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WCAB Denied Commutation of 76% PD Award to Pay Bills

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Chester Taylor worked as a kosher food manager/inmate laborer for State of California, Department of Corrections Inmate Claims when he sustained an industrial injury to his bilateral arms on January 20, 2017.

The injury was resolved through a Stipulated Findings & Award on April 6, 2024, which provided him with a 76% permanent disability rating. The defendant, State Compensation Insurance Fund (SCIF), paid permanent disability benefits at a weekly rate of $160.00, totaling $49,406.39 through December 13, 2024.

Mr. Taylor filed a petition to commute his remaining permanent disability benefits into a lump sum, covering the period from December 13, 2024, for the remainder of his life expectancy.

At trial, he testified that his monthly income (from Social Security, workers’ compensation, and SNAP benefits) totaled $2,428.00, while his expenses (rent, food, medical copays, and dental expenses) amounted to $1,251.00. He claimed to be in arrears by $300.00 to $600.00 per month, borrowing approximately $600.00 per week from his daughter. However, he provided no documentary evidence to substantiate these figures.

The presiding Workers’ Compensation Administrative Law Judge (PWCJ) denied Mr. Taylor’s petition, finding that he failed to meet the burden of proof under Labor Code § 5100(a). The lack of documentary evidence supporting his financial claims and the unclear calculations of his expenses were critical factors.

The WCAB denied reconsideration in the panel decision of Chester Taylor vs. State of California, Department of Corrections Inmate Claims – ADJ13319691 (April 2025).

Under Labor Code § 5100(a), commutation of benefits is allowed if it is “necessary for the protection of the person entitled thereto, or for the best interest of the applicant.” Additionally, § 5100(b) requires that commutation must avoid inequity and not cause undue expense or hardship to the applicant.

The Workers’ Compensation Appeals Board (WCAB) has discretion to grant or deny commutation, and the applicant bears the burden of proving the necessity of commutation. (Hulse v. Workers’ Comp. Appeals Bd. (1976) 63 Cal.App.3d 221, 226 [41 Cal.Comp.Cases 691].)

The PWCJ also noted that commuting the benefits could potentially cause undue hardship, as Mr. Taylor’s current income, including permanent disability payments, was insufficient to cover his expenses. Commuting the benefits would reduce or eliminate this income stream, potentially exacerbating his financial difficulties.

The WCAB, in its Opinion and Order dated April 8, 2025, adopted and incorporated the PWCJ’s report and denied the Petition for Reconsideration, affirming the PWCJ’sdenial of commutation.

The WCAB noted that Mr. Taylor remains free to file a new petition for commutation if he can provide adequate evidence meeting the requirements of Labor Code § 5100(a) and (b).

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Insurance Agent and Son Charged With $1.4M Commission Fraud

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The California Department of Insurance announced that five individuals, including former insurance agents, have been charged in a large-scale insurance fraud scheme involving misrepresented life insurance policies that resulted in fraudulent commissions totaling over $1.4 million.

Daniel Jon Carpenter, 62, of Morgan Hill, was arraigned on felony charges of insurance fraud, grand theft, and identity theft. Carpenter, a former insurance agent, allegedly orchestrated the fraudulent scheme alongside four co-defendants.

– – Natorae Marie Wettstein, 56, of Rancho Mirage, was arraigned on felony charges of insurance fraud and grand theft.
– – Blake John Carpenter, 27, of San Jose, the son of Daniel Jon Carpenter, was arraigned on felony charges of insurance fraud and grand theft.
– – Noah Maxwell Kuh, 26, of San Jose, was arraigned on a felony charge of insurance fraud.
– – Alejandro Carlos, 25, of Gilroy, remains a fugitive at large and is wanted on felony charges of insurance fraud and grand theft.

The Department of Insurance launched its investigation after receiving a complaint from a consumer alleging forgery and insurance fraud linked to life insurance policies sold by Daniel Carpenter.

