Tag: 2024 News

The founder and CEO of a California-based digital health company and its clinical president were just arrested in connection with their alleged participation in a scheme to distribute Adderall over the internet, conspire to commit health care fraud in connection with the submission of false and fraudulent claims for reimbursement for Adderall and other stimulants, and obstruct justice.

Ruthia He,also known as Rujia He, the founder and CEO of Done Global Inc., was arrested in Los Angeles and was expected to make her initial appearance in a Los Angeles federal court.

David Brody M.D., the clinical president of Done Health P.C. (collectively, Done), was arrested in San Rafael, California, and will make his initial appearance in San Francisco, California. Brody is a psychiatrist who maintained a DEA registration number and was authorized to prescribe controlled substances in the State of California.

The charges coincide with an ongoing shortage of several stimulant medications commonly prescribed to treat ADHD, according to the U.S. Centers for Disease Control and Prevention. A disruption “involving this large telehealth company could impact as many as 30,000 to 50,000 patients ages 18 years and older across all 50 U.S. states,” the agency said.

Back in September 2022 The Wall Street Journal and people familiar with the inquiries claimed that U.S. Drug Enforcement Administration agents have questioned people about telehealth company Done Global Inc.’s practices for prescribing controlled substances.

According to court documents, He and Brody allegedly conspired with others to provide easy access to Adderall and other stimulants in exchange for payment of a monthly subscription fee. The indictment alleges that the conspiracy’s purpose was for the defendants to unlawfully enrich themselves by, among other things, by increasing monthly subscription revenue and thus increasing the value of the company. Done allegedly arranged for the prescription of over 40 million pills of Adderall and other stimulants, and obtained over $100 million in revenue.

He and Brody allegedly obtained subscribers by targeting drug seekers and spending tens of millions of dollars on deceptive advertisements on social media networks.

They also allegedly intentionally structured the Done platform to facilitate access to Adderall and other stimulants, including by limiting the information available to Done prescribers, instructing Done prescribers to prescribe Adderall and other stimulants even if the Done member did not qualify, and mandating that initial encounters would be under 30 minutes. To maximize profits, He allegedly put in a place an “auto-refill” function that allowed Done subscribers to elect to have a message requesting a refill be auto-generated every month. He wrote that Done sought to “use the comp structure to dis-encourage follow-up” medical care by refusing to pay Done prescribers for any medical visits, telemedicine consultation, or time spent caring for patients after an initial consultation, and instead paying solely based on the number of patients who received prescriptions.

He and Brody allegedly persisted in the conspiracy even after being made aware that material was posted on online social networks about how to use Done to obtain easy access to Adderall and other stimulants, and that Done members had overdosed and died. They also allegedly concealed and disguised the conspiracy by making fraudulent representations to media outlets to forestall government investigations and action and induce third parties to continue doing business with Done.

He, Brody, and others also conspired to defraud pharmacies and Medicare, Medicaid, and the commercial insurers to cause the pharmacies to dispense Adderall and other stimulants to Done members in violation of their corresponding responsibility; Medicare, Medicaid, and the commercial insurers to pay for the cost of these drugs; and Done members to continue to pay subscription fees to Done. He and others allegedly made false and fraudulent representations about Done’s prescription policies and practices to induce the pharmacies to fill Done’s prescriptions. As a result, Medicare, Medicaid, and the commercial insurers paid in excess of approximately $14 million.

The indictment also alleges that He and Brody conspired to obstruct justice after a grand jury subpoena was issued to another telehealth company and in anticipation of a subpoena being issued to Done, including by deleting documents and communications, using encrypted messaging platforms instead of company email, and ultimately failing to produce documents in response to a subpoena issued to Done by a federal grand jury.

If convicted, He and Brody each face a maximum penalty of 20 years in prison on the conspiracy to distribute controlled substances and distribution of controlled substances counts.

