Los Angeles County Superior Court ruled in favor of Allstate Insurance Company and the State of California in a lawsuit topping more than $2.3 million that ends the illegal ownership, kickbacks and fraudulent operation of two medical clinics in Los Angeles.

In its lawsuit, Allstate alleged chiropractor Byum Suk Kim violated the state’s Insurance Frauds Prevention Act when he submitted to Allstate more than 90 claims for treatment of patients at the two clinics that were illegally owned in violation of California’s Moscone Knox Professional Corporation Act. In its complaint, Allstate alleged the two clinics, Wilshire Spinal Disc Clinic, Inc. and Allied Medical, Inc. were held out to the public as legitimate medical clinics incorporated in the State of California, but were actually owned and operated by Byum Suk Kim, D.C. in violation of the Moscone Knox Professional Corporation Act and Business & Professions Code sections 2052, and 2400, commonly referred to as the “corporate practice of medicine bar.” Both clinics are no longer operating.

Judge Terry A. Green agreed with Allstate and ordered Kim to pay $1.8 million in penalties, plus over $582,000 in assessments and fees – a $2.3 million judgment.

“Submitting even one false insurance claim is more than just a bad idea; it’s fraud, and insurance fraud is a crime,” said Allstate’s California Field Senior Vice President Phil Telgenhoff. “Fraud drives up the cost we all pay for insurance by stealing millions of dollars from insurers. This cannot and will not be tolerated in California or anywhere. Allstate will fight fraud to help protect our customers and keep insurance costs down.”

Allstate’s suit identified Kim as a chiropractor owning and operating the two medical clinics. The judgment was based on evidence submitted by Allstate showing Kim engaged in clinical and billing fraud in connection with claims that were submitted to Allstate, which included hundreds of individual violations of California Penal Code section 550. Specifically, the evidence showed Kim was responsible for the preparation of 91 separate reports for patients allegedly treated by him at Wilshire and Allied, each of which contained misrepresentations in violation of section 550 regarding the level and type of treatment purportedly provided.

Additionally, the billing records for the treatment allegedly provided were likewise fraudulent, as the evidence presented by Allstate showed there was illegal “up-coding” for services. The judgment was based on Allstate proving the medical records, narrative reports, and bills of patients purportedly treated by Kim amounted to billing and clinical frauds perpetrated and carried out by Kim on a systematic basis at both Wilshire Spinal Disc Clinic, Inc. and Allied Medical, Inc.

This is the second multimillion-dollar ruling against insurance fraud that Allstate has successfully argued in Los Angeles County Superior Court in 2016.

Uber won a courtroom victory on Wednesday when an appeals court ruled that drivers are subject to individual arbitration in a lawsuit over background checks, a ruling that might help the ride-hailing company fend off another costly class action lawsuit filed by its drivers.

While the Ninth U.S. Circuit Court of Appeals found that agreements signed by two former drivers for the service over background checks “clearly and unmistakably” require legal disputes be settled by a private arbiter, the reasoning may be applied to another class action lawsuit filed by drivers over the company’s employment classifications.

Uber agreed to settle that classification lawsuit earlier this year — an agreement that was rejected by a federal judge last month. Arbitration is a method frequently used by companies for resolving legal conflicts outside of the court system.

Uber Technologies Inc.’s message to the judge who was asked to approve its $100 million settlement with drivers last month was clear: take it or leave it. Bloomberg reports there is an escalating game of courtroom brinkmanship, Uber has hit what was an impasse with U.S. District Judge Edward Chen who presides over the federal class action suit pending in San Francisco, its demand that, as part of the deal, he erase his own order intended to protect the ride-hailing company’s drivers.

And indeed Judge Chen rejected the proposed settlement in August. Uber drivers contended in the lawsuit they should be deemed employees and reimbursed for expenses such as gasoline and vehicle maintenance. Those expenses are now borne by the drivers. The proposed settlement would have kept drivers classified as independent contractors. Several drivers who were part of the class filed objections with the court, particularly because the proposed amount was well below the total potential damages in the case of roughly $850 million.

In an order handed down last August in San Francisco, US District Judge Edward Chen said that, despite changes to its policies that Uber was ready to enact, the proposed settlement on the whole “is not fair, adequate, and reasonable.” Had it been approved, the agreement would have impacted about 385,000 Uber drivers California and Massachusetts involved in the class-action suit.

The U.S. 9th Circuit Court of Appeals in San Francisco said with Wednesday in the published case of Mohamed v Uber Technologies that drivers who signed up with Uber in 2013 and 2014 must go to arbitration, not the courts, to resolve disputes with the company. Judge Chen previously ruled in the companion classification case that the arbitration agreements were unenforceable and unconscionable. But the appeals panel said Chen lacked the authority to make that call because the contracts require an arbiter to decide “all matters.”

The ruling on Wednesday applies directly to two drivers’ challenge of Uber’s background-check practices in a proposed class-action lawsuit. But it could have an effect on dozens of lawsuits across the nation. Uber drivers have used the threat of a class-action lawsuit to extract concessions from the San Francisco company. Having to go to arbitration largely takes the specter of mass litigation off the table.

