Tag: 2024 News

On March 2, 2023, a workers’ compensation administrative law judge (WCJ) issued an award of total permanent disability in favor of Mayor based on an industrial injury he suffered in December 2013 during his employment by Ross Valley.

Ross Valley filed a petition for reconsideration with the Board on March 23, 2023. The Board’s electronic filing system, Electronic Adjudication Management System (EAMS), showed it was received the same day. Mayor filed his answer to the petition on April 3, 2023.

At the time, former Labor Code section 5909 stated, “A petition for reconsideration is deemed to have been denied by the appeals board unless it is acted upon within 60 days from the date of filing.” On June 5, 2023, 74 days after Ross Valley filed its petition, Ross Valley wrote to the Board, inquiring about the status of its petition and noting that it had been more than 60 days since Ross Valley had filed it.

On July 19, 2023, Mayor requested a hearing to enforce the WCJ’s award.

On August 14, 2023, 144 days after Ross Valley filed its petition, the Board issued a document titled, “Opinion and Order Granting Petition for Reconsideration.” Attached to the Board’s order granting reconsideration was a document titled, “Notice Pursuant to Shipley v. Workers’ Comp. Appeals Bd. (1992) 7 Cal.App.4th 1104 [57 Cal.Comp.Cases 493].” This notice states, “Reconsideration has been sought with regard to the decision filed on March 2, 2023. Labor Code section 5909 provides that a petition for reconsideration is deemed denied unless the Workers’ Compensation Appeals Board (Appeals Board) acts on the petition within 60 days of filing. (Lab. Code, § 5909.) The petition(s) was filed on March 23, 2023. The Appeals Board first received notice of the petition(s) on or about June 15, 2023. (Shipley v. Workers’ Comp. Appeals Bd. (1992) 7 Cal.App.4th 1104 [57 Cal.Comp.Cases 493] [allowing tolling as a matter of due process.].) The Opinion and Order Granting Petition for Reconsideration filed simultaneously with this Notice may be considered timely if issued within 60 days of the Appeals Board receiving notice of the petition(s). (Id.)”

Mayor wrote to the Board in September 2023, asking it to clarify why it first received notice of the petition on June 15, 2023, when Ross Valley filed it on March 23, 2023.

After receiving no reply, Mayor filed his petition for writ of mandate on January 9, 2024, asking the Court of Appeal  to direct the Board to rescind its order granting reconsideration because former section 5909 dictated that the Board lost jurisdiction over the matter 60 days after Ross Valley filed its petition for reconsideration. On January 26, 2024, the Board issued a document titled, “Opinion and Order Granting Petition for Reconsideration and Decision After Reconsideration.” The Board then reconsidered and rescinded that order and issued a revised version on February 2, 2024. The revised order stated that the Board was rescinding the WCJ’s award and returning the matter to the trial level for further proceedings.

According to the revised order, “due to an administrative irregularity” that was not the fault of either party, the Board did not receive Ross Valley’s petition for reconsideration until more than 60 days after the date Ross Valley filed it, March 23, 2023. EAMS, which the Board does not control, does not give the Board direct notification of filings. Instead, the staff of the district office must manually notify the Board that a party is requesting reconsideration and transmit the case to the Board. Mistakes and delays from “normal human error” can thwart the manual transmission of information from the district offices to the Board. When this occurred, the Board’s practice was to treat the 60-day deadline in former section 5909 as tolled and issue a decision on the petition within 60 days of receipt of the petition. The Board’s order stated that Ross Valley secured a statutory right to reconsideration upon timely filing its petition for reconsideration, so its conduct “is not and should not be at issue.”

The Court of Appeal agreed with Mayor and the recent decision in Zurich American Ins. Co. v. Workers’ Comp. Appeals Bd. (2023) 97 Cal.App.5th 1213 (Zurich) that the Board’s action after 60 days exceeded its jurisdiction in the published case of Mayor v. Workers’ Compensation Appeals Bd A169465 (August 2024).

