Tag: 2023 News

New federal Department of Labor figures regarding the massive looting of the nation’s unemployment insurance systems during the pandemic show that California’s improper payment figure has climbed again and is now estimated to be nearly $40 billion.

Labor Department Inspector General Larry Turner testified in front of Congress that an estimated 21.5% of the $888 billion paid out in unemployment benefits across the country were improper.  That means $191 billion dollars were lost to fraud and other more typical bureaucratic incompetencies nationwide.

According to a new report by the California Globe, what that means for California is that nearly $40 billion – or about $1,000 per state resident – was lost.

The new figures also show that, while having only 12% percent of the nation’s residents, California accounted for about 21% of all unemployment expenditures during the pandemic and about 22% of the fraud and other improper payments made nationwide.

This raises the specter of international gangs specifically targeting the state because they quickly became aware of how lax the system was, a system the EDD took more than seven months to put in even the most basic safeguards. Identity experts have said previously that the EDD, even with its antiquated tech systems, could have added a “bolt on” security program for a few million dollars in about a week’s time very early in the pandemic.

In the past, the EDD has claimed that “95%” of the fraud losses were directly related to the federal PUA (pandemic unemployment assistance) program.

PUA – which offered assistance to those who would not normally qualify for benefits like independent contractors, freelancers, etc. – was only one of the federal unemployment programs created at the start of the pandemic and accounted for about 15% of the overall national (state and federal) payment total of $888 billion. Regular state funds, the FPUC (the $600 then $300 weekly supplement that was available for about a year during the pandemic,) and other programs made up the rest.

Turner added the fraud estimate percentage for the PUA itself – unlike all of the other programs – has not yet been determined though he expects it to be higher than the 21.5 % averaged by all other payment types.

Exactly how much California received – and lost – as part of the PUA system should become clearer when the Department of Labor completes its PUA audit in the coming months.

At the end of January, new EDD chief Nancy Farias told the Sacramento Bee that she blamed the problem on the Trump administration for neglecting “state efforts to combat domestic and foreign criminals collecting billions of dollars fraudulently from overwhelmed unemployment systems.”

Exactly how the Trump administration could have been at fault remains unclear – for example, when the EDD finally added some security “friction” to the system, Trump was still president and his administration clearly did not stop them from hiring ID.me and, therefore, undoubtedly would not have stopped them from doing so earlier on in the pandemic.

It should also be noted the Trump administration provided the EDD with an additional $788 million just to cover the department’s additional administrative costs caused by the pandemic.  With a typical annual administration/operations budget estimated to be in the one billion dollar range, that amounts to an annual budget bump of about 40% during the pandemic.

A Department of Labor spokeswoman said they will be spending about $1.6 billion around the nation in the coming months in an attempt to modernize and secure unemployment benefit systems. The OIG has made several recommendations to DOL and Congress to improve the efficiency and integrity of the UI program.

While action has been taken to resolve some recommendations, further action is still needed. The OIG report provided summaries of key recommendations that remain open on page 19 of the 28 page report.

As of February 9, the EDD owes the feds $18,507,914,539.74 in principal and $107,155,511.76 in interest, money that will be paid back by increasing the unemployment insurance taxes state businesses pay.

Nearly three quarters of U.S. physicians (74%) are employed by hospitals, health systems or corporate entities as of January 1, 2022, according to new data from Avalere, in a study sponsored by the Physicians Advocacy Institute (PAI) that examined physician practice trends over the three-year period between 2019 and 2021. This is an increase from 69% of U.S. physicians being employed just last year.

Health systems and corporate entities have been steadily acquiring physician practices for years, but Avalere researchers found the trend has accelerated drastically since the onset of COVID-19. More than one hundred thousand (108,700) physicians became employees since January 2019. Of those, 83,000 (76%) became employees since the pandemic began.

Corporate entities such as private equity firms and health insurers are driving the spike in these trends. Corporate purchases of practices increased by 86% during the study period, and corporate employment of physicians increased by 43%. In 2021, corporate entities acquired 13,600 additional physician practices. In comparison, hospital, and health system purchases of practices (9%) and employment of physicians (11%) continued at steadier rates.

PAI’s data also back up the American Medical Association’s latest national survey that highlighted the largest shift in physician employment the professional group has seen since kicking off the biennial poll in 2012. Susan R. Bailey, M.D., president of the organization at the time, pointed to a handful of potential factors in the shift ranging from a new crop of young physicians entering the workforce to COVID-19 disruption.

And this trend brings up the question: How is this going to change the quality of medical care for the public? Anecdotal reports that may answer this question are beginning to appear in the media.

