- Agreement Requires Plaintiff to Initiate Arbitration after Court Orderon February 20, 2025 at 12:15 PM
Plaintiffs Michelle Arzate and others filed a class action complaint alleging that ACE American Insurance Company misclassified them as exempt employees and failed to provide them with the benefits required for nonexempt employees under state law, such as overtime pay and meal and rest periods. In an amended complaint, the plaintiffs added claims on an individual and representative basis under the Private Attorneys General Act of 2004.
The trial court granted the defendant’s motion to compel arbitration, but the court’s order did not address who was to commence the arbitration. The court ordered the parties “to submit a joint statement by September 8, 2023, confirming that an arbitrator has been selected and notifying the [c]ourt of the arbitration hearing date and the date of anticipated completion.”
The plaintiffs filed a petition for a writ of mandate challenging the trial court’s order, which was summarily denied on July 19, 2023 (Arzate v. Superior Court, No. B328586), followed by a petition for review in the Supreme Court, which was denied on September 20, 2023 (Arzate v. Superior Court, No. S281211).
On August 25, 2023, while their petition remained pending before the Supreme Court, the plaintiffs filed a motion in the trial court to lift the stay in the case. The plaintiffs argued that ACE was required to initiate the arbitration process, and that by failing to do so within the agreement’s 30-day time period, ACE had waived its right to arbitration.
On February 2, 2024, the trial court agreed with the plaintiffs’ assessment and granted the motion, finding that ACE’s inaction “was inconsistent with its right to arbitrate.”The trial court concluded that the obligation to commence arbitration lay with the defendant, ACE American Insurance Company, which had filed the motion to compel arbitration, rather than with the plaintiffs, a group of ACE employees who had consistently resisted arbitration. In the court’s view, ACE waived its right to arbitrate the dispute by failing to commence the arbitration.
The Court of Appeal disagreed with the trial court and reversed in the published case of Arzate v. ACE American Insurance Company -B336829 (February, 2025).
ACE argues that the trial court erred by finding it breached the arbitration agreements and waived its right to arbitration by failing to initiate arbitration within 30 days of the court’s order compelling arbitration. The Court of Appeal agreed.
The plaintiffs argue that ACE is the only party that “want[ed]” arbitration. ACE filed a motion to compel arbitration, whereas the plaintiffs always preferred to remain in court and resisted arbitration. The plaintiffs conclude that ACE was thus required to submit a demand within 30 days of the court order compelling arbitration. When it failed to do so, it breached the arbitration agreement and waived any right to arbitration.
The arbitration agreements at issue require any person having “employment related legal claims” to “submit them to . . . arbitration.” They also require “A party who wants to start the [a]rbitration [p]rocedure should submit a demand within the time periods required by applicable law."
The agreements also specified that "In the event an employee demands arbitration, the employee must also send with the demand letter a check or money order for $200 made payable to the [AAA]. The $200.00 sent by the employee will be used to pay a part of the administrative fees charged by the [AAA], the organization that will be providing arbitration services. The remaining fees charged by AAA will be paid by ACE. In the case of a court ordered arbitration, the demand for arbitration must be filed in accordance with these rules and procedures within thirty (30) calendar days from the date of entry of the court order or such other time period as determined by the court.”
"In this case, the language regarding the party that 'wants' or 'demands' arbitration occurs in the context of an agreement by the plaintiffs, 'in the event [they] have any employment related legal claims, [that they] will submit them to final and binding neutral third-party arbitration.' ACE’s arbitration policy, which was incorporated in the arbitration agreements, made the point even clearer, stating that 'arbitration by a neutral third party is the required and final means for the resolution of any employment-related legal claim not resolved by the internal dispute resolution processes,' and that the policy 'prevents both ACE and the employee from going to court over employment-related disputes.' "
The plaintiffs also claim that ACE, by failing to initiate arbitration, acted unconscionably and “effectively block[ed] every forum for redress including arbitration itself.” However the Court of Appeal noted that "The reason this case has not proceeded in arbitration is that the plaintiffs have thus far declined to pursue it there. We now make clear that it is the plaintiffs who must prosecute their case, including submitting a demand as specified in the arbitration agreements, so that it may proceed."
- Sutter Health Unveils $1B East Bay Facility Expansion Planon February 20, 2025 at 12:15 PM
Sutter Health announced a transformational plan to expand access to its comprehensive, integrated and coordinated high-quality care across the greater East Bay region. As part of this phased approach, Sutter will construct a flagship campus in the City of Emeryville featuring a regional destination ambulatory care complex and a new medical center with an initial capacity of up to 200 beds and room for future expansion. The plan prioritizes recruiting primary care and specialty physicians, reducing barriers for patients when scheduling appointments and obtaining referrals for care, and investing in programs and partnerships to strengthen the healthcare workforce.
Sutter announced it is investing more than $1 billion to expand services across the East Bay, ensuring patients will be able to conveniently reach comprehensive care within a 15-minute drive from home or work. At the heart of this regional expansion is the newly acquired, 12-acre Sutter Emeryville Campus at Horton and 53rd streets, which will serve as a key healthcare destination.
When complete, the new medical campus (approximately 1.3 million sq. ft.) in the heart of Emeryville will offer outpatient services at two existing buildings (approximately 530,000 sq. ft.) at 5555 Hollis Street and 5300 Chiron Street plus acute care services at a newly constructed medical center adjacent to the Hollis Street property. The Sutter Emeryville campus will also offer medical office space and parking at an existing 1,992-space parking garage.
Key Features of the Sutter Emeryville Campus
- - A new ambulatory care complex offering hospital-based outpatient clinics (neuroscience, rheumatology, pulmonary, dermatology, non-chemotherapy infusion), orthopedic center, physical therapy, ophthalmology, women’s center, pediatrics, digestive diseases and surgery, OB/GYN graduate medical education clinic, urology, ear, nose and throat (ENT), audiology, endoscopy center, urgent care, imaging and laboratory. The first ambulatory patients are expected as early as 2028.
- - Destination advanced centers in neuroscience, orthopedics, women’s health, primary care, urgent care, imaging, and other specialty clinics.
- - Approximately 190 primary and specialty care clinicians.
- - A new medical center (approximately 335,000 sq. ft.) with up to 200 beds is slated to include labor and delivery, neonatal intensive care, an ICU, emergency services, imaging services, operating rooms, private patient rooms and additional space for future bed expansion. The target opening for the new medical center is 2032-2033. When it opens, the new Emeryville medical center will replace the acute care services at 2450 Ashby Ave. in Berkeley. The Ashby campus will be reimagined to encompass an ambulatory surgery center, urgent care clinic, and possibly skilled nursing services. These new services offered in Berkeley will complete the integrated care continuum in the East Bay.
The Alta Bates campus will remain an acute care facility until the new medical center is built about 2.5 miles away in Emeryville. Once the new medical center opens, Sutter Health will reimagine the campus to feature an ambulatory surgery center, urgent care services and possibly skilled nursing. Convenient, on-site resources - including diagnostic labs, blood draw stations, advanced imaging technologies and treatment areas - will continue to provide care close to home for patients in Berkeley.
Sutter plans to expand behavioral health at the Herrick campus in Berkeley. Patients will access acute, crisis and outpatient care tailored to meet the needs of people with mental health conditions and substance use disorders, while ensuring specialized care for those with the most complex and serious conditions.
Renovation of a 10,000 sq. ft. medical office building at 3075 Adeline Street, across from the Ashby BART station, is already underway. This 20-exam-room primary care facility will also offer dedicated OB/GYN services. It will be staffed by 10 providers and is slated to open in the Spring 2025.
In Oakland, the Summit campus of Alta Bates Summit Medical Center already offers advanced centers dedicated to cancer care, heart and vascular care and other specialties. The campus will also be home to the $400 million Stanford Medicine Sutter Health Cancer Center when it opens in November 2026. The five story, 167,000 sq. ft. building is currently under construction and will bring advanced cancer care to the East Bay, offering infusion services, outpatient clinics, imaging, radiation oncology and an ambulatory surgery center.
Renovations are planned for the emergency departments at Oakland’s Summit campus and Castro Valley’s Sutter Eden Medical Center to accommodate more patients.
