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2013 Annual Report of Inventory Due on April 1

Claims administrators are reminded that the 2013 annual report of inventory (ARI) for claims reported in calendar year 2012 is due to be submitted to the Division of Workers’ Compensation (DWC) Audit Unit no later than April 1, 2013.

The California Code of Regulations,title 8, section 10104 requires claims administrators to file an annual report of inventory (ARI) with the number of claims reported at each adjusting location for the preceding calendar year. Even if there were no claims reported in 2013, the report must be completed and submitted to the DWC Audit Unit. Each adjusting location is required to submit an ARI, whether or not they receive a form for reporting claims from the Audit Unit, unless their ARI requirement has been waived by the AD.

In 2011, the Audit Unit began requesting the federal employer identification number (FEIN) for each adjusting location and for all underwriting companies and/or clients for which claims are administered at the given location. A claims administrator’s obligation to submit an ARI can be waived if the AD determines that they are in compliance with electronic data reporting requirements of the Workers’ Compensation Information System (WCIS). FEIN information will be used by the DWC Research Unit to match claims information submitted electronically to the WCIS with that reported to the Audit Unit on the ARI. This will allow the AD to waive ARI requirements for claims administrators, as appropriate.

When ARI requirements are waived, claims administrators must file an annual report of adjusting locations. This report is to be filed annually on April 1 of each calendar year for the adjusting location operations as of Dec. 31 of the prior year. DWC has provided a form which can be used for this purpose.

Claims administrators are also required to report any change in the information reported in the ARI or annual report of adjusting location within 45 days of the effective date of the change.

The forms for the required 2013 ARI and annual report of adjusting locations, along with advice for claims administrators, are posted on the website.

Questions about submission of the ARI or the annual report of adjusting locations may be directed to the DWC Audit Unit by email, phone or U.S. mail: to the State of California Department of Industrial Relations, Division of Workers’ Compensation – Audit Unit, 160 Promenade Circle, Suite #340, Sacramento, CA 95834-2962. E-mail:, Facsimile: 916.928.3183. Telephone inquiry: 916.928.3180.

US Supreme Court Hears Drug Company “Pay for Delay” Arguments

The U.S. Supreme Court will hear arguments today over whether big drug companies can settle patent litigation with generic rivals by making deals to keep cheaper products off the market. U.S. and state regulators say the practice costs consumers, insurers and government billions of dollars annually.

The story in Reuters Health says that the Federal Trade Commission, which has dubbed the arrangements “pay for delay,” has fought them in court for more than a decade with mixed success, culminating in the case now before the U.S. Supreme Court. “The continuing stream of monopoly profits is large enough to pay the generic competitors more than they could hope to earn if they entered the market at competitive prices,” the FTC said in a brief. At the same time, the brand-name manufacturer receives greater profits than it could earn in the face of generic competition, the regulatory agency argued.

The Justice Department, the European Union and more than two dozen U.S. state attorneys general view the deals as illegal, but drug companies defend them as a way to avoid potentially lengthy patent litigation. “In every case that we’ve been involved in that resulted in a settlement, it has resulted in years being taken off the patent life,” said Paul Bisaro, chief executive of generic drug maker Actavis, Inc. Actavis was formerly Watson Pharmaceuticals. “It’s very unsophisticated to say ‘Oh, they get paid a bunch of money to stay off the market,'” said Bisaro.

In the case before the court, Solvay Pharmaceuticals Inc, now owned by AbbVie, sued generic drug makers Watson, Paddock Laboratories Inc and Par Pharmaceutical Cos in 2003 to stop them from making cheaper versions of AndroGel, which is used to treat men with low testosterone. The firms settled in 2006, reaching a deal that generic AndroGel would not be marketed until 2015. The patent expires in 2020. In exchange, the FTC alleges, the generic manufacturers were each paid as much as $30 million annually. AbbVie’s 2012 sales of AndroGel totaled $1.2 billion.

Solvay internal documents dating from April 2006 which were released at the Supreme Court on Friday, show that months before the companies struck their deal, Solvay concluded that it would make about $1.4 billion from AndroGel if it won the court fight and $359 million if it did not. The documents also show what appear to be a list of ideas of what to offer the generic firms to make it attractive to them to settle and delay entry. One was to allow Watson to promote the drug to urologists, while Solvay would not.

