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Tag: 2024 News

Portions of State Prison Workers Wage/Hour Class Action Revived on Appeal

Plaintiffs Azeem Bath, Megan Roberts, and Makisha Bomar are hourly paid, non-exempt employees who work at an adult state prison. Bath is a dental hygienist, Roberts and Bomar are dental assistants, and they all are currently assigned to the California Medical Facility.

The parties agree that plaintiffs’ union and the State of California entered a memorandum of understanding governing the terms and conditions of plaintiffs’ employment and that the MOU incorporates the Fair Labor Standards Act of 1938 (FLSA), as amended by the Portal-to-Portal Act (29 U.S.C. § 251 et seq.). Plaintiffs further acknowledge that it is the FLSA that “determine[s] whether activities performed by Plaintiffs are compensable.”

In November 2022, plaintiffs filed a first amended complaint against the State of California, California Department of Correction and Rehabilitation (CDCR), California Correctional Health Care Services, and California Department of Human Resources (CalHR) styled as a class action.

They asserted four causes of action: (1) failure to pay California minimum wage in violation of Labor Code sections 1182.11, 1182.12. and 1194, (2) failure to pay overtime wages in violation of section 1194, (3) failure to pay wages and/or overtime in breach of common law contractual obligations, and (4) failure to pay wages in violation of section 222.

Plaintiffs alleged, “a principal activity [of their employment and that of all class members] is to provide safety and security for all prison occupants.” They continued, “California Prisons present multiple dangers and safety concerns that are not present in the average workplace,” and given the risks, plaintiffs (and putative class members) “are specially employed to focus on and promote the security and safety of staff, visitors, and inmates.”

Plaintiffs alleged the uncompensated “Pre-Shift Work” that they and other class members perform compromises the following five activities: (1) “The Security Checkpoint” – at the front gate of a prison, presenting their identification cards to security officers and opening their bags for visual inspections; (2) “The First Sally Port” – walking to a sally port, waiting to enter, and then waiting for the guard to open the gate; (3) “Collecting Work Specific Tools and Equipment” – walking to an administrative building, picking up an alarm device and, if necessary, keys; (4) “The Control Sally Port” – “proceed[ing] to a second sally port to enter the mainline prison premises” and, again, showing their identification cards; and (5) “Walking to the Department and Signing In” -walking to their assignment area. When they arrive at their assignment area, they sign in “by reporting the precise time they arrive.” According to plaintiffs, these preshift activities generally take 10 to 15 minutes and sometimes take 20 minutes, and their “Post-Shift Work” involves “many of the same activities and functions . . . but in reverse” and takes a similar amount of time.

Defendants filed a demurrer to the first amended complaint. On April 21, 2023, the trial court issued a written ruling sustaining the demurrer to plaintiffs’ first amended complaint without leave to amend on the ground these activities are not compensable under the Portal-to-Portal Act of the Fair Labor Standards Act. After judgment was entered, plaintiffs appealed.

The Court of Appeal affirmed in part and reversed in part in the published case of Bath et al. v. State of Cal. et al. -A167908 (October 2024.)

Plaintiffs contend they have alleged viable wage claims and the trial court improperly decided a disputed question of fact in ruling on the demurrer. Defendants respond that the trial court did not err, and, in any event, the judgment may be affirmed on alternative grounds they raised in their demurrer. Specifically, defendants argue the MOU governing the terms and conditions of plaintiffs’ employment precludes their claims; plaintiffs’ statutory claims fail because the statutes at issue do not apply to government employers; the claims are all subject to dismissal because plaintiffs failed to exhaust their contractual remedies (grievance and arbitration procedures in the MOU); and the claims are all barred by the applicable statute of limitations.

The Court of Appeal concluded defendants’ demurrer was well taken as to plaintiffs’ statutory claims, but plaintiffs have stated a claim for breach of contract. It further concluded that defendants’ affirmative defense of failure to exhaust contractual remedies cannot be resolved in a demurrer and plaintiffs’ contract claim is not time barred.

The demurrer was reversed as to plaintiffs’ third cause of action for “failure to pay regular wages and/or overtime in breach of common law contractual obligations” and was affirmed as to the first, second, and fourth causes of action. The judgment was reversed, and the matter was remanded for further proceedings consistent with this opinion.

