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Tag: 2019 News

ABC Employment Test Limited to “Wage and Hour Laws”

Francisco Gonzales formerly worked as a driver for San Gabriel Transit, Inc. (SGT), a company that coordinates with public and private entities to arrange transportation services for passengers.

In February 2014, Gonzales filed this putative class action seeking to represent over 550 drivers engaged by SGT as independent contractors from February 2010 to the present.

Among other things, Gonzales alleged that by misclassifying drivers as independent contractors, SGT violated various provisions of the Labor Code and the Industrial Welfare Commission’s (IWC) wage orders, particularly Wage Order No. 9-2001 (codified at Cal. Code Regs., tit. 8, § 11090 [Wage Order No. 9]), which governs the transportation industry, and engaged in unlawful business practices under Business and Professions Code section 17200 (17200).

The trial court did not evaluate individual causes of action. Rather, analyzing the action as a whole, premised on terms contained in several lease agreements in effect during the class period, the court found that Gonzales failed to demonstrate the requisite community of interest or typicality among SGT drivers under the then-prevailing legal test, and denied the motion for class certification.

While this appeal was pending, the California Supreme Court decided Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), in which it adopted the “ABC test” used in other jurisdictions to streamline and provide consistency in analyzing the distinction between employees and independent contractors for purposes of wage order claims.

The Court of Appeal reversed in the published case of Gonzales v San Gabriel Transit, Inc. Because the trial court did not have the benefit of the Dynamex decision, it remand the matter with directions.

It conclude that: (1) the ABC test adopted in Dynamex is retroactively applicable to pending litigation on wage and hour claims; (2) the ABC test applies with equal force to Labor Code claims that seek to enforce the fundamental protections afforded by wage order provisions; and (3) statutory claims alleging misclassification not directly premised on wage order protections, and which do not fall within the generic category of “wage and hour laws,” are appropriately analyzed under what has commonly been known as the “Borello” test (referring to S.G. Borello and Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello)).

On remand, the trial court shall: (1) evaluate which alleged Labor Code claims enforce wage order requirements, and which do not; (2) as to the Labor Code claims that enforce wage order requirements, apply the ABC test as set forth in Dynamex to determine whether the requirements of commonality and typicality for purposes of certification of a class action are satisfied; (3) as to the Labor Code claims that do not enforce wage order requirements, apply the Borello test to determine whether the requirements of commonality and typicality for purposes of certification of a class action are satisfied; (4) as to the derivative claim under section 17200, apply the ABC or Borello test as appropriate for the underlying alleged unlawful business practice; and (5) in the event the court determines class certification is appropriate for any claims, complete the analysis by determining whether proceeding as a class action would be superior to alternative methods of adjudication.

Google Collects and Analyzes Patient Health Data in 21 States

Google is engaged in a secret project with one of the country’s largest health-care systems to collect and crunch the detailed personal health information of millions of Americans across 21 states, according to people familiar with the matter and internal documents reported by Morningstar.

The initiative, code-named “Project Nightingale,” appears to be the largest in a series of efforts by Silicon Valley giants to gain access to personal health data and establish a toehold in the massive health-care industry. Amazon.com Inc., Apple Inc. and Microsoft Corp. are also aggressively pushing into health care, though they haven’t yet struck deals of this scope.

Google began the effort last year with St. Louis-based Ascension, the second-largest health system in the U.S., with the data sharing accelerating over this summer and fall, the documents show.

The data involved in Project Nightingale pertains to lab results, doctor diagnoses and hospitalization records, among other categories, and amounts to a complete health history, including patient names and dates of birth.

Neither patients nor doctors have been notified. At least 150 Google employees already have access to much of the data on tens of millions of patients, according to a person familiar with the matter and documents.

Some Ascension employees have raised questions about the way the data is being collected and shared, both from a technological and ethical perspective, according to the people familiar with the project, but privacy experts said it appeared to be permissible under federal law. That law, the Health Insurance Portability and Accountability Act of 1996, generally allows hospitals to share data with business partners without telling patients, as long as the information is used “only to help the covered entity carry out its health care functions.”

