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Tag: 2021 News

COVID Cases Surge in Silicon Valley

Reuters reports that a California community that has been a bellwether of the coronavirus pandemic’s rampage across the United States warned on Thursday that the number of cases of more contagious COVID-19 variants is increasing to worrisome levels.

“The region’s progress in curbing the pandemic remains precarious,” the health department in Santa Clara County, home to California’s Silicon Valley, said.

“County residents are therefore urged to avoid travel, quarantine if travelling, and consistently use face coverings.”

The situation in Santa Clara, which was home to an early surge of coronavirus in California last year and the nation’s first death from COVID-19, offers a window into the pandemic’s progress across the wider United States.

Several states, including Florida and Michigan, are struggling to contain a resurgence of the virus linked to new highly contagious variants.

The 7-day daily average of cases across the United States has been increasing continuously since March 19, Reuters analysis shows. Over the past 13 days, the average daily number of new cases of COVID-19 has increased by about 17%, from 5,5591 on March 19 to 6,4814 on March 31. Total cases stand at 30,562,884, including 552,932 deaths.

“We’re already seeing surges in other parts of the country, likely driven by variants,” Santa Clara Health Officer Sara Cody said in a statement. “Combined with the data we are seeing locally, these are important warning signs that we must continue to minimize the spread.”

The rise in cases comes despite unprecedented efforts to vaccinate people worldwide and across the United States, where nearly 30% of the population had received at least one vaccine dose by Thursday, according to data from the U.S. Centers for Disease Control and Prevention (CDC).

Many U.S. states are moving to ease pandemic public health restrictions, and people who have been vaccinated are starting to venture out from a year of staying mostly at home.

But with the vast majority of the population still unvaccinated, experts warn that could be a recipe for a deadly fourth wave of the disease.

In California, the most populous U.S. state with 40 million residents, about 5.6 million people, or 17.3% percent of the population, had received one vaccine dose, the CDC said.

As cases have leveled off in recent weeks, state officials have reopened activities like restaurant dining and are making plans to send children back to school.

However, California Governor Gavin Newsom warned that with at least seven variants of the virus in circulation, the state is not close to achieving so-called herd immunity, which would require the vast majority of people to be inoculated.

“Now is not the time to spike the ball,” said Newsom, who received his own vaccination on Thursday in Los Angeles. “Now is not the time to announce, mission accomplished.”

In neighbouring Canada, officials in the province of Ontario declared a limited lockdown beginning on Saturday, while French president Emmanuel Macron on Wednesday ordered his country into its third national lockdown.

South Coast Gymnastics Cited for $1.3M Wage Theft Violations

The California Labor Commissioner’s Office has cited Perfect Point Corp. dba South Coast Gymnastics in Irvine $1.3 million for failing to pay 28 employees properly. An investigation found that employees were not paid for all hours worked, with some employees making less than $5 an hour.

“California law requires that workers be paid for all hours worked. Anything less is wage theft,” said Labor Commissioner Lilia García-Brower. “My office is committed to ending wage theft and recovering stolen wages.”

South Coast Gymnastics is a USA Gymnastics member club where gymnasts train to compete in national tournaments. The Labor Commissioner’s investigators visited on November 16, 2020 as part of a COVID-19 compliance inspection. After investigators found that the coaches and administration staff were underpaid, an audit identified the 28 workers who were underpaid during the violation period.

The Labor Commissioner’s Office on March 8, issued citations totaling $1,320,450 in wages and penalties against Perfect Point Corp. and owner Xiaoping Li, who is jointly and severally liable. The citations include $590,689 in minimum wages, meal periods, rest periods, contract wages and waiting time penalties, and $342,765 in interest due to employees. The citations also include $386,996 in civil penalties for minimum wage, meal break, rest break, pay period, and paystub violations.

