Tag: 2021 News

State law authorizes the California State Auditor to develop a state high-risk government agency audit program.  The office implemented this program to improve the operation of state government by identifying, auditing, and recommending improvements to state agencies and statewide issues at high risk for waste, fraud, abuse, or mismanagement or for having major challenges associated with their economy, efficiency, or effectiveness.

It first designated the State’s management of federal funds related to COVID-19 as a high-risk statewide issue in August 2020 based on the significant amount of funding granted to the State, the urgent need for the funding, and the rapid nature of the allocation of this funding to state departments, among other factors

In the new August 19 report, the State Auditor Elaine Howle voiced concern regarding the state’s mismanagement of $71 billion in federal COVID-19 funding.

An audit report released on Thursday indicated that the state’s Finance, Employment Development and Public Health departments should remain at the top of the list of issues which pose a risk to the state’s financial health as a result of mismanagement.

It reported in January 2021 (2020-628.2) that significant weaknesses in EDD’s approach to fraud prevention had led to billions of dollars in improper unemployment benefit payments. EDD did not take substantive action to bolster its fraud detection efforts for its unemployment insurance program until months into the pandemic, resulting in payments of about $10.4 billion for claims that it has since determined may be fraudulent. Specifically, EDD waited about four months to automate a key antifraud measure, took incomplete action against claims filed from suspicious addresses, and removed a key safeguard against improper payments without fully understanding the significance of the safeguard.

In September 2020, because of fraud concerns, EDD directed Bank of America to freeze 344,000 debit cards (accounts) that it used to provide benefit payments to claimants. However, EDD did not have a plan in place to ensure that it could unfreeze those accounts found to belong to legitimate claimants, and it has been slow to acknowledge its role in freezing these accounts.

In January 2021, it reported (2020-610) that Finance’s allocation of funds from the federal Coronavirus Relief Fund (CRF) had resulted in smaller counties receiving significantly less funding per person than larger counties. Finance’s inequitable allocation of CRF funds increased the risk that smaller counties’ COVID-19 related funding needs were unmet.

Its April 2021 audit (2020-612) of Public Health’s oversight of approximately $467 million in federal COVID-19 funding found that, although the State met or exceeded targets for testing individuals for COVID-19, contact tracing throughout the State lagged behind case surges that far exceeded the department’s initial planning. Fewer-than-expected tracing staff and an influx of new cases resulted in only a small fraction of COVID-19 cases undergoing the full contact-tracing process. Because of the mismanagement of federal COVID-19 funds by several state agencies, it remains a high-risk statewide issue.

The updated August 2021report indicted that these three departments were to be “retained on the high risk list.”

Ian Czirban was charged with a number of regulatory crimes following a fatal July 2016 accident involving his bulldozer, which had been assisting the California Department of Forestry and Fire (Cal Fire) at a wildfire in Monterey County.

After a bench trial, the trial court convicted Czirban of procuring or offering a false or forged instrument, tax evasion, failure to collect, account for, or pay taxes, and misdemeanor failure to secure payment of workers’ compensation insurance.

For these convictions, the trial court suspended imposition of sentence and placed Czirban on felony probation for three years with various conditions, including the payment of a $10,000 fine under Labor Code section 3700.5.

On appeal, Czirban contends that his convictions for tax evasion, failure to pay taxes, and failure to secure payment of workers’ compensation insurance must be reversed because he did not have an employment relationship with his bulldozer drivers, an element of those offenses.

The parties agreed at trial that the trial court should resolve this factual question central to counts 5, 6, and 7 under the multifactor test articulated in Borello – not the three-part – “ABC test” – adopted by the California Supreme Court for wage order claims, a year before Czirban’s trial, in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903, 916, 964.

Given the timing of the criminal acts alleged against Czirban, the court concluded that the parties’ agreement regarding the applicability of Borello was proper.

Czirban relies on Borello, 48 Cal.3d at p. 349 and Lara v. Workers’ Comp. Appeals Bd. (2010) 182 Cal.App.4th 393, 396, 398 (Lara) to argue that the question of worker status.