Mayor argues that when the Board failed to act on Ross Valley’s petition for 60 days, former section 5909 dictated that it was denied by operation of law. According to Mayor, the Board’s attempt to grant the petition on August 14, 2023, 144 days after it was filed, was therefore in excess of its jurisdiction and must be set aside. Zurich American Ins. Co. v. Workers’ Comp. Appeals Bd recently accepted this argument in factual and procedural circumstances essentially identical to those here, and Mayor urged the Court of Appeal to follow it.

The Board, conversely, seeks to minimize, distinguish, or refute Zurich’s reasoning on a variety of grounds. Thus the Court of Appeal began by reviewing it and the legal principles it applied. After doing so it concluded that for “the reasons Zurich set forth at length, we agree with Mayor that former section 5909 was mandatory and the Board exceeded its jurisdiction in purporting to grant Ross Valley’s petition after 60 days had passed since Ross Valley filed it.

It went on to say that the “Board’s various attempts to avoid or defeat Zurich’s reasoning are unpersuasive.” Among other reasons the Opinion said “Given the goal of average or substantial, but expeditious, justice in workers’ compensation proceedings, opposing parties need not subordinate their rights to prompt resolution of disputes to accommodate open-ended delays that the Board claims are necessary for it to rule on petitions for reconsideration.” In doing so, it overruled anything said in Shipley v. Workers’ Comp. Appeals Bd to the contrary.

It must be noted that while Mayor’s petition was pending in the Court of Appeal, the Legislature enacted Assembly Bill 171 which amended former Labor Code section 5909 which now states, “(a) A petition for reconsideration is deemed to have been denied by the appeals board unless it is acted upon within 60 days from the date a trial judge transmits a case to the appeals board. [¶] (b)(1) When a trial judge transmits a case to the appeals board, the trial judge shall provide notice to the parties of the case and the appeals board. [¶] (2) For purposes of paragraph (1), service of the accompanying report, pursuant to subdivision (b) of Section 5900, shall constitute providing notice. [¶] (c) This section shall remain in effect only until July 1, 2026, and as of that date is repealed.” The former version of section 5909 is currently set to be reinstated on July 1, 2026.

Disbarred 85 year old plaintiffs’ personal injury attorney Thomas Vincent Girard,of Seal Beach California, was found guilty this week of leading a years-long scheme in which he embezzled tens of millions of dollars of money that belonged to his clients, some of whom awaited payment for treatment of severe physical injuries.He was found guilty of four counts of wire fraud.

Throughout his more than 50-year career, Girardi had two claims to fame: he played a key role in winning a $333 million settlement for residents of Hinkley, California, in their lawsuit against Pacific Gas & Electric, a case that later became the basis for the film “Erin Brockovich.” Decades later, he and his wife Erika Jayne were cast on the reality show “Real Housewives of Beverly Hills.”

According to evidence presented at a 13-day trial, Girardi – a once-powerful figure in California’s legal community – ran the now-defunct law firm Girardi Keese. For years, Girardi misappropriated and embezzled millions of dollars from client trust accounts at his law firm. The scheme involved defendant Girardi stealing millions of dollars in client settlement funds and failing to pay Girardi Keese clients – some of whom had suffered serious injuries in accidents – the money they were owed.

In carrying out this scheme, from October 2010 to late 2020, Girardi provided a litany of lies for failure to pay clients and directed a law firm employee to pay previously defrauded clients or other unrelated expenditures. Girardi sent lulling communications to the clients that, among other things, falsely denied that the settlement proceeds had been paid and falsely claimed that Girardi Keese could not pay the settlement proceeds to clients until certain purported requirements had been met. These bogus requirements included addressing supposed tax obligations, settling bankruptcy claims, obtaining supposedly necessary authorizations from judges, and satisfying other debts.