- WCAB Panel Says WCJ Self Destruct Orders are "Disfavored"on February 19, 2025 at 3:52 PM
On June 16, 2022, Scott McNalley filed an application for adjudication, alleging that he sustained cumulative injury to his neck, back and foot while employed as a foreman by Taft Electric Company during the period of November 12, 2020 through November 12, 2021.
Taft Electric Company filed a petition for dismissal, alleging that the “parties were subject to the terms and conditions of the collectively bargained [ADR] agreement,” that, “although jurisdiction is conferred upon the Appeals Board by Labor Code Section 3201.5, all parties preserve their rights by following the alternative system procedures,” and that dismissal of the application for adjudication was therefore warranted.
The WCJ granted the petition for dismissal, stating that the claim was dismissed with prejudice on the grounds that the alleged ADR agreement established that “the WCAB lacks jurisdiction.” The order states that “timely objection within 10 days of service showing good cause voids the order.” On October 4, 2022, defendant’s attorney filed a proof of service of the order upon applicant and applicant’s attorney.
On August 21, 2023, McNalley filed a petition to have his claim removed from ADR and proceed with his claim at the WCAB. On April 17, 2024, the parties appeared for a mandatory settlement conference on the issue of the petition. The WCJ advised that he would issue a formal order denying McNalley’s petition, and he ordered the case off calendar. On November 8, 2024, the WCJ issued the Order.
McNalley Petitioned for Reconsideration of the “Order Denying Applicant’s Petition to Remove Claim from Alternative Dispute Resolution (ADR) and Affirming Previous Order Dismissing Case for Lack of Jurisdiction” issued on November 8, 2024, wherein the workers’ compensation administrative law judge (WCJ) denied applicant’s petition to remove his case from ADR and proceed before the WCAB and that the previous order dismissing the case for lack of WCAB remains in effect."
His Petition was granted in the panel decision of McNalley v Taft Electric Company -ADJ16306548 (February 2025).
"Here, the record reveals that the WCJ granted the Petition for Dismissal without holding a settlement conference, framing the issues for trial, or holding a hearing in violation of Labor Code section 5502(d)(2). Applicant’s petition essentially sought to set aside the September 19, 2022 order dismissing the case for lack of jurisdiction. The result of this process was the Order served to terminate applicant’s case in a manner akin to summary judgment. However, pursuant to WCAB Rule 10515, summary judgment proceedings are not permitted in the workers’ compensation system and contested matters are to be tried by way of hearing on the record. (Cal. Code Regs., tit. 8, § 10515.)"
The WCAB panel noted that decisions of the Appeals Board “must be based on admitted evidence in the record.” (Hamilton v. Lockheed Corporation (Hamilton) (2001) 66 Cal.Comp.Cases 473, 476 (Appeals Board en banc).) Furthermore, decisions of the Appeals Board must be supported by substantial evidence. (Lab. Code, §§ 5903, 5952(d); Lamb v. Workmen’s Comp. Appeals Bd. (1974) 11 Cal.3d 274 [39 Cal.Comp.Cases 310]; Garza v. Workmen’s Comp. Appeals Bd. (1970) 3 Cal.3d 312 [35 Cal.Comp.Cases 500]; LeVesque v. Workmen’s Comp. Appeals Bd. (1970) 1 Cal.3d 627 [35 Cal.Comp.Cases 16].)
"We observe that “self destruct” orders such as the one here illustrate why use of this type of notice and order is disfavored. Whether good cause is presented is an issue of fact that requires a record, and because the moment that the order becomes “void” is dependent on whether and when a good cause objection is filed, it makes it difficult to determine exactly when or if the order is void."
"Because the September 19, 2022 order dismissing the case and the November 8, 2024 Order were issued without a hearing, we are persuaded that the orders violate applicant’s right of due process. Accordingly, we will rescind the Order and return the matter to the trial level so that the record may be developed on the parties’ respective contentions regarding the enforceability of the ADR agreement."
- Task Force Uncovers Large-Scale Organized Insurance Fraud Ringon February 19, 2025 at 3:52 PM
The California Department of Insurance issued a PSA with a warning for California drivers about an increase in scams involving tow truck companies targeting car accident victims where vehicles are being held hostage for cash. The scam has become prevalent in Southern California and the Department’s Inland Empire Automobile Insurance Fraud Task Force, has investigated multiple cases including one that has resulted in the arraignment and charges against 16 Southern California residents.
This task force investigation found the auto fraud ring allegedly conspired together to create fraudulent insurance claims to illegally collect over $216,932. The investigation discovered the large-scale organized auto insurance fraud ring was engaged in multiple types of schemes including holding vehicles hostage and collusive collisions. This same ring was previously charged in a similar scheme stemming from vehicles stolen under false pretences and brought to California Collision in San Bernardino County.
One of the scams in this case involves a tow truck showing up immediately after a collision occurs and offering to help the driver by towing their vehicle to a body shop. Then the body shop forces the driver to pay a large amount of money typically not covered by your insurance in order to get the vehicle back.
The Inland Empire Automobile Insurance Task Force began this investigation in November 2022 after they found out a California Highway Patrol non-sworn employee, Rosa Isela Santistevan, 56, of Irvine, was unlawfully selling traffic collision report face pages, which contained personal information of people who had been involved in collisions throughout Southern California.
After the task force served numerous search warrants they seized over 3,500 CHP traffic collision report face pages from the residence of Esmeralda Parga, 27, of Pomona, who the task force determined was connected to Santistevan through the organized ring’s ringleader, Andre Angelo Reyes, 37, of Corona. The conspiracy began after Reyes befriended Santistevan and other CHP employees by donating to various CHP events and parties. Santistevan printed and unlawfully sold thousands of traffic collision face pages to Reyes who would then provide the reports to E. Parga. E. Parga would then contact the parties involved in the collision, pretending to be from their insurance company and coordinate having their vehicle towed to a repair center that they misrepresented as approved by the insurance company.
Unbeknownst to the victims, E. Parga did not represent the insurance company and was stealing the victims’ vehicles. Reyes and E. Parga would then dispatch tow trucks, whose drivers cooperated in the scheme and would pick up the vehicles in Riverside County and tow them to Certified Auto in Buena Park, owned by Anthony Gomez, 36, of Jurupa Valley. Once the vehicles were at Certified Auto, Certified Auto would hold the vehicle hostage and demand cash payment from the insurance companies to have the vehicles released.
During the numerous search warrants, additional evidence was obtained showing the alleged ring was engaged in other types of insurance fraud schemes, including collusive collisions.The Riverside County District Attorney’s Office has also charged Reyes and Diana Villa Pineda, 34, of Corona with tax evasion of $136,408.
The Department of Insurance said that there are a few red flags drivers should be aware of to make sure they are not a victim of this type of scam:
- - Tow truck shows up within minutes of accident, you may not even have had time to call anyone yet.
- - Tow truck driver tells you which body shop your car is going to instead of working with you to identify where you want your vehicle to go.
- - Tow truck driver tells you someone will contact you by phone or asks you to sign documents.
- - Tow truck driver requests a rideshare for you.
The Department urges drivers if they believe they may be in a situation like this to verify the tow truck with their insurance company or wait for CHP to verify the tow truck was dispatched by CHP. Also, do not sign any documents until they have talked to their insurance company.
- Blue Cross Sues L.A. "Insurance Advocate" for $7.6M Fraudon February 18, 2025 at 3:53 PM
Blue Cross of California d/b/a Anthem Blue Cross is a California Stock Corporation with its principal place of business in Woodland Hills, California. Anthem sells health insurance and related administrative services to California employers, individuals, and families.
AA Insurance Advocacy, Inc. is a California-based company that was incorporated on May 21, 20212. The company is registered as a California Stock Corporation and is currently active. The principal address for the company is 1421 Ambassador Street, Unit #212, Los Angeles, CA 900352. Alanna Apfel is listed as the Chief Executive Officer, Chief Financial Officer, Director, and Secretary of the company. She is an insurance patient advocate who helps patients with employer-sponsored PPO insurance negotiate with insurance companies to cover their out-of-pocket mental health therapy costs or services provided by out-of-network therapists.
According to a Civil Complaint filed on February 3, 2025 in the Los Angeles County Superior Court, Anthem alleges that Apfel and her Corporation submitted "fraudulent claims for out-of-network healthcare services that were misrepresented, inflated, or never provided at all." Anthem further alleges that "This scheme was carried out by Alanna Apfel, on her own behalf and through AA Insurance Advocacy, Inc., an entity through which she presents herself to Anthem members and the public as an “insurance advocate” that will negotiate with Anthem (and other insurers) to maximize reimbursement for certain out-of-network medical expenses."
