Cigna Corporation and Cigna Health and Life Insurance Company was sued in the United States District Court for the Eastern District of California in 2023 following a ProPublica report that it relied on the PxDx algorithms to reject patients’ claims without Cigna doctors opening their files. The report went on to claim that “Over a period of two months last year, Cigna doctors denied over 300,000 requests for payments using this method, spending an average of 1.2 seconds on each case, the documents show. The company has reported it covers or administers health care plans for 18 million people.”

Plaintiffs Suzanne Kisting-Leung, Samantha Dababneh, Randall Rentsch, Christina Thornhill, Amanda Bredlow, and Abdulhussein Abbas filed a putative class action on July 24, 2023 against defendants Cigna Corporation and Cigna Health and Life Insurance Company for purported wrongful denial of plaintiffs’ claims for benefits and for defendants’ use of the automated PxDx algorithm to review plaintiffs’ claims.

Their third amended complaint alleges that plaintiffs had benefit claims wrongfully denied by defendants as not medically necessary. And that “Cigna’s policies falsely claim that determinations related to medical necessity of health care services would be made by a medical director, when in reality the medical directors are not involved in reviewing patients’ claims.” Each of plaintiffs’ claims for benefits were in fact reviewed and denied by defendants’ PxDx algorithm.

And they alleged that “Cigna developed an algorithm known as PXDX that it relies on to enable its doctors to automatically deny payments in batches of hundreds or thousands at a time for treatments that do not match certain pre-set criteria[.]” (Id. at ¶ 2.) “Relying on the PXDX system, Cigna’s doctors instantly reject claims on medical grounds without ever opening patient files, leaving thousands of patients effectively without coverage and with unexpected bills.”

Defendants filed a motion to dismiss plaintiffs’ Third Amended Complaint. U.S. District Judge Dale Drozd granted Ciga’s motion in part and denied its motion in part on March 31, 2025, and allowed plaintiffs to amend their complaint with respect to the aspects of the case where the motion was granted if they so choose within 21 days.

With respect to the causes of action that survived the motion, plaintiffs alleged that under the California Unfair Competition Law’s (UCL) unlawful prong that defendants’ use of PxDx violated California Health & Safety Code § 1367.01(e). This provision states: “No individual, other than a licensed physician or a licensed health care professional who is competent to evaluate the specific clinical issues involved in the health care services requested by the provider, may deny or modify requests for authorization of health care services for an enrollee for reasons of medical necessity.”

The court found that plaintiffs have adequately plead a violation of the UCL.

However the court said it “agrees with defendants that where the plaintiff’s state law claim seeks recovery for the loss of insurance benefits, the claim is expressly preempted by ERISA.” However Plaintiffs argue “that the savings clause applies.” The savings clause protects from express preemption “any law of any State which regulates insurance, banking, or securities.” 29 U.S.C. § 1144(b)(2)(A).

California Health & Safety Code § 1367.01(e) is specifically directed toward entities engaged in insurance because it applies to certain “health care service plan[s] and any entity with which it contracts for services[,]” California Health & Safety Code § 1367.01(a), and restricts how medical necessity determinations are made, California Health & Safety Code § 1367.01(e).

The court concluded that the savings clause applies, and plaintiffs’ California Unfair Competition Law claim is not expressly preempted.

Regina Brice, a former employee of the California Employment Development Department, was sentenced in federal court to 66 months in prison for using her position to file $858,339 in fraudulent unemployment claims, effectively stealing money that was intended to give economic relief to people impacted by the pandemic.

According to court documents, Brice was employed by the EDD since 2010. During the pandemic, she was responsible for processing COVID-related unemployment claims. However, between July 2020 and May 2021, Brice exploited her employee access at EDD to manipulate and file fraudulent unemployment claims for her co-conspirators in exchange for thousands of dollars in bribes. These co-conspirators included California prison inmates whom she instructed on how to bypass the system’s fraud checking software to obtain the money.

