Menu Close

Tag: 2021 News

Farm Labor Contractor to Serve 6 Years for $2.5M Premium Fraud

Felipe Saurez Barocio, 63, of Atwater, owner of Agriculture Services, Inc., and his daughter, Angelita Barocio-Negrete, 34, of Merced, were sentenced to 10 years after pleading no contest to six felony counts of insurance fraud each.

Pursuant to Penal Code 1170(h), they will both serve six years in custody and four years on mandatory supervision.

They have also been ordered to pay $2,582,142 in restitution – the amount of workers’ compensation insurance premium they avoided paying over five years.

Barocio and his daughter underreported employee payroll by $11 million in order to fraudulently reduce the business’s premium for workers’ compensation insurance. The fraud potentially left employed farm workers without insurance coverage and at financial risk.

On October 14, 2019, State Compensation Insurance Fund (SCIF) filed a suspected fraudulent claim with the California Department of Insurance alleging potential insurance fraud.

SCIF reported that Barocio, as owner of a farm labor contracting business, underreported employee payroll in order to reduce the proper rate of insurance premium owed to SCIF.

An investigation by the California Department of Insurance revealed that between 2015 and 2019, Barocio and his daughter, who worked as the office manager, provided SCIF with fabricated quarterly employee payroll reports.

The Department discovered $11 million in missing payroll when they compared the quarterly reports submitted to SCIF to the quarterly reports submitted to the Employment Development Department. This underreporting of employee payroll resulted in a total loss of $2,582,142 in insurance premium.

Barocio and his daughter, Barocio-Negrete, were sentenced on January 12, 2021, in the Merced Courthouse and ordered to pay restitution on February 22, 2021.

The Merced County District Attorney’s Office prosecuted this case.

Grocers Association Seeks “Hero Pay” Ordinance Injunction

Courthouse News reports that an attorney for the California Grocers Association told a federal judge Tuesday a city of Long Beach ordinance providing a $4 an hour boost in hazard pay for grocery workers interferes with ongoing labor negotiations and should be blocked.

The Southern California city’s “Premium Pay for Grocery Workers Ordinance” provides the $4 per hour in premium pay for essential grocery workers who face higher risk during the Covid-19 pandemic.

CGA, which represents 6,000 grocery stores across California, filed a federal lawsuit against Long Beach on Jan. 21, claiming companies operate on thin profit margins and that some have already given their workers hazard pay bonuses.

In court papers, attorneys for CGA said the ordinance would result in grocery stores being more crowded and food prices more expensive for customers.

Upon filing its lawsuit in the Central District of California, CGA moved on an ex parte basis for a temporary restraining order blocking enforcement of the ordinance.

The next day, U.S. District Judge Dolly M. Gee, who had been initially assigned to the case, denied CGA’s bid, ruling that the association failed to show how it would be irreparably harmed without emergency action by the court.

Gee also called the threat of city-sanctioned lawsuits against noncomplying grocery stores “speculative,” which the ruling said cannot be the basis for granting a TRO.

The case had since been transferred to U.S. District Judge Otis D. Wright II.

In court papers opposing an injunction, attorneys for Long Beach cited reports of grocery store corporations such as Kroger earning “eye-popping” profits during the pandemic while their frontline workers continue to face potential daily exposure to the novel coronavirus.

In a virtual federal court hearing Tuesday, CGA attorney William F. Tarantino told Wright a preliminary injunction should be granted because the ordinance’s alleged effect on collective bargaining is preempted by the National Labor Relations Act.

To support CGA’s preemption claims, Tarantino cited the U.S. Supreme Court’s 1976 ruling in Machinists v. Wisconsin Employment Relations Comm, which held local governments should not interfere in business that would otherwise be determined by “the free play of economic forces.”

Wright took the matter under submission and indicated a final ruling on the preliminary injunction would be issued soon.

Tuesday’s hearing came on the same day the Los Angeles County Board of Supervisors voted 4-1 to approve an urgency ordinance requiring national grocery and drug stores chains in unincorporated LA County to pay workers an extra $5 an hour in “hero pay.”