To date, Anthem alleges it "has already identified more than $7.6 million dollars in payments that were directly caused by Ms. Apfel’s fraudulent requests for out-of-network authorizations and/or submission of claims on behalf of more than 480 Anthem members." And it further alleges that this "figure is highly conservative, with the true amount of loss expected to grow dramatically as Anthem continues its investigation." Anthem provided details in the allegations of its lawsuit.
"In reality, Ms. Apfel generates additional reimbursement not through advocacy, but rather by falsely seeking out-of-network authorizations and creating sham out-of-network medical claims for healthcare services. She then submits those claims to Anthem to obtain reimbursement payments to her member-clients for services never rendered or which are far in excess of what the healthcare providers actually charged and the members actually paid for." Anthem further alleges that "Ms. Apfel then charges Anthem members a fee for her “services,” typically based on a percentage of these inflated reimbursements as a kickback for submitting the falsified claims on the members’ behalf."
"Ms. Apfel typically starts with a request for a “network exception” for the member: a way for the member to see an out-of-network provider so that, in theory, the member can receive reimbursement from Anthem for the full out-of-pocket costs supposedly paid to the provider by the member for that authorized, out-of-network care." Anthem then claims that when "Anthem, predictably, is unable to identify an appropriate in-network provider satisfying Ms. Apfel’s numerous requirements, it will authorize the out-of-network referral and provide the member with a network exception which requires Anthem to reimburse the member for the actual out-of-pocket costs paid to that out-of-network provider."
"Ms. Apfel’s and Defendants’ “advocacy” was designed to fraudulently intervene and capitalize on this out-of-network reimbursement process by, depending on the case, grossly inflating or completely fabricating services supposedly rendered by the out-of-network provider and paid for by the member. This caused, and continues to cause, Anthem to pay out millions of dollars to reimburse members for costs they never actually incurred."
Anthem provided several examples of the alleged fraudulent scheme, all involving inflated schemes for psychotherapy with various mental health practitioners. In one example, "Anthem member K.S. retained Ms. Apfel to obtain reimbursement for treatment from out-of-network provider Dr. Joseph Whitcomb, PsyD, LMFT, a provider who had previously treated K.S."
"Based on Ms. Apfel’s representations, Anthem authorized an out-of-network referral/network exception for K.S., in good faith, to treat with Dr. Whitcomb for in-office treatment from May 1, 2023 through April 29, 2024. On or about January 9, 2024, Anthem renewed the authorization for in-office treatment from Dr. Whitcomb from January 1, 2024 through December 31, 2024."
"Dr. Whitcomb, however, could not have treated K.S. during this timeframe because he had moved to Europe years earlier in 2021, shortly after K.S. had originally stopped treating with him." Anthem alleges that "Apfel submitted a claim for reimbursement on behalf of K.S. which included a fraudulent bill Ms. Apfel had created purporting to show that, in March 2024, K.S. had received 17 sessions of psychotherapy from Dr. Whitcomb at a cost of $675 per session, and that K.S. had paid Dr. Whitcomb $11,475 for this period."
Further, Anthem alleges "Dr. Whitcomb died suddenly on May 18, 2024 while in Europe. Roughly one month after his death, on June 16, 2024, Ms. Apfel submitted a claim for reimbursement on behalf of K.S. which included a fraudulent bill Ms. Apfel had created showing that, in May 2024, K.S. supposedly had received 23 sessions of psychotherapy from Dr. Whitcomb at a cost of $995 per session, including 10 sessions that purportedly occurred after Dr. Whitcomb’s May 18, 2024 death, and that K.S. had paid Dr. Whitcomb $22,885 for this period."
No answer or other responsive document has been filed in the Superior Court by any defendants as of the date of this report.
- Health Net to Pay Over $11M for False Cybersecurity Certificationon February 18, 2025 at 3:53 PM
Centene Corporation is a leading healthcare enterprise that provides access to healthcare services. The company focuses on government-sponsored healthcare programs, including Medicaid and Medicare, as well as individuals and families served by the Health Insurance Marketplace. Centene operates in all 50 states and serves over 28.6 million managed care members.
Health Net Federal Services, Inc. (HNFS) of Rancho Cordova, is a subsidiary of Centene Corporation. HNFS provides healthcare services to military service members, retirees, and their families through the TRICARE program. HNFS is responsible for managing the TRICARE West Region, which includes processing claims, providing customer service, and ensuring access to healthcare for beneficiaries.
HNFS and its corporate parent, Centene Corporation, have agreed to pay $11,253,400 to resolve claims that HNFS falsely certified compliance with federal contractor cybersecurity requirements, The cybersecurity requirements were contained in a contract between HNFS and the U.S. Department of Defense (DoD) to administer the Defense Health Agency’s (DHA) health insurance program TRICARE for servicemembers and their families.
The settlement resolves allegations that, between 2015 and 2018, HNFS failed to meet certain cybersecurity controls and falsely certified compliance with them in annual reports to DHA that were required under its contract. The United States alleged that HNFS failed to timely scan for known vulnerabilities and to remedy security flaws on its networks and systems, in accordance with its System Security Plan and the response times HNFS had established.
Furthermore, the United States alleged HNFS ignored reports from third-party security auditors and its internal audit department of cybersecurity risks on HNFS’s networks and systems related to asset management; access controls; configuration settings; firewalls; end-of-life hardware and software in use; patch management (i.e., installing critical security updates released by vendors to counter known threats); vulnerability scanning; and password policies. Nonetheless, the United States alleged, HNFS annually certified to DHA that it complied with controls that it violated and, for all of these reasons, its claims for payment were false.
The government’s pursuit of this matter is part of its ongoing efforts to hold accountable entities or individuals that put sensitive information at risk by knowingly providing deficient cybersecurity products or services, knowingly misrepresenting their cybersecurity practices or protocols or knowingly violating obligations to monitor and report cybersecurity incidents. Information on how to report cyberfraud can be found here.
The claims asserted against defendants are allegations only; there has been no determination of liability.
- Judge Limits New California Anti "Pay-for-Delay" Pharma Lawon February 17, 2025 at 3:44 PM
On October 7, 2019, California Governor Gavin Newsom signed Assembly Bill 824 (“AB 824”) into law. AB 824 creates a presumption that “reverse payment” settlement agreements regarding patent infringement claims between brand-name and generic pharmaceutical companies are anticompetitive and unlawful.
Reverse payment settlement agreements arise primarily - if not exclusively - in the context of pharmaceutical drug regulations and suits brought under the statutory provisions of the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Act.
Under the Hatch-Waxman Act, once a brand-name company has submitted a new prescription drug to the U.S. Food and Drug Administration (“FDA”) and gained approval to market it, a manufacturer of a generic drug with the same active ingredients that is biologically equivalent to the approved brand-name drug can gain approval to market the generic through an abbreviated FDA process.
The New Drug Application (“NDA”) process to which new prescription drugs are subject is long, comprehensive, and expensive, whereas the Abbreviated New Drug Application (“ANDA”) process to which generic drugs are subject is substantially less expensive and requires far less testing.
In order to gain approval through the FDA, the generic company must file an ANDA. As part of this application, the generic company must assure the FDA that its drug will not infringe on any patents owned by the brand-name company. The brand-name company can and often does bring suit against the generic drug manufacturer over patent rights.
Settlements of the resulting lawsuits sometimes include reverse payments in which the plaintiff, the brand-name company, pays the defendant, the infringing generic company, a sum of money for the promise that the generic company will keep its drug off the market for an agreed-upon length of time. These have become known as "pay-for-delay" agreements in the drug industry.
AB 824 targets these types of settlements. According to the State, AB 824 closes this loophole in the Hatch-Waxman Act and ensures a brand-name company cannot continue to enforce an otherwise weak patent against generic companies through these reverse payment settlement agreements. AB 824 imposes a presumption that a settlement agreement involving a brand-name company compensating the generic company for keeping its drug off the market is anticompetitive under California antitrust law.
