The Justice Department announced the results of a coordinated, nationwide enforcement action to combat COVID-19 fraud, which included 718 enforcement actions – including federal criminal charges against 371 defendants – for offenses related to over $836 million in alleged COVID-19 fraud.

Deputy Attorney General Monaco also announced the launch of two additional COVID-19 Fraud Enforcement Strike Forces: one at the U.S. Attorney’s Office for the District of Colorado, and one at the U.S. Attorney’s Office for the District of New Jersey. These two strike forces add to the three strike forces launched in September 2022 in the Eastern and Central Districts of California, the Southern District of Florida, and the District of Maryland.

Michael C. Galdo, Acting Director of COVID-19 Fraud Enforcement, detailed the results of the three-month coordinated law enforcement action that took place from May through July 2023, which included criminal, civil, and forfeiture actions. More than 50 U.S. Attorneys’ Offices, including the COVID-19 Fraud Enforcement Strike Forces, the Justice Department’s Criminal and Civil Divisions, and more than a dozen law enforcement and OIG partners worked together to conduct the sweep.

Galdo also said that 63 of the defendants had alleged connections to violent crime, including violent gang members also accused of using pandemic funds to pay for a murder for hire. Twenty-five defendants have alleged connections to transnational crime networks.

718 law enforcement actions occurred, including criminal charges, civil charges, forfeitures, guilty pleas, and sentencings, with a combined total actual loss of more than $836 million. Criminal charges were filed against 371 defendants, and 119 defendants pleaded guilty or were convicted at trial during the sweep. Over $57 million in court-ordered restitution was imposed. 117 civil matters occurred during the sweep, with over $10.4 million in judgments. Prosecutors worked with law enforcement to secure forfeiture of over $231.4 million.

Many of the cases in the enforcement action involve charges related to pandemic unemployment insurance benefit fraud and fraud against the two largest pandemic Small Business Administration programs: the Paycheck Protection Program and Economic Injury Disaster Loans. Additional matters involved pandemic healthcare billing fraud, fraud against the Emergency Rental Assistance program, and fraud committed against the IRS Employee Retention Credit program (ERC), a refundable tax credit for businesses and tax-exempt organizations that had employees and were affected during the COVID-19 pandemic. IRS Criminal Investigations (IRS-CI) worked with the California Strike Force and the U.S. Attorney’s Office for the District of New Jersey to bring multimillion dollar ERC fraud cases during the enforcement action.

In May 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force (CFETF) to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The task force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts.

The cases were investigated by the following agencies: FBI; U.S. Secret Service; IRS-CI; Defense Criminal Investigative Service; Homeland Security Investigations; U.S. Postal Inspection Service; Army Criminal Investigations Division; Food and Drug Administration’s Office of Criminal Investigations; the Diplomatic Security Service; and the Offices of Inspectors General from the Small Business Administration, Department of Labor, Department of Homeland Security, Federal Deposit Insurance Corporation, Department of Health and Human Services, Department of Veterans Affairs, Federal Housing Finance Agency, Federal Reserve Board, Social Security Administration, the Special Inspector General for Pandemic Relief, Treasury, and the Treasury Inspector General for Tax Administration.

OCDETF Fusion Center and OCDETF’s International Organized Crime Intelligence and Operations Center, the Pandemic Response Accountability Committee, the Financial Crimes Enforcement Network, and the National Unemployment Insurance Fraud Task Force provided key support.

From March 2020 through February 2023, California was in a State of Emergency due to COVID-19. Midway through this period, on August 11, 2021, the State Public Health Officer issued an order requiring K-12 schools to verify the COVID 19 vaccination status of all school workers (State Dept. of Public Health, State Public Health Officer Order of Aug. 11, 2021.)

When the Public Health Order went into effect, Gloria Elizabeth Rossi was working at the School, as she had for decades, providing in-person classroom assistance for children with special needs and children whose primary language is Spanish.

