Tag: 2022 News

Following eight years of litigation, an Orange County Superior Court judge threw out a major insurance fraud case. According to the report in the Orange County Register, all charges of involuntary manslaughter and felony insurance fraud-related counts were dismissed against Kareem Ahmed, Andrew Robert Jarminski and Michael Rudolph, according to court records.

Back in 2014, an Orange County Grand Jury initially indicted 15 people – including 10 doctors and a pharmacist – for their alleged involvement in a multi-million dollar workers compensation fraud scheme. The alleged ringleader was Kareem Ahmed, president and CEO of Landmark Medical Management, an Ontario California company.

Ahmed allegedly paid physicians a total of more than $25 million to dispense the compound creams between June 15, 2010, and Dec. 31, 2012. The amounts individual doctors received between 2010 and 2013 ranged from $600,000 to more than $2.5 million, it alleged. Among those Ahmed allegedly paid were Daniel Capen, M.D. (more than $2.5 million); Andrew Jarminski, M.D. (more than $1.9 million); pharmacist Michael Rudolph (more than $1 million); and Rahil Kahn, M.D. (more than $1 million), according to the indictment.

Challenges to the procedures used in the indictment eventually were elevated to the Court of Appeal in the case of Kareem Ahmed v Superior Court, which agreed with some the challenges made by the defendants, and thus reversed the trial court, and remanded the case.

Instead of returning to the Grand Jury, the Orange County District Attorney then re-filed a felony complaint against Kareem Ahmed, Andrew Jarminski, Michael Rudolph and Norma Garner instead.

The case had another setback in 2019, when Orange County Superior Court Judge Sheila Hanson ruled that prosecutors violated the defendants’ Sixth Amendment rights to counsel and Fifth Amendment rights to due process, invaded the attorney-client privilege, and ordered that prosecutors purge all privileged materials from their computer servers and that on the servers at the Orange County Regional Forensics Lab. And that going forward, she would exclude all evidence that was privileged or derived from privileged evidence.

This ruling obviously made it difficult for prosecutors to go forward with the case. Since that ruling, the attorneys have been working through what evidence was not tainted and could still be used in the case. There apparently was not enough evidence left. All charges of involuntary manslaughter and felony insurance fraud-related counts were dismissed this month against Kareem Ahmed, Andrew Robert Jarminski and Michael Rudolph, according to court records.

Courthouse News reports that federal judge cleared the way last week for San Francisco’s opioid lawsuit against Walgreens and a number of pharmaceutical companies to head to trial, which is set to begin on April 25.

Thousands of states, cities and counties have sued pharmaceutical companies over their role in the opioid epidemic, which is believed to have been caused by the marketing and overprescription of prescription drugs like Oxycontin. Many patients who were prescribed an opiate later switched over to using illegal narcotics like heroin. According to the CDC, nearly half a million people died from opiate overdoses between 1999 and 2019.

The biggest culprit was Purdue Pharma, which manufactured and marketed Oxycontin, and which entered bankruptcy in 2020. That proceeding hit the pause button on all lawsuits against Purdue, and eventually lead to a massive settlement, in which cities and states will effectively take over ownership of Purdue. The former owners of the company, the Sackler family, contributed $6 billion to the settlement, a good deal of which went to the governmental entities, in exchange for immunity from future lawsuits.

The drugmaker Johnson & Johnson and three pharmaceutical distributors agreed to a $26 billion settlement with states and municipalities in February.

But that still leaves a multitude of other opioid-related lawsuits in active litigation.

San Francisco filed its suit in 2018 against a panoply of defendants, including Purdue, nine members of the Sackler family and a host of other companies. Some of those defendants, like Purdue, have been released from the case thanks to settlements. But some parties remain, including Walgreens, Actavis, Teva Pharmaceuticals and Endo Pharmaceuticals, the latter two of which specialize in making generic versions of drugs.

The city’s suit made a number of what were at the time novel allegations, including public nuisance and racketeering. In 2020, U.S. District Judge Charles Breyer dismissed the racketeering claims, but allowed the public nuisance claims to go through.

Last week, Judge Breyer further whittled down the list of defendants. In a 9-page decision, Breyer dismissed claims against parent company Endo International, writing, “evidence fails to suggest that Endo subsidiaries are ‘merely an instrumentality’ of Endo International.” He also dismissed claims against a subsidiary, Par Pharmaceuticals. But Endo Pharmaceutical and Endo Health Solutions must still stand trial.

San Francisco has made two claims about the company – that it “made false and misleading statements about the safety and risks of opioids,” and that it “failed to design and operate effective systems to identify suspicious orders of opioids and to prevent diversion of opioids.” Both of those failures, the city claims, amounted to a public nuisance.

In another, much shorter decision, Breyer dismissed motions for summary judgment from five other defendants, including Teva and Walmart.