AbbVie spokeswoman Adelle Infante described the papers as “a single document among hundreds of thousands of pages of documents that were provided to the FTC.” “This internal analysis is insignificant because the negotiated patent settlement led to generic entry years in advance of the expiration of the patent, she said. The company also said that it expected to prevail. “The federal district and appellate courts have both previously ruled that the plaintiff’s allegations lacked merit. We are confident that these decisions will be upheld,” Adelle Infante, an AbbVie spokeswoman, said in a statement.

AbbVie’s arrangement with the generic manufacturers is similar to the 40 deals made in the 2012 fiscal year, which ended on September 30. That was up from 28 the previous year, despite FTC efforts to stop them. The FTC said the agreements involved 31 different brand-name drugs with total U.S. sales of more than $8.3 billion annually. The FTC sued to stop the AndroGel arrangement, arguing that it was illegal under antitrust law because the companies divided up the market. The FTC lost at the district court level and lost an appeal as well. But another appellate court has said the deals were illegal, prompting the Supreme Court to step in.

The Supreme Court is expected to issue a decision by the end of June.

S.B. 863 Triggers Sharp Rise in Lien Filings

The California Workers’ Compensation Insurance Rating Bureau says that California experienced a significant increase in lien filings from workers compensation service providers after the state adopted S.B. 863 in September. reports that San Francisco-based WCIRB discussed the impact of S.B. 863 on California’s workers comp loss development during an actuarial committee meeting on Wednesday. The bill included several workers comp reform provisions, including a lien filing fee of $150 and a three-year statute of limitations for new lien filings – both of which took effect Jan. 1. Another statute of limitations of 1.5 years for new lien filings will go into effect July 1.

During the fourth quarter of 2012, there were 513,129 lien filings from copy services, interpreters, medical providers and other workers comp services, according to a presentation posted on WCIRB’s website. That’s compared with 323,294 liens filed in the third quarter of 2012 and 463,856 liens filed in all of 2011.

WCIRB expects that 640,000 liens will be filed in 2013, according to the rating bureau’s presentation. The lien filing fee is expected to reduce the projected number of workers comp liens by 30% and reduce California’s comp system costs by $480 million.

Cal/OSHA Investigates Death Caused by Trench Collapse

One of two people who were trapped in a 15-foot trench in Pacific Palisades has died. The second worker in the construction project incident was rescued after an effort that lasted more than an hour after firefighters arrived on the scene.

The Los Angeles Times reports that the victims were working for a subcontractor on a storm-water treatment project at 200 Temescal Canyon Road and were excavating the trench, according to the Los Angeles Fire Department.

The worker who was pulled alive from the trench was rushed by ambulance to the nearby beach, where he was met by a helicopter and airlifted to UCLA Medical Center. The Los Angeles County coroner’s office identified the dead man as 50 year old Gilbert Vargas. Emergency workers recovered his body after about nine hours of digging in the 200 block of North Temescal Canyon Road, just north of Pacific Coast Highway. Vargas and the unidentified injured man had been excavating with back hoes on a city storm water project.

Peter Melton, a spokesman for Cal-OSHA, said the agency has ordered work stopped at the site until any hazards have been resolved.

The state Division of Occupational Safety and Health has six months to complete its investigation, but Melton said Los Angeles Engineering Inc., the men’s employer, “is going to want to get this taken care of as soon as possible to get back to work, if they can get back to work.”

Santa Rosa Orthopedist/QME Suspended Pending Criminal Charges

An orthopedic surgeon accused of meeting a girl for sex in Novato surrendered his medical license pending the outcome of the criminal case. As a result of the medical license suspension, the Division of Workers’ Compensation has also suspended his QME certificate. According to the report in the Marin Independent Journal, 53 year old Raymond Severt M.D. made his initial appearance in Marin Superior Court, where he is charged with four felony sex charges. Deputy District Attorney Aicha Mievis he delayed entering a plea until his next hearing on April 10.

Severt, in stipulating to the suspension of his medical practice, is also barred from prescribing or dispensing drugs, and he must surrender his wall certificates and prescription pads, according to a filing by Deputy Attorney General Brenda Reyes. At the time of his arrest last month Severt worked for Santa Rosa Orthopeadics. He is on leave.

