Tag: 2023 News

Gabriella Santibanez, 59, and her sister Lisa Hazard, 55, both of Temecula, were sentenced Monday to 15 months in prison and ordered to pay over $7.5 million in restitution for health care fraud.

According to court documents, between Dec, 1, 2015, and Dec, 1, 2020, Santibanez and Hazard ran a mobile phlebotomy company, PhlebXpress Inc. (NPI  1174906432) that provided phlebotomy and other medical collection services at patients’ homes and long-term care facilities in Sacramento and elsewhere.

Santibanez and Hazard agreed to bill Medicare for services provided that were not reimbursable by Medicare. Santibanez and Hazard also agreed to bill Medicare for overstated mileage that PhlebXpress phlebotomists traveled. On average, Santibanez and Hazard caused false billing to Medicare of over 140 miles for each patient seen by PhlebXpress. Santibanez and Hazard caused a loss to Medicare of at least $7.5 million based on false billing by PhlebXpress.

In November 2020, due to “credible allegations of fraud” at PhlebXpress, Medicare instituted a payment suspension for PhlebXpress under which Medicare ceased paying PhlebXpress for the services it continued to bill Medicare.

According to court documents, between July 1, 2021, and Dec. 31, 2021, Santibanez and Hazard agreed to circumvent the payment suspension by representing to Medicare that services provided to Medicare patients were done by another company, Phlebotomy Solutions, when they were in fact being provided by PhlebXpress through its contractors and employees from PhlebXpress’s offices.

Through Phlebotomy Solutions, Santibanez and Hazard agreed to bill Medicare for a non-reimbursable service, misrepresenting that it was for another reimbursable service and overstating the mileage traveled by phlebotomists in order to receive additional money from Medicare. For example, in September 2021, Phlebotomy Solutions billed Medicare for 124.6 miles of travel by a phlebotomist when in fact the phlebotomist travelled 1.4 miles. Santibanez and Hazard caused a loss to Medicare of at least $50,000 based on false billing by Phlebotomy Solutions.

This case was the product of an investigation by the Federal Bureau of Investigation and the U.S. Department of Health and Human Services Office of Inspector General. Assistant U.S. Attorney Lee Bickley prosecuted the case.

The California Department of Insurance announced two settlement agreements with Go Maps, Inc. and its insurance underwriter, Topa Insurance Company, after an investigation into complaints that consumer claims were mishandled for more than two dozen drivers.

As part of the agreement, Go Maps agreed to surrender its insurance license, pay a $150,000 fine, pay $50,000 in cost reimbursement, and provide the Department all the information necessary to ensure statutory requirements are fulfilled in regards to existing policyholders.

Topa was fined $2,108,000, and agreed to ensure it has permanent access to all policies managed by any future general agents, certify all general agents and entities hired by general agents are properly licensed, and not to seek any money from consumers who may have been undercharged as a result of rating mistakes in the Go Maps/Topa program.

Go Maps is an “insurtech” company that used an app-based marketing platform to sell and transact its insurance business for Topa. Insurtech companies and insurance companies that use them to market and manage their products must follow California consumer protection laws and have the insurance expertise and licensed individuals in place to properly transact insurance in this state.

In 2019, Go Maps entered into an agreement with Topa to perform all the functions necessary for the sale, service, management, and claims handling of Topa’s private passenger automobile policies that were sold to the public through the Go Maps app. At one point, the Go Maps/Topa program had more than 10,000 California customers representing the vast majority of its approximately 12,000 policies nationwide.

In June 2022, the Department announced it was taking action against Go Maps and Topa in order to protect the public from further harm caused by the companies’ repeatedly violating various consumer protection laws relating to insurance claims.

Go Maps’ and Topa’s failures to follow California’s consumer protection rules forced drivers to pay for rental car expenses and other costs while their insurance claims were delayed. Among other violations Go Maps and/or Topa:

– – Failed to pay claims within 30 days after the coverage was determined or a settlement was reached. For one consumer, the companies missed the deadline by 52 days. The average delay was more than 24 days beyond the legal 30-day claims payment deadline.
– – Failed to acknowledge claims, provide necessary forms or instructions, or begin investigations within the statutory 15-day requirement. For one consumer, the companies missed the deadline by 30 days. The average delay was more than 8 days beyond the legal 15-day requirement.
– – Failed to respond to consumers’ inquiries about their claims within 15 days. For one consumer, the companies missed the deadline by 25 days. The average delay was more than 11 days beyond the legal 15-day requirement.
– – Failed to deny or accept claims within 40 days. For one consumer, the companies missed the deadline by 66 days. The average delay was more than 25 days beyond the legal 40-days deadline.
– – Hired an unlicensed insurance adjusting firm to adjust claims.

