, at any time before his termination, that he would be paid wages or treated as an employee. Second, the court rejected Iloff’s claim for penalties under the Paid Sick Leave law, concluding that the statute did not authorize Iloff to seek those penalties in the context of the employers’ Berman appeal. (§§ 246, subd. (i), 248.5, subds. (a) & (b).)

Iloff appealed, and the Court of Appeal affirmed in part and reversed in part, affirming the trial court’s judgment in the employers’ favor on the liquidated damages and Paid Sick Leave law issues. (Seviour-Iloff v. LaPaille (2022) 80 Cal.App.5th 427, 447–451 (Seviour-Iloff).) The Supreme Court granted review to address these two issues.

This case addresses two issues concerning the rights of California workers whose employers fail to pay them the minimum wage or provide them paid sick leave benefits. The first issue relates to the good faith defense to the default rule that employees who prove minimum wage violations are entitled to liquidated damages. (Labor Code, § 1194.2.) The Supreme Court held that to establish the good faith defense, an employer must show that it made a reasonable attempt to determine the requirements of the law governing minimum wages; proof that the employer was ignorant of the law is insufficient.

The second issue relates to the process for raising claims under the Healthy Workplaces, Healthy Families Act of 2014 (§ 245 et seq.; the “Paid Sick Leave law”). Specifically, we must determine whether a court may consider a Paid Sick Leave law claim that an employee raises in the context of their employer’s appeal to the superior court of a Labor Commissioner ruling. (§ 98.2, subd. (a).) We hold that a court may do so.

The Court of Appeal reached the opposite conclusion on both issues, thus the Supreme Court reversed in the published case of Iloff v. LaPaille – S275848 (August 2025).