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Tag: 2023 News

L.C. 139.32 (b) Held Unconstitutional in Applicants Attorney Prosecution

Moses Luna has been practicing workers’ compensation law in California for roughly half a century. On May 12, 2021, the district attorney charged him in an amended complaint with 22 counts of felony insurance fraud pursuant to Penal Code section 550, subdivision (b)(3) (Penal Code section 550(b)(3)).

At the preliminary hearing, the district attorney presented evidence Luna opened a side business called Adelante Interpreters in 2011. Although Luna controlled and ran the business, he did not mention that on the incorporation papers. Instead, he listed his daughters as its acting officers. When Luna’s legal clients needed interpreter services in connection with their workers’ compensation claims, he invariably enlisted Adelante for those services. Adelante then made insurance claims for the cost of those services. All told, it received payments totaling over $100,000 from 22 different insurance carriers between 2016 and 2020. The parties stipulated those benefits would not have been paid had the carriers known of Luna’s interest in Adelante. He was bound over for trial at the conclusion of the preliminary hearing.

Luna filed a Penal Code section 995 motion to dismiss the information. Luna argued the Williamson rule barred his felony prosecution under Penal Code section 550(b)(3) because his alleged misconduct is specifically addressed in Labor Code section 139.32, which, inter alia, makes it a misdemeanor for workers’ compensation attorneys to refer clients to a business in which they have a financial interest. Luna also argued dismissal was warranted because section 139.32 is unconstitutionally vague, and his conduct falls within the safe harbor provisions of the statute.

The trial court concluded the Williamson rule precluded Luna’s felony prosecution under Penal Code section 550(b)(3). Although Luna prevailed on that issue, the trial court rejected his vagueness argument, and it found his safe harbor argument premature because it presented factual issues that needed to be fleshed out at trial. The court then amended the information by interlineation to change all 22 of the felony charges to misdemeanors under section 139.32. However, upon reconsideration, and at the parties’ request, the court vacated its amendments and dismissed the information altogether.

The Court of Appeal affirmed the trial court dismissal in the unpublished case of People v Luna -G062297 (December 2023).

This appeal turns on the applicability of the Williamson rule, which precludes criminal prosecution under a general statute if there is a more specific statute that applies to the defendant’s conduct. (In re Williamson (1954) 43 Cal.2d 651 (Williamson).)

Generally, when the defendant’s conduct violates more than one statute, prosecutors have the discretion to decide which statute to charge under. However, that discretion is not unlimited. Under the Williamson rule, if a general statute includes the same conduct as a special statute, the court infers that the Legislature intended that conduct to be prosecuted exclusively under the special statute. In effect, the special statute is interpreted as creating an exception to the general statute for conduct that otherwise could be prosecuted under either statute.

The general statute at issue here is Penal Code section 550(b)(3), which makes it unlawful for any person to “[c]onceal, or knowingly fail to disclose the occurrence of, an event that affects any person’s initial or continued right or entitlement to any insurance benefit or payment, or the amount of any benefit or payment to which the person is entitled.”

The special statute at issue is Labor Code section 139.32. Under subdivision (b) of the statute, all interested parties in the workers’ compensation system, including attorneys representing injured employees, are required to disclose any financial interest they have in an entity that provides services to an employee.

Thus “the rule precludes the prosecution from charging Luna pursuant to Penal Code section 550(b)(3) because his culpability under that general statute hinges on whether he violated section 139.32, a special statute which fits Luna’s alleged misconduct to a tee.

Since it was expected the prosecution will charge Luna with violating section 139.32 the Court of Appeal addressed his arguments respecting that prospect. To satisfy due process, a statute must give fair notice of the conduct proscribed and be sufficiently definite to prevent arbitrary and discriminatory enforcement. On the core vagueness question, it agreed with Luna that subdivision (b) of section 139.32 is unconstitutional.

The “statute does not provide any guidance as to whom disclosure must be made. Nor does it shed any light on when or how the requisite disclosure must be proffered. These shortcomings make the disclosure requirement both difficult to obey from a defense perspective, and difficult to enforce from a prosecutorial perspective. Since the requirement is susceptible of multiple interpretations and fails to provide reasonable notice of what it entails, we conclude it is too vague to enforce against Luna in this case.”

While “we strike down subdivision (b) of section 139.32 on vagueness grounds, we see no reason to invalidate the remaining portions of the statute.” “The trial court’s order dismissing the felony charges against Luna is affirmed. If the district attorney files misdemeanor charges against Luna under section 139.32, he cannot rely on subdivision (b) of the statute, which is void for vagueness.”

Public Self-Insured Claim Volume, Total Paid and Incurred Losses Decline

The CWCI reports that initial data on fiscal year (FY) 2022/23 public self-insured claims experience in the California workers’ compensation system show that public self-insured’s total claim volume, spurred by a sharp drop in indemnity claims, fell 16.8% in the 12 months ending June 30 of this year, which helped drive down public self-insured total incurred losses for the second time since the pandemic hit, while public self-insured total paid losses fell for the first time since the 2012 workers’ comp reforms were implemented a decade ago.

