How many depositions of the applicant may you take in one case

This is a panel decision which ordered sanctions against the insurance carrier and the defense attorney for engaging in bad faith and frivolous actions.

The defendant took a deposition of the applicant. At the end of the deposition the defense attorney said he had no more questions.

Four years later the defendant wished to take a second deposition. Applicant’s attorney objected and requested a protective order and sanctions under Labor Code section 5813 and Code of Civil Procedure 2023. The defendant filed a petition to compel the deposition. The Workers’ Compensation Judge (WCJ) ruled that the defendant was not entitled to a deposition in that code of Civil Procedure Section 2025.610 only allows one deposition.

Applicant requested sanctions and attorney fees for having to fight the deposition and the WCJ awarded $15,610 in attorney fees and a penalty of $2500.

Defendant filed for reconsideration and lost. The Board agreed that once the record is closed that the defendant is only entitled to one deposition. There are other ways in which to complete discovery.


The Court Of Appeal indicates who must bear the loss for a stolen check

This is a very significant case for workers’ compensation principles.

This is a published decision of the Court of Appeal. The applicant was employed as a laborer when he injured his back. The applicant authorized his attorney to sign legal documents on his behalf. The applicant moved several times during the pendency of the claim.

The applicant attorney settled the claim and signed the Compromise and Release (C&R) on behalf of applicant. The C&R had an incorrect address for the applicant. The settlement was approved with the incorrect address.

The employer mailed a check to the applicant to the incorrect address listed on the C&R. The check was fraudulently endorsed and cashed at a check cashing store. The applicant never received the check.

The case went to Trial before a Workers’ Compensation Judge (WCJ) on the issue of nonpayment. The WCJ ordered the defendant to issue a new payment. The defendant filed a Petition for Reconsideration which was denied.

The Appellate Court looked at the Uniform Commercial Code and determined the payee never became the holder of the check. Therefore, the issuer of the check remains liable to the payee. The employer had to issue a new check to the applicant.


The Court of Appeal Issued a Published Decision in the Ogilvie Case

This is a very significant case for workers’ compensation principles in that it discusses the current case law.

The applicant was injured in 2004. The applicant underwent knee replacement surgery in 2006. A physician recommended spinal surgery which applicant declined. The applicant never returned to work.

At trial the applicant rebutted the rating of the schedule on the basis of diminished future earning capacity. The applicant used a vocational rehabilitation expert. The Workers’ Compensation Judge (WCJ) agreed with the applicant and devised an alternative way to calculate applicants disability at a higher rate than the schedule.

The Workers’ Compensation Appeals Board (WCAB) in an en banc decision indicated that the applicant could rebut the schedule and created a new methodology to rebut the schedule.

The appellate court concluded that an employee may challenge the presumptive schedule of permanent disability by showing a factual error in the calculation of a factor in the rating formula or application of the formula, or by showing that the applicant is not amenable to rehabilitation and therefore has a greater disability than is shown in the rating schedule. The applicant can show the rating was incorrectly applied or the rating inadequate in light of the industrial injury. The case was reversed.

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Editor: Harvey Brown

Firm: Samuelsen, Gonzalez, Valenzuela and Brown

Address: 3501 Jamboree Suite 602

Newport Beach, ca 92662

Phone: 949 252-1300


The Court of Appeal Issued a Non Published Decision on the Issue of Good Cause to Reopen Under Labor Code 5803

This is a very significant case for workers’ compensation principles in that it discusses the current case law.

The applicant was injured in 2002. In 2006 the parties entered into a Stipulation with Request for Award for 35 percent permanent disability.

In 2007 the applicant filed a timely Petition to Reopen for New and Further Disability. An Agreed Medical Examiner (AME) determined the condition was non industrial and did not know what the original 35 percent was based on. The AME did indicate the applicant was still permanently disabled, as he was at the time of the original stipulation.

The defendant filed a Petition to Reopen to Reduce the award in 2008. The appellate court ruled that Labor Code section 5803 establishes a five-year statute of limitation and the WCAB had no jurisdiction to lower the award.

The court indicated that you can not rescind a stipulation after the five year period.

Te appellate court also indicated that to support an additional award there must be further disability. In this case there was no further disability because the applicant’s condition did not change since the original award.

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Editor: Harvey Brown

Firm: Samuelsen, Gonzalez, Valenzuela and Brown

Address: 3501 Jamboree Suite 602

Newport Beach, ca 92662

Phone: 949 252-1300


En Banc Decision of the WCAB on Surgery Center Billing

The WCAB evaluated a case on surgery center billing charges.

The surgery center in this case filed a lien for $31,007. The lien went to trial because the defendant disputed the charges. The Workers’ Compensation Judge (WCJ) allowed the full amount of the lien. The WCJ indicated the defendant did not raise the reasonableness and necessity of treatment in the Stipulations and Issues framed at the trial.

The WCJ indicated in the opinion that even if the defendant would have raised the reasonableness issue, the defendant did not meet the burden of proving the lien was unreasonable. The defendant filed a petition for reconsideration which resulted in this en banc decision.