When workers are paid less than minimum wage, they are entitled to liquidated damages that equal the amount of underpaid minimum wages plus interest. Waiting time penalties are imposed when the employer intentionally fails to pay all wages due to the employee at the time of separation. This penalty is calculated by taking the employee’s daily rate of pay and multiplying it by the number of days the employee was not paid, up to a maximum of 30 days.

Enforcement investigations typically include a payroll audit of the previous three years to determine minimum wage, overtime and other labor law violations, and to calculate payments owed and penalties due. Civil penalties collected are transferred to the State’s General Fund as required by law.

The Department of Industrial Relations’ Division of Labor Standards Enforcement, or the California Labor Commissioner’s Office, combats wage theft and unfair competition by investigating allegations of illegal and unfair business practices.

The Labor Commissioner’s Office in 2020 launched an interdisciplinary outreach campaign, “Reaching Every Californian.” The campaign amplifies basic protections and builds pathways to impacted populations so that workers and employers understand legal protections and obligations, and the Labor Commissioner’s enforcement procedures. Californians can follow the Labor Commissioner on Facebook and Twitter.

Experts Say Long Term COVID Health Effects Difficult to Predict

Business Insurance Magazine published a report on a recent Out Front Ideas webinar, entitled “COVID Claims Development: Workers’ Compensation & Beyond,” Experts in the workers’ comp line of business came together to discuss the long-term medical complications that are arising from the virus and what they’ve seen so far in terms of COVID-19 claims.

Coronavirus long-haulers have been in the news for some time now, with symptoms from the virus stalking them for months after they’ve contracted it. This in turn has had implications for workers’ comp claims, but what’s coming down the pike for such claims is yet to be determined.

Pointing to a National Institute for Health Research study that followed more than 4,000 people in the United States, “What they found is that 50% of the people were unable to work full-time six months after they tested positive for COVID, and only 8% of those people actually were hospitalized so they weren’t the most severe cases,” said Teresa Bartlett, senior medical officer at Sedgwick. She added that “88% of people said that they were coping with some form of cognitive dysfunction – and that is such a difficult thing to deal with [on the claims side].”

Studies on ‘long’ COVID-19 are still only in their infancy, but there’s clearly some cause for concern. Respondents have highlighted issues related to hair loss, cardiomyopathies, and blood clots in the legs, among many other symptoms. Healthcare workers, who have been on the frontlines for the entirety of the pandemic, are likewise being watched closely for signs of Post-Traumatic Stress Disorder. “It’s something that we have to be very mindful of in our industry, and we have to be prepared for how we will deal with it,” noted Bartlett.

As for workers’ comp claims that have arisen out of COVID-19 already, there are challenges here as well, particularly in identifying trends and predicting future impacts. That’s partly because there’s no single source for workers’ compensation information in the US, with data split across the NCCI, multiple independent bureaus, and monopolistic states.

Another factor that poses a challenge to workers’ compensation data analysis is the existence of self-insured employers, who, for the most part, do not report their data to any of the bureaus. Several top industries by employment in the US are mostly self-insured and collectively represent over 30% of the jobs across the top 20 industries. Additionally, a significant portion of the healthcare industry is also self-insured – and all of this data is missing from the bureaus’ analyses, noted Walls.

One of the places that does provide access to a robust set of workers’ compensation data is the California Workers’ Compensation Institute (CWCI). A deep dive into the institute’s figures reveals key trends in workers’ comp claims tied to COVID-19 so far.

California as a whole had about 13% of the infections and about 10% of the deaths [in the US],” said Alex Swedlow, president of CWCI, but he also noted, “Only about 4.7% of the California working age infections had a corresponding workers’ compensation claim, and about 5.6% of California’s working aged fatalities had an accompanying workers’ compensation claim.”

As of March 22, 2021, there had been almost 140,000 COVID-19 claims reported in California, with healthcare taking the lion’s share at 31.9%, followed by the public sector at 16.9% and retail at 10.3%, according to the CWCI. COVID-19 is also taking the heat off of other causes of workers’ compensation claims.