Any patient of Done or medical professional who has been involved with the allegedly illegal conduct should call to report this conduct to the DEA hotline at 646-466-5159.

Title VII of the Civil Rights Act of 1964 mandated employers to maintain records that could be used to identify potential discrimination in hiring practices.Following this, in 1966, the Equal Employment Opportunity Commission (EEOC) implemented a requirement for certain employers to report employee data categorized by job category, race, ethnicity, and sex. This data collection became known as “EEO-1.”

While EEO-1 data collection has been in place for decades, it wasn’t until 2020 that the current EEO-1 Component 1 report format was finalized. In 2016, the EEOC sought approval to collect this specific data set, which focuses on workforce demographics. After receiving final approval from the Office of Management and Budget (OMB) in June 2020, the EEO-1 Component 1 report became the official format for this mandatory data collection.

The EEO-1 Component 1 report is a mandatory annual data collection that requires all private sector employers with 100 or more employees, and federal contractors with 50 or more employees meeting certain criteria, to submit demographic workforce data to the EEOC.

The EEOC has the authority to compel employers to file EEO-1 reports through court order pursuant to Section 709(c) of Title VII of the Civil Rights Act.

The U.S. Equal Employment Opportunity Commission (EEOC) just announced it has filed suit against 15 employers in 10 states this week, alleging the companies failed to comply with mandatory federal reporting requirements. The list of employer includes companies from the retail, construction, restaurant, manufacturing, logistics, and service industries.

Federal law requires employers with 100 or more employees to submit workforce data to the EEOC. The data collected includes workforce information by job category and sex, race, or ethnicity. This workforce demographic data is used for a variety of purposes including enforcement, analytics and research, and employer self-assessment.

“This data collection is an important tool for ensuring compliance with Title VII’s prohibition on workplace discrimination,” said EEOC General Counsel Karla Gilbride. “Not only did Congress authorize the EEOC to collect this data, Congress also authorized the agency to go to court to obtain compliance when employers ignore their obligation to provide the required information.”

The 2023 EEO-1 Component 1 data collection is currently underway. The EEOC began collecting EEO-1 Component 1 data from employers for the 2023 reporting cycle on April 30, 2024. The published deadline to file the 2023 EEO-1 Component 1 report was June 4, 2024.

The EEOC publishes an Instruction Booklet for employers to assist them in complying with this mandatory reporting requirement, which is available at https://www.eeocdata.org/eeo1

For more information on EEO data collection, please visit https://www.eeoc.gov/data/eeo-data-collections.

Ruben Perez Mireles Jr., 49, of Clovis, and his business associate, John Mena, 29, of Lemoore, were arraigned  on multiple felony counts including insurance fraud, grand theft, and tax fraud after a task force investigation led by the California Department of Insurance found they allegedly underreported over $29.2 million in payroll for multiple businesses to illegally save on workers’ compensation insurance premium and taxes.

Mireles and Mena operated two Kings County farm labor contracting companies, Vista Pacific Labor Solutions, Inc. and Calzona Ag Management, Inc. The investigation by the Central Valley Workers’ Compensation Fraud Task Force found that Mireles, owner of Vista Pacific Labor Solutions, Inc, underreported $7.6 million in employee payroll to his workers’ compensation insurance carrier for the period of September 2019 through August 2020. This underreporting resulted in a premium loss of $1.7 million.

The investigation revealed Mireles then created another farm labor contracting company, Calzona Ag Management, Inc. Mireles recruited Mena and together they shifted payroll to this new company to avoid an increased assessment of the business’ workplace safety, which would have more than doubled the insurance premium. Together, they underreported $8.8 million in employee payroll for the period of December 2019 through December 2021, resulting in an additional premium loss of $1.8 million.

Additionally, the task force investigation found Mireles underreported $12.8 million in employee payroll to the Employment Development Department and failed to report personal income to the Franchise Tax Board. This underreporting resulted in a combined loss of approximately $3 million for unpaid tax liability, penalties, and interest. Mireles and Mena’s fraud scheme defrauded their insurance carries, EDD, and FTB out of over $6.5 million.