“These settlements represent an important victory for California consumers as we hold all companies accountable and ensure that they comply with our strong consumer protection laws,” the Insurance Commissioner said. “While we encourage new products and innovation in our marketplace, our top priority is protecting policyholders and making sure insurance companies deliver on their promises.”

The California Governor signed Senate Bill 428 on September 30, 2023. The new law expands the circumstances under which employers can seek civil restraining orders on behalf of their employees for harassment.

Under the new law, harassment is defined as “a knowing and willful course of conduct directed at a specific person that seriously alarms, annoys, or harasses the person, and that serves no legitimate purpose. The course of conduct must be that which would cause a reasonable person to suffer substantial emotional distress, and must actually cause substantial emotional distress.”

To obtain a restraining order for harassment, a declaration must be filed that establishes:

– – that an employee has suffered harassment by the respondent;
– – that great or irreparable harm would result to an employee;
– – that the course of conduct at issue served no legitimate purpose; and
– – that the issuance of the order is not prohibited by speech or other activities protected by any other law as defined in the law.

The problem with the current law, from the point of view of the author and sponsor of the bill, is that the employer was powerless to obtain a restraining order for an employee until the situation reaches the point of including unlawful violence or a credible threat of violence. Even when a co-worker, a customer, or some other third party is harassing an employee in extreme ways therefore, the employer may try other measures to protect the employee, but a civil restraining order is not one of the employer’s available tools unless and until the harasser becomes or threatens to become violent.

An example of this problem was illustrated by our August 2022 report on the California Court of Appeal published case in Technology Credit Union v Rafat 82 Cal. App. 5th 314 (August 17, 2022). The Court of Appeal reversed a Santa Clara County Superior Court restraining order under existing law against Matthew Mehdi Rafat.

In doing so, the Opinion said “Rafat’s conduct on March 24 was indisputably rude, impatient, aggressive, and derogatory. Further, he had a history of using aggressive language, including making offensive remarks.” However it went on to say “However, while he appeared angry and frustrated during the March 24 incident and its aftermath, there was not sufficient evidence produced by TCU linking any of Rafat’s statements or conduct to any implied threat of violence.”

Perhaps the new law will assist employers who want a restraining order against behavior such as what occurred in the case of Mr. Rafat.

Newsom also signed Senate Bill (SB) 553, which will require employers to establish, implement, and maintain an effective workplace violence prevention plan (WVPP) effective January 1, 2025. The employer will also be required to record information in a violent incident log for every workplace violence incident, and to provide effective training to employees on the workplace violence prevention plan, along with other requirements specified in the new law.

And at the federal level, on September 29, 2023, the Equal Employment Opportunity Commission (EEOC) issued Proposed Enforcement Guidance on Harassment in the Workplace.

In Proposing this new Guidance, the EEOC said “harassment remains a serious workplace problem. Between the beginning of fiscal year (FY) 2018 and the end of FY 2022, thirty-five percent of the charges of employment discrimination received by the Equal Employment Opportunity Commission included an allegation of harassment based on race, sex, disability, or another protected characteristic. The actual cases behind these numbers reveal that many people still experience harassment that may be unlawful.”

The Proposed Enforcement Guidance on Harassment in the Workplace is part of the EEOC’s Fiscal Years 2024 – 2028 Strategic Enforcement Plan.

The purpose of the EEOC’s Strategic Enforcement Plan (SEP) is to focus and coordinate the agency’s work over a multiple fiscal year period to have a sustained impact in advancing equal employment opportunity. The agency’s first Strategic Enforcement Plan adopted for FY 2013-2016 established subject matter priorities and strategies to integrate the EEOC’s private, public, and federal sector activities. In adopting the FY 2017-2021 SEP, the Commission reaffirmed its subject matter priorities with some modifications and additions.

In its Fiscal Years 2024 – 2028 Strategic Enforcement Plan the EEOC says it “will focus on harassment, retaliation, job segregation, labor trafficking, discriminatory pay, disparate working conditions, and other policies and practices that impact particularly vulnerable workers and persons from underserved communities.”

It seem clear that once the Proposed Guidance on Harassment in the Workplace becomes final, and other measures and policies under Fiscal Years 2024 – 2028 Strategic Enforcement Plan are announced, SB 428 may assist employers in obtaining restraining orders against persons who are outside their facilities. Unfortunately SB 428 does not take effect until January 1, 2025.

Mesa Pharmacy, Mesa Pharmacy, Inc., and Mesa Pharmacy Irvine are admitted to be the same entities. Mesa Pharmacy has been in the workers’ compensation system as a lien claimant who provided compounded pharmaceuticals for many years.

