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Tag: 2019 News

Chick-fil-A and Starbucks Distributor Moving HQ From Irvine to Texas

Quality Custom Distribution, a fast-food industry supplier for the likes of Starbucks, Chick-fil-A and Chipotle, is moving its corporate headquarters to Texas from Irvine.  

It joins a growing list of California firms moving headquarters operations to Texas, most notably Toyota USA’s relocation from Torrance three years ago. Other movers include Occidental Petroleum (from L.A.) and Jamba Juice (from San Francisco).

The company, a logistics unit of food-industry supply giant Golden State Foods, runs a nationwide chain of 19 distribution centers that warehouses and distributes food and supplies to individual chain restaurants. The new headquarters will initially be home to between 30 and 45 workers, both relocations and new hires. It is expected to be open by January.

A Quality Custom statement said the move “will maximize company efficiencies by placing multiple services, including finance, accounting, customer service and purchasing, into one location.”

Quality Custom is a food-delivery subsidiary of Golden State Foods, which started in 1947 as a meat supplier to Southern California restaurants and hotels. In the 1950s it won a curious new customer – the fledgling restaurant chain McDonald’s.

Things soon changed as that partnership helped Golden State Foods grow globally into an Irvine-based behemoth with $7 billion in revenues handling various industry functions from making food to warehousing and inventory management to stocking an estimated 120,000 restaurants.

The Quality Custom unit, as the name implies, handles some odd services for clients. Take a new warehouse in Fontana that opened last year with just one purpose: handling the needs of 300-plus Starbucks around Southern California.

In moving its corporate operations to Texas, Quality Custom felt a need to “better align our corporate resources with our business and provide enhanced support to our distribution centers and to our customers,” said Ryan Hammer, Quality Custom’s corporate vice president and president of Golden State Foods’ logistics operations, said in a statement. He came to the company from Texas-based PepsiCo Inc. two years ago.

Hammer added: “This centralization will enable us to continue to grow our distribution business and solidify our position as a dominant player in the food industry. We are looking forward to expanding within the Dallas area, which we chose due to its central location, large talent pool, and excellent business community overall.”

California Trucking Association Challenges AB-5

The California Trucking Association (CTA) filed a second amended complaint, in its lawsuit challenging a new labor law that seeks to give wage and benefit protections to workers in the gig economy, including those who are employed by Lyft and Uber.

The International Brotherhood of Teamsters has become a party to this high profile case.

The new California labor law, AB5 is expected to take effect on January 1, 2020. AB5 will make it harder for employers to claim their employees as independent contractors. The CTA brings this suit as they believe that AB5 violates their rights guaranteed by the Supremacy and Commerce Clauses of the US Constitution.

The complaint addresses the test that the California Supreme Court adopted in Dynamex. This test is used to determine whether a worker is an employee or an independent contractor.

Under this test, motor carriers in California would have to stop all contracting with independent contractors in order to prevent facing civil or criminal penalties. The complaint states: “The new ABC test is unlawful, and is void and unenforceable pursuant to the Commerce Clause of the United States Constitution as an unreasonable burden on interstate commerce.”

The CTA also argues that AB5, a state law, conflicts with the federal law regulating commercial motor vehicle safety. Thus, in the present case, they believe that the federal law should rule due to the Supremacy clause of the Constitution. “At all relevant times, Plaintiffs, CTA members, and all other similarly situated, had, have and will have the right under the Supremacy Clause not to be subjected to or punished under state laws that interfere with, are contrary to, or otherwise preempted by federal law.”

The First Amended Complaint was dismissed without prejudice in September. The dismissal did not address the merits of the claim.  Instead it dismissed the case based upon standing to sue issues, and the “mootness” of the claim. A federal court does not have jurisdiction to hear cases that are neither ripe for review nor “moot.” “Mootness is the ‘doctrine of standing set in a time frame: The requisite personal interest that must exist at the commencement of the litigation (standing) must continue throughout its existence (mootness).”

CWCI Reports Opioid Use Declines

The prevalence of opioids in California workers’ comp lost-time claims has dropped 51% over the past decade, reducing both average benefit payments and average days away from work on those claims, so 10-year costs on 2010 through 2017 claims systemwide are projected to decline by an estimated $6.5 billion according to a new study by the California Workers’ Compensation Institute (CWCI).

The study’s authors analyzed 273,106 lost-time claims in which treatment was initiated within a 10-year period (2008 through 2017), with payment and prescription data on the claims valued through 2018.

The authors found that over the 10-year span of the study, chronic opioid use (defined as three or more opioid prescriptions, each filled at least three weeks apart, and all filled within four consecutive months) declined from 13% to 3% of all lost-time claims (a relative decline of 77%); while acute use (i.e., all other opioid use) declined from about 36% to just over 21% of the claims (a relative decline of 40%).

The study also showed that the strength of the opioids dispensed within the first 12 months of treatment, measured in cumulative morphine milligram equivalents, declined 59% for chronic opioid use claims, and 36% for acute opioid use claims.

Regression models were used to estimate the impact of opioid use versus non-use on benefit costs per claim. Applying these estimates against the declining opioid trend, the authors projected that savings will reach 16.5 percent for 2017 claims after 10 years of development, with a cumulative savings of $6.5 billion for 2010 to 2017 claims.