The annual summary of public self-insured data issued on December 5 by the Office of Self-Insurance Plans (OSIP) offers the first look at the workers’ comp experience of cities, counties, and other public self-insured entities for the 12 months ending June 30 of this year. The summary notes the number of medical-only and indemnity claims filed and the total paid and incurred losses on those claims. Compared to the initial summary from FY 2021/22, the new report shows California’s public self-insured work force increased by 3.4 percent to nearly 2.09 million workers last year, with wages and salaries for those workers totaling just under $162 billion. The public self-insured employers reported 120,328 claims last year, 24,348 fewer than the record 144,676 claims in the FY 2021/22 initial report, prompted in part by the influx of COVID-19 claims among public sector employees.

The distribution of the $510.3 million in total payments on the FY 2022/23 public self-insured claims at first report shows indemnity payments accounted for $317.1 million, $67.0 million (17.4%) less than in the prior year, while medical payments accounted for $193.2 million, $7.7 million (3.8%) less than in FY 2021/22.

However, with far fewer claims last year, that works out to an average benefit payment of $4,241 for the FY 2022/23 claims, 4.9% more than the comparable figure from FY 2021/22. The breakdown of the average payment shows public self-insureds averaged $2,636 in indemnity payments on FY 2022/23 claims, nearly matching the record $2,654 from the prior year’s first report, but average paid medical climbed to $1,605, up 15.6% from FY 2021/22.

The first report data on incurred losses (paid amounts plus reserves for future payments) show a slightly different pattern for public self-insured claim costs. Aggregate incurred losses on the FY 2022/23 claims totaled just under $1.54 billion, 8.3% less than the first report total from the prior year. In this case, the one-year decline in total incurred can be completely attributed to the decline in public self-insured claim volume, as unlike the average paid data, where the average indemnity payments were flat, the incurred results showed sharp increases in both the average incurred indemnity (+7.7%) and the average incurred medical (+12.5%), but the combined impact of those increases was not enough to offset the 16.8% reduction in claim volume, which drove the average incurred loss per claim up from $11,608 in FY 2021/22 to $12,309 in FY 2022/23 (+10.0%).

OSIP also compiles private self-insured claims data, which is reported on a calendar year basis rather than on a fiscal year basis, so the private self-insured data, which was posted in June, now lags the public self-insured data by 6 months. The next report on private self-insured experience should be released next summer. In the meantime, CWCI has issued a Bulletin that includes exhibits and additional details on the most recent public self-insurer paid and incurred losses, including comparative results from the past decade. Institute members and subscribers may access the bulletin by logging in at OSIP’s annual summaries for private and public self-insured employers from the past dozen years are posted online.

This is a correction to the WorkCompAcademy story published on December 18 which had incorrect data and conclusions. May we thank Bob Young at the CWCI for pointing out our mistake. Our apologies to our readers and the CWCI for our incorrect post.

Employer Excess Insurance Policies May Cover Whistleblower Litigation

On March 3, 2015, six officers in the Whittier Police Department, including Joseph Rivera filed a complaint against the City of Whittier in the Los Angeles County Superior Court. The complaint alleged the police department instituted ‘an unlawful citation and arrest quota in violation of California Vehicle Code sections 41600 et seq. on its officers, and illegally compared officers using shift averaging as a means of determining a benchmark for performance.” The complaint further alleged the police department “retaliated against those [who] refused to participate in and/or reported the unlawful citation and arrest quota,” including, inter alia, “negative language and/or documentation being placed in [plaintiffs’] personnel packages about their refusal to comply with the unlawful quota, unwarranted counseling sessions, unwarranted increased scrutiny, unwarranted transfers, [and] disparaging comments made about them.”

The City notified Everest National Insurance Company and Starr Indemnity and Liability Company about the Rivera action, advising that the plaintiffs sought damages exceeding $1 million and there was a potential for coverage under the insurers’ policies. Everest issued four public entity excess liability insurance policies to the California Insurance Pool Authority (CIPA), and included the City of Whittier as a named insured and member agency. The policies provided coverage for employment practice liability of $10 million per “wrongful act” in excess of a retained limit of $1 million. The Starr policies provided coverage for employment practice liability of $10 million per “wrongful act” in excess of a retained limit of $1 million.

Prior to trial, the City’s counsel notified the insurers of an upcoming mediation session and demanded that they attend. Everest’s and Starr’s coverage counsel attended the mediation, at which the City negotiated a settlement with the Rivera plaintiffs and agreed to pay $3 million to resolve the action. Neither Everest nor Starr consented to the settlement.