Rossi was placed on unpaid administrative leave and then terminated from her employment with defendant Sequoia Union Elementary School District after refusing to either provide verification of her COVID-19 vaccination status or undergo weekly testing as required by a then-operative order of the State Public Health Officer.

Rossi brought suit under the Confidentiality of Medical Information Act (CMIA) (Civ. Code, § 56 et seq.) against defendants the School District; Sequoia Union Elementary School, the School where she worked, and Ken Horn, the School principal and superintendent.

Her complaint asserted two causes of action under the CMIA, alleging (1) discrimination due to her refusal to authorize release of her medical information and (2) unauthorized use of her medical information.

The trial court sustained defendants’ demurrer without leave to amend, finding each claim failed as a matter of law due to certain statutory exceptions.

This appeal is related to two other contemporaneous appeals (Dennis v. Tulare City School District (Aug. 25, 2023, F085428) [nonpub. opn.]; Moran v. Tulare County Office of Education (Aug. 25, 2023, F085385) [nonpub. opn.]) from nearly identical orders by judges of the Tulare County Superior Court dismissing identical CMIA causes of action by similarly situated school-worker plaintiffs.

The plaintiff-appellants in all three cases were represented by the same counsel; the cases were argued on the same day before the same panel of this Court. In this case the Court of Appeal affirmed the trial court’s orders in the published case of Rossi v. Sequoia Union Elementary School District F085416 (August 2023) on substantially identical grounds in all three cases.

Plaintiff’s principal contention on appeal is that the Public Health Order did not specify “what to do with individual employees not complying” and did not mandate their termination; she argues defendants’ disciplinary actions were therefore undertaken at their discretion, not necessitated by the Order.

The Court of Appeal noted that “The Public Health Order required “full compliance” by facilities and mandated that all K-12 schools “must verify vaccine status of all workers” and that those schools with workers who must test (i.e., with workers not reporting complete vaccination) “must report results to local public health departments.”

Notably, “the School could not fulfill either of these requirements without the cooperation of plaintiff (and all School workers).” And the “administration could not verify her vaccination status on its own, and it could not transmit test results it did not have. Although the Order did not literally state that unvaccinated and non-testing workers could not be present on school campuses, the Order’s prefatory text makes clear that its goal was to “minimize the risk that [workers] will transmit [COVID-19] while on K-12 school campuses,”

Plaintiff argues a fact finder might reasonably conclude that other reasonable accommodations could have been reached besides putting her on unpaid leave and ultimately firing her – positing “plexiglass [or] physical distancing” as other possible solutions.

“However, we do not see how other potential arrangements like these would allow defendants to bring the School into ‘full compliance’ with the Public Health Order. Even if defendants allowed plaintiff to return to work in the classroom from behind a plexiglass shield, that would not allow them to either verify her vaccination status or report all unvaccinated-worker test results to local health departments. There is no room for factual debate about how else defendants could have complied with the Order’s requirements without directing plaintiff to stay home until she provided test results – and terminating her when it was clear she was never going to test.”

The Court of Appeal likewise concluded that the demurrer was properly sustained for the second cause of action, under Civ. Code § 56.20(c) (Unauthorized Use Claim), but not for the reasons stated by the trial court.

The complaint pleads a section 56.20(c) cause of action arising purely from defendants’ unauthorized use of plaintiff’s purported medical information (that is, her presumed unvaccinated status) to terminate her employment. Section 56.20(c)(1)’s exception states: “The information may be disclosed if the disclosure is compelled by judicial or administrative process or by any other specific provision of law.”

There is no allegation that defendants disclosed her vaccination status to any third party.

The California State Auditor is required by Government Code section 8546.5, to report to the California Governor and State Legislature about statewide issues and state agencies that represent a high risk to the State or its residents. It’s latest report published on August 24, 2023 concludes that the Employment Development Department meets the criteria to me moved to the High Risk list, and two other agencies, the California Department of Technology, and the Department of Health Care Services, should remain on the High Risk list.