The characteristics of COVID-19 claims have also evolved since early reporting days. The healthcare industry’s share of claims has slowly dropped over time, though transportation has surged due to the partial opening up of the California economy. When it comes to regional analysis, Swedlow pointed out that regional infections have been relatively stable, with Los Angeles unsurprisingly being a constant and key center of infections.

Despite having some data to look at, a lot of what’s to come in the workers’ compensation space with regards to COVID-19 is still up in the air; some experts compare making predictions about future trends to trying to look into a crystal ball.

Orange County Recovery Center “Body Broker” Arrested

An Orange County man was arrested on charges of soliciting and receiving illegal kickbacks from corrupt sober living homes in exchange for finding them new patients in a process known as “body brokering.”

27 year old Darius Jarell Moore, who lives in Santa Ana, is charged with one count of solicitation and receipt of payment in return for referring a patient to a recovery home or clinical treatment facility. Moore is scheduled to make his initial appearance tin United States District Court in Santa Ana.

An affidavit filed with the complaint alleges Moore received hundreds of thousands of dollars in kickbacks from four Orange County facilities with two separate ownership groups via a shell company – Moore Recovery Solutions LLC, a Santa Ana-based business. The kickbacks allegedly were covered up by bogus contracts for “marketing” services.

According to the affidavit, Patient brokering has created a situation where substance abusers with no desire to stop using drugs are able to gain income from their insurance benefits by periodically participating in treatment programs. The facilities generally know patient brokers pay patients and give patients drugs, but they maintain deniability by discharging patients who admit they were paid and stopping work with particular patient brokers as soon as such actions become overtly known.

The complaint specifically alleges that Moore in October 2020 accepted a $16,000 kickback wired to a bank account held in the name of Moore Recovery Solutions from a checking account of a corrupt sober living home. The affidavit further details more than $350,000 in illegal kickbacks that the sober living homes allegedly paid to Moore in exchange for recruiting new patients. The sober living homes then submitted claims to health insurers.

The affidavit also details a recorded conversation between Moore and a sober living home employee discussing the clients Moore had placed into the facility and the cash value of the clients.

In December 2020, investigators executing search warrants at Moore’s residence found marketing agreements between Moore Recovery Solutions and two sober living homes that agreed to pay him $70,000 per month and $10,000 per month, respectively, but no other evidence that Moore’s company was a legitimate marketing service, according to the affidavit.

Investigators also found text messages from patients to Moore asking for money and asking to be placed in treatment. In response, Moore told the patients he would only talk to them through Signal, an encrypted communication application.

If convicted, Moore would face a statutory maximum sentence of 10 years in federal prison.

This matter was investigated by the FBI, the United States Office of Personnel Management – Office of Inspector General, and the California Department of Insurance.

Pharmacist Sentenced to Only 6 Months for $200M Comp Fraud

Hootan Melamed has long been accused of masterminding a kickback and fraud scheme that involved a number of accomplices in a conspiracy to refer patients to his pharmacies to fill prescriptions, resulting in close to $200 million in fraudulent workers compensation billings. He was indicted in federal district court for the Southern District of California in 2016.

He allegedly operated and was the de facto owner of New Age Pharmaceuticals Inc., a compounding pharmacy located in Beverly Hills, California. He also had business interests in other pharmacies, including RoxSan Pharmacy Inc., Concierge Compounding Pharmaceuticals, Inc , Alexso, Inc. and Portland Professional Pharmacy, These compound pharmacies supplied compound creams and other custom pharmaceuticals to patients.

Prosecutors alleged that “It was the goal of the conspiracy to fraudulently obtain money from health care benefit programs by submitting claims for prescription pharmaceuticals and DME that were generated through a secret pattern of bribes to doctors (and those acting with them and on their behalf), to induce the doctors to refer patients to particular pharmacies and DME providers, in violation of the doctors’ fiduciary duty to their patients.”

