Tag: 2019 News

Citizens of Humanity LLC, designs, markets, and manufactures blue jeans and other apparel under the trademark “Citizens of Humanity.” Noe Abarca worked in Citizens’s quality control department, separating and inspecting boxes of jeans from February 2006 until his termination on August 28, 2012.

After approximately four months with Citizens, Abarca started experiencing pain in his chest and clavicle area, which became more intense when lifting. The pain worsened and in July of 2012, the pain became unbearable.

His direct supervisor, Augustina Manzano, instructed him to see a doctor and referred him to Citizens’s head of human resources, Alma Casas, who did not advise Abarca to fill out a workers’ compensation claim form, so Abarca was not aware that he could file a claim for injury.

Abarca saw a doctor who issued a work restriction that Abarca was “unable to lift heavy objects” and that “15 to 20 lbs is the most” he could lift. The certificate also said that Abarca could return to work only doing “light work” from July 24, 2012 through August 24, 2012.

Two business days after the restriction expired, Citizens terminated Abarca. On the day of his termination, Casas, who Citizens entrusted to oversee employee terminations, thanked Abarca for his work, but said his services were no longer needed. Abarca insisted that he could continue inspecting jeans, but Casas responded that Citizens could not accommodate him.

On the day of his termination, Casas instructed Abarca to complete a workers’ compensation claim form which she did not explain and Abarca did not understand. This was the first workers’ compensation claim form that Abarca filled out. Under the heading, “Date employer first knew of injury,” Casas instructed Abarca to write, “August 28, 2012,” that same day.

Abarca sued Citizens for: retaliation, disability discrimination, failure to engage in the interactive process, failure to provide reasonable accommodation, failure to prevent/remedy discrimination and retaliation under the Fair Employment and Housing Act (FEHA), and wrongful termination in violation of public policy.

The jury awarded Abarca a total of $100,000 in compensatory damages: $35,000 for past lost earnings; $20,000 in other past economic loss; $45,000 in past non-economic losses including mental suffering; and nothing for future non-economic losses. The jury also awarded Abarca $550,000 in punitive damages.

The Court of Appeal affirmed the judgment in the unpublished case of Abarca v. Citizens of Humanity, LLC.

One of the eight issues raised on appeal by Citizens was judicial estopple. Citizens contended that judicial estoppel bars Abarca’s claims because, in his successful application for disability benefits, Abarca represented that he was unable to work, but then sued Citizens for lost wages contending that he could have worked all along. According to Citizens, Abarca cannot reconcile the conflict between the finding that he was “temporarily totally disabled” for purposes of receiving state disability benefits and his present claim for lost wages.

Cleveland v. Policy Management Systems Corp., supra, 526 U.S. at page 807 held that an employee should have the opportunity to explain how she can be both entitled to disability and recover lost wages in a disability discrimination action based on her ability to perform at her job with reasonable accommodations.

Abarca’s explanation at trial was that he could have continued working for Citizens had they continued to honor his work restriction. This is critical because disability determinations do not consider whether an employee can perform his job duties with reasonable accommodations.

Milad Demetry was the president and principal actor for both plaintiffs Errands and its successor company American Angel Transportation Inc..

In 2012, Errands entered into a business relationship with Wayne Walz , wherein Errands would transport individuals claiming workers’ compensation benefits to and from their medical appointments. In 2013, American Angel Transportation Inc., effectively became the successor of Errands, with respect to its business dealings with Walz.

According to the written contracts with Walz, titled the “Billing & Collections Agreement.” Walz was responsible for negotiating and securing payments from the workers’ compensation insurers (or their third party administrators) connected to the applicants transported by plaintiffs. Walz was to be paid 20 percent of the actual payments collected for the transportation companies.

The companies provided transportation services to applicants based upon requests by Waltz, typically ranging between 10 to 50 requests per day. Insurers would issue payment checks naming the transportation companies as payees, but would deliver them to Walz’s office. Demetry, as president of the transportation companies, would periodically go to his office to collect the payment checks and simultaneously pay 20 percent of the amounts received.