A trial was convened as part of the Special Adjudication Unit to determine the whether John Garbino – who previously plead guilty to Medicare fraud – exercised control of Mesa Pharmacy sufficient to subject them to the stays under Labor Code §4615 and §139.21. Some of the testimony produced at this trial was summarized by the WCJ as follows:

Mytu Do, aka Julie Do, and Benny Leo Birch, aka Ben Birch, met as she was a house flipper and he contracted as her landscaper. Ben Birch has a Federal conviction for Bankruptcy Fraud. At some point they came up with the idea of opening a pharmacy, Pharmacy Development Corporation (PDC), which was the top corporation and all the Mesa iterations were under that umbrella. Ben Birch was the only one who put up any capital for the venture. They formed Mesa in 2005 or 2006, approximately two to three years after Mytu Do’s son, Andrew Do, had graduated from pharmacy school. and he was made the Mesa Pharmacist in Charge.

Although Andrew Do testified that he “formed” the corporation, he had no knowledge of if there was a board or who was on the board, how much money they did or did not make, who actually ran the day to day operations, whether there was stock issued and how he ultimately wound up with Praxsyn stock. He testified at one point that he was the president of Mesa, but then contradicted himself later indicating that this title was “only on paper,” he could not recall ever attending a meeting, seeing a profit or loss statement or doing more than signing checks. Ultimately Andrew Do Ultimately took the Fifth when asked to testify as to whether he ever signed a contract with Trestles Pain Specialists, LLC (TPS) to market the products that he prepared as a pharmacist.

According to Ben Birch, Mesa was introduced to the owners of PAWS Airline in 2013, which had gone “belly up.” Neither Ben Birch, Andrew Do nor Mytu Do were involved in the merger of PAWS and Mesa to become Praxsyn. They just knew they got stock out of the deal. Despite still being “president” of Mesa, Andrew Do did not participate in any of the merger negotiations, did not sign the merger contract.

In 2012 Mesa and a company owned by Garbino, Trestles Pain Specialists, LLC (TPS) entered into their first contracts with each other. None of the other Mesa players were aware of this business arrangement until the contracts were signed. John Edward Garbino plead guilty to a Federal Felony of Healthcare fraud in the fall 2017. Garbino/TPS had contractual business relationships with Ray Riley and David Fish. David Fish was convicted, as part of Premier Medical Management, of Workers’ Compensation kick-back schemes and permanently suspended from participating in the California Workers’ Compensation System. As part of the TPS agreement, Mesa was filling prescriptions through TPS contracts for Andrew Robert Jarminski and Craig Chanin, both of whom were charged with involvement in the Workers’ Compensation kick- back scheme as part of the First Choice and Landmark Medical schemes. This was in addition to Mesa’s already established relationship with Robert Villapania, DC as a referral source for prescriptions. This is the same Villapania who was charged in People of the State of California v. Robert Julian Villapania (Case no. 16CF1360) and who is listed by the DIR on the criminally charged providers list.

Mesa could not handle the amount of business that TPS was bringing in. They needed financing to expand, and that was rectified by obtaining financing through parties such as Javlin III. Garbino discussed Mesa’s business with Javlin and other financers. Andrew Do, although allegedly Mesa’s president, was not involved in any of these meetings. This funding revitalized the Mesa/TPS agreement. Mesa’s sales “exploded” in 2014 as a result of the agreement. Garbino testified that TPS brought in most, if not all, of the sales for Mesa during their relationship. According to Garbino, he, Riley and Fish had a great deal of input into Mesa’s business strategy. Garbino confirmed that he was listed as an officer of Mesa on Exhibit O, but he claimed he didn’t know how his name got there.

Andrew Do testified, then immediately recanted, that Mr. Garbino told him what ingredients should be used in the prescriptions. Mr. Garbino admitted, then immediately recanted, that he had discussions with Mr. Do regarding the compounds and formularies. Garbino did confirm during trial that, as he had testified in his deposition, he had a lot of influence on Mesa – “about one-hundred-million dollars” worth. In 2014 Garbino became aware that Mesa listed him as an officer in filings with the Arizona Pharmacy Board.

PAWS and Mesa merged to become Praxsyn. Garbino was on the board of directors of Praxsyn for about eight months, and it was his testimony that he thought Mesa, PAWS and Praxsyn were all the same, and Mesa business was discussed at the Praxsyn Board Meetings. Garbino testified that he had voting rights in Mesa. Garbino had voting rights in Praxsyn of which Mesa was a wholly owned subsidiary. The ALJ requested that Mesa produce its Board of Director’s Meeting Minutes. Mesa was either unwilling or unable to do so. The court was therefore entitled to, and did, form an adverse inference that those documents contained material adverse to the position of Mesa.

