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Tag: 2020 News

California “Urgently” Walks Back AB-5 Employment Test

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Gov. Gavin Newsom has promptly signed into law, a bill that exempts more occupations from Assembly Bill 5, the controversial law that required most independent contractors to become employees of their clients.

Assembly Bill 5 included exemptions for many politically-connected occupations like real estate agents and doctors, but ensnared many others, drawing particular criticism from musicians, independent truck drivers, franchise business owners and freelance writers.

The amendments in AB 2257 specific to writers, photographers, videographers, editors, and illustrators make changes to AB 5 that further accommodate the needs for those individuals in the industry that operate as their own small business.

The new law establishes an exemption for services provided by a still photographer, photojournalist, videographer, or photo editor, as defined, who works under a written contract that specifies certain terms, subject to prescribed restrictions.

It also establishes an exemption for services provided to a digital content aggregator, as defined, by a still photographer, photojournalist, videographer, or photo editor.

It also establishes an exemption for services provided by a fine artist, freelance writer, translator, editor, content contributor, advisor, narrator, cartographer, producer, copy editor, illustrator, or newspaper cartoonist who works under a written contract that specifies certain terms, subject to prescribed restrictions.

The law creates additional exemptions for various professions and occupations. It exempt from the ABC test people who provide underwriting inspections and other services for the insurance industry, a manufactured housing salesperson, subject to certain obligations, people engaged by an international exchange visitor program, as specified, consulting services, animal services, and competition judges with specialized skills, as specified.

The law would also create exceptions for licensed landscape architects, specialized performers teaching master classes, registered professional foresters, real estate appraisers and home inspectors, and feedback aggregators.

The law revises the conditions pursuant to which business service providers providing services pursuant to contract to another business are exempt.

The law revises the criteria pursuant to which referral agencies and service providers providing services to clients through referral agencies are exempt and would revise applicable definitions.

The law also create an exemption for business-to-business relationships between 2 or more sole proprietors, as specified. The bill would provide that a hiring entity need only satisfy all of the conditions of one of the exemption provisions to qualify for the exemption from the ABC Test.

The new law makes conforming changes to tax law regarding the determination of the status of a worker as either an employee or an independent contractor per the criteria described above.

The new law takes effect immediately as an urgency statute.

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Political Back Story to Gig Worker Law Walk Back

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A major complaint among Californians affected by the state’s anti-freelancing law, AB5, is that the labor unions wrote it and essentially paid for its passage and that the purpose was to enrich unions by creating millions of new “employees” to “organize.”

The bill’s author, Asm. Lorena Gonzalez-Fletcher has admitted that the California Labor Federation sponsored the bill but denies that the unions ensured its passage, saying that its purpose was to provide benefits and a guaranteed minimum wage.

Newsom had up to 30 days to sign AB-2257, the AB-5 walk back, so it’s significant that he signed it only three days after passage. And that the new law was deemed an “urgency statute” so that it take effect immediately.

There’s bad blood between San Francisco Democrats and Los Angeles/San Diego Democrats, and Gonzalez-Fletcher’s already made Gavin Newsom’s life more difficult this year by failing to negotiate clean-up provisions for AB-5, and by publicly battling with Elon Musk, a long-time friend of Newsom and major job creator in the state.

Entering stage left, is Willie Brown, who perhaps put his thumb on the scales of legislation once again. For those not familiar, Willie Brown is not only one of the most powerful politicians to have ever graced the floor of the California State Assembly; he’s been the most powerful Democrat in the state since the 1960s.

At age 86, he still wields considerable power as a “kingmaker” in the state. After serving 32 years in the Assembly, Brown was Mayor of San Francisco for eight years and was succeeded by his protege, Gavin Newsom. Kamala Harris’ political career started when Brown appointed her to a state commission then helped her become the elected District Attorney of San Francisco.

Brown wanted AB2257 signed immediately because, as a weekly columnist for the San Francisco Chronicle, he had hit his 35 story limit under AB-5, and they were prohibited from publishing additional columns until AB2257 was signed.

Brown fumed of the move by Hearst Newspapers’ flagship publication. “For 12-plus years, every Sunday, I’ve written that column in the paper and never taken a vacation. And this is the most important year. This is a campaign year, when there’s really a contest.”

“I signed the bill, write the damn column!”’ Newsom wrote to Brown in a text message that Brown shared with POLITICO.

