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Well Known Los Angeles Attorney Pleads Guilty to $4M IncomeTax Fraud

Milton C. Grimes, a long-time Los Angeles lawyer, pleaded guilty to evading the payment of more than $4 million in federal taxes over a 21-year period.

Grimes pleaded guilty to one count of tax evasion relating to his 2014 taxes, admitting that he failed to pay $1,690,922 to the IRS. He was the man who served as the lead attorney for Rodney King about three decades ago has been payed close attention to the events that led to the death of George Floyd.

Grimes was responsible for winning a $3.8 million civil claim on behalf of King, the Black motorist who became the most infamous victim of police brutality in the history of America.

It is not the first time tax charges have been leveled against Grimes. Not long after the lawyer made national headlines representing accused murderer Sheryl Lynn Massip – who was charged with running over her infant son with the family Volvo in 1987, Grimes pled guilty in 1988 to three counts of willfully failing to file a tax return. (Rev. & Tax. Code, § 19401.)

According to his plea agreement, Grimes did not pay federal income taxes due for 23 years, 2002 through 2005, 2007, 2009 through 2011, and 2014 through 2023 – a total of $4,071,215 owed to the IRS. Grimes also admitted he did not file a 2013 tax return with the IRS.      

From at least September 2011, the IRS attempted to collect Grimes’ taxes by issuing more than 30 levies on his personal bank accounts. However, from at least May 2014 to April 2020, Grimes willfully evaded the payment of the outstanding income tax owed to the IRS by not depositing income he earned from his clients into his personal bank accounts that were subject to levy.

Instead, Grimes purchased approximately 238 cashier’s checks totaling $16 million to keep the money out of the reach of the IRS. Grimes would routinely purchase cashier’s checks and withdraw cash from his client trust account, his Interest on Lawyers’ Trust Accounts (IOLTA), and his law firm’s bank account, rather than pay the IRS.

For example, on December 5, 2018, Grimes purchased nine cashier’s checks worth approximately $1,001,961, following the deposit of the same amount and on the same date into his IOLTA bank account.

United States District Judge Stanley Blumenfeld Jr. scheduled a February 11, 2025, sentencing hearing, at which time Grimes will face a statutory maximum sentence of five years in federal prison. Prosecutors have agreed to seek a prison sentence of no more than 22 months for Grimes.

IRS Criminal Investigation investigated this matter.

Assistant United States Attorneys Valerie L. Makarewicz and Sarah S. Lee of the Major Frauds Section and Trial Attorney Sara A. Henderson of the Justice Department’s Tax Division are prosecuting the case.

October 14, 2024 – News Podcast


Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Additional Notices Not Required After Timely UR Delay Notice in Denied Case. Justice Department Sues LA Fitness for Disability Discrimination at Its Gyms. Court Decides When Ending Forced Arbitration of Sexual Assault Act Applies. Court Again Rules that EFAA Prohibits Arbitration of Entire FEHA Claim. L.A. Pair Indicted for $54M Diagnostic Testing and Hospice Fraud. Farm Labor Contractor Cited for Heat-Related Safety Violations. Andrea Coleman to Succeed Bill Mudge as WCIRB President, CEO. Stanford Medicine Now Deploys 30 AI Tools for Diagnosis & Decision Making.

Audit Documents Serious Problems With Addiction Treatment Centers

Back in 2012, a blistering study titled “Rogue Rehabs: State failed to police drug and alcohol homes, with deadly results” took no prisoners. It was done by the California Senate Office of Oversight and Outcomes and the department overseeing addiction treatment was dismantled in its wake — and DHCS was born. To, like, fix things. Perhaps it’s time to examine how well that’s worked out?

The State Auditor released a long-awaited study on how California regulates its (fraud-prone) addiction treatment industry. It confirmed that there are serious issues, and that Orange County in particular and Southern California in general are the epicenters, and that there are steps lawmakers can and should take to make things better.