The investigation revealed that Carpenter, in conjunction with Wettstein, Blake Carpenter, Carlos, and Kuh, misrepresented life insurance policy terms to California consumers while falsifying agent information on policy applications submitted to multiple insurance companies. This deceptive scheme allowed them to collect unearned commissions from four insurance carriers between 2017 and 2023.

In total, the defendants fraudulently obtained over $1.4 million in commissions by manipulating over $2 million in insurance premiums from 28 California consumers. The California Department of Insurance has successfully assisted in recovering over $2 million for the affected victims.

Carpenter, Wettstein, Blake Carpenter, and Kuh are scheduled to return to court on April 25, 2025. Anyone with information on Carlos’ whereabouts is asked to contact the Department at 707-751-2000. The Santa Clara County District Attorney’s Office is prosecuting the case.

According to Santa Clara County Superior Court records one client, Alex Lowry, sued Carpenter and Wettstein in 2021, alleging Carpenter forged his signature to purchase two $7.5 million life insurance policies, with Wettstein listed as the agent due to Carpenter’s lack of authorization.

Wettstein claimed Lowry was repaid $190,000 in premiums and knowingly held the policies, while Carpenter denied the allegations but offered to settle. Lowry dropped the case in August 2024 for unclear reasons.

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Exclusive Remedy Applies if Contracting for 52+ Hour Job

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Hugo Osoy hired Pablo Arredondo Padron in 2019 to install two skylights in Osoy’s home, a project expected to take 10–12 days (80–96 hours). Padron, who lacked a contractor’s license, agreed to the job for $4,000.

On July 31, 2019, while working, Padron fell from a ladder held by Osoy, suffering serious injuries after less than 52 hours of work. Padron lost consciousness and could not recall the cause of the fall. He was unable to continue the project and was paid $1,000 for his work.

On May 21, 2020, Padron sued Osoy in Los Angeles Superior Court for negligence, premises liability, and labor code violations, alleging Osoy provided a defective ladder and failed to ensure safety.

Osoy moved for summary judgment, arguing workers’ compensation was Padron’s exclusive remedy, as he had a homeowners’ insurance policy with workers’ compensation coverage from the Interinsurance Exchange of the Automobile Club (AAA)

It was undisputed that Padron and Osoy contracted for Padron to perform residential work exceeding 52 hours (specifically, 80–96 hours for the skylight installation). The trial court concluded that the exclusion in Labor Code section 3352 (a)(8)(A) which applies to employment “was, or was contracted to be, for less than 52 hours” – did not apply because the contracted duration surpassed the 52-hour threshold, – regardless of Padron’s injury occurring after fewer hours.The trial court granted summary judgment for Osoy, and Padron appealed.

The California Court of Appeal affirmed a summary judgment in favor of defendant Hugo Osoy in the published case of Padron v. Osoy – B333512 (April 2025) – holding that plaintiff Pablo Padron’s exclusive remedy for injuries sustained while working on Osoy’s home was through workers’ compensation, not a civil lawsuit.

The central dispute involved interpreting Labor Code section 3352 (a)(8)(A), which excludes workers from workers’ compensation coverage if their employment “was, or was contracted to be, for less than 52 hours” in the 90 days before the injury. Padron argued that because he worked less than 52 hours before his injury, he was excluded from workers’ compensation and could sue in court.

The Court of Appeal disagreed. “When employment is contracted to be for more than 52 hours, the exclusion in section 3352(a)(8)(A) does not turn on the fortuity of how many hours into that employment a worker is when they are injured. Rather, section 3352(a)(8)(A) excludes from workers’ compensation (1) employment contracted to be for less than 52 hours, and (2) employment for less than 52 hours where no time period was contracted for.”

“Because Padron contracted to do more than 52 hours of work, section 3352(a)(8)(A) does not exclude him from workers’ compensation coverage regardless of his injury occurring in less than 52 hours of work.”