Earlier in the day, some of Brown’s powerful friends in politics, including attorney Joe Cotchett, contacted Newsom in an effort to get him to move quickly on the bill to get Brown’s Sunday column back in the paper as soon as possible, sources said.

“If there was a place to picket organized labor, I’d do it today,” Brown said. “If there was a place to picket a legislator, I’d do it,” he said. As Assembly speaker, “I made sure that special interests, no matter who they were – labor or non labor – did not take advantage of the Legislature,” but he said it was clear this time was not the case.

“Those bastards,” he added.

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Study Reveals Surge in “Mega” Comp Claims Over $3M

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The surge in workers compensation “mega claims” of at least $3 million continues as medical treatments and technologies advance, according to a report by Business Insurance about research by ratings bureaus around the country.

While mega claims comprise a statistically small percentage of all workers comp claims, claims are reaching the mega threshold more quickly, primarily because of the associated costs of technological advances in medicine. Experts say that upward trend is likely to continue.

Overall, mega claims account for upwards of $2 billion in workers comp costs each year, according to research compiled by the National Council on Compensation Insurance, California’s Workers Compensation Insurance Ratings Bureau and other states that pooled their data to report on mega claims trends across the country.

The study includes data from 43 states and the District of Columbia. It found that more than 4,500 claims from these states and D.C. incurred losses in excess of $3 million (at 2018 cost levels) from 2001 through 2017. Of those claims, 57% cost between $3 million and $5 million, 33% between $5 million and $10 million, and 10% in excess of $10 million, with mega claim counts for 2017 at a 12-year high, according to the report released on Aug. 25.

While fewer than 50% of mega claims reach the $3 million threshold by 18 months from policy inception, these claims are reaching that number more quickly than in the past, the study found.

The types of claims most likely to develop into mega claims include spinal cord injuries, brain injuries and severe burns. Presumption laws – such as those covering a range of cancers for firefighters or heart conditions for law enforcement officers – can also lead to claims cresting the mega threshold.

Then there are the “massive claims that shouldn’t be that big,” said William Zachry, San Carlos, California-based workers compensation consultant and board member of California’s State Compensation Insurance Fund. “We’ve seen an increase in the severity of claims, but not an increase in the severity of the injuries.”

These claims, which Mr. Zachry refers to as “jumper claims,” are those that cost millions of dollars not due to a severe injury, but such issues as a worker’s lack of coping skills, plaintiffs’ attorneys adding multiple body parts to the claim, repeat surgeries, overprescribing and poor care, leading the worker to believe he or she is disabled.

“If you can identify and intervene very early, it is possible to really change the dynamic, change the outcomes,” he said.

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Telemedicine Enhances Access to Palliative Care

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A report in MedPage Today claims that the experience of hospitals with significant surges of severely ill COVID-infected patients has delivered a powerful marketing case for the future of palliative care beyond the current pandemic, experts say.

While studies have shown that palliative care improves quality of life and reduces caregiver burden, not everyone can access it, “partly because we don’t have enough clinicians, services, and programs — especially for people outside of the hospital who are seriously ill but not hospice-eligible,” she said.

Enter telemedicine, which can dramatically increase access for people in community settings, at home, in assisted living facilities, in long-term care. One clinician can see 8 to 10 seriously ill patients a day at multiple sites without leaving the office — exponentially increasing access.

It’s not only more efficient for the clinician, it expands access for patients who can get to the clinic only with difficulty because they are homebound, live miles away or constrained by geographical barriers, or depend on public transit.

At the height of the COVID surge in New York City, three large health systems separately recruited and deployed palliative care and other professionals from across the country to serve as back-up volunteers to hospital teams on the ground. They gave debriefings for frontline providers, held family meetings and goals-of-care conversations online, even offered psychological and grief support.

“We have made huge strides toward building palliative care into the healthcare system focused on the broad concept of improving quality of life, recognizing that serious illness can turn one’s life upside down,” says Ashwin Kotwal, MD, assistant professor of geriatrics at the University of California San Francisco. “It’s not just about end-of-life support but addressing physical symptoms throughout the disease trajectory, along with psycho-social and spiritual needs. And communication is a big part of what we do.”

Kotwal spent the last year building a tele-palliative care program at the San Francisco VA Medical Center, focusing on patients who were homebound or who lived four hours or more from the clinic. Then COVID came along.