While the audit didn’t mention the many federal prosecutions for body brokering and insurance fraud currently underway in O.C. and L.A., it did back up some general assertions. Key Findings of the State Auditor:

– – There were approximately 500 small facilities in California in 2023, and we identified groupings of such facilities in specific geographic areas throughout the State. For example, we found several small facilities with the same owner located next door to or across the street from each other in residential neighborhoods in Orange County and in San Diego County.
– – State law mandates that small facilities must be considered a residential use of property for purposes of any zoning ordinance. Because local authorities may use zoning requirements to regulate facilities serving more than six residents (large facilities) more strictly than small facilities, some facility operators may avoid certain zoning regulations by intentionally grouping small facilities in the same geographic area instead of establishing one large facility.
– – Although required to assign a complaint to an investigator within 10 days, Health Care Services frequently does not assign complaints on time. The audit found that it took Health Care Services an average of 183 days to assign the complaints when it did not meet its 10-day required time frame.
– – The department’s internal guidelines generally identify that investigative reports must be submitted by the analyst to a supervisor within 30 to 60 days. However, the audit found that it took Health Care Services analysts nearly one year on average to submit investigative reports for low – and medium – priority complaints.
– – Health Care Services completed high – priority investigations, such as those relating to resident deaths, within an average of less than three months but still did not meet its guidelines.
– – Health Care Services did not always conduct site visits when investigating unlicensed facilities and did not always follow up after completing investigations of unlicensed facilities that were unlawfully advertising or providing services to ensure that they ceased doing so.

For Sen. Tom Umberg, D-Santa Ana, the audit confirms what he and other lawmakers have been saying for years: DHCS is seriously under-sourced, takes forever to investigate complaints, can’t do frequent-enough inspections or enforce the laws.

The Auditor had recommendations to improve oversight. “Legislature could potentially change state law if these facility concentrations are not consistent with the law’s intent, which we believe was to integrate residents of these facilities into the communities and to provide for sufficient numbers and types of treatment services to meet local needs.”

The auditor also recommended that DHCS fill its vacant positions, improve the timeliness of inspections and complaint investigations, do additional site visits and follow up with unlicensed facilities to ensure they stop providing or advertising services beyond their reach.

We have a road map here,” said Assemblymember Diane Dixon, R-Newport Beach, who requested the audit more than a year ago. “It confirms key concerns that are now validated by third-party analysis: Investigations take too long, sometimes don’t even happen, and there can be infrequent follow-up. It will help us shape legislation based on these facts.”

Dixon quickly assembled lawmakers after the report to push the governor and Department of Health Care Services (DHCS) Director Michelle Baass for greater accountability and an increase in the number of inspectors. “We’re coming together for solutions,” she said. “We want people to get well.”

In its response, Baass said the department is already implementing many of the auditor’s recommendations and “is committed to robust oversight of residential treatment facilities to ensure Californians receive safe and high-quality care.” According to the Audit Report “Health Care Services agreed with our findings and, in some cases, has already begun implementing the recommendations that we directed to it.”

Newsom’s Tax Credit Proposal to Bolster California’s Sagging Film Industry

The Hollywood film industry has experienced a significant shift in recent decades, with many productions relocating from California to other states and countries.This trend is primarily driven by financial incentives, such as tax credits and rebates offered by various governments to attract film and television productions.  

States like Georgia, New York, and Louisiana have emerged as popular alternatives to California, offering generous tax breaks that can significantly reduce production costs. Additionally, factors such as labor costs, infrastructure, and local film crews have also influenced the decision to relocate.

According to Bureau of Labor Statistics data crunched by Marketplace partners at APM Research Lab, employment in “motion picture and sound recording” has grown nationwide, but the share of workers in LA or New York went from just under half at the beginning of 2023 to just one-third earlier this year.

The shift comes amid major upheavals in the industry and the ways in which it delivers shows and movies, which are having an effect on the availability of work for the people left in the industry’s historic capitals.

Chasing the success of Netflix, tons of companies set up streaming services in recent years, banking on demand from subscribers. To entice them, they filled their platforms with new shows and movies. All this activity peaked in 2022, when 600 original scripted shows were in production, according to the network FX. That gave lots of opportunities to everyone who makes a film shoot possible: Writers, crew members, caterers, and actors. But it didn’t last..

Per FX’s count, the number of scripted shows dropped to 516 last year. Studios pulled back for a few reasons, according to Patrick Adler, an assistant professor at the University of Hong Kong and head of the consulting firm Westwood Economics, which issued a recent report on the film industry workforce.