Now, Uber could drop the settlement talks altogether in the classification case because the appeals court could go on to unwind Chen’s certification of a class of drivers, forcing most of the drivers to individual arbitration. One-one-one fights typically result in smaller benefits for complainants. The class currently includes some 240,000 drivers from California and Massachusetts. If the arbitration agreements are enforced, the class could be reduced to 8,000 people – those who had rejected the arbitration agreements when they joined Uber’s driver roster.

The California Insurance Commissioner approved an order agreed to by California Insurance Company (CIC) and Applied Underwriters Captive Risk Assurance Company, Inc. (AUCRA), under which they will stop selling workers’ compensation policies that the two Berkshire Hathaway companies used without filing key addendums to the policies (called EquityComp) with the Department of Insurance for the commissioner’s review and approval, and will work with the department’s actuaries to agree upon fair terms for calculating future claims that would apply to existing EquityComp policies.

The agreement to submit to a cease and desist order was in response to the commissioner’s June 28, 2016 notice that a hearing would be held to decide whether CIC and AUCRA should be ordered to cease and desist from issuing new unapproved EquityComp policies.

The order halts the issuance of new EquityComp policies unless and until the commissioner approves them. The order also provides substantial relief under existing EquityComp policies, which includes eliminating punitive requirements for posting collateral, and specifying new, appropriate loss development factors. The order does not affect the ability of any employer to challenge the legality of the EquityComp policies.

Commissioner Jones’ action stemmed from his precedential decision that a complex insurance scheme in the Shasta Linen case circumvented regulatory review and cannot be sold in California unless it is filed and approved. Shasta Linen, a small employer, purchased an EquityComp policy from CIC and AUCRA. Shasta Linen brought a case before the commissioner, challenging the legality of the policies.

The commissioner found that the insurance companies issued the policies and rates without his approval, as is required by law. The commissioner also ruled that the companies designed the unusual and complex program with the intent of avoiding the review of insurance regulators.

Among the most troubling features of the EquityComp policy was the imposition of unexpected and greatly excessive collateral requirements upon termination of the employers’ policies. The collateral requirements had serious and unexpected consequences for many employers.

The policies also forced an employer who disputed the insurers’ decisions to arbitrate their disputes in Tortola, British Virgin Islands, or in other locations outside of California. The expense of a remote arbitration made it unreasonably difficult for employers to challenge the insurers’ decisions. The commissioner’s order requires CIC/AUCRA to arbitrate disputes with the policyholders in California.

“Insurance companies are required to file rates and terms so we can make sure they are complying with the law,” said Commissioner Jones. “These filing requirements were put in place to protect businesses from insurers seeking to take advantage of their market power – for example, the unfiled insurance scheme sold to small business Shasta Linen shifted the risk back to Shasta Linen, had prohibitively expensive renewal and cancellation penalties, and required disputes to be arbitrated in the British Virgin Islands.”

The Racketeer Influenced and Corrupt Organizations Act, commonly referred to as the RICO Act or simply RICO, is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization.In order to prevail in a RICO action, a plaintiff must prove a “predicate offense” one of which is fraud. In addition to the predicate offense, a plaintiff must also prove a “pattern of racketeering activity” which requires a showing of at least two acts of racketeering activity. This second requirement opens the doors to fairly broad discovery rights covering practically any history of a target defendant that might prove a pattern of racketeering, an open ended discovery process. Federal RICO allows a successful plaintiff to recover treble damages, plus attorney fees.

The plaintiffs bar has sought to apply RICO laws as a penalty in workers’ compensation claims for at least a decade with mixed results. Conceptually they allege that an employer, carrier or third party administrator concocts a fraudulent scheme that is used over and over to prevent workers from obtaining just benefits.

Plaintiff efforts to succeed at RICO in the federal 6th Circuit (Kentucky, Michigan, Ohio, and Tennessee) ultimately ended in failure. In one the the last tries, a Michigan claimant alleged that employer/carrier defrauded him with “false” medical testimony, and filed federal Racketeer Influenced and Corrupt Organizations Act RICO case, In that case, Brown v. Ajax Paving Industries, 752 F.3d 656 (2014), the United States Court of Appeals for the Sixth Circuit followed the prior ruling in Jackson v. Sedgwick Claims Management Services, a carbon copy of this case, 731 F.3d 556, 558 (6th Cir.2013) (en banc). Essentially in the 6th Circuit, RICO cannot be based on an underlying workers’ compensation claim because the court held that “loss or diminution of benefits the plaintiff expects to receive under a workers’ compensation scheme does not constitute an injury to ‘business or property’ under RICO.”