In the Auditor’s prior January 2021 Report it explained that EDD’s fraud prevention approach during the pandemic was marked by significant missteps and inaction that led to billions of dollars in unemployment benefit payments that EDD later determined may have been fraudulent.

The new 2023 Auditor’s assessment said that “EDD is a high-risk agency because of its mismanagement of the UI program. Specifically, EDD is unable to reliably estimate improper payments under the UI program, thus adversly affecting the State’s financial statements as well as impairing efforts to independently evaluate the efficacy of EDD’s own fraud prevention activities.”

“Despite the program’s critical importance, EDD’s management of the UI program has been characterized by significant internal control weaknesses. For example, the program did not block addresses used to file unusually high numbers of claims, and it removed a safeguard preventing payment to individuals who had unconfirmed identities. These inadequate internal controls did not prevent potential fraud during fiscal years 2019-20 and 2020-21 and allowed the payments of potentially fraudulent claims, estimated at tens of billions of dollars, most of which have yet to be recovered.”

“Contributing to this serious detriment, EDD’s inadequate identification of potentially fraudulent UI benefit payments was also a significant factor leading to modified audit opinions and the delayed publication of California’s Annual Comprehensive Financial Report (ACFR) for fiscal years 2019-20 and 2020-21, which the State Controller published in February 2022 and March 2023, respectively.”

“EDD has not taken adequate corrective action to prevent the substantial risk of serious detriment to the State and its residents. Corrective action is adequate when it prevents a risk – such as the risk of fraud – from presenting a substantial risk of serious detriment. Because the potentially fraudulent payments have already occurred, have not been fully identified, and have largely not been recovered, EDD’s corrective action is not adequate.”

The Auditor “noted this issue in Report 2021-001.1, March 2023, the report that reviewed internal controls and compliance. In fact, we found that EDD’s estimate of potentially fraudulent payments omitted certain payments to claimants who made false statements to obtain benefits and also incorrectly included valid claims for benefits. EDD has established a process to pursue recovery of ineligible payments, but until it identifies all inappropriate transactions, it cannot effectively manage that process or allocate appropriate resources to pursuing recovery. Thus EDD’s current corrective action remains insufficient and is a contributing element to our designation of the agency as high-risk.

“Apart from the potentially fraudulent UI payments that EDD made during the pandemic, which it has estimated to be in the tens of billions of dollars and which continue to affect the State’s financial reporting, EDD’s eligibility decisions are frequently overturned during appeal and have resulted in the substantial risk of serious detriment to California residents.”

” From 2017 through 2022, about half of the issues in UI claims that claimants appealed were ultimately overturned in favor of the claimant. This rate of overturned decisions is consistent with the high rate of overturned decisions we noted in Report 2014-101, August 2014.” The Auditor added that “as of March 2023, California had the third highest reversal rate in the nation.”

The North Coast Village Condominium Association is a California nonprofit corporation with forty-two employees and five board members. The North Coast Village condominium complex includes approximately 550 condominium units, an on-sight management office, and a security office.

The Association filed a workplace violence restraining order petition pursuant to Code of Civil Procedure, section 527.8 in support of its board president, Neil Anderson, and 46 other employees and board members seeking to restrain resident Nancy Phillips. Phillips and Anderson both own units within the community and Phillips previously served two terms on the Association’s board of directors. Anderson is the current board president.

Phillips and Anderson both own units within the community and Phillips previously served two terms on the Association’s board of directors. Anderson is the current board president.

Joseph Valenti was the Association’s general manager for twenty-four years before he retired early – due in part to the fact that dealing with Phillips was “too much.” He first met Phillips in 2005 when she angrily confronted him for supporting a contractor she had reported to the contractor’s licensing board. Valenti estimated that Phillips threatened to fire him over fifty times, including while she was on the board and was his boss. He said he feared for his safety as a result because he was the sole provider for his wife.