While California remains a major hub for the entertainment industry, the exodus of productions has raised concerns about job losses and economic impact. To counter this trend, California has implemented its own tax credit program to retain productions within the state. However, the competition from other states and countries continues to pose a challenge.

Travis Knox, a longtime movie producer who teaches at Chapman University, thinks a long-term industry trend might be at play here: Generous state tax credits for film production. “If the state’s going to give you 30% of your budget back, it’s kind of a no-brainer, you have to go,” he said.

This trend goes back decades, to when Louisiana first offered a tax credit to film studios that brought their productions to the state. Dozens more states have followed suit since, with some, like Georgia, becoming major players in the industry. Many allow production companies to recoup significant percentages of their spending, if they film in a particular state and meet local hiring thresholds and other requirements.

Though some incentives have come and gone over the decades, state policy makers have shown a resurgent interest in enticing film productions in recent years: At least 18 states have created or expanded film incentive programs since 2021, according to the National Conference of State Legislatures.

California’s film industry tax credit program has evolved over the years to compete with other states and countries that offer similar incentives. California introduced its initial film tax credit program in 2009, allocating $100 million annually for eight years. This program aimed to retain and attract film and television productions to the state.

The program was significantly expanded in 2014, increasing the annual allocation to $330 million. This expansion aimed to make California more competitive in attracting major productions.

This weekend at a press conference Governor Newsom proposed a significant increase in the annual tax credit allocation from $330 million to $750 million. The program aims to attract a wider range of productions, including TV series, feature films, and independent films. Local hire incentives: The program provides additional incentives for hiring local crews and talent.

American Airlines Penalized 50M for Its Treatment of Disabled Passengers

The U.S. Department of Transportation (DOT) announced a $50 million penalty against American Airlines for numerous serious violations of the laws protecting airline passengers with disabilities between 2019 and 2023. DOT’s investigation into American Airlines uncovered cases of unsafe physical assistance that at times resulted in injuries and undignified treatment of wheelchair users, in addition to repeated failures to provide prompt wheelchair assistance. American also mishandled thousands of wheelchairs by damaging them or delaying their return, leaving travelers without the device they need for mobility.

DOT regulations require airlines to timely return wheelchairs and other mobility devices in the condition in which they were received and to provide passengers with disabilities prompt assistance to get on and off aircraft including moving within the airport. The Department also considers violations of these regulations for those traveling on domestic flights to be a failure to provide safe and adequate service. In July 2022, DOT published the first-ever Airline Passengers with Disabilities Bill of Rights to help travelers understand what they’re entitled to when they fly.

In its investigation of American Airlines, DOT reviewed complaints against the airline involving allegations of inadequate wheelchair assistance, including three formal complaints filed by Paralyzed Veterans of America alleging similar issues. DOT also investigated American’s handling of wheelchairs between 2019 and 2023, including an incident captured on video at the Miami International Airport of American’s personnel mishandling a wheelchair by dropping it down a baggage ramp. American had been one of the worst performers among U.S. airlines in terms of both the total number of wheelchairs and scooters mishandling claims and the rate of mishandling claims, and DOT’s investigation revealed a significant number of violations.

These problems are not unique to American Airlines, and allegations of wheelchair mishandling and inadequate wheelchair assistance are far too common. DOT has active investigations into similar violations at other U.S. airlines. Today’s enforcement action is 25 times larger than DOT’s previous largest airline penalty for violations of disability protections and sets a new precedent for how DOT will enforce against such violations going forward.

The U.S. Department of Justice’s Civil Rights Division provided valuable assistance and advice to DOT during the negotiation of this penalty

As part of the $50 million penalty, American Airlines will be required to pay a $25 million fine to the U.S. Treasury. In addition, American Airlines will be credited $25 million towards the total penalty for investments in equipment to reduce incidents of wheelchair damage, investments in a systemwide wheelchair tagging system to reduce incidents of wheelchair delay, deployment of hub control center employees to coordinate wheelchair handling on a systemwide basis at large airports, and compensation for affected passengers during the timeframe covered by DOT’s investigation. If these expenditures are not made, the additional $25 million will be paid as a fine to the U.S. Treasury.