The ordinance – which takes effect immediately and is enforceable for the next 120 days – cited frontline workers’ higher risk of contracting Covid-19 and their ongoing labor contributions as justification for the wage increase.

SoCal Worker Arraigned for Fraudulent COVID Comp Claim

Stephanie Medrano, 33, of West Covina, was arraigned on multiple counts of grand theft and insurance fraud after allegedly making misrepresentations following a COVID-19 diagnosis in an attempt to collect over $33,000 in undeserved workers’ compensation insurance benefits.

The California Department of Insurance launched an investigation after receiving a claim of suspected fraud from Medrano’s employer, the Baldwin Park Unified School District, on August 21, 2020.

The investigation revealed Medrano made multiple misrepresentations in order to extend a workers’ compensation insurance claim submitted to her employer after she was diagnosed with COVID-19.

Medrano was reportedly exposed to COVID-19 while in the workplace and subsequently filed a workers’ compensation claim. She told her employer that she self-quarantined from July 6, 2020 to August 3, 2020, and reported she only left her house twice to buy medicine for her mother and sister, who were also diagnosed with COVID-19. Medrano reported her symptoms related to the COVID-19 diagnosis were so severe she was unable to work.

The investigation found that during the time Medrano claimed she was self-quarantining, she was seen shopping at multiple stores for several hours a day and interacting with people from outside her immediate household without face masks.

Further, investigators uncovered that Medrano traveled to Lake Havasu with people who live outside her household just two days after she reported she was still experiencing symptoms to the doctor overseeing her claim.

The Department’s investigation into Medrano’s false statements regarding her symptoms and need for extended self-quarantine prevented a potential loss of $33,516 to the school district.

The Los Angeles County District Attorney’s Office is prosecuting this case.

Suit by COVID Infected Wife Against Husband’s Employer Fails

A California woman, 65 year old Corby Kuciemba, sued her husband’s employer because she believes he caught the novel coronavirus at work and brought it home with him – ultimately infecting her also.

The couple then tested positive for the virus on July 16, 2020, and both were hospitalized as a result, with Corby Kuciemba being held for treatment until the beginning of August.

She and her husband, Robert Kuciemba, alleged in their Oct. 23, 2020 lawsuit that his employer, Nevada-based Victory Woodworks, violated local and federal virus-safety guidelines when it moved workers from one site to another in the San Francisco region.

The company’s failure to take basic precautions allegedly caused Robert Kuciemba to contract the virus and unknowingly bring it home and infect his wife, and both required extended hospital stays and suffer from after-effects.

The closely watched case was removed by the employer to the Federal District Court in Northern California on December 28. The removal was soon followed by a Motion to Dismiss filed on January 4, and then a hearing on that motion set for February 12.

On February 22, the federal judge ruled that the First, Second, Third, and Fifth Causes of Action, titled, respectively, “Negligence,” “Negligence Per Se,” “Negligence – Premises Liability,” and “Loss of Consortium,” are barred by the exclusive remedy provisions of California’s workers’ compensation statutes.

Judge Chesney also ruled that the couple’s Fourth Cause of Action doesn’t meet the required threshold, or standing, to hold Robert Kuciemba’s employer, Victory Woodworks Inc., liable for creating a public nuisance.

However, the plaintiffs were given leave to file, no later than March 19, 2021, a First Amended Complaint.

The case is Kuciemba v. Victory Woodworks, 20-cv-09355, U.S. District Court, Northern District of California (San Francisco).

5 Year Sentence for Dr. Grusd Office Administrator Affirmed

In approximately 2002, Ruben Martinez, and his son, Alex Martinez, opened a medical clinic in Calexico.

In 2009, a chiropractor, Dr. Steven Rigler, moved his practice into the clinic and examined patients who were referred to him by Ruben and Alex and were receiving workers’ compensation benefits.