Padron also contends the trial court erred in granting summary judgment because there is a triable issue whether Osoy should be estopped from relying on the exclusivity defense. As the factual predicate for this estoppel claim, Padron relies on evidence that Osoy and his insurer, a homeowners’ insurance policy from the Interinsurance Exchange of the Automobile Club (AAA), which included workers’ compensation coverage, delayed informing Padron that he was entitled to workers’ compensation benefits and providing him with a claim form.

“Despite raising a claim of estoppel, Padron did not adduce any evidence to show that Osoy or AAA made any factual misrepresentations regarding Padron’s eligibility for workers’ compensation coverage. Even if Osoy and AAA remained silent as to whether Padron was eligible for workers’ compensation benefits, such inaction does not show a triable issue of affirmative conduct intended to convey facts to Padron regarding potential workers’ compensation coverage.”

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Accounting Chief at Girardi Keese Law Firm to Serve 10 Years

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The former longtime head of the accounting department at the now-shuttered downtown Los Angeles plaintiffs’ personal injury law firm Girardi Keese was sentenced to 121 months in federal prison for enabling the embezzlement of millions of dollars from the firm’s injured clients and for embezzling money from the law firm itself.

Christopher Kazuo Kamon, 51, formerly of Encino and Palos Verdes and who was residing in The Bahamas at the time of his November 2022 arrest, was sentenced by United States District Judge Josephine L. Staton. Judge Staton also ordered Kamon to pay $8,903,324 in restitution.

At today’s hearing, Judge Staton remarked on Kamon’s assistance with the ongoing fraud against Girardi Keese clients, noting he helped build a “web of deceit and manipulation.”

Kamon pleaded guilty in October 2024 to two counts of wire fraud.

From 2004 until December 2020, Kamon was the head of the accounting department at Girardi Keese, a plaintiffs’ personal injury law firm based in downtown Los Angeles. In this position, Kamon worked closely with co-defendant Thomas Vincent Girardi, 85, formerly a resident of Pasadena but who now resides in Seal Beach, as well as other senior lawyers at the law firm.

In December 2020, Girardi Keese’s creditors forced the once-prominent law firm into bankruptcy proceedings. The law firm dissolved in January 2021 and the State Bar of California disbarred Girardi in July 2022. On August 27, a federal jury in Los Angeles found Girardi guilty of four counts of wire fraud. Girardi’s sentencing hearing is expected to occur in the coming months.

In addition to supervising the law firm’s accounting department, Kamon oversaw facilitating payment of the law firm’s expenses. Kamon had a duty to keep accurate books and records of Girardi Keese, including accounting of money held in its attorney-client trust accounts. Typically, Girardi determined and directed which clients would be paid, how much they would be paid, when they would be paid, and signed all outgoing checks to clients. Kamon had signatory authority on additional Girardi Keese operating accounts.

From at least 2010 until December 2020, Girardi and Kamon schemed to defraud Girardi Keese clients out of their settlement money, using the misappropriated funds to pay the law firm’s payroll, the law firm’s credit card bills, and to pay Girardi and Kamon’s personal expenses.

Specifically, one Girardi Keese victim-client suffered severe burns all over his body when a natural gas pipeline exploded in San Bruno, California in September 2010. Girardi negotiated a $53 million settlement of the case without the client’s prior approval and told the client the case settled for just over $7 million. Per the terms of the settlement, $25 million was invested into an annuity. The remaining $28 million was wired into a Girardi Keese client trust account in January 2013. Girardi, aided and abetted by Kamon, misappropriated, and embezzled that client’s settlement money and used the funds to pay other Girardi Keese expenses and liabilities unrelated to this client, including payments to other law firm clients whose own settlement funds previously had been misappropriated by Girardi and others.

To prevent the victim from discovering Girardi’s embezzlement, Girardi lied to the client by saying the funds had been transferred into a separate interest-bearing account. In fact, no such transfers had been made and no such interest-bearing account containing these funds existed.

