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Supreme Court Denies Union Effort to Invalidate Prop 22

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The California Supreme Court rejected a major labor union and several ride-hailing drivers attempt to overturn a newly passed ballot measure classifying gig workers as independent contractors in California.

The groups filed suit in the Supreme Court, alleging Proposition 22 violated the state constitution and limits the power of state legislators to implement certain worker protections they are authorized to grant.

The Service Employees International Union and group of ride-hailing drivers, asked the state Supreme Court to invalidate Prop 22, which classified gig driver’s status as independent contractors after more than 58 percent of voters supported it in November.

They argued the measure limits state legislators’ ability to implement a system of workers’ compensation in defiance of their constitutional authority to do so. It also argues that the proposition unconstitutionally defines what comprises an amendment to the measure, as well as violating a rule limiting ballot measures to a single subject to prevent voter confusion.

The Protect App-Based Drivers and Services coalition, which represents gig companies such as Uber, Lyft and Doordash, criticized the lawsuit in a statement attributed to Uber driver Jim Pyatt, an activist who has worked in favor of Prop 22.

The groups that filed the suit, which also include SEIU California State Council, took particular issue with the measure’s inclusion of a provision requiring a seven-eighths legislative supermajority to amend and even define what constitutes an amendment.

They said they were suing in the state Supreme Court rather than a lower court because the issues were of broad public importance and required a speedy resolution to minimize harm to gig workers.

However the Supreme Court refused to hear the case, and did not write a formal opinion. The docket entry simply stated “The petition for writ of mandate is denied without prejudice to refiling in an appropriate court.”

Thus, their arguments were not heard on the merits. They were redirected to the jurisdiction of lower courts. However, as they pointed out, this would now require years of costly litigation, first in lower courts, then intermediate appellate courts, and finally back to the Supreme Court.

It would not be unusual for this to be a ten year journey.

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Claimant Faces Fraud Charges for False History of Prior Injuries

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45 year old Crescencio Velasco Covarrubias, who lives in Buttonwillow California, was arraigned on multiple felony counts of insurance fraud after allegedly failing to disclose prior work-related injuries in order to collect workers’ compensation benefits.

Covarrubias filed a workers’ compensation claim for an injury he sustained on June 26, 2017, while employed at a retail warehouse center. He alleged he injured his left ankle, foot, heel, and back when he misstepped while sweeping.

As part of the claims process, Covarrubias was responsible for reporting any prior injuries, as they could have affected the outcome of the current claim.

An investigation conducted by the California Department of Insurance revealed on November 11, 2010, Covarrubias filed a workers’ compensation claim, processed by a different insurance company, for a bilateral knee, neck, and back injury, along with left foot and ankle injuries.

Those injuries were sustained when Covarrubias was driving a tractor shuttle loaded with almonds and was struck by another tractor shuttle. Covarrubias’ injuries were treated by his primary treating physicians and he received a $90,000 settlement.

The investigation into the June 2017 injury claim found that Covarrubias not only failed to report the November 2010 injuries, but when specifically asked, he denied any prior injuries to his left foot, ankle or back.

Covarrubias’ fraudulent statements resulted in a loss to his employer’s insurance company of more than $87,000. If Covarrubias would have reported the injuries from November 2010, the insurance company would have conducted an investigation and likely denied or modified the current claim, thereby preventing Covarrubias from receiving benefits he was not entitled to.

Covarrubias self-surrendered and was arraigned on January 7, 2021. He is scheduled to return to court on March 15, 2021. The Kern County District Attorney’s Office is prosecuting this case.

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Cal/OSHA Data Significantly Undercounting COVID-19

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A year after the first COVID-19 case hit California, Cal/OSHA – the state agency in charge of policing warehouses, offices, factories and other workplaces – is woefully understaffed and significantly undercounting the number of employees who have fallen seriously ill or died as a result of the coronavirus.

California employers reported only 1,600 serious worker illnesses or deaths to the Division of Occupational Safety and Health, known as Cal/ OSHA, from the start of the pandemic through mid-December, according to data obtained by The Sacramento Bee through a Public Records Act request.