DOT has sought higher penalties that go beyond the cost of doing business to better hold airlines accountable for the mistreatment of passengers and change airline behavior. Between 1996 and 2020, DOT collectively issued $71 million in total penalties against airlines for consumer protection and civil rights violations. During the current Administration, DOT has tripled that amount, issuing nearly $225 million in penalties, including the following:

– – DOT’s largest ever airline penalty: $140 million against Southwest Airlines for its 2022 meltdown during Winter Storm Elliot.
– – DOT’s largest airline penalty for religious discrimination: $4 million against Lufthansa for denying boarding to 128 Jewish passengers.
– – DOT’s largest airline penalty for extreme tarmac delays: $4.1 million against American Airlines for dozens of instances where passengers were kept on the tarmac for 3+ hours.

DOT claims it has also taken historic action to improve transportation for people with disabilities in air travel.

– – Published the Airline Passengers with Disabilities Bill of Rights, which describes the fundamental rights of air travelers with disabilities under the Air Carrier Access Act and its implementing regulation.
– – Established a final rule on accessible lavatories on aircraft, requiring airlines to make lavatories on new single-aisle aircraft large enough to permit a passenger with a disability and an attendant to approach, enter, and maneuver within as necessary to use the aircraft lavatory.
– – Funded accessibility improvements at airports through the Bipartisan Infrastructure Law Airport Terminals Program. Nearly 150 projects funded under this program are improving airport terminal access for people with disabilities and ensuring compliance with the Americans with Disabilities Act.
– – Proposed a new rule to ensure safe and dignified accommodations for air travelers with disabilities using wheelchairs. The proposed rule would set new standards for assistance, mandate enhanced training for airline employees and contractors who physically assist passengers with disabilities and handle passengers’ wheelchairs, and outline actions that airlines must take to protect passengers when a wheelchair is damaged during transport. DOT is currently working towards issuing a final rule.

82% of Healthcare Leaders See AI as Vital Amid Burnout Crisis

Innovaccer Inc., has published its latest research report, The State of AI During the Great Burnout in Healthcare, offering timely insights into the current adoption of AI and its potential to transform healthcare delivery.

The report, based on a survey of 568 healthcare professionals from 386 US healthcare organizations, highlights the growing reliance on AI to tackle administrative burdens, improve operational efficiency, and mitigate clinician burnout.

The report shows that 82% of leaders consider AI crucial for their operations, and 67% believe AI is essential in addressing the escalating burnout crisis that continues to strain the workforce.

“In today’s complex healthcare environment, AI is not a silver bullet but a powerful multiplier that can enhance efficiencies and alleviate systemic burdens,” said David B. Nash, MD, Founding Dean Emeritus of the Jefferson College of Population Health, in the report. “AI’s ability to provide timely information to doctors, streamline workflows, and reduce the operational load will be key to improving outcomes and reducing burnout at its source.”

A Balanced Approach to AI Adoption and avoid over-reliance on Point Solutions

While the potential of AI in healthcare is promising, the research emphasizes that organizations must approach AI adoption strategically rather than tactically. The report strongly cautions against over-reliance on point solutions that address only immediate needs, advocating instead for comprehensive AI strategies that consider the broader healthcare ecosystem.

A key finding highlights the critical role of unified data platforms in successful AI adoption. The research reveals that fragmented systems and multiple vendors for isolated AI use cases often lead to operational inefficiencies and integration challenges. Organizations achieving the most success with AI implementation are those taking a unified approach, resulting in smoother operations, better interoperability, and more streamlined decision-making processes.

As healthcare professionals look for solutions to reduce administrative tasks and improve patient care, the report identifies several key trends that underscore AI’s growing importance:

– – AI as a Workforce Support Tool: Unlike common fears of AI replacing jobs, the research shows that AI is primarily seen as an assistant, with 69% of healthcare leaders prioritizing AI’s role in reducing burnout, while 48% emphasize addressing gaps in care quality.
– – Adoption Barriers: Although 87% of those who haven’t yet implemented AI are eager to explore its potential, concerns over data accuracy, ease of integration, and financial feasibility remain the primary barriers to adoption.
– – Unified Approach Drives Positive Experience: When leaders used AI in three or more areas integrated with their systems, 100% reported a positive experience.

