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Tag: 2023 News

Jury Convicts Orthopedic Surgeon for Kickbacks After Six-Day Trial

An orthopedic surgeon has been found guilty by a federal jury of accepting more than $315,000 in bribes and kickbacks for performing spinal surgeries at a now-defunct Long Beach hospital whose owner was imprisoned for committing a massive workers’ compensation insurance fraud, the Justice Department announced today.

Dr. David Hobart Payne, 65, of Irvine, was found guilty late Friday afternoon at the conclusion of a six-day trial. The jury found Payne guilty of one count of conspiracy, two counts of honest services wire fraud, and one count of use of an interstate facility in aid of bribery.

A five-count superseding indictment returned by a federal grand jury on April 25, 2018 alleged that Payne was paid approximately $450,000 to steer more than $10 million in kickback-tainted surgeries to Pacific Hospital of Long Beach.

According to court documents and evidence presented at trial, Michael Drobot “the owner of Pacific Hospital ” conspired with doctors, chiropractors, and marketers to pay kickbacks and bribes in return for the referral of patients to Pacific Hospital for spinal surgeries and other medical services.

These services and surgeries were paid for primarily through the California workers’ compensation system. During its final five years, the scheme resulted in the submission of more than $500 million in medical bills for spinal surgeries involving kickbacks.

Payne received bribes from Drobot of up to $15,000 for each spinal surgery that he performed at Pacific Hospital. The top bribe payment was for lumbar spinal surgeries Payne performed on patients at Pacific Hospital with implants from one of Drobot’s companies. Drobot and Payne covered up the bribes by disguising them as payments for marketing services and fees based on a sham contract.

In total, Payne received more than $315,000 in illegal payments.

Nonetheless, according to the Medical Board of California, his license G 62826 is still renewed and current. No evidence of any disciplinary action appears to have been taken against him.

In April 2013, law enforcement searched Pacific Hospital, which was sold later that year, bringing the kickback scheme to an end.

To date, 24 defendants, among them doctors and surgeons, have been convicted for participating in the kickback scheme.

United States District Judge Josephine L. Staton scheduled a June 2 sentencing hearing, at which time Payne will face a statutory maximum sentence of 50 years in federal prison.

The FBI, IRS Criminal Investigation, United States Postal Service Office of Inspector General, and the California Department of Insurance investigated this matter.

First Assistant United States Attorney Joseph T. McNally and Assistant United States Attorneys Billy Joe McLain and Hava Mirell of the Violent and Organized Crime Section are prosecuting this case.

Home Health Care Provider Cited for $9M for Employee Misclassification

The Labor Commissioner’s Office has cited Feld Care Therapy, Inc., located in Westlake Village, $9,041,100 for willfully misclassifying 1,280 speech, physical and occupational therapists as independent contractors. The part-time workers, who traveled to clients’ homes to provide care, were not given paid sick leave or California’s COVID-19 Supplemental Paid Sick Leave (SPSL) as required by law.

The Labor Commissioner’s Office opened its investigation into Feld Care Therapy, Inc., dba FeldCare Connects, in November 2020 after receiving a report of labor law violation that the company was incorrectly classifying employees as independent contractors. The Labor Commissioner’s Bureau of Field Enforcement conducted an audit of the company’s records from 2019 to 2022 and uncovered the willful misclassification and other violations, including workers not being provided with complete itemized wage statements.

Feld Care Therapy, Inc. and CEO Randi Peled are jointly and severally liable for $1,134,500 in damages owed to the 1,280 workers and a civil penalty of $1,677,500 for the violation of the itemized statement provision.

Feld Care Therapy, Inc. is liable for damages of $1,707,350 for failure to provide written notice of sick leave balance/usage, $1,554,850 for the violation of the supplemental sick leave provisions and $256,900 for paid sick leave recordkeeping requirements. Feld Care Therapy, Inc. is also liable for civil penalties of $2,710,000 for willful misclassification of employees as independent contractors. Civil penalties collected are transferred to the State’s general fund as required by lCEO Randi Peledaw.

Misclassification occurs when an employer improperly classifies their employees as independent contractors to avoid paying minimum wage, overtime or payroll taxes. A misclassified worker is denied the legal right to workers’ compensation coverage if injured on the job, the right to family leave, the right to unemployment insurance, the right to organize or join a union, and protection against employer retaliation. Misclassification also undermines businesses that play by the rules.