The City paid the $3 million, and the Rivera action never went to trial or resulted in a judgment. On December 24, 2019, counsel for CIPA and the City tendered the Rivera settlement to Everest and Starr for indemnity under their respective policies. The insurers denied the request for indemnity. The City filed a civil action against Everest and Starr, asserting causes of action for declaratory relief, breach of contract, and bad faith.

The insurers each moved for summary judgment, and the City moved for summary adjudication. The insurers contended retaliation claims under Labor Code section 1102.5 can be established only through proof of an employer’s willful acts, and Insurance Code section 533 therefore barred indemnity. Starr argued in the alternative that its policy required indemnification only of “damages” which did not include amounts paid in prejudgment settlement. In its motion, the City contended section 533 did not bar indemnity and therefore the insurers were in breach of the insurance contracts.

The trial court agreed with the insurers, after an agreed upon referee found no triable issue existed as to whether the insurers owed the City indemnification of the Rivera settlement. The referee reasoned that section 533 prohibits coverage for loss caused by an insured’s willful act, and whistleblower retaliation under Labor Code section 1102.5 an only be established by evidence of an employer’s motive and intent to violate or frustrate’ California’s Whistleblower laws. The referee granted the insurers’ motions for summary disposition and denied the City’s motion. The trial court adopted the referee’s statement of decision as its own.

The Court of Appeal reversed as to Everest in the partially published case of City of Whittier v. Everest Nat. Ins. Co. -B321450M (December 2023). In the unpublished portion of this opinion, the Court of Appeal agreed with Starr’s alternative argument that its specific policy language does not obligate it to indemnify the City for the settlement, and affirmed the judgment as to Starr under Starr’s alternative argument.

This appeal presents a question of first impression: whether Insurance Code section 533 under which “[a]n insurer is not liable for a loss caused by the wilful act of the insured,” bars indemnification for claims under Labor Code section 1102.5. Labor Code section 1102.5 prohibits, inter alia, retaliation against employees for reporting activity they have reasonable cause to believe is unlawful, or for refusing to participate in activity that actually is unlawful. Section 533 reflects a fundamental public policy of denying coverage for willful wrongs and discouraging willful torts.

However the Court of Appeal “found no case in California or elsewhere addressing whether section 533 bars coverage of claims under Labor Code section 1102.5. The trial court and the insurers analogize to B & E Convalescent Center v. State Compensation Ins. Fund (1992) 8 Cal.App.4th 78 and federal district court cases applying it, all of which address retaliation claims in contexts other than Labor Code section 1102.5.”

Here, the parties rely on jurisprudence, first developed in underlying sexual molestation and assault cases, that equates “willful” with inherently harmful or intentional. The Court of Appeal concluded that not all Labor Code section 1102.5 claims involve necessarily willful conduct, but rather some involve conduct more akin to negligence, the trial court erred when it found to the contrary in granting summary judgment in favor of Everest and Starr.

The Court noted “This is an important question whose answer will influence enforcement of our employment laws. How so? Retaliation claims are the most common employment claims in California. For fiscal years 2016 through 2022, retaliation claims of all types were the majority of charges filed in California with the United States Equal Employment Opportunity Commission. (See EEOC, FY 2009-2022 EEOC Charge Receipts for CA.) In 2019, retaliation was the most common basis for right-to-sue requests filed with the California Department of Fair Employment and Housing. (DFEH, 2019 Annual Report, at p. 9.)”

And after reading state federal case authorities it went on to say “Given the significant number of retaliation cases in our courts and importance of insurance in resolving those cases and securing compensation for injured employees, we tread carefully in applying the above jurisprudence to a new category of claims.”  

“The employer’s conduct in our scenario is not comparable to that in B & E Convalescent Center, where the employer retaliated against the employee for refusing to engage in activity that was illegal under clearly established law. Although whistleblower protections themselves are clearly established, the illegality of the underlying conduct the whistleblower is resisting may not be.”

“Doctrinally, the employer’s conduct in our scenario is closer to negligence than intentional misconduct.  The employer intends the act – the adverse employment action – but not the consequence – a violation of the employee’s rights under Labor Code section 1102.5, rights that do not become clear until a court has decided the legality of the conduct in which the employee refused to participate.”

Phillips Respironics Pays $2.4 Million for Giving Kickbacks to Sleep Labs

The U.S. Attorneys Office for the Southern District of California announced that Phillips Respironics, a manufacturer of durable medical equipment based in Pennsylvania, has paid $2,471,359.25 to resolve allegations that it violated the False Claims Act by giving kickbacks to sleep laboratories.

The Anti-Kickback Statute prohibits paying money or giving goods to induce referrals for medical services or items covered by a federal health care program, such as Medicare, Medicaid or TRICARE. Claims submitted to these programs in violation of the Anti-Kickback Statute give rise to liability under the False Claims Act.