A nonprofit, voluntary association comprised of the leading manufacturers and distributors of generic and biosimilar medicines, manufacturers and distributors of bulk active pharmaceutical ingredients, and suppliers of other goods and services to the generic and biosimilar pharmaceutical industry, filed a federal lawsuit in an attempt to invalidate AB 824 in the case of Association for Accessible Medicines v Bonta - 2:20-cv-01708-TLN-SCR.
On September 15, 2023, the State of California and Plaintiff Association-for-Accessible-Medicines filed motions for summary judgment. The State argued the participation of each of Plaintiff’s members is necessary to establish associational standing and all of Plaintiff’s claims fail on the merits. Plaintiff argued there are no genuine disputes of fact regarding its standing and that it succeeds on the merits of its dormant Commerce Clause claim.
On February 12, 2025 the motions were granted in part and denied in part. The Court converted "the current preliminary injunction into a permanent injunction. The State may enforce the provisions of AB 824 with respect to settlement agreements negotiated, completed, or entered into within California’s borders. The injunction bars the Attorney General of the State of California, as well as the Attorney General’s officers, agents, employees, attorneys, and all persons in active concert or participation with them from implementing or enforcing AB 824 against Plaintiff, its member entities, or their agents and licensees, with the exception of settlement agreements negotiated, completed, or entered into within California’s borders."
- Musk Escalates AI Battle As OpenAI Rejects $97B Takeover Bidon February 17, 2025 at 3:44 PM
OpenAI was founded in December 2015 by a group of tech visionaries, including Sam Altman, Elon Musk, Ilya Sutskever, Greg Brockman, and others. Their mission was to develop artificial intelligence in a way that benefits all of humanity. OpenAI is headquartered in San Francisco, California, nestled in the heart of Silicon Valley, what some say is the global hub for technology and innovation.
Initially, OpenAI was a non-profit organization, but in 2019, it transitioned to a capped-profit model to attract more funding and talent. The organization consists of the non-profit OpenAI, Inc., registered in Delaware, and its for-profit subsidiary introduced in 2019, OpenAI Global, LLC. Microsoft owns roughly 49% of OpenAI's equity, having invested US$13 billion. It also provides computing resources to OpenAI through its cloud platform, Microsoft Azure.
A dispute between OpenAI and Elon Musk has been brewing for some time. Musk, who was one of the co-founders and early investors in OpenAI, has been critical of the organization's direction and its shift towards a for-profit model.There has been an ongoing power struggle within OpenAI, with Musk and Altman having differing visions for the company's future.
Musk has taken legal action against OpenAI, claiming that the organization is violating the terms of his foundational contributions. He has also accused OpenAI of unfairly stifling business competition, particularly with his own AI startup, xAI. In response to Musk’s lawsuit, OpenAI has said it will move to dismiss Musk’s claims and that Musk “should be competing in the marketplace rather than the courtroom”.
“Something is going to trial in this case,” US District Judge Yvonne Gonzalez Rogers in Oakland, California, said earlier this month as Judge Rogers was considering Musk’s recent request for a preliminary injunction to block OpenAI’s conversion before going to trial.
The stakes on OpenAI’s corporate transition have now escalated, as OpenAI’s last fundraising round of $6.6bn and a new round of up to $25bn under discussion with SoftBank are conditioned on the company restructuring to remove the nonprofit’s control.
Recently, Musk led a group of investors in an unsolicited $97.4 billion bid to buy OpenAI. This bid was unanimously rejected by OpenAI's board over the weekend. OpenAI has accused Musk of contradicting his own lawsuit with his takeover bid, arguing that his actions are at odds with his legal claims.
AI models like ChatGPT, has become a dominant force in the field. Musk’s vision of a more open-source, safety-oriented approach to AI development stands in contrast to OpenAI’s evolving business model, which increasingly focuses on monetization. The situation remains dynamic, with both legal and business maneuvers playing out publicly.
- CDI to Assess Carriers $1B for FAIR Plan Bailout After LA Fireson February 13, 2025 at 4:14 PM
Ordering the insurance companies’ FAIR Plan to continue swiftly paying claims to Southern California wildfire survivors, Insurance Commissioner Ricardo Lara today took action to maintain its solid financial footing. The FAIR Plan, an insurance safety net that the state requires insurance companies to operate, requested the Commissioner’s approval for $1 billion in additional funds from its member companies and also released detailed data about its claims paid to wildfire survivors.
Commissioner Lara approved the FAIR Plan’s request - known as an “assessment” - for the funding necessary to continue meeting its obligations to Californians. The fee will be divided among insurers based on their market share. The $1 billion assessment is the largest since the FAIR Plan was created in 1968, and the first time since the 1994 Northridge earthquake. State regulations allow insurers to pass along as much as half the cost of the assessment to customers, in the form of higher charges. Insurers must absorb the other half.
Additional key actions include:
- - Directing the FAIR Plan to hire additional staff needed to process and pay claims fairly, fully, and quickly.
- - Requiring the FAIR Plan to utilize all available funds, including reserves and reinsurance funds.
- - Protecting consumers from bearing the full cost of an assessment, with insurance companies responsible for half the assessment under an agreement reached last year. Subject to the Commissioner’s prior approval under Proposition 103, insurance companies may issue a temporary supplemental fee as a percentage of the policy premium and cannot pass assessment costs on to consumers in future rates.
- - Maintaining a healthy FAIR Plan reserve fund for future claims as the summer wildfire season approaches.
- - Requiring the FAIR Plan to comply with all laws applicable to other insurance companies, including advance payments for living expenses and personal property without the need for an inventory.
Commissioner Lara claims he finalized the Sustainable Insurance Strategy in 2024 - the largest insurance reform in 30 years - aimed at increasing the issuance of regular insurance policies in higher-risk areas and reducing reliance on the FAIR Plan.
Further underscoring the need for this reform, the most recent FAIR Plan assessments followed the 1993 Kinneloa Fire in Altadena and the Old Topanga Fire in Malibu and Topanga, which affected some of the same areas as the 2025 fires - claiming three lives and destroying nearly 550 structures in those devastating incidents. Previous insurance commissioners approved $260 million, or approximately $563 million in today’s dollars, in assessments for those fires and for the fires following the 1994 Northridge Earthquake.
Commissioner Lara expects to file the Department’s Report of Examination for an ongoing financial examination of the FAIR Plan, including its compliance with recommendations from the Department’s 2022 Operational Assessment Report in coming months. The report called for significant changes in the FAIR Plan’s governance, operations, underwriting and claims handling, risk management, customer service, and financial planning strategies and policies.
Using FAIR Plan data from the Property Insurance Plans Service Office (PIPSO), the AM Best Commentary titled, “California Wildfires: Multiple Credit Negative Impacts for Insurers,” reveals that the number of California FAIR Plan policies rose by 276 percent from 2018 through 2024 (based on fiscal years ending September 30). And the premium attributable to these policies jumped to $1.4 billion in 2024, up more than 15-times higher than the $87.2 million recorded for the California FAIR plan in 2018.
- Legislature Seeks to Limit Misleading AI Healthcareon February 13, 2025 at 4:14 PM
A new proposed law was introduced on February 10, 2025, AB 489, that is aimed to protect Californians from AI systems that misrepresent “themselves” as health professionals. Specifically, the bill will provide regulators the authority to enforce title protections against those who develop or deploy AI systems that claim to be a licensed or certified health professional.
This legislation, sponsored by SEIU California and the California Medical Association, comes after multiple stories of individuals developing unhealthy relationships with AI chatbots and these same chatbots being found to pose as licensed practitioners.
Additionally, the Bill author claims AI is taking the health field by storm, with some companies pushing staff to use Generative AI to respond to patients and others developing for-hire "AI nurses." This bill ensures consumers are clear about who they are or are not talking to.
This bill would make provisions of law that prohibit the use of specified terms, letters, or phrases to falsely indicate or imply possession of a license or certificate to practice a health care profession, as defined, enforceable against an entity who develops or deploys artificial intelligence technology that uses one or more of those terms, letters, or phrases in its advertising or functionality.
The bill would prohibit the use by AI technology of certain terms, letters, or phrases that indicate or imply that the advice or care being provided through AI is being provided by a natural person with the appropriated health care license or certificate.
This bill would make a violation of these provisions subject to the jurisdiction of the appropriate health care profession board, and would make each use of a prohibited term, letter, or phrase punishable as a separate violation.