Enforcement investigations typically include a payroll audit of the previous three years to determine minimum wage, overtime and other labor law violations, and to calculate payments owed and penalties due.

In perhaps a related civil action, Arizona Graves filed a lawsuit in the Los Angeles Superior Court on September 20, 2021 against Feld Care Therapy, Inc. and its CEO Randi Peled, on behalf of herself and other aggrieved employees under the Public Attorney General Act.

She claimed she was employed by Feld Care Therapy from February 2019 until April 2020. She alleges that they failed to compensate her for all hours worked, missed meal periods and rest breaks. She also alleges that defendants failed to provide accurate wage statements, failed to keep accurate records, failed to pay overtime premiums, failed to pay at least minimum wage, did not pay all wages due upon resignation, and did not reimburse employees for necessary business expenses.

Prior to commencing a civil action for PAGA recovery, “[t]he aggrieved employee or representative shall give written notice by online filing with the Labor and Workforce Development Agency and by certified mail to the employer of the specific provisions of this code alleged to have been violated, including the facts and theories to support the alleged violation.” Lab. Code § 2699.3. One might assume that this notice was indeed provided as required.

Both parties filed a Request for Dismissal of this Action in August 2022, and the case was accordingly dismissed. It is worthy of note that the Labor Commissioner’s office opened its investigation into the case in November 2020, which predates the filing of her civil action.

Labor Code § 2699.3 (2)(a)(i) provides that “If the division issues a citation, the employee may not commence an action pursuant to Section 2699”. Thus her PAGA civil action she filed would at this time be inconsistent with the Citation which was announced to the public on on March 7, 2023, and consistent with the Request for Dismissal filed by both parties in the Civil Action.

No Equitable Contribution Between Employer’s GL and Comp Carriers

Byron Remeyer and Asia Torres both worked for the La Sirena Grill at its South Laguna location. One night in August 2013, they had drinks together at La Sirena and then left around 10:00 p.m. to go to a party. Shortly before midnight, Torres, who was intoxicated, drove his vehicle into a tree in Laguna Niguel. Remeyer, his passenger, suffered traumatic, life-altering brain injuries as a result.

Remeyer filed a complaint against La Sirena and Torres for negligence. He alleged that Torres was employed as a cook for La Sirena and “got drunk on the job” on the night of the accident, that drinking on the job was a common occurrence at La Sirena, that La Sirena provided the alcohol that Torres drank on the night of the accident, that La Sirena’s management was well aware of Torres’s intoxicated state when Torres and Remeyer left for the party, and yet management did nothing to prevent Torres from driving. Remeyer also alleged that Torres was acting within the course and scope of his employment for La Sirena at the time of the accident, and was driving a vehicle that La Sirena had entrusted to him for performing his job duties. The complaint did not mention that Remeyer was also an employee of La Sirena.

La Sirena was insured by two different insurers. California Capital Insurance Company issued La Sirena a commercial general liability (CGL) policy with bodily injury limits of $2 million per occurrence; this policy generally covered bodily injury claims, but excluded coverage for workers’ compensation claims and for bodily injuries arising out of and in the course of a claimant’s employment with La Sirena.

The second insurer, appellant Employers Compensation Insurance Company (ECIC), issued La Sirena a workers’ compensation and employers’ liability policy. Part One of this policy covered workers’ compensation claims, and Part Two covered bodily injury claims by employees arising out of and in the course of their employment with La Sirena if not otherwise covered by workers’ compensation.

La Sirena tendered the Remeyer lawsuit to its CGL insurer, California Capital. California Capital agreed to defend La Sirena under a reservation of rights citing, among other provisions, its employer’s liability exclusion for bodily injuries arising out of and in the course of a claimant’s employment with La Sirena.

During discovery, it came to light that Remeyer had been an employee of La Sirena at the time of the accident, that both Remeyer and Torres had worked at La Sirena earlier in the day, but that both had been off the clock for several hours by the time the accident occurred. Whether Remeyer was acting within the course and scope of his employment at La Sirena at the time of the accident (a question relevant to the applicability of California Capital’s employer’s liability exclusion) remained contested.