For Michael Fratkin, MD, founder and CEO of Resolution Care Network in Eureka, California, the telemedicine encounter is not just more convenient, it’s superior.

“The heart of the matter is the preservation of boundaries in healing relationships. We find that a video visit in real time is substantially better than invading people’s homes,” he says. “This is such a leveling technology. Something about the framing of the computer screen sets limits and puts us more on the same level. Clients show me only what they want to show me in their homes. It keeps the boundaries clearer.”

What happens on these visits for Fratkin’s community-based palliative care service, which covers a large rural area: trust-building; goal setting; shared-decision-making; advance care planning; symptom management. Surprisingly, he says, there are greater opportunities for intimacy in this encounter, even though the clinician can’t reach out and put a hand on the patient’s shoulder.

Of course, the future of telemedicine in palliative care will depend on reimbursement. Currently, temporary emergency Medicare waivers, extended for three months on July 23, have allowed payment for professional telehealth and some telephone visits, including physicians’ advance care planning conversations with patients and families. The emergency will end eventually, but at least 20 bills have been introduced in Congress to make some aspects of telemedicine coverage permanent.

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No. Cal. Employer Convicted for $2M Premium Fraud

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57 year old Selina Singh, and 30 year old Kabir Singh, plead guilty to conspiracy to commit insurance premium fraud and related felonies. Both defendants also admitted an aggravated white collar crime enhancement for a loss exceeding $500,000 through a pattern of criminal activity.

The investigation of this case started after an employee severed his thumb while working on a Bara Infoware, Inc. construction jobsite at Fort Hunter Liggett. The injured employee and his site safety supervisor reported to Monterey County District Attorney investigators that Selina Singh directed them to lie about the injury occurring on a Bara Infoware, Inc. jobsite and report it occurred while working for the family’s other company, Federal Solutions Group.

The Monterey County District Attorney’s Office determined the companies were headquartered in San Ramon, California and started a joint investigation with the relevant local and State agencies.

Investigators determined that the defendants obtained government contracts, including construction contracts that required compliance with workers compensation laws.

Defendants then used their companies hire, employ, and pay construction laborers, carpenters, painters, and other workers in order to complete construction work, even as they fraudulently misrepresented the construction payroll to insurance carriers in less dangerous industries such as clerical, and consulting, in order to lower their insurance rates.

Investigators located another injured employee that reported that Kabir Singh asked him not to report his injury and offered to pay his medical expenses instead of reporting the injury to company’s insurance and located a third company, Eagle Solutions, that was used first to move money between Bara Infoware, Inc. and Federal Solutions Group, and then eventually directly to obtain workers compensation policies for non-construction payroll while running construction jobsites.

An audit by a forensic accountant at the Contra Costa District Attorney’s Office concluded that the scheme evaded over $2 million dollars of insurance premiums that law abiding competitors would have had to pay in seven years, in addition to over $200,000 of evaded payroll tax owed to the State of California.

Selina Singh pled guilty to conspiracy to commit insurance fraud, insurance premium fraud, payroll tax fraud, and a white collar crime enhancement. The maximum sentence for those charges is eleven years and eight months.

Kabir Singh pled guilty to conspiracy to commit insurance fraud, insurance premium fraud, and a white collar crime enhancement. The maximum sentence for those charges is eleven years and eight months.

Sentencing is scheduled for November 19 at 1:30 p.m. in Department 31 of the Contra Costa County Superior Court.

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SCIF Declares $75M Mid Year Dividend

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State Compensation Insurance Fund announced plans to distribute an approximate $75 million dividend to its qualifying policyholders with policies that took effect between January 1 and August 26, 2020.

This dividend equals approximately 10% of the estimated annual premium reported during that period.

State Fund’s Board will consider dividends again for the remainder of the 2020 policy year later this year. While the board cannot guarantee future dividends, this mid-year declaration does not affect the possibility of a future payout for the remainder of the 2020 policy year.

Through July of this year, State Fund reported approximately $700 million in estimated annual premium and approximately $60 million in realized capital gains.

“We’re working hard to support our policyholders in every way we can during this difficult time,” said State Fund President and CEO Vern Steiner.

“Due to our strong, stable financial position and the claims outcomes we’ve seen over the past several years, we’re able to return money to policyholders and we want to let them know it’s coming as early as possible. This is money they can count on as they plan for next year amidst so much uncertainty.”

