John S. Romero, 74, of Loma Linda, the former president of a Colton-based labor union was sentenced to 144 months in prison for stealing nearly $800,000 from the union’s health plan trust fund, which he used to pay for personal expenses including legal bills and a car loan for his son’s sports car.

At the conclusion of a five-day trial, a jury found Romero guilty of one count of conspiracy, 12 counts of theft in connection with health care, and one count of making a false statement to a government agency.

Romero appointed himself president of United Industrial Services Workers of America (UISWA) and trustee of the UISWA health plan trust fund. Money paid into the fund was supposed to be used exclusively for health care benefits of its participants. Instead, Romero stole the union’s health funds for the benefit of himself and his immediate family.

In furtherance of his scheme, Romero appointed a sham trustee who had no prior experience with unions. He also actively misled the third-party administrators of the health plan into making improper payments from the trust fund.

From 2008 to 2014, Romero embezzled health plan funds to pay a $110,000 personal civil judgment against himself and his son, John J. Romero, 55, also of Loma Linda. He also embezzled $40,000 to pay criminal defense lawyers who represented Romero in a separate case. Romero funneled more than $310,000 to himself by disguising the funds as rent payments on two properties he owned and held under a shell company.

In addition, he stole more than $300,000 in union health plan money to make “salary” payments to his family, even though none of his family members ever worked for the plan. He also used plan funds to pay off a $25,000 loan on his son’s Ford Mustang Shelby GT500 sports car.

Romero also filed a false financial report with the U.S. Department of Labor in which he concealed the existence of more than $100,000 in union receipts and disbursements that Romero held in a secret bank account and from which he made regular payments to his mistress.

Romero advanced his scheme by appointing his son as the secretary and treasurer of the union. He later appointed his ex-wife, Evelyn Romero, 71, as the UISWA president and trustee in 2010, shortly before Romero began serving a two-year federal prison sentence for making false statements to federal officials while he was president of a different labor union. Romero’s son, ex-wife, and daughter, Danae Romero, 42, of Loma Linda, pleaded guilty to criminal charges in this case. Evelyn and Danae Romero each were sentenced to two years’ probation in this case. John J. Romero was sentenced to time served in prison, plus three years of supervised release.

At a September 9 hearing, Judge Phillips ordered this case’s other defendants to pay restitution in the following amounts: Evelyn Romero – $316,502; John J. Romero – $273,350; and Danae Romero – $200,552.

A new nonprofit, trade association, the California Staffing Agency Reform Association (Cal-SARA), has been established by staffing industry leaders to clean up the current marketplace, which it claims is inundated with fraudulent and black market workers’ compensation insurance.

“The increasing demand for a contingent or variable workforce, combined with the decreasing supply of employees and workers’ compensation insurers, has allowed a massive black market to grow virtually unchecked. These illegal practices put staffing agencies, injured workers and California taxpayers at risk. Regulators have thus far been unsuccessful in policing these activities causing the situation to get worse,” says Mark Bertler, Executive Director of Cal-SARA.

Cal-SARA says that legitimate staffing agencies are forced to compete with scam agencies that do not operate with legitimate workers’ compensation insurance. Illegal operations drive prices down below the cost of doing business, creating an unfair marketplace. Customers of the California staffing industry have come to accept these illegitimate operations, largely due to the unfilled and accelerating demand for workers. Regulators appear to be playing “whack-a-mole” and cannot seem to shut them down as fast as they pop up.

Cal-SARA will provide education, training and legal support for its members, as well as providing assistance to regulators and insurers. Cal-SARA will also act to protect its members from illegal and unethical activity by aggressively pursuing all parties who enable these illegal arrangements, including brokers and PEOs.

A robust and inclusive committee structure will ensure that Cal-SARA’s mission and goals are advanced. These committees include industry leaders on their education, governance, audit, membership and litigation committees.

“Self-reform is the fastest and most reliable way to clean up our industry,” says Bertler. “Unethical and unscrupulous actors continue to destroy the market by blatantly utilizing illegal business practices without fear of sanction or punishment,” he explains. “The temptation to cross the line and operate in this emerging and dangerous underground marketplace is often too great. Once they stop paying for workers’ compensation insurance, they may also resort to payroll tax fraud as well. Cal-SARA is in the process of generating a war chest of resources and talent to put an end to these crimes,” he adds.

Cal-SARA promotes legal and regulatory compliance in the sale of workers’ compensation insurance and advocates for the common business interests of its members in recognizing and eliminating workers’ compensation fraud in the temporary staffing/staffing/recruiting industries. To learn more and join the fight against staffing industry workers’ compensation fraud, visit https://www.cal-sara.org/.

The Ohio Attorney General’s office says it may have uncovered evidence in a court battle to show that a pharmacy benefit manager knowingly overcharged a state agency.

A report in the Columbus Dispatch says that among hundreds of thousands of emails obtained from PBM OptumRX as part of the litigation was one that appears to acknowledge that the multibillion-dollar corporation was not following the terms of its contract with the Ohio Bureau of Workers’ Compensation.

The PBM administered prescription drugs for workers injured on the job. In all, OptumRX overcharged the bureau on more than 1.3 million claims for generic medications, the lawsuit says. The contract, in effect from mid-2009 until the fall of 2018, called for the PBM to charge the lowest of four potential prices for generic drugs, including a measure from the Centers for Medicare and Medicaid known as the Federal Upper Limit, or FUL for short.

But in a series of May 2015 emails marked as “confidential,” John Spankroy, director of public sector account management for Catamaran, a company purchased by OptumRX, said the Federal Upper Limit was never applied, despite the contract.