Google in this case is using the data, in part, to design new software, underpinned by advanced artificial intelligence and machine learning, that zeroes in on individual patients to suggest changes to their care. Staffers across Alphabet Inc., Google’s parent, have access to the patient information, documents show, including some employees of Google Brain, a research science division credited with some of the company’s biggest breakthroughs.

A Google spokeswoman said the project is fully compliant with federal health law and includes robust protections for patient data. An Ascension spokesman had no immediate comment.

Google and nonprofit Ascension have parallel financial motives. Google has assigned dozens of engineers to Project Nightingale so far, without charging for the work, because it hopes to use the framework to sell similar products to other health systems. Its end goal is to create an omnibus search tool to aggregate disparate patient data and host it all in one place, documents show.

The project is being developed under Google’s cloud division, which trails rivals like Amazon and Microsoft in market share. Google CEO Sundar Pichai has said repeatedly this year that finding new areas of growth for cloud is a priority.

Ascension, a Catholic chain of 2,600 hospitals, doctors’ offices and other facilities, aims in part to improve patient care. It also hopes to mine data to order up more tests or determine where it might be able to make more money from an individual patient, documents show. Ascension is also eager for a faster system than its existing decentralized electronic record-keeping network.

Google, like many of its Silicon Valley peers, has at times drawn criticism for not doing enough to protect user privacy. Its YouTube unit agreed in September to pay $170 million in fines and make changes to its practices in response to complaints that it illegally collected data on children to sell ads. YouTube neither admitted nor denied wrongdoing.

Last year, The Wall Street Journal reported that Google hid a flaw that exposed hundreds of thousands of birth dates, contact information and other personal data of subscribers in its now-defunct social-networking website Google Plus, in part because of fears that the incident could trigger regulatory scrutiny. Google said at the time it went beyond legal requirements in determining not to inform users.

Were the NFL Dementia Claims Scientifically Valid

Not many years ago, applicant attorneys aggressively filed workers’ compensation claims for professional athletes in California, alleging that the long term effects of head injury while playing caused a form of dementia known as CTE. Later, many thousands of those athletes were involved in major civil litigation which were consolidated in a Pennsylvania federal court and then settled by the NFL. Ultimately, in 2013, the California legislature passed AB1309 which limited claims for out-of-state athletes.

The subject of head trauma and athletes involved in hard-hitting contact sports has become a hot button topic among both the scientific and athletic communities in recent years. Many now believe that these athletes are putting themselves at a much greater risk of serious neurological and cognitive problems later in life, but a recent study has come to contradictory conclusions.

A study by researchers from the University at Buffalo compared former National Football League and National Hockey League athletes with current participants in non-contact sports. Due to recent research into chronic traumatic encephalopathy (CTE), a neurodegenerative disease caused by repeated head injuries, the researchers expected to find much higher rates of early-onset dementia among retired professional sports players. However, the study revealed no evidence of early-onset dementia in the retired players.

The study assessed 21 former players for the NFL’s Buffalo Bills and the NHL’s Buffalo Sabres based on neuropsychological measures associated with mild cognitive impairment (MCI) and executive function.

Many players who suffer from CTE also suffer from early-onset dementia, but complicating matters is the fact that CTE can only be diagnosed after death through an autopsy. There is also evidence that it’s possible to suffer from CTE brain damage without any clinical symptoms.

Seeking to discover just how prevalent CTE is in athletes, the researchers tested the 21 professional athletes for signs of MCI using a series of comprehensive neurological assessments. These assessments included questionnaires plying the participants with questions about personality and executive function.

Researchers also scanned each athlete’s brain to look for signs of MCI, which is thought to be a precursor of early-onset dementia. The participants were asked about their diet, lifestyle, drug and alcohol use, and common cardiovascular problems. They gave blood samples to test for cholesterol levels, and were given thorough physical exams.

Researchers then compared the professional athletes’ results to a control group of 21 amateur participants in non-contact sports such as swimming, cycling, and running. Surprisingly, they found little to no difference between the variable group and the control group in cognitive ability, memory, and executive function.