Melamed “paid doctors to recommend certain goods and services and refer workers compensation patients to specific providers for those goods and services, including to pharmacies in which Melamed had an interest for prescription pharmaceuticals.”

The scheme has already resulted in charges and convictions against several co-conspirators, including anesthesiologist Dr. Amir Friedman, medical marketer John Pangelian, Dr. Phong H. Tran, Jean Picard, and Jonathan Pena.

Phong Hung Tran was the owner of Coastline Medical Clinics in Southern California. Dr. Tran was previously a licensed physician in the State of California, but had his license suspended after his arrest and indictment by the San Diego District Attorney’s Office in January 2016.

On November 2, 2020 a plea agreement was reached between Melamed and federal prosecutors and filed with the court. However, that document as well as the Pre-sentencing Report remain sealed by the Court, and thus the terms are unavailable to the public.

Melamed was sentenced on March 29, 2021 to six months in prison, followed by three years of supervised probation.

Prior to sentencing, a document from the “Pharmacy and Worker’s Compensation Industry” was filed in the case, objecting to the “rumored” Plea Agreement recommendation of only 18 months in prison. That document points out that any “sentence less than 7 years would be a huge travesty and mockery to the industry as so many people in the same industry have been watching this case very closely.” That letter goes on to note that this was Melamed’s second felony, and that he lives in a “12 million 15,000 sqft mansion that he put under his mother’s name to shelter assets from his wife during a divorce and now the court system.”

One would speculate that the Plea Agreement offered leniency in exchange for cooperation in the prosecution of many others. This speculation would be consistent with both the sealed plea agreement and pre-sentencing report, and lenient sentence.

New Med-Legal Fee Schedule Effective April 1

The Division of Workers’ Compensation has received notification from the Office of Administrative Law that the final version of the proposed Medical-Legal Fee Schedule was forwarded on March 30, 2021 to the office of the Secretary of State for filing and printing.

This action represents official adoption of the new fee schedule, which has an effective date of April 1, 2021. All medical-legal evaluations that occur on or after April 1, 2021 will be subject to the new MLFS.

DWC has posted on its website the final rulemaking documents filed with OAL. The documents include the final text of the new MLFS.

The MLFS provides that a declaration to the physician accounting for the records that were provided is required by the proposed regulations for evaluations that occur on or after April 1, 2021.

The language states: “Any documents sent to the physician for record review must be accompanied by a declaration under penalty of perjury that the provider of the documents has complied with the provisions of Labor Code section 4062.3 before providing the documents to the physician. The declaration must also contain an attestation as to the total page count of the documents provided. A physician may not bill for review of documents that are not provided with this accompanying required declaration from the document provider. Any documents or records that are sent to the physician without the required declaration and attestation shall not be considered available to the physician or received by the physician for purposes of any regulatory or statutory duty of the physician regarding records and report writing.’

DWC realizes that there are Qualified Medical Evaluator evaluations currently scheduled for April that may not comply with the provisions of the attestation requirement for medical records under the new Medical-Legal Fee Schedule. The parties to these evaluations should communicate with each other to reach agreement on the handling of these evaluations.

New Law Requiring Additional COVID Sick Leave Now In Effect

Senate Bill 95’s supplemental COVID paid sick leave requirement goes into effect as of March 19, 2021. The new law mandates that employers provide employees with supplemental paid sick leave for COVID-related leave in addition to other paid time off obligations under existing federal, state, or local statutes.

The obligation to provide paid COVID related sick leave is also retroactive to January 1, 2021. Upon an oral or written request by an employee, the employer is obligated to reimburse an employee who took leave between January 1, 2021, and March 29, 2021, that would have otherwise qualified under SB 95.