The findings suggest that AI, when applied thoughtfully, can play a transformative role – not just by automating administrative tasks, but by enabling more meaningful patient-provider interactions and improving clinical decision-making.

“AI is set to be a game changer in healthcare by simplifying everyday tasks. With smart tools that automate scheduling, manage patient info, address clinical documentation and coding, and provide clinical decision support, healthcare professionals will have more time to focus on their patients,” said Dr. Drew Albano, Chief Medical Officer, Prisma Health.

Download the full report to explore detailed findings on how AI can help transform your organization’s approach to burnout and operational efficiency.

Portions of State Prison Workers Wage/Hour Class Action Revived on Appeal

Plaintiffs Azeem Bath, Megan Roberts, and Makisha Bomar are hourly paid, non-exempt employees who work at an adult state prison. Bath is a dental hygienist, Roberts and Bomar are dental assistants, and they all are currently assigned to the California Medical Facility.

The parties agree that plaintiffs’ union and the State of California entered a memorandum of understanding governing the terms and conditions of plaintiffs’ employment and that the MOU incorporates the Fair Labor Standards Act of 1938 (FLSA), as amended by the Portal-to-Portal Act (29 U.S.C. § 251 et seq.). Plaintiffs further acknowledge that it is the FLSA that “determine[s] whether activities performed by Plaintiffs are compensable.”

In November 2022, plaintiffs filed a first amended complaint against the State of California, California Department of Correction and Rehabilitation (CDCR), California Correctional Health Care Services, and California Department of Human Resources (CalHR) styled as a class action.

They asserted four causes of action: (1) failure to pay California minimum wage in violation of Labor Code sections 1182.11, 1182.12. and 1194, (2) failure to pay overtime wages in violation of section 1194, (3) failure to pay wages and/or overtime in breach of common law contractual obligations, and (4) failure to pay wages in violation of section 222.

Plaintiffs alleged, “a principal activity [of their employment and that of all class members] is to provide safety and security for all prison occupants.” They continued, “California Prisons present multiple dangers and safety concerns that are not present in the average workplace,” and given the risks, plaintiffs (and putative class members) “are specially employed to focus on and promote the security and safety of staff, visitors, and inmates.”

Plaintiffs alleged the uncompensated “Pre-Shift Work” that they and other class members perform compromises the following five activities: (1) “The Security Checkpoint” – at the front gate of a prison, presenting their identification cards to security officers and opening their bags for visual inspections; (2) “The First Sally Port” – walking to a sally port, waiting to enter, and then waiting for the guard to open the gate; (3) “Collecting Work Specific Tools and Equipment” – walking to an administrative building, picking up an alarm device and, if necessary, keys; (4) “The Control Sally Port” – “proceed[ing] to a second sally port to enter the mainline prison premises” and, again, showing their identification cards; and (5) “Walking to the Department and Signing In” -walking to their assignment area. When they arrive at their assignment area, they sign in “by reporting the precise time they arrive.” According to plaintiffs, these preshift activities generally take 10 to 15 minutes and sometimes take 20 minutes, and their “Post-Shift Work” involves “many of the same activities and functions . . . but in reverse” and takes a similar amount of time.

Defendants filed a demurrer to the first amended complaint. On April 21, 2023, the trial court issued a written ruling sustaining the demurrer to plaintiffs’ first amended complaint without leave to amend on the ground these activities are not compensable under the Portal-to-Portal Act of the Fair Labor Standards Act. After judgment was entered, plaintiffs appealed.

The Court of Appeal affirmed in part and reversed in part in the published case of Bath et al. v. State of Cal. et al. -A167908 (October 2024.)

Plaintiffs contend they have alleged viable wage claims and the trial court improperly decided a disputed question of fact in ruling on the demurrer. Defendants respond that the trial court did not err, and, in any event, the judgment may be affirmed on alternative grounds they raised in their demurrer. Specifically, defendants argue the MOU governing the terms and conditions of plaintiffs’ employment precludes their claims; plaintiffs’ statutory claims fail because the statutes at issue do not apply to government employers; the claims are all subject to dismissal because plaintiffs failed to exhaust their contractual remedies (grievance and arbitration procedures in the MOU); and the claims are all barred by the applicable statute of limitations.

