Tag: 2022 News

A workers’ compensation applicant attorney was sentenced to four years in state prison and ordered to pay over $700,000 in restitution to seventeen different insurance carriers for participating in two separate insurance fraud referral schemes.

Jon Woods, 61, of Cypress, was convicted in August of 37 felony counts of insurance fraud along with an aggravated white-collar crime sentencing enhancement. Woods was one of ten workers’ compensation applicant attorneys charged by the Orange County District Attorney’s Office in June 2017 as a result of a complex insurance fraud investigation.  

Charges were also filed against Carlos Arguello, Fermin Iglesias, and Edgar Gonzalez, along with four chiropractors, and several employees working for Carlos Arguello.  Carlos Arguello, his employees, and Fermin Iglesias have all pleaded guilty in their Orange County Superior Court cases.  Arguello and Iglesias were also charged in federal court for violating federal laws related to their scheme with medical providers, resulting in a four-year federal sentence for Arguello and a five-year federal prison sentence for Iglesias.

Woods was found guilty of participating in two different insurance fraud schemes – one with a “marketer” named Carlos Arguello, and the other with a subpoena company owner named Edgar Gonzalez.  From 2011 to 2016, Woods paid Carlos Arguello for workers’ compensation clients procured through Arguello’s attorney marketing business, Centro Legal International, and later Tu Justicia Legal, as well as Centro de Abogados.

Targeting mainly Hispanic neighborhoods across the State, Arguello’s business handed out more than four million business-card-sized flyers per month to attract prospective workers’ compensation clients for Arguello’s “marketing” scheme.  The flyers contained different toll-free numbers that all rang to a call center located in Tijuana, Mexico.  The call center operators served as a sales force, responsible for securing clients for Arguello’s attorneys by conferring with staff of various law firms about the callers’ cases, and then dispatching a “sign-up” representative from Arguello’s network to the caller’s home within 24-48 hours to sign legal paperwork to hire the law firm and start the injury claim.  Arguello distributed clients to law firms based on the amount each law firm paid Arguello for clients that month.

In addition to paying a monthly fee for obtaining clients, Woods also sent records subpoena work to companies controlled and operated by Carlos Arguello, in an amount equal to the number of clients he received from Arguello.  These companies billed the workers’ compensation insurance policy of the injured worker’s employer for all the records subpoena services they provided for Woods, because the law requires that cost of an injured worker proving his/her workers’ compensation claim must be paid by the employer’s workers’ compensation insurance.  This includes expense for obtaining records through subpoenas ordered by the injured worker’s lawyer.

Arguello’s scheme required that all clients procured through Arguello’s “marketing” would be sent to clinics chosen by Arguello’s organization.  Like the lawyers participating in his scheme, a group of doctors or chiropractors were also paying Arguello for workers’ compensation patients.  Fermin Iglesias, an associate of Carlos Arguello, oversaw the medical side of the scheme, in which medical service providers issued prescriptions for medical products to businesses owned by Iglesias in exchange for referral of patients to their clinics.

California’s workers’ compensation laws prohibit any person from paying for referral of business that would be billed through workers’ compensation insurance, and prohibit acceptance of such business in exchange for any kind of payment, benefit or compensation.  At trial, representatives of seventeen different workers’ compensation insurance companies testified that their companies would not have paid any of the bills received from a records subpoena company if they knew that the services rendered were a result of an unlawful referral scheme.

Woods was also found guilty of participating in a second fraud scheme in which he referred additional records subpoena work to USA Photocopy, a subpoena company owned by Edgar Gonzalez. Gonzalez paid various business expenses for Woods’ law firm as a bribe to receive the firm’s records subpoena work, including paying salaries for several entry-level employees who worked at Woods’ law firm, and paying bills for shredding costs, copier maintenance, new scanners, as well as an overseas back-office assistant.

Arguello and Gonzalez’s records subpoena companies had offshore offices in El Salvador, where employees reviewed subpoenaed records to identify more businesses that they can serve with more records subpoenas on Woods’ behalf. These companies billed workers’ compensation insurance companies for each individual subpoena.

Senior Deputy District Attorney Noor Hasan of Insurance Fraud prosecuted this case.

Wage theft has been a federal crime for decades but in California, where felony cases are punishable by up to three years in jail, prosecutors across the state rarely filed criminal charges based solely on wage theft.