Severt, a Santa Rosa resident, was arrested by Novato police on Feb. 11. The investigation began when police received information that a man was sending sexually explicit messages to the girl and had arranged to meet her in Novato. Investigators intercepted Severt in the area of South Novato Boulevard and Gateway Court. Police said he initially met the girl through an online chat room.

Severt’s lawyer, Stephen Turer, said that the girl initially told Severt she was 21 years old. Police allege she later told Severt that she was under 18, but Severt agreed to meet anyway because he did not know which age she was telling the truth about, Turer said. Severt never actually had the chance to meet her and see that she was underage, because police arrested him first, Turer said. “It becomes one of those not-so-unique situations where people get involved online under, at least, ambiguous or confusing circumstances,” he said. “It doesn’t appear that initially his interest was in young girls,” he added. “There’s no indication he has any history in any way of soliciting minors. It’s unfortunate what he did even if she was 21, given his age, but it’s not a crime.”

Severt is charged with attempted lewd acts with a child under 14, communicating with a minor for the purpose of lewd behavior, arranging a meeting with a minor for purposes of lewd behavior, and distribution of lewd material to a minor. The latter charge is for the sexually explicit messages he allegedly sent the girl. Severt could face up to four years in prison on charges of attempted lewd acts with a child under 14, communicating with a minor for the purpose of lewd behavior, arranging a meeting with a minor for purposes of lewd behavior, and distribution of lewd material to a minor. The latter charge is for the sexually explicit messages he allegedly sent the girl.

DWC, WCAB Revise Policy and Procedural Manual

The Division of Workers’ Compensation and Workers’ Compensation Appeals Board have revised their Policy and Procedural Manual (PPM) and posted it on the WCAB website.

The PPM is an internal employee guide, prepared under the authority of the administrative director of DWC and the chair of the WCAB. The manual is designed to promote uniformity and provide direction to judges and other employees in the day-to-day operation of DWC’s district offices and the Appeals Board. It is also a resource for attorneys, claims administrators and other parties wanting information on the rules of court. Because it an internal document, the PPM is not subject to regulations, which require formal rulemaking procedures and public hearings.

The PPM became operative in 2003, with some revisions made in the following years. The 2012-13 revisions, which are effective on March 8, were drafted by a committee consisting of Appeals Board Secretary and Deputy Commissioner Rick Dietrich, DWC Chief Judge Richard Newman, Associate Chief Judges Thomas Clarke, Mark Fudem and Ellen Flynn, and Marina del Rey Presiding Judge Paige Levy, who was the project manager.

DWC monitors the administration of workers’ compensation claims, and provides administrative and judicial services to assist in resolving disputes that arise in connection with claims for workers’ compensation benefits. The WCAB, a seven-member, judicial body appointed by the Governor and confirmed by the Senate, exercises all judicial powers vested in it by the Labor Code. Its major functions include review of petitions for reconsideration of decisions by workers’ compensation administrative law judges of the DWC and regulation of the adjudication process by adopting rules of practice and procedure.

Neighborly Help With Roof Repairs Does Not Create Employment Relationship

Decedent, Juan Sanchez, fell from the roof of the residence of Defendant Alejandro Perez. Prior to the incident, Defendant Alejandro Perez believed that there were some areas of dry rot under the eaves on various portions of the roof. The sole cost of the roof repairs was $186.68, which was the cost of supplies purchased by Perez. The decedent had several years of construction experience, including roofing repairs and according to his wife knew how to perform all aspects of construction.

On April 22, 2006, the decedent began making roof repairs to Defendant’s eaves. The decedent used his own tools and ladder to make the repairs, with the exception of one saw which was provided by Defendant Perez. Defendant Perez’s only assistance in the repairs was handing materials up the ladder. As decedent was familiar with roof repairs, Defendant Perez did not direct the details of the decedent’s work. Prior to the decedent’s fall, his wife warned him to be careful because he was near the edge of the roof. Defendant Perez subsequently found the decedent lying injured on the driveway. Decedent was transported to San Joaquin County General Hospital where he died the following day from his injuries. Prior to the fall, the decedent had been drinking beer. The decedent’s survivors sued defendant Alejandro Perez alleging negligence.

