CEO Magazine has published it’s annual Best & Worst States survey of CEOs this year. Broadly speaking, the trends dictating how states are performing as economic actors these days extend beyond CEO opinion to include foreign companies’ increasing embrace of the U.S. market; reshoring and a renaissance in domestic manufacturing; the leveraging of state coffers flush from recent federal largess through tax cuts and other means; the rising value of experienced labor along with the expansion of automation; and the pandemic-era migration from city cores to exurbs and beyond.

Texas again places No. 1 this year, as it has annually in the survey since its inception. Florida ranked No. 2 again, extending its own string but also putting unprecedented pressure on Texas for the top spot. Tennessee once again is ranked No. 3 in state business climate by CEOs. North Carolina, at No. 4, and No. 5 Arizona flipped spots this year. No. 6 Indiana is a mainstay as well.

Just as CEOs have solidified opinions about the welcoming top states, their assessment of the worst has ossified: No. 47 New Jersey, No. 48 Illinois, No. 49 New York and No. 50 California remain the same as in the 2022 survey.

Tech layoffs amounted to an estimated 333,000 just since last year, according to a new study by Boston Consulting Group. California workers certainly have suffered the most.

But in between, there are some significant advances in this year’s ranking, especially the rise of Georgia and South Carolina, each up four spots to No. 7 and No. 8 in the Chief Executive list. They’ve joined Florida in the broad advance of the Southeast, especially as a new manufacturing hub.

In another related study of small business sentiment, the Freedom Economy Index surveyed a universe of over 80,000 small business owners throughout the United States, fielding the questionnaire from February 6 to 9, 2024, with 840 respondents. The survey has a margin of error of +/-3.0% at the 95% confidence level.

The survey compared the individual results for California and Florida, and also Red States and Blue States nationwide. The stark contrasts leave little doubt where small businesses thrive.

Only 13% of small businesses in California are happy with their location, which is nearly 40% lower than the national average, according to the February survey of 80,000 small business owners nationwide, a joint project of PublicSquare and RedBalloon.

Nationwide, half of respondents say they are happy with their current location and don’t plan on moving. In California, 13% say they are happy in their location, and 67% are either planning a move (10%), considering a move (30%) or they are feeling trapped, wanting to move but can’t afford it (27%).

Respondents were asked to identify which factors make them want to relocate, with the ability to choose multiple items, 64.5% of employers list high tax rates, and 59.4% blame anti-business government policies. Again, looking just at California, the Golden State is struggling, as 86.4% say high taxes are driving them away, and 84.9% say the anti-business government is also to blame.

But the weather is nice”

The California Medical Board supervises the medical profession in California by issuing licenses, reviewing the quality of medical practice carried out by physicians and surgeons, approving medical- evaluation programs, and administering the continuing- medical-education program. As part of this responsibility, the Medical Board has a duty to “take action against any licensee who is charged with unprofessional conduct,” which includes gross negligence, repeated negligent acts, incompetence, dishonesty, and corruption.

California’s Business and Professions Code identifies a wide array of activities that the California legislature has determined constitute unprofessional conduct and can lead to professional discipline.

Frustrated by what it saw as an “amplification of misinformation and disinformation related to the COVID-19 pandemic” by licensed medical providers who hold a high degree of public trust, the California Medical Association sponsored a bill aimed at ensuring medical professionals were “held accountable for the information they spread.”

In the Fall of 2022, after some revisions narrowing its scope, the legislature passed, and Governor Newsom signed into law, AB 2098. As codified, the law provided, in relevant part: (a) It shall constitute unprofessional conduct for a physician and surgeon to disseminate misinformation or disinformation related to COVID-19, including false or misleading information regarding the nature and risks of the virus, its prevention and treatment; and the development, safety, and effectiveness of COVID-19 vaccines.

In his signing statement, Newsom acknowledged that he was “concerned about the chilling effect” of legislating doctor-patient conversations. Nontheless he signed the law because it was “narrowly tailored to apply only to those egregious instances in which a licensee is acting with malicious intent or clearly deviating from the required standard of care while interacting directly with a patient under their care.”

The Liberty Justice Center filed McDonald v. Lawson  in the U.S. District Court for the Central District of California, in October 2022 to challenge AB2098.

The district court denied a preliminary injunction, holding that AB 2098 was neither an unconstitutional restraint on speech nor impermissibly vague. Drs. McDonald and Barke timely appealed.

In Couris v. Lawson, No. 22-55069, Michael Couris, M.D. and Michael Fitzgibbons, M.D. separately sued various California officials and also sought an injunction, but the district court stayed their case pending the 9th Circuit Court of Appeals decision in McDonald. Drs. Couris and Fitzgibbons timely appealed, and the Court of Appeals consolidated the two appeals.