How much lower can opioid utilization fall? The Institute study concludes that future declines will depend on advances in evidence-based medicine research and treatment guidelines, medical providers’ continued adoption of alternative pain management protocols, continued elimination of fraudulent and abusive provider practice patterns, increased general awareness of the dangers of opioid use, and the growing number of class action lawsuits against opioid manufacturers.

CWCI’s Report to the Industry report :The Impact of Declining Opioid Use on Lost-Time Claim Development & Outcomes in California Workers’ Compensation” is available at

Police Officer Fraud Conviction Affirmed Despite Trial Error

In 2014, Ryan Patrick Natividad, 32, Corona, while working as a Costa Mesa Police Department officer, reported a work-related injury. He falsely claimed that earlier in the day, he struck his hand against a brick wall near the CMPD jail while transporting an arrestee for booking.

Natividad claimed that the arrestee stumbled into the wall, prompting him to use his hand to prevent the arrestee from striking the wall. He was subsequently directed by CMPD to seek immediate medical attention. He listed a jail employee as a witness to the incident in his injury paperwork.The employee reviewed the jail surveillance camera footage, determined that the incident the defendant reported never occurred, and brought the video footage to his supervisor’s attention.

The City of Costa Mesa, the city’s insurance company AdminSure, and a private investigation firm hired by AdminSure investigated Natividad’s workers’ compensation insurance claim and reported the fraud to the Orange County District Attorney’s Office, who investigated this case.

Natividad was sentenced to six months in county jail for committing insurance fraud by presenting a false insurance claim and making false material statements related to the claim, after he was found guilty of one felony count each of insurance fraud and making a fraudulent statement, after a jury trial on Feb. 16, 2017.

Before trial, the prosecution filed a motion in limine to admit evidence of Natividad’s 2009 workers’ compensation claim for a right hand injury while booking an arrestee. The prosecutor argued that because of the similarities, evidence of the 2009 claim was admissible to prove knowledge, common plan, and absence of mistake in the 2014 claim even though the insurance provider did not contest the 2009 claim (although it suspected fraud).

The court ruled the prosecutor would be allowed to put on evidence of the 2009 claim, including the video, to establish intent, common plan, or knowledge, but she had to inform the jury the claim was paid. The court, however, ruled the prosecutor could not argue there was fraud in the 2009 claim. Natividad appealed his conviction because of this ruling. However the court of Appeal affirmed the conviction in the unpublished case of People v Natividad.

The Court agreed the trial court erred by admitting other acts evidence. There are similarities between the 2009 and 2014 claims were Natividad injured his right hand in the jail while booking an arrestee. But they differ in one important respect.

In 2009, the insurance company processed and settled his claim while in 2014 the insurance company denied his claim. The admission of Natividad’s prior legitimate 2009 workers compensation claim had little probative value. At most it indicated he knew how to file a claim.

It’s prejudicial value, on the other hand, was significant. Even valid claims of workplace injuries are viewed with suspicion. Here, the 2009 claim unfairly suggested a pattern despite the fact there was no indication there was anything improper about the that claim. A negative stigma attaches generally to workers compensation claims, and subsequent claims give rise to even greater doubts and misgivings. Repeat claimants can easily be perceived as not wanting to work and as using such an injury as an excuse to get out of work

But he was not prejudiced by this error. The trial court’s admission of evidence of the 2009 claim was harmless pursuant to People v. Watson (1956) 46 Cal.2d 818, 836. . “It was not reasonably probable that had the trial court excluded evidence of the 2009 claim the result of the proceeding would have been different.”

Dept. of Insurance Seeks $2B From Opiod Makers for Premium Increases

New York’s insurance regulator has formally notified a group of opioid manufacturers and distributors that it will launch a civil enforcement action against them for contributing towards a rise in health insurance premiums in the state, said two sources familiar with the matter.

Reuters reports that the New York State Department of Financial Services has sent letters to around 23 opioid manufacturers and distributors, notifying them that the regulator would begin the process to hold a hearing on the issue in an administrative proceeding, the sources said.

New York Governor Andrew Cuomo said in September the state would launch a legal action against drug companies and distributors that sell opioids in order to recoup about $2 billion in insurance rate increases that were passed on to New York consumers because of opioids.

Premiums surged because insurers had to cover prescription costs and opioid-related issues such as emergency room visits and addiction treatments, Cuomo had said.

The two sources familiar with the NYDFS action declined to name the companies to which the letters were sent.

Cuomo, on Sept. 10, published a list of entities the regulator had subpoenaed here including Purdue Pharma Inc, Johnson & Johnson, Teva Pharmaceuticals USA Inc, McKesson Corp, AmerisourceBergen Drug Corp and Janssen Pharmaceuticals Inc.

“Janssen acted as a responsible manufacturer and seller of its opioid pain medications, which play in an important role in the lives of patients with severe pain,” the company said. Other companies mentioned above could not immediately be reached for comment.

A letter of intent to bring an enforcement action follows a determination by the regulator that there is sufficient evidence to bring the case, the sources said.

The entities will first have an opportunity to try to convince the regulator not to start the proceeding. The case would be heard by a hearing officer within the agency.

Funds that New York would collect from the suits would be returned to consumers, possibly in the form of rebates of lower insurance premiums, NYDFS Superintendent Linda Lacewell has said.

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. 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.