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May 29 – Floyd Skeren HR Update – Free COVID–19 Webinar

Please join Bernadette M. O’Brien, Esq., SPHR, of Floyd Skeren Manukian Langevin, along with Senior Partners John B. Floyd, Esq. and Amanda A. Manukian, Esq., this Friday for an updated COVID-19 Webinar. The presentation will featuring special guest speakers, Dr. Nachman Brautbar, M.D., medical expert, practicing physician and Managing Partner of Ford & Wallach, Scott Ford Esq., for important updated information on workers’ compensation and COVID-19.

Topics Include:

— An employment law update on issues pertained of COVID-19 provided by Ms. O’Brien;
— Update on the work comp presumption and the impact on California COVID-19 claims;
— Workers’ compensation case scenarios;
— DOL’s enforcement of paid sick leave laws;
— Reopening guidance and requirements;
— Pros and Cons of “Immunity Certificates”; and
— Common questions

Friday, May 29, 2020 from 10:00 am until 12:00 pm (PST).  Webinar is free. Please register online

Contact: for assistance.

Bernadette M. O’Brien is a Partner at Floyd Skeren Manukian Langevin, LLP, and an SPHR/SHRM-SCP certified Human Resources Consultant.

Ms. O’Brien is author of the LexisNexis publication Labor and Employment in California: A Guide to Employment Laws, Regulations and Practices, co-author of California Leave Law: A Practical Guide for Employers, and co-author of California Unemployment Insurance and Disability Compensation Programs.

Four More Convicted in $199M Illegal Prescription Drug Conspiracy

Mihran Stepanyan, Artur Stepanyan, Yan German, and Khachig Geuydjian pleaded guilty to crimes stemming from their respective roles in a wide-ranging racketeering conspiracy involving diversion of prescription drugs, money laundering, bank fraud, identity theft, and additional crimes, This leaves one remaining defendant to stand trial for allegations made in a Second Superseding Indictment filed in February of 2016 against 38 defendants.

The crimes committed by these defendants ranged from picking up drugs at a pizza shop to a half-million-dollar tax check fraud scheme. In total, more than $199 million in diverted prescription drug proceeds were laundered through bank accounts established with false identities and shell companies.

The four acknowledged that they were members of a nationwide conspiracy referred to in court documents as the Karapedyan-Stepanyan Enterprise. One key aspect of the criminal activity was a multi-million dollar prescription drug diversion scheme.

Members and associates of the Enterprise procured prescription drugs from unlicensed sources, usually street dealers, and resold the drugs to unknowing customers. The Stepanyans also admitted that they are not licensed to sell drugs, that they procured millions of dollars of drugs through street suppliers and other unlicensed sources, and that the drugs they procured eventually were resold as legitimate products.

Members of the Enterprise conducted the affairs of the organization through a pattern of racketeering and committed crimes throughout California as well as in Minnesota, Ohio, and Puerto Rico. Members and associates of the Enterprise procured and distributed a wide variety of drugs from unlicensed sources for distribution throughout the country.

The drugs included medications used to treat HIV infection, Type-2 diabetes, dementia, and high blood pressure, among other conditions.

Members and associates of the Enterprise also created false and fraudulent paperwork, referred to as pedigrees, to make it appear that those drugs had been purchased from legitimate sources. In addition, they created sham companies and used multiple bank accounts to receive and distribute the proceeds from their fraudulent transactions.

The plea agreements also describe how the Stepanyans, along with other members and associates of the Enterprise, intentionally used the identities of real people to carry out their unlawful objectives.

Geuydjian’s plea agreement describes how he negotiated fraudulent personal and tax checks for the benefit of the Enterprise, and German’s plea agreement describes how he supplied drugs for distribution by the Enterprise and managed aspects of the Enterprise’s money laundering operations.

Stepanyan became a member of the Enterprise as early as January 2010. He admitted that he agreed with his co-conspirators to commit multiple criminal acts involving money laundering, mail fraud, wire fraud, bank fraud, identity theft, and multiple acts involving the distribution of drugs from unlicensed sources to conduct the affairs of the Enterprise. Stepanyan admitted that he controlled several entities through which approximately $199 million of pharmaceutical money flowed between 2010 and 2014.

All four defendants pleading guilty have released on bond pending sentencing. A majority of the defendants in this case have pleaded guilty to various charges.

Uber/Lyft AB-5 Initiative Qualifies for November Ballot

An initiative that would overturn provisions of AB 5 applying to app-based transportation and delivery drivers has qualified for the November ballot in California. The “Protect App-Based Drivers and Services Act” was written in response to last year’s passage of AB 5. If passed by the voters, the initiative would add Chapter 10.5 (commencing with Section 7448) to Division 3 of the Business and Professions Code with approximately 18 pages of new law.

