The Division of Workers’ Compensation has posted the 2017 ethics advisory committee’s annual report. The workers’ compensation ethics advisory committee is a state committee independent from the DWC, that is charged with reviewing and monitoring complaints of misconduct filed against workers’ compensation administrative law judges.

As civil servants, workers’ compensation administrative law judges (WCALJs or judges) are not subject to review by the California Commission on Judicial Performance, the agency responsible for investigating misconduct complaints against supreme, superior, and appellate court judges. Instead, it is the EAC that monitors and reviews complaints of judicial misconduct filed against WCALJs.

Of the 34 complaints reviewed by the EAC, misconduct was found in five of them. Many of the complaints involved allegations of rude, abrasive or other inappropriate conduct by judges in courtrooms, mostly toward attorneys, at at times toward claimants.

For example, in one case, an applicant claimed the WCJ showed racial prejudice because “as soon as the judge saw complainant’s spouse, before asking any other questions, the judge asked, ‘Do we need an interpreter?’ Complainant’s spouse felt insulted by being regarded as a non-English-speaking person based solely upon the spouse’s appearance and perceived race.”

The same claimant had further problems during trial. ” At several points during the trial, the judge stopped the proceedings and requested to go off the record. Complainant complained that, with arms flailing, the judge used a loud voice directed at complainant and complainant’s attorney.”

In this case, the EAC identified violations of Canons 2A, 3B(7) and 3B(8) of the Code of Judicial Ethics and recommended to the CJ that appropriate action be taken.

In another illustrative case an applicant’s attorney, complained that the judge was prejudiced against the attorney’s firm. The judge would scold the applicant’s attorney in front of the applicant and the defense. The judge’s diatribes concerned what the judge thought the applicant’s firm had done incorrectly in the past. Similar examples were given in other specific litigated cases before the same judge.

In this case, the committee also identified violations of the Code of Judicial Ethics and recommended to the CJ that appropriate action be taken.

Many of the complaints found no ethical violations. Typically, they were based upon complaints about the merits of the claim, asserting the WCJ made the wrong decision. 29 cases were reviewed where no violation was found.

This summer, Atlas General Insurance Services, LLC, added an exclusive new workers’ compensation insurance program with Accredited Surety & Casualty Company, Inc., a Florida-headquartered insurance company.

Accredited recently expanded its insurance offerings to include workers’ compensation and selected Atlas as its exclusive program administrator nationwide.

California is the first state where the program is available, and Atlas is actively working with Accredited to expand this program nationwide.

And now, Atlas announced its new workers’ compensation program for the cannabis industry in California.

This exclusive program with Accredited Surety and Casualty Co. can accommodate work comp risks involved in all aspects of the cannabis industry – including growers, extractors, analytical labs, medicine manufacturers, food & beverage products manufacturing, packaging, warehousing & distribution, transportation and dispensaries.

According to Bill Trzos, CEO of Atlas, “Atlas has been studying the cannabis industry well before it became legalized in California,” said Trzos “through our research we recognized the opportunity to be proactive in entering the cannabis market and are excited to be one of a few work comp platforms in the state.”

While the program is only available in California now, Atlas will be opening this program in other states that have legalized cannabis.

Atlas heard the call to action from Insurance Commissioner Dave Jones last year and responded by developing a comprehensive workers’ compensation program to serve the industry.

“Cannabis businesses should have insurance coverage available to them just like any other California business,” said Insurance Commissioner Dave Jones. “As Insurance Commissioner, my mission is insurance protection for all Californians, which includes insurance for California’s legalized cannabis businesses and its workers.

This new program from Atlas is a crucial step in the right direction for this evolving industry. I encourage more insurance companies to offer cannabis business insurance products with the department to meet the needs of this emerging market.”

In 2003, defendants Jose Luis Alvarez, and Kim Marugg, (at the time known as Kim Alvarez) pled guilty to charges they had defrauded the State Compensation Insurance Fund. At the time, Alvarez and Marugg were husband and wife and operated Alverez Construction Company. Some of the workers were paid in cash by an intermediary and as a result SCIF was not paid workers’ compensation premium.

Marugg later claimed that, although she “was not guilty of the charges and . . . insistent on moving forward to trial,” she nonetheless pled guilty in December 2003 because the plea agreement “sounded like a sound financial decision.”

Marugg and Alvarez separated in February 2003; and began dissolution of marriage proceedings in 2004. She then married the prosecutor in her criminal case after she and the prosecutor began a personal relationship on some undisclosed date. The prosecutor died in October 2013, while they were still married.

Marugg testified she had “since learned” that, at time she pled guilty in 2003, her criminal defense counsel was colluding with Jose Luis Alvarez’s family law attorney. and her criminal conviction had an adverse effect on her community property rights.

In January 2007, Marugg started her court battled and filed what she calls a “Petition for Expungement” of the conviction, seeking relief under Penal Code sections 1203.4 and 1203.4a which was taken off calendar and not resolved.