The agency’s inspectors determined that only 779 of those serious or deadly infections were actually contracted in the workplace. That represents a tiny fraction of the 3.2 million people who have tested positive for the disease in California, and less than 2 percent of the more than 41,000 who have died from it.

“It’s troubling; it absolutely is troubling,” said state Sen. Jerry Hill, D- San Mateo, who co-authored legislation last year strengthening workers’ compensation protections for employees who contract COVID-19 on the job.

Cal/ OSHA officials “have a responsibility to make sure … those employee environments are safe,” Hill said. “We want to guarantee the employer is doing everything possible. … That’s where Cal/ OSHA has to have accurate data.”

While state inspectors have responded to thousands of complaints and levied fines against some workplaces that failed to report serious cases, a long-existing staffing shortage has hindered that process. There were 107 job openings posted for the department as of Friday.

Asked about overlooked infections, Cal/ OSHA spokesman Luke Brown said: “We cannot speculate about the number of cases that have not been reported to Cal/ OSHA.”

The agency’s database includes employer names, inspection numbers and dates that the businesses reported to the state serious illnesses – defined by Cal/ OSHA as cases that resulted in deaths or hospitalization. It is the most detailed official glimpse into how the coronavirus has seriously harmed employees in California.

But it’s far from a complete portrait. The database identifies only businesses that have volunteered information to the state. Workplace researchers, health experts and lawmakers all agree the data is likely missing swaths of essential workers who were seriously sickened at work.

“Obviously, that is way under the experience that has been reported daily about the huge numbers of serious illnesses and deaths among vulnerable communities who are people who have not been able to shelter at home,” said Laura Stock, director of UC Berkeley’s Labor Occupational Health Program.

Taken as a whole, the Cal/ OSHA database creates an improbable portrait of significant COVID-19 cases in the workplace. Only four serious, confirmed illnesses have been recorded at poultry processing plants – an industry that, in reality, has been a well-known hot spot for COVID-19. Just 77 serious cases have been tallied across all of California’s agriculture, meat and poultry sectors.

According to Cal/ OSHA’s data, Sacramento County had 51 confirmed workplace infections. That’s second only to the 220 cases reported in Los Angeles County – one of the nationwide epicenters for COVID-19. More than 16,000 Angelenos have died and more than 1 million have contracted the diseases, according to Los Angeles County health officials.

“If you’re not paying attention, and documenting where and why people are getting sick and dying, (the virus) doesn’t just stay in the workplace,” said Marcy Goldstein-Gelb, co-executive director of the National Council for Occupational Safety and Health. “It goes back to families. It goes back to whole communities.”

The lopsided reporting of the most serious suspected cases, deaths and major illnesses, and a de facto honor system for companies to report problems, are the latest in a line of failures at the state’s long-struggling worker safety department, critics said.

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Hearing on COVID-19 MTUS Canceled Pending ACOEM Updates

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The Division of Workers’ Compensation has canceled the scheduled February 18, 2021 virtual public hearing on the proposed adoption of a COVID-19 evidence-based guideline to the Medical Treatment Utilization Schedule (MTUS).

The publisher of the American College of Occupational and Environmental Medicine’s (ACOEM) guidelines made an edit to the version of the Coronavirus (COVID-19) Guideline that DWC posted for the 30-day public comment period.

As a result, DWC will not have sufficient time to repost the edited version and complete the formal guideline adoption process before another ACOEM update to this guideline is expected in mid-March.

DWC plans to adopt and incorporate ACOEM’s COVID-19 Guideline into the MTUS when the next update is published if there is enough time to complete the formal adoption process before another update.

In the meantime, the DWC continues its support of this guidance and encourages providers to follow the MTUS Medical Evidence Search Sequence found in California Code of Regulations, title 8, section 9792.21.1, for treatment recommendations pertaining to COVID-19.

This regulatory search sequence requires a search of the most current version of ACOEM guidance. The ACOEM COVID-19 Guideline meets that criteria. Additional information is available at DWC’s MTUS webpage.