The settlement resolves allegations that from 2016 through 2021, Philips RS North America LLC f/k/a Philips Respironics, Inc. provided sleep labs with free masks used to treat and diagnose sleep-related respiratory disorders to induce the labs’ physicians to write referrals or prescriptions for Respironics-brand masks that suppliers would fill and bill to federal health care programs.

“Respironics’ improper inducements corrupted the integrity of federal healthcare programs, including the Department of Defense’s (DoD) TRICARE program,” said Bryan D. Denny, Spec ial Agent-in-Charge of the DoD Office of Inspector General, Defense Criminal Investigative Service (DCIS), Western Field Office. “DCIS will continue to pursue those who defraud or attempt to defraud TRICARE, because those deceptive actions ultimately harm those defending our country and their families.”

This settlement was the result of a coordinated effort by the U.S. Attorney’s Office for the Southern District of California; the Defense Criminal Investigative Service; the Department of Health and Human Services, Office of Inspector General and Office of Counsel to the Inspector General; the Defense Health Agency Office of General Counsel; the Civil Division of the United States Department of Justice; and the National Association of Medicaid Fraud Control Units.

This case was prosecuted by Assistant U.S. Attorney Dylan M. Aste. The claims resolved by the settlement are allegations only, and there has been no determination of liability.

The kickback allegations are separate from the ongoing issues surrounding the recall of millions of Philips CPAP machines initiated in June 2021, due to concerns about a toxic sound abatement foam. Approximately 5.5 million CPAP, BiPAP, and mechanical ventilator devices are affected globally, due to concerns about potential health risks associated with the sound abatement foam used in these machines. The specific models and serial numbers involved can be found on the FDA website.

The degraded foam can potentially release particles, chemicals, and volatile organic compounds (VOCs) that users can inhale or swallow. These exposures may lead to irritation, inflammation, headaches, chest discomfort, and other respiratory problems. In some cases, more serious risks like lung cancer and other long-term health effects are also a concern.

Multiple lawsuits have been filed against Philips in the US and other countries, alleging negligence and harm caused by the defective devices.

In September 2023, Philips agreed to a partial $479 million settlement to compensate US patients for financial damages related to the recall.

Bellwether trials, intended to set precedents for future lawsuits, are now expected to begin in 2025.

9th Circuit Vacates it’s Decision on AB5 and Grants En Banc Rehearing

In the case of Olson v. California, 62 F. 4th 1206, decided in March 2023 by the Ninth Circuit Court of Appeals, a California-based Uber driver, Nicole Olson, challenged the constitutionality of Assembly Bill 5 (A.B. 5), the California law that redefined many app-based workers as employees instead of independent contractors. WorkCompAcademy reported on this case soon after it was published.

A.B. 5, as amended, codified the “ABC test” adopted by the Supreme Court of California in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal. 5th 903 (2018), to categorize workers as employees or independent contractors for the purposes of California Labor and Unemployment Code provisions..However, A.B. 5 exempted a broad swath of workers from the Dynamex presumption.

Within a year of its enactment, A.B. 5 was amended by A.B. 170 and A.B. 2257. Both bills exempted even more workers from the Dynamex presumption.

Lydia Olson, Miguel Perez, Uber, Inc. and Postmates, Inc. filed a law suit in federal court to enjoin the State of California and the Attorney General of California , from enforcing California Assembly Bill 5 against them. The trial court denied a preliminary injunction, and the plaintiffs appealed. The 9th Circuit Court of Appeals heard argument in that case on November 18, 2020. However, on November 3, 2020, shortly before argument, Proposition 22 was adopted through California’s ballot initiative process.

Olson argued that A.B. 5 violated the Equal Protection Clause of the Fourteenth Amendment by creating an exemption for certain app-based businesses, like errand-running and dog-walking, while not exempting ride-sharing and delivery drivers like herself. This, she claimed, constituted unfair discrimination against a specific class of workers. The trial court ruled against her, and she appealed.

The 9th Circuit panel held that, even under the fairly forgiving rational basis review, Plaintiffs plausibly alleged that A.B. 5, as amended, violated the Equal Protection Clause for those engaged in app-based ride-hailing and delivery services. Thus, Plaintiffs plausibly alleged that the primary impetus for the enactment of A.B. 5 was the disfavor with which the architect of the legislation – Assemblywoman Lorena Gonzalez – viewed Uber, Postmates, and similar gig-based business models.
Additionally, it ruled that Plaintiffs plausibly alleged that their exclusion from the wide-ranging exemptions, including for comparable app-based gig companies, could be attributed to animus rather than reason. The district court therefore erred by dismissing Plaintiffs’ equal protection claim.

The 9th Circuit panel therefore remanded the case for the district court to reconsider Plaintiffs’ motion for a preliminary injunction, considering the new allegations contained in the Second Amended Complaint.

This case was decided and published on March 17, 2023. Subsequently the Attorney General of California filed a Petition for Rehearing on April 28, 2023.