In September 2023, the California Legislature passed Senate Bill 815, enacted as 2023 Cal. Stat., ch. 294 (SB 815), which repealed AB 2098. Governor Newsom signed SB 815 on September 30, 2023, and it took effect on January 1, 2024.

The 9th Circuit Court of Appeals requested supplemental briefing from the parties on the impact of SB 815 on this consolidated appeal. Relevant here, a “repeal, amendment, or expiration of legislation” gives rise to “a presumption that the action is moot, unless there is a reasonable expectation that the legislative body is likely to enact the same or substantially similar legislation in the future.” Bd. of Trs. of Glazing Health & Welfare Tr. v. Chambers, 941 F.3d 1195, 1197 (9th Cir. 2019) (en banc).

While a private party’s voluntary cessation of challenged conduct “ordinarily does not suffice to moot a case” because the defendant may be “free to return to his old ways” and resume the conduct, see Friends of the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc., 528 U.S. 167, 174, 189 (2000) (citation omitted), the voluntary cessation of challenged conduct by government officials ‘must be treated with more solicitude.

Plaintiffs argue that this appeal is not moot because they face the possibility of being disciplined for violations that occurred while AB 2098 was in effect. If true, this could defeat a finding of mootness.

As part of California’s response addressing the impact of SB 815, the Executive Director of the Medical Board stated under penalty of perjury that, due to the legislative repeal, the Medical Board’s “employees and agents, including investigators . . . have been instructed not to enforce [AB 2098]” through the repeal effective date and that after AB 2098 is no longer in effect, “the Medical Board will have no legal authority to enforce [AB 2098].”

The Executive Director’s sworn statement was made in the context of litigation, and, consequently, the Medical Board may be judicially estopped from assuming a contradictory position on enforcement or pursuing legal action against Plaintiffs at a later date.

Thus the 9th Circuit Court of Appeals vacated the judgments and remanded both cases with instructions to dismiss the cases as moot in the published case of McDonald et. al. v. Lawson et. al. -22-56220 (February, 2024)

On November 25, 2020, Dana Hohenshelt filed a complaint against his former employer Golden State Foods Corp.. She alleged four causes of action: retaliation under the California Fair Employment and Housing Act (FEHA); failure to prevent retaliation under FEHA; violation of Labor Code section 226, subdivision (c), failure to timely provide copies of wage statements; and violation of Labor Code section 1198.5, subdivision (b), failure to timely provide copies of personnel records.

Golden State moved to compel arbitration according to the parties’ arbitration agreement. On April 1, 2021, the trial court granted the motion and stayed court proceedings pending binding arbitration.

On August 3, 2021, arbitration commenced via Judicial Arbitration and Mediation Services (JAMS). An arbitrator was appointed on August 16, 2021. Per the arbitrator’s fee schedule, “All fees are due and payable in advance of services rendered.” On July 29, 2022 JAMS sent an invoice to Golden State for $32,300. On August 29, 2022, JAMS sent another invoice for $11,760. Both invoices were due to be paid within 30 days of their respective due dates; both invoices provide that payment is “due upon receipt.”

On September 30, 2022, JAMS sent a letter stating: “Pursuant to our fee and cancellation policy, all fees must be paid in full by October 28, 2022, or your [arbitration] hearing may be subject to cancellation.”

Later that same day, on September 30, 2022, Hohenshelt notified JAMS and the court that because Golden State did not pay within 30 days of the due date, he was “unilaterally elect[ing]” to withdraw his claims from arbitration and to proceed in court pursuant to Code of Civil Procedure section 1281.98, subdivision (b)(1).

On October 5, 2022, Golden State confirmed via email to Hohenshelt that “all outstanding fees have been paid in full.” On October 6, 2022, Hohenshelt filed a motion to lift the litigation stay pending arbitration.

On February 2, 2023, the court denied the motion. It deemed Golden State’s payment timely based on the September 30, 2022 letter providing a new due date of October 28, 2022 for payment. The court held that “the arbitrator seemingly set a new due date of October 28, 2022.”

The Court of Appeal granted Hohenshelt’s petition for writ of mandate and directed the trial court to vacate its order denying the motion to lift the stay of litigation and to enter an order lifting the stay in the published case of Hohenshelt v. Superior Court -B327524 (February 2024).