- Agreement Requires Plaintiff to Initiate Arbitration after Court Orderon February 20, 2025 at 12:15 PM
Plaintiffs Michelle Arzate and others filed a class action complaint alleging that ACE American Insurance Company misclassified them as exempt employees and failed to provide them with the benefits required for nonexempt employees under state law, such as overtime pay and meal and rest periods. In an amended complaint, the plaintiffs added claims on an individual and representative basis under the Private Attorneys General Act of 2004.
The trial court granted the defendant’s motion to compel arbitration, but the court’s order did not address who was to commence the arbitration. The court ordered the parties “to submit a joint statement by September 8, 2023, confirming that an arbitrator has been selected and notifying the [c]ourt of the arbitration hearing date and the date of anticipated completion.”
The plaintiffs filed a petition for a writ of mandate challenging the trial court’s order, which was summarily denied on July 19, 2023 (Arzate v. Superior Court, No. B328586), followed by a petition for review in the Supreme Court, which was denied on September 20, 2023 (Arzate v. Superior Court, No. S281211).
On August 25, 2023, while their petition remained pending before the Supreme Court, the plaintiffs filed a motion in the trial court to lift the stay in the case. The plaintiffs argued that ACE was required to initiate the arbitration process, and that by failing to do so within the agreement’s 30-day time period, ACE had waived its right to arbitration.
On February 2, 2024, the trial court agreed with the plaintiffs’ assessment and granted the motion, finding that ACE’s inaction “was inconsistent with its right to arbitrate.”The trial court concluded that the obligation to commence arbitration lay with the defendant, ACE American Insurance Company, which had filed the motion to compel arbitration, rather than with the plaintiffs, a group of ACE employees who had consistently resisted arbitration. In the court’s view, ACE waived its right to arbitrate the dispute by failing to commence the arbitration.
The Court of Appeal disagreed with the trial court and reversed in the published case of Arzate v. ACE American Insurance Company -B336829 (February, 2025).
ACE argues that the trial court erred by finding it breached the arbitration agreements and waived its right to arbitration by failing to initiate arbitration within 30 days of the court’s order compelling arbitration. The Court of Appeal agreed.
The plaintiffs argue that ACE is the only party that “want[ed]” arbitration. ACE filed a motion to compel arbitration, whereas the plaintiffs always preferred to remain in court and resisted arbitration. The plaintiffs conclude that ACE was thus required to submit a demand within 30 days of the court order compelling arbitration. When it failed to do so, it breached the arbitration agreement and waived any right to arbitration.
The arbitration agreements at issue require any person having “employment related legal claims” to “submit them to . . . arbitration.” They also require “A party who wants to start the [a]rbitration [p]rocedure should submit a demand within the time periods required by applicable law."
The agreements also specified that "In the event an employee demands arbitration, the employee must also send with the demand letter a check or money order for $200 made payable to the [AAA]. The $200.00 sent by the employee will be used to pay a part of the administrative fees charged by the [AAA], the organization that will be providing arbitration services. The remaining fees charged by AAA will be paid by ACE. In the case of a court ordered arbitration, the demand for arbitration must be filed in accordance with these rules and procedures within thirty (30) calendar days from the date of entry of the court order or such other time period as determined by the court.”
"In this case, the language regarding the party that 'wants' or 'demands' arbitration occurs in the context of an agreement by the plaintiffs, 'in the event [they] have any employment related legal claims, [that they] will submit them to final and binding neutral third-party arbitration.' ACE’s arbitration policy, which was incorporated in the arbitration agreements, made the point even clearer, stating that 'arbitration by a neutral third party is the required and final means for the resolution of any employment-related legal claim not resolved by the internal dispute resolution processes,' and that the policy 'prevents both ACE and the employee from going to court over employment-related disputes.' "
The plaintiffs also claim that ACE, by failing to initiate arbitration, acted unconscionably and “effectively block[ed] every forum for redress including arbitration itself.” However the Court of Appeal noted that "The reason this case has not proceeded in arbitration is that the plaintiffs have thus far declined to pursue it there. We now make clear that it is the plaintiffs who must prosecute their case, including submitting a demand as specified in the arbitration agreements, so that it may proceed." - Sutter Health Unveils $1B East Bay Facility Expansion Planon February 20, 2025 at 12:15 PM
Sutter Health announced a transformational plan to expand access to its comprehensive, integrated and coordinated high-quality care across the greater East Bay region. As part of this phased approach, Sutter will construct a flagship campus in the City of Emeryville featuring a regional destination ambulatory care complex and a new medical center with an initial capacity of up to 200 beds and room for future expansion. The plan prioritizes recruiting primary care and specialty physicians, reducing barriers for patients when scheduling appointments and obtaining referrals for care, and investing in programs and partnerships to strengthen the healthcare workforce.
Sutter announced it is investing more than $1 billion to expand services across the East Bay, ensuring patients will be able to conveniently reach comprehensive care within a 15-minute drive from home or work. At the heart of this regional expansion is the newly acquired, 12-acre Sutter Emeryville Campus at Horton and 53rd streets, which will serve as a key healthcare destination.
When complete, the new medical campus (approximately 1.3 million sq. ft.) in the heart of Emeryville will offer outpatient services at two existing buildings (approximately 530,000 sq. ft.) at 5555 Hollis Street and 5300 Chiron Street plus acute care services at a newly constructed medical center adjacent to the Hollis Street property. The Sutter Emeryville campus will also offer medical office space and parking at an existing 1,992-space parking garage.
Key Features of the Sutter Emeryville Campus
- - A new ambulatory care complex offering hospital-based outpatient clinics (neuroscience, rheumatology, pulmonary, dermatology, non-chemotherapy infusion), orthopedic center, physical therapy, ophthalmology, women’s center, pediatrics, digestive diseases and surgery, OB/GYN graduate medical education clinic, urology, ear, nose and throat (ENT), audiology, endoscopy center, urgent care, imaging and laboratory. The first ambulatory patients are expected as early as 2028.
- - Destination advanced centers in neuroscience, orthopedics, women’s health, primary care, urgent care, imaging, and other specialty clinics.
- - Approximately 190 primary and specialty care clinicians.
- - A new medical center (approximately 335,000 sq. ft.) with up to 200 beds is slated to include labor and delivery, neonatal intensive care, an ICU, emergency services, imaging services, operating rooms, private patient rooms and additional space for future bed expansion. The target opening for the new medical center is 2032-2033. When it opens, the new Emeryville medical center will replace the acute care services at 2450 Ashby Ave. in Berkeley. The Ashby campus will be reimagined to encompass an ambulatory surgery center, urgent care clinic, and possibly skilled nursing services. These new services offered in Berkeley will complete the integrated care continuum in the East Bay.
The Alta Bates campus will remain an acute care facility until the new medical center is built about 2.5 miles away in Emeryville. Once the new medical center opens, Sutter Health will reimagine the campus to feature an ambulatory surgery center, urgent care services and possibly skilled nursing. Convenient, on-site resources - including diagnostic labs, blood draw stations, advanced imaging technologies and treatment areas - will continue to provide care close to home for patients in Berkeley.
Sutter plans to expand behavioral health at the Herrick campus in Berkeley. Patients will access acute, crisis and outpatient care tailored to meet the needs of people with mental health conditions and substance use disorders, while ensuring specialized care for those with the most complex and serious conditions.
Renovation of a 10,000 sq. ft. medical office building at 3075 Adeline Street, across from the Ashby BART station, is already underway. This 20-exam-room primary care facility will also offer dedicated OB/GYN services. It will be staffed by 10 providers and is slated to open in the Spring 2025.
In Oakland, the Summit campus of Alta Bates Summit Medical Center already offers advanced centers dedicated to cancer care, heart and vascular care and other specialties. The campus will also be home to the $400 million Stanford Medicine Sutter Health Cancer Center when it opens in November 2026. The five story, 167,000 sq. ft. building is currently under construction and will bring advanced cancer care to the East Bay, offering infusion services, outpatient clinics, imaging, radiation oncology and an ambulatory surgery center.
Renovations are planned for the emergency departments at Oakland’s Summit campus and Castro Valley’s Sutter Eden Medical Center to accommodate more patients. - WCAB Panel Says WCJ Self Destruct Orders are "Disfavored"on February 19, 2025 at 3:52 PM
On June 16, 2022, Scott McNalley filed an application for adjudication, alleging that he sustained cumulative injury to his neck, back and foot while employed as a foreman by Taft Electric Company during the period of November 12, 2020 through November 12, 2021.