The transportation companies filed their lawsuits against Walz as well as individual doctors, alleging seven causes of action. They alleged that because of Waltz conduct and omissions, over $1.2 million in billed trips went unpaid by insurers and became uncollectible.

Their argument at trial focused on a theory that defendant had breached the Agreements by failing to obtain authorizations for plaintiffs’ trips ahead of time from insurers and by failing to file liens at the WCAB so that plaintiffs’ rights to payment for their billed trips could be formally adjudicated by the WCAB in the event an insurer refused to pay.

The evidence at trial was insufficient to show causation, as the trial judge reasoned that many bills were paid without having obtained prior authorization or filing liens before the WCAB. There was thus no direct evidence that failure to obtain prior authorization or file a lien resulted in loss of the payment in every transportation event, since some were paid and some were not. The plaintiffs were provided an opportunity to provide evidence showing a link between the failures, and the non payment on a bill by bill basis, and they could not.

Thus the trial court entered judgment in favor of Wayne Walz, which was affirmed by the Court of Appeal in the unpublished case of America Angel Transportation Inc. v Wayne Walz.

The Court of Appeal concluded that the “Plaintiffs have not carried their burden to demonstrate reversible error under a substantial evidence standard of review.”

The Sacramento Bee reports that the California Insurance Commissioner Ricardo Lara, is under fire for accepting campaign contributions from insurance executives and their spouses. He has yet to release his office calendars in response to public requests.

But Lara acknowledged last week that he did meet with a CEO whose company has multiple complaints against it in cases before his department.

Lara said he met with CEO Steven M. Menzies, who heads Applied Underwriters, a workers’ compensation agency that the department formerly settled with for “bait and switch” marketing tactics in 2017. Berkshire Hathaway is in the process of selling the company, a sale Lara must approve.

Lara called the May 6 meeting with Menzies “casual” in a July 25 interview with KQED. But he also said he agreed to a meeting after the executive reached out “to see if staff could meet with him to review the cases before him.” His department said the meeting occurred on May 6.

Lara, who was serving as his own campaign treasurer, accepted $46,500 in contributions to his 2022 reelection campaign in April from out-of-state executives with ties to the company. During his campaign for the post, Lara had pledged not to take political money from insurers.

The meeting and decisions refreshed concerns from the advocacy nonprofit Consumer Watchdog, which has pressed Lara’s office to release calendar records of meetings with executives who donated the money in question.

President Jamie Court said the meeting with Menzies raises questions of potential ex parte communication violations because of Lara’s quasi-judicial role as commissioner. Ex parte communications are illegal under California law, but Department spokesman Michael Soller said Lara did not violate ex parte regulations because the conversation was “not about a specific case.”

Lara has not said whether he personally knows the donors who contributed the total $54,000. Stephen and Carole Acunto each donated $15,500 to Lara. Mr. Acunto has spoken on behalf of Applied Underwriters in the past, but did not respond to requests for comment.

Theresa DeBarbrie also donated $15,500, and is the wife of another company executive with ties to Applied Underwriters. Nearly $8,000 came from Darlene Graber, whose husband is also in the insurance industry.

Jessica Levinson, a professor at Loyola Law School in Los Angeles, said because Lara’s role “stands somewhere in the middle” between a lawmaker and a judicial official, the meetings and decisions raise “serious red flags.”

Claims Administrators should carefully review SJDB vouchers for possible fraudulent claims, especially if they pertain to Alliance School of Trucking in Chatsworth.

Emmit Marshall, 52, the owner and president of the trucking school pleaded guilty to federal criminal charges for bilking the United States Department of Veterans Affairs out of more than $4 million in tuition and other payments after falsely certifying that veterans had attended classes that they never took.

The is scheduled for a sentencing hearing on a November 18, where Marshall will face a statutory maximum sentence of 100 years in federal prison.