The Attorney General argued in it’s 62 page Petition that the decision was “a highly unusual departure from this Court’s consistent practice of affording States “wide latitude … in managing their economies.” And went on to provide examples such as “The equal-protection analysis in the panel opinion conflicts with the Court’s recent decision in American Society of Journalists (Am. Soc’y of Journalists & Authors Inc. v. Bonta 15 F.4th 954 (9th Cir. 2021)) – and many other decisions of this Court and the Supreme Court treating rational-basis review as “a paradigm of judicial restraint.”

Court Docket entries show a flurry of Amicus briefs were then filed by various interest groups arguing positions supporting the Petition for Rehearing including the states of Arizona, Washington, Connecticut, District of Columbia, Hawaii, Illinois, Maine, Maryland, Commonwealth of Massachusetts, Michigan, Minnesota, New Jersey, New York, Nevada, Commonwealth of the Northern Mariana Islands, Oregon and Vermont.

On December 18, 2023 The Court of Appeals for the 9th Circuit granted the Petition for Rehearing. The order said “Upon the vote of a majority of nonrecused active judges, it is ordered that this case be reheard en banc pursuant to Federal Rule of Appellate Procedure 35(a) and Circuit Rule 35-3. The three-judge panel opinion is vacated.

En banc oral argument will take place during the week of March 18, 2024, in San Francisco, California. The date and time will be determined by separate order.

Three Charged With Fraud Tied To Insurance Company Collapse

A federal grand jury indictment was unsealed charging Jasbir S. Thandi, Sandeep Sahota, and Jaspreet Padda with insurance fraud crimes related to the collapse of Global Hawk Risk Retention Group, an insurance company headquartered in Livermore, California, announced United States Attorney Ismail J. Ramsey, FBI Special Agent in Charge Robert K. Tripp, and San Francisco Division Postal Inspector in Charge Rafael Nuñez.

According to the indictment, Thandi 67, of El Sobrante, was the president and treasurer of Global Hawk, The indictment alleges that between 2017 and 2019, Thandi, misappropriated over $19 million in Global Hawk funds, including sending over $1 million to an entity domiciled in the British Virgin Islands, and over $7 million to other outside entities controlled by Thandi.

The indictment further alleges that Thandi, Sahota, 47, resident of Concord, and Padda, 40, of Elk Grove, submitted false and fraudulent financial statements to insurance regulators that overstated Global Hawk’s assets by tens of millions of dollars and concealed the misappropriations. Sahota was Global hawk’s vice president and secretary and Padda was the company’s outside investment advisor.

Global Hawk’s primary business was providing automobile liability insurance coverage for truck drivers and small trucking companies. In May 2020, after regulators discovered the misappropriation and Global Hawk’s insolvency, Global Hawk was declared insolvent and was liquidated pursuant to a court order.

The indictment charges Thandi, Sahota, and Padda with conspiracy to commit insurance fraud, in violation of 18 U.S.C. § 371 as well as two counts of insurance fraud (false statements to regulators), in violation of 18 U.S.C. §§ 1033(a) and 2. The indictment also charges Thandi with two counts of insurance fraud (misappropriation) in violation of 18 U.S.C. § 1033(b).

The indictment also charges Thandi with two counts of bank fraud, in violation of 18 U.S.C. § 1344. The indictment alleges that in 2016, Thandi obtained a $6.4 million bank loan based on false representations, and in 2017, obtained another $14.75 million bank loan, also based on false representations.

The conspiracy count has a maximum statutory sentence of five years in prison and a fine of $250,000. Each insurance fraud count has a maximum statutory sentence of 10 years in prison (or 15 years if the fraud jeopardized the safety and soundness of an insurer and was a significant cause of such insurer being placed in conservation, rehabilitation, or liquidation by an appropriate court) and a maximum fine of $250,000. Each bank fraud count has a maximum statutory sentence of 30 years in prison and a maximum fine of $1,000,000.

For all counts, the court also may order a term of supervised release, fines or other assessments, restitution, and forfeiture, if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Sahota was arrested yesterday morning and made an initial appearance before the Hon. Alex G. Tse, U.S. Magistrate Judge for the Northern District of California. Padda was arrested in the Eastern District of California.

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Assistant United States Attorneys David Ward and Abraham Fine are prosecuting the case with assistance from Kay Konopaske, Kathleen Turner, and Kevin Costello. The prosecution is a result of an investigation by the FBI and the United States Postal Inspection Service.

Individuals who believe that they may be a victim in this case should contact the United States Attorney’s Office for the Northern District of California’s victim specialists by email at:

Former WCJ David O’Brien Peacefully Passed Away at 95

Retired Workers’ Compensation Judge David William “Billy” O’Brien bid a peaceful farewell on December 15th, 2023 at 95 years of age, leaving behind a tapestry of memories woven through his remarkable life. Raised in a humble New Hampshire town, David’s journey began at Plymouth Teacher’s College in 1950, followed by honorable service in the Korean War’s United States Army Counter Intelligence Corps, a testament to his devotion to duty and country.