Wallmart Resolves Illegal Medical Waste Disposal Litigation for $7.5

The California Attorney General announced a settlement with Walmart, resolving allegations that the retail corporation unlawfully disposed hazardous waste and medical waste from their facilities statewide to municipal landfills. As part of the settlement, Walmart will be required to pay $7.5 million in penalties and costs and comply with injunctive terms. The Attorney General is joined by the California Department of Toxic Substances Control (DTSC) and the district attorneys of Alameda, Fresno, Monterey, Orange, Riverside, Sacramento, San Bernardino, San Diego, San Joaquin, Solano, Tulare, and Yolo Counties in today’s settlement.

The settlement is the result of over 70 waste audits conducted by the district attorneys’ offices statewide and DTSC from 2015 through 2021. During those audits, the district attorneys’ offices reviewed the contents of waste that Walmart had sent from its facilities to municipal landfills and found thousands of containers of toxic aerosols and liquid wastes including spray paints, rust removers, bleach, pesticides, and medical waste, such as over-the counter drugs. The unlawful disposals are alleged to violate the Hazardous Waste Control Law, Medical Waste Management Act, and Unfair Competition Law.

The settlement resolves the allegations above and requires Walmart to pay $7,500,000 in civil penalties and costs. The settlement also imposes injunctive terms, which require Walmart to hire an independent, third-party auditor to conduct three annual rounds of waste audits at its facilities throughout California during the next four years. Walmart’s auditor must use specific requirements set forth in the settlement to ensure that the waste is thoroughly and accurately reviewed and characterized, and the audit results must be shared with the Attorney General’s Office, the Department of Toxic Substances Control, and the district attorneys involved in this settlement.

A copy of the complaint and proposed stipulated judgment, which details the aforementioned settlement terms and remains subject to court approval, can be found here and here.

Litigation Against Kaiser for Not Updating Provider Directory to Proceed

In 1975, the Legislature enacted the Knox-Keene Act, which provides the legal framework for the regulation of California’s individual and group health care [service] plans. Effective January 1, 2016, the Legislature enacted Health and Safety Code section 1367.27, which requires health care service plans to, among other things, maintain and update accurate provider directories (PDs). (Stats. 2015, Reg. Sess. 2014- 2015, ch. 649, § 2.)

The plaintiff, the People of the State of California, acting by and through Mara W. Elliott, the San Diego City Attorney, filed a complaint against Kaiser Foundation Health Plan, Inc.

Citing section 1367.27, the complaint alleged that health insurance companies are required to publish, maintain, and update accurate provider directories (PDs), setting forth information regarding a health plan’s providers (e.g., location, contact information, specialty, etc.). In particular, the People alleged that Kaiser failed to maintain and update accurate PDs for its health plans, as required by Health and Safety Code section 1367.27.

The complaint sought the following relief: (1) civil penalties pursuant to Business and Professions Code sections 17206, 17206.1, subdivision (a)(1), and 17536; (2) restitution; and (3) provisional and final remedies against Kaiser, including, without limitation, “an injunction prohibiting [Kaiser] from continuing [its] unlawful, unfair, and fraudulent activities, and discontinue [its] false and misleading advertising.”

Kaiser filed a motion for summary judgment. In support of its motion, Kaiser argued that there were no triable issues of material fact and it was entitled to judgment as a matter of law because the trial court should abstain from adjudicating the action. It submitted a separate statement of undisputed material facts, along with various declarations and exhibits and a request for judicial notice, in support of its motion.

In their opposition papers, the People argued that the court should not abstain from adjudicating their action because, among other things, Kaiser’s violations of section 1367.27 and other statutes provide predicates for their UCL cause of action and the UCL contemplates co-enforcement by the People and administrative agencies. In reply, Kaiser reasserted its original arguments in support of its motion.

The trial court, after hearing arguments of counsel, issued a minute order granting Kaiser’s motion for summary judgment based solely on the exercise of its discretion to abstain from adjudicating the People’s action. The court entered a judgment in favor of Kaiser. The People timely filed a notice of appeal challenging the judgment.