On August 30, 2019, three companies – DoorDash, Lyft, and Uber – each placed $30 million into campaign accounts to fund the ballot initiative campaign. Subsequently Instacart (Maplebear, Inc.) and Postmates Inc. contributed $10 million each to the effort.

Backers of the initiative say it would allow app-based drivers to gain additional income by working a few hours a week on schedules they determine as independent contractors. The official ballot title will be “Changes Employment Classification Rules for App-based Transportation and Delivery Drivers. Initiative Statute.”

The ballot measure would enact labor and wage policies specific to app-based drivers and companies, including a net earnings floor based on 120 percent of the state’s or municipality’s minimum wage and 30 cents per mile; a limit to the hours permitted to work during a 24-hour period; healthcare subsidies; occupational accident insurance; and accidental death insurance. The ballot measure would also require the companies to develop anti-discrimination and sexual harassment policies.

Opponents, led by the California Labor Federation, say passage of the initiative would remove protections for app-based drivers, such as paid sick and family leave, health insurance and workers’ compensation. The Coalition to Protect Riders and Drivers, Sponsored by the California Labor Federation, AFL-CIO contributed $690 thousand to defeat the initiative.

If approved by voters, the initiative would require companies with independent contractor drivers to provide specified alternative benefits, including minimum compensation and health care subsidies based on engaged driving time, vehicle insurance, safety training and sexual harassment policies.

The initiative would also restrict local regulation of app-based drivers, criminalize impersonation of such drivers and require background checks. Interestingly, the last sentence of the proposed law provides that “this Act shall be liberally construed in order to effectuate its purposes.

The initiative needed at least 685,534 projected valid signatures to become eligible by random sampling. It exceeded that threshold Friday, Secretary of State Alex Padilla announced.

Hollywood Spawns New Cottage Industry – COVID-19 Consultants

Along with hair stylists, camera operators and the hundreds of others who make magic happen for TV and film, Hollywood is counting on a new supporting member for future productions: COVID-19 consultants.

According to the report in Reuters, the coronavirus pandemic has prompted producers, movie studios and workers’ unions to seek expert advice on how to safely reopen film and TV sets, which shut down worldwide in mid-March.

In demand are epidemiologists and other public health specialists to provide detailed strategies for dealing with large crews who work in cramped spaces, makeup artists who get face-to-face with stars, and actors who kiss, hug and fight on set.

The shutdown has taken a severe financial toll across the industry, as well as on cities such as Los Angeles that benefit economically from production. Restarting is important to companies, including Netflix Inc, Walt Disney Co and others, which need fresh programming to engage audiences.

While sets remain empty in the United States, productions are ramping back up in South Korea, Australia, Sweden, as well as New Zealand, where James Cameron’s “Avatar 2” is restarting this week.

People who work in the industry expect to see smaller crews, regular testing, hand sanitizer everywhere and the use of computer-generated imagery to create big crowds on screen when work resumes.

Unions representing actors and set employees, including SAG-AFTRA, IATSE and the Directors Guild of America, have hired experts from Harvard and the University of California to help develop guidelines.

All are looking to California Gov. Gavin Newsom, who is taking input from labor and industry representatives and said he is aiming to release protocols for film and TV shoots as early as this week.

Handling the coronavirus is complicated in television because many workers are freelancers, said Dr. Paul Litchfield, an occupational physician, who helped develop guidelines for TV networks in Britain.

“People are moving in and out of your bubble to other productions with other companies,” he said. “So it’s making sure that the guidance is consistent across (TV) companies.”

WCIRB Estimates Costs of COVID-19 Executive Order at $1.2B

The COVID-19 pandemic and resultant stay-at-home orders are significantly impacting California’s economic, health care and workers’ compensation systems. Many COVID-19 workers’ compensation claims have already been filed. However, at this time, it is unclear what proportion of the illnesses and deaths resulting from the virus will ultimately be determined to be work-related.