The WCAB referred to a previous en banc decision in Kunz v. Patterson Floor Covering. They also cited another case for the proposition that the burden of proof lies with party or lien claimant holding the affirmative on the issue. In this case, the surgery center. The WCAB indicated that the defendant does not have the burden to show that the surgery center bill was unreasonable.

The WCAB indicated they believed the WCJ misinterpreted their holding in Kunz.

It appears that the WCAB is stating that a surgery center bill has to be reasonable on its face. It wont be presumed reasonable as several in the industry had contended. It must be reasonable on its face even if the defendant doesn’t challenge it. In this case the defendant never even raised the reasonableness at trial level and it was still sent back to the WCJ for evaluation of the bills reasonableness. Therefore, even though there may have been no defense the defendant prevailed.


En Banc Decision On Apportionment Dealing With Compromise And Release

The applicant filed a claim alleging two claims for injury. The first was in December 2001. It was an injury to the back. It was admitted. The second injury was admitted, and occurred on August 2, 2002. It also was to the back.

On May 9, 1998 the applicant had a back injury. This injury resulted in the applicant having a lateral microdiscectomy. The applicant was rehabilitated. The case settled by compromise and Release in September 1999.

The applicant had a pre- employment physical that he passed, prior to the current injuries.

The case was tried by a Workers’ Compensation Judge (WCJ) who found for the 2001 and 2002 cases the applicant was not entitled to anything. The WCJ reasoned the applicant had a prior disability of no heavy work for the 1998 injury and the same restriction for the 2001 and 2002 injuries. Applicant petitioned for reconsideration. The Workers’ Compensation Appeals Board issued an en banc decision

They indicated that a compromise and release, without more, is not a basis for apportioning under Labor Code section 4664 (b). A compromise and release does not constitute an “award of permanent disability”

However, where there is a prior claim and Compromise and Release even thought there is no prior disability, the medical reports and other evidence may be “other factors”. Under Labor Code section 4663 “other factors… including prior injuries” are a proper basis for apportionment. Here, the WCJ did not consider that

The WCAB did indicate that you could rehabilitate yourself from a prior injury under section 4663, but not 4664.


90 Day Denial May Be Rebutted With Reasonable Diligence

The applicant filed a workers’ compensation claim form on

November 27, 2000. A delay later issued on December 21, 2000. This is past the 14 day time limit. On February 26, 2001 the adjusted decided to deny the claim. The applicant received the denial on February 27, 2001. This was 92 days after the claim form was received.

The case was heard by a Workers’ Compensation Judge (WCJ) that first determined that the denial was timely (within 90days). Therefore, Labor Code section 5402, which presumes compensability, did not apply because the denial was timely.

The WCJ found the psychiatric case was not compensable because of a good faith personnel action under Labor Code section 3208.3.

The applicant filed a petition for reconsideration and the WCJ recalculated the 90 days and found the denial untimely. The WCJ, concluded, however, that the medical evidence rebutted the presumption. The Workers’ Compensation Appeals Board (WCAB) agreed with the WCJ and indicated that the medical evidence could not have been reasonably obtained in the 90 days.

The appellate court on review indicated that medical evidence should be obtained within 90 days. The court indicated that the adjusters testimony that the adjuster could not obtain a medical within 90 days was sufficient. The doctors were too busy to set an appointment within the 90 days.

The case is also interesting to read for the determination of what qualifies as a “good faith personnel” action. In this case two-thirds of the applicants psychological injury was caused by “good faith personnel actions”.

Therefore, the applicant did not meet the standard for a psychiatric injury.


Labor Code 3208.3 (h) Good Faith Personnel Action

The court of appeal, in a published decision, has given a definition to a “good faith personnel action” under Labor Code section 3208.3 (h).

The applicant was employed by the City of Oakland for 30 years and rose through the ranks to a supervisor. The director of the department that the applicant worked in informed the applicant his position was going to be eliminated.  The applicant accepted a position and was later demoted. The applicant filed a stress claim and left work.

The Workers’ Compensation Judge (WCJ) concluded after trial that the employer did not prove that its personnel actions were in good faith.  The WCJ found the injury industrial.  The employer petitioned for reconsideration and the Workers’ Compensation Appeals Board (Board) upheld the WCJ.

Since there was no prior case that defined what a “lawful, nondiscriminatory, good faith personnel action” the appellate court looked at a wrongful termination case Cotran v. Rollins Hudig Hall Internal. Inc. (1998) 17 Cal 4th 93 (Cotran). This case described that there must be a “objective good faith standard” in determining the employers conduct.  This appellate court concluded that 3208.3 has a similar meaning to the objective good faith standard.

The employer is allowed a certain freedom in making its regular and routine personnel decisions. “To be in good faith, the personnel action must be done in a manner that is lacking outrageous conduct, is honest and with a sincere purpose, and is without intent to mislead, deceive, or defraud, and is without collusion or unlawful design.”

The appellate court indicated that the Board was trying to use a “no fault” concept for 3208.3 which is not