The conviction was affirmed in the published case of People v Czirban. The terms of probation were however reversed and the matter submitted back to the trial court with instructions.

Examining the trial evidence under the Borello test, the court concluded that there is sufficient evidence of an employment relationship between Czirban and his bulldozer drivers during the relevant period.

The evidence demonstrates that it was Czirban who decided whether to accept 24-hour resource assignments from Cal Fire (including the Soberanes fire assignment), knowing that he would need to enlist other bulldozer drivers to complete them. Czirban thus controlled the overall scope of the work, the number of operators needed for any assignment he accepted, who those other operators would be, and the overall period during which the operators would work.

During Czirban’s chosen wildfire assignments, his bulldozer drivers also were not “engaged in a distinct occupation or business.”

These circumstances demonstrate Czirban’s “right to control the manner and means of accomplishing the result desired,” (Borello, supra, 48 Cal.3d at p. 350) i.e., to have certain workers operate his bulldozer to fulfill his chosen wildfire assignments so he could obtain a higher rate of compensation from Cal Fire.

The Division of Workers’ Compensation (DWC) has issued a Notice of Public Hearing for a proposed evidence-based update to the Medical Treatment Utilization Schedule (MTUS), which can be found at California Code of Regulations, title 8, section 9792.23.5. The Zoom public hearing is scheduled for Friday, September 17, at 10 a.m.

The proposed evidence-based update to the MTUS incorporate by reference the latest published guideline from American College of Occupational and Environmental Medicine (ACOEM) for the following:

– – Low Back Disorders (ACOEM February 13, 2020)

Two of the many recommendations in the new guideline illustrate the emphasis of early return to work as a treatment objective:

– – “Many invasive and noninvasive therapies are intended to cure or manage LBP, but no quality evidence exists that they accomplish this as successfully as therapies that focus on restoring functional ability without focusing on pain. In those cases, the traditional medical model of “curing” the patient does not work well. Instead, patients should be aware that returning to normal activities most often aids functional recovery.”

– – “Patients should be encouraged to accept responsibility for managing their recovery rather than expecting the provider to provide an easy “cure.” This process promotes the use of activity and function rather than pain as a guide, making the treatment goal of return to occupational and non- occupational activities more obvious.”

The proposed evidence-based update to the MTUS regulations are exempt from Labor Code sections 5307.3 and 5307.4 and the rulemaking provisions of the Administrative Procedure Act. However, DWC is required under Labor Code section 5307.27 to have a 30-day public comment period, hold a public hearing, respond to all the comments received during the public comment period and publish the order adopting the update online.

Members of the public may review and comment on the proposed updates. Written comments must be submitted no later than September 17. Please see the proposed regulation page for direction for submitting written comments.

Members of the public may attend the public hearing:
Access Information
Join from PC, Mac, Linux, iOS or Android: https://dir-ca-gov.zoom.us/j/83914299767
Or Telephone:
Dial:
USA 216 706 7005
USA 8664345269 (US Toll Free)
Conference code: 956474

The jury in the case of United States of America v. Dr. Serge Obukhoff, (Case No. CR:18-00140-JLS), issued a verdict of Not Guilty on all 35 counts of conspiracy and healthcare fraud contained in the Indictment, after a nearly three week federal criminal jury trial,

According to case documents, the case stemmed from allegations that Michael Drobot Sr., former owner of Pacific Hospital of Long Beach paid $2.3 million in kickbacks to Neurosurgeon Dr. Serge Obukhoff to induce the neurosurgeon to direct his patients to Paciific Hospital in violation of the anti-kickback statute, honest services fraud statute, conspiracy, wire fraud and mail fraud.

Additionally, the Indictment alleged that Dr. Obukhoff accepted kickbacks in the form of free rent and a paid medical directorship with Willow Medical Group as inducement to direct spinal surgeries to Monrovia Hospital. The indictment also includes honest services fraud and Travel Act charges. Obukhoff practiced out of various medical clinics in Southern California.

