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Michael G. McConville is an associate attorney with the Law Offices of Floyd, Skeren & Kelly, LLP in our firm's Pasadena office location. Mr. McConville graduated from Southwestern University of Law and passed the State Bar in 1983. Since that time, he has divided his practice between workers' compensation defense and civil litigation. During his 15 years of workers' compensation experience, he also handled crossover issues involving subrogation. His broad experience in both fields brings a practical approach to the issue of subrogation.


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Workers' Compensation Daily News for Mar 23, 2017

DWC Extends Deadline for RTW Supplement Program
Wed, 22 Mar 2017 08:09:52 - Pacific Time
An amendment that extends the deadline to file for the Return-to-Work Supplement Program (RTWSP) has been approved by the Office of Administrative Law (OAL) and filed with the Secretary of State, effective March 20, 2017.

The regulation amendment extends the deadline to file for RTWSP benefits for certain individuals who received the Supplemental Job Displacement Benefit (SJDB) voucher between April 13, 2015 and December 1, 2015, and who may not have received notice of their eligibility to apply for the RTWSP benefit.

The amendments to 8 CCR section 17304 are shown below with new language underlined and deleted language struck through:

(a) An application for the Return-to-Work Supplement must be received by the Return-to-Work Supplement Program within one year from the date the Voucher (DWC-AD Form 10133.32 (SJDB) Rev: 10/1/15, or later version) was served on the individual.

(b) Notwithstanding subdivision (a) of this section, an application for the Return-to-Work Supplement from any individual who was issued a Voucher prior to December 1, 2015, for an injury occurring on or after January 1, 2013, must be received by the Return-to-Work Supplement Program no later than or within one year from the effective date of this subdivisionese regulations, whichever is later.

Applicants who were previously denied due to the eligibility deadline due to the eligibility deadline do not need to reapply. Their case will be reopened, reviewed, and a new determination made within 60 days.

The amended regulations can be found on the DIR website. Read More...

Chubb Comp Coverage - There's an App for That!
Wed, 22 Mar 2017 08:09:45 - Pacific Time
A new online system from Chubb will help independent agents quote and issue a comprehensive workers' compensation policy for small businesses.

"Our new workers' compensation system is efficient and fully automated, making it easier for our agents to place and service small business accounts," said Jim Williamson, Division President, Small Commercial Insurance, Chubb North America.

Chubb's workers' compensation policy for small business owners is designed to meet the needs of a wide range of industries, and includes the following coverage highlights:

- Provides coverage for small businesses with as few as one employee up to businesses with revenues of $10M
- Includes small business protection for medical expenses and lost wages to employees, providing security and peace of mind for employers
- Incorporates versatile coverage options including waiver of subrogation and various employer liability limits
- Easy, 24/7 automated system access with the ability to generate a quote and issue a policy in just minutes

When combined with Chubb's business owner's policy (Chubb BOP), Chubb's workers' compensation policy for small businesses provides customers an insurance solution with broad coverage and Chubb's policy and claim service capabilities.

Williamson added, "At Chubb we understand that employees are a small business' most valuable asset and are often like family. Our goal is to provide small business owners the confidence of knowing if an injury or illness occurs on the job, they'll have the right coverage in place to ensure their employees, and their businesses, will return to normal as quickly and cost-effectively as possible."

Chubb is the world's largest publicly traded property and casualty insurance company. With operations in 54 countries, Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients.

Parent company Chubb Limited is listed on the New York Stock Exchange (NYSE: CB) and is a component of the S&P 500 index. Chubb maintains executive offices in Zurich, New York, London and other locations, and employs approximately 31,000 people worldwide. Read More...

As IMR Volume Grows - 90% of UR Upheld
Tue, 21 Mar 2017 11:01:17 - Pacific Time
A CWCI analysis of the California workers’ comp independent medical review (IMR) process used to resolve medical disputes finds that in 2016, IMR physicians once again upheld about 90% of utilization review (UR) physician’s modifications or denials of treatment, yet IMR volume continued to grow, climbing 6.5% last year.