In 1960, David’s pursuit of knowledge led him to graduate from the University of San Francisco with a law degree. His legal acumen flourished, establishing him as a distinguished figure in workers’ compensation law. For decades, he served as a respected Judge, author and scholar, leaving an indelible imprint on the legal landscape.

Beyond his professional achievements, David’s magnetic storytelling illuminated every gathering, endearing him to all who crossed his path. His warmth, wisdom, and boundless humor resonated with friends, family, and acquaintances.

David is survived by his cherished family, his cherished colleagues and the many friends he made in his life.

David’s absence leaves a void felt deeply by his community. His legacy as a devoted family man, accomplished legal luminary, and captivating raconteur will endure i n the hearts of those privileged to have shared in his extraordinary life.

Professionally he was a member of the California and New Hampshire bars, was admitted to the U.S. District Courts, of New Hampshire and California. He is also a member of the American Bar Association.

He served as a Workers’ Compensation Judge with the California Workers’ Compensation Appeals Board, as an Administrative Law Judge with the California Unemployment Insurance Appeals Board, as a Deputy Commissioner of Corporations for the State of California, and as a Senior Counsel for the State Compensation Insurance Fund.

He has also devoted many years to the private practice of law as both a defense and plaintiff attorney, serves as an expert witness in civil cases and is a Certified Administrator for Self-Insurance Plans.

At 95 he was actively engaged as a partner with the firm of Floyd Skeren Manukian Langevin, LLP at its Westlake Village office.

Judge O’Brien is the author of the textbook “California Workers’ Compensation Claims and Benefits” as well as a pamphlet entitled “California Workers’ Compensation Insurance, Employee Rights and Responsibilities” approved by the Administrative Director for use in educating employees as to their rights and responsibilities in the event of an industrial injury.

And he is the author of a second treatise “California Unemployment, Disability and Paid Family Leave Insurance Programs.”

Contributing authors to these texts are his daughter Bernadette O’Brien Esq., and Brianne Uebelhardt, Esq., who are attorneys with Floyd Skeren, and the firms senior partner John Floyd Esq.,

Both texts are available by subscription at

WCAB Orders Issued More Than 60 Days After Pet for Recon are Void

Carlos Uribe suffered an industrial injury in September 2010 during his employment with XCEL Mechanical Systems, Inc., and he thereafter filed a workers’ compensation claim. At the time of Uribe’s injury, XCEL was insured for workers’ compensation by Reliance Insurance. Reliance was subsequently declared insolvent and placed in liquidation. CIGA assumed administration of Uribe’s claim.

Nearly 20 years after Uribe’s injury, on August 3, 2020 CIGA petitioned to join Zurich in the workers’ compensation proceeding based on a December 17, 2018 report prepared by the WCIRB showing that Zurich provided coverage for XCEL during the policy period from February 1, 2000 through February 1, 2001. On September 1, 2020 the Board ordered Zurich joined as a party defendant, and Zurich subsequently denied liability.

The parties arbitrated the issue of Zurich’s liability for payments made on Uribe’s claim. The arbitrator denied CIGA’s petition, finding CIGA’s claim that Zurich provided coverage for XCEL with respect to Uribe’s injury was not supported by substantial evidence. Therefore, CIGA was required to continue to administer Uribe’s claim and pay all lawful benefits, without reimbursement from Zurich.

CIGA filed a petition with the Board for reconsideration of the arbitrator’s ruling on August 31, 2021.On December 7, 2021, Zurich requesting the Board dismiss it from the proceeding because the arbitrator’s decision had become final. Zurich noted the Board did not act on the petition before the 60-day deadline, and CIGA did not file a petition for review in the Court of Appeal pursuant to section 5950 within 45 days from the date the petition for reconsideration was denied by operation of law.

CIGA submitted a reply brief in which it argued the Board retained jurisdiction over CIGA’s petition for reconsideration because the petition had not been forwarded to the Board’s reconsideration unit until October 6, 2021, a month and a half after CIGA filed its petition.

The Board failed to act (again) until June 13, 2022. By this time, more than nine months had passed since CIGA had filed its petition for reconsideration. The Board issued an order granting the petition for reconsideration for the purpose of allowing an opportunity for further study of the factual and legal issues (a “grant-for-study” order).

Zurich filed a petition for writ of mandate in the Court of Appeal requesting it issue an order directing the Board to rescind its June 13, 2022 order and dismissing Zurich as a defendant. The Court of Appeal issued an order to show cause requesting the Board address the issues raised by Zurich. The Board sought to justify its late decision on the basis its delay was the result of an “administrative irregularity” in the workers’ compensation appeals process that delayed transmission of CIGA’s timely filed petition to the Board. The Court of Appeal rejected the Board’s argument and agreed with Zurich in the published case of Zurich Am. Ins. Co. v. Workers’ Comp. App. Bd – B321864 (December 2023).