The trial court granted defendant’s motion for summary judgment. It concluded that: (1) all of plaintiffs’ causes of action were for negligence; (2) defendant did not owe the decedent a duty of care; (3) California Occupational Safety and Health Act (Cal-OSHA) regulations were inapplicable; (4) the decedent was not defendant’s employee; (5) defendant did not exercise control over the work; (6) defendant had no duty to warn the decedent of an obviously dangerous condition; (7) plaintiffs cannot establish causation; (8) the decedent assumed the risk; and (9) plaintiffs cannot establish a claim for emotional distress.

The plaintiff appealed the summary judgment. The Court of Appeal affirmed the dismissal in the unpublished decision of Dolores Rivera-Sanchez v Alejandro Perez.

Plaintiffs claim that the decedent was defendant’s employee under the presumption created in Labor Code section 2750.5. But the Court of Appeal found that the presumption does not apply because the job fell within an exception under Business and Professions Code section 7048.

Labor Code section 2750.5 states: “There is a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required pursuant to [the Contractors’ State License Law], or who is performing such services for a person who is required to obtain such a license is an employee rather than an independent contractor. . . .”

Plaintiffs tried to apply Labor Code section 2750.5 to establish that the decedent was defendant’s employee because the work the decedent was doing required a contractor’s license (and the decedent did not have a contractor’s license). However, Business and Professions Code section 7048 states that the Contractors’ State License Law “does not apply to any work or operation on one undertaking or project by one or more contracts, the aggregate contract price which for labor, materials, and all other items, is less than five hundred dollars ($500), that work or operations being considered of casual, minor, or inconsequential nature.” The only evidence of the cost of the project in this case was $186.68 that defendant spent on materials. Because the project cost less than $500, no contractor’s license was required. The Court ruled that because no contractor’s license was required, the Labor Code section 2750.5 presumption that the decedent was defendant’s employee does not apply.

Plaintiffs also attempt to invoke Labor Code section 3357, which states: “Any person rendering service for another, other than as an independent contractor, or unless expressly excluded herein, is presumed to be an employee.” However, this workers compensation statute does not apply “if the essential contract of hire, express or implied, is not present.” (Spradlin v. Cox (1988) 201 Cal.App.3d 799, 807.) A contract for hire requires “‘(1) consent of the parties, (2) consideration for the services rendered, and (3) control by the employer over the employee.’” (Ibid.) Here, there was no consideration for services rendered, and defendant did not exercise control over the decedent. Therefore, the Court ruled that decedent was not an employee under Labor Code section 3357.

Floyd, Skeren and Kelly LLP Schedules Employment Law Conference

Floyd, Skeren and Kelly LLP is pleased to announce its 3rd Annual Employment Law Conference, which will feature keynote speaker Phyllis W. Cheng, Director of the California Department of Fair Employment and Housing (DFEH). The conference will be held on May 9, 2013 at the Disneyland Hotel.

This is an all-day event, designed for employers, supervisors, managers, claims adjusters, risk managers, and any other professionals associated with human resources and employment law. The conference will focus on the latest employment law cases, most recent legislation, and provide helpful practical guidance related to numerous workplace topics, including: the new California disability regulations (which impact an employer’s policies and procedures on reasonable accommodation, the interactive process and medical certifications); an overview of important OSHA workplace requirements; a review of 10 critical steps an employer can take to stay out of court and avoid costly and time consuming employment related lawsuits; a workers’ compensation case law and legislative update; helpful guidance on preventing workers’ compensation fraud; a review of the new comprehensive pregnancy disability regulations now in effect; and, an update on the evolving role of social media in the workplace.

Cost of attendance is $120.00

Discounted room rates at the Disneyland Hotel and discounted Disneyland tickets are available for attendees and their guests. Upon registration this information will be provided to you.

Please visit for more details and online registration. You can also contact Christina Bardelli by phone (818) 854-3239 or, email

Court of Appeal Expands Employee Privacy Rights

Yum! Brands is the corporate parent of several fast food franchises, such as Taco Bell, Pizza Hut, and KFC (formerly known as Kentucky Fried Chicken). Yum employed Melissa Ignat between 2005 and 2008 in the Yum Real Estate Title Department, located in Irvine. She assisted paralegals in the department with securing title to the real estate on which Yum’s franchised stores conducted business.