Girardi and Kamon sent lulling payments to the victim as “interest payments” deriving from the purported interest-bearing account. In July 2019, they sent the victim a $2.5 million check, purportedly as disbursement of the victim’s settlement funds. In fact, Girardi and Kamon knew these settlement proceeds belonged to other Girardi Keese clients. Girardi already had spent the victim’s settlement funds through disbursements unrelated to the victim’s case.

In a separate criminal case, Kamon admitted to running a years-long scheme in which he embezzled Girardi Keese funds for his personal enrichment. From at least 2013 to December 2020, Kamon utilized co-schemers to pose as “vendors” who were providing goods and services to the law firm. Kamon caused the supposed vendors to issue fraudulent invoices to Girardi Keese for goods and services that they purportedly provided to the law firm.

Kamon caused Girardi Keese to pay the amounts due on the fraudulent invoices. In fact, the law firm was paying the “vendors” for Kamon’s personal benefit, including for construction projects at his homes in Palos Verdes and Encino.

According to evidence presented at the recent trial of Tom Girardi, part of Kamon’s scheme involved payments to a female companion amounting to hundreds of thousands of dollars, including a monthly stipend of $20,000, out of the Girardi Keese operating accounts despite the woman having no employment relationship with Girardi Keese.

Kamon – along with Girardi and David R. Lira, Girardi’s son-in-law and a former Girardi Keese lawyer – also faces federal fraud charges in Chicago. Trial in that case is scheduled for July 14.

IRS Criminal Investigation and the FBI investigated this matter.

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Labor Alliance Officers Sentenced For WC and Pension Fraud

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Fresno residents Marcus Asay, 69, and Antonio Gastelum, 53, were sentenced to five years in prison and two years in prison, respectively, for committing a long-running pension fraud scheme through their company, Agricultural Contracting Services Association dba American Labor Alliance. ALA also received a corporate fine of $2.5 million. Asay and ALA were each ordered to pay $69,250 in restitution.

On June 18, 2024, Asay, Gastelum, and ALA were convicted of the pension fraud scheme following a five-week jury trial. Asay and ALA were also convicted of committing a worker’s compensation fraud scheme, a hardship exemption fraud scheme, and money laundering. The hardship exemption fraud scheme involved a supposed exemption from the Affordable Care Act’s requirement that people obtain health insurance or pay a significant shared responsibility payment when they file their taxes.

According to court documents and evidence presented at trial, Asay was the founder and chairman of ALA, and Gastelum was the company’s Chief Operating Officer, Chief Financial Officer, and Compliance Officer. From 2011 through 2019, the defendants offered three sham products: retirement plan, worker’s compensation coverage, and hardship exemption.

For the worker’s compensation fraud scheme, Asay and ALA falsely represented that national insurers backed the worker’s compensation coverage that the company offered in several states, including California. Asay and ALA did so by listing the national insurers on the certificates of insurance and policy declarations that the company issued to customers. The accuracy of the certificates of insurance and policy declarations was important to the customers because they needed to present these items to their own customers and regulators as proof of having worker’s compensation coverage in order to continue doing business. When government authorities began investigating the workers’ compensation fraud scheme, Asay and ALA sent letters to customers telling them not to cooperate. The worker’s compensation fraud scheme generated $2.25 million in premiums.

For the pension fraud scheme, Asay, Gastelum, and ALA falsely represented to more than 3,000 people that they would protect and invest their retirement money through a 401(k) Plan when, in fact, they used the money for improper business and personal expenses. The improper expenses included restaurants, travel, credit cards, rare coins, transfers to Asay’s personal retirement account, online companion websites, and rent for Asay’s lakefront mansion in Fresno. Asay, Gastelum, and ALA then covered up the fact that the retirement money was gone by taking money the company received from the worker’s compensation fraud scheme and holding those funds out as pension funds. The loss caused by the pension fraud scheme was more than $620,000.

Asay’s money laundering conviction resulted from this scheme because he moved pension funds through multiple bank accounts to conceal the source of the funds before using them for improper expenses.