On May 6, 2020, the Governor issued Executive Order N-62-20 (Order) providing for a rebuttable presumption of compensability for all workers directed by their employer to work outside the home. Key provisions of the Order include:

— Rebuttable presumption of compensability applied to workers contracting COVID-19 who worked outside of their home or residence at the employer’s direction within 14 days prior to diagnosis
— Presumption limited to dates of injury from March 19, 2020 to July 5, 2020
— Requires a positive test for COVID-19 or a diagnosis of COVID-19 by a licensed physician that is confirmed by a positive test within 30 days
— Temporary disability must be certified by a physician and can be offset by COVID-19 related sick leave
— Elimination of death benefits for workers with no dependents that are usually paid to the state

The WCIRB has evaluated the potential workers’ compensation claims cost arising from COVID-19 claims under the Order. While some of the workers who are directed to work outside their home during this period have filed or would file a compensable workers’ compensation claim in the absence of a rebuttable presumption, we had no basis to estimate this proportion and, as a result, made no estimate of the incremental impact of the Order. Also, since an actual positive test or diagnosis of COVID-19 is required for the Order to apply, our cost estimates exclude any potential costs for workers who are quarantined, but have not been diagnosed with COVID-19. Finally, our estimates reflect the potential cost impact arising from COVID-19 diagnoses during the time the Order applies and do not reflect costs for potential extensions of the Order or future legislation.

The cost estimates in this Research Brief are based on WCIRB data including unit statistical reports, aggregate financial data calls and medical transaction data.  The WCIRB estimates that the cost of COVID-19 claims filed by workers subject to the Order ranges from $0.6 billion to $2.0 billion with a mid-range estimate of $1.2 billion. This mid-range estimate comprises 7% of the $18.3 billion estimated annual cost of workers’ compensation claims in the system prior to the pandemic.

CWCI Reports on Effects of COVID-19 Presumptions

The California Workers’ Compensation Institute (CWCI) has issued a white paper that looks at the historic role of workers’ compensation presumptions, the current and proposed COVID-19 presumptions and results of a survey detailing characteristics and outcomes of initial COVID-19 claims.

On May 6, Governor Newsom issued Executive Order N-62-20 creating a disputable presumption of compensability for COVID-19 as it relates to California workers directed by their employers to work outside the home. The order applies to work performed on or after March 19, 2020 and unless extended, will remain in place until July 5, 2020.

Beyond that, a legislative approach has been proposed in SB 1159 (Hill, Daly) which would create a disputable COVID-19 presumption with an extended timeframe for first responders and “critical” workers, a group that has yet to be specifically defined, but that would include public or private sector employees working to combat the spread of the virus.

The CWCI analysis compares the differences between the current and proposed presumptions, but notes that both shift the traditional burden of proof found in workers’ compensation by no longer requiring employees to prove the illness is work-related, instead requiring employers to accept compensability for a COVID-19 claim unless they can overwhelmingly prove it is not work-related.

Although COVID-19 is new to workers’ compensation, the analysis also reviews existing precedents and policies regarding presumptions that policymakers should consider in evaluating the potential impacts of modifying the existing workers’ compensation legal architecture in regard to compensability and coverage.

The white paper also adds real-world perspective to advance the presumption debate by providing results of a survey of 28 insurer and self-insured CWCI members that encompassed 1,077 California workers’ compensation COVID-19 claims filed before April 30, a week before the governor’s Order granted the disputable presumption.

Among key results, the survey found that 35% of the COVID-19 claims in the study sample were denied, but 7 out of 10 workers whose claims were denied tested negative for the virus, with the balance of the denials made after it was found that the employee had not been exposed at work, or for other reasons including the lack of a diagnosis, lack of symptoms, or that the employee had been working at home or refused to take a COVID-19 test.

CWCI has released the white paper as a Report to the Industry, “Integrating COVID-19 Presumptions into the California Workers’ Compensation System.” The free report is available on the CWCI website.

Trial Lawyers Predict COVID-19 Legal Battles “Most Expensive” in History

An outsized battle looms in Washington, as trade associations for trial lawyers push their own vision of open-ended lawsuits while groups like the U.S. Chamber of Commerce come down on the side of restricting litigation over coronavirus. The brewing fight in Congress, too, could become a hinge-point on whether there is a fourth major coronavirus relief package that could pass and be signed into law in the coming weeks and if there is one what it looks like.

The issue that confronts lawmakers is how to limit the scope of litigation over coronavirus while also not giving away too much to the business community.

A trial lawyer representing part of a group of celebrity chefs suing insurance giants over the pandemic, described the forthcoming fight in a quote to the Washington Post as what he said is “going to be the most expensive legal battle in history.” He then predicted: The insurance companies are going to win some of those, and they’re going to lose some of those. But in the meantime, the businesses are going to fail. People are going to be out of work.

Houghtaling is a managing partner at Gauthier Murphy & Houghtaling LLC, a firm in the New Orleans suburb Metairie, Louisiana. Houghtaling is testifying before the Democrat-led House Small Business Committee on Thursday afternoon, where lawmakers will discuss the liability issues as Congress considers potentially granting a liability shield to companies nationwide upon reopening – something many Republicans consider imperative to successfully return to normal as a society.