The California Workers’ Compensation Institute (CWCI) analysis is based on a review of data from 477,045 IMR decision letters issued in 2014, 2015, and 2016 in response to applications submitted to the state after a UR physician modified or denied a requested medical service.

State lawmakers who included IMR in the 2012 workers’ comp reforms expected the process would reduce workers’ comp treatment disputes once doctors, attorneys and other participants came to understand which services could be approved because they meet evidence-based medicine standards. Three years in, however, IMR volume is at a record high, as the Division of Workers’ Compensation reports there were 10,477 more cases in 2016 than in 2015.

The 2016 IMR outcomes data show that IMR physicians upheld the UR doctor’s modification or denial of a requested service 91.2% of the time, which was up from an 88.4% uphold rate in 2015 and matched the rate noted in 2014.

The mix of services reviewed by IMR physicians in 2016 showed little change from the two prior years, as prescription drug requests (28.5% of which were for opioids) again accounted for nearly half of all IMRs, with UR modifications or denials of pharmaceutical requests upheld 92.5% of the time.

Notably, requests for compounded drugs (typically gels or creams) did represent a declining share of the 2016 prescription drug IMRs, as they fell from 8.0% of the 2015 determinations to 6.2% last year, which may have to do with their consistently low IMR overturn rate (IMR physicians deemed them not medically necessary 99% of the time in 2014, 2015, and 2016).

Requests for physical therapy, injections and durable medical equipment together represented about 24% of the 2016 IMRs, while no other medical service category accounted for more than 5% of the disputed requests.

Among the medical service categories, uphold rates in 2016 ranged from 78.9% for evaluation and management services (primarily referrals for consultations) to 93.6% for acupuncture.

As in the prior 2 years, the analysis found that most of the disputed medical services that went through IMR in 2016 were requested by a small number of physicians. The top 10% of physicians named in the 2016 IMR decision letters (1,248 physicians) accounted for 85% of the disputed service requests, while the top 1% (125 providers) accounted for 44%.

Significant geographic variation was again evident as well, as 32.8% of the IMR decision letters were addressed to Los Angeles County recipients even though the region only accounted for 23.6% of all workers’ comp medical services in the state.

IMR volume also was disproportionately high in the Bay Area, which accounted for 20.1% of the IMR letters vs. 15.2% of the medical services; while less populated regions of the state had a disproportionately small share of the IMRs, as did the Inland Empire, Orange County and San Diego.

A complete analysis of the latest IMR results has been released in a CWCI Spotlight Report, "Independent Medical Review Decisions: January 2014 Through December 2016." Read More...

LA Rite Aid Pharmacies Settle Fed Drug Charges
Tue, 21 Mar 2017 11:01:12 - Pacific Time
Rite Aid Corporation has paid $834,200 in civil penalties to the United States to settle claims stemming from alleged violations of the Controlled Substances Act.

Rite Aid paid the civil settlement as part of an agreement reached last week to resolve allegations that certain Rite Aid pharmacies in Los Angeles dispensed and/or recorded controlled substances using a medical practitioner’s incorrect or invalid DEA registration number. The government alleged that the incorrect or invalid registration numbers were used at least 1,298 times as a result of Rite Aid’s failure to adequately maintain its internal database.

The settlement also resolves allegations that Rite Aid pharmacies dispensed, on at least 63 occasions, prescriptions for controlled substances written by a practitioner whose DEA registration number had been revoked by the DEA for cause.

In 1970, the United States Congress passed the Controlled Substances Act (CSA), which created "a closed system" of distribution for controlled substances. The CSA established a regulatory framework to control every facet of the handling of the substances, from their manufacture to their consumption.

The CSA became law against the backdrop of increasing diversion and abuse of legitimate controlled substances, but the law was also designed to ensure an adequate supply of those substances needed to meet the medical and scientific needs of the United States.

"Accurate record keeping at retail pharmacies helps ensure that authorities can keep track of how many controlled substances a pharmacy should have and does have on hand," said United States Attorney Eileen M. Decker. "These federal regulations were put into place to prevent the abuse of powerful drugs that are dispensed by pharmacies and should only be used under the careful watch of a medical professional."