Girardi diverted tens of millions of dollars from his law firm’s operating account to pay illegitimate expenses, including more than $25 million to pay the expenses of EJ Global, a company formed by his wife related to her entertainment career, as well as spent millions of dollars of Girardi Keese funds on private jet travel, jewelry, luxury cars, and exclusive golf and social clubs.

At the end of 2020, as Girardi and his law firm faced mounting legal problems related to his years-long theft of client funds, Girardi Keese was forced into involuntary bankruptcy. The State Bar of California disbarred Girardi in July 2022.

United States District Judge Josephine L. Staton scheduled a December 6 sentencing hearing, at which time Girardi will face a statutory maximum sentence of 20 years in federal prison for each count.

Relatedly, co-defendant Christopher Kazuo Kamon, 50, formerly of Encino and Palos Verdes and who was residing in The Bahamas at the time of his November 2022 arrest on a federal criminal complaint, awaits trial in this matter in January 2025.

Kamon, the former chief financial officer at Girardi Keese, is charged with multiple fraud counts for allegedly aiding and abetting Girardi’s scheme to defraud clients. Kamon allegedly also embezzled millions of dollars from the law firm’s accounts for his own personal enrichment. Kamon, who remains in federal custody, has pleaded not guilty to these charges.

Girardi, Kamon, and David R. Lira, Girardi’s son-in-law and a former lawyer at Girardi Keese, also face federal fraud charges in Chicago. Trial in that case is scheduled for March 3, 2025.

In 2010, Ari Resnik Resnick and Dr. Ismael Silva, an orthopedic surgery specialist, discussed forming a factoring business to purchase medical accounts receivable, including workers’ compensation liens, from healthcare treatment providers at a discount and then collect on them. They agreed to each invest $500,000 into the new company.

Silva owned or controlled several entities even if he is not formally named as an officer, owner, or manager, including cross-defendants Healthcare Management Associates, Inc.(HMA), National Intra-Operative Monitoring, Inc. (NIOM), Orangewood Surgical Center, LLC (Orangewood), Starbase, Inc. (Starbase), and American Financial Investment Services, Inc. (AFIS), and non-parties Healthpointe Medical Group, Inc. (Healthpointe) and ProCare.

Other than NIOM and Healthpointe, these companies were headed, on paper, by Silva’s relatives, including cross-defendants Mary Aviles for HMA, James Aviles for Orangewood and ProCare, and Silva’s son, Geli Silva (Geli) for AFIS and Starbase, and non-party Medina for ProCare.

Healthcare Financial Solutions, LLC was a company that factored healthcare-related receivables. When the parties that formed it, Ari Resnick through R.O.A.R. Management Company, Inc. and Dr. Ismael Silva, Jr. through Healthcare Management Associates, Inc, could not agree how to dissolve it, litigation commenced. HMA sued Resnick, ROAR, and another Resnick-owned company for breach of the HFS operating agreement, theft of trade secrets, and various business-related torts.

Resnick and ROAR (the Resnick parties) filed a cross-complaint against HMA and another individual for declaratory relief and breach of fiduciary duty. The Resnick parties assert that during the litigation they learned that a decade’s worth of Silva’s past assurances, including his statements about the lack of merit to numerous prior civil suits and a criminal case against Silva, were untrue.

The Resnick parties then filed a first amended cross-complaint (FAXC), asserting Racketeer Influenced and Corrupt Organizations Act (RICO; 18 U.S.C. § 1961 et seq.) claims and a civil fraud cause of action against Silva and others allegedly affiliated with him based on Silva’s alleged misrepresentations. Silva and the cross-defendants named in these RICO and fraud claims either filed or joined in an anti-SLAPP motion to strike portions of the FAXC. Silva and his fellow cross-defendants argued certain allegations of the FAXC described statements made in connection with prior litigation and, thus, were protected activity. They further argued the Resnick parties had not demonstrated that these claims had minimal merit.