The effort to win comp related RICO cases then moved to the 9th Circuit (nine western states including California and Arizona) arguably the most liberal Circuit in the federal system. In Laurie Miller et al. v. York Risk Services Group, nine plaintiffs worked as firefighters or engineers for the Phoenix fire department, and York adjusted the department’s workers comp claims. The plaintiffs alleged, in part, that York worked with the City of Phoenix to wrongfully deny or delay their workers comp benefits in violation of the federal RICO Act. York moved to dismiss based partly on the en banc decision from the 6th U.S. Circuit Court of Appeals, which dismissed similar RICO claims against Sedgwick Claims Management Services Inc. That defense did not work in Arizona. Judge Sedwick ruled in 2013 that the employees “possess a property right in their workers compensation benefits under Arizona law,” which allows them to have a property interest under RICO law and the case was allowed to proceed. Before the case went to trial, it was settled at the end of 2015. Thus the ruling was not tested in the 9th Circuit Court of Appeals.

Now they have lost another 9th Circuit RICO case this time filed in California.

John Black, and a group of police officers and fire fighters assert a RICO claim in their fourth amended complaint involving the City of Rialto and the City of Stockton, CorVel Enterprises, York Risk Services Group and others. These plaintiffs allege “York, CorVel, and Rialto engaged in a pattern of fraudulently denying and delaying legitimate claims in order to lower the liability of the city, while at the same time maximizing the TPA’s revenues (and allowing the TPA to maintain and obtain contracts with other public entities based on their ‘outstanding’ financial performance at the expense of public servants)”

At the end of April, the Federal Judge granted the defendant’s motion to dismiss the third amended complaint, but gave the plaintiffs leave to amend for the fourth time.  And on August 25, the federal judge reviewed the 4th amended complaint and dismissed the case without leave to amend. The decision was based in part upon a determination that a workers’ compensation benefit is not a property right subject to RICO, a ruling consistent with the 6th Circuit.

Plaintiffs now have an opportunity to appeal the decision in the 9th Circuit Court of Appeals. Assuming a defense result in that tribunal, this would likely end the effort in the 6th and 9th Circuits, and these plaintiffs will have to go elsewhere.

It will be important to monitor the City of Rialto case until it reaches its ultimate conclusion.

Physician Naga Raja Thota, a board certified anesthesiologist who works as a pain-control specialist with an office in El Cajon, was arrested and charged with distributing oxycodone and other highly addictive drugs without any legitimate medical purpose in exchange for sex acts. He has been licensed to practice in California since 1994.

The doctor was taken into custody by San Diego Drug Enforcement Administration agents at his place of work.

The criminal complaint said at least two young women received prescriptions for opioids without a legitimate medical purpose on numerous occasions in exchange for sex acts. The complaint also shows a pattern in which sexually-explicit texts are exchanged by the doctor and the women, followed by prescriptions written for them by Thota.

According to the complaint, one victim said she met Thota when she was hospitalized for withdrawal symptoms for Hydrocodone and Alprazolam. Thota agreed to treat her but documented that his treatment was for pain even though this victim did not suffer from any medical condition that caused chronic or ongoing pain. This victim also stated that Thota kept increasing the dosage.

This victim, who was twenty years old when she met Thota, said she felt that if she did not submit to sexual acts with Thota he would not have provided her with additional opioid prescriptions. After being exposed to greater dosage levels of opioids by Thota, the young woman started using an even stronger opioid – heroin.

About a dozen potential new victims have come forward following the arrest according to Amy Roderick of the U.S. Drug Enforcement Administration. Roderick said she could provide no details on those individuals or their allegations

Thota’s arrest came at the conclusion of a several-year investigation Officials said he is accused of prescribing the alleged victims, ranging in age from early 20s to early 30s, various narcotics, including hydrocodone, methadone and oxycodone, and using his access to the narcotics a way to pressure them into sex acts.

During his arraignment, Assistant U.S. Attorney Orlando Gutierrez said a 20-year-old patient of Thota’s reported that the doctor upped the dosage of a prescription she was taking without telling her and that she felt she couldn’t get more of it unless she had sex with the defendant.

Another woman threatened to take allegations of abuse to the DEA, and Thota paid her money not to do so, the prosecutor alleged.

And this is not his first run-in with authorities. In 2014 the California Medical Board accusation claimed that he committed gross negligence in his care and treatment of patients. The specific allegations say he prescribed increasing doses of opiates to patients without any clear positive response. In November 2015 Thota entered into a stipulated settlement and disciplinary order which provided for the revocation of his license, however the revocation was stayed and he was placed on seven years probation with restrictions. He was therefore on probation when this current arrest was made.

“Prescription drug abuse and overdoses have reached alarming levels,” said U.S. Attorney Laura Duffy. “We are going after doctors who abuse their power to prescribe and exploit the desperation of addicts for their own gratification.”

“Doctors who exploit patients are the worst kind of predators.” said DEA San Diego Special Agent in Charge William Sherman. “DEA recognizes the trust the citizens of San Diego place in their doctors. We will continue to ensure that physicians who are abusing that trust by bartering sex for prescriptions will be arrested and prosecuted.”

If anyone has information regarding other victims or if you believe you were victimized by Dr. Thota, we urge you to contact DEA at (858) 616-4100 and ask for the Diversion Duty Agent.

Under Title 21, United States Code, Section 841, and Title 21, United States Code of Federal Regulations, Section 1306.04(a), a medical doctor may not prescribe a controlled substance unless there is a legitimate medical purpose.