California Capital incurred roughly $88,000 in attorney fees defending the claims against La Sirena. Then, in June 2015, California Capital settled the Remeyer lawsuit on La Sirena’s behalf for its policy limits of $2 million, without any participation from ECIC. California Capital then filed the subject lawsuit against ECIC for equitable contribution. ECIC moved for summary judgment, asserting neither part of its policy covered the allegations in the Remeyer lawsuit; the trial court denied that motion without explanation.

The trial court conducted a bench trial on stipulated facts in December 2020. The court found the ECIC policy potentially covered the Remeyer lawsuit and California Capital was equitably entitled to half of what it expended in defense and settlement of that lawsuit. The court then entered judgment for California Capital, awarding it $44,182.42 in equitable contribution for the cost of defending La Sirena, $1 million in equitable contribution for indemnifying La Sirena, and interest of $501,299.37.

The Court of Appeal reversed in the unpublished case of Cal. Capital Ins. Co. v. Employers Compensation Ins. Co -G060532 (March 2023)

The issue on appeal is straightforward: is California Capital entitled to equitable contribution from ECIC for the cost of defending and indemnifying their common insured, La Sirena?

Equitable contribution (not to be confused with equitable subrogation or equitable indemnity) is a loss sharing procedure by which an insurer that defended and settled a claim against its insured may seek to apportion those costs among coinsurers who refused to settle or defend the claim.

Equitable contribution permits reimbursement to the insurer that paid on the loss for the excess it paid over its proportionate share of the obligation, on the theory that the debt it paid was equally and concurrently owed by the other insurers and should be shared by them pro rata in proportion to their respective coverage of the risk. (Fireman’s Fund Ins. Co. v. Maryland Casualty Co. (1998) 65 Cal.App.4th 1279)

Equitable contribution is only available if the two insurers share the same level of liability on the same risk as to the same insured. In this case California Capital’s CGL policy does not cover the same risk as ECIC’s workers’ compensation and employers’ liability policy. In fact, the two policies are mutually exclusive.

The judgment for California Capital was reversed. On remand, the trial court was directed to enter judgment for ECIC.

Santa Ana Recovers $96K From Police Officer Convicted for Comp Fraud

A 39-year old Santa Ana police officer convicted of committing workers’ compensation insurance fraud for continuing to accept his full pay without working even though he was physically capable of returning to work has repaid the City all of the stolen wages as a result of efforts by the Orange County District Attorney’s Insurance Fraud unit. The total amount repaid in restitution was $95,870.

On October 5, 2017, Santa Ana Police Officer Jonathan Ridge was injured on duty while in pursuit of a suspect driving a stolen vehicle.  On that day, October 5, 2017, Ridge went out on disability leave due to his injuries. On May 2, 2018, while still on leave, Ridge had surgery on his left wrist, and his doctor continued to keep him off work while he was recovering from the surgery.

In November 2018, Ridge was released by a doctor to return to work with restrictions. The work restrictions were too severe for the City of Santa to accommodate, despite the City of Santa Ana having an extensive return-to-work program for injured employees. This resulted in the City of Santa Ana being required to continue to pay Ridge Total Temporary Disability and for Ridge to receive disability payments through an insurance policy, resulting in Ridge receiving 100% of his pay without working.

From March 2019 to May 2019 the City of Santa Ana authorized surveillance on Ridge because he did not seem to improve despite having had surgery on his wrist in May 2018 for injuries sustained in the on-duty collision 18 months earlier.

The surveillance and subsequent investigation found that Ridge was engaging in activities well beyond what the doctor had imposed.  Ridge began attending college classes nearly full-time beginning in June 2018 – just weeks after his surgery. Additionally, he packed up his car and drove to Utah, went to the beach, and drove his motorcycle.

Ridge failed to disclose to his doctor or to the City of Santa Ana what he was actually capable of doing. This deprived the doctor of the opportunity to impose realistic work restrictions that the City of Santa Ana could accommodate.  Instead, Ridge continued to receive 100% of his pay without working even though he was capable of returning to work in a modified position.

Ridge pleaded guilty on April 16, 2021 to three felony counts of insurance fraud and one felony count of making a fraudulent statement to obtain compensation.  He had faced a maximum sentence of eight years in state prison if convicted on all counts. Ridge was sentenced to 180 days in the Orange County Jail with the sentenced stayed if he paid back the stolen wages in a timely manner.