The trial court denied the special motion to strike. It found the challenged allegations were not protected activity because they related to statements about judicial proceedings and not to statements made in connection with judicial proceedings. As its analysis of the first prong of section 425.16 was dispositive, the court did not address whether the Resnick parties’ claims had minimal merit.

Silva and his fellow cross-defendants argued on appeal that the trial court erred because statements made about legal proceedings to interested nonparties are protected conduct under the anti-SLAPP statute, and the Resnick parties failed to show those allegations have minimal merit.

The Resnick parties counter that the trial court properly denied the special motion to strike because the challenged portions of the FAXC are only context or evidence of the wrongs complained of, and do not supply the elements of any cause of action. To the extent any of the subject allegations involve protected activity, the Resnick parties have abandoned any effort on appeal to contend such claims have minimal merit. Instead, the Resnick parties argue the appropriate disposition would be to strike only those claims involving protected activity and not their causes of action, which they contend they can state without any stricken allegations.

The allegations challenged by the special motion to strike fall into four categories: (1) statements Silva or other cross-defendants made about other lawsuits to interested parties; (2) statements Silva made in other lawsuits (most of which he made in an unrelated family law divorce case); (3) information the Resnick parties learned from the other lawsuits; and (4) allegations that appear to have nothing to do with any prior lawsuit.

As to the first category, case law establishes that statements by a litigant about a lawsuit to an interested person are protected conduct and, here, those protected statements supply at least one element of the RICO and fraud causes of action alleged in the FAXC. However, as to the remaining categories, none of the allegations concerning litigation-related statements supply an element of the challenged claims.

Accordingly, the Court of Appeal reversed in part, and remand with instructions to strike only the statements in the first category. It affirmed the denial of the special motion to strike as to the remaining allegations in the unpublished case of Healthcare Management v. R.O.A.R. Management -B330809 (August 2024)

Of interest to the workers’ compensation community are the allegations of the FAXC. The FAXC alleged that as a result of the litigation, the Resnick parties more closely scrutinized Silva’s representations and actions since 2010, ” ‘connect[ed] the dots,’ ” and determined cross-defendants had defrauded them. The allegations also show the inter relatedness and entanglement of the multitude of organizations that were involved. And that Silva, his companies, and his family members were involved in lawsuits and a criminal prosecution.

The list of “dots” connected by the Resnik parties begins by learning that in 2011, a physician at Healthpointe sued it and Silva in Orange County Superior Court, asserting claims that included fraud and breach of contract. Among other things, the physician alleged that Silva overbilled insurance companies for physician services at Healthpointe, pressured physicians to perform unnecessary medical procedures, and concealed conflicts of interest from Healthpointe patients. The FAXC does not state when the Resnick parties learned of this lawsuit or that Silva made any representations to Resnick about this lawsuit.

On October 16, 2013, WorkCompCentral, a workers’ compensation industry publication, reported that Healthpointe was involved in a qui tam case asserting it had overbilled for procedures and devices, used counterfeit medical implant hardware, and paid illegal kickbacks to doctors. The publication further asserted Silva controlled Healthpointe. In response to this article, Silva reassured Resnick there was no problem with HFS continuing to accept business generated by Healthpointe. However, HFS scaled back its purchase of liens from Healthpointe. Silva and Mary Aviles formed ProCare, which accepted lien referrals from Healthpointe.

In May 2015, Resnick discovered that Silva, Starbase, and Healthpointe had been named in a civil RICO lawsuit filed by the State Compensation Insurance Fund (SCIF). When Resnick emailed Silva about the lawsuit, Silva assured Resnick that the allegations were not true, but that they might have to deal with bad publicity.