Dr. Rigler did not pay rent or utilities or contribute to the salaries of clinic staff. In exchange, Rigler permitted Ruben and Alex to determine the providers to whom Dr. Rigler’s patients would be referred for ancillary medical services. These ancillary service providers compensated Ruben and Alex for the referrals, and Ruben and Alex split the referral fees evenly.

In 2010, Gonzalo Ernesto Paredes was the office administrator for an entity called Advanced Radiology, owned by Dr. Ronald Grusd. Ruben Martinez entered into an agreement with Paredes, on behalf of Dr. Grusd, through which Advanced Radiology would pay Ruben a referral fee for patients referred to Advanced Radiology for magnetic resonance imaging (MRI) scans.

Thereafter, Paredes implemented the agreement with Ruben by, among other activities, receiving invoices from Ruben for patient referral fees and arranging payment of those fees to Ruben.

Paredes and Grusd were tried in federal court in 2017. Grusd was found guilty on all 42 counts that went to the jury. The jury hung on the counts against Paredes. The federal case against Paredes was subsequently dismissed by the government, without prejudice, pending his trial on state charges.

A jury in the state court trial found Paredes guilty of 35 counts of offering or delivering compensation for workers’ compensation patient referrals and 16 counts of concealing an event affecting an insurance claim.

The trial court sentenced Paredes to an aggregate term of five years in prison.

On appeal, Paredes claims that the prosecutor committed misconduct during his examination of one of the witnesses and during closing argument by suggesting the existence of facts not in evidence. Paredes also maintains that the trial court erred in excluding, as hearsay, an unavailable witness’s testimony from a prior federal trial. Finally, Paredes contends that there is insufficient evidence to support the verdicts.

The Court of Appeal affirmed the conviction in the unpublished case of People v. Gonzalo Ernesto Paredes.

The appellate court rejected his arguments one by one, and concluded that there was substantial evidence supporting his conviction.

NCCI Reports 2020 “Not a Bad Year” for Comp Claims

While it obviously presented challenges, 2020 is looking like it may not have been such a bad year for workers’ compensation insurers and insureds after all.

Insurers took in less premium but paid fewer claims. They managed to achieve one of the lowest combined ratios in history. An increasing number of workers were able to be treated via telemedicine, meaning they did not have to travel. Injured workers, including COVID-claimants, appear to have received their medical care without much delay. And the vast majority of COVID-19 claimants needed only limited treatment.

On the down side, 2020 may have seen a return of opioid over-prescribing.

Experts from the industry’s data and rating organization, the National Council on Compensation Insurance (NCCI), recently shared their preliminary analysis of 2020 claims data. In a virtual roundtable, COVID-19 and Workers Compensation, summarized by the Insurance Journal.

NCCI looked at results through the third quarter of 2020 and extended those through the end of the year. NCCI uses data from private carriers and state funds in 41 jurisdictions but its data does not include many public entities such as first responders or health care entities including hospitals and nursing homes that are largely self-insured.

Some highlights of the year include:

– – The pandemic has “put gas on a fire that was already burning,” that is, workers’ compensation loss costs have been on a downward trend for years and expense ratios have been climbing.
– – The percentage of COVID-19 claims among all workers’ compensation paid claims has varied greatly among states and occupations, as has the decrease in non-COVID claims, according to research from the Workers Compensation Research Institute (WCRI).
– – While at least 17 states have passed laws or issued orders that expanded access to workers’ compensation benefits for employees who contract COVID-19, many of those directives are creating new exposure for only a sliver of the workforce, new research by the WCRI shows.
– – Although the nation’s focus may have shifted to the coronavirus pandemic, the opioid crisis not only remains a challenge, but also may have worsened due to COVID-19, according to speakers at a forum sponsored by the American Property Casualty Insurance Association and the U.S. Chamber of Commerce.
– – Written premium for the full calendar year of 2020 is expected to be the lowest since 2012.

The NCCI figures are calendar year and do not reflect the full costs of treating COVID-19 or other health conditions with long-term effects.