Investigators also discovered that Mireles fraudulently obtained a COVID-19 Paycheck Protection Program loan. After an investigation led by the FBI, Mireles pleaded guilty and was sentenced to one year in prison. Mireles is also in court today on additional felony charges for his role in an earlier workers’ compensation insurance fraud scheme, also uncovered by the task force.

Mireles has been charged with eight felony counts including workers’ compensation insurance fraud, grand theft, unemployment insurance fraud, and tax fraud. Mena has been charged with three felony counts of workers’ compensation insurance fraud and one felony count of grand theft.

The Central Valley Workers’ Compensation Fraud Task Force is an inter-agency anti-fraud partnership with members from the California Department of Insurance, the California Employment Development Department, the California Franchise Tax Board, the Kings County District Attorney’s Office, the Fresno County District Attorney’s Office, the Kern County District Attorney’s Office, the Madera County District Attorney’s Office, the Merced County District Attorney’s Office, the San Luis Obispo County District Attorney’s Office, and the Tulare County District Attorney’s Office.

The case is being prosecuted by Kings County District Attorney Sarah Hacker.

Concerned with the widespread misclassification of workers, the legislature enacted A.B. 5 in 2019. A.B. 5 codified the California Supreme Court’s Dynamex Operations W., Inc. v. Superior Ct., 416 P.3d 1, 5 (Cal. 2018) decision and extended the application of the ABC test beyond wage orders to other labor and employment legislation, including workers’ compensation, unemployment insurance, and disability insurance.

On December 30, 2019, Lydia Olson, Miguel Perez, Uber Technologies, Inc., and Postmates, Inc.jointly filed a complaint against the State of California and the Attorney General of California (collectively seeking declaratory, injunctive, and other relief based on their allegations that A.B. 5 violates the Equal Protection Clauses, the Due Process Clauses, and the Contract Clauses of the United States and California Constitutions. They sought a preliminary injunction to prevent Defendants from enforcing A.B. 5.

The district court denied Plaintiffs’ motion for preliminary injunctive relief. Plaintiffs appealed the district court’s denial of the preliminary injunction. In November 2020, shortly before the 9th Circuit Court of Appeals heard argument in that appeal, California voters approved Proposition 22, a ballot initiative that classifies rideshare and delivery drivers – like Plaintiffs Olson and Perez – as independent contractors, notwithstanding A.B. 5 or any other provision of law. Prop. 22 took effect on December 16, 2020, in accordance with the default rule provided by the California Constitution.

After Prop. 22 passed, but before the Court of Appeals issued a decision in the appeal of the preliminary injunction, Plaintiffs filed the operative Second Amended Complaint. Defendants moved to dismiss the Second Amended Complaint for failure to state a claim. The district court granted the motion. The district court determined that Plaintiffs’ new allegations concerning the amendments to A.B. 5 and Prop. 22 did not rescue their claims.Plaintiffs timely appealed that order.

A three-judge panel reversed in part, concluding that the district court erred by dismissing Plaintiffs’ Equal Protection claims. The panel concluded that Plaintiffs plausibly alleged that “the exclusion of thousands of workers from the mandates of A.B. 5 is starkly inconsistent with the bill’s stated purpose of affording workers the ‘basic rights and protections they deserve.’ “

Upon the vote of a majority of nonrecused active judges, a rehearing en banc was granted and the three-judge panel decision. Olson v. California, 88 F.4th 781 (9th Cir. 2023).was vacated It then conducted a review de novo of the district court order granting a motion to dismiss for failure to state a claim.