In 2017, the Orange County District Attorney filed a felony complaint against Silva and Geli for fraud and kickbacks related to patient and client referrals. The complaint asserted that Healthpointe doctors referred workers’ compensation applicants for urine toxicology tests administered by Christopher King and Tanya Moreland King, and Silva aided the Kings in submitting fraudulent claims for payment. In exchange, the Kings made payments to Starbase. Resnick learned about the lawsuit, but Silva assured Resnick that Starbase and AFIS would cooperate to protect HFS and that Geli, but not Starbase, had been named as a criminal defendant.

An Orange County man was sentenced to 87 months in federal prison for defrauding companies who in mid-2020 paid more than $3 million for COVID-related medical protective equipment that was never delivered.

Christopher John Badsey, 63, of Lake Forest, was sentenced by United States District Judge Josephine L. Staton, who also ordered him to pay $1,938,990 in restitution.

Badsey pleaded guilty in April 2023 to four counts of wire fraud.

In June and July of 2020, Badsey lied to three victim companies when he told them he had access to millions of boxes of nitrile gloves through his Irvine-based company, First Defense International Security Services Corp. (FDI).

This type of personal protective equipment was in high demand and short supply during the early months of the COVID-19 pandemic.

Badsey agreed by contract to sell millions of boxes of gloves to each of the three companies. But he told the companies’ representatives that before they could inspect the gloves, which he claimed were stored in a Los Angeles warehouse, the companies would be required to pay deposits of upwards of $1 million to FDI.

In fact, Badsey did not have any gloves stored in any warehouse.

Badsey instructed the companies to wire the deposits to accounts controlled by himself, FDI or a co-schemer. Relying on Badsey’s false statements, the companies wired a total of $3,231,990 to these accounts.

After receiving the deposits, Badsey allegedly instructed victims to travel to the Los Angeles area, where he claimed the gloves were stored in a warehouse. But when victims attempted to visit the warehouse, Badsey and other FDI employees allegedly provided excuses as to why the gloves could neither be inspected, nor delivered, to the victims.

Nitrile gloves were never provided to the victims, and Badsey is alleged to have absconded with the deposit money. Badsey used the deposit money to make expensive purchases, all while stringing would-be purchasers along with false stories, including absurd claims that government agents were blocking access to his warehouse of gloves, prosecutors argued in a sentencing memorandum.

He has forfeited all title and interest in money or items derived from his crimes, including a yacht, a pontoon boat, two Mercedes-Benz automobiles, two Ford pickup trucks, an RV, a tractor, three ATVs, miscellaneous fishing equipment, and $58,923 in cash.

The FBI investigated this matter.  Assistant United States Attorneys Kristin N. Spencer and Melissa S. Rabbani of the Santa Ana Branch Office prosecuted this case.

In 2010, the City of Los Angeles contracted with PricewaterhouseCoopers to modernize the billing system for the City’s Department of Water and Power. The rollout of the new billing system did not go smoothly. When the system went live in 2013, it sent inaccurate or delayed bills to a significant portion of the City’s population.

In March 2015, following the botched rollout, the City filed suit against PwC. In a complaint filed by the City’s attorneys and special counsel Paul Paradis, Gina Tufaro, and Paul Kiesel, the City alleged that PwC had fraudulently misrepresented its qualifications to undertake the LADWP billing modernization project.

Then, about a month later, in April 2015, attorney Jack Landskroner, representing Los Angeles resident Antwon Jones, filed a putative class action against the City on behalf of overbilled LADWP customers (Jones v. City of Los Angeles). The two lawsuits were assigned to the same trial judge. (City of Los Angeles v. PricewaterhouseCoopers, LLC (2022) 84 Cal.App.5th 466, 477 (City of L.A.).)

Instead of filing an answer to the Jones v. City of Los Angeles complaint, the City quickly entered into negotiations with Landskroner. On August 7, 2015, the parties arrived at a preliminary settlement agreement, which provided that the City would reimburse 1.6 million LADWP customers the full amount by which they were overcharged.The City publicly announced its intent to recover the full cost of the Jones v. City of Los Angeles settlement in its lawsuit against PwC.