The largest differences in health between the pro hockey and football players and the non-contact athletes were that the professional players had significantly higher risks for obesity, chronic pain, orthopedic surgeries, and severe sleep or anxiety problems. But, those differences were mostly attributed by the research team to overall health differences among the two groups. The non-contact sport athletes were considerably healthier, more educated, and weighed less than the retired pro athletes.

Leddy and his co-author Barry Willer have long been known for their research on concussions, CTE, and early-onset dementia. They developed a new recovery method for concussions that assists concussion sufferers in becoming more active after only a relatively brief rest period.

The study is published in the Journal of Head Trauma Rehabilitation, the official journal of the Brain Injury Association of America.

Bipartisan PAID Act to Resolve MSP Uncertainty

Insurance Companies and Self-Insureds that process claims for workers’ compensation, liability and no-fault claims (Primary Plans) involving Medicare beneficiary claimants need a better way to obtain information about Medicare Advantage and Part D Drug Plans that may have a claim for conditional payment reimbursement.

Numerous lawsuits have been filed across the Country demanding double damages for failure to reimburse Medicare Advantage and Part D Drug Plans.

These Private Medicare Plans advocate that they have the same recovery rights as traditional Medicare. Thus far, they have convinced two U.S. Court Circuits (3rd and 11th) that they are correct.

For Alabama, George, Florida, Delaware, Pennsylvania and New Jersey, Primary Plans are challenged to find out the identity of Private Medicare Plans at time of settlement. There is no central database for this information that is available. Consequently, they must rely on Claimants and their attorneys for the information which prove unreliable leading to costly lawsuits.

The solution to all of this may be a simple piece of legislation pending in both houses of Congress (H.R. 1375 and S. 1989).

The Provide Accurate Information Directly (PAID Act) aims to address current challenges claims payers have in determining Part C and Part D enrollment with identifying potential reimbursement claims.

Senate Bill 1989, which is identical to the House version, proposes that the Centers for Medicare and Medicaid (CMS) expand its Section 111 Query Process to identify whether an individual is, or during the preceding three-year (3) period, was enrolled in Medicare Part C (Medicare Advantage) and/or Medicare Part D (Prescription Drugs) plan, and provide the name and address of each plan identified during the preceding three year (3) period.

As with the House bill, Senate Bill 1989 does not require CMS to also return information on an individual’s Medicaid enrollment which was previously included in a prior version of the PAID Act introduced in the last Congressional session.

The legislation, initially introduced in the 115th Congress, has been updated to eliminate Medicaid references from the bill at the request of CMS through technical assistance. In December 2018 CBO scored the legislation as saving $25 million.

Passage of the PAID Act will allow settling parties to repay MSP amounts, and allow for the coordination of benefits, by requiring CMS to share the needed information.

Courtroom Secrecy Hides Public Safety Information

A Reuters investigation concluded that judges regularly allow information pertinent to public health and safety to be filed under seal, even though court documents are, by law, presumed to be public. In nearly all jurisdictions, judges are required to provide an on-the-record rationale for allowing litigants to file information under seal – to protect trade secrets, for example, or an individual’s medical records – but they rarely do that.

In its analysis, Reuters found that information pertinent to public health and safety was filed under seal in 55 of the 115 biggest product liability cases consolidated in federal courts over the past 20 years. These mega-cases, known as multidistrict litigation (MDL), involved products used by millions of consumers.

The secrecy exacts a heavy toll. In just a handful of cases Reuters analyzed, hundreds of thousands of people were killed or seriously injured by allegedly defective products – including cars, drugs and guns – after judges allowed litigants to file under seal evidence that could have alerted consumers and regulators to potential danger.

It’s a measure of their role in maintaining court secrecy that in nearly all of the 55 big cases, it was plaintiff lawyers who filed the information under seal. That’s because of the way secrecy is baked into the process early on.

During pretrial discovery, when the opposing sides request information from each other to prepare their cases, the defendant usually won’t give plaintiffs any information until they agree to a protective order. In theory, these agreements are meant to keep under wraps potentially damaging proprietary or personal information. But in many cases, nearly everything ends up being stamped “confidential,” and plaintiff lawyers often just agree to the secrecy without complaint.

Later, when plaintiff lawyers begin filing motions or presenting their cases in court, the standard for imposing secrecy moves higher. Material obtained through discovery that is later submitted as evidence becomes part of the court record; as a matter of law, litigants must provide a reason for submitting such evidence under seal, and the judge must approve.