The Attorney General for the State of California has filed an amicus curiae brief in support of the People. The that the California Department of Managed Health Care has filed an amicus curiae brief in support of neither party, and the California Association of Health Plans has filed an amicus curiae brief in support of Kaiser. The People and Kaiser have filed answers to the amicus curiae briefs.

The Court of Appeal concluded that the trial court abused its discretion by applying the doctrine of judicial abstention. Accordingly, it reversed the judgment and remand the matter in the published case of People. ex rel. Elliott v. Kaiser Foundation Health Plan -D081262 (October 2024)

Under the doctrine of judicial abstention, a trial court has discretion to abstain from adjudicating an action if: (1) ” ‘ “granting the requested relief would require a trial court to assume the functions of an administrative agency, or to interfere with the functions of an administrative agency” ‘ “; (2) the action ” ‘ “involves determining complex economic policy, which is best handled by the Legislature or an administrative agency” ‘ “; or (3) ” ‘ “granting injunctive relief would be unnecessarily burdensome for the trial court to monitor and enforce given the availability of more effective means of redress.” ‘ ” (Hambrick, supra, 238 Cal.App.4th at pp. 147 – 148, quoting Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 496 (Arce); Blue Cross of California, Inc. v. Superior Court (2009) 180 Cal.App.4th 138, 157 (Blue Cross).)

The Court of Appeal concluded that “[A]bstention is not appropriate where resolution of the issues involves solely the judicial function of resolving questions of law based on facts before the court.” (Hambrick, supra, 238 Cal.App.4th at p. 152.) In this case, the People’s complaint requests that the trial court simply apply section 1367.27’s clear requirements for PD accuracy to the facts alleged and proven at trial, which the People argue will show Kaiser’s violation of its statutory obligations regarding PD accuracy and thus the “unlawful” prong of their UCL cause of action. Therefore, their complaint merely requests that the trial court “perform an ordinary judicial function.” (Blue Cross, supra, 180 Cal.App.4th at p. 157.) Abstention is not appropriate in these circumstances. (Hambrick, at p. 152.)

Southern California Dentist Charged for $900K Medi-Cal Fraud

The California Attorney General announced the filing of criminal charges against Southern California dentist, Husam Aldairi, along with five employees of his dental practice, for their allegedly fraudulent billing scheme that allegedly defrauded the state Medi-Cal program of nearly $900,000.

Husam Aldairi, Rawaa Attar, Lilyan Krikorian, Inci Narin, Laith Alani, and Fadi Shammas, have been charged with conspiracy to commit a crime and Medi-Cal fraud, both felonies.

Aldairi’s clinics contracted with Borrego Community Health Foundation, a Federally Qualified Health Center that serves Medi-Cal patients, to provide dental services to underserved populations and communities. Aldairi was entitled to reimbursement for each patient visit, rather than the specific services performed. However, Aldairi allegedly fraudulently billed for services that were either not rendered, or not rendered over multiple days, as was claimed to maximize profit from Medi-Cal reimbursements. Aldairi and his employees allegedly fraudulently billed more than $847,000 between 2016 and 2020.

It is important to note that criminal charges must be proven in a court of law. Every defendant is presumed innocent until proven guilty.

The Division of Medi-Cal Fraud and Elder Abuse receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $69,244,976 for Federal fiscal year (FY) 2025. The remaining 25 percent is funded by the State of California. FY 2025 is from October 1, 2024 through September 30, 2025.

“When providers defraud Medi-Cal, it not only undermines the integrity of the program, but it also poses a significant threat to the patients who rely on its critical services for their health and well-being,” said  the Attorney General. “At the California Department of Justice, we will continue to hold accountable those who perpetuate Medi-Cal fraud. We must ensure that the program remains reliable and accessible in providing quality healthcare to those who need it most.”