Under Labor Code 248.2 all employers with 26 or more employees must allow all employees who are unable to work or telework due to COVID use of the new supplemental paid sick leave. The employee qualifies for leave if the employee:

A. Is subject to a quarantine or isolation period related to COVID.
B. Has been advised by a health care provider to self-quarantine due to concerns related to COVID.
C. Is attending an appointment to receive a vaccine for protection against contracting COVID.
D. Is experiencing symptoms related to a COVID vaccine that prevent the employee from being able to work or telework.
E. Is experiencing symptoms of COVID and seeking a medical diagnosis.
F. Is caring for a family member who is subject t ho a quarantine or isolation period related to COVID; or who has been advised to self-quarantine by a health care provider.
G. Is caring for a child whose school or place of care is closed or otherwise unavailable for reasons related to COVID on the premises.

Full-time qualified employees are eligible for up to 80 hours of supplemental paid sick leave. Non-full-time employees with normal weekly schedules receive the total number of hours they are normally scheduled to work over two weeks. Employees who work a variable number of hours, whose tenure is six months or more, receive 14 times the average number of hours they worked each day in the six months preceding their leave date.

In addition, as with all other paid sick leave requirements mandated by law in California, there are posting requirements and a requirement that the leave hours be available on paystubs or other written notices to employees received on payday.

SB 95 is nuanced and specific with regard to the qualifications, exemptions, and obligations.

The firm of Roxborough Pomerance Nye & Adreani LLP has invited employers to contact members of the firm about this new law if necessary If your company has any questions about the new paid sick leave requirements, please contact Nicholas Roxborough at (818) 992-9999, ext. 222, Drew Pomerance at ext. 212, Michael Adreani, at ext. 234, Marina Vitek, at ext. 236, or Trevor Witt, at ext. 224.

Santa Clarita Employer Pleads Guilty to $1.8M SBA COVID Fraud

A Santa Clarita Valley man pleaded guilty to perpetrating a scheme to fraudulently obtain approximately $1.8 million in COVID-19 relief guaranteed by the Small Business Administration (SBA) through the Economic Injury Disaster Loan (EIDL) program and the Paycheck Protection Program (PPP).

According to court documents, Hassan Kanyike, 29, of Santa Clarita, admitted that he submitted six fraudulent PPP loan applications and two fraudulent EIDL applications.

The applications sought funds to purportedly pay the salaries of employees whom he claimed worked for two of his businesses. Kanyike successfully obtained approximately $1 million through four PPP loans, and another $300,000 through two EIDL loans.

In support of the fraudulent PPP loan applications, Kanyike submitted fake federal tax filings and payroll reports.

For example, in one loan application, Kanyike falsely claimed the business had 26 employees and an average monthly payroll of $168,000, and he submitted a fabricated IRS tax form claiming Falcon Motors had paid $2,022,300 in payroll in 2019.

But Kanyike admitted during his plea that the company had substantially fewer employees and substantially lower payroll. Kanyike further admitted that he obtained additional Employer Identification Numbers from the IRS in April and May 2020, so that he could apply for multiple loans for the same used-car business. Kanyike then used a substantial portion of the PPP loan proceeds for his own personal benefit.

Kanyike was arrested in December 2020 at Los Angeles International Airport just before he was about to board a flight to Dubai. At the time of his arrest, Kanyike had transferred approximately $762,000 to Uganda, his country of citizenship, from one of the business accounts that had received the loan proceeds, in violation of the terms of the PPP and EIDL program.

Kanyike pleaded guilty to one count of wire fraud before United States District Judge Virginia A. Phillips. He is scheduled to be sentenced on August 23 and faces a maximum penalty of 20 years in prison.

As part of his guilty plea, Kanyike is required to pay approximately $1.3 million in restitution.

Homeland Security Investigations and Treasury Inspector General for Tax Administration investigated the case.

2017 Insurance Start-up Expands Rapidly in Comp Market

Despite the softening of rates and the challenges of the coronavirus pandemic, the Insurance Journal reports that one Midwest-based workers’ compensation insurance provider that opened its doors just over three years ago reports that it not only has experienced significant growth during that time, it simultaneously has managed to maintain a loss ratio that is one of the lowest in the industry.