The Court of Appeal concluded defendants’ demurrer was well taken as to plaintiffs’ statutory claims, but plaintiffs have stated a claim for breach of contract. It further concluded that defendants’ affirmative defense of failure to exhaust contractual remedies cannot be resolved in a demurrer and plaintiffs’ contract claim is not time barred.

The demurrer was reversed as to plaintiffs’ third cause of action for “failure to pay regular wages and/or overtime in breach of common law contractual obligations” and was affirmed as to the first, second, and fourth causes of action. The judgment was reversed, and the matter was remanded for further proceedings consistent with this opinion.

Wallmart Resolves Illegal Medical Waste Disposal Litigation for $7.5

The California Attorney General announced a settlement with Walmart, resolving allegations that the retail corporation unlawfully disposed hazardous waste and medical waste from their facilities statewide to municipal landfills. As part of the settlement, Walmart will be required to pay $7.5 million in penalties and costs and comply with injunctive terms. The Attorney General is joined by the California Department of Toxic Substances Control (DTSC) and the district attorneys of Alameda, Fresno, Monterey, Orange, Riverside, Sacramento, San Bernardino, San Diego, San Joaquin, Solano, Tulare, and Yolo Counties in today’s settlement.

The settlement is the result of over 70 waste audits conducted by the district attorneys’ offices statewide and DTSC from 2015 through 2021. During those audits, the district attorneys’ offices reviewed the contents of waste that Walmart had sent from its facilities to municipal landfills and found thousands of containers of toxic aerosols and liquid wastes including spray paints, rust removers, bleach, pesticides, and medical waste, such as over-the counter drugs. The unlawful disposals are alleged to violate the Hazardous Waste Control Law, Medical Waste Management Act, and Unfair Competition Law.

The settlement resolves the allegations above and requires Walmart to pay $7,500,000 in civil penalties and costs. The settlement also imposes injunctive terms, which require Walmart to hire an independent, third-party auditor to conduct three annual rounds of waste audits at its facilities throughout California during the next four years. Walmart’s auditor must use specific requirements set forth in the settlement to ensure that the waste is thoroughly and accurately reviewed and characterized, and the audit results must be shared with the Attorney General’s Office, the Department of Toxic Substances Control, and the district attorneys involved in this settlement.

A copy of the complaint and proposed stipulated judgment, which details the aforementioned settlement terms and remains subject to court approval, can be found here and here.

Litigation Against Kaiser for Not Updating Provider Directory to Proceed

In 1975, the Legislature enacted the Knox-Keene Act, which provides the legal framework for the regulation of California’s individual and group health care [service] plans. Effective January 1, 2016, the Legislature enacted Health and Safety Code section 1367.27, which requires health care service plans to, among other things, maintain and update accurate provider directories (PDs). (Stats. 2015, Reg. Sess. 2014- 2015, ch. 649, § 2.)

The plaintiff, the People of the State of California, acting by and through Mara W. Elliott, the San Diego City Attorney, filed a complaint against Kaiser Foundation Health Plan, Inc.

Citing section 1367.27, the complaint alleged that health insurance companies are required to publish, maintain, and update accurate provider directories (PDs), setting forth information regarding a health plan’s providers (e.g., location, contact information, specialty, etc.). In particular, the People alleged that Kaiser failed to maintain and update accurate PDs for its health plans, as required by Health and Safety Code section 1367.27.

The complaint sought the following relief: (1) civil penalties pursuant to Business and Professions Code sections 17206, 17206.1, subdivision (a)(1), and 17536; (2) restitution; and (3) provisional and final remedies against Kaiser, including, without limitation, “an injunction prohibiting [Kaiser] from continuing [its] unlawful, unfair, and fraudulent activities, and discontinue [its] false and misleading advertising.”

Kaiser filed a motion for summary judgment. In support of its motion, Kaiser argued that there were no triable issues of material fact and it was entitled to judgment as a matter of law because the trial court should abstain from adjudicating the action. It submitted a separate statement of undisputed material facts, along with various declarations and exhibits and a request for judicial notice, in support of its motion.