In most of the big MDLs, however, plaintiff attorneys actually cited the defense’s earlier claims of confidentiality to justify filing evidence under seal. Since judges rarely ask for a more specific rationale for the secrecy, documents marked as confidential remain so.

That’s true when the parties settle, which is how most product liability cases end. It can also be true after a jury decides in favor of the plaintiff. Sometimes, plaintiff lawyers even agree to keep evidence confidential that has already been aired in open court in other cases.

Lawyers who do fight secrecy seldom succeed. They challenged defendants’ claims of confidentiality for material relating to public health and safety in 23 of the 55 big cases Reuters analyzed. Judges nearly always refused to unseal the evidence.

Yet potentially harmful flaws in many products remain secret years after the first lawsuits are filed. Overly broad protective orders are a big part of the problem, legal experts and plaintiff lawyers said. In 45 of the 55 big MDLs Reuters analyzed, the protective order allowed most any document to be marked as confidential.

NASI Report – Decreasing Comp Benefits are Inadequate

Benefits paid to injured workers continued to decline, while covered employment and wages continued to rise, according to data in the new Workers’ Compensation Benefits, Costs, and Coverage (2017 Data) report. Produced annually by the National Academy of Social Insurance.

Employee coverage has increased fairly steadily over the past two decades, but employer costs have fallen from just over $1.50 per $100 of covered wages in 1997 to $1.25 in 2017. Worker benefits decreased even more, from $1.17 twenty years ago to $0.80 per $100 of covered wages in 2017. “This year’s report shows that the trends that have dominated the workers’ compensation system for the past three decades – declines in both workers’ benefits and employers’ costs – continue to be sustained,” noted Les Boden, Chair of the Academy Study Panel on Workers’ Compensation Data and co-author of the report.

“To the extent that costs and benefits have fallen because of improved safety at work, that is, of course, good news. However, there is also evidence that suggests that many injured workers are not receiving the cash benefits and/or medical care they need, and that some states are achieving lower benefits by shifting costs rather than improving safety.

In addition to the full report, including sources and methods, an Executive Summary and four state-specific spotlights on Wyoming, Florida, Ohio, and Missouri are available for download. Additional highlights include:

— Covered jobs increased in all jurisdictions except Alaska, North Dakota, West Virginia, and Wyoming. Covered wages increased in all jurisdictions except Wyoming.
— Benefits per $100 of covered wages decreased in all jurisdictions except Missouri and Hawaii, where they increased by $0.09 and $0.04, respectively.
— Costs per $100 of covered wages, or standardized costs, decreased in all but five jurisdictions, with the largest percent decrease (38.3 percent) in Oklahoma.

Air Ambulance Ride to UCLA Cost More than Lung Transplant

“Balance billing,” better known as surprise billing, occurs when a patient receives care from a medical provider outside of his insurance plan’s network, and then the provider bills the patient for the amount insurance didn’t cover. These bills can soar into the tens of thousands of dollars.

Surprise bills hit an estimated 1 in 6 insured Americans after a stay in the hospital. And the air ambulance industry, with its private equity backing, high upfront costs and frequent out-of-network status, is among the worst offenders.

Congress is considering legislation aimed at addressing surprise bills and air ambulance charges. And some states, including Wyoming and California, are trying to address the problem even though there are limits to what they can do, because air ambulances are primarily regulated by federal aviation authorities.

Here is an example of how a surprise bill might work. Before his double-lung transplant, Tom Saputo thought he had anticipated every possible outcome.  But after the surgery, he wasn’t prepared for the price of the 27-mile air ambulance flight from a hospital in Thousand Oaks, Calif., to UCLA Medical Center – which cost more than the lifesaving operation itself.

Saputo, 63, was diagnosed in 2016 with idiopathic pulmonary fibrosis, a progressive disease that scars lung tissue and makes it increasingly difficult to breathe. The retired Thousand Oaks graphic designer got on the list for a double-lung transplant at UCLA and started the preapproval process with his insurance company, Anthem Blue Cross, should organs become available.