“This defendant turned her back on the oath of her office and those she was supposed to help during a once-in-a-century pandemic,” said Acting U.S. Attorney Andrew Haden. “Today she is being held accountable for her greed.”

“Former California Employment Development Department (EDD) Employment Program Representative Regina Brice filed fraudulent and manipulated unemployment insurance (UI) claims in exchange for kickbacks, diverting vital taxpayer resources away from unemployed American workers who lost their jobs due to the COVID-19 pandemic,” said Quentin Heiden, Special Agent-in-Charge, Western Region, U.S. Department of Labor, Office of Inspector General (DOL-OIG). “Brice violated the public trust afforded to her as an EDD employee to enrich herself and others. We will continue to work with our law enforcement partners to safeguard the integrity of the UI program for those who need it. This sentencing demonstrates DOL-OIG’s commitment to root out waste, fraud, and abuse in DOL programs.”

DHS Inspector General Joseph V. Cuffari, Ph.D., said, “Regina Brice defrauded government programs meant to help Americans at the height of the COVID-19 pandemic. DHS OIG will continue to prioritize pandemic-related fraud investigations and work with our law enforcement partners to bring perpetrators to justice. I appreciate the continued partnership between DHS OIG and the Department of Labor OIG in bringing this case to a close.”

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at (866) 720-5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form. This case is being prosecuted by Assistant U.S. Attorney Ronald Sou.

Applicant, Jian Kallash while employed on April 6, 2019, as a Sales/Customer Service Associate at National City, California, by Macy’s West Stores, Inc., sustained injury arising out of and in the course of employment to the lumbar spine.

Applicant’s secondary treater, Dr. Abitbol, submitted an RFA dated March 18, 2024. Defendant untimely issued a UR denying such requests for treatment such that the parties proceeded to trial from an Expedited hearing on such issue of treatment.

The WCJ issued a Findings and Award/Opinion on Decision on December 20, 2024 and awarded the treatment. The Petition for Reconsideration of the award was was denied for the reasons stated in the WCJ’s Opinion on Decision and the Report, both of which it incorporated in the WCAB panel decision of Kallash v Macy’s West Stores, Inc.,– ADJ12663627 (March 2025)

The employer contended that the WCJ erred in granting the requested treatment arguing the WCJ failed to reference any MTUS provision or supporting evidence-based medical or scientific guideline in support of the award of the requested treatment over the utilization review non-certification, And failed to show the MTUS or evidence-based medical and/or scientific guidelines were rebutted by substantial medical evidence.

Defendant cites the panel decision of Thompson v. County of L.A. (2016 Cal.Wrk.Comp. P.D. Lexis 107) and Rios v. S. San Francisco Unified Sch. Dist. (2021 Cal.Wrk.Comp. P.D. Lexis 15).

In Thompson, the applicant was not entitled to the requested lumbar surgery because the requesting physician failed to reference either MTUS or other evidence-based guides to support the treatment modality. That case refers to a physician failing to justify the request, not the WCJ.

Currently, what defendant has not shown is that the WCJ must specifically reference the MTUS guidelines, ACOEM guidelines or any other evidence-based treatment guidelines to substantiate the requested treatment. In fact, in reviewing the findings of the untimely UR denial, such denial itself failed to state or reference any MTUS updates or ACOEM guidelines in which they based their denial.

The untimely UR denial only states that, “The records did not document failure of non-operative measures for the claimant. No formal physical therapy records for the claimant were included for review detailing response and lack of progress with treatment. No recent medications for pain or injections were detailed. Further, review of the lumbar imaging report did not detail evidence of any spondylolisthesis with motion segment instability at L5-S1 measuring 5mm or more. The current evidence-based guidelines do not recommend lumbar spine fusion to address lumbar spondylosis or radiculopathy only.”