Senior Deputy District Attorney Pamela Leitao of the Insurance Fraud Unit prosecuted this case.

Good Faith Belief of Compliance Precludes Penalties & Attorney Fees

Spectrum Security Services, Inc., provides secure custodial services to federal agencies. The company transports and guards prisoners and detainees who require outside medical attention or have other appointments outside custodial facilities.

Gustavo Naranjo was a guard for Spectrum. Naranjo was suspended and later fired after leaving his post to take a meal break, in violation of a Spectrum policy that required custodial employees to remain on duty during all meal breaks.

Naranjo filed a putative class action on behalf of Spectrum employees, alleging that Spectrum was required to report the premium pay on employees’ wage statements and timely provide the pay to employees upon their discharge or resignation, but had done neither. The complaint sought an additional hour of pay – commonly referred to as “premium pay” – for each day on which Spectrum failed to provide employees a legally compliant meal break.The complaint sought the damages and penalties prescribed by statutes as well as prejudgment interest.

After a remand from the Court of Appeal (Naranjo I v. Spectrum Security Services, Inc. (2009) 172 Cal.App.4th 654) on several issues, the trial court certified a class for the meal break and related timely payment and wage statement claims and then held a trial in stages. The trial court entered judgment for the plaintiff class on the meal break and wage statement claims and awarded attorney fees and prejudgment interest at a rate of 10 percent.

Both sides appealed. The Court of Appeal affirmed the trial court’s determination that Spectrum had violated the meal break laws but reversed the court’s holding that a failure to pay meal break premiums could support claims under the wage statement and timely payment statutes. It also ordered the rate of prejudgment interest reduced from 10 to 7 percent. (Naranjo II v. Spectrum Security Services, Inc. (2019) 40 Cal.App.5th 444).

The California Supreme Court disagreed with the Court of Appeal, decision in Naranjo II, and concluded that the extra pay constitutes wages subject to the same timing and reporting rules as other forms of compensation for work, but agreed that the 7 percent default rate set by the state Constitution applies. (See Cal. Const., art. XV, § 1.) in its opinion in Naranjo III v Spectrum Security Services Inc. (2022) 13 Cal.5th 93.

The Supreme Court then remanded the matter back to the Court of Appeal to resolve two issues the parties addressed in their respective appeals, but that it did not reach based on its conclusion about the nature of missed-break premium pay: (1) whether the trial court erred in finding Spectrum Security Services, Inc. (Spectrum) had not acted “willfully” in failing to timely pay employees premium pay (which barred recovery under § 203); and (2) whether Spectrum’s failure to report missed-break premium pay on wage statements was “knowing and intentional,” as is necessary for recovery under section 226. (Naranjo III v. Spectrum Security Services, Inc., supra, 13 Cal.5th at p. 126.)

The Court of Appeal noted that during the bench trial involving several of Spectrum’s affirmative defenses,.Spectrum argued state labor laws do not apply to the class members because they were working on federal enclaves and/or performing federal functions such that they should be treated as federal employees.

In the second phase of trial, the meal break class cause of action was tried to a jury. Naranjo did not dispute that Spectrum had always required on-duty meal periods as company policy because of the nature of its guards’ work but argued that Spectrum did not have a valid written on-duty meal break agreement with its employees. The jury found Spectrum not liable for the period beginning on October 1, 2007, after Spectrum had circulated and obtained written consent to its on-duty meal break policy.

After receiving supplemental briefing following remand, the Court of Appeal in its published opinion in Naranjo IV v Spectrum Security Services Inc. (2023) – B256232A, concluded that: (1) substantial evidence supports the trial court’s finding that Spectrum presented defenses at trial – in good faith – for its failure to pay meal premiums to departing employees and therefore, Spectrum’s failure to pay meal premiums was not “willful” under section 203; and (2) because an employer’s good faith belief that it is in compliance with section 226 precludes a finding of a knowing and intentional violation of that statute, the trial court erred by awarding penalties, and the associated attorneys’ fees, under section 226.