In November 2009, Marugg discovered another woman who previously had been prosecuted by the same deputy district attorney, and with whom the prosecutor later engaged in a romantic relationship. This other woman’s story was “almost identical” to Marugg’s.

This woman complained to the district attorney’s office, and at some point during the August – October 2010 time period, the office commenced an internal affairs investigation of the prosecutor. During the investigation, Marugg learned that the prosecutor had engaged in “personal” and “romantic” relationships with other defendants he had prosecuted, as well as one of the principal witnesses, the SCIF investigator, whom the prosecutor had presented to the grand jury in May 2002 in his effort to indict Defendants.

After the investigation, in May 2011, the superior court ruled in favor of this other woman, finding in her case “that there have been substantial irregularities in the prosecution of this case, of which the court was unaware until this petition, that undermine the lawfulness of defendant’s conviction.”

In September 2011, at Marugg’s request, the prosecuting deputy district attorney (who, by this time, was Marugg’s husband) provided Marugg with a declaration that she submitted to the State Bar of California as part of a complaint she filed against the defense attorney who represented her at the time she pled guilty and was sentenced in 2003. In part, the prosecutor testified that, as early as 2002, he knew that “[Marugg] was not the guilty party.”

A year later, in September 2012, Marugg wrote a letter to the district attorney, asking that the People stipulate to allow Marugg to withdraw her plea. The People declined Marugg’s request in an October 2012 letter.

After gaining information in 2015 regarding what Marugg considered to be criminal behavior of one of the SCIF investigators who testified before the grand jury in May 2002, Marugg requested and obtained copies of all of the state’s records from its investigation into the activities of Alvarez Construction that led to the grand jury evidence, the indictment, and the convictions. She received the initial documents in July 2015 and retained a forensic accounting firm in November 2015.

In 2016, Marugg filed petitions for writs of error coram nobis and section 1473.7 motions to vacate her convictions. Much of Marugg’s January 2017 testimony attempts to impeach evidence presented to the grand jury in May 2002. Marugg denied portions of witnesses’ grand jury testimony, presented evidence that she contended contradicted grand jury evidence, and identified facts that she believed discredited grand jury witnesses.

Based on what she found, Marugg testified that her criminal defense attorney “completely failed to identify and present evidence that exonerated [her] as well as failed to challenge by way of motions false evidence that was presented to the Grand Jury and challenge the prosecutor’s failure to present exonerating evidence to the Grand Jury.”

The trial court denied the requested relief. The Court of Appeal gave her a second chance in the unpublished case of People v Marugg.

The major problem for Marugg was her failure to raise her concerns earlier, and/or to exercise due diligence on time. Much of what she argues in 2017 was know much earlier, and should have been known with a due diligence investigation, both prerequisites to granting her relief.

Nonetheless, the trial court procedurally failed to hold a hearing as statutorily requiredand timely requested by Marugg before ruling on Marugg’s section 1473.7 motion. The case was remanded for that purpose.

Compounded medications are custom-made medications that traditionally were formulated by pharmacies for specific patients. By 2012, the practice had mushroomed, with some pharmacies selling thousands of doses of regularly used mixtures for physicians to keep for future use.

Now utilization and costs associated with compound medications fell significantly for both managed and unmanaged claims in 2017. This welcome news is attributable to payers continuing to leverage processes that identify whether a compound is necessary and only allowing those prescriptions that appear to provide medical benefit. In addition, most states have either been considering or have already implemented formularies in part to short-circuit exorbitant compound use.

Coventry reports that managed compound costs have steadily declined for three consecutive years and fell by more than half between 2016 and 2017.

The decreases were notable in California, New York, Pennsylvania, and Texas. Each of these states saw the percentage of all claims using compounds drop by more than half for the last two years.

Unmanaged compound costs have likewise posted sharp declines. Spending has now reached the lowest level in seven years.

The same large states that logged decreases in managed compound costs also registered sizable drops in unmanaged compound costs. Eight of the top 10 states experienced at least 40% reductions in the number of injured workers using compounds. These states were Arizona, California, Connecticut, Georgia, Illinois, New York, Pennsylvania, and Texas.

More payers, prescribers and injured workers have begun to question the need for a compound over a commercially available formulation. The workers’ compensation industry has for several years highlighted the limited clinical appropriateness of compounds, their high cost and the continued instances of civil and criminal investigations into compounding.

And the Food and Drug Administration is poised to limit large scale compounding.

In 2012 there was a fungal meningitis outbreak caused by tainted steroids made by a compounding pharmacy. That prompted Congress in 2013 to pass a law aimed at bringing more compounding pharmacies, traditionally overseen by states, under FDA oversight. The law, the Drug Quality and Security Act, created a category of “outsourcing facilities” that could register with the FDA and sell products in bulk while following federal manufacturing standards.

Under this new law, the FDA on Monday proposed excluding  three substances from a list of ingredients that could be used to manufacture compounded medications in bulk for use by hospitals and doctors’ offices. The action was the first time the regulator has moved to exclude any substance from a list of ingredients that may be used to produce in bulk compounded medications that do not need to go through the agency’s safety approval process.