Taft Electric Company filed a petition for dismissal, alleging that the “parties were subject to the terms and conditions of the collectively bargained [ADR] agreement,” that, “although jurisdiction is conferred upon the Appeals Board by Labor Code Section 3201.5, all parties preserve their rights by following the alternative system procedures,” and that dismissal of the application for adjudication was therefore warranted.
The WCJ granted the petition for dismissal, stating that the claim was dismissed with prejudice on the grounds that the alleged ADR agreement established that “the WCAB lacks jurisdiction.” The order states that “timely objection within 10 days of service showing good cause voids the order.” On October 4, 2022, defendant’s attorney filed a proof of service of the order upon applicant and applicant’s attorney.
On August 21, 2023, McNalley filed a petition to have his claim removed from ADR and proceed with his claim at the WCAB. On April 17, 2024, the parties appeared for a mandatory settlement conference on the issue of the petition. The WCJ advised that he would issue a formal order denying McNalley’s petition, and he ordered the case off calendar. On November 8, 2024, the WCJ issued the Order.
McNalley Petitioned for Reconsideration of the “Order Denying Applicant’s Petition to Remove Claim from Alternative Dispute Resolution (ADR) and Affirming Previous Order Dismissing Case for Lack of Jurisdiction” issued on November 8, 2024, wherein the workers’ compensation administrative law judge (WCJ) denied applicant’s petition to remove his case from ADR and proceed before the WCAB and that the previous order dismissing the case for lack of WCAB remains in effect."
His Petition was granted in the panel decision of McNalley v Taft Electric Company -ADJ16306548 (February 2025).
"Here, the record reveals that the WCJ granted the Petition for Dismissal without holding a settlement conference, framing the issues for trial, or holding a hearing in violation of Labor Code section 5502(d)(2). Applicant’s petition essentially sought to set aside the September 19, 2022 order dismissing the case for lack of jurisdiction. The result of this process was the Order served to terminate applicant’s case in a manner akin to summary judgment. However, pursuant to WCAB Rule 10515, summary judgment proceedings are not permitted in the workers’ compensation system and contested matters are to be tried by way of hearing on the record. (Cal. Code Regs., tit. 8, § 10515.)"
The WCAB panel noted that decisions of the Appeals Board “must be based on admitted evidence in the record.” (Hamilton v. Lockheed Corporation (Hamilton) (2001) 66 Cal.Comp.Cases 473, 476 (Appeals Board en banc).) Furthermore, decisions of the Appeals Board must be supported by substantial evidence. (Lab. Code, §§ 5903, 5952(d); Lamb v. Workmen’s Comp. Appeals Bd. (1974) 11 Cal.3d 274 [39 Cal.Comp.Cases 310]; Garza v. Workmen’s Comp. Appeals Bd. (1970) 3 Cal.3d 312 [35 Cal.Comp.Cases 500]; LeVesque v. Workmen’s Comp. Appeals Bd. (1970) 1 Cal.3d 627 [35 Cal.Comp.Cases 16].)
"We observe that “self destruct” orders such as the one here illustrate why use of this type of notice and order is disfavored. Whether good cause is presented is an issue of fact that requires a record, and because the moment that the order becomes “void” is dependent on whether and when a good cause objection is filed, it makes it difficult to determine exactly when or if the order is void."
"Because the September 19, 2022 order dismissing the case and the November 8, 2024 Order were issued without a hearing, we are persuaded that the orders violate applicant’s right of due process. Accordingly, we will rescind the Order and return the matter to the trial level so that the record may be developed on the parties’ respective contentions regarding the enforceability of the ADR agreement." - Task Force Uncovers Large-Scale Organized Insurance Fraud Ringon February 19, 2025 at 3:52 PM
The California Department of Insurance issued a PSA with a warning for California drivers about an increase in scams involving tow truck companies targeting car accident victims where vehicles are being held hostage for cash. The scam has become prevalent in Southern California and the Department’s Inland Empire Automobile Insurance Fraud Task Force, has investigated multiple cases including one that has resulted in the arraignment and charges against 16 Southern California residents.
This task force investigation found the auto fraud ring allegedly conspired together to create fraudulent insurance claims to illegally collect over $216,932. The investigation discovered the large-scale organized auto insurance fraud ring was engaged in multiple types of schemes including holding vehicles hostage and collusive collisions. This same ring was previously charged in a similar scheme stemming from vehicles stolen under false pretences and brought to California Collision in San Bernardino County.
One of the scams in this case involves a tow truck showing up immediately after a collision occurs and offering to help the driver by towing their vehicle to a body shop. Then the body shop forces the driver to pay a large amount of money typically not covered by your insurance in order to get the vehicle back.
The Inland Empire Automobile Insurance Task Force began this investigation in November 2022 after they found out a California Highway Patrol non-sworn employee, Rosa Isela Santistevan, 56, of Irvine, was unlawfully selling traffic collision report face pages, which contained personal information of people who had been involved in collisions throughout Southern California.
After the task force served numerous search warrants they seized over 3,500 CHP traffic collision report face pages from the residence of Esmeralda Parga, 27, of Pomona, who the task force determined was connected to Santistevan through the organized ring’s ringleader, Andre Angelo Reyes, 37, of Corona. The conspiracy began after Reyes befriended Santistevan and other CHP employees by donating to various CHP events and parties. Santistevan printed and unlawfully sold thousands of traffic collision face pages to Reyes who would then provide the reports to E. Parga. E. Parga would then contact the parties involved in the collision, pretending to be from their insurance company and coordinate having their vehicle towed to a repair center that they misrepresented as approved by the insurance company.
Unbeknownst to the victims, E. Parga did not represent the insurance company and was stealing the victims’ vehicles. Reyes and E. Parga would then dispatch tow trucks, whose drivers cooperated in the scheme and would pick up the vehicles in Riverside County and tow them to Certified Auto in Buena Park, owned by Anthony Gomez, 36, of Jurupa Valley. Once the vehicles were at Certified Auto, Certified Auto would hold the vehicle hostage and demand cash payment from the insurance companies to have the vehicles released.
During the numerous search warrants, additional evidence was obtained showing the alleged ring was engaged in other types of insurance fraud schemes, including collusive collisions.The Riverside County District Attorney’s Office has also charged Reyes and Diana Villa Pineda, 34, of Corona with tax evasion of $136,408.
The Department of Insurance said that there are a few red flags drivers should be aware of to make sure they are not a victim of this type of scam:
- - Tow truck shows up within minutes of accident, you may not even have had time to call anyone yet.
- - Tow truck driver tells you which body shop your car is going to instead of working with you to identify where you want your vehicle to go.
- - Tow truck driver tells you someone will contact you by phone or asks you to sign documents.
- - Tow truck driver requests a rideshare for you.
The Department urges drivers if they believe they may be in a situation like this to verify the tow truck with their insurance company or wait for CHP to verify the tow truck was dispatched by CHP. Also, do not sign any documents until they have talked to their insurance company. - Blue Cross Sues L.A. "Insurance Advocate" for $7.6M Fraudon February 18, 2025 at 3:53 PM
Blue Cross of California d/b/a Anthem Blue Cross is a California Stock Corporation with its principal place of business in Woodland Hills, California. Anthem sells health insurance and related administrative services to California employers, individuals, and families.
AA Insurance Advocacy, Inc. is a California-based company that was incorporated on May 21, 20212. The company is registered as a California Stock Corporation and is currently active. The principal address for the company is 1421 Ambassador Street, Unit #212, Los Angeles, CA 900352. Alanna Apfel is listed as the Chief Executive Officer, Chief Financial Officer, Director, and Secretary of the company. She is an insurance patient advocate who helps patients with employer-sponsored PPO insurance negotiate with insurance companies to cover their out-of-pocket mental health therapy costs or services provided by out-of-network therapists.
According to a Civil Complaint filed on February 3, 2025 in the Los Angeles County Superior Court, Anthem alleges that Apfel and her Corporation submitted "fraudulent claims for out-of-network healthcare services that were misrepresented, inflated, or never provided at all." Anthem further alleges that "This scheme was carried out by Alanna Apfel, on her own behalf and through AA Insurance Advocacy, Inc., an entity through which she presents herself to Anthem members and the public as an “insurance advocate” that will negotiate with Anthem (and other insurers) to maximize reimbursement for certain out-of-network medical expenses."