In their opposition papers, the People argued that the court should not abstain from adjudicating their action because, among other things, Kaiser’s violations of section 1367.27 and other statutes provide predicates for their UCL cause of action and the UCL contemplates co-enforcement by the People and administrative agencies. In reply, Kaiser reasserted its original arguments in support of its motion.

The trial court, after hearing arguments of counsel, issued a minute order granting Kaiser’s motion for summary judgment based solely on the exercise of its discretion to abstain from adjudicating the People’s action. The court entered a judgment in favor of Kaiser. The People timely filed a notice of appeal challenging the judgment.

The Attorney General for the State of California has filed an amicus curiae brief in support of the People. The that the California Department of Managed Health Care has filed an amicus curiae brief in support of neither party, and the California Association of Health Plans has filed an amicus curiae brief in support of Kaiser. The People and Kaiser have filed answers to the amicus curiae briefs.

The Court of Appeal concluded that the trial court abused its discretion by applying the doctrine of judicial abstention. Accordingly, it reversed the judgment and remand the matter in the published case of People. ex rel. Elliott v. Kaiser Foundation Health Plan -D081262 (October 2024)

Under the doctrine of judicial abstention, a trial court has discretion to abstain from adjudicating an action if: (1) ” ‘ “granting the requested relief would require a trial court to assume the functions of an administrative agency, or to interfere with the functions of an administrative agency” ‘ “; (2) the action ” ‘ “involves determining complex economic policy, which is best handled by the Legislature or an administrative agency” ‘ “; or (3) ” ‘ “granting injunctive relief would be unnecessarily burdensome for the trial court to monitor and enforce given the availability of more effective means of redress.” ‘ ” (Hambrick, supra, 238 Cal.App.4th at pp. 147 – 148, quoting Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 496 (Arce); Blue Cross of California, Inc. v. Superior Court (2009) 180 Cal.App.4th 138, 157 (Blue Cross).)

The Court of Appeal concluded that “[A]bstention is not appropriate where resolution of the issues involves solely the judicial function of resolving questions of law based on facts before the court.” (Hambrick, supra, 238 Cal.App.4th at p. 152.) In this case, the People’s complaint requests that the trial court simply apply section 1367.27’s clear requirements for PD accuracy to the facts alleged and proven at trial, which the People argue will show Kaiser’s violation of its statutory obligations regarding PD accuracy and thus the “unlawful” prong of their UCL cause of action. Therefore, their complaint merely requests that the trial court “perform an ordinary judicial function.” (Blue Cross, supra, 180 Cal.App.4th at p. 157.) Abstention is not appropriate in these circumstances. (Hambrick, at p. 152.)

Southern California Dentist Charged for $900K Medi-Cal Fraud

The California Attorney General announced the filing of criminal charges against Southern California dentist, Husam Aldairi, along with five employees of his dental practice, for their allegedly fraudulent billing scheme that allegedly defrauded the state Medi-Cal program of nearly $900,000.

Husam Aldairi, Rawaa Attar, Lilyan Krikorian, Inci Narin, Laith Alani, and Fadi Shammas, have been charged with conspiracy to commit a crime and Medi-Cal fraud, both felonies.

Aldairi’s clinics contracted with Borrego Community Health Foundation, a Federally Qualified Health Center that serves Medi-Cal patients, to provide dental services to underserved populations and communities. Aldairi was entitled to reimbursement for each patient visit, rather than the specific services performed. However, Aldairi allegedly fraudulently billed for services that were either not rendered, or not rendered over multiple days, as was claimed to maximize profit from Medi-Cal reimbursements. Aldairi and his employees allegedly fraudulently billed more than $847,000 between 2016 and 2020.

It is important to note that criminal charges must be proven in a court of law. Every defendant is presumed innocent until proven guilty.

The Division of Medi-Cal Fraud and Elder Abuse receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $69,244,976 for Federal fiscal year (FY) 2025. The remaining 25 percent is funded by the State of California. FY 2025 is from October 1, 2024 through September 30, 2025.

“When providers defraud Medi-Cal, it not only undermines the integrity of the program, but it also poses a significant threat to the patients who rely on its critical services for their health and well-being,” said  the Attorney General. “At the California Department of Justice, we will continue to hold accountable those who perpetuate Medi-Cal fraud. We must ensure that the program remains reliable and accessible in providing quality healthcare to those who need it most.”