In entering into and paying the settlement, Rite Aid did not admit liability. Prior to entering into the agreement, Rite Aid implemented a DEA registration validation program designed to verify DEA registration numbers for medical professionals who prescribe controlled substances.

"This settlement demonstrates DEA’s commitment to monitoring and holding accountable all potential sources of diversion for controlled substances and maintaining the safety of our communities,” said DEA Special Agent in Charge Steve Comer

This case was investigated by the Drug Enforcement Administration’s Office of Diversion Control, Los Angeles Field Division.

The settlement was negotiated by Assistant United States Attorney Donald W. Yoo of the Civil Fraud Section. Read More...

Can Employers Subrogate Against Opioid Drugmakers?
Mon, 20 Mar 2017 09:25:47 - Pacific Time
This January, the city of Everett, in Washington filed a first-of-its-kind lawsuit against Purdue Pharma alleging the drug maker "supplied OxyContin to obviously suspicious physicians and pharmacies," ultimately failing "to prevent the illegal diversion of OxyContin into the black market."

While other suits against the company by states and municipalities have accused Purdue Pharma of deceptive marketing - allegedly playing up OxyContin's effectiveness while playing down its addictiveness - Everett's lawsuit is the first to claim the company knew its drugs were being diverted and did nothing to stop it.

In particular, the complaint outlines a drug ring that began with a sham clinic in Los Angeles and ended with a kingpin running OxyContin on the streets of Everett. The unravelling was detailed in a Los Angeles Times investigation that triggered the idea for Everett's lawsuit.

The so-called Los Angeles pill mill was ultimately shut down and the cadre of physicians, pharmacists, and dealers that kept it churning were prosecuted.

In Everett, Washington, the jail is overflowing with addicts, the detox facility is set to double in size, and the city spends a fortune clearing its streets and parks of needles and tiny plastic bags.Those are the hallmarks of a heroin epidemic that began, city officials said, as a crisis dating back to the late 2000s that involved different drugs: opioid prescription painkillers.

Nearly a decade after the opioid onslaught, Everett is still struggling with the cost. And now the city wants the company that manufactured OxyContin to pay the bill.

Key to the complaint are internal Purdue emails outlined by the Los Angeles Times, including a 2009 excerpt from an exchange between the company's compliance director and a sales manager who had become suspicious of the number of OxyContin prescriptions traced back to the clinic's doctors.

After paying the clinic a visit, the sales manager wrote that "the line was out the door, with people who looked like gang members. I feel very certain that this is an organized drug ring."

Purdue Pharma disputes the allegations in the lawsuit. In a statement to NBC News, the company said the city "paints a flawed and inaccurate portrayal of events that led to the crisis in Everett."

The company said it has been a leader in developing abuse-deterrent medications, "which the FDA and National Institute on Drug Abuse have said are making a difference in the fight against abuse." The company also said that OxyContin accounts for less than 2 percent of all opioid prescriptions in the United States.

The first Oxycontin lawsuit to successfully procure a settlement came in 2007. The federal Oxycontin lawsuit alleged that the company had fraudulently encouraged over-prescription of the drug.This Oxycontin lawsuit distributed $130 million to victims of Oxycontin addiction. The "settlement" of the civil case was however part of a package settlement of criminal charges also pending against the company, and may not have been accomplished otherwise.

Private Oxycontin lawsuits concerning side effects have not been widely successful; however, a large number of Oxycontin lawsuits were settled out-of-court.

Santa Clara and Orange counties filed a case in 2015 in Orange County Superior Court. They alleged that Purdue Pharma, Cephalon, Janssen Pharmaceuticals, Endo Health Solutions and Actavis violated California's false advertising and unfair competition laws and created a public nuisance. The case was placed on hold in 2015 pending the outcome of FDA investigations that were underway at the time.

Chicago sued Teva Pharmaceuticals, Purdue Pharma Inc. and other drugmakers in 2014, saying they misled doctors and the public about the addictive nature of opiates and pushed prescriptions despite known dangers of addiction. A defense request for a stay order pending FDA investigations was denied in September 2016, and the Chicago case is still active.