But according to a report by CalMatters, some prosecutors say that is beginning to change.

Since 2015, the state’s Labor Commissioner’s Office has investigated 16 labor violation cases that resulted in criminal charges, spokesperson Paola Laverde said in an email; 11 of those cases involved wage theft. Five years ago, the criminal investigation unit in the Labor Commissioner’s office forwarded three cases to prosecutors. So far this year, it has referred more than a dozen, Laverde said.

Few local prosecutors contacted across the state could tell CalMatters how many wage theft cases they’ve brought charges for since 2015.

By contrast, the Labor Commissioner’s office conducted investigations of worksites and issued 141 minimum wage violation citations and 102 overtime violation citations in the 2019-2020 fiscal year. Those wage theft citations were handled administratively or in civil court.

Also workers who think their wages were stolen usually file claims with the Labor Commissioner’s office, rather than reporting it to law enforcement. Last year California employees filed 19,000 unpaid wage claims for a total of $320 million, which also are usually handled administratively.

As California continues to grapple with the scope of wage theft, prosecutors say criminal charges could become more common. Several prosecutors’ offices in recent years have announced units that will focus on labor violations such as wage theft.

“The goal here is to increase our prosecutorial attention to wage theft,” said George Gascón, LA’s district attorney who last year agreed to take referrals and investigate wage theft alongside the Labor Commissioner’s Office. “This (wage theft) is bad for the entire community.”

The initiatives coincide with an increase in what some call “progressive prosecutors,” who seek to refocus their offices’ attention on issues that disproportionately affect low-income and minority residents, such as labor violations and human trafficking. Studies show wage theft primarily affects the most vulnerable workers – those who make low wages, often people of color or immigrants.

These efforts often draw on law enforcement that already is targeting related forms of white-collar crime, such as workers compensation fraud or tax evasion – where victims are other businesses or the government, rather than workers.

Last year California lawmakers gave law enforcement additional flexibility when charging wage theft as a felony.

While the state’s felony grand theft statute already includes stolen wages of at least $950 from a single worker in a one-year period, the new statute allows charges if multiple workers lose at least $2,350 in unpaid wages combined. Nationally there is a rise in criminal prosecutions of labor abuses, according to a report released last year by the Economic Policy Institute. The study noted that since 2017 prosecutors in 15 states have brought new criminal cases against employers.

“My strong sense was that the employer community really responded differently to criminal versus civil cases,” said Terri Gerstein, the report’s author and a former labor bureau chief in New York’s Attorney General’s office. “It felt different when there was a criminal case. It was much more scary.”

Some labor experts question whether criminal prosecution is an effective tool for recovering money. After all, many workers who win civil wage judgments against their bosses still end up collecting nothing, and some businesses operating in the so-called underground economy don’t even have liquid assets, workers’ attorneys say.

When a business owner gets convicted, “if they’re behind bars, they’re definitely not paying their workers,” said Tia Koonse, legal and policy research manager at the UCLA Labor Center.

Others say the threat of jail time and the negative press associated with criminal charges are stronger deterrents than other labor enforcement methods.

The prospect of jail also can force a business owner to pay restitution, said Joel McComb, a deputy district attorney in San Mateo County.

Albert Villareal began working for Toyota of Downtown Los Angeles as a car salesman in 2015, and his job performance was satisfactory or better. The parent company of the dealership was Lithia Motors Inc. On February 1, 2018 Villareal injured his knee and back and was unable to walk without difficulty.

He returned to work on March 1, and worked up until June 4, 2018, when he took leave due to recurring pain. He underwent knee surgery in August 2018. Following the surgery, Villareal was placed on medical leave. When he informed the employer that his medical leave was extended for another three months, his employment was terminated the following day.

Villareal filed this action on August 24, 2020, asserting claims under FEHA for discrimination, retaliation, failure to prevent discrimination, failure to provide reasonable accommodation, and failure to engage in a good faith interactive process and other theories.of violation of the Labor Code.

When his employment began, he signed an agreement to resolve employment disputes through binding arbitration. Thus the defendants filed a motion to compel arbitration, A header on the first page of the agreement stated it was “[b]etween DT Los Angeles Toyota and Albert Villareal.” Villareal argued there was no valid arbitration agreement because DT Los Angeles Toyota was neither a legal entity nor a fictitious business name. Thus the dealership lacked the capacity to contract or consent to the agreement. And they could not maintain an action because they had not filed a fictitious business name statement..