The WCJ in his Response to the Petition for Reconsideration notes that “There is no mention of the MTUS guidelines or ACOEM guidelines or a reference to any other evidence-based guidelines to explain the denial. Records presented to the WCJ to review in assessing the reasonableness and necessity of the treatment were not sent to UR. It was this lack of the medical evidence provided to the UR department that created the original denial.”

“Had the adjuster been forthcoming with the complete medical file, UR may not have denied the necessary treatment. Furthermore, as previously stated in the Opinion on Decision, the evidence clearly established that applicant had exhausted all conservative treatment and the EMG and MRI studies revealed positive findings. (Court Exhibit JJ) The medical evidence, taken as a whole, between the multiple treaters and the QME establishes the medical necessity of the requested surgery.”

A federal grand jury indicted Jose Vicente Badillo on one count of conspiracy to commit arson in connection with an alleged scheme to burn tow trucks throughout the San Francisco Bay Area in 2023.

According to the newest March 11, 2025 indictment against him unsealed earlier this month, Badillo, 29, of San Francisco, conspired with others to set fire to at least six tow trucks on four occasions between April 2023 and October 2023. Specifically, Badillo and his co-conspirators allegedly set fire to and damaged or destroyed (i) two tow trucks in San Francisco on April 4, 2023; (ii) one tow truck in San Francisco on April 29, 2023; (iii) one tow truck in East Palo Alto on July 25, 2023; and (iv) two tow trucks in San Francisco on Oct. 3, 2023.

The indictment describes that the purpose of the conspiracy was, among other things, to drive more business to two Bay Area-based towing companies with which Badillo was associated – Auto Towing and Specialty Towing – by impeding the business prospects of competitor towing companies, and to retaliate against those same competitors for perceived wrongs. Badillo allegedly orchestrated the conspiracy and then directed others to set fire to the targeted tow trucks.

This prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation.

The indictment is the latest of several criminal investigations centered around Badillo. Jose Vicente Badillo and Jessica Elizabeth Najarro were indicted last August 2024 on charges of mail fraud, wire fraud, and money laundering related to a scheme to defraud an auto insurance company. The allegations include submitting a fraudulent insurance claim for a wrecked car, which resulted in a reimbursement check of over $34,000 being deposited into an account controlled by Badillo.

The August indictment also alleges that, at the time of the offenses in 2019, Badillo owned and/or controlled at least two companies engaged in the business of towing vehicles: Jose’s Towing, LLC, and Auto Towing, LLC, both of which operated out of San Francisco.

In another fraud case, Badillo and Abigail Fuentes were charged with multiple felonies in October 2023 by the San Francisco District Attorney’s Office. The charges stem from an alleged welfare fraud scheme. Fuentes, who worked as a Senior Eligibility Worker at the Human Services Agency, is accused of improperly approving Badillo’s application for public welfare programs without disclosing their personal relationship. Both individuals allegedly misrepresented their income and assets to qualify for benefits they were not eligible for, including Medi-Cal, CalFresh, and CalWORKs. Authorities say Badillo and Fuentes are in a relationship and have children.

At the time the application was filed, investigators said the pair had been operating three towing companies – Auto Towing, Jose’s Towing and Specialty Towing – which generated more than $2 million in gross annual income. Both Fuentes and Badillo allegedly lied about their substantial income and assets in order to receive public benefits they were not eligible for. The case led to more scrutiny of the pair’s business practices by San Francisco authorities, specifically from San Francisco City Atty. David Chiu, whose office later alleged that one of the couple’s companies was profiting from illegal tows.

In August 2023, the City Attorney initiated debarment proceedings against Auto Towing after the company violated multiple state and local laws by illegally towing vehicles from private property. Between February and May 2023, Auto Towing employees illegally towed several cars from a bank parking lot in the Portola neighborhood without the permission of the property owner. It is unlawful for a tow company to tow a car from private property without the consent of the property owner. In February 2024, Chiu moved to suspend the company. Auto Towing, and its affiliates, which included Specialty Towing, from receiving contracts from the city.