But before a transplant could be arranged, he suddenly stopped breathing on the evening of July 7, 2018. His wife called 911. A ground ambulance drove the couple to Los Robles Regional Medical Center, 15 minutes from their house, where Saputo spent four days in the intensive care unit before his doctors sent him to UCLA by air ambulance.

He was on the brink of death, but just in time, the hospital received a pair of donor lungs. They were a perfect match, and two days after arriving at UCLA, Saputo was breathing normally again.

Much later, when Saputo opened a letter from Anthem, he discovered the helicopter company, which was out of his network, had charged the insurance company $51,282 for the flight. Saputo was responsible for the portion his insurance didn’t cover: $11,524.79.  By contrast, the charges from the day of his transplant surgery totaled $40,575 – including $31,605 for his surgeon – and were fully covered by Anthem.

In California, Democratic Gov. Gavin Newsom signed a bill in early October that will limit how much some privately insured patients will pay for air ambulance rides. Effective next year, the law, by state Assemblyman Tim Grayson, will cap out-of-pocket costs at patients’ in-network amounts, even if the air ambulance company is out of network.

Wyoming is moving to treat the industry like a public utility, allowing the state’s Medicaid program to cover all of its residents’ air ambulance trips and then bill patients’ health insurance plans. The state would then cap out-of-pocket costs at 2% of the patient’s income or $5,000, whichever is less. Wyoming needs permission from the federal government to proceed.

Ultimately, though, state authority is limited because the federal Airline Deregulation Act of 1978 prohibits states from enacting price laws on air carriers.

Congress is considering several bipartisan bills on surprise billing. One measure by Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., would ban balance bills from air ambulance companies. The bill passed committee and is now headed to the Senate floor for a vote, pending approval from Senate Majority Leader Mitch McConnell of Kentucky.

Judge Extends Litigation Stay for Purdue Pharma

The Washington Post reports that a federal bankruptcy judge on Wednesday temporarily extended protection that halts scores of lawsuits against Purdue Pharma and members of the Sackler family, who founded the opioid maker, until April 8.  The order by Judge Robert Drain continues a temporary injunction that was put in place last month and expired Wednesday. It came over the objections of some litigants who have argued that the Sackler family does not deserve such legal protection.

Purdue Pharma, the maker of OxyContin, filed for bankruptcy Sept. 15 as part of a broad opioid settlement proposal with 24 states but that is opposed by 24 states and the District of Columbia. Oklahoma and Kentucky separately have already settled with Purdue Pharma.

Officials representing the dissenting states and a number of municipalities have objected to the temporary injunction covering the Sacklers, who have not filed for personal bankruptcy. But some reached a deal with Purdue Pharma on Wednesday agreeing to voluntarily comply with the temporary injunction. The agreement allows those states to change their minds later and fight the injunction.

The Sacklers have agreed, for the first time, to provide more personal financial information, Marshall Huebner, an attorney representing Purdue, said during the hearing. But an attorney representing creditors said progress had been “slow and strained.” OxyContin, which has been blamed as a major driver of America’s opioid epidemic, makes up about 90 percent of Purdue Pharma’s sales.

As part of that deal, the Sacklers agreed to relinquish control of their firm and contribute at least $3 billion to the settlement, an amount that would be derived at least in part from the sale of an overseas drug company it owns.

Some state attorneys general have argued that is not enough from a family whose wealth Forbes has estimated at $13 billion. If the Sacklers want special protection from the bankruptcy court, they should be forced to give a detailed accounting of their wealth, North Carolina Attorney General Josh Stein said in September. Stein has sued eight members of the family individually.

Purdue Pharma said during Wednesday’s hearing that it had started looking for an outside monitor as part of its negotiations with creditors and states that have yet to sign on to the settlement. The company also has agreed to new restrictions on its behavior during the bankruptcy, including limiting its lobbying, said Huebner, the company attorney.

There has been substantial progress, he said, adding: “The goal is always to get to a deal whenever it is possible.”

California Insurance Company Placed in Conservatorship

The San Mateo County Superior Court issued an order appointing the California Department of Insurance’s Conservation and Liquidation Office as conservator of California Insurance Company (CIC) and directing the conservator to take immediate possession of the workers’ compensation insurer in response to the company’s willful violation of state law and established pattern of continually flouting California’s regulatory processes.