The trial court found no merit in any of Villareal’s arguments except for the fictitious business statement problem. Business and Professions Code 17918 provides that a party who fails to file a valid statement cannot “maintain any action upon or on account of any contract made . . . in the fictitious business name in any court of this state until the fictitious business name statement” has been filed. The motion to compel arbitration was denied on that basis.

The employer appealed, and the Court of Appeal vacated the order and remanded in the published case of Published case of Villareal v LAD-T, LLC B313681 (October 2022).

Failure to comply with the fictitious-name statutes does not make the parties’ promises, agreements, and transactions invalid as such. Noncompliance merely prevents a fictitiously named business from enforcing obligations owed to it until it places on record its true nature and ownership.(Hand Rehabilitation Center v. Workers’ Comp. Appeals Bd. (1995) 34 Cal.App.4th 1204, 1214). The requirement similarly applies to motions to compel arbitration.

On May 17, 2022, after the appeal was in progress for many months, LAD-T filed a fictitious business name statement registering the names “DT Los Angeles Toyota” and “Toyota Downtown LA.,

Thus the employer contend that LAD-T’s recent filing of a fictitious business name statement for DT Los Angeles Toyota “resolves any grounds for abatement of [defendants’] petition to compel arbitration under . . . section 17918,” rendering the trial court’s order denying defendants’ motion to compel arbitration moot, and the trial order should be reversed on that basis.

Ultimately the Court of Appeal concluded the trial court did not err in denying defendants’ motion to compel arbitration, but it “must address the appropriate disposition in light of the unusual facts before us.”

It “agree with Villareal that defendants failed to act diligently in filing their fictitious business name statement.” After the June 1, 2021 Order denying the motion to compel arbitration, defendants then filed their notice of appeal on June 18 2021. But it was not until May 17, 2022 that it filed the Fictitious Business Name Statement.

“Defendants provide no explanation for why they would vigorously defend their position that no fictitious business name statement was required, including appealing the trial court’s order, then abandon this position at the eleventh hour by filing the very statement that could have enabled the case to proceed to arbitration a year earlier.” The trial court will need to determine in the first instance whether defendants have by their conduct waived their right to arbitration.

The order denying defendants’ motion to compel arbitration was vacated and the matter remanded for the trial court to address whether defendants have waived their right to compel arbitration. If the court finds waiver, it should again deny the motion to compel arbitration; if it finds no waiver, it should grant the motion.

California’s Division of Occupational Safety and Health (Cal/OSHA) Standards Board met on April 21, 2022, and formally approved the third readoption of its COVID-19 Emergency Temporary Standard (“3rd Revised ETS”), by a 6-1 vote.

The ETS has no set rules for close contact exclusion from the workplace. Instead, it requires that employers “review current [California Department of Public Health] guidance” regarding “quarantine or other measures to reduce transmission,” to “develop, implement, and maintain effective policies” to prevent COVID-19 transmission from close contacts.

On October 14, 2022, the California Department of Public Health published an Order which updated the definitions of Close Contact and Infectious Period to provide entities strategies to prioritize response to potential exposures.

“Close Contact” means the following:

– – In indoor spaces 400,000 or fewer cubic feet per floor (such as home, clinic waiting room, airplane etc.), a close contact is defined as sharing the same indoor airspace for a cumulative total of 15 minutes or more over a 24-hour period (for example, three separate 5-minute exposures for a total of 15 minutes) during an infected person’s (confirmed by COVID-19 test or clinical diagnosis ) infectious period.
– – In large indoor spaces greater than 400,000 cubic feet per floor (such as open-floor-plan offices, warehouses, large retail stores, manufacturing, or food processing facilities), a close contact is defined as being within 6 feet of the infected person for a cumulative total of 15 minutes or more over a 24-hour period during the infected person’s infectious period.

Spaces that are separated by floor-to-ceiling walls (e.g., offices, suites, rooms, waiting areas, bathrooms, or break or eating areas that are separated by floor-to-ceiling walls) must be considered distinct indoor airspaces.