The case is City of Chicago v. Purdue Pharma LP et al., case number 1:14-cv-04361, in the U.S. District Court for the Northern District of Illinois. The current federal court docket shows the case to be in the discovery stage with 439 documents filed in the case so far. The Third Amended Complaint filed on October 25, 2016 contains 341 pages of specific allegations against the defendant drugmakers (not counting exhibits) and reads like an organized crime fiction novel laced with intrigue. The information in this document would certainly steer a competent subrogation lawyer in the right direction to find evidence to make a case.

The outcome of these pending cases, and certainly more to follow, will weigh heavily on the answer to the question about the subrogation potential against opiate drugmakers for recovery of the costs of some of our most costly and protracted injury claims. Read More...

Prosecutors Struggle With Uwaydah Fraud Case
Mon, 20 Mar 2017 09:25:39 - Pacific Time
It was touted as a mega-bust: the successful end to a five-year investigation aimed at dismantling one of the largest insurance fraud schemes in California history.

More than a dozen people associated with Frontline Medical Associates were accused in 2015 of taking part in a $150-million scam that involved unnecessary surgeries by non-surgeons, doling out kickbacks for illegal patient referrals and fraudulently billing insurance companies.

But the Los Angeles Times reports that over the 18 months that followed, a judge dismissed most of the 132 counts laid out in two indictments. The most serious charges - for aggravated mayhem, carrying a potential life sentence - were dropped for a lack of evidence.

Now, prosecutors are taking a second stab at the case after acknowledging flaws in how they presented it to a grand jury. At their request, Los Angeles County Superior Court Judge Kathleen Kennedy Thursday threw out pending charges in the two indictments against 13 defendants, except for two suspects who are fugitives.

Prosecutors immediately brought new charges against a dozen people, filing three separate criminal complaints listing 194 counts, including aggravated mayhem, money laundering, insurance fraud and unlawful patient referrals. An 82-year-old physician who was accused of overbilling insurance companies was not charged in the new complaint; prosecutors noted that he is suffering serious health issues.

Prosecutors allege that Dr. Munir Uwaydah, the certified orthopedic surgeon patients believed would conduct procedures, instead let a physician’s assistant perform surgeries. The scheme left nearly two dozen patients with lasting scars.

Uwaydah, the accused ringleader who prosecutors initially said had been captured in Germany, remains at large. They believe he is living in Lebanon.

Defense attorneys called the move to drop and then refile charges a transparent stunt to dodge an evidentiary hearing scheduled for next week. They claim that prosecutors and investigators improperly reviewed thousands of records, including communications between defendants and their attorneys, protected by attorney-client privilege.

More than 50 prosecutors - including Mathai - and district attorney’s investigators had been subpoenaed to testify, defense attorneys said.

Defense attorneys alleged in a court filing that some documents that prosecutors and others reviewed were used to bolster the criminal case.

In one example, an investigator developed leads based on correspondence between Uwaydah and one of his attorneys, leading to an undercover operation a year later, according to the filing. The investigator’s testimony before a grand jury led to three of the original counts.

The violation of the privilege could justify throwing county prosecutors off the case, defense attorneys said.

"They want to basically say, ‘We don’t like the way this game is going so we’re turning the board over,’" said Benjamin Gluck, an attorney representing Uwaydah’s business partner, Paul Turley.

"These people are going to be under the spotlight. That’s not a comfortable place to be. But you know what? The case has been going along - they made their bed, they’re going to have to sleep in it." It’s unclear if and when the evidentiary hearing will move forward - and in front of which judge. Kennedy, who ordered the hearing last month, said that the allegations the defense raised aren’t going away.

"All those issues are still going to be there," she said. Read More...

Munir Uwaydah M.D. Fraud Case(s) Get Nasty(ier)
Fri, 17 Mar 2017 10:40:11 - Pacific Time
Munir Uwaydah was an orthopedic surgeon well known as a treating physician in California workers' compensation cases. He has been charged as the ringleader in one of California's biggest health fraud schemes, which included unnecessary operations by an untrained assistant that scarred patients forever, according to indictments unsealed in Los Angeles County.