For the hardship exemption fraud scheme, Asay and ALA falsely represented that for a few hundred dollars they could provide people with an exemption that would protect them from the Affordable Care Act’s shared responsibility payment for not having health insurance when, in fact, only government agencies could issue such exemptions. Moreover, the exemptions were free to those who qualified.

Asay and Gastelum received enhanced sentences because they both testified in their own defense at trial and were found to have perjured themselves.

This case was the product of an investigation by the U.S. Department of Labor’s Employee Benefits Security Administration and Office of Labor-Management Standards, Federal Bureau of Investigation, the IRS Criminal Investigation, and the Social Security Administration Office of Inspector General. Assistant U.S. Attorneys Michael Tierney, Joseph Barton, and Stephanie Stokman prosecuted the case.

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Community Colleges Face Massive “Pell Runner” Financial Aid Fraud

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California’s community colleges are reporting a rise in financial aid fraud. In January, suspected bots represented 1 in 4 college applicants. Schools have given away millions to these scams, and college officials say fraudsters are getting smarter with the help of AI.

They’re called “Pell runners.” “Pell Running” in this context refers to a type of financial aid fraud where individuals enroll in colleges, apply for federal Pell Grants (intended for low-income students to cover education costs), collect the funds – up to $7,395 per year as of recent award years – and then drop out without completing courses. These individuals, called “Pell Runners,” exploit the system for personal profit, as Pell Grants don’t require repayment under normal circumstances

Estimates suggest Pell Grant fraud costs taxpayers over $1 billion annually, with some experts citing 3.6% of disbursements as fraudulent. In 2003, the U.S. General Accounting Office (GAO) estimated that Pell grant fraud accounted for about $300 million in grants per year – about 3 percent of total money handed out. A decade later, the program has more than tripled in scope (roughly doubling between 2008 and 2010), and fraud seems to be as bad as ever.

One expert, Mark Kantrowitz of FinAid.org, believes that Pell grant fraud still runs at about 3.6 percent or more than $1 billion a year. The Obama administration reported that “improper payments” – money distributed erroneously due either to fraud or mistakes – to Pell recipients totaled 2.7 percent of disbursements in 2011. Kantrowitz’s higher number is based on the number of students who receive grants but never obtain degrees. Considering that the Education Department doesn’t have the manpower to track down all fraudsters, Kantrowitz’s estimate may be closer to reality.

Since fall 2021, California’s community colleges have given more than $5 million to Pell runners, according to monthly reports they sent to the California Community Colleges Chancellor’s Office. Colleges also report they’ve given nearly $1.5 million in state and local aid to these scammers. The chancellor’s office began requiring the state’s 116 community colleges to submit these reports three years ago, after fraud cases surged.

The California Student Aid Commission told the Los Angeles Times it had identified more than 65,000 applications for aid from purported community college students that appear to be fake, lending credence to the idea that scammers are seeking to get their hands on state grants.

A 2024 IntelliBoard article estimates 460,000 fraudulent applications in California alone, clogging enrollment and wasting funds. Nationally, fraud spiked post-COVID due to online learning and stimulus funds – $40 billion in emergency aid was a magnet for scammers. A 2011 Chronicle of Higher Education piece (older but relevant) notes the Education Department investigating 74 fraud rings back then, suggesting this isn’t new, just evolved. Community colleges remain prime targets due to low tuition, leaving more grant money for fraudsters to pocket.

There are two primary ways in federal student aid is abused. One is the Pell runner described above. Students obtain grants, receiving directly whatever money is left over after tuition and fees are paid. Then they drop out of school without finishing any courses.

Federal law makes this scam possible. Grantees are allowed to attend school for 12 semesters (six years) in total before they lose eligibility for more money. There are no academic requirements to obtain a Pell grant; the only requirements are based on income and the cost of attending school. And there is no graduation requirement.