Ignat suffered from bipolar disorder, for which she was being treated with medications. Sometimes these were effective, sometimes not. Side effects of medication adjustments occasionally forced Ignat to miss work. Ignat alleged that after returning from one such absence in mid-2008, her supervisor, Mary Shipma informed her that she had told everyone in the department Ignat was bipolar. Ignat alleged her coworkers subsequently avoided and shunned her, and one of them asked Shipma if Ignat was likely to “go postal” at work.

Ignat was terminated in early September 2008. She filed suit against Yum! Brands and Shipma on November 12, 2008, alleging one cause of action for invasion of privacy by public disclosure of private facts. The trial court granted summary judgment in favor of the employer. Summary judgment was ordered on the ground that the right of privacy can be violated only by a writing, not by word of mouth. Because Ignat had not produced any document disclosing private facts, she could not pursue this cause of action. The trial court lamented the “irrationality” of this rule, but felt itself bound by precedent.

Ignat appealed. The Court of Appeal reversed in the published opinion of Ignat v Yum! Brands Inc.

In reviewing the case law the Court of Appeal noted that the “rule” requiring a written publication as an element of a public disclosure of private facts privacy claim in California originated in dictum in Melvin v. Reid (1931) 112 Cal.App. 285 – which lacked support in the case law on which it was based – an opinion that rejected the tort and all its principles, instead basing its holding on another principle entirely. It was followed by two cases from the 1960’s.(Gautier v. General Telephone Co., supra, 234 Cal.App.2d at p. 303; Grimes v. Carter, supra, 241 Cal.App.2d at pp. 698-699.) With these two exceptions, restricting privacy violations to written publications has been either roundly criticized or ignored by the courts dealing with disclosure of private facts in oral statements since the principle was first enunciated, in dictum, in Melvin . The Court of Appeal concluded that “This is not a firm foundation for a ruling dismissing a cause of action”.

The Court concluded “that limiting liability for public disclosure of private facts to those recorded in a writing is contrary to the tort’s purpose, which has been since its inception to allow a person to control the kind of information about himself made available to the public – in essence, to define his public persona. (See Briscoe, supra, 4 Cal.3d at p. 534; The Right to Privacy, supra, 4 Harv. L.Rev. at pp. 198-199.) While this restriction may have made sense in the 1890’s – when no one dreamed of talk radio or confessional television – it certainly makes no sense now. Private facts can be just as widely disclosed – if not more so – through oral media as through written ones. To allow a plaintiff redress for one kind of disclosure but not the other, when both can be equally damaging to privacy, is a rule better suited to an era when the town crier was the principal purveyor of news. It is long past time to discard this outmoded rule.”

Operators of Leasing Company Charged in $1.7 Million Fraud Case

A Corona man and his daughter who have been charged with taking more than $1.7 million in what officials say was a workers’ compensation fraud scheme have pleaded not guilty.The Press-Enterprise reports that Antonio Torres Arias, 47, and Nayeli Iliana Torres, 22, each pleaded not guilty during their Thursday, March 14, arraignment in the downtown Riverside Hall of Justice courthouse. Their next court date is April 4. Jail records showed Torres is out of custody; Arias remained in jail early Thursday evening on $1.7 million bail.

Investigators said the defendants operated several companies that leased employees to the Cardenas Markets supermarket chain. There is no information that Cardenas Markets was involved in any of the alleged wrongdoing, a news release from the district attorney’s office said.

Arias and Torres are each charged with five felonies – four counts of misrepresentation to obtain workers’ compensation insurance and one count of tax evasion. If convicted as charged, each could face up to 16 years in prison. Arias and Torres conducted the alleged fraud to reduce the amount of premiums owed for workers’ compensation insurance. They used “cash pay” employees, misclassified employee jobs, and concealed the history of employees’ workplace injuries as far back as 2009, prosecutors said.

Two of the defendants’ companies included Torres Services and Torres Cleaning. The companies that authorities say were wronged in the case include First Comp Insurance, Chartis Insurance, National Fire Insurance and the state Employment Development Department.

The case was investigated for about nine months by a task force that includes the Riverside County District Attorney’s office and the California Department of Insurance. Authorities were alerted to the case by investigators from First Comp Insurance. The case is being prosecuted by Deputy District Attorney Michael Mayman, of the office’s Insurance Fraud Unit of the Special Prosecution Section.