Under Labor Code section 5909, the last day for the Board to act on CIGA’s petition was November 1, 2021, the first business day following expiration of the 60-day period. (See Cal. Code Regs. tit. 8, § 10600, subd. (b) [“Unless otherwise provided by law, if the last day for exercising or performing any right or duty to act or respond falls on a weekend, or on a holiday for which the offices of the Workers’ Compensation Appeals Board are closed, the act or response may be performed or exercised upon the next business day.”].)

The Board relies on an exception to section 5909’s 60-day deadline recognized over three decades ago by the Court of Appeal in Shipley v. Workers’ Comp. Appeals Bd. (1992) 7 Cal.App.4th 1104 (Shipley), which found the 60-day deadline was tolled because the claimant diligently inquired into the status of his petition for reconsideration and the Board misled the claimant to believe his petition would be considered once the lost file on his case was retrieved or reconstructed.

However the Court of Appeal responded that “Because section 5909 divests the Board of jurisdiction to consider a deemed-denied petition for reconsideration after 60 days has passed, we disagree with the conclusion in Shipley, supra, 7 Cal.App.4th at page 1108 that a petitioner has a due process right to review by the Board after the deadline.”

“But even if Shipley can be read to apply equitable principles to allow the Board to consider a petition for reconsideration beyond the statutory deadline, the exception must be applied only (1) where a diligent petitioner’s rights were violated due to the fault of the Board (such as a lost petition), and (2) the Board misled the petitioner in a manner that deprived the petitioner of a right to review by the Board or the appellate courts.”

The Board also argued that “the workers’ compensation appeals process system is inefficient, with petitions electronically filed or submitted to a district office being lost or, as here, the arbitrator failing to submit the arbitration record to the Board.”

In response the Court of Appeal said “We reject the Board’s assertion it is powerless to address these failures. Nor is the remedy for the Board to ignore the Constitutional mandate in article XIV, section 4 that the Board “expeditiously” determine matters under the Workers’ Compensation Act (§ 3201 et seq.). Petitioners must be diligent-promptly inquiring of the Board as to the status of their petitions and, if the Board does not act within the 60-day time period, seeking review of the deemed-denied petition under section 5950 within 45 days. Had CIGA timely filed a petition for review, it could have obtained judicial review of the arbitrator’s initial decision.”

The Court of Appeal then held that after 60 days the administrative process is final, and a petitioner has 45 days under section 5950 in which to seek a writ of review of the decision of the workers’ compensation judge or arbitrator by the Court of Appeal or Supreme Court. It therefore issued a writ of mandate directing the Board to rescind its order granting CIGA’s petition for reconsideration and ordering Zurich dismissed as a party defendant from the proceeding.

Activision Resolves SoCal Harassment Case for $54 M

The California Civil Rights Department (CRD) announced reaching an approximately $54 million settlement agreement to resolve allegations that Activision Blizzard, Inc., Blizzard Entertainment, Inc., and Activision Publishing, Inc. (Activision Blizzard) discriminated against women at the company, including by denying promotion opportunities and paying them less than men for doing substantially similar work. Under the agreement, which is subject to court approval, Activision Blizzard will take additional steps to help ensure fair pay and promotion practices at the company and provide monetary relief to women who were employees or contract workers in California between October 12, 2015 and December 31, 2020.

After more than two years of investigation, CRD filed a lawsuit against Activision Blizzard in 2021 for alleged violations of California’s Equal Pay Act and Fair Employment and Housing Act – key civil rights laws that help protect Californians against discrimination. In the lawsuit filed before the Los Angeles County Superior Court, the department sought relief on behalf of the State of California and a class of women employees and contract workers who allegedly experienced discrimination in compensation, promotions, and other aspects of Activision Blizzard’s workplace.

Headquartered in Santa Monica, California, Activision Blizzard is a video game company known for many popular video game franchises played around the world, including “Call of Duty,” “World of Warcraft,” “Guitar Hero,” and “Diablo.”

Today’s announcement is in addition to measures Activision Blizzard has implemented through a separate 2021 consent decree with the U.S. Equal Employment Opportunity Commission and other proactive recruitment and retention steps as described in the company’s 2022 Environmental, Social, and Governance Report.

If approved by the court, the settlement agreement will require Activision Blizzard to:

– – Pay approximately $54,875,000 to cover direct relief to workers and litigation costs. Of the total, approximately $45,750,000 will go to a settlement fund dedicated to compensating workers.
– – Distribute any excess settlement funds to charitable organizations focused on advancing women in the video game and technology industries or promoting awareness around gender equality issues in the workplace.
– – Retain an independent consultant to evaluate and make recommendations regarding Activision Blizzard’s compensation and promotion policies and training materials.
– – Continue its efforts regarding inclusion of qualified candidates from underrepresented communities in outreach, recruitment, and retention.