He told Susan McCreight, senior director of public sector account management, “Per BWC contract we are supposed to be using pricing logic that includes lower of FUL for generics. None of the BWC price schedules has FUL as a cost source.”

In a separate email, Spankroy told Bryce Owens, the Illinois-based PBM’s manager for pricing and analytics, “We do not see FUL included as a cost source option.”

Spankroy also acknowledged: “BWC is not aware of this (yet).”

“The admission is highly relevant” to the central issue in the legal dispute: “whether OptumRX was required to follow the pricing terms included in the BWC contract,” said Yost’s legal team in a Dec. 16 court filing.

But Andrew Krejci, who is with Optum’s corporate communication office, says the federal FUL requirement was never part of the PBM’s agreement with the state.

“The plain language of the contract demonstrates that the lesser-of reimbursement methodology, which was agreed upon and utilized by the parties over the course of their almost decade-long relationship, incorporated three reimbursement options and CMS FUL was never one of them,” OptumRx said in a court filing.

The bureau dropped OptumRX more than two years ago after a consultant determined the PBM was vastly overcharging the state.

The same consultant later discovered that PBMs – including OptumRX – in Ohio’s Medicaid program, which pays for health care of the poor and disabled, were charging three to six times the standard rate, enabling them to take home nearly $250 million in a single year.

According to the lawsuit, which seeks unspecified damages, OptumRx overcharged the bureau on 57% of 2.3 million prescription claims from injured Ohio workers between January 2014 and September 2018.

Jorge Gerardo Maldonado, 55, of Sacramento, was charged with three felony counts of insurance fraud after allegedly underreporting payroll and employees to illegally save on workers’ compensation insurance premiums, resulting in a $687,560 loss to three insurance carriers.

After one of the victim insurance companies suspected Maldonado of fraud, the California Department of Insurance launched an investigation into his Sacramento cleaning company Pro-Care Building Maintenance (Pro-Care). It found that Maldonado underreported payroll and committed premium fraud. Maldonado has owned Pro-Care since 2014.

On July 10, 2016, a Pro-Care employee was injured while on the job and a workers’ compensation insurance claim was filed with one of the company’s insurance carriers. During a review of the claim, it was found that Pro-Care underreported payroll and failed to report the end of policy payroll to the insurance company as the policy required.

The Department’s investigation further discovered that Maldonado failed to report payroll and employees of Pro-Care to three insurance carriers from 2017 through 2019. The alleged unreported payroll was over $5 million.

Maldonado self-surrendered to the Sacramento County Jail on Wednesday, December 23, 2020.

The case is being prosecuted by the Sacramento County District Attorney’s Office.

Cal/OSHA has cited eight more employers for not protecting workers from COVID-19 during inspections at meat processing facilities across the state.

The inspections were opened upon learning of a COVID-19 fatality and several illnesses, and after receiving complaints. The employers cited failed to take required steps to prevent COVID-19 infection in the workplace such as safe physical distancing procedures or proper face covering usage for workers in production areas.

“Enforcement of COVID-19 protections at meatpacking and food processing facilities has been a priority of Cal/OSHA given the high rates of positive cases and alarming number of deaths among food processing workers,” said Cal/OSHA Chief Doug Parker. “These citations represent a portion of our enforcement efforts in these industries. More citations will be issued when violations are identified and inspections are closed.”

On November 12, Cal/OSHA cited Smithfield Foods, Inc. in Vernon $58,100 in proposed penalties for multiple COVID-19 related violations, including two serious in nature, and its staffing firm CitiStaff Solutions was also cited $46,695 for two serious violations. Both employers failed to ensure that workers used face coverings properly in production areas and during breaks, and failed to provide effective training and instruction on how the virus is spread and how to disinfect areas properly. The investigators determined that Smithfield Foods, Inc. failed to adequately address at least 300 COVID-19 illnesses (including three that required hospitalization) amongst its employees and contracted workers hired by CitiStaff Solutions. Smithfield Foods, Inc. further failed to report serious COVID-19 illnesses to Cal/OSHA.

Central Valley Meat Co. was cited for not informing employees of possible exposure when coworkers were infected with COVID-19 and for failing to provide face coverings and ensure their proper use. Cal/OSHA opened a complaint-initiated inspection at the facility in Hanford on April 29 and identified violations in the employer’s training procedures and response to COVID-19 hazards. Citations were issued on December 11 with $50,000 in proposed penalties for two violations classified as serious.

In June, Cal/OSHA became aware that several One World Beef Packer employees were hospitalized for complications related to COVID-19, including one employee who died. When Cal/OSHA inspected the Brawley facility, investigators noted that workers in the production lines and quality assurance area were not provided protective barriers and were working too close to each other. Furthermore, the employer failed to report the serious illnesses and fatality within the eight-hour time limit as required by law. Cal/OSHA cited One World Beef Packer $23,000 on December 11 for one serious violation and a regulatory violation for failing to report the serious illnesses.

After reports of outbreaks, Cal/OSHA opened inspections at meat processing plants in Vernon last June and July as part of a targeted enforcement effort. An onsite inspection at California Farms Meat Company confirmed the employer did not implement physical distancing procedures or install barriers in the production area, where workers separated chicken by hand and operated machines within close distance of each other. Cal/OSHA cited the employer $11,700 in proposed penalties on December 14 for the serious violation.

In July, Cal/OSHA opened inspections with CLW Foods and its staffing firms California Enterprises Employment and HR Staffing Solutions in Vernon. The employers were cited on December 14 for multiple violations, including some categorized as serious for failing to address COVID-19 hazards by training employees and ensuring proper physical distancing procedures on conveyor lines, in the production area and when employees took breaks. CLW Foods and California Enterprise Employment were also cited for failing to report serious COVID-19 illnesses to Cal/OSHA.