Los Angeles District Attorney Jackie Lacey alleged in a case filed in 2015 that Uwaydah and 14 associates, including another doctor and a lawyer, bilked insurance companies out of $150 million in the scheme.

The fraud indictment also names Uwaydah's business associate Kelly Soo Park, who was acquitted in a sensational murder trial several years ago of strangling the doctor's ex-girlfriend, college student and aspiring model Juliana Redding.

During that murder trial, prosecutors had described Park as a "female James Bond" who was hired to kill Uwaydah's former girlfriend Redding because of a failed business deal between Redding's father, who is an Arizona pharmacist, and Uwaydah. The doctor was never charged in the murder case and denied any involvement in the killing.

Redding was strangled in Santa Monica in 2008. Karen Thompson of the Santa Monica Police Department was the lead investigator on the murder case. Prosecutors alleged that Park strangled Redding with her bare hands and left overwhelming DNA evidence on the body and around the apartment. They say that Uwaydah who had dated Redding gave Park a six-figure payment to kill her after a business deal soured with Redding's father.

Prosecutors alleged in the murder case that Park turned on a gas stove and lit candles in an effort to blow up the apartment after strangling the victim and dragging her scratched and bruised body into the bedroom.

Prosecutors during the murder trial had presented a link between Park and Uwaydah, alleging she had received $250,000 before Redding's killing from Uwaydah, who was her employer at the time. Over the next 18 months, Park or her company received another $750,000 from Uwaydah's company, according to the prosecutors.

Park is now accused in the pending fraud case of being the office manager and personal assistant to Uwaydah who ran Frontline Medical Associates, which prosecutors allege served as a front to fraudulently bill more than $150 million to insurance companies.

But Kelly Soo Park bites back.

Before her trial on murder charges, the judge ruled that she would not allow Park to present any evidence of third party culpability for the murder after Park’s key witness on that question, Melissa Ayala, invoked her Fifth Amendment privilege and refused to testify when subpoenad as a witness.

As part of her criminal defense, Park sought to introduce evidence that Redding’s killer was actually John Gilmore, the victim’s boyfriend at the time of her death. Gilmore had a history of domestic violence and had previously assaulted Redding.

Park’s investigator interviewed Gilmore’s former girlfriend, Melissa Ayala. During that interview, Ayala told the investigator that Gilmore had been violent toward her and had choked her on at least three occasions. According to Ayala, the first of these incidents occurred after Ayala brought up Redding’s death and accused Gilmore of murdering Redding.

After learning of this potentially exculpatory evidence, Park gave notice to the District Attorney of her intention to call Ayala as a defense witness at trial. Detective Thompson then contacted Ayala and allegedly attempted to dissuade her from testifying for the defense. Park alleges that Thompson later spoke with the El Segundo Police Department about filing charges against Ayala for assault and criminal threats against Gilmore based on an incident that had occurred during the previous year.

After her acquittal, Park sued City of Santa Monica Police Detective Karen Thompson alleging that Thompson violated her constitutional rights by intimidating and attempting to dissuade Ayala from testifying on behalf of the defense. Park asserted that Thompson orchestrated criminal charges against Ayala with the intention that Ayala invoke the Fifth Amendment and refuse to testify on Park’s behalf.

The federal district court dismissed Parks lawsuit against Thompson for failure to state a claim. But the 9th Circuit Court of Appeals reversed this month in the published case of Kelly Soo Park v Karen Thompson.

The majority opinion concluded that "Park’s complaint alleged facts that are "suggestive" of an agreement to engage in "illegal conduct" and reinstated the complaint. Park will now proceed with her case against Detective Thompson. Read More...

Hearing on MTUS Drug Formulary Set for May 1
Fri, 17 Mar 2017 10:40:03 - Pacific Time
The Department of Industrial Relations’ Division of Workers’ Compensation has issued a notice of public hearing on May 1 for the Medical Treatment Utilization Schedule (MTUS) Drug Formulary regulations, which includes a list of preferred drugs that can be dispensed without the need for prospective utilization review.