Houghtaling is representing Thomas Keller, the celebrity chef who the Washington Post’s Tim Carman described as “the mastermind behind the three-star Michelin restaurants Per Se in New York and the French Laundry in California.” Keller is one of many restauranteurs nationwide suing their insurance companies because the insurance companies are not paying them for the shutdowns caused by COVID-19.

“The owners are pressing carriers to honor business-interruption policies during an outbreak that has wreaked so much financial havoc that it could bankrupt insurance companies and put at risk claims not related to covid-19,” Carman wrote in the Post.

In these particular kinds of cases, what these trial lawyers like Houghtaling and the others representing these various restaurants are looking for is for insurance companies to honor business interruption policies or to cover their clients like they would in a natural disaster even if the policies do not explicitly cover pandemics.

But this is just the tip of the iceberg for trial lawyers as the reopening battle moves forward coast to coast – cases that could be forthcoming include against states for various policies they implemented like New York Gov.

According to Politico, the American Association for Justice – a national collective of trial lawyers – released polling on the issue that forecast many potential lines of litigation that the attorneys may see coming.

“The trial lawyers hired Hart Research Associates, a Democratic polling firm, which surveyed more than 1,200 voters online last week,” Politico’s Theodoric Meyer wrote earlier in May. “The pollsters told voters that companies want to prevent workers and consumers who contract coronavirus from suing them ‘even if they could demonstrate that the company engaged in unsafe practices.’ Sixty-four percent of respondents said they opposed giving companies such immunity, while 36 percent supported it.”

The Chamber of Commerce, which is squarely on the other side of the fight, released its own polling according to Politico showing the exact opposite.

“A poll conducted days earlier by the Republican firm Public Opinion Strategies for the Chamber’s Institute for Legal Reform found the opposite among 800 voters surveyed by phone,” Politico’s Meyer wrote. “Asked whether ‘Congress should protect many businesses and types of companies from lawsuits related to the coronavirus,’ 61 percent of voters agreed and 27 percent said no.”

But no matter who is paying out and who is receiving payments as a result of litigation, and no matter who wins and who loses lawsuits, the one group that always comes out on top is the trial lawyers. That “most expensive legal battle in history” that Houghtaling describes has but one absolute winner: the trial lawyers who bring the cases.

Encino Opiod Ring Conspiracy Ringleader Sentenced

A San Fernando Valley man was sentenced to 108 months in federal prison for leading a conspiracy to distribute powerful prescription opioids via sham medical clinics that hired corrupt doctors who wrote fraudulent prescriptions to black market customers.

Minas Matosyan, a.k.a. “Maserati Mike,” 40, of Encino, was sentenced by United States District Judge Philip S. Gutierrez. Matosyan pleaded guilty in April 2019 to one count of conspiracy to distribute a controlled substance.

Matosyan was arrested in August 2017 pursuant to a federal grand jury indictment charging him and 12 other defendants with scheming to divert at least 2 million controlled prescription pills for sale on the black market.

According to his plea agreement, Matosyan and his co-conspirators controlled the sham clinics and hired corrupt doctors who allowed their names to be used on fraudulent prescriptions in exchange for kickbacks. Matosyan also admitted that he and his co-conspirators stole the identities of other doctors and then issued prescriptions in those doctors’ names, either by personally acquiring prescription pads in the doctors’ names or by arranging for other co-conspirators to do so.

As part of the scheme, Matosyan staffed receptionists at the clinics who would falsely verify the phony prescriptions to pharmacists who called to check on their veracity. He also sold narcotic prescriptions to black market customers – either directly or through couriers – and bulk quantities of hydrocodone and oxycodone he had acquired from phony prescriptions filled at pharmacies by other customers.

In May 2016, Matosyan offered a doctor a “very lucrative position” where the doctor would “sit home making $20,000 a month doing nothing,” according to Matosyan’s plea agreement. After the doctor declined the offer, Matosyan stole the doctor’s identity, sending a co-conspirator a text message containing the doctor’s full name, medical license number and national provider identifier number that the co-conspirator used to order prescription pads in the doctor’s name. Over the next two months, Matosyan and his co-conspirators sold fraudulent prescriptions, purportedly issued by the victim doctor, for at least 9,450 pills of oxycodone and 990 pills of hydrocodone.

