Tag: 2015 News

A Glendale man pleaded guilty to federal money laundering and tax charges related to a scheme in which he helped launder $1.1 million generated by a health care fraud scheme.

Khachatour Hakobyan, 47, pleaded guilty to conspiracy to commit money laundering and filing a false tax return. A second defendant in this case – Aram Aramyan, 59, also of Glendale – pleaded guilty on July 13 to the same two felony offenses.

In plea agreements filed in United States District Court, Hakobyan and Aramyan admitted that they deposited over $1.1 million in proceeds derived from a health care fraud scheme into bank accounts in the names of bogus corporations they established “primarily to launder money.” Once the proceeds were deposited, Hakobyan and Aramyan wrote checks from these corporations to themselves and their associates. Hakobyan and Aramyan further admitted that they cashed some of the checks – and directed their associates to cash others – and returned the cash to the medical entities, typically after deducting a 10 percent commission. In some cases, they deposited the checks into their personal accounts and used the money to pay personal expenses, such as mortgage payments, rent and home remodeling costs.

As part of their guilty pleas, Hakobyan and Aramyan each admitted that they failed to report all of their income from the corporations in their 2009 tax returns and have agreed to pay, respectively, $606,681 and $353,669 in back taxes for tax years 2007 through 2011.

As a result of their guilty pleas, Hakobyan and Aramyan each face a statutory maximum sentence of 23 years in federal prison. Judge Morrow is scheduled to sentence Hakobyan on November 16, and Aramyan on November 2.

There are three remaining defendants in this case: Edgar Hakobyan, 30, of Glendale; Karen Sarkissian, 43, of Glendale; and L’Tanya Smith, 57, of Ladera Park. They are currently scheduled to go on trial before Judge Morrow on February 2, 2016. Two of the defendants are also charged with health care fraud related to a clinic on Sunset Boulevard in Echo Park. The clinic was operated by Sarkissian and employed Smith, a physician’s assistant. Between July 2009 and March 2010, Smith allegedly prescribed or ordered medically unnecessary tests and services, some of which were never provided to the patients. Those prescriptions and orders led to more than $11 million in fraudulent claims.

The investigation in this case was conducted by the Federal Bureau of Investigation; the U.S. Department of Health and Human Services, Office of Inspector General; and IRS – Criminal Investigation.

An increase in legal action forcing employers to reclassify contract workers as full-time employees could drive up labor costs significantly and heighten scrutiny on applications for workers’ compensation insurance.

Though no firm statistics are available on the size of the freelance economy, the story published in Insurance Business American says that a consulting firm estimated in 2014 that as many as 17.9 million Americans work as contract employees for 15 hours or more each week. And though the popularity of “1099 workers” – thus named for their tax status – is growing, so are court decisions ruling that many of these workers are misclassified and are due full employment benefits, including healthcare, training programs, travel reimbursements and workers’ compensation.

Such lawsuits and the additional expenses attached to reclassification could increase the cost of labor by 20% to 40%, a Wall Street Journal report estimated this week.

The misclassification of workers is particularly common in businesses such as dentist offices and nail salons, or for workers in the sales profession. Additionally, lawsuits against Uber and other app-related services like Homejoy and Luxe, have raised significant questions about the responsibility of “on-demand” companies.

“Many of these companies operate on very thin margins – not all can absorb the hit of having to switch to an employee workforce,” Jamie Davison, a partner at Redpoint Ventures, told the newspaper. “There is a real regulatory risk here, which we have to weigh, that some of these companies could owe millions in back wages and taxes.”

For insurance agents, the heightened scrutiny means additional pressure to help employers correctly classify employees. That’s something many companies and agents overlook while submitting workers’ compensation applications, said La’Troya McKinney, commercial lines account manager with Abram Interstate Insurance Services in California.

“One thing I always tell people is that 1099 is not an employment status,” McKinney said. “If an employer is scheduling their time, telling them who to see or where to go, they are an employee under the labor code and they can be fined up to $150 per day per employee for not having comp in place.”

She added that though these stipulations apply primarily in California – where 1099 status is under strictest review – it doesn’t hurt for agents across the country to adopt a similar no-risks attitude. “I tell people that if they base their decisions off regulations in what is one of the most rigid states, they can’t go wrong,” she said.

The WCAB determined that SB 863 changed the QME Panel timing requirements specified in Messelle v. Pitco Food, Inc. (2011) 76 Cal.Comp.Cases 956 (Appeals Bd., en banc).

In the case of David Murray v. County of Monterey a claim denial was sent to applicant by defendant’s adjusting agent on August 1, 2014 . On August 18, 2014, defendant requested a QME panel in the specialty of orthopedic surgery. The only issue at an expedited hearing was whether defendant’s QME panel request is timely. The outcome of this hearing was to determine what would be the correct specialty since applicant had requested physical medicine and rehabilitation. The WCJ found that the defendants panel request was not timely, and the defendant requested removal.