A recent report by Kaiser Health News says that private equity companies pool money from wealthy investors to buy their way into various industries, often slashing spending and seeking to flip businesses in three to seven years. While this business model is a proven moneymaker on Wall Street, it raises concerns in health care, where critics worry the pressure to turn big profits will influence life-or-death decisions that were once left solely to medical professionals.

Nearly $1 trillion in private equity funds have gone into almost 8,000 health care transactions over the past decade, according to industry tracker PitchBook, including buying into medical staffing companies that many hospitals hire to manage their emergency departments.

KHN says that two firms dominate the ER staffing industry: TeamHealth, bought by private equity firm Blackstone in 2016, and Envision Healthcare, bought by KKR in 2018. Trying to undercut these staffing giants is American Physician Partners, a rapidly expanding company that runs ERs in at least 17 states and is 50% owned by private equity firm BBH Capital Partners.

These staffing companies have been among the most aggressive in replacing doctors to cut costs, said Dr. Robert McNamara, a founder of the American Academy of Emergency Medicine and chair of emergency medicine at Temple University.

American Physician Partners employs fewer doctors in its ERs as one of its cost-saving initiatives to increase earnings, according to a confidential company document obtained by KHN and NPR.

This staffing strategy has permeated hospitals, and particularly emergency rooms, that seek to reduce their top expense: physician labor. While diagnosing and treating patients was once their domain, doctors are increasingly being replaced by nurse practitioners and physician assistants, collectively known as “midlevel practitioners,” who can perform many of the same duties and generate much of the same revenue for less than half of the pay.

In a statement to KHN, American Physician Partners said this strategy is a way to ensure all ERs remain fully staffed, calling it a “blended model” that allows doctors, nurse practitioners and physician assistants “to provide care to their fullest potential.”

Critics of this strategy say the quest to save money results in treatment meted out by someone with far less training than a physician, leaving patients vulnerable to misdiagnoses, higher medical bills, and inadequate care. And these fears are bolstered by evidence that suggests dropping doctors from ERs may not be good for patients.

Not everyone sees the trend of private equity in ER staffing in a negative light. Jennifer Orozco, president of the American Academy of Physician Associates, which represents physician assistants, said even if the change – to use more nonphysician providers – is driven by the staffing firms’ desire to make more money, patients are still well served by a team approach that includes nurse practitioners and physician assistants.

In December 2019, Jazmine Quintero applied for employment with Dolgen California, LLC (Dollar General), a wholly owned subsidiary of Dollar General Corporation. She was employed by Dollar General from December 14, 2019, until January 4, 2021, when she resigned.

As part of the application and hiring process, Quintero accessed Dollar General’s web-based Express Hiring system, and electronically signed Dollar General’s arbitration agreement. In addition to other provisions, the agreement provided “Class and Collective Action Waiver: You and Dollar General may not assert any class action, collective action, or representative action claims in any arbitration pursuant to this Agreement or in any other forum.”

Quintero sued her former employer, Dollar General, to recover civil penalties under the Private Attorneys General Act of 2004 (PAGA; Lab. Code, § 2698 et seq.) for various Labor Code violations suffered by her or by other employees. Dollar General moved to compel arbitration, which the superior court denied.

Dollar General appealed. The order denying Dollar General’s motion to compel arbitration was reversed in part and affirmed in part in the unpublished case of Quintero v. Dolgen California, LLC – F083769 (February 2023).

An issue in this appeal is whether plaintiff’s PAGA claims seeking civil penalties for Labor Code violations suffered by employees other than plaintiff may be pursued by plaintiff in court. The issue is pending before the California Supreme Court. (Adolph v. Uber Technologies, Inc. (2022) (Aug. 1, 2022, S274671) [2022 Cal. Lexis 5021].)

The Court of Appeal has already decided that and other issues involving Dollar General’s arbitration agreement in Galarsa v. Dolgen California, LLC, -F082404 (Feb. 2, 2023 ), which it did not publish “because it soon will be superseded by the decision in Adolph.”

It also said that in Silva v. Dolgen California, LLC (Oct. 21, 2022, E078185) review granted Jan. 25, 2023, S277538 – another case involving Dollar General’s arbitration agreement – “our Supreme Court granted review and deferred briefing pending a decision in Adolph, which suggests the court will do the same in Galarsa and this case.”

Thus a disposition of this case by a memorandum opinion in accordance with the California Standards of Judicial Administration, Standard 8.1 was found to be appropriate.

Conclusion One: Viking River and the FAA (9 U.S.C. § 1 et seq.) do not invalidate the rule of California law that a provision in an arbitration agreement purporting to waive an employee’s right to pursue representative actions is not enforceable as to representative claims pursued under PAGA. (See Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 360 [“an arbitration agreement requiring an employee as a condition of employment to give up the right to bring representative PAGA actions in any forum is contrary to public policy”], abrogated on another ground by Viking River, supra, 142 S.Ct. 1906.)