Although district courts in California are divided on the question, the majority view is that an employer’s good faith belief it is not violating the California Labor Code precludes a finding of a knowing and intentional violation. In this case the Court of Appeal agreed “with the weight of authority that a good faith dispute over whether an employer is in compliance with section 226 precludes a finding of a knowing and intentional violation.”

It was unpersuaded by the approach Naranjo advanced, and that a minority of federal district courts have adopted, which is that “knowing and intentional” is a “minimal standard” that may be satisfied by simply showing an employer provided an inadequate wage statement not as a result of clerical error or inadvertent mistake.

JAMA Study Shows Increasing Surgical Procedures in Outpatient Settings

A new retrospective cohort study – Performance of General Surgical Procedures in Outpatient Settings Before and After Onset of the COVID-19 Pandemic – confirmed that some common general surgeries had the biggest migrations to the outpatient setting during the first year of the COVID-19 pandemic. And this is likely a favorable trend perhaps reducing the costs of worker’s compensation medical claims.

Compared with the previous few years, calendar year 2020 saw disproportionately more outpatient cases of mastectomy for cancer, minimally invasive adrenalectomy, thyroid lobectomy, breast lumpectomy, minimally invasive ventral hernia repair, minimally invasive sleeve gastrectomy, parathyroidectomy, and total thyroidectomy.

For the present retrospective cohort study, Thiels and colleagues analyzed case volumes for the 16 most common general surgeries in the ACS National Surgical Quality Improvement Program (NSQIP). Outpatient procedures were defined as those that had patients discharged the same day as their procedure.

Patients were split between the 823,746 who received surgery prior to the COVID-19 pandemic (January 2016 through December 2019) and the 164,690 patients who had surgery during the pandemic (January through December 2020). The study population had an average age of 54.5 years and 58.1% were women.

According to a report on this study published by MedPage Today, the increase in outpatient volumes from 2016 to 2020 was deemed clinically significant for the following four procedures:

– – Mastectomy for cancer: 9.2% to 28.6%
– – Thyroid lobectomy: 43.2% to 57.9%
– – Minimally invasive ventral hernia repair: 58.8% to 69.4%
– – Parathyroidectomy: 51.8% to 61.8%

Driving the accelerated transition to outpatient surgeries was the need to simultaneously meet the needs of the massive influx in patients, a result of the COVID-19 pandemic, while still accepting and treating patients in need of non-urgent surgery, according to Cornelius Thiels, DO, MBA, surgical oncologist at the Mayo Clinic in Rochester, Minnesota, and coauthors, writing in JAMA Network Open.

As U.S. hospitals were beginning to buckle under limited resources and the need to mitigate SARS-CoV-2 exposure, the American College of Surgeons (ACS) and other organizations published elective case triage guidelinesopens in a new tab or window in early 2020.

“These guidelines recognize that postoperative inpatient admission uses key hospital resources that need to be allocated toward the care of acutely unwell patients with COVID-19 and exposes patients undergoing routine surgery to the risk of nosocomial COVID-19 infection,” Thiels and colleagues noted.

Adrian Diaz, MD, general surgery resident at The Ohio State University in Columbus, said the study’s findings are consistent with his group’s reported experience before and since the pandemic, and that the trends may continue for years.

Diaz suggested that outpatient surgery may be the preference for many patients. “Often times outpatient surgery is logistically more convenient and patients can return home and to normalcy much faster. Finally, outpatient surgery is often less resource intensive and thereby less expensive, leading to less cost to patients.

“I believe this study is further evidence that more and more surgery is moving to an outpatient setting. Although this study did not assess safety or outcomes, the trends in the study demonstrate that most providers feel comfortable performing these operations in an outpatient setting,” he told MedPage Today.

The pandemic-era rise of outpatient procedures reportedly also extends to minimally invasive procedures like percutaneous coronary intervention and transcatheter aortic valve replacement, other groups have shown.

Data from the ACS-NSQIP-participating hospitals may not be fully representative of the entire U.S. population, the investigators acknowledged. Another limitation was the possibility of confounding due to surgical patients during the pandemic being sicker overall.

Wallmart, Best Buy, Dollar General Announce Health Care Expansion

Walmart Health announced that it is expanding into two new states and opening 28 centers in 2024. This will expand Walmart Health’s footprint into two new states – Missouri and Arizona – and deepen its presence in Texas. By the end of 2024, it will have more than 75 Walmart Health centers across the United States.