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Congress Investigating Meatpackers for High COVID Deaths

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Reuters reports that a U.S. congressional panel is investigating three large meatpacking companies for possible worker-safety violations following reports that hundreds of industry workers have died of COVID-19. The House of Representatives’ coronavirus subcommittee asked JBS USA, Tyson Foods Inc and Smithfield Foods Inc to provide records of inspections, complaints and other internal documents.

The panel also asked the Occupational Safety and Health Administration (OSHA), the nation’s workplace safety watchdog, to provide records of its efforts to enforce worker safety rules.

Meatpacking plants emerged as early hubs of coronavirus infection last spring, forcing many of them to close temporarily and pushing up meat prices. Companies erected physical barriers and took other steps to protect workers, but they were not able to eliminate the risk of infection.

Surrounding communities also were affected. Meatpacking plants were associated with at least 236,000 coronavirus cases and up to 5,200 deaths as of July, according to the National Academy of Sciences.

Labor unions and workers have accused the companies of taking inadequate steps to protect workers.

Smithfield, Tyson and JBS said they have spent hundreds of millions of dollars on worker safety, bonuses and other measures. All three companies said they would cooperate with the investigation.

The Meat Institute trade group said case rates for industry workers were five times lower in December than they were in May, while infections rose for the U.S. population as a whole.

The coronavirus subcommittee’s chairman, U.S. Representative James Clyburn, said his panel would also examine OSHA’s enforcement efforts, which he described as ineffective. “It is imperative that the previous Administration’s shortcomings are swiftly identified and rectified to save lives in the months before coronavirus vaccinations are available for all Americans,” he said in a statement.

In response, OSHA said more stringent safety guidelines issued to employers on Friday were a “first step” in its efforts to work with Congress on worker protections.

A Reuters investigation found that workplace inspections by OSHA dropped 44% between March, when the virus began to spread widely in the United States, and December.

OSHA last year fined Smithfield, owned by Hong Kong-listed WH Group Ltd, $13,494 for a violation at its Sioux Falls, South Dakota, plant, where four workers died and nearly 1,300 were infected.

The agency fined JBS $15,615 for a violation at its Greeley, Colorado, plant, where six died and about 300 tested positive. Both companies are appealing the fines.

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EHR Vendor Resolves Kickback Case for $18M

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A national electronic health records (EHR) technology vendor, athenahealth Inc., has agreed to pay $18.25 million to resolve allegations that it violated the False Claims Act by paying unlawful kickbacks to generate sales of its EHR product, athenaClinicals.

In a complaint filed in conjunction with this settlement, the United States alleged that Athena violated the False Claims Act and the Anti-Kickback Statute through three marketing programs.

First, Athena invited prospective and existing customers to “Concierge Events,” providing free tickets to and amenities at sporting, entertainment, and recreational events, including trips to the Masters Tournament and the Kentucky Derby with complimentary travel and luxury accommodations, meals, and alcohol.

Second, Athena paid kickbacks to its existing customers under a “Lead Generation” program designed to identify and refer new prospective clients to Athena. Under this program, Athena paid up to $3,000 to existing customers for each new client that signed up for Athena services, regardless of how much time, if any, the existing customer spent speaking to or meeting with the new client.

Finally, Athena entered into deals with competing vendors that were discontinuing their EHR technology offerings to refer their clients to Athena. Under such deals, Athena paid remuneration to the competitor based on the value and volume of practices that were successfully converted into Athena clients.

“It is illegal for companies to extend invitations to all-expense-paid sporting, entertainment, and recreational events, and other perk-filled offers to its prospective customers to win business and boost their bottom line through illegal kickback schemes,” said Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division. “Today’s agreement by Athena to pay $18.25 million should send a strong message to anyone thinking about engaging in this type of illegal activity. The FBI will continue to work with our law enforcement partners to do everything in our power to safeguard our government health care programs and the taxpayers picking up the bill.”