The proposed rulemaking implements Assembly Bill 1124 (Statutes 2015, Chapter 525), which mandated the adoption of an evidence-based workers’ compensation drug formulary into the MTUS by July 1, 2017.

"We must ensure that California’s injured workers are prescribed the right medications for their conditions without frictional system delays," said George Parisotto, DWC Acting Administrative Director. DWC is a division of the Department of Industrial Relations (DIR).

The May 1 public hearing on the proposed regulations has been scheduled at 10 a.m. in the auditorium of the Elihu Harris Building, 1515 Clay Street in Oakland.

Members of the public may also submit written comments on the regulations until 5 p.m. that day.

The MTUS Drug Formulary is based on, and consistent with, medical treatment guidelines created by the American College of Occupational and Environmental Medicine (ACOEM), which are published by Reed Group, Ltd. The preferred drug list was compiled by DWC, with assistance from ACOEM, and takes into consideration medications frequently prescribed for occupational injuries and the evidence-based drug recommendations in the guidelines.

"The formulary, designed to work in tandem with our medical treatment utilization guidelines, will incorporate the evidence-based standards of care that best meet the needs of California’s injured workers," said Christine Baker, Director of DIR.

The proposed formulary regulations are to be adopted at section 9792.27.1, et seq. of Title 8 of the California Code of Regulations. DWC will consider all public comments, and may modify the proposed regulations for consideration during an additional 15-day public comment period.

The notice of rulemaking, text of the regulations, and the initial statement of reasons can be found on the DWC rulemaking web page. Read More...

Janitorial Owners Guilty of Massive Premium Fraud
Thu, 16 Mar 2017 07:58:49 - Pacific Time
Hyok Kwon, owner of Good Neighbor Services, a janitorial company that provided services to some of San Diego's most exclusive hotels and resorts pleaded guilty this week to seven felonies, including premium and employment tax fraud in an elaborate scheme to avoid paying workers' compensation insurance premiums and employment taxes.

Kwon stipulated to an eight-year prison sentence and to pay restitution exceeding $5 million.

Woo Hui Kwon pleaded guilty on December 6, 2016 to two counts of premium fraud and two counts of employment tax fraud. She was sentenced to four years and eight months, and restitution that totaled over $5 million to insurance carriers and Employment Development Department.

The two defendants own a janitorial company that provides cleaning staff to major hotels across San Diego, Los Angeles and Riverside Counties, including The Hotel Del Coronado, Loews Coronado, La Costa Resort and Spa, The Grand Del Marin La Jolla, L'Auberge Del Mar, The Ritz Carlton, Four Seasons, Hilton and Hyatt hotel chains.

The Kwons were indicted by a grand jury on 11 counts of workers' compensation premium fraud, 18 counts of payroll tax evasion and one count of extortion.

The investigation uncovered a methodical and systematic shell game involving six straw owners. These straw owners were used to conceal the existence of hundreds of hotel workers to avoid paying millions of dollars in insurance premiums and payroll taxes. If convicted of all charges, they each would have faced up to 31 years in prison.

For nearly a decade, Good Neighbor Services concealed their real payroll information in order to fraudulently obtain workers' compensation insurance from multiple companies including Travelers, Norguard, AIG, Southern Insurance, Everest National, Preferred Employers, State Compensation Insurance Fund and Employers Compensation Insurance.

Employees who were interviewed said they were paid with checks bearing the name of businesses other than Good Neighbor Services throughout the course of their employment, even though they wore uniforms with the Good Neighbor Services' logo and identified the Kwons as the owners.

The employees also said they did not receive overtime pay or workers' compensation benefits when they were injured on the job, and they feared retaliation if they reported their injuries. One employee said she had to repeatedly ask for medical attention for her injury. When she was finally sent to a doctor, she found out later the Kwons sent her to a dentist rather than a physician.