The other form of student aid abuse is more complex. It tends to be aimed at online education and is designed to make off with Pell grants and federal student loans as well. Criminals form rings, in which the leader recruits multiple “straw students” who apply for the grants and loans, then shares the haul with them.

Such fraud has lately become easier to commit due to the rise of online education, since students don’t even have to appear in person. In 2011, the Education Department reported a “dramatic” increase in financial aid scams involving online education, opening 100 investigations in the first 8 months of 2011, compared to just 16 investigations in 2005.  The report found that “straw students drop or withdraw from programs after they receive their credit balance payments and then kick back a portion of the funds to the ringleader and, if applicable, a recruiter.”

According to the FBI website, Pell Grant fraud is widespread. Technological advances and changes to the administration of higher education present new opportunities for criminals and greater challenges for law enforcement. Federal law is reactive, but colleges and universities must be proactive by extending orientation periods, mandating in-person orientations, assigning more coursework during the first weeks of class, reporting nonattending students, and delaying or compartmentalizing financial aid disbursements to help eliminate this white-collar crime.

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April 7, 2025 – 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: Cigna Faces Class Action for Use of PxDx Algorithm to Deny Claims. Legal Aid Lawsuit Forces EDD to Fix Broken UI Notification System. UIM Arbitration is Not a “Civil Action” Protected by Covid Rules. Old Arbitration Agreements Need Clear Wording After Viking River. After Supreme Ct. Remand, CSU Need Not Reimburse Employees. LA Couple Sentenced for $2.3M WC Premium Fraud. San Diego Plumbing Contractor Sentenced for SCIF Premium Fraud. EDD Employee to Serve 66 Months for Fraud and Bribery Scheme.

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2024 Developments in Orthopedic Surgical and Non-Surgical Care

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According to a new report by the The Kettering Joint Center, 2024 has ushered in a new era for orthopedic research, with the field experiencing a surge of innovation and advancement in the way physicians approach musculoskeletal health.

One of the most significant shifts in orthopedic medicine has been the move towards personalized medicine. Advances in genetic testing and the understanding of individual patient’s unique biology have paved the way for treatments that are tailored to the specific needs of each patient. This personalized approach has the potential to significantly improve the efficacy of treatments and reduce the risk of complications.

Technology has played a pivotal role in shaping these new therapies. From the use of 3D printing to create custom implants to the development of advanced imaging techniques that provide detailed insights into joint health, technology has enabled orthopedic surgeons to perform procedures with unprecedented precision and accuracy. Moreover, the integration of wearable sensors and mobile health applications has allowed for continuous monitoring of patients’ recovery, enabling real-time adjustments to treatment plans.

The field of orthopedics has also seen a rise in the use of regenerative medicine, with stem cell therapy and platelet-rich plasma treatments gaining traction as viable alternatives to traditional surgical interventions. These therapies harness the body’s natural healing mechanisms to repair damaged tissues, offering hope to patients suffering from a range of orthopedic conditions.

Robotic-assisted surgery represents a significant leap forward in orthopedic surgical precision. Surgeons are now able to leverage robotic systems that provide unparalleled accuracy and control during operations. These systems, often guided by pre-operative imaging and real-time intraoperative data, allow for the precise placement of implants and the meticulous execution of bone cuts. The benefits are clear: reduced risk of complications, improved surgical outcomes, and a more predictable recovery process for patients. The integration of robotics has particularly revolutionized joint replacement surgeries, where the alignment and positioning of implants are critical to long-term success.

The advent of 3D printing technology has ushered in an era of personalized orthopedic care. Custom implants, tailored to the exact anatomical specifications of an individual patient, can now be manufactured with remarkable speed and precision. This technology has been particularly beneficial for patients with complex bone deformities or unique anatomical structures, where off-the-shelf implants may not provide the best fit.

Orthopedic care in 2024 has seen a significant shift towards non-surgical therapies that offer alternatives to traditional invasive procedures. These emerging treatments have the potential to revolutionize the way we address musculoskeletal conditions, providing patients with less invasive options that can yield impressive results.