The strategy of suing opioid companies by alleging public nuisance has had a mixed track record. An Orange County Superior Court Judge, in November 2021, ruled in favor of four pharmaceuticals (including Endo and Teva) after a bench trial in a lawsuit brought by the counties Santa Clara, Los Angeles and Orange and the city of Oakland. That same month, an Oklahoma Supreme Court overturned a $465 Million ruling against Johnson & Johnson, rejecting the public nuisance argument.

Other lawsuits against drugmakers alleging public nuisance are still pending, including a trial in West Virginia, which started this week.

Tiffany Aveau sustained a work-related injury to her back on September 6, 2016, and was placed on an extended leave of absence until September 15, 2017. Russian River terminated Aveau on September 18, 2017.

On April 16, 2018, Aveau filed a workers’ compensation petition pursuant to Labor Code section 132a, alleging Russian River had discriminated against her when it fired her due to her work-related injury.

More than a year after her termination, Aveau filed an administrative complaint with the Department of Fair Employment and Housing (DFEH), alleging Russian River discriminated against her due to her work-related injury. That same day, November 20, 2018, the DFEH issued a Notice of Case Closure and Right to Sue letter.

On June 17, 2019, Aveau filed a civil complaint against Russian River alleging three causes of action for wrongful termination. Russian River filed a motion for summary judgment arguing that Aveau failed to comply with DFEH’s one-year filing requirement and, as such, Aveau’s “cause of action for Wrongful Termination is barred by the applicable Statute of Limitations.”

The court subsequently granted Russian River’s motion. The Court of Appeal reversed in the unpublished case of Aveau v. 23 Bottles of Beer.

On appeal Aveau contended the trial court erred by summarily adjudicating her wrongful termination in violation of public policy claim because it was timely brought within the applicable statute of limitations set forth in Code of Civil Procedure section 335.1, which provides a two-year statute of limitations for tort actions.

Russian River maintained that Aveau’s claim is barred by FEHA’s one-year statute of limitations. Alternatively, Russian River asserts that even if the two-year statute of limitations applies, Aveau’s claim still fails for failing to adequately plead a cause of action for wrongful termination in violation of public policy. Both of Russian River’s arguments were rejected.

Citing Prue v. Brady Co./San Diego, 242 Cal.App.4th 1367 (2015) 196 Cal.Rptr.3d 68, the Court concluded that FEHA’s one-year statute of limitations does not apply to Aveau’s common law tort cause of action for wrongful termination in violation of FEHA’s public policy against disability discrimination, and Aveau’s failure to exhaust her administrative remedies for the underlying FEHA claims does not, standing alone, bar her wrongful termination claim.

Thus the summary judgment for the first and second causes of action – (1) disability discrimination in violation of Government Code section 12940, subdivision (a), (2) failure to engage in a timely, good faith interactive process (§ 12940, subd. (n)), – were appropriate.

However summary judgment for the third cause of action – wrongful termination in violation of the public policy articulated under the Fair Employment Housing Act (FEHA) (Gov. Code, § 12920 et seq.) – was reversed. Instead, Code of Civil Procedure section 335.1 applies, providing a two-year statute of limitations for tort actions based on injuries to plaintiffs caused by the wrongful act or neglect of others.

Prescription drug costs for California’s massive Medicaid program were draining the state budget, so in 2019 Gov. Gavin Newsom asked the private sector for help. The new Medicaid drug program debuted this January, with a private company in charge. But it was woefully unprepared, and thousands of low-income Californians were left without critical medications for weeks, some waiting on hold for hours when they called to get help.

But according to the report by California Health Line, what happened in the two years between the contract award and the start of the program is a case study in what can go wrong when government outsources core functions to the private sector.

California awarded the Medi-Cal Rx program to a unit of Magellan Health, a company with expertise in pharmacy benefits and mental health. But Magellan was then gobbled up by industry giant Centene, worth roughly $50 billion, which was looking to expand its mental health portfolio.

Centene was already a big player in state Medicaid drug programs – but one with a questionable record. The company was accused by six states of overbilling their Medicaid programs for prescription drugs and pharmacy services and settled to the tune of $264.4 million. Three other states made similar allegations and have settled with the company, but the amounts have not been disclosed. Centene, in resolving the civil actions, denied any wrongdoing.

In his 2019 inauguration speech, Newsom vowed to use California’s “market power and our moral power to demand fairer prices” from the “drug companies that gouge Californians with sky-high prices.”

Drug spending by the state for its Medicaid, prison, state hospital, and other programs had been climbing 20% a year since 2012, so the first-term Democrat issued an executive order requiring California to make its own generic drugs and forge partnerships with counties and other states to buy drugs in bulk. He also directed the state to buy prescription drugs for Californians enrolled in Medi-Cal, the state’s Medicaid program, which covers roughly 14 million people.

Newsom no longer wanted to allow the state’s two dozen Medi-Cal managed-care health plans to provide prescription drug coverage to their enrollees, arguing the state would get a better deal from drug companies by harnessing its purchasing power.