Since its launch in October 2017, Omaha National, based in Omaha, Nebraska, has gone from $0 to $100 million of in-force premium and grown from a six-person operation to one with more than 150 employees.

That brisk pace of growth is expected to continue, says Reagan Pufall, president and CEO of the managing general agent (MGA) / insurance carrier. The company will move into a new office building this summer “because we’ve run out of room where we are,” he said. “Five years from now, we expect to be well over $400 million in-force premium.”

Omaha National launched as an MGA with California as its initial target market. It is now offering coverage in 14 states and will continue to expand into other states, including New York this year, Pufall said. It also established Omaha National Insurance Co., which currently “acts as a reinsurer for a portion of the risk that we write. So even as an MGA, we are already on the risk, which is what we like.”

However, “the intention has always been to become a direct writer. And we’re now approaching the time when it looks like we will be able to initiate that transition to becoming a carrier,” he said.

A complementary division of the company is its payroll service. “It’s an optional part of what we offer. Any company that is insured by us, if they choose, they can also make use of us as their payroll service,” Pufall said.

Small- to mid-size companies operating in industries where employees work with their hands are Omaha National’s core customers – landscapers, framers, electricians, plumbers, parcel delivery services, for example. “We like to say that we insure the companies that build America,” Pufall said.

The falling rates in the workers’ compensation line are a challenge as they are for any insurer, Pufall said. “But we designed this company to prosper throughout the market cycle, in hard markets and soft markets. None of what we’re encountering or anything we see in the future causes us substantial concern. Of course, we will look forward to the day when the market cycle changes, and the rates are rising again. But until then, we’re doing just fine, even during this soft market.”

California Unemployment Rate Drops to 8.5%

Driven by the reopening of restaurants and the tourism industry, California unemployment dropped to 8.5% in February, the Golden State’s lowest mark of the pandemic.

With the state loosening business restrictions incrementally since the holiday spike of Covid-19 cases dwindled, the hospitality and leisure industry added over 100,000 jobs last month. In total, California employers hired 141,000 new employees, nearly erasing the deficit accrued in December and January under Governor Gavin Newsom’s most recent lockdown order.

California registered the third largest jobless rate decrease in February of any state, but its estimated 8.5% mark remains well above the nationwide figure of 6.2%.

State officials celebrated Friday’s U.S. Department of Labor release, calling it a “milestone” in what has thus far been a slow economic recovery for the nation’s most populous and richest state.

The state’s improvement was led by the hospitality and leisure industry, which resumed offering indoor dining in some parts of the state last month and combined to add 102,000 jobs. The hiring surge was a positive sign for the hard-hit industry that is still down nearly 700,000 jobs compared to February 2020.  

Overall, seven of California’s 11 industries added jobs including other services (14,100), education and health services (13,000), manufacturing (8,900), trade, transportation and utilities (8,200) and professional and business services (5,400). Meanwhile, the agriculture industry added nearly 3,000 jobs, tallying gains for the seventh straight month.

February’s performance will likely be repeated or enhanced in March and April, assuming Covid-19 cases continue to drop, says Jeffrey Clemens, economics professor at University of California, San Diego.

The hospitality industry’s February hiring-spree was certainly encouraging, but Clemens emphasized the enormity of the job losses suffered in California over the last year.

The jobs market is climbing out of a deep hole,” Clemens added, referencing the fact California is still down 1.6 million total jobs.  

Statewide unemployment may have sunk a half-point in February, but nearly a dozen of the state’s 58 counties still have double-digit unemployment.

Los Angeles County’s rate fell to 10.9% from 12.7% the previous month, but it remains the only urban county in the double digits. The rest of the list consists of mostly rural, agricultural-producing counties like Kern (10.8%), Imperial (15.9%) and Monterey (10.9%).