Women who worked as employees or contract workers for Activision Blizzard in California between October 12, 2015 and December 31, 2020 may be eligible to receive compensation. At this time, no action is needed by individuals covered under the proposed agreement and additional information will be posted on CRD’s website upon approval by the court. If the court approves the settlement, covered workers will receive further information and updates from a settlement administrator.

The settlement announced today comes as a result of the efforts of attorneys in CRD’s Legal Division and at Outten & Golden LLP, with support from CRD investigators.

LA-area Poultry Plants to Pay $3.8M for Child Labor Law Violations

Since 2018, the U.S. Department of Labor has seen a 69 percent increase in children being employed illegally by companies. In the last fiscal year, the department found 835 companies it investigated had employed more than 3,800 children in violation of labor laws.

As the U.S. Department of Labor’s Wage and Hour Division and Office of the Solicitor continue to find serious illegal employment practices in the meat and poultry processing industries, a California poultry processor and supplier to supermarkets and food distributors has agreed to pay nearly $3.8 million in back wages, damages and penalties after the department found the company endangered young workers recklessly in Southern California.
Division investigators found that The Exclusive Poultry Inc. and related companies established by owner Tony Bran employed children as young as 14 years old to debone poultry using sharp knives and operate power-driven lifts to move pallets. The children also worked excessive hours in violation of federal child labor regulations. The company also retaliated against employees for cooperating with investigators by cutting their wages.

Bran and The Exclusive Poultry are subject to a consent judgment entered by the U.S. District Court for the Central District of California on Nov. 16, 2023, after an investigation and litigation by the department. The investigation included two poultry plants controlled by Bran in City of Industry and La Puente, California.  Investigators found that Bran set up several front companies to employ workers at these plants. Those front companies were Meza Poultry LLC, Valtierra Poultry LLC, Sullon Poultry Inc. and Nollus’s Poultry LLC. The department has also obtained consent judgments against these companies and their owners.

The judgments resolve the lawsuit filed by the department based on the division’s findings that, in addition to their unlawful employment of children and retaliation against workers, the employers failed to pay workers their required wages.

Specifically, the division determined that Bran, The Exclusive Poultry and their associated companies willfully failed to pay required overtime wages to their employees, paying them either a piece rate or a straight time hourly rate even when they worked 50 or 60 hours per week. Investigators also found the employers failed to maintain required records when they intentionally omitted workers from payroll records.

Upon substantiating the child labor and overtime violations, the department’s Office of the Solicitor obtained from the U.S. District Court a temporary restraining order and an injunction to prevent Bran and The Exclusive Poultry from shipping into commerce any “hot goods,” in this case, poultry produced in violation of the Fair Labor Standards Act and any goods from a location where the department observed child labor.

As directed by the consent judgment, Bran and The Exclusive Poultry must pay $3.5 million in back wages and damages to affected workers. Of that total, $300,000 in punitive damages and $100,614 in back wages will be paid to workers who faced retaliatory conduct. In addition, the employers must pay $201,104 in civil money penalties assessed by the division for the child labor and willful violations.

The judgment also requires Bran and The Exclusive Poultry to retain a monitor for three years to ensure future compliance and to show a hiring preference for those workers they fired following the department’s search of the poultry plants. Under that preference, Bran and The Exclusive Poultry must offer these workers employment first before hiring others.

The division’s West Covina District Office conducted the investigation and the department’s Office of the Solicitor in Los Angeles filed the complaint and secured the consent judgments. In conducting the enforcement action, the department worked with the Los Angeles County Office of Immigrant Affairs and its community partners, who provided support services to workers, and with the U.S. Marshals, who assisted with the execution of a search warrant at the two poultry processing plants.

The department is seeking any current or former employees of The Exclusive Poultry, Meza Poultry, Valtierra Poultry, Sullon Poultry or Nollus’s Poultry who believe they may be owed back wages. These employees should contact the West Covina District Office at (626) 966-0478.

The consent judgment is part of the department’s ongoing effort to combat child labor abuses and wage theft in the poultry and meat processing industries. The action follows the division’s investigation of Packers Sanitation Services Inc. and its assessment of $1.5 million in penalties for child labor violations in February 2023. In that case, investigators discovered that the company employed at least 102 children – from 13 to 17 years of age – in dangerous occupations and had them working overnight shifts at 13 meat processing facilities in eight states.

In March 2023, the department recovered $353,141 in back wages for 322 workers in Alabama and North Carolina who were denied overtime wages. Between 2020 and 2023, the department obtained judgments against three La Puente poultry processing companies requiring them to pay more than $1.2 million for denying overtime wages to 113 workers deliberately and using intimidation to hide their wage thefts. Investigators are also probing into the death of a 16-year-old worker at a Mississippi poultry plant.