Labor Code § 4062.2, as amended by SB 863, allows a request for qualified medical evaluator panel to be made “[n]o earlier than the first working day that is at least 10 days after the mailing” of request for evaluation under Labor Code § 4060

In this case, defendant mailed the claim denial letter to applicant on August 1, 2014. The 15th day after the denial (10 days plus five for mailing) was August 16, 2014, a Saturday. Because the 15th day fell on a Saturday, that day is excluded and the next business day on which defendant could send its QME panel request was Monday, August 18, 2014. Defendant made its QME panel request on August 18, 2014, making the request a timely request.

The WCJ reached a contrary conclusion in reliance on Messelle v. Pitco Food, Inc. (2011) 76 Cal.Comp.Cases 956 (Appeals Bd., en banc). That decision, however, involved an earlier version of section 4062.2 that was substantially altered by amendment as part of Senate Bill 863.

Existing section 4062.2, which is the version applicable to this case, no longer requires the parties to seek agreement on an AME. The legislature deleted that provision in Senate Bill 863. Now the party desiring a QME panel may request one, “[n]o earlier than the first working day that is at least 10 days after the mailing” of a request for evaluation under section 4060 or an objection to the treating physician’s opinions under section 4061 or 4062. Thus, section 4062.2 now allows a request for a QME panel to be made on the 10th day after a written objection (or, on the 15th day, if the request is mailed). The rationale in Messelle, supra, is not applicable to section 4062.2 in its current version.

In 2012 the US Justice Department announced that drugmaker GlaxoSmithKline agreed to plead guilty and to pay $3 billion to resolve its criminal and civil liability arising from the company’s unlawful promotion of certain prescription drugs, its failure to report certain safety data, and its civil liability for alleged false price reporting practices. The resolution is the largest health care fraud settlement in U.S. history and the largest payment ever by a drug company.

But that was not the end of trouble for the global health care giant. Reuters Health reports it was then fined a record 3 billion yuan ($483 million) for corruption in China last year and is examining possible staff misconduct elsewhere, faces new allegations of bribery in Romania.

GSK confirmed it was looking into the latest claims of improper payments set out in a whistleblower’s email sent to its top management on Monday. A copy of the email was seen by Reuters. The company is already probing alleged bribery in Poland, the United Arab Emirates, Lebanon, Jordan, Syria and Iraq.

The latest allegations say GSK paid Romanian doctors hundreds, and in one cases thousands, of euros between 2009 and 2012 for prescribing its medicines, including prostate treatments Avodart and Duodart and Parkinson’s disease drug Requip. According to the email, the doctors were notionally paid for speaking engagements, but in three out of six cases, including the most highly paid one, they did not give any speech. The other three medics gave only one speech each, despite receiving multiple payments.

GSK also provided doctors with many international trips and made payments to them under the guise of participation in advisory boards, the email said.

The China scandal, which involved alleged bribes totaling hundreds of millions of dollars, hit GSK’s sales in the country, although Chief Executive Andrew Witty, reporting quarterly results on Wednesday, said its Chinese business was stabilizing.

The sender of the Romania email said its contents would be passed on to the U.S. Department of Justice and the Securities and Exchange Commission (SEC), which are investigating GSK for possible breaches of the Foreign Corrupt Practices Act. An SEC program provides cash incentives for whistleblowers to report corporate malpractice.

Each year the California Chamber of Commerce releases a list of “job killer” bills to identify legislation that will decimate economic and job growth in California. The CalChamber tracks the bills throughout the rest of the legislative session and works to educate legislators about the serious consequences these bills will have on the state. The 2015 session will soon close, so what remains of the 2015 “job killer” list of proposed legislation.

As of July 17, the deadline for bills to pass policy committees and move to the floor, seven Senate job killer bills and two Assembly job killer bills remain active. One “job killer” bill is already on its way to the Governor. Surprisingly, none of them pertain to workers’ compensation.

AB 359 has been sent to the Governor for signature. The proposed law alters the employment relationship by requiring any successor grocery employer to retain employees of the former grocery employer for 90 days and continue to offer continued employment unless the employees’ performance during the 90-day period was unsatisfactory. The law was supported in part by A 2014 study by the Food Labor Research Center at U.C. Berkeley (commissioned by the United Food and Commercial Workers) titled, “Shelved: How Wages and Working Conditions for California’s Food Retail Workers Have Declined as the Industry has Thrived,”

Other labor related bills that are still alive, but not passed include SB 3 which would increase the minimum wage by $3.00 over the next two and a half years with automatic increases tied to inflation.

Also pending is SB 406 which would significantly expand the California Family Rights Act by reducing the employee threshold from 50 to at least 25 employees and expanding the family members for whom leave may be taken, which will provide a California-only, separate 12 week protected leave of absence for both small and large employers to administer.

AB 465 would preclude mandatory employment arbitration agreements. The CalChamber says the proposed law is likely pre-empted by the Federal Arbitration Act even if passed.

The remaining seven “job killer bills” are not directly related to employment law issues, but nonetheless are targeted by the CalChamber for driving up costs. There should be no workers’ compensation surprises as was the case in August 2013 with SB 863. But then again, the industry did not know SB 863 was in the pipeline until the very last week.