The settlement resolves allegations in a lawsuit filed by Geordie Sanborn and a separate lawsuit filed by Cheryl Lovell and William McKusick; both matters are pending in federal court in Boston, Massachusetts. The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The Act allows the government to intervene and take over the action, as it did in these two cases. The whistleblower share to be awarded in connection with the settlement has not been determined.

This matter is being handled by the Civil Division’s Commercial Litigation Branch (Fraud Section) and the U.S. Attorney’s Office for the District of Massachusetts, with assistance from the U.S. Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; the Department of Veterans Affairs, Office of Inspector General; and the U.S. Postal Service, Office of Inspector General.

The two lawsuits are captioned United States ex rel. Sanborn. v. athenahealth, Inc., No. 17-cv-12125 (D. Mass.) and United States ex rel. Lovell and McKusick v. athenahealth, Inc., No. 17-cv-12543 (D. Mass.). The claims resolved by the settlement are allegations only and there has been no determination of liability.

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132a Not Released by Civil Settlement Without WCAB Approval

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Edward Vaca pursued both a tort claim, and a number of workers’ compensation claims against his employer, Vons, including a 132a claim for discrimination.

A 132a was filed in each WC case, and was the subject of a Finding and Award in 2015, which stated that damages for the Section 132a claim would be informally adjusted by the parties with jurisdiction reserved. A Finding of violation of Labor Code section 132a was affirmed by Opinion on Decision After Reconsideration in 2019,

While the workers’ compensation claim was pending, Vons and Varga entered into a Confidential Settlement Agreement and General Release of Claims in the civil action in 2016.

The Settlement Agreement contained language that Vons claims provided for the disposition of the 132a claim, although the Settlement Agreement did not specifically provide for that in a clear and unambiguous way.

For example, Paragraph 5 provided that “Plaintiff shall withdraw any and all pending charges and complaints of discrimination filed against any of the defendants in the Action with any governmental agency that are open at the time of Plaintiff’s execution of this Agreement.”

Paragraph 9 provided that “The Claims released herein include . . . any Claims in any way arising out of or based upon Plaintiff’s employment with Defendant, or the termination thereof, . . . Plaintiff will not institute, . . . and/or continue any legal, administrative or grievance proceeding against the Releasees . . .”

Paragraph 13 provided that “It is expressly understood and agreed that Plaintiff is not eligible for reinstatement . . . Plaintiff will neither seek nor accept any such employment . . .”

However, In Paragraph A of Page 1, provided that the “Action’ that is the subject of the entire agreement is defined as Case BC589377.” This civil case is not the same action as the workers’ compensation claims bearing case numbers ADJ9770846 et al.

On February 11, 2020, the matter proceeded to trial in the workers’ compensation case of the issue of whether “applicant’s 132a claim and accompanying remedies are barred, estopped or precluded or otherwise invalid as a matter of law.” The WCJ concluded that it was not released. Reconsideration was denied in the panel decision of Varga v Vons. The Court of Appeal recently denied a Petition for Writ of Review, and the decision is now final.

Labor Code 5000(a) plainly prohibits contracts such as releases that purport to exempt employers from liability for workers’ compensation benefits without without WCAB approval. “We are therefore unable to discern statutory support for defendant’s position.”

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Last Physician Sentenced in $154M Surgical Fraud Case

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Dr. Mario Rosenberg, a 73-year-old physician who lives in Beverly Hills, is the last of 19 defendants in a $154 million medical insurance fraud scheme dating back more than two decades – was sentenced Friday to three years of formal probation, 1,000 hours of community service and ordered to pay $2.9 million in restitution.

He is one of the doctors accused of performing more than 1,000 unneeded surgeries on healthy patients. Prosecutors alleged that 2,841 people across the country were recruited to undergo unnecessary and dangerous surgeries in exchange for access to lower cost cosmetic surgery. Authorities once described this as the largest medical fraud prosecution in the United States, dubbed the “Unity Outpatient Surgery Center scheme,” referring to the Unity Outpatient Surgery Center in Buena Park, California.