Conclusion Two: The severability clause in the arbitration agreement allows the unenforceable waiver provision to be stricken from the agreement. (Viking River, supra, 142 S.Ct. at p. 1925.)

Conclusion Three: The provisions of the arbitration agreement remaining after the invalid waiver of representative claims is stricken cover the PAGA claims that seek to recover civil penalties for Labor Code violations suffered by plaintiff.

Conclusion Four: Plaintiff’s PAGA claims that seek to recover civil penalties for Labor Code violations suffered by employees other than plaintiff may be pursued by plaintiff in court.

Based on Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. ___ [142 S.Ct. 1906] (Viking River) and the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.), the Court of Appeal concluded the parties’ agreement requires arbitration of plaintiff’s PAGA claims that seek to recover civil penalties for Labor Code violations suffered by plaintiff.

On an issue of California law currently pending before the California Supreme Court, it concluded plaintiff’s PAGA claims that seek to recover civil penalties for Labor Code violations suffered by employees other than plaintiff may be pursued by plaintiff in the superior court.

As football fans across the country prepare for Super Bowl parties, Courthouse News reports that 10 former players are suing the NFL’s benefit plan for what they say are wrongful denials of disability benefits.

The class action filed Thursday in U.S. District Court in Baltimore, home of the league’s benefit plan office, seeks to remove all members of the disability board, including chairman and NFL Commissioner Roger Goodell, for “egregious and repeated breaches of fiduciary duties.”

Former players Jason Alford, Willis McGahee, Daniel Loper, Michael McKenzie, Jamize Olawale, Alex Parsons, Eric Smith, Charles Sims, Joey Thomas and Lance Zeno represent the proposed class. These plaintiffs “seek to pull back the curtain on behalf of all similarly situated former NFL players, bringing many relevant factual and legal issues concerning the plan to light,” the 86-page complaint states.

The players accuse the board of “ever-shifting inconsistent and illogical interpretations of the terms of the plan,” and say “reliance on conflicted advisors have resulted in a pattern of systematic bias against disabled NFL players” motivated by financial considerations to limit the payment of benefits to the very players whom the plan was designed to help.”

According to the complaint, in order to receive benefits, players must undergo an excessively complicated process in which many are denied for arbitrary reasons. Over 1,000 players applied for benefits each year between 2014 and 2016, the lawsuit states.

The players specifically complain about the use of so-called neutral physicians appointed by the board to examine players who apply for benefits.

Plaintiff Lance Zeno played center for the Dallas Cowboys, Cleveland Browns, Tampa Bay Buccaneers, Green Bay Packers and St. Louis Rams between 1991 and 1996, and suffered numerous concussions over his playing career. A benefit board-appointed physician, Dr. Dean Delis, concluded that Zeno showed no evidence of mild acquired neurocognitive impairment. Zeno’s test scores, however, had been described by other physicians as showing mild impairments.

“The plan, however, does not contain other procedures to ensure that plan represented ‘neutral ph,ysicians’ are indeed impartial and unbiased,” the lawsuit states. “The plan provides no other penalties for inaccurate or inadequate decision-making by plan-declared ‘neutral physicians.'”

The players claim that the board relies on physicians like Delis, who has authored or co-authored multiple publications that downplay the effects of traumatic brain injuries or attempt to shift those effects to other non-cognitive causes. Delis has received north of a million dollars for his work with the board, according to the complaint, and in a study of 66 players he evaluated, 92% were deemed not entitled to benefits.

“The board knows that, having collected more than $1.1 million from the plan, Dr. Delis benefits financially from doing repeat business with the board,” the filing states. “It follows that the board knows that Dr. Delis has an incentive to provide it with reports that will increase the chances that the board will frequently return to him in the future.”

The board’s four highest-paid neutral physicians concluded that none of the 46 players that applied for total and permanent disability from April 2019 through March 2020 qualified.

The players claim the board failed to look at the totality of players’ injuries and instead viewed each individually when reviewing an application for benefits.

“Defendants wrongfully denied benefits and abused their discretion when they unreasonably failed to consider that players may be T & P disabled from the cumulative impact and combined effects of all of a claimant’s impairments,” they claim.

Despite rule changes with player safety in mind, NFL players continue to suffer violent injuries, including those suffered this season by Buffalo Bills safety Damar Hamlin, who collapsed on the field last month after suffering cardiac arrest, and Miami Dolphins quarterback Tua Tagovailoa, who was carted off the field with head and neck injuries last September.