To date, Anthem alleges it "has already identified more than $7.6 million dollars in payments that were directly caused by Ms. Apfel’s fraudulent requests for out-of-network authorizations and/or submission of claims on behalf of more than 480 Anthem members." And it further alleges that this "figure is highly conservative, with the true amount of loss expected to grow dramatically as Anthem continues its investigation." Anthem provided details in the allegations of its lawsuit.
"In reality, Ms. Apfel generates additional reimbursement not through advocacy, but rather by falsely seeking out-of-network authorizations and creating sham out-of-network medical claims for healthcare services. She then submits those claims to Anthem to obtain reimbursement payments to her member-clients for services never rendered or which are far in excess of what the healthcare providers actually charged and the members actually paid for." Anthem further alleges that "Ms. Apfel then charges Anthem members a fee for her “services,” typically based on a percentage of these inflated reimbursements as a kickback for submitting the falsified claims on the members’ behalf."
"Ms. Apfel typically starts with a request for a “network exception” for the member: a way for the member to see an out-of-network provider so that, in theory, the member can receive reimbursement from Anthem for the full out-of-pocket costs supposedly paid to the provider by the member for that authorized, out-of-network care." Anthem then claims that when "Anthem, predictably, is unable to identify an appropriate in-network provider satisfying Ms. Apfel’s numerous requirements, it will authorize the out-of-network referral and provide the member with a network exception which requires Anthem to reimburse the member for the actual out-of-pocket costs paid to that out-of-network provider."
"Ms. Apfel’s and Defendants’ “advocacy” was designed to fraudulently intervene and capitalize on this out-of-network reimbursement process by, depending on the case, grossly inflating or completely fabricating services supposedly rendered by the out-of-network provider and paid for by the member. This caused, and continues to cause, Anthem to pay out millions of dollars to reimburse members for costs they never actually incurred."
Anthem provided several examples of the alleged fraudulent scheme, all involving inflated schemes for psychotherapy with various mental health practitioners. In one example, "Anthem member K.S. retained Ms. Apfel to obtain reimbursement for treatment from out-of-network provider Dr. Joseph Whitcomb, PsyD, LMFT, a provider who had previously treated K.S."
"Based on Ms. Apfel’s representations, Anthem authorized an out-of-network referral/network exception for K.S., in good faith, to treat with Dr. Whitcomb for in-office treatment from May 1, 2023 through April 29, 2024. On or about January 9, 2024, Anthem renewed the authorization for in-office treatment from Dr. Whitcomb from January 1, 2024 through December 31, 2024."
"Dr. Whitcomb, however, could not have treated K.S. during this timeframe because he had moved to Europe years earlier in 2021, shortly after K.S. had originally stopped treating with him." Anthem alleges that "Apfel submitted a claim for reimbursement on behalf of K.S. which included a fraudulent bill Ms. Apfel had created purporting to show that, in March 2024, K.S. had received 17 sessions of psychotherapy from Dr. Whitcomb at a cost of $675 per session, and that K.S. had paid Dr. Whitcomb $11,475 for this period."
Further, Anthem alleges "Dr. Whitcomb died suddenly on May 18, 2024 while in Europe. Roughly one month after his death, on June 16, 2024, Ms. Apfel submitted a claim for reimbursement on behalf of K.S. which included a fraudulent bill Ms. Apfel had created showing that, in May 2024, K.S. supposedly had received 23 sessions of psychotherapy from Dr. Whitcomb at a cost of $995 per session, including 10 sessions that purportedly occurred after Dr. Whitcomb’s May 18, 2024 death, and that K.S. had paid Dr. Whitcomb $22,885 for this period."
No answer or other responsive document has been filed in the Superior Court by any defendants as of the date of this report. - Health Net to Pay Over $11M for False Cybersecurity Certificationon February 18, 2025 at 3:53 PM
Centene Corporation is a leading healthcare enterprise that provides access to healthcare services. The company focuses on government-sponsored healthcare programs, including Medicaid and Medicare, as well as individuals and families served by the Health Insurance Marketplace. Centene operates in all 50 states and serves over 28.6 million managed care members.
Health Net Federal Services, Inc. (HNFS) of Rancho Cordova, is a subsidiary of Centene Corporation. HNFS provides healthcare services to military service members, retirees, and their families through the TRICARE program. HNFS is responsible for managing the TRICARE West Region, which includes processing claims, providing customer service, and ensuring access to healthcare for beneficiaries.
HNFS and its corporate parent, Centene Corporation, have agreed to pay $11,253,400 to resolve claims that HNFS falsely certified compliance with federal contractor cybersecurity requirements, The cybersecurity requirements were contained in a contract between HNFS and the U.S. Department of Defense (DoD) to administer the Defense Health Agency’s (DHA) health insurance program TRICARE for servicemembers and their families.
The settlement resolves allegations that, between 2015 and 2018, HNFS failed to meet certain cybersecurity controls and falsely certified compliance with them in annual reports to DHA that were required under its contract. The United States alleged that HNFS failed to timely scan for known vulnerabilities and to remedy security flaws on its networks and systems, in accordance with its System Security Plan and the response times HNFS had established.
Furthermore, the United States alleged HNFS ignored reports from third-party security auditors and its internal audit department of cybersecurity risks on HNFS’s networks and systems related to asset management; access controls; configuration settings; firewalls; end-of-life hardware and software in use; patch management (i.e., installing critical security updates released by vendors to counter known threats); vulnerability scanning; and password policies. Nonetheless, the United States alleged, HNFS annually certified to DHA that it complied with controls that it violated and, for all of these reasons, its claims for payment were false.
The government’s pursuit of this matter is part of its ongoing efforts to hold accountable entities or individuals that put sensitive information at risk by knowingly providing deficient cybersecurity products or services, knowingly misrepresenting their cybersecurity practices or protocols or knowingly violating obligations to monitor and report cybersecurity incidents. Information on how to report cyberfraud can be found here.
The claims asserted against defendants are allegations only; there has been no determination of liability. - Judge Limits New California Anti "Pay-for-Delay" Pharma Lawon February 17, 2025 at 3:44 PM
On October 7, 2019, California Governor Gavin Newsom signed Assembly Bill 824 (“AB 824”) into law. AB 824 creates a presumption that “reverse payment” settlement agreements regarding patent infringement claims between brand-name and generic pharmaceutical companies are anticompetitive and unlawful.
Reverse payment settlement agreements arise primarily - if not exclusively - in the context of pharmaceutical drug regulations and suits brought under the statutory provisions of the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Act.
Under the Hatch-Waxman Act, once a brand-name company has submitted a new prescription drug to the U.S. Food and Drug Administration (“FDA”) and gained approval to market it, a manufacturer of a generic drug with the same active ingredients that is biologically equivalent to the approved brand-name drug can gain approval to market the generic through an abbreviated FDA process.
The New Drug Application (“NDA”) process to which new prescription drugs are subject is long, comprehensive, and expensive, whereas the Abbreviated New Drug Application (“ANDA”) process to which generic drugs are subject is substantially less expensive and requires far less testing.
In order to gain approval through the FDA, the generic company must file an ANDA. As part of this application, the generic company must assure the FDA that its drug will not infringe on any patents owned by the brand-name company. The brand-name company can and often does bring suit against the generic drug manufacturer over patent rights.
Settlements of the resulting lawsuits sometimes include reverse payments in which the plaintiff, the brand-name company, pays the defendant, the infringing generic company, a sum of money for the promise that the generic company will keep its drug off the market for an agreed-upon length of time. These have become known as "pay-for-delay" agreements in the drug industry.
AB 824 targets these types of settlements. According to the State, AB 824 closes this loophole in the Hatch-Waxman Act and ensures a brand-name company cannot continue to enforce an otherwise weak patent against generic companies through these reverse payment settlement agreements. AB 824 imposes a presumption that a settlement agreement involving a brand-name company compensating the generic company for keeping its drug off the market is anticompetitive under California antitrust law.