Marshall, the owner and president of Chatsworth-based Alliance School of Trucking (AST), admitted in his plea agreement that, from July 2011 until April 2015, he and co-defendant Robert Waggoner, 56, of Canyon Country, who was a director at AST, schemed to defraud the VA. Marshall and Waggoner recruited eligible veterans to take trucking classes paid under the Post-9/11 GI Bill. AST was certified to offer classes under the Post-9/11 GI Bill that included a 160-hour Tractor Trailer & Safety class and a 600-hour Select Driver Development Program.

Pursuant to the Post-9/11 GI Bill, the VA paid tuition and fees directly to the school at which the veteran was enrolled. The VA also paid a housing allowance to the veteran enrolled full-time in an approved program, and, in some cases, the VA paid a books and supplies benefit directly to the veteran.

Marshall admitted that Waggoner and another individual recruited eligible veterans to enroll at AST by telling the veterans they could collect housing and other fees from the VA without attending the programs. Knowing that the vast majority of veterans enrolling at AST did not intend to attend any portion of those programs,

Marshall and Waggoner created and submitted fraudulent enrollment certifications, according to Marshall’s plea agreement. They also created student files that contained bogus documents.

When they became aware of the investigation into their conduct, Marshall, Waggoner and others at AST removed fraudulent documents from student files, and Marshall later ordered that these files be destroyed, the plea agreement states.

Waggoner is scheduled to go to trial in this case on February 25, 2020.

The United States has filed a civil healthcare fraud lawsuit against Life Spine Inc., Michael Butler, the founder, president, and chief executive officer of Life Spine, and Richard Greiber, the vice president of business development of Life Spine. The Government’s complaint seeks damages and civil penalties for paying kickbacks in the form of millions of dollars of consulting fees, royalties, and intellectual property acquisition fees to surgeons to induce them to use Life Spine’s spinal implants, devices, and equipment.

The lawsuit alleges that the surgeons who received these payments accounted for approximately half of Life Spine’s total domestic sales of spinal products from 2012 through 2018. As set forth in the complaint, these payments violated the Anti-Kickback Statute and, as a result of this unlawful conduct, Life Spine, Butler, and Greiber caused hospitals and surgeons to submit false claims for payment to Medicare and Medicaid.

Life Spine is a Delaware corporation with its principal place of business in Huntley, Illinois. Life Spine designs, develops, manufactures, and markets medical devices and equipment primarily used in spinal surgeries performed by orthopedic surgeons and neurosurgeons, including implants and instruments. Butler is the founder, president, and chief executive officer of Life Spine and is its majority shareholder. Butler was closely involved in overseeing the operations of Life Spine. From 2012 to 2015, Greiber was involved in selecting and approving surgeons who served as paid “consultants” for Life Spine.

Life Spine paid surgeons to induce them to use Life Spine Products during their surgeries. Life Spine aggressively recruited surgeons who had the potential to use a high volume of Life Spine Products to enter into agreements to serve as paid consultants and/or to transfer their patents/patent applications to Life Spine in exchange for payments and promised support to bring the surgeons’ new products to market.

Life Spine tied these agreements and the associated payments – as well as the company’s continued commitment to devote resources to the surgeons’ product development projects – to the surgeons’ usage of Life Spine Products. Life Spine and Butler expected surgeons to commit to using Life Spine Products at a certain level in exchange for the consulting fees, royalties, and intellectual property acquisition fees paid to them.

Life Spine, with the knowledge, involvement, and participation of Butler and Greiber, entered into agreements with dozens of surgeons. These agreements included medical education agreements under which the surgeons were paid to provide training and/or educational services; product development agreements under which the surgeons were paid to purportedly provide input on new products and then would receive royalties on future sales of the product; and intellectual property agreements under which the surgeons were paid large up-front acquisition fees for their patents/patent applications and then would receive royalties on sales of any products developed based on the patents. Life Spine paid surgeons millions of dollars in consulting fees, royalties, and intellectual property acquisitions pursuant to these agreements.

The Government intervened in a private whistleblower lawsuit before Judge Jed S. Rakoff that had previously been filed under seal pursuant to the False Claims Act.

The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorneys Jennifer Jude, Jeffrey K. Powell, and Lara K. Eshkenazi are in charge of the case.