The Department of Insurance sought the order after company officials unilaterally and illegally attempted to merge its business with a New Mexico-based insurer without first securing the Department’s prior approval.

The order also blocks the attempted merger, which seeks to divest California of its regulatory oversight over this entity. If CIC is permitted to consummate this illegal transfer, CIC employer policyholders, employees with serious work-related injuries and other claimants entitled to vital and necessary insurance benefits, will be left holding policies of a non-admitted insurer not qualified to transact insurance in California.

Effective immediately, the Department of Insurance’s Conservation and Liquidation Office will serve as conservator to protect the company’s existing policyholders and covered workers from an insurer attempting to operate without the approval and authority to continue to transact insurance in California.

The conservator will, to the fullest extent of the law, ensure that California Insurance Company policyholders remain covered under their existing policies and retain the full protections provided to them under California law.

This action follows an established pattern and practice by company officials of illegal actions, misrepresentations, and willful disregard for the authority of the Department of Insurance and other states’ regulators:

— In 2016, the Department of Insurance issued a precedential decision In the Matter of the Appeal of Shasta Linen Supply, Inc. stating that California Insurance Company (CIC) “created a product to circumvent California’s statutory and regulatory requirement; a product that ultimately enriched CIC at the expense of California employers.”
— The Department subsequently served California Insurance Company officials with a Cease and Desist Order for selling unapproved workers’ compensation policies to unsuspecting business owners in what amounted to a “bait and switch” scheme.
— Other states including Vermont, Wisconsin, New York, and New Jersey have also taken regulatory actions against the same company officials’ affiliated companies for engaging in similar unapproved transactions within those states.

While the Department of Insurance was in the process of reviewing the company’s application for sale, on October 9, with less than 48 hours’ notice to California, company officials attempted to transfer the ownership of California-domiciled California Insurance Company to a New Mexico entity called “California Insurance Company II.”

The California Department of Insurance denied an application for approval of the sale of California Insurance Company on October 18, citing, among other reasons, the applicants’ abrupt and unilateral attempt to merge the company with a New Mexico-based entity without seeking or obtaining California’s prior approval.

California law is unequivocal in giving the Department of Insurance the responsibility and power to review transactions of California-based insurers in order to protect policyholders and the public. No company can evade this authority if it wants to sell insurance in this state.

5 Year Sentence in Merced $6M Medical Fraud Case

The embattled ex-CEO of a string of now-shuttered Merced-area health clinics that served thousands of low-income patients signed an agreement to plead guilty to defrauding Medi-Cal of millions of dollars.

Sandra Haar, 59, of Merced, was sentenced to five years in prison and ordered to pay $6,107,846 in restitution for health care fraud and conspiracy to receive kickbacks. Haar was ordered to self-surrender on Jan. 15, 2020, to begin serving her sentence.

Haar was the founder and chief executive officer of Horisons Unlimited, a nonprofit public benefit corporation that provided health and dental services in Merced and surrounding communities. She was a nurse practitioner who had been CEO of the clinic since its opening in 2004

According to its 2014 tax filings, Horisons reported nearly $7.6 million in revenue, with functional expenses of $6.7 million.

According to court documents, between January 1, 2014, and March 2017, Haar orchestrated a scheme to bill Medicare and Medi-Cal for services she knew were not reimbursable, and she profited by over $3.7 million from her fraud.

For example, Haar billed Medi-Cal for health and dental services that were not rendered and for unnecessary health care services. She also billed Medi-Cal for office visits with purportedly licensed doctors when the patients instead were dispensed Suboxone, an opioid medication, in the parking lots of McDonald’s and Rite Aid in baggies.

According to court documents, Haar also received thousands of dollars in kickbacks in cash from an account executive at a laboratory in exchange for using it for patients’ laboratory testing.

This case was the product of an investigation by the Federal Bureau of Investigation, the U.S. Department of Health and Human Services Office of Inspector General (HHS OIG), the California Department of Health Care Services, and the California Bureau of Medi-Cal Fraud & Elder Abuse.