“The trial court’s ruling was inconsistent with statutory mandate as well as recent appellate opinions. First, the trial court’s ruling ignored the clear language of Code of Civil Procedure.section 1281.98, subdivision (a)(2), which expressly provides that “[a]ny extension of time for the due date shall be agreed upon by all parties.” Here, there is no evidence that Hohenshelt agreed to any extension.

Secondly, the Second District Court of Appeal dealt with this exact same situation in Cvejic v. Skyview Capital, LLC (2023) 92 Cal.App.5th 1073. As did their colleagues in Gallo v. Wood Ranch USA, Inc. (2022) 81 Cal.App.5th 621.

“The same logic applies in the case before us. Golden State’s arbitration fees were due to be paid within 30 days of the two invoices.” Payment was not paid on time. “Section 1281.98 entitled Hohenshelt to withdraw from the arbitration. Section 1281.98 does not allow for any extension of time for the due date absent an agreement ‘by all parties.’ “

Golden State argues for the first time via its supplemental brief that section 1281.98 is preempted by the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) and that the Court of Appeal should uphold the trial court’s order to allow the parties to return to arbitration.

“The question of whether section 1281.98, as well as sections 1281.97 and 1281.99, are preempted by the FAA was addressed and answered in Gallo and followed thereafter by other courts. (See Suarez v. Superior Court (2024) 99 Cal.App.5th 32, 41-42; Espinoza v. Superior Court (2022) 83 Cal.App.5th 761, 783-784; De Leon v. Juanita’s Foods (2022) 85 Cal.App.5th 740, 753-754.)”

However, on this last point, Justice John Shepard Wiley Jr. wrote a dissenting opinion which began by noting “What preempts this statute is the decision to make arbitration the hostage of delay.”

“Delaying contract performance in bad faith is an odious tactic. Employers pursuing this tactic may deserve sanction. But sanctions like damages, a statutory fine of a motivating magnitude, and attorney fees would amply deter delay. Why abolish the arbitration itself?”

“One answer is that California state law disagrees, strongly and persistently, with federal law about whether arbitration is desirable.”

“By again putting arbitration on the chopping block, this statute invites a seventh reprimand from the Supreme Court of the United States.“

“Recall the past six. Over and over again, with determined but unavailing persistence, the Supreme Court of the United States has rebuked California state law that continues to find new ways to disfavor arbitration.”

Three members of a massive conspiracy to defraud the military’s healthcare program known as TRICARE out of more than $65 million have been sentenced in federal court.

Former U.S. Marines, Daniel Castro and Jeremy Syto, were sentenced to 21 months and 15 months, respectively; Nurse Practitioner Candace Craven was sentenced to serve three months in home confinement. Castro and Syto recruited fellow Marines to receive expensive compounded drugs; Craven and others wrote bogus prescriptions and filled out fraudulent paperwork to process the insurance reimbursements. All told, tens of millions of dollars in false claims were submitted; everyone got kickbacks.

All of the defendants were working for Jimmy and Ashley Collins, a married couple living in Birchwood, Tennessee, who quarterbacked the scheme. Two weeks ago, Jimmy Collins received a 10-year prison sentence; Ashley Collins was sentenced to 18 months in home confinement. To account for all the fraud, the couple was ordered to pay $65,679,512.71 in restitution to Defense Health Agency and TRICARE.

According to plea agreements, the Marines who Castro and Syto recruited agreed to receive the pricey compounded medications in return for a monthly kickback of approximately $300. For young Marines-turned-straw-beneficiaries, this money significantly augmented their monthly paycheck. One defendant noted “it took very little work to sign people up to receive free money.”

For recruiting bogus patients, Castro and Syto were paid a commission – somewhere between 3 to7 percent of the total TRICARE reimbursement paid to the pharmacy for the drugs sent to their recruits. By the time this fraud scheme was in full swing, the average cost for these compounded drugs was more than $13,000 for a 30-day supply, peaking at around $25,000 for certain individual drugs. Over the course of the conspiracy, the illegal kickbacks amounted to at least $1,013,450.36 for Castro and $264,000 for Syto.

In total, TRICARE paid at least $11,949,710.15 in insurance reimbursements for compounded medications prescribed to straw beneficiaries directly recruited by Castro. During the same period, TRICARE paid at least $8,620,215.83 for compounded medications prescribed to straw beneficiaries directly recruited by Syto.

Nurse Practitioner Craven admitted that her primary role was to write and process fraudulent prescriptions and fill out other fraudulent paperwork for compounded drugs for the straw beneficiaries.

According to the pleadings, the sharp increase in the number of bogus prescriptions for compounded drugs was the result of multiple fraud schemes, including this one, that popped up around the country. As a result, the TRICARE program faced a $2 billion explosion in liability for compounded prescription drugs.