CHP Captain Arrested For Workers’ Compensation Fraud

California Highway Patrol (CHP) investigators arrested a former CHP captain on suspicion of workers’ compensation insurance fraud and theft, pursuant to an arrest warrant issued by the Sacramento County District Attorney’s Office for the following charges:

– – 1871.4(a)(1) IC – False statement to fraudulently obtain compensation
– – 550(a)(1) PC – Knowingly presenting false insurance claim
– – 550(b)(1) PC – Knowingly making false statement for insurance payment
– – 550(b)(3) PC – Concealing or failing to disclose event affecting benefits
– – 118(a) PC – Perjury
– – 20 VC – False statement to DMV

Matthew Stover, 51, a 22-year veteran of the Department, was arrested without incident in Folsom and was booked into the Sacramento County Jail. The arrest resulted from an extensive, multi-year investigation by the CHP’s Workers’ Compensation Fraud Investigations Unit based at CHP’s Headquarters in Sacramento.

Stover filed a workers’ compensation insurance claim on June 20, 2023, and was placed off work by his physician on June 23, 2023. Analysis conducted by the CHP’s Workers’ Compensation Fraud Investigations Unit identified potential fraud, and an investigation was initiated.

The investigation revealed Stover committed worker’s compensation fraud by engaging in activities, while on injury leave, inconsistent with limitations he reported to physicians and restrictions placed upon him by his medical providers. During the investigation, CHP investigators also discovered Stover committed perjury and fraud by falsifying vehicle registration paperwork he submitted to the Department of Motor Vehicles.

The CHP wants to assure the public that it takes all allegations of employee misconduct very seriously.  When allegations of misconduct by an employee are suspected, the Department takes swift and appropriate action to investigate the allegations. Questions regarding the criminal case should be directed to the Sacramento County District Attorney’s Office.

The CHP’s Workers’ Compensation Fraud Investigations Unit is a specialized team that investigates allegations of workers’ compensation fraud. Allegations of workers’ compensation fraud may be reported by calling a toll-free Fraud Reporting Hotline (1-866-779-9237) or at https://www.chp.ca.gov/notify-chp/workers-comp-fraud

The mission of the CHP is to provide the highest level of Safety, Service, and Security.

Fresno Vocational School Owner Faces Work Comp Fraud Charges

An investigation by the Central Valley Workers’ Compensation Fraud Task Force resulted in the arraignment of Paul Steve Ramirez, 59, for allegedly fraudulently billing for workers’ compensation voucher services and failing to provide adequate training at the for-profit school he owns.

Ramirez was charged with 11 felony counts, including insurance fraud and prohibited referrals. The fraudulent insurance claims are estimated to reach $200,000.

Ramirez owns P. Steve Ramirez Vocational Training Centers, a private post-secondary educational institution and Supplemental Job Displacement Benefit (SJDB) training provider. Ramirez owns a second business which provides vocational counseling. SJDB vouchers provide up to $6,000 for educational retraining or skill enhancement to injured workers who have a permanent partial disability and are unable to return to work at their employer. Ramirez gained access to students at the counseling center and then self-referred them directly to his educational institution, allowing him to maximize his billing.

A Central Valley Workers’ Compensation Fraud Task Force investigation, led by the Fresno County District Attorney’s Office and the California Department of Insurance, found Ramirez fraudulently collected SJDB voucher funds related to 37 different students over a three-year period. Ramirez billed insurance companies for services even though the students did not meet the minimum qualifications for the program and also engaged in prohibited referrals for services.

Ramirez’s actions led to many of these injured workers not having a choice in the program they were in enrolled in and many of them not receiving the benefit because of unsuccessful completion of the course they should never have been placed into.

The Fresno County District Attorney’s Office is prosecuting this case.

Study Shows California Utilization of Medical Care for Injured Workers Declines

The Workers Compensation Research Institute (WCRI) is an independent, not-for-profit research organization based in Cambridge, MA. Founded in 1983, the Institute does not take positions on the issues it researches; rather, it provides information obtained through studies and data collection efforts, which conform to recognized scientific methods.

A new set of studies from the WCRI found that utilization of medical services by workers with injuries declined in the majority of the 17 study states. The studies address two aspects of utilization: the percentage of claims receiving a particular medical service, and the number of services provided.

“We continue to see the effects of the pandemic on 2022 claims with experience through March 2023,” said Sebastian Negrusa, vice president of research for WCRI. “Besides strained hospital capacity and avoided medical care by many people out of fear of COVID-19 in the early months of the pandemic, waves of increased COVID-19 cases and medical provider shortages may have also affected the delivery of medical care. Even in the few cases where utilization in certain states has begun to rebound, we do not see it reaching pre-pandemic levels yet.”