The company also says it i changing the physical footprint and layout of the center so patients spend less time in the waiting room and more time with their doctor. It also integrated modern equipment and technology to enable our providers and patients alike to experience what it claims is best-in-class healthcare technology. This includes integrating Epic’s electronic health record system across Walmart Health locations.

With 90% of the U.S. population located within 10 miles of a Walmart, Walmart Health is in a unique position to provide health and wellness services where its neighbors already live and shop.

The new state-of-the-art facilities will be approximately 5,750 square feet, located inside Walmart Supercenters, and will feature Walmart Health’s full suite of health services. The range of services include primary care, dental care, behavioral health, labs and X-ray, audiology and Walmart Health Virtual Care telehealth services.

Electronics retailer Best Buy recently kicked off a partnership with Atrium Health, part of Advocate Health, one of the country’s largest nonprofit hospital systems, Best Buy Chief Executive Officer Corie Sue Barry announced Thursday on a call with analysts. The partnership combines Atrium’s hospital-at-home program with Best Buy’s technological services, she said.

The partnership combines Atrium’s hospital-at-home program with Best Buy’s technological services, she said.

Best Buy has been investing heavily in health care services over the last few years as an alternative revenue stream to electronics sales, and has made several acquisitions in the sector, the most notable being its $800 million purchase of senior-citizen focused GreatCall Inc in 2018.

In 2021, the company also bought Current Health, a home-care technology platform that offers monitoring through wearable devices. “The role of technology within health care is becoming more important than ever, and our strategy is to enable care at home for everyone,” Barry said.

Dollar General is expanding into healthcare services in what could be a competitive shot across the bow for drugstores and other retailers. The company is piloting mobile health clinics at three stores in Tennessee to provide customers with basic, preventive and urgent care services along with lab testing.

The discount retailer teamed up with DocGo, a provider of mobile health and transportation services, to provide the medical services, which are set up in large vans in store parking lots.

The two companies plan to evaluate customer response and determine the feasibility of expanding the mobile health clinic offering to additional stores, executives said in a press release. Customers can schedule appointments online or walk in without an appointment. The retailer noted at the time that 75% of the U.S. population lives within about five miles from a Dollar General store, providing unique access to rural and other communities often underserved in the current health care ecosystem.

Health spending – projected to reach $5.2 trillion nationally by 2025, according to the U.S. Centers for Medicare and Medicaid Services – has become an alluring growth avenue for some retailers.

$2.6B in Major Hospital Construction Under Way in Sacramento Area

The Sacramento Bee reports that the four largest hospital groups in the Sacramento area are all beginning new construction projects to rebuild old facilities, meet state earthquake safety requirements and add new hospital beds to accommodate a projected population increase.

UC-Davis Health System, Sutter Health, Catholic Healthcare West (Now Dignity Health) and Kaiser Permanente are undergoing construction projects that will add a combined 3.5 million square feet to their facilities and cost about $2.6 billion. The projects are expected to add as many as 2,000 health care jobs by 2013 and already have created a boom in construction employment..

UC Davis Health is planning a new medical outpost in Folsom Ranch, a new tower at UC Davis Medical Center in Sacramento, and just south of that, is part of the Aggie Square research/education project coming out of the ground.

UC Davis Health has purchased a 34.5-acre parcel, at the intersection of East Bidwell Street and Highway 50, in Folsom Ranch. This property expands UC Davis Health’s care in Folsom and offers a prime location for the region to deliver wellness, community, convenience and excellent care for patients. Initial plans call for an outpatient medical office building and, in the future, a micro-hospital, an ambulatory surgery center and a hotel.

The California Tower will be added to the eastern side of the existing UC Davis Medical Center. It will feature a 14-story hospital tower and five-story pavilion, adding to a hospital complex that has been expanding eastward and serving the neighborhoods at this location for over 150 years.

The project is envisioned to comprise a minimum of 332 inpatient beds including ICU and medical/surgical, Acuity Adaptable (ICU capable rooms), complex procedure rooms, and imaging and support services. The building option under consideration is approximately 909,000 gross square feet of new space.