State Fund has paid out more than $5 billion in dividends to policyholders over its history – more than any other California workers’ compensation carrier.

Just last year State Fund declared an approximate $160 million dividend for 2019 policyholders.

State Fund policyholders eligible for a 2020 dividend will receive their payments after the expiration date of their individual policies.

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WCIRB Reports Declining Premiums, Increasing Loss Ratio

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The WCIRB published its Quarterly Experience Report as of March 31, 2020.

Written premium for 2019 is 7% below that for 2018 and 12% below the peak in 2016. And premium continues decline in 2020. Written premium for the first quarter of 2020 is 5% below that for the first quarter of 2019.

With the COVID-19 pandemic-related economic slowdown, the WCIRB expects employer payroll and insurer premium to decline sharply for the remainder of 2020 compared to 2019.

And rates have declined as well. The average charged rate for the first quarter of 2020 is 7% below that for 2019 and 39% below the peak in 2014. The January 1, 2020 approved advisory pure premium rates are on average 47% below those for January 1, 2015.

And the loss ratio is increasing. The projected loss ratio for 2019 is 5 points above that for 2018, primarily driven by lower premium rates. These ultimate projections as of March 31, 2020 are generally consistent with those as of recent prior quarters as the trends in downward loss development have moderated through March31, 2020.

Loss development for the remainder of 2020 will likely by impacted by the pandemic and stay-at-home orders.

The projected combined ratio for 2019 is 8 points higher than 2018 and 16 points higher than the low point in 2016 as premium levels have dropped while claim frequency and severity increased moderately.

Despite the recent increase, combined ratios for 2013 through 2019 are below 100% and are the lowest since the 2003 through 2007 period.

The COVID-19 crisis is likely to significantly reduce premium levels in 2020 and may increase overall costs leading to further increases in the combined ratio.

There is however some good news. Indemnity claims have settled quicker over the last several years, largely driven by SB 863 and SB1160 reforms. The ratio for 2019 is consistent with 2018, suggesting claim settlement rates may be plateauing.

Claim activity is expected to slow down in the second quarter of 2020 as a result of the COVID-19 crisis. Indemnity claim frequency increased by 11% from 2009 to 2014, but decreased by 9% from 2014 to 2018. Indemnity claim frequency increased modestly in 2019. Data through the first quarter of 2020 shows relatively flat frequency.

The impact of the COVID-19 crisis on overall 2020 claim frequency is not yet clear. Although many claims arising from exposure to the virus continue to be filed, the slowdown in economic activity is expected to reduce claim filings.

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Walgreens and VillageMD to Open Primary Care Centers in 700 Stores

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One would think, in these days of COVID-19, that America’s doctors and patients are as reliant on our hospitals as they’ve ever been, and that they’re going to stay that way. Guess again.

Today, even as the health care system and the economy face strains from the coronavirus and its complications, scores of doctors and patients are avoiding large bureaucratic hospitals and instead flocking toward leaner and meaner models of health care.

Professional providers of all types — from surgeons to drugstore owners — are focusing on innovation. Even better, they’re now treating patients as consumers who value quality care at reasonable prices they can know in advance.

Walgreens and VillageMD, for instance, have partnered to open primary-care centers in 500 to 700 drugstores over a five-year period. These centers will provide annual check-ups, walk-in appointments, and many other services. Physician-led teams of four people will treat up to 120 patients per day at these mostly 3,300-square-foot locations.

This model is the latest iteration of a trend called decentralized care, in which patients obtain treatment through telehealth services and outpatient surgery centers and clinics — rather than by visiting hospitals.

For two decades, the late Harvard Business professor Clayton Christensen predicted that decentralization in health care would follow other industries on this path, such as travel, retail, and financial services. It was only a matter of time, said Christensen, before health care innovators improved access to services and reduced costs.

Two key factors are driving this emerging trend, as a recent Healthline.com article pointed out: 1) urgent-care clinics and expanded pharmacy services are improving the efficiency of health care delivery; and 2) more people, especially older adults, are receiving care at home.

Americans who support this free-market health trend share some of the top reasons for its popularity, including convenience and price transparency.

The media has been reporting on the trend, too. Yahoo Finance, for example, ran a piece this summer about the expected growth of urgent-care centers over the next five years.