That December, California awarded a competitive $302 million contract to Magellan Medicaid Administration, a subsidiary of Magellan Health, to make sure Medi-Cal enrollees get the medications that California would buy in bulk. Magellan provides pharmacy services to public health plans in 28 states and the District of Columbia.

Magellan was supposed to take over the drug program in April 2021. But on Jan. 4 of that year, Centene – which was seeking a greater role in the lucrative behavioral health market – announced plans to buy Magellan.

St. Louis-based Centene, however, is one of the largest Medi-Cal insurers in the state, a factor that would have disqualified it from bidding for the original contract. Centene provides health coverage for about 1.7 million low-income Californians in 26 counties through its subsidiaries Health Net and California Health & Wellness. It earned 11% of its revenue from California businesses in 2019, according to its 2021 annual report to the U.S. Securities and Exchange Commission.

But the state bent over backward to make it work, delaying implementation of the program while Magellan set up firewalls, sectioned off its business operations from Centene, and paid for a third-party monitor.State regulators reviewed the merger in a 30-minute public hearing in October 2021. They didn’t mention Centene’s legal settlements with other states.The state Department of Managed Health Care approved the merger Dec. 30. Two days later, the state launched its new prescription drug program with Magellan at the controls.

In the past 10 months, Centene has settled with nine states over accusations that it and its pharmacy business, Envolve, overbilled their Medicaid programs for prescription drugs and services: It settled with Arkansas, Illinois, Kansas, Mississippi, New Hampshire, and Ohio, according to news releases from attorneys general in those states. The three other states have not been identified by Centene or the states themselves.

The company has set aside $1.25 billion for those settlements and future lawsuits, according to its 2021 report to the SEC.

In a suit relating to wages, employee classification and sick leave, a federal court in California preliminarily approved an $8.43 million settlement for 1,322 drivers for the company in the state who opted out of Uber’s arbitration clause.

BloombergLaw reported that the proposed $8.4 million deal reached between Uber Technologies Inc. and more than 1,300 California drivers, who alleged they were misclassified as contractors, would end one of the gig economy court battles that predate the passage of Proposition 22.

The settlement award would go to about 1,322 drivers who opted out of arbitration agreements and worked for the company between Feb. 28, 2019, and Dec. 17, 2020, according to a motion for preliminary approval filed on Thursday. The December date reflects the enactment of Prop. 22, a ballot initiative that Uber helped to fund to cement app-based drivers as independent contractors.

Uber and the drivers agreed to dismiss the case in November after signaling they had reached an agreement. The deal is slated for a final approval hearing before the U.S. District Court for the Northern District of California in June. It would follow a $20 million settlement approved by the same court in 2019 between Uber and 15,000 California and Massachusetts drivers.

This class action lawsuit, seeking to represent nearly 5,000 Uber drivers, was launched in April of 2020. The plaintiffs allege that the rideshare giant improperly classifies them and others, depriving its drivers of important benefits, including minimum wage, overtime, and sick leave. The complaint also charged Uber with failing to provide properly itemized pay statements and reimburse drivers for business expenses, such as gas and insurance.

In a Jan. 26 order, the court agreed to grant certification of the proposed Class for itemized wage statements and expense reimbursement; however, U.S. District Judge Edward M. Chen trimmed claims for minimum wage, overtime, and sick leave pay.

Explaining that claims for minimum wages, overtime, and sick pay would all hinge on individual evaluations of each Class Member’s claim, Chen dismissed those class action allegations. Judge Chen also addressed Proposition 22, a new voter-enacted California law that applies only to rideshare drivers.

The settlement doesn’t answer the question of whether Uber drivers are employees entitled to benefits such as overtime, minimum wage, and business expenses – an issue that continues to be debated despite Prop. 22, which was struck down by a state judge as unconstitutional. A California appellate court is weighing that challenge. Drivers wrote in a motion for preliminary approval filed Feb. 17 that, while the settlement doesn’t answer the question of whether they were misclassified, but that it will provide them “significant value.”

Of the $8.4 million proposed settlement, administration costs totaled $29,000; requested attorneys’ fees represent a quarter or $2.1 million; and each named plaintiff will receive $10,000.

Each driver, under the proposed settlement, would be entitled to part of the settlement based on the number of miles drivers picked up passengers and food deliveries, as well as the number of miles driven. The drivers’ attorney Shannon Liss-Riordan anticipated about half of the class will submit a claim.

This is but one of many legal actions Uber is facing over its use of independent contractors as drivers for the ride-hailing app, with the company facing another class action lawsuit lodged early this year over Prop 22. The lawsuit claims that Prop 22, reportedly written and heavily funded by Uber and other rideshare apps, leaves drivers with little pay and few options.

Uber has also been in the spotlight over a growing number of sexual assaults reported by drivers and riders alike.