Located on the UC Davis Sacramento campus, Aggie Square will house business partners and community-based programs together with UC Davis innovation and research.The first phase of Aggie Square features state-of-the-art research facilities, modern office and mixed-use space and world-class amenities. The result will be a unique live/learn/work/play environment that values inclusion, advances human health, enriches lifelong learning, develops emerging technologies, and sets the stage for creative collaborations.

An 85,000-square-foot building to house the new residency program at Sutter Roseville Medical Center is expected to open in 2024. It features a new three-story building located right outside the current emergency department.

Dignity Health announced its plans to build a new Medical Office Building south of Highway 50 in the new development known as Folsom Ranch. The new MOB will house a host of specialty services as well as an outpatient surgery center. The new facility is at Mercy and McCarthy Way, in the heart of the new Folsom Ranch neighborhood.

The Folsom announcement comes on the heels of Dignity Health’s unveiling of plans to build a new full service hospital in neighboring Elk Grove. City entitlements and environmental approvals are already complete for the future medical campus, and work continues in advance of the groundbreaking and construction at Wymark Road and Elk Grove Boulevard.

Kaiser Permanente’s Railyards project is part of the health care construction boom. It will include an 18-acre Kaiser Permanente Hospital and Medical campus; a Historic Central Shops District; a Major League Soccer Stadium; 5-million square feet of modern innovative office space, half a million square feet of retail space; thousands of urban high-density residential units; cultural and entertainment amenities like a museum and hotels; 30-acres of green open space and parks; and a multi-modal transportation hub.

Scott Seamons, regional vice president for the Northern California Hospital Council, said none of the projects is excessive, needlessly duplicative or unsustainable over the long term.

However, Maribeth Shannon of the California HealthCare Foundation added that large cuts in reimbursement rates from federal and state health insurance programs could make it hard for the hospitals to justify these new investments.

Carrier and Defense Firm to Face Applicant Fraud/Slander Lawsuit

Heath Fulkerson, At Home Electric, and Heath V. Fulkerson LLC sued Albert & Mackenzie LLP, a law firm, Jeremiah Brasher, an attorney, and Hartford Accident & Indemnity Company, a workers’ compensation insurer, for intentional infliction of emotional distress, slander, and fraud.

The workers’ compensation case involved an alleged injury that occurred on August 22, 2020. Albert & Mackenzie LLP was the attorney of record for Hartford in that case. Brasher investigated Fulkerson’s claim, communicated with Fulkerson regarding possible settlement, developed Hartford’s defenses, conducted discovery, and filed documents in the case.

Fulkerson filed another application for adjudication of claim with the Workers’ Compensation Appeals Board in relation to an alleged injury that occurred on February 6, 2020.

The complaint alleged that as a result of defendants’ actions, Heath Fulkerson was forced to represent himself in Workers’ Compensation Appeals Board case No. ADJ13747725 and incur costs. The complaint did not specify the conduct or statements by defendants upon which plaintiffs’ claims for relief were based.

Defendants filed special motions to strike the complaint pursuant to Code of Civil Procedure section 425.16, asserting that plaintiffs’ claims arose from counsel’s conduct in representing Hartford before the Workers’ Compensation Appeals Board and that plaintiffs could not establish a prima facie case supporting their claims.

The trial court denied the motions, concluding the complaint was too vague to support a finding that it arose from protected activity.

Hartford and Albert & Mackenzie LLP contend on appeal that the trial court should have considered the declarations defendants submitted with their motions, which they claim allowed them to meet their threshold burden of showing that plaintiffs’ claims arose from protected conduct under section 425.16, subdivision (e).

Finding no error, the court of appeal affirmed the trial court’s order in the unpublished case of Fulkerson v Albert & Mackenzie LLP – C095168 (February 2023).

Section 425.16 sets out a procedure for striking what are commonly called strategic lawsuits against public participation or SLAPPs, which are lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.

Section 425.16, subdivision (b)(1) provides, “A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.”

A motion brought under section 425.16 is called an anti-SLAPP motion. Consideration of such a motion involves a two-step process. Only a cause of action that satisfies both steps is subject to being stricken under the statute.