A nonprofit, voluntary association comprised of the leading manufacturers and distributors of generic and biosimilar medicines, manufacturers and distributors of bulk active pharmaceutical ingredients, and suppliers of other goods and services to the generic and biosimilar pharmaceutical industry, filed a federal lawsuit in an attempt to invalidate AB 824 in the case of Association for Accessible Medicines v Bonta - 2:20-cv-01708-TLN-SCR.
On September 15, 2023, the State of California and Plaintiff Association-for-Accessible-Medicines filed motions for summary judgment. The State argued the participation of each of Plaintiff’s members is necessary to establish associational standing and all of Plaintiff’s claims fail on the merits. Plaintiff argued there are no genuine disputes of fact regarding its standing and that it succeeds on the merits of its dormant Commerce Clause claim.
On February 12, 2025 the motions were granted in part and denied in part. The Court converted "the current preliminary injunction into a permanent injunction. The State may enforce the provisions of AB 824 with respect to settlement agreements negotiated, completed, or entered into within California’s borders. The injunction bars the Attorney General of the State of California, as well as the Attorney General’s officers, agents, employees, attorneys, and all persons in active concert or participation with them from implementing or enforcing AB 824 against Plaintiff, its member entities, or their agents and licensees, with the exception of settlement agreements negotiated, completed, or entered into within California’s borders." - Musk Escalates AI Battle As OpenAI Rejects $97B Takeover Bidon February 17, 2025 at 3:44 PM
OpenAI was founded in December 2015 by a group of tech visionaries, including Sam Altman, Elon Musk, Ilya Sutskever, Greg Brockman, and others. Their mission was to develop artificial intelligence in a way that benefits all of humanity. OpenAI is headquartered in San Francisco, California, nestled in the heart of Silicon Valley, what some say is the global hub for technology and innovation.
Initially, OpenAI was a non-profit organization, but in 2019, it transitioned to a capped-profit model to attract more funding and talent. The organization consists of the non-profit OpenAI, Inc., registered in Delaware, and its for-profit subsidiary introduced in 2019, OpenAI Global, LLC. Microsoft owns roughly 49% of OpenAI's equity, having invested US$13 billion. It also provides computing resources to OpenAI through its cloud platform, Microsoft Azure.
A dispute between OpenAI and Elon Musk has been brewing for some time. Musk, who was one of the co-founders and early investors in OpenAI, has been critical of the organization's direction and its shift towards a for-profit model.There has been an ongoing power struggle within OpenAI, with Musk and Altman having differing visions for the company's future.
Musk has taken legal action against OpenAI, claiming that the organization is violating the terms of his foundational contributions. He has also accused OpenAI of unfairly stifling business competition, particularly with his own AI startup, xAI. In response to Musk’s lawsuit, OpenAI has said it will move to dismiss Musk’s claims and that Musk “should be competing in the marketplace rather than the courtroom”.
“Something is going to trial in this case,” US District Judge Yvonne Gonzalez Rogers in Oakland, California, said earlier this month as Judge Rogers was considering Musk’s recent request for a preliminary injunction to block OpenAI’s conversion before going to trial.
The stakes on OpenAI’s corporate transition have now escalated, as OpenAI’s last fundraising round of $6.6bn and a new round of up to $25bn under discussion with SoftBank are conditioned on the company restructuring to remove the nonprofit’s control.
Recently, Musk led a group of investors in an unsolicited $97.4 billion bid to buy OpenAI. This bid was unanimously rejected by OpenAI's board over the weekend. OpenAI has accused Musk of contradicting his own lawsuit with his takeover bid, arguing that his actions are at odds with his legal claims.
AI models like ChatGPT, has become a dominant force in the field. Musk’s vision of a more open-source, safety-oriented approach to AI development stands in contrast to OpenAI’s evolving business model, which increasingly focuses on monetization. The situation remains dynamic, with both legal and business maneuvers playing out publicly. - CDI to Assess Carriers $1B for FAIR Plan Bailout After LA Fireson February 13, 2025 at 4:14 PM
Ordering the insurance companies’ FAIR Plan to continue swiftly paying claims to Southern California wildfire survivors, Insurance Commissioner Ricardo Lara today took action to maintain its solid financial footing. The FAIR Plan, an insurance safety net that the state requires insurance companies to operate, requested the Commissioner’s approval for $1 billion in additional funds from its member companies and also released detailed data about its claims paid to wildfire survivors.
Commissioner Lara approved the FAIR Plan’s request - known as an “assessment” - for the funding necessary to continue meeting its obligations to Californians. The fee will be divided among insurers based on their market share. The $1 billion assessment is the largest since the FAIR Plan was created in 1968, and the first time since the 1994 Northridge earthquake. State regulations allow insurers to pass along as much as half the cost of the assessment to customers, in the form of higher charges. Insurers must absorb the other half.
Additional key actions include:
- - Directing the FAIR Plan to hire additional staff needed to process and pay claims fairly, fully, and quickly.
- - Requiring the FAIR Plan to utilize all available funds, including reserves and reinsurance funds.
- - Protecting consumers from bearing the full cost of an assessment, with insurance companies responsible for half the assessment under an agreement reached last year. Subject to the Commissioner’s prior approval under Proposition 103, insurance companies may issue a temporary supplemental fee as a percentage of the policy premium and cannot pass assessment costs on to consumers in future rates.
- - Maintaining a healthy FAIR Plan reserve fund for future claims as the summer wildfire season approaches.
- - Requiring the FAIR Plan to comply with all laws applicable to other insurance companies, including advance payments for living expenses and personal property without the need for an inventory.
Commissioner Lara claims he finalized the Sustainable Insurance Strategy in 2024 - the largest insurance reform in 30 years - aimed at increasing the issuance of regular insurance policies in higher-risk areas and reducing reliance on the FAIR Plan.
Further underscoring the need for this reform, the most recent FAIR Plan assessments followed the 1993 Kinneloa Fire in Altadena and the Old Topanga Fire in Malibu and Topanga, which affected some of the same areas as the 2025 fires - claiming three lives and destroying nearly 550 structures in those devastating incidents. Previous insurance commissioners approved $260 million, or approximately $563 million in today’s dollars, in assessments for those fires and for the fires following the 1994 Northridge Earthquake.
Commissioner Lara expects to file the Department’s Report of Examination for an ongoing financial examination of the FAIR Plan, including its compliance with recommendations from the Department’s 2022 Operational Assessment Report in coming months. The report called for significant changes in the FAIR Plan’s governance, operations, underwriting and claims handling, risk management, customer service, and financial planning strategies and policies.
Using FAIR Plan data from the Property Insurance Plans Service Office (PIPSO), the AM Best Commentary titled, “California Wildfires: Multiple Credit Negative Impacts for Insurers,” reveals that the number of California FAIR Plan policies rose by 276 percent from 2018 through 2024 (based on fiscal years ending September 30). And the premium attributable to these policies jumped to $1.4 billion in 2024, up more than 15-times higher than the $87.2 million recorded for the California FAIR plan in 2018. - Legislature Seeks to Limit Misleading AI Healthcareon February 13, 2025 at 4:14 PM
A new proposed law was introduced on February 10, 2025, AB 489, that is aimed to protect Californians from AI systems that misrepresent “themselves” as health professionals. Specifically, the bill will provide regulators the authority to enforce title protections against those who develop or deploy AI systems that claim to be a licensed or certified health professional.
This legislation, sponsored by SEIU California and the California Medical Association, comes after multiple stories of individuals developing unhealthy relationships with AI chatbots and these same chatbots being found to pose as licensed practitioners.
Additionally, the Bill author claims AI is taking the health field by storm, with some companies pushing staff to use Generative AI to respond to patients and others developing for-hire "AI nurses." This bill ensures consumers are clear about who they are or are not talking to.
This bill would make provisions of law that prohibit the use of specified terms, letters, or phrases to falsely indicate or imply possession of a license or certificate to practice a health care profession, as defined, enforceable against an entity who develops or deploys artificial intelligence technology that uses one or more of those terms, letters, or phrases in its advertising or functionality.
The bill would prohibit the use by AI technology of certain terms, letters, or phrases that indicate or imply that the advice or care being provided through AI is being provided by a natural person with the appropriated health care license or certificate.
This bill would make a violation of these provisions subject to the jurisdiction of the appropriate health care profession board, and would make each use of a prohibited term, letter, or phrase punishable as a separate violation.