At the time, Rosenberg was on staff at Cedars-Sinai Medical Center and affiliated with Herbalife. He primarily performed colonoscopies and esophagogastroduodenoscopy (EGDs). Rosenberg was accused of performing 646 procedures on 554 patients, which resulted in the fraudulent billing to insurance companies of more than $9 million, for which Unity was paid more than $2.3 million. Of Rosenberg’s patients, 84 percent were referred by cappers who were also charged.

Rosenberg entered a no contest plea in the case on Jan. 24, 2014. Attorneys have been working since the no contest plea to assess the gastroenterologist’s assets and determine how much he should pay in restitution.

The Unity cappers, or recruiters, targeted employees from businesses in more than 32 states and covered by PPO insurance plans, as pre-approval from the insurance company would not be a requirement for surgery.

More than 1,600 employers were affected by employees who were involved in this scheme. The cappers arranged transportation for the patients, scheduled the surgeries, and coached the healthy patients on what to say. In exchange for undergoing surgery, the “patients” would receive a cash payment, usually between $300 and $1,000 per surgery, or credit toward a free or discounted cosmetic surgery.

Many of the surgeries were performed on Saturdays and Sundays by the doctors. Often, they operated on members of the same household on the same day. The doctors are accused of ignoring basic medical protocols such as: 1) patients receiving surgeries on consecutive days instead of while under one anesthesia; 2) doctors not meeting the patients prior to operating; 3) doctors not following up with patients after the procedure was completed; and 4) doctors not obtaining necessary medical information.

In a rare move, Fourth District Appellate Court Justice Thomas Goethals, who presided over the no contest plea and the trials and plea bargains of the other defendants, returned to Orange County Superior Court to hand down Rosenberg’s punishment.

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January 25, 2021 – 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: Supreme Court Rules Dynamax Decision Applies Retroactively. Lowe’s Faces Class Action for Sick Pay Miscalculation. 5,000 California Prison Inmates Filed Fraudulent Unemployment Claims. Fresno Construction Worker Charged With Comp Fraud. Former Firefighter to Serve 90 Days and Pay $130K for Comp Fraud. NCCI Economic Briefing Shows Slow Comp Premium Growth. DWC Reviews IBR Performance of 2018-2019. Gallagher Acquires Atlas General Insurance Services in California.

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CA DOJ Launches Worker Rights and Fair Labor Section

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The California Attorney General announced the creation of the Worker Rights and Fair Labor Section within the California Department of Justice’s Division of Public Rights.

The Section initially operated as a bureau within the Civil Rights Enforcement Section. The establishment of the unit as a new Section will expand DOJ’s capacity to protect the health, safety, and rights of workers.

Expanding on and elevating DOJ’s existing efforts, the Section will, among other things, help bring increased focus and expertise to implement policy and protect against workplace issues – including in the underground economy.

One target will be wage theft, by working with partner agencies to help address systemic deficiencies that result in workers losing out on the wages they are due, including in instances where businesses fail to pay overtime or allow for meal and rest breaks;

Another will be Health and Safety violations, by stepping up DOJ’s ability to tackle current and emerging trends such as those brought on by the coronavirus; and

Also employee misclassification, by protecting workers from being inappropriately classified as independent contractors, which can allow companies to evade legal obligations such as minimum wage, sick leave, and overtime.

In December of 2020, the Attorney General’s Office took action in court against Amazon as part of an ongoing investigation into the company’s coronavirus policies and protocols.

In November of 2020, the Attorney General secured a court decision protecting the rights of more than half a million healthcare workers in California’s In-Home Supportive Services program.

In October of 2020, the Attorney General secured an appellate court decision against Uber and Lyft as part of an ongoing case involving employee classification in the state.

In 2019, the Attorney General – alongside the California Labor Commissioner’s Office – filed criminal charges against the operators of an alleged illegal garment shop licensing scheme.

The AG also secured settlements with four major fast food companies to end the use of “no-poach policies” that harm workers by making it more difficult to seek better pay and benefits at competing franchises.

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