At the first step of the anti-SLAPP analysis, the moving defendant must make a prima facie showing that the plaintiff’s cause of action arises from an act by the defendant taken in furtherance of the defendant’s right of petition or free speech under the United States or the California Constitution in connection with a public issue. A defendant meets his or her threshold burden by demonstrating that the conduct by the defendant underlying the plaintiff’s claim fits one of the categories described in section 425.16, subdivision (e). Those categories include statements or writings in connection with matters before the Workers’ Compensation Appeals Board.

Here the complaint did not identify liability-producing conduct or statements by defendants. Defendants do not cite authority for the proposition that they can satisfy their threshold burden with declarations articulating possible bases for the plaintiffs’ claims when the challenged pleading does not contain such allegations.

The court of appeal cannot assume that Hartford’s attorneys must have engaged in protected activity. The trial court properly denied the anti-SLAPP motions. The court need not address the second step, whether plaintiffs could demonstrate a probability of prevailing on the merits.

NLRB Limits Confidentiality & Non-Disparagement Severance Agreements

McLaren Macomb operates a hospital in Mt. Clemens, Michigan, where it employs approximately 2300 employees. After an election on August 28, 2019, the Board certified Local 40 RN Staff Council, Office of Professional Employees International Union (OPEIU), AFL-CIO (Union) as the exclusive collective-bargaining representative of a unit of approximately 350 of its service employees.

Following the onset of the Coronavirus Disease 2019 (Covid-19) pandemic in March 2020,the government issued regulations prohibiting McLaren Macomb from performing elective and out-patient procedures and from allowing nonessential employees to work inside the hospital.

McLaren Macomb then terminated its outpatient services, admitted only trauma, emergency, and Covid-19 patients, and temporarily furloughed 11 bargaining unit employees because they were deemed nonessential employees.

In June, McLaren Macomb permanently furloughed those 11 employees and contemporaneously presented each of them with a “Severance Agreement, Waiver and Release” that offered to pay differing severance amounts to each furloughed employee if they signed the agreement. All 11 employees signed the agreement.

The agreement required the subject employee to release McLaren Macomb from any claims arising out of their employment or termination of employment. The agreement further contained provisions broadly prohibiting disparagement of McLaren Macomb and requiring confidentiality about the terms of the agreement.

And Administrative Law Judge found that McLaren Macomb violated Section 8(a)(5) and (1) of the National Labor Relations Act (NLRA) by permanently furloughing the 11 employees without first notifying the Union and giving it an opportunity to bargain about the furlough decision and its effects, and by directly dealing with the 11 employees while entirely bypassing and excluding the Union.

However, he found no violation of the Act as a result of the nondisparagement and confidentiality provisions of the severance agreement relying on Baylor University Medical Center 369 NLRB No. 43 (2020). and IGT d/b/a International Game Technology 370 NLRB No. 50 (2020) which reversed a long-settled precedent that provisions in a severance agreement proffered to employees have a reasonable tendency to interfere with, restrain, or coerce the exercise of employee rights under Section 7 of the Act and are thus unlawful..

The National Labor Relations Board issued a decision in McLaren Macomb, 372 NLRB No. 58, returning to longstanding precedent by holding that employers may not offer employees severance agreements that require employees to broadly waive their rights under the National Labor Relations Act.

The decision reverses the previous Board’s decisions in Baylor University Medical Center and IGT d/b/a International Game Technology, issued in 2020, which abandoned prior precedent in finding that offering similar severance agreements to employees was not unlawful, by itself.

The new February 2023 decision, in contrast, explains that simply offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the Act violates Section 8(a)(1) of the Act. The Board observed that the employer’s offer is itself an attempt to deter employees from exercising their statutory rights, at a time when employees may feel they must give up their rights in order to get the benefits provided in the agreement.

Thus, such clauses must be carefully drafted and narrowly tailored to mitigate the issues addressed by the Board in this case.

“It’s long been understood by the Board and the courts that employers cannot ask individual employees to choose between receiving benefits and exercising their rights under the National Labor Relations Act. Today’s decision upholds this important principle and restores longstanding precedent,” said Chairman Lauren McFerran.

Members Wilcox and Prouty joined Chairman McFerran in issuing the decision. Member Kaplan dissented stating “extent law is sufficient to resolve this matter, my colleagues take this opportunity, not raised by the General Counsel until her Brief in Support of Exceptions to the Board, to address circumstances not present in this case and overrule the sound law of Baylor and IGT. On this aspect of their decision, I dissent.”