The WCJ found that John Garbino exercised de facto control of Mesa under Labor Code section 139.21, subdivision (a)(3) (section 139.21(a)(3)). The the Findings of Fact was affirmed except it was amended to add an additional exhibit in the case of Melvin Garcia Galdames v Vinyl Technology Inc., -SAU9997873 (September 2023)

After review of the record, based upon that evidence the WCAB panel found that Praxsyn Corporation was not merely a separate parent corporation to Mesa Pharmacy, but rather, that Mesa Pharmacy was the alter ego of Praxsyn Corporation, i.e., that they were one and the same.

The panel also found that as a director of Praxsyn Corporation, Garbino “controlled” Mesa Pharmacy under Labor Code section 139.21, subdivision (a)(3) as an “officer or director.”

In May 2020, foreshadowing this appeal, the Attorney General of California, joined by city attorneys of the cities of Los Angeles, San Diego, and San Francisco, brought a civil action on behalf of the People of the State of California that alleged Uber and Lyft violated the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) (UCL) by misclassifying their California ride-share and delivery drivers as independent contractors rather than employees, thus depriving them of wages and benefits associated with employee status.

The People sought, and the trial court entered, a preliminary injunction prohibiting Uber and Lyft from misclassifying their drivers as independent contractors in violation of Assembly Bill 5. The Court of Appeal affirmed in an October 2020 opinion (People v. Uber Technologies, Inc., 56 Cal.App.5th 266) .

Following the passage of Proposition 22, which altered the standards for determining whether app-based drivers are independent contractors (Bus. & Prof. Code, § 7451), the People and Uber and Lyft stipulated to dissolve the preliminary injunction, which had been stayed since it was entered. The People’s operative first amended and supplemental complaint clarifies that the People seek injunctive relief to the extent Proposition 22 is unconstitutional or otherwise invalid.

In August 2020, the Labor Commissioner filed separate actions against Uber and Lyft, pursuant to her enforcement authority under the Labor Code. (E.g., Lab. Code, §§ 61, 90.5, 95, 98.3, subd. (b).) The Labor Commissioner alleges Uber and Lyft have misclassified drivers as independent contractors and have thus violated certain Labor Code provisions and wage orders. The Labor Commissioner seeks injunctive relief, civil penalties payable to the state, and unpaid wages and other amounts alleged to be due to Uber’s and Lyft’s drivers, such as unreimbursed business expenses.

The People’s action and the Labor Commissioner’s actions were coordinated (along with other cases not involved in this appeal) as part of Uber Technologies Wage and Hour Cases.

Uber and Lyft filed motions to compel arbitration in the People’s action; and filed similar motions in the Labor Commissioner’s actions, to the extent they seek remedies that Uber and Lyft characterize as “driver-specific” or “individualized” relief, such as restitution under the UCL and unpaid wages under the Labor Code. In their motions, Uber and Lyft relied on arbitration agreements they entered into with drivers.

The trial court denied the motion, and the Court of Appeal affirmed in the published case of In re Uber Technologies Wage and Hour Cases -A166355 (October 2023).

Uber and Lyft contend the arbitration agreements they entered into with their drivers require that portions of the civil enforcement actions brought by the People and the Labor Commissioner be compelled to arbitration.

The trial court correctly concluded there is no basis to compel arbitration here because the People and the Labor Commissioner are not parties to the arbitration agreements Uber and Lyft entered into with their drivers. Uber and Lyft contend arbitration nevertheless should be compelled on the basis of either (1) federal preemption or (2) equitable estoppel.

The Court of Appeal disagreed. The United States Supreme Court has emphasized that, while the FAA embodies a strong federal policy in favor of enforcing parties’ agreements to arbitrate, that policy is founded on the parties’ consent, and there is no policy in favor of requiring arbitration of disputes the parties have not agreed to arbitrate. (Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. __, __  [142 S.Ct. 1906, 1918].

“We reject Uber’s and Lyft’s suggestion that the People and the Labor Commissioner should be bound because they allegedly are mere proxies for Uber’s and Lyft’s drivers.” … “The relevant statutory schemes expressly authorize the People and the Labor Commissioner to bring the claims (and seek the relief) at issue here. (Bus. & Prof. Code, §§ 17203, 17204, 17206).

“The order denying Uber’s and Lyft’s motions to compel arbitration of, and to stay, the People’s and the Labor Commissioner’s actions is affirmed.”