Defense attorneys countered that the defendant honestly held the belief that the $2.3 million was paid to him as part of an option agreement for a management company to buy his medical practice.

Additionally, Dr. Obukhoff was advised by the attorney for the management company, Michael Tichon, that the agreement was legal, valid and customary.

Dr. Obukhoff testified that he had done more than a 1000 surgeries at Pacific Hospital prior the option agreement and that he did not know that Michael Drobot Sr., and the healthcare company’s attorney Michael Tichon engineered a 15 year healthcare fraud conspiracy that raked in $500 million.

Dr. Obukhoff testified that he was lied to by the attorney and Michael Drobot. Dr. Obukhoff further testified that his directorship with Willow Medical Group was valid and that in fact he never sought out or received any kickbacks in the form of rent.

After trending down over the first half of this year and falling to a 16-month low of just 676 claims in June, the monthly tally of new COVID-19 claims in the California workers’ compensation system spiked to 2,581 cases in July, just shy of the combined total of 2,635 COVID claims recorded for the prior three months.

That translates to a nearly four-fold increase in one month, the biggest monthly gain since COVID-19 claim volume hit its peak in December 2020. Claims with June and July injury dates are still coming in, but California Workers’ Compensation Institute (CWCI) projections based on historical reporting patterns estimate that ultimately the COVID-19 claim count for July will hit 3,872 cases, or 4.8 times the projected total of 811 claims for June.

Notably, July was the first full month following the June 15 reopening of the California economy, a move that coincided with a wave of COVID-19 infections fueled by the emergence of the highly infectious Delta variant. The state’s reopening plan allowed most businesses to fully reopen and brought many Californians who had been working remotely back into offices and other worksites.

July was also the first full month following the June 17 adoption and implementation of revised emergency health and safety standards designed to protect workers from COVID-19. Those standards, adopted following contentious public meetings, apply to most California workers not covered by Cal/OSHA’s standard for aerosol transmissible diseases. Among other things, the revised standards allowed fully vaccinated employees to not wear face coverings (but required unvaccinated employees to mask up when in a room or vehicle with other employees) and eliminated the physical distance requirement in non-outbreak settings.

While the recent resurgence of California workers’ compensation COVID-19 claims has been broad-based, a CWCI analysis of June and July COVID claims data reveals that the extent of the surge varied by region and industry. Comparing June and July claim volume by region, the Institute confirmed that much of the July surge in COVID claims occurred in the state’s metropolitan job centers, led by Los Angeles County, which accounts for more than a quarter of all jobs in the state.

In June, COVID-19 workers’ comp claim volume in Los Angeles County had fallen to 128 cases, or 18.9% of the statewide total, ranking it behind the Central Valley (22.0%), the Bay Area (20.1%), and the Inland Empire/Orange County (19.4%). But in July, L.A. County’s COVID claim volume soared to 621 claims, nearly 5 times its June total, and it surpassed every other region of the state as its share of the statewide COVID claim count rose to 24.1%.

The review of COVID claims by industry found that while public safety/government workers continued to account for more claims than any other sector as their claim total increased from 144 claims in June to 546 claims in July, that growth rate was in line with the statewide increase, so their share of the COVID claim total remained at just over 21%. Meanwhile,

COVID claims among for health care workers were also up, increasing from 124 claims in June to 456 in July, but that was slightly less than the statewide growth rate, so the health care sector’s share of the statewide total dipped from 18.3% to 17.7%. The transportation sector, on the other hand, saw the biggest increase in its share of the COVID claims, as it went from 59 claims in June to 352 claims in July, a 6-fold increase that moved it ahead of both the retail and the food service sectors, making it the number 3 industry sector for COVID claims last month.

The public can view additional data on the latest California workers’ compensation COVID-19 claims data by using CWCI’s COVID-19/Non-COVID 19 Interactive Data Application.