The studies, CompScope Medical Benchmarks, 25th Edition, examined medical payments, prices, and utilization overall and by provider and type of service across 17 states and how these metrics of medical payments have changed over time. The following are sample findings for some of the study states:

– – California: Utilization of medical services decreased in 2022, particularly in the percentage of claims with inpatient care and facility services (both hospital outpatient departments and ambulatory surgery centers).
– – Indiana: Utilization declined in 2022, particularly for major surgery and facility services.
– – Minnesota: Unlike most study states, utilization of most services in Minnesota either stayed stable or began to increase in 2022.
– – North Carolina: Decreasing utilization was a driver of the state’s decline in medical payments per claim in 2022, in contrast to many study states which experienced growth.
– – Pennsylvania: The share of claims with facility services in the state declined more than most study states since 2019.

The analysis results reflect experience on claims through March 2023, including non-COVID-19 claims from the pandemic period (March 2020-September 2022). The studies, therefore, provide a look at how the pandemic impacted non-COVID-19 workers’ compensation claims. The 17 study states ― Arkansas, California, Florida, Illinois, Indiana, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Tennessee, Texas, Virginia, and Wisconsin ― represent about 60 percent of all workers’ compensation benefit payments nationwide. Individual reports are available for every state except Arkansas, Iowa, and Tennessee.

Click here for more information on these studies.

DWC Set 2025 Profile Audit Review and Full Compliance Audit Standards

The Division of Workers’ Compensation’s (DWC) Audit and Enforcement Unit conducts a profile audit review (PAR) for all adjusting locations of California workers’ compensation claims at least once every five years, per the requirements of Labor Code sections 129 and 129.5.

Performance of the adjusting locations is measured in five areas of claims administration:

– – The payment of accrued and undisputed indemnity
– – The late first payment of temporary disability / first notice of salary continuation
– – The late first payment of permanent disability and death benefits
– – The late subsequent indemnity payments
– – The provision of notices with Qualified Medical Evaluator/Agreed Medical Evaluator advice.

DWC annually establishes profile audit review and full compliance audit (FCA) standards in accordance with Labor Code sections 129(b)(1) and (2) and California Code of Regulations, title 8 (8 C.C.R.), section 10107.1. The 2025 standards are based on the audit results of calendar years 2021 through 2023.

Performance standards for 2025

The PAR performance standard for audits conducted in 2025 is 1.57376. Audit subjects with PAR performance ratings of 1.57376 or lower will be required to pay any unpaid compensation, but no administrative penalties will be assessed. If an audit subject’s PAR performance rating is 1.57377 or higher, the audit will expand to a FCA, and an additional sample of indemnity claims will be audited.

The FCA performance standard for audits conducted in 2025 is 2.14192. Audit subjects with an FCA performance rating of 2.14192 or less will be required to pay any unpaid compensation and administrative penalties will be assessed for all violations involving unpaid and late paid compensation. If an audit subject’s full compliance audit performance rating is 2.14193 or higher, an additional sample of denied claims as well as the expanded sample of indemnity claims will be audited. Penalties will be assessed for allviolations as appropriate pursuant to 8 C.C.R. sections 10111 through 10111.2.

Severity Rate standard for 2025

The Severity Rate standard for 2025 is $157.44.

More information on the performance standards that will be in use for the profile audit reviews and full compliance audits during calendar year 2025 will be posted on the DWC Audit and Enforcement Unit web page.

Business Group on Health 2025 Employer Health Care Strategy Survey

The Business Group on Health 2025 Employer Health Care Strategy Survey explored ways employers address health care costs and key benefit strategy considerations in the near future and long-term. Among inflationary pressures in the health care sector, worsening chronic condition burden in the population and the demand for many ground breaking – albeit expensive – treatments, employers are juggling many priorities. Strategies to lower costs, improve outcomes and strengthen the employee experience were explored in this survey.

Fielded between June 3 and July 12, the survey was completed by 125 employers that cover more than 17.1 million lives in the United States. Companies that completed the survey represent a broad range of industries and are diverse in size.