Fidel Jiran is the security patrol supervisor, and once while investigating a car in the parking area, Phillips became irate, shouted numerous profanities, walked quickly towards him, and took a backhanded swipe at his facial area. Jiran pulled his head backward to try to avoid her, but she knocked his baseball cap to the ground.

Jennifer Duren works as an administrative assistant and client relations specialist in the Association office.Phillips came into the office and asked to speak with Valenti. Duren went to Valenti’s doorway to announce Phillips. Phillips then came up behind Duren and shoved her with both hands into Valenti’s office.

Anderson served in the military for 26 years before retiring and taking a job as the director of disaster preparedness with a local fire department. He first encountered Phillips at an executive committee meeting after they were both elected to the Association’s board in 2016. He testified of many confrontations with her, one where she accused him and had him prosecuted in 2018 for lewd conduct for walking around in his underwear. He hired an attorney, defended and won the misdemeanor criminal case she instigated. Numerous conflicts occurred between the two during the following years.

Phillips continued to walk by his condominium almost every day – at least a hundred times according to Anderson – constantly muttering. This persisted even after the Association obtained a temporary workplace violence restraining order against her on February 4, 2021. On one occasion, he heard Phillips say “you (expletive deleted), I’m going to get you if it’s the last thing I do.” He said she appeared to be filming him as she walked by.

At the conclusion of a three-day hearing, the trial court denied the Association’s request. It then sua sponte and absent a request to amend the pleadings by either party, awarded Anderson a civil harassment restraining order pursuant to Code of Civil Procedure section 527.6 against Phillips “in the interest of judicial efficiency and conforming pleadings to proof.”

Phillips appealed and the Association cross-appealed. The Court of Appeall reversed and remanded in the published decision in North Coast Village Condominium Assn. v. Phillips D079455 (August 2023).

The Court of Appeal agreed with Phillips on her appeal claiming that that she was denied due process protections when the court sua sponte amended the pleadings at the conclusion of the case without prior notice.

“The breadth of behavior subject to restriction under section 527.8 also is narrower than that covered by section 527.6, meaning the section 527.8 petition did not put Phillips on notice to engage in discovery of certain facts or prepare appropriate defenses.”

On cross-appeal, the Association argues the trial court misinterpreted and misapplied section 527.8. It contends the trial court erred in concluding that section 527.8 did not apply to the December 23, 2020, and January 16, 2021 incidents because (1) Phillips was standing on public versus Association property, and (2) Anderson was not acting in his official capaciy as a board member at the time of the incidents.

Anderson testified that he considers his home to be his office, and he will respond to Association needs 24 hours a day if he is needed. He also testified residents approach him in the community to ask him questions or talk to him “all the time” and at all different hours.

But the Court of Appeal noted that some ambiguity remains in the workplace violence statute as to whether the definition of “workplace” includes a home office when the individual is not actively engaged in work at the time. And neither the legislative history nor caselaw “provides clear guidance as to whether section 527.8 encompasses protection for those who live at their workplace.”

“The boundary also is not clear regarding the trial court’s other distinction between whether Anderson was acting as an employee at the relevant times or not.“

“Now that many employees have the ability to work from anywhere and even on their phones, employees may alternate between handling personal and work matters throughout the day and night and follow a less defined work schedule than in the past. As a result, the distinction between when someone is and is not functioning as an employee may not always be abundantly clear.”

“Ultimately, how this statute is applied in an evolving work environment likely is an issue the legislature will need to revisit. We conclude only that the limitations imposed by the trial court in this case are not supported by the language or history of the statute.“

The reasoning of the trial Judge on these issued “do not provide a sufficient record that would allow us to determine the court’s holding absent the added limitations regarding location and capacity, remand is appropriate.”

“We express no opinion as to how the petition should be resolved.”