Overall for 2020, NCCI projects an 8% decline in premium to $38.6 billion, the lowest since 2014. That is accompanied by a 7.6% decline in losses and a favorable 86% calendar year combined ratio.

Worker claims due to COVID-19 have ranged from no symptoms to critical care, hospitalizations and, unfortunately, fatalities in some cases.

The overall COVID-19 claims picture is by no means dire. The larger majority of the cases are small and have only required the injured worker to miss work and quarantine or recover at home.

Sun-Maid Growers Faces Labor Law Class Action

A proposed class action just filed in a federal court in California, alleges Sun-Maid Growers of California has failed to pay proper wages and provide adequate meal and rest breaks to workers at its raisin and dried fruit processing plant.

The plaintiff, who worked for Sun-Maid from September 2016 to March 2020, alleges in the 55-page complaint that the company has unilaterally and unlawfully failed to accurately calculate overtime wages to avoid paying such.

Further, Sun-Maid has allegedly failed to accurately record the amount of time employees worked despite being required by law to do so, and permitted work to be done off the clock without pay, the case says.

More specifically, the lawsuit alleges Sun-Maid required the plaintiff and similarly situated employees to work while clocked out during what was supposed to be off-duty meal breaks. The plaintiff, the suit claims, was from time to time interrupted by work assignments, and there were many days where the man did not even receive a partial lunch, according to the lawsuit. Per the case, Sun-Maid workers were deprived of an off-duty meal period for every five hours worked during a shift, as well as a second off-duty meal period when they were required to work 10 hours.

Further, the lawsuit claims Sun-Maid, from time to time, failed to pay wages, including overtime, for every hour worked, such that employees were in aggregate underpaid wages due to the defendant’s “pattern and practice of unevenly rounding” their hours worked. Instead of receiving overtime at one-and-one-half times their regular rate of pay,

The case alleges Sun-Maid failed to include non-discretionary incentive pay in employees’ regular rates of pay for the purpose of calculating overtime wages. Per the suit, workers were also underpaid when it came to sick pay, as Sun-Maid allegedly failed to pay such at their regular pay rate and instead remitted the wages based on their base rates of pay sans non-discretionary incentives.

The case also alleges Sun-Maid failed to reimburse workers for business expenses, in particular for the required use of their personal cell phones for work purposes.

Sun-Maid has not yet entered an appearance in the federal case, and has not filed any responsive document.

New Problems with Reserving for Lifetime Awards

For many years the life expectancy for the average American increased, and as a result, so did the reserve estimate for lifetime awards in workers’ compensation claims. Maybe it is time to re-think that assumption in the mathematical calculation.

American life expectancy decreased by a full year in the first half of 2020, hitting its lowest point since 2006, as the Covid-19 pandemic burned through the country.

The Centers for Disease Control and Prevention announced the findings Thursday in a first-of-its-kind report based on provisional vital statistics data, joining the annual and decennial national life tables that the agency typically publishes.

According to the analysis in the report by Courthouse News, life expectancy summarizes the mortality conditions in a given year, providing a baseline for health officials to track changes across populations and over time.

According to the latest data, pandemic-related deaths have deepened life-expectancy disparities along racial and ethnic lines that were already striking.

The CDC put the latest life-expectancy gap between Black and white Americans at six years – the largest since 1998. In addition to reporting on the three-year fall in the expected life spans of Black Americans, the CDC observed a nearly two-year drop in the lives of Hispanic Americans, another group whom white Americans statistically tend to outlive.

This is a huge decline,” Robert Anderson, who oversees the numbers for the CDC, announced on Thursday. “You have to go back to World War II, the 1940s, to find a decline like this.”

The study from the CDC’s National Center for Health Statistics backs up what other researchers have been finding.

In an email, University of Southern California postdoctoral scholar Theresa Andrasfay called it “another important piece of evidence of the enormous mortality toll – and the large racial and ethnic disparities – of Covid-19.”

Andrasfay was the co-author of a similar study on the subject that appeared last month in the Proceedings of the National Academy of Sciences.