Meanwhile, over the next five years, pretrial discovery in the PwC case would gradually reveal a more substantial connection between the two lawsuits: Counsel for the City had been behind the Jones v. City of Los Angeles lawsuit, and they had sought to engineer the litigation so that the City could definitively settle all of the claims brought by overbilled customers while passing the costs of the settlement in a suit against PwC.

One of the discovery issues was the Cities assertion of attorney client privilege. At one point the City filed a petition for writ of mandate to appeal the court’s determination that the attorney-client privilege did not apply. But before the Court of Appeal could review the writ petition, the City voluntarily dismissed with prejudice its case against PwC. As a result of the dismissal, the City did not complete its production of documents responsive to PwC’s discovery requests.

After the dismissal, federal prosecutors announced that Paul Paradis, Thomas Peters, and two other City officials had pleaded guilty to criminal charges. Paradis and Peters admitted that the City had pursued a collusive litigation strategy wherein Paradis and Kiesel would represent both Jones and the City in parallel lawsuits against PwC.

Paradis, a disbarred New York City lawyer, who simultaneously represented the Los Angeles Department of Water and Power and a ratepayer suing the City of Los Angeles in the wake of an LADWP billing debacle, was sentenced to 33 months in federal prison for accepting a kickback of nearly $2.2 million for causing another lawyer to purportedly represent his ratepayer client in a collusive lawsuit against the city, which enabled the city to settle the case on favorable terms.

After years of stonewalling discovery efforts, the City eventually turned over information revealing serious misconduct in the initiation and prosecution of the lawsuit. The trial court found that the City had been engaging in an egregious pattern of discovery abuse as part of a campaign to cover up this misconduct. The court ordered the City to pay $2.5 million in discovery sanctions which the City appealed. .

This order worked its way to the California Supreme Court. The central question before the Supreme Court was whether the trial court had the authority to issue the order under the general provisions of the Civil Discovery Act concerning discovery sanctions, Code of Civil Procedure sections 2023.010 and 2023.030.

The Court of Appeal in this case answered no. Bucking the long-prevailing understanding of these provisions, the appellate court read the Civil Discovery Act as conferring authority to sanction the misuse of certain discovery methods, such as depositions or interrogatories, but as conferring no general authority to sanction other kinds of discovery misconduct, including the pattern of discovery abuse at issue here.

The Supreme Court reversed the Court of Appeal in the Case of City of Los Angeles v. Pricewaterhousecoopers, LLP -S277211 (August 2024).

Sections 2023.010 and 2023.030 were enacted as part of the Civil Discovery Act of 1986, a comprehensive revision of the statutes governing discovery in California courts.Before 1986, discovery in civil cases was governed by the Discovery Act of 1957, which had been “the California Legislature’s first attempt to codify a comprehensive system of discovery procedures in California.”

After decades of experience under the 1957 Act revealed gaps in the statute’s coverage, a Joint Commission on Discovery of the State Bar and Judicial Council began a top-to-bottom reexamination of California’s system of civil discovery. It then made recommendations that were ultimately enacted, with some amendments, as part of the 1986 Act.

“Before the Court of Appeal’s decision in this case, courts frequently cited sections 2023.010 and 2023.030 as sources of authority to impose sanctions for discovery misuse.” The Court of Appeal in this case acknowledged cases reflecting this prevailing understanding of sections 2023.010 and 2023.030. But as the court correctly noted, none of these cases carefully considered the language of the provisions in their broader statutory context. (City of L.A., supra, 84 Cal.App.5th 466.).

The Supreme Court concluded: “Under the general sanctions provisions of the Civil Discovery Act, Code of Civil Procedure sections 2023.010 and 2023.030, the trial court had the authority to impose monetary sanctions for the City’s pattern of discovery abuse. The court was not limited to imposing sanctions for each individual violation of the rules governing depositions or other methods of discovery.”