Infectious Period is defined as:

– – For symptomatic infected persons, 2 days before the infected person had any symptoms through Day 10 after symptoms first appeared (or through Days 5–10 if testing negative on Day 5 or later), and 24 hours have passed with no fever, without the use of fever-reducing medications, and symptoms have improved, OR
– – For asymptomatic infected persons, 2 days before the positive specimen collection date through Day 10 after positive specimen collection date (or through Days 5–10 if testing negative on Day 5 or later) after specimen collection date for their first positive COVID-19 test.

For the purposes of identifying close contacts and exposures, infected persons who test negative on or after Day 5 and end isolation are no longer considered to be within their infectious period. Such persons should continue to follow CDPH isolation recommendations, including wearing a well-fitting face mask through Day 10.

This Order went into effect on October 14, 2022, at 12:01 a.m.

Following the new CDPH order defining Close Contact and Infectious Period the Cal/OSHA issued a fifteen-day notice with requests for written comments on proposed updated COVID-19 regulations to Title 8 of the General Industry Safety Orders.

Modifications are now proposed by Cal/OSHA for subsection 3205(a)(1) (scope); subsection 3205(b)(1) (definition of “close contact”); subsection 3205(b)(7)(A) (exception to the definition of “exposed group”); subsection 3205(b)(11) (definition of “returned case”); subsection 3205(c)(1) (universal precaution); subsections 3205(e)(1), (e)(2), and (e)(3) (notice of COVID-19 cases); subsection 3205(h)(1) (ventilation); subsection 3205(j) (reporting and recordkeeping requirements); subsection 3205.1(a)(2) (scope); subsection 3205.1(e) (COVID-19 investigation, review, and hazard correction); and subsection 3205.2(g)(2) (COVID-19 cases and close contacts).

Written comments on the Cal/OSHA proposal are invited, but must be received by 5:00 p.m. on October 31, 2022 at the Occupational Safety and Health Standards Board,

The State of California employs attorneys, judges, and other legal professionals in more than 100 state departments, agencies, boards and commissions. The union representing legal professionals employed by California sued the state because too many legal jobs at state departments, agencies, boards, and commissions are allegedly given to retirees rather than to rank-and-file state employees.

Courthouse News reports that California Attorneys, Administrative Law Judges and Hearing Officers in State Employment, or CASE, filed a lawsuit Tuesday in Fresno against the California Department of Human Resources, seeking a ruling that the the state is skirting its own rules when it comes to hiring retirees for positions that statutorily should go to rank-and-file employees. CASE argues that CalHR enjoys broad statutory authority over the employment practices of all state departments, agencies, boards, and commissions.

CASE, which represents about 4,500 legal professionals employed by the state, claims that California relies on so-called retired annuitants to fill jobs because they are cheaper, in so far as the state doesn’t have to pay pension contributions and many employee benefits that can add as much as 64% to the costs of hiring rank-and-file employees, and because they don’t require as much training.

“RAs almost invariably are employed to work at the department from which they retired, and typically served at that department as a rank-and-file employee for many years.” according to CASE. “As a result, RAs do not require any training, any orientation or onboarding, and are generally able to be productive workers from the first day of employment as an RA. As such, departments perceive the use of RAs as more attractive in the short term than hiring and training new employees.”

California currently employs at least 173 persons as retired annuitants in legal positions, distributed amongst at least 50 state departments, the union said.

There are state laws, however, that limit the hiring and reliance on retirees, according to the union. Retired annuitants are supposed to be temporary positions, but the Department of Human Resources has allowed departments to employ them indefinitely, according to the complaint. Departments also can’t hire a retired annuitant until at least 180 days after their retirement, but the department hasn’t enforced this condition either, the union said

In addition, the retiree must have specialized skills needed to perform the jobs for a limited period, according to the union.

“CalHR has refused to enforce the requirement that departments show that their RAs have any specialized skills that do not exist among rank-and-file state employees and has refused to enforce the requirement that RAs be employed for only a limited duration,” the union claimed. “CASE seeks to end the unlawful employment of RAs — at least as to attorneys and judges — and obtain from this court an interpretation of state law regarding the proper employment of RAs.”

The union is asking for the court to find that the Department of Human Resources’ interpretation of the meaning of “limited duration” and “specialized skills” is contrary to state law.

A spokeswoman for the Department of Human Resources said she’s unable to comment on pending litigation.The union is represented by Patrick Whalen in Sacramento.