Regenerative medicine has taken center stage in orthopedic non-surgical treatments. Two of the most promising therapies within this field are stem cell therapy and platelet-rich plasma (PRP) injections.

Targeted drug delivery systems have become increasingly sophisticated, allowing for the precise administration of medications directly to the site of injury or disease. This approach minimizes systemic side effects and maximizes the therapeutic impact.

The identification of specific biomarkers has revolutionized the diagnosis of orthopedic conditions. Through advanced laboratory techniques, healthcare professionals can now detect and measure biological indicators of inflammation, tissue damage, and disease progression. This has led to more objective and quantifiable diagnoses, paving the way for targeted therapies.

One of the most anticipated developments is the potential for bioabsorbable implants, which offer the advantage of eliminating the need for a second surgery to remove permanent implants. These implants are designed to break down over time, allowing the body to heal naturally without foreign objects remaining.

Despite the technological advancements, the orthopedic community faces the critical challenge of conducting robust clinical trials to validate new treatments. The high cost and complexity of these trials can be a barrier to progress, and there is a pressing need for more efficient and collaborative approaches to research.

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ASHP Reports AI Helps Pharmacists Streamline Routine Tasks

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The American Society of Health-System Pharmacists (ASHP), is the largest association of pharmacy professionals in the United States, representing 60,000 pharmacists, student pharmacists, and pharmacy technicians in all patient care settings, including hospitals, ambulatory clinics, and health-system community pharmacies. For over 80 years, ASHP has championed innovation in pharmacy practice, advanced education and professional development, and served as a steadfast advocate for members and patients.

According to an ASHP new report this month, Pharmacy informaticists say that although they’re optimistic about the potential for artificial intelligence (AI) to improve patient care, some of the best current uses of the technology target nonclinical tasks that help keep the pharmacy running.

“I think AI is going to revolutionize a lot of the things that we do and free us up to do other things. But it’s just a tool,” said Kendall Gross, manager of the pharmacy informatics team for University of California, San Francisco (UCSF) Health. “What we have really focused on as we build trust is things like administrative tasks, or pain points, where we can leverage AI and then use the human to validate, rather than having the human mine data or do manual transcription work.”

What that means in practice is that a UCSF-developed large language model platform sorts incoming faxes, reads invoices, and identifies documentation and billing opportunities – common administrative tasks that used to be performed manually by the pharmacy staff.

Gross said additional areas under exploration include integrating AI into prior authorizations, prescribing, and dose adjustments and using the technology to make audits more efficient.

“We have a really talented pharmacy analytics team,” she said. “They have been identifying problems and potential use cases and then leveraging this internal large language model tool to build things ourselves to solve problems.”

Arlene Johnstone, pharmacy director for MarinHealth Medical Center, a 327-bed facility in the North Bay region of San Francisco, said her department uses AI technology to manage the facility’s automated dispensing cabinets (ADCs), replacing a tedious manual process for assessing and maintaining stock levels in the cabinets.

“It looks at all the movement, expiration dates, and volumes,” Johnstone said. “It basically is telling us things like, ‘Move that product that’s about to expire over to this other unit where you’re using it more.’ And it’s really improved our efficiency tremendously.” Previously, she said, the pharmacy team spent a lot of time on the phone with nursing “chasing complaints” about ADC stock levels.

“I don’t think we were completely aware that this was really a problem,” Johnstone recalled. “It was just kind of way it was.”

After the ADC vendor’s AI product was fully implemented a couple years ago, the number of complaints declined substantially. The technology also cut by half the number of trips pharmacy and nursing staff made to the ADCs looking for products that weren’t there and then restocking and retrieving those items.

“It really reduced the stress on our staff,” Johnstone said. She added that with the more efficient process in place, the department has redeployed some pharmacy technicians to better support clinical care.

The pharmacy team’s experience with this AI tool underscored the need for human oversight of both the AI system and the people who use it.