“This outrageous scheme undermined health services for those who risk their lives to serve our country,” said U.S. Attorney Tara McGrath. “Our military members and taxpayers deserve so much better. This case reflects our dedication to the well-being of our armed forces and our steadfast protection of the U.S. taxpayer.”

During the course of the investigation, authorities seized numerous items and properties purchased by the Collinses and others with the proceeds of the fraud: an 82-foot yacht; multiple luxury vehicles, including two Aston Martins; a multimillion-dollar investment annuity; gold and silver bars; dozens of pieces of farm equipment and tractor-trailer trucks; and three pieces of Tennessee real estate.

Samreen Riaz began practicing dentistry in the Central Valley in approximately 2013. In 2018, she was terminated from a position of employment with Altura Centers for Health.

In January 2019, Riaz sued Altura for wrongful and retaliatory discharge. That same month, she obtained employment with Family HealthCare Network. Soon thereafter, Riaz was allegedly subjected to “whistleblower retaliation” in the form of a “[p]lanned organized covert stalking and harassment campaign” at Family HealthCare Network. The alleged mistreatment at Family HealthCare Network allegedly occurred because of plaintiff’s “whistleblowing” while employed at Altura, and due to her lawsuit against Altura, but the pleadings in her civil action do not otherwise explain the supposed connection between the two employers.

In March 2019 (about two months into her employment at Family HealthCare Network), Riaz began seeing a psychiatrist (Dr. Sievert) “due to ongoing stress related to [the] serious harassment campaign at work.” She sought and received treatment from Dr. Sievert in a “private capacity,” i.e., outside of the workers’ compensation process. According to plaintiff’s own allegations, Dr. Sievert diagnosed her with having “[d]elusional disorders.”

In approximately September 2019, Riaz sought workers’ compensation benefits for a psychiatric injury allegedly sustained “at work – due to unlawful covert harassment, discrimination and [r]etaliation.” Exhibits to the pleadings list the alleged date of injury as “9/24/19,” but the record is silent as to what occurred on that date.

Psychiatrist Micah Hoffman, M.D.acting in the capacity of a QME, evaluated Riaz and concluded her mental health issues were attributable to a “chronic psychotic illness, [which is] not industrial in nature in any way.” The QME findings and conclusions were documented in a 71-page QME report, which was later relied upon by a workers’ compensation administrative law judge (ALJ). The ALJ found there was no industrial causation for her claimed psychiatric injury.

Approximately three months after being evaluated by QME Micah Hoffman, M.D., in September 2020, Riaz underwent a psychological evaluation performed by Bradley A. Schuyler, Ph.D. This was done in connection with her lawsuit against Altura.

On December 15, 2021, Ruaz filed a pro se complaint against QME Micah Hoffman, M.D., in the Tulare Superior Court. The complaint purported to assert six causes of action labeled as follows: (1) “Medical Malpractice”; (2) “Unprofessional Conduct (Violation of Business and Professional [sic] Code)”; (3) “Professional Negligence”; (4) “Fraud and Misrepresentation”; (5) “Civil RICO 18 U.S.C. § 1964”; and (6) “Vicarious Liability.”

On February 18, 2022, defendant demurred to the complaint which was sustained with leave to amend. The same ruling was made to her second amended complaint, however the trial court sustained defendant’s third demurrer without leave to amend.

The Court of Appeal affirmed in the unpublished case of Riaz v Hoffman – -F085321 (February 2024)

Notwithstanding the issues of forfeiture and inadequate briefing, the Court of Appeal noted that “the trial court’s analysis appears correct.“

In King v. CompPartners, Inc. (2018) 5 Cal.5th 1039, the exclusivity rule was held to apply to claims against physicians who render services in the worker’s compensation utilization review process, “under which a [reviewing physician] assesses a treating physician’s recommendation according to a schedule that establishes uniform guidelines for evaluating treatment requests.” (Id. at p. 1047.)

If an alleged injury “arose out of and in the course of utilization review – a statutorily required part of the workers’ compensation claims process [-] to which [the claimant] would not have been subject had he [or she] not suffered a work-related …. injury,” related claims fall within the workers’ compensation exclusivity rule. (Id. at p. 1053.) In other words, “the workers’ compensation system provides the exclusive remedy for otherwise compensable injuries stemming from alleged mistakes in the utilization review process.” (Id. at p. 1060.)

As for the 12th cause of action (mislabeled as a second 11th cause of action in the operative pleading), the FEHA component of plaintiff’s disability claim is meritless since no employment relationship is alleged or suggested as between her and defendant.