Common injuries that derail pro football careers include disc herniations. From the 2000 season to the 2012 season, 275 disc herniations occurred in the spine of NFL players. Shoulder instability is also typical for players, with 403 such injuries documented in 355 players from 2012 to 2017.

In addition to in-season injuries, the NFL’s style of play has long-term effects on retired players like those who filed the lawsuit. Over 36% of former players complain of suffering from degenerative joint disease. A Boston University study on the brains of deceased former players found that 92% suffered from chronic traumatic encephalopathy, or CTE.

“Signs and symptoms of CTE include, but are not limited to, memory loss, attention and processing speed impairment, confusion, impaired judgment, visual spatial impairment, depression, language impairment, parkinsonism, suicidality, and progressive dementia,” the complaint states. “These symptoms often manifest years or even decades after a player’s last brain trauma.”

Centene Corporation, is a Fortune 50 company (ranked 26th), and is a diversified, multi-national health care enterprise that provides a portfolio of services to government-sponsored health care programs. Centene is the parent company of Health Net. It is a big player in state Medicaid drug programs – but one with a questionable record.

In recent years, the company was accused by six states of overbilling their Medicaid programs for prescription drugs and pharmacy services and settled to the tune of $264.4 million. Three other states made similar allegations and have settled with the company, but the amounts have not been disclosed. Centene, in resolving the civil actions, denied any wrongdoing.

And they now have resolved their pending case in California. This month the California Attorney General announced a settlement of more than $215 million against the Centene Corporation over allegations that the national healthcare company overcharged California’s Medi-Cal program by falsely reporting higher prescription drug costs incurred by two of its managed care plans.

In doing so, Centene is alleged to have violated the California False Claims Act. California Health & Wellness and Health Net, the two managed care plans, provide healthcare services to Medi-Cal beneficiaries in over 20 California counties.

California Department of Justice investigators found that between January 2017 and December 2018, California Health & Wellness and Health Net reported inflated figures for the costs they incurred in providing prescription drugs to patients.

Centene allegedly leveraged advantages in its pharmacy benefit manager (PBM) contracts to save its managed care plans $2.70 per prescription drug claim over the two-year period. DOJ alleges that Centene and its PBM failed to disclose or pass on these discounted fees to Medi-Cal, which inflated fees and drug costs reported to California.

The settlement amounts to a total of $215,392,758, recovers twice the value of Centene’s inflated price reporting, and ensures full restitution to the Medi-Cal program.

Nonetheless in January 2023 the California Department of Health Care Services selected Centene’s California subsidiary – Health Net of California – for direct contracts in Los Angeles and Sacramento counties, increasing the number of direct county contracts by DHCS to 10.

In total, Health Net will provide Medi-Cal managed care services in Los Angeles, Sacramento, Amador, Calaveras, Inyo, Mono, San Joaquin, Stanislaus, Tulare and Tuolumne counties. Health Net continues to serve members in Fresno, Imperial, Kings, and Madera counties via other contractual arrangements. Health Net did not receive an award ini San Diego.

More troubling is a report a few months ago by NPR Saint Luis that claims “Centene showers politicians with millions as it courts contracts and settles overbilling allegations.” One example in a sister state, involves Nevada Gov. Steve Sisolak, who they say “has accepted at least $197,000 from Centene, its subsidiaries, top executives, and their spouses since August 2018.”

They report that less than two months after Centene’s subsidiary contributions in November 2021 for his re-election were made, Nevada settled with the company over allegations the insurer overbilled the state’s Medicaid pharmacy program. The state attorney general’s office did not publicly announce the $11.3 million settlement but disclosed it in response to a public records request from KHN.

The contract went before the Nevada Board of Examiners for final approval. Sisolak is one of three voting members.

Since 2015, Centene, its subsidiaries, its top executives, and their spouses have given more than $26.9 million to state politicians in 33 states, to their political parties, and to nonprofit fundraising groups, according to a KHN analysis of IRS tax filings and data from the nonpartisan, nonprofit group OpenSecrets.

Last year, according to IRS filings that go through Sept. 30, Centene has given $2.2 million, combined, to the Republican and Democratic governors’ associations, which help elect candidates from their respective parties. And Centene gave $250,000, combined, to the Republican Attorneys General Association and its Democratic counterpart.

State attorneys general, whose campaigns are benefiting from the associations’ money, have negotiated massive settlements with Centene over accusations the company’s prescription drug programs overbilled Medicaid.

More than 20 states are investigating or have investigated Centene’s Medicaid pharmacy billing. The company has agreed to pay settlements to 13 of those states, with the total reaching about $596 million.

And Centene told KHN in October that it is working to settle with Georgia and eight more states that it didn’t identify. It has denied wrongdoing in all the investigations.