Another $500K EDD Fraud Perpetrator Pleads Guilty

A San Dimas man pleaded guilty to a criminal charge that he fraudulently obtained more than $500,000 in COVID-19-related unemployment benefits in the names of foreign nationals he falsely claimed were local real estate agents hit hard financially by the pandemic.

50 year old Bonifacio Jastilana Marinas, pleaded guilty to a single-count criminal information charging him with mail fraud.

According to his plea agreement, from April 2020 to August 2020, Marinas took advantage of provisions in the CARES Act to file approximately 85 unemployment insurance claims with the California Employment Development Department (EDD) that falsely asserted that the named claimants were self-employed real estate agents in Los Angeles County whose jobs had been adversely impacted by the COVID-19 pandemic.

Marinas often listed his own real estate business – Vintage Realty & Finance Inc., located in West Covina – as the purported workplace of the named claimants.

In actuality, the named claimants resided in Saipan or the Philippines, were not registered as real estate agents in Los Angeles County, had no employment history in California, and were not eligible for the benefits Marinas claimed.

Marinas listed his own residence as the mailing address for each of the named claimants, the plea agreement states. As a result, the debit cards used to distribute the unemployment benefits were mailed to Marinas, who then used them to withdraw the fraudulently obtained funds.

In his plea agreement, Marinas admitted that his scheme caused losses to EDD and the United States Treasury of at least $516,244.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress and signed into law in March 2020, helped provide unemployment insurance benefits during the COVID-19 pandemic to people who did not otherwise qualify, including business owners, self-employed workers, independent contractors, and those with a limited work history.

A June 24 sentencing hearing has been scheduled, at which time Marinas will face a statutory maximum sentence of 20 years in federal prison.

This matter was investigated by the Department of Labor Office of Inspector General, IRS Criminal Investigation; the United States Postal Inspection Service, and the United States Secret Service. EDD Investigations provided substantial assistance.

L.A. McDonald’s Cited for Retaliation and Labor Law Violations

The California Labor Commissioner has cited a Los Angeles McDonald’s franchisee $125,913 for workplace retaliation and labor law violations, after the Labor Commissioner found that the employer illegally fired four workers for reporting unsafe working conditions during the COVID-19 pandemic.

The four employees of the Marengo Street McDonald’s, operated by R&B Sanchez, Inc., filed retaliation complaints with the Labor Commissioner’s Office last September.

The workers had advised their employer, Cal/OSHA and the Los Angeles County Health Department about unsafe work conditions that they were concerned exposed them to COVID-19 infections. They had also participated in strikes over safety conditions at the Marengo Street McDonald’s, and subsequently received termination letters from their employer.

The Labor Commissioner’s Office on February 12th issued citations totaling $125,913 in wages and penalties against McDonald’s franchisee R&B Sanchez, Inc. Also named in the citations as jointly and severally liable are owners Robert Sanchez and Beverly Sanchez, as well as Brian Sanchez, who served as the franchisee human resources officer.

The citations include $45,193 in lost wages, $720 in interest due, $40,000 in Section 98.6 retaliation penalties, and $40,000 in Section 1102.5 retaliation penalties. R&B Sanchez must reinstate the four workers to their jobs, remove any negative references from their personnel files, and post information on the citations and violations in the workplace.

“Too many workers fear retaliation if they report a problem or stand up for their rights,” said Labor Commissioner Lilia García-Brower. “California law has anti-retaliation protections in place that make it illegal for employers to punish workers for exercising their labor rights, such as reporting a workplace safety hazard. My office is committed to ensuring those laws are enforced.”

The Labor Commissioner’s Office enforces more than 45 labor laws that specifically prohibit discrimination and retaliation, including Equal Pay Act violations. The Labor Commissioner’s Office investigates workplace retaliation complaints including instances of termination, suspension, transfer or demotion, reduction in pay or hours, disciplinary actions or threats, or unfair immigration-related practices.

The Labor Commissioner’s Office has 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, obligations and how to defend them. Californians can follow the Labor Commissioner’s Office on Facebook and on Twitter.