Matosyan also admitted in the plea agreement that he conspired with others, including a lawyer, Fred Minassian, 53, of Glendale, to obstruct justice, by providing falsifying medical records to police to thwart an investigation into the seizure of a load of Vicodin from one of the conspiracy’s major customers.

This case so far has resulted in 11 convictions. Minassian is scheduled to go on trial on July 7.

53 of 58 CA Counties Assess Reopening

California is relaxing its criteria for counties that want to reopen their economies faster than the state during the coronavirus pandemic, after local leaders complained that the original requirements were too difficult to meet.

Newsom said his administration estimated that all but five of California’s 58 counties would qualify for a variance from the statewide stay-at-home order through the new rules, though not all may choose to seek one. Newsom did not specify which five counties fell short, but he mentioned outbreaks at Tulare County nursing homes and a meatpacking plant in Kings County, as well as the overall increase in cases in Los Angeles County, as points of concern.

The bottom line is people can go at their own pace, and we are empowering our local health directors and county officials who understand their local communities and conditions better than anyone,” Newsom said during a news conference at Mustards Grill in Napa.

The number of ineligible counties is likely significantly higher, however. A San Francisco Chronicle analysis found at least six counties in the Bay Area alone that still do not meet thresholds previously set by the state for minimum daily testing and hiring employees to trace the spread of infections.

Under the new framework, counties must demonstrate that their hospitalization rates remain stable. Counties will have to show either that their number of coronavirus patients has not increased by more than 5% in the past week, or that they have not had more than 20 patients on a given day for at least two weeks.

Counties must also meet one of two other conditions: fewer than 25 cases per 100,000 residents for at least 14 days, or a rate of positive coronavirus tests that has dropped below 8%.

Qualifying counties could move ahead of the state by resuming dining-in restaurants, permitting shopping in retail stores and reopening schools, provided they implement safety protocols. Two dozen counties were already given permission last week, mainly in the sparsely populated far north or in the Sierra.

A bloc of six Bay Area counties has been moving slower than most parts of the state to ease its own restrictions, agreeing just this week to allow curbside pickup for retail stores, more than a week after Newsom made a similar adjustment to the state order.

All six counties fall short on at least two state targets to move to the next reopening phase. But along with announcing they would be resuming some curbside retail sales, the counties said Monday that they did not plan to further ease restrictions for at least two weeks.

Three North Bay counties that are not part of the group are seeking permission to go faster, despite not meeting the original state benchmarks for a variance. Napa and Solano counties filed requests with the state last week, while Sonoma County supervisors voted Monday to seek one. All three of the counties appear to meet the new criteria laid out by Newsom, or are very close.

CA Employers Deploy Contact Tracing Systems

Technology companies are developing their own contact tracing systems to help prevent coronavirus outbreaks in their offices as countries begin to ease lockdown measures and a return to the workplace is in the offing.

Silicon Valley company Juniper Networks Inc plans to equip its about 10,000 employees with work identification badge holders that have a Bluetooth chip that will help to record a worker’s movements and interactions in the office, company vice president Jeff Aaron said in an interview.

The system employs Wi-Fi routers and access points from Juniper Network’s unit Mist that will communicate with the Bluetooth chips on the badges. The data collected will help determine which employees need to be tested and isolate after a colleague tests positive for the new coronavirus.

All U.S. states have eased virus lockdowns, but work-from-home remains the norm in California’s tech industry. California has reported more than 86,000 coronavirus cases and 3,500 deaths, the lowest tallies in the United States relative to the state’s large population.

Mist, which is a small but fast-growing Wi-Fi equipment maker, is selling its new system to other businesses through its annual subscription of $150 per access point, and about 25 customers are testing it, Aaron said.

He said businesses that are typically reluctant to spend on replacing older technology have indicated that significant funding is available for contact tracing in the workplace.

“They are saying: If this is a reason for me to rip out my old Wi-Fi and put in a Wi-Fi plus BLE (Bluetooth Low Energy) solution and support contact tracing use cases, I can definitely get budget for that,” he said.

Aaron said customers could skip the Bluetooth component in its system, but still see when spaces such as conference rooms become overcrowded by tracking the number of Wi-Fi-connected devices.

Several software companies have announced tools during the pandemic to automate workplace contact tracing and help customers avoid disruptions.

Among others touting workplace tracking tools, Slovakia-based Symbiosy said its own software, along with sensors from technology partner Quuppa, helped identify about 40 people to test after an employee became infected last month.

“Manually, we would not even have been able to get that precision,” said Tomas Melisko, head of real estate company HB Reavis’ Symbiosy unit. “And we would need to have sent twice that many people for testing” if solely analyzing building access logs.