The role of a HR/Benefits leader has never been more complex and demanding. The 2025 survey results highlight the challenges employers face. Based on the findings of this survey, the following emerged as top focus areas among employers.

– – Health care costs are expected to grow at the highest rate in a decade.Since 2022, the projected increase in health care trend, before plan design changes, rose from 6% in 2022 to almost 8% for 2025.
– – Pharmacy costs are largely responsible for overall increases and consume a growing share of the health care budget. Between 2021 and 2023, the median percentage of health care dollars spent on pharmacy has jumped from 21% to 27%, suggesting that nearly all of the health care cost increase noted above is related to pharmacy cost.
– – Employers are seeing cost pressures from GLP-1 medications (which regulates blood sugar, appetite, and digestion), which are considered a top driver of health care costs this year. Seventy-nine percent of employers have seen an increase in interest in obesity medications – including GLP-1s – among their covered members.
– – Managing and reassessing vendor partnerships are at the center of employers’ plans to address costs and improve performance. Employers are reassessing the quality and effectiveness of their partnerships and looking to integrate their benefits to reduce costs and simplify the member experience.
– – Cancer remains the top condition driving cost; however, more employers say that cardiovascular conditions are among their top three cost drivers.Concerns about the cost of cancer care may be further fueled by increased prevalence in younger populations. Furthermore, the growing cost of cancer treatments, including gene and cell therapies currently in the pipeline, leaves employers questioning how their plans will be impacted.
– – Protecting ERISA preemption is employers’ highest priority for the Administration and Congress.This finding reflects the importance of ERISA to employers, which allows them to offer their employees comprehensive benefits in a nationally consistent and competitive manner.
– – Mental health continues to be a priority for employers, with a focus on access and ways to eliminate cost barriers. Seventy-nine percent of employers say that access is one of their top three mental health priorities for 2025. To address access and costs, employers continue to pursue strategies, such as virtual counseling, eliminating out-of-network barriers and using on-site counselors.
– – Employers remain committed to health equity efforts that address disparities. Employers continue to pursue a number of targeted approaches to narrow health disparities within their plans and programs. Holistically, the most common tactic found in the survey is collaborating with employee resource groups (ERGs) to promote benefits and well-being initiatives to specific groups.

Business Group on Health CEO Ellen Kelsay expects employers to react by being more selective about the care that people receive. They also will try to manage the use of expensive treatments for obesity and diabetes.The CEO spoke recently with The Associated Press, and answered questions about implementation of expected strategies by employers.

CWCI Reports that the SAWW Increase Bumps California WC Benefits for 2025

California’s State Average Weekly Wage (SAWW) rose nearly 3.8 percent in the year ending March 31, 2024, which will result in an increase in California workers’ compensation temporary total disability (TTD) and permanent total disability (PTD) rates for 2025 work injury claims and other workers’ compensation benefits that are tied to SAWW increases.

The latest wage data from the U.S. Department of Labor show that California’s SAWW increased by 3.77588 percent from $1,642 in the first quarter of 2023 to $1,704 in the first quarter of 2024.

As a result, the TTD/PTD maximum rate, which stands at $1,619.15 per week for 2024 injuries, will increase by an additional $61.14 to $1,680.29 per week for claims with injury dates on or after January 1, 2025. State law also ties minimum weekly TTD/PTD rates to SAWW increases, so those minimums will rise by $9.17 from the current $242.86 per week to $252.03 per week for claims with 2025 injury dates. The California Division of Workers’ Compensation provided the new TTD/PTD rates for 2025 injury claims and plans to issue a Newsline announcing the new rates.

Also beginning on January 1, 2025, other workers’ compensation benefits, including TTD paid two years or more after injury, life pension and PTD payments for injuries on or after January 1, 2003, and installment payments on death claims will be going up due to the SAWW increase. Underpayment of benefits results in penalties, so CWCI encourages claims administrators to review changes in benefit rates with legal counsel to assure that adjustments are appropriate and accurate.

For reference, data tables showing the SAWW for the 12 months ending March 31, 2023 and for the 12 months ending March 31, 2024 are on the U.S. Department of Labor Unemployment Insurance web page. A CWCI Bulletin with more details is also available to Institute members and subscribers under the Communications tab at www.cwci.org.