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Legislature Passes Retroactive COVID-19 Rebuttable Presumption

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California lawmakers on Monday wrapped up a legislative session largely defined by the pandemic. The bills will next head to Gov. Newsom, who will have until Sept. 30 to sign or veto the measures.

Late Monday night, the Legislature passed SB 1159 which would make it easier for police, firefighters and other essential employees who contract COVID-19 on the job to be covered under the state’s workers’ compensation program by establishing a disputable presumption of compensability.

It was declared an “urgency” measure, which means if signed by the Governor, the law will take effect immediately, instead of on January 1. Additionally, the statute “applies to all pending matters except as otherwise specified, including, but not limited to, pending claims relying on Executive Order N-62-20.”

Also going to the Governor is Assembly Bill 3216, a proposal pushed by unions that would create significant labor protections for hotel, janitorial, airport, event center and building maintenance workers. The bill requires employers in those industries to first rehire workers they laid off during a state of emergency, including in cases in which a new owner takes over a business.

The Legislature also passed a budget trailer bill, first made public Friday, that would require food-sector companies, healthcare providers and emergency responders with more than 500 employees to provide two weeks of supplemental paid sick leave for full-time workers who are unable to work after being exposed to the coronavirus or contracting COVID-19. AB 1867, which expires Dec. 31, is similar to an executive order Newsom signed earlier this year.

The Legislature also approved AB 276, which would raise the amount Californians can borrow penalty-free from their employer-sponsored retirement accounts to $100,000 from $50,000 if they have been financially impacted by the pandemic.

Another proposal approved by the Legislature, AB 2537, would require general acute care hospitals to stockpile three months of protective equipment supplies by April 1 or face a fine of up to $25,000.

AB 2043 would require the state’s Division of Occupational Safety and Health to compile and publicly report investigations into agricultural workplace conditions related to COVID-19, as well as illnesses from the virus.

Lawmakers approved SB 275 which calls for the state to build a supply of medical equipment. Hospitals and other healthcare employers would be required to assemble a 45-day supply by June 1, 2023.  .

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Summary Judgment in Power Press Case Reversed

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Marivel Santos was employed by Crenshaw Manufacturing, Inc. in January 2017 as a machine operator. She was instructed by her supervisor, Jose Flores, to operate a material-forming machine utilizing a die without any protective guards or cages.

Ordinarily, Santos would have had to use both hands to operate the machine. This time, however, Flores instructed her to operate it “from the side using a bypass button.” Using the machine in this manner allowed Santos to operate the machine with her right hand, leaving her left hand free to reach into the machine to “press down the part” being cut.

On January 12, 2017, Santos was operating the machine in this fashion when her left hand was crushed underneath the die, mutilating and severely injuring it. She filed a workers’ compensation claim against Crenshaw.

She also filed a civil action for a sole cause of action against Crenshaw for violation of Labor Code 4558, which allows an action against the employer where the injury is caused by the removal of, or knowing failure to install, a point of operation guard on a power press, known as the “power press” exception to the exclusive remedy of worker’s compensation.

The machine in this case was an A3 gap frame press, manufactured in or around 1937 by Niagara Machine & Tool Works. Crenshaw purchased two Niagara A3 gap frame presses, along with other equipment, in late 2013 as part of an asset purchase from another business.

Crenshaw filed a motion for summary judgment, asserting Santos failed to meet the requirements of the power press exception, and argued that Niagara had never designed, provided, installed, or specified any particular guard or barrier to be used with the machine in any given context.

The trial court granted summary judgment in favor of the employer. However the Court of Appeal reversed in the unpublished case of Santos v Crenshaw Manufacturing.

A provision in section 4558 provides that “No liability shall arise under [section 4558] absent proof that the manufacturer designed, installed, required, or otherwise provided by specification for the attachment of the guards and conveyed knowledge of the same to the employer. Proof of conveyance of this information to the employer by the manufacturer may come from any source.”

Crenshaw argues that section 4558 requires a manufacturer to convey specific  information – in other words, to identify a particular point of operation guard.

However, the Court of Appeal noted that the case law has only established that a high degree of specificity in the manufacturer’s safety directives will suffice under section 4558. But not what is the lowest degree of specificity that would suffice?

When a defendant moves for summary judgment, ‘its declarations and evidence must either establish a complete defense to plaintiff’s action or demonstrate the absence of an essential element of plaintiff’s case. Here this standard was not met, and the summary judgment was reversed.

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