Johnstone said that after a smooth initial deployment, the pharmacy suddenly began fielding an influx of complaints about the ADCs. The problem was traced to a system user who was inadvertently silencing some of the AI tool’s alerts – an issue that was readily resolved through training.

The medical center also uses an AI product to strengthen its diversion prevention program. The tool, which was implemented as part of an electronic health record (EHR) system replacement, analyzes all ADC transactions to track the movement of controlled substances throughout the facility.

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Critic of Medi-Cal Crisis Launches SoCal Fraud and Corruption Task Force

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In early 2025, California Governor Gavin Newsom requested a $6.2 billion emergency bailout for Medi-Cal, the state’s Medicaid program, to address a significant funding shortfall. This request was broken into two parts: a $3.4 billion loan from the general fund to cover costs through March 2025, followed by an additional $2.8 billion to sustain the program through June 2025. The shortfall stemmed from higher-than-expected costs, with total Medi-Cal spending projected to reach $188.1 billion for the 2025-26 fiscal year, an 84% increase over six years.

Several factors contributed to the overrun. Enrollment surged beyond projections, partly due to expanded eligibility for undocumented immigrants, which began in 2024 and cost an estimated $9.5 billion in 2024 alone, including $2.8 billion in unanticipated expenses. Other drivers included rising pharmacy costs and higher overall enrollment, partly due to pandemic-era policies that delayed eligibility reviews. About 15 million Californians, roughly half the state’s children, rely on Medi-Cal for healthcare.

The request sparked debate. Republicans, including Assembly Minority Leader James Gallagher and Senator Brian Jones, criticized the expansion to undocumented immigrants, arguing it strained the system and reduced access for legal residents. They called for an audit to investigate cost spikes, with some, like Assemblyman Bill Essayli, claiming the program was insolvent. Democrats, however, defended the expansion as a step toward universal healthcare, with Newsom himself stating it was “partially” responsible for the shortfall but aligning with his belief in universal coverage. He expressed openness to adjustments but ruled out reversing the expansion.

Bill Essayli is now currently serving as the interim United States attorney for the Central District of California, having been appointed to the position in April 2025. He previously served as a member of the California State Assembly from 2022–2025 until his appointment as interim U.S. attorney. On April 8, 2025, as United States Attorney, Essayli announced the formation of the Homelessness Fraud and Corruption Task Force, which will investigate fraud, waste, abuse, and corruption involving funds allocated toward the eradication of homelessness within the seven-county jurisdiction of the Central District of California. The Central District of California is comprised of approximately 20 million residents within the counties of Los Angeles, Orange, Riverside, San Bernardino, San Luis Obispo, Santa Barbara, and Ventura.

This task force will be comprised of federal prosecutors from the Major Frauds Section, the Public Corruption and Civil Rights Section, and the Civil Division’s Civil Fraud Section of the United States Attorney’s Office for the Central District of California. Assisting the U.S. Attorney’s Office will be the FBI, the United States Department of Housing and Urban Development Office of Inspector General (HUD-OIG), and IRS Criminal Investigation.

Despite voter-approved initiatives and billions of dollars spent on tackling this issue, homelessness remains a crisis, especially in Los Angeles County. Last month, a court-ordered audit found that homelessness services provided by the city and county of Los Angeles were “disjointed” and contained “poor data quality and integration” and lacked financial controls to monitor contracts for compliance and performance.

Newsom’s administration noted that tax revenues were holding up, with February 2025 collections $4.6 billion above projections, providing some fiscal cushion. However, the bailout adds pressure to California’s budget, already facing a proposed $7 billion reserve withdrawal for 2025-26. Critics worry about long-term sustainability, especially with potential federal Medicaid cuts looming under the Trump administration. Democrats, like Assemblymember Pilar Schiavo, argued the increased enrollment reflects successful coverage efforts, while Newsom’s team pledged to work with legislative leaders to curb long-term spending without gutting core services.

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