“We must decide whether A.B. 5’s differential treatment of app-based work arrangements in the transportation and delivery service industry, on the one hand, and app-based work arrangements in other industries, on the other hand, survives rational basis review. In other words, we must determine whether it was rational for the California legislature to apply one test to determine the classification of Uber drivers and a different test to determine the classification of dogwalkers who provide services through Wag!, the “Uber for dogs.”

Under the deferential rational basis standard, the Court was required to approach A.B. 5 with “a strong presumption of validity,” and will invalidate it only if Plaintiffs negate “every conceivable basis” which might justify the lines it draws.

“Plaintiffs have failed to carry that burden here. There are plausible reasons for treating transportation and delivery referral companies differently from other types of referral companies, particularly where the legislature perceived transportation and delivery companies as the most significant perpetrators of the problem it sought to address – worker misclassification.”

Under the deferential rational basis standard, the en banc court in the published opinion of Olson et.,al, v State of California et. al. 21-55757 (June 2024) concluded that there were plausible reasons for treating transportation and delivery referral companies differently from other types of referral companies, particularly where the legislature perceived transportation and delivery companies as the most significant perpetrators of the problem it sought to address- worker misclassification.

That A.B. 5 may be underinclusive because it does not extend the ABC test to every industry and occupation that has historically contributed to California’s misclassification woes does not render it unconstitutionally irrational.

The en banc court did not disturb the prior panel’s disposition of plaintiffs’ Due Process, Contract Clause, and Bill of Attainder claims. Accordingly, the en banc court reinstated Parts III.B, III.C, and III.D of Olson v. California, 62 F.4th 1206, 1220–23 (9th Cir. 2023).

Six consumer organizations warned state Senate and Assembly leaders that a budget trailer bill proposed by the governor would cut the public out of insurance rate review and cost consumers billions.

In a letter sent last night, the groups said the governor’s proposal would gut the consumer intervention process and tie the insurance commissioner’s hands, sacrificing transparent public scrutiny of insurance rate increases for speedy approvals.

“Consumer interventions by Consumer Watchdog over the last 22 years have produced $6 billion in savings, and Consumer Federation of California Education Foundation’s interventions over the past 10 years have resulted in over $400 million in savings for California policyholders. These savings are in jeopardy under this proposal,” wrote the groups.

Consumer organizations signing the letter include: Consumer Watchdog, Consumer Federation of California, Consumers for Auto Reliability and Safety, Consumer Federation of America, Consumer Protection Policy Center, and The Children’s Advocacy Institute.

The governor’s trailer bill goes far beyond timelines, said Consumer Watchdog. It would:

– – Exclude consumers’ voice in rate increases below 7%
– – Force the insurance commissioner to make rate decisions on partial information
– – Speed rate hikes so the public cannot meaningfully participate before a rate increase is approved
– – Change the rules even in cases – a rate hike above 7% – where public challengers have a right to a public hearing by law
– – Encourage insurers to apply for three 7% rate hikes a year to avoid public hearings

Nothing in the proposal would stop the clock if insurance companies refuse to provide information the department or a public participant needs to determine if a rate is justified. And nothing in the proposal would ensure the department of insurance has enough staff to complete rate reviews quickly.

The plan mirrors a proposal that Insurance Commissioner Ricardo Lara and the insurance industry unsuccessfully tried to jam through the legislature during the final days of session in 2023.

“Giving insurers the right to raise rates more quickly will only leave Californians paying higher rates, not get more insurance companies back in the market. The largest insurance companies in California have received double digit rate hikes recently ” 20% for State Farm that took effect in March on top of an additional 6.9% last year, three rate hikes adding up to 37% for Farmers in the last year – and the companies still refuse to write new business,” said the groups.

Insurance companies fear greater liability under the FAIR Plan, the letter continues.  The best way to get Californians out of the high-cost, low-benefit FAIR Plan and covered by real home insurance again is to make insurance companies sell to Californians who protect their homes from wildfire. The groups called on lawmakers to require insurers to cover people who meet state home hardening and brush clearance guidelines.