The perpetrator also made it difficult for vehicle owners to retrieve their vehicles, restricted the hours when vehicles could be retrieved, and pressured vehicle owners to pay in cash. Under the California Vehicle Code, vehicle owners have the right to retrieve their vehicles 24 hours a day, any day of the year, and have the right to pay with cash or major credit card. The victims whose cars were towed were primarily Spanish- and Cantonese-speaking residents, who are especially vulnerable to predatory tows.

Specialty Towing came under public scrutiny two months later when a bystander recorded one of its trucks trying to tow a woman’s car as she was driving in San Francisco. “We were freaking out calling and basically rolling down our window and saying, ‘Hey what you are doing? You can’t be doing that,’ ” the driver, identified only as Joanne, told ABC 7 News in an interview. “He started backing up and his lever came down and basically he was just backing up trying to latch onto our car.”

The video of this incident is horrifying. the driver was waiting on a public street behind a tow truck stopped for a red light. The two truck driver then dropped his towing apparatus hoping to hook onto Joanne’s car while she was in it with the motor running. She backed up, and the tow truck driver backed up chasing her backward down the street. Had the tow truck driver been successful he would have towed her car away with the motor running, while kidnapping her inside.

Prior to this incident, the city received complaints from multiple victims who were allegedly scammed by Specialty Towing.

A Hollywood Hills man was sentenced to 41 months in federal prison for paying illegal kickbacks for patient referrals to his addiction treatment facilities located in Orange County.

Casey Mahoney, 48, was sentenced by United States District Judge Josephine L. Staton, who also fined him $240,000.

At the conclusion of a nine-day trial in September 2024, a jury found Mahoney guilty of one count of conspiracy to solicit, receive, pay, or offer illegal remunerations for patient referrals and seven counts of receiving illegal kickbacks for patient referrals.

The charges relate to Mahoney’s operation of two addiction treatment facilities: the Huntington Beach-based Healing Path Detox LLC, and the San Juan Capistrano-based Get Real Recovery Inc.

From at least October 2018 to December 2020, Mahoney paid nearly $2.9 million in illegal kickbacks to so-called “body brokers” who referred patients to Mahoney’s addiction treatment facilities. Those body brokers in turn paid thousands of dollars in cash to patients. Brokered patients sometimes were dropped off at motels in Orange County and introduced to drug dealers. Some of these patients later overdosed and died.

Brokers also arranged for patients to receive drugs to make them eligible for more lucrative levels of care at Mahoney’s facilities. Mahoney paid one broker $140,000 per month for additional patients despite knowing that brokers offered to get some patients high. Mahoney also requested that his employees send brokers to track down former patients with lucrative insurance policies, which he called his “most wanted list.”

Throughout the scheme, Mahoney concealed the illegal kickbacks by entering into sham contracts with the body brokers which purportedly required fixed payments and prohibited payments based off of the volume or value of the patient referrals.

In reality, Mahoney and the brokers negotiated payments based on the patients’ insurance reimbursements and the number of days Mahoney was able to bill for treatment.

The FBI and IRS Criminal Investigation investigated this matter. The California Department of Insurance provided valuable assistance.

Assistant United States Attorney Nandor F.R. Kiss of the Orange County Office and Justice Department Trial Attorney Siobhan M. Namazi of the Criminal Division’s Fraud Section prosecuted this case.

Mahoney’s conviction arose out of violations of the Eliminating Kickbacks in Recovery Act (EKRA). EKRA was enacted in October 2018 as part of comprehensive legislation designed to address the opioid crisis and to target the rise in body brokering and substance abuse facility profiteering.

The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, currently comprised of nine strike forces operating in 27 federal districts, has charged more than 5,000 defendants who collectively have billed federal health care programs and private insurers more than $24.7 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at www.justice.gov/criminal-fraud/health-care-fraud-unit.