Six co-defendants have also been charged with workers' compensation premium fraud and tax evasion. They are Melquiades Brizuela Jr., Manuel Rodriguez, Veronica Lucas Cuin, Aimee Sunmyung Kwon, Daniel Kwon and Hyun Bung Chae for their involvement in the scheme.

The San Diego District Attorney worked with the California Department of Insurance, Employment Development Department, Maintenance Cooperation Trust Fund, and Department of Industrial Relations to bring this complicated, underground economy case to light. The extensive amount of fraud would not have been uncovered without the efforts of these community partners. Read More...

Apparel CEOs Guilty in $3.8 Million Fraud Case
Thu, 16 Mar 2017 07:58:43 - Pacific Time
The Los Angeles County District Attorney’s Office announced that two clothing manufacturing executives and their accountant were sentenced this week for their roles in a $3.8 million workers’ compensation fraud scheme.

In December, Sung Hyun Kim and Jae Young Kim each pleaded no contest to two counts of workers’ compensation fraud, while Choi entered her plea to two counts of failure to pay state payroll taxes.

Sung Hyun Kim, 59, was sentenced to two years in local custody or electronic monitoring and two years of mandatory supervision. Jae Young Kim, 73, and Caroline Sung Choi, 61, were each sentenced to one year in custody or electronic monitoring and placed on probation for five years.

Choi and her sister, Sung Hyun Kim, were corporate officers for Meriko, Inc., and its successor, SF Apparel, both garment manufacturing companies that make high-end brand jeans such as the True Religion Brand Jeans. True Religion Brand Jeans was not suspected of any fraud or wrongdoing in this case.

Beginning as early as 2006, Sung Hyun Kim and Jae Young Kim, an accountant, underreported millions of dollars in payroll to insurance carriers. Losses were estimated to be roughly $3.8 million.

The State Fund notified Department of Insurance detectives when they discovered payroll reports submitted to them by the companies showed significantly less total payroll than similar reports submitted to the California Employment Development Department (EDD). Evidence also revealed many employees were paid under the table through a bank account that was never disclosed to EDD or insurance carriers.

Companies pay significantly reduced workers’ compensation premiums when they underreport the number of employees and the amounts actually paid, prosecutors added. Victim insurers include: State Fund, Tower Insurance/AM Trust North America, Star Insurance Company, Granite State Insurance Company (Chartis), Insurance Company of the West, National Liability and Fire Insurance Company (owned by Berkshire Hathaway) and Cypress Insurance Company (owned by Berkshire Hathaway).

Restitution, investigative costs and fines totaling $4.6 million have been paid.

Deputy District Attorney Theresa Mitchell of the Healthcare Fraud Division prosecuted the case. This case was a joint effort of the LA County Premium Fraud Task Force including State Fund and EDD. Read More...

Past Week News Archive

Is Monsanto Mass Litigation a Subro Opportunity?: Wed, 15 Mar 2017 09:47:17 - Pacific Time: Read More...

9 Northern Counties Scored by CWCI Report: Wed, 15 Mar 2017 09:47:12 - Pacific Time: Read More...

WCAB Asks Court for Second Chance: Tue, 14 Mar 2017 09:13:52 - Pacific Time: Read More...

Hiscox Enters California WC Insurance Market: Tue, 14 Mar 2017 09:13:45 - Pacific Time: Read More...

Study Says PT as Effective as Surgery for CTS: Mon, 13 Mar 2017 09:21:31 - Pacific Time: Read More...

New Jersey Crackdown on Pain Doctors: Mon, 13 Mar 2017 09:21:25 - Pacific Time: Read More...

Should 635 Physicians on Probation Tell Their Patients?: Fri, 10 Mar 2017 12:06:45 - Pacific Time: Read More...

AssuredPartners to Purchase Keenan & Associates: Fri, 10 Mar 2017 12:06:38 - Pacific Time: Read More...

Rehab Clinic Director to Serve Ten Year Sentence: Thu, 9 Mar 2017 06:28:36 - Pacific Time: Read More...

CWCI Appoints New Claims and Medical Director: Thu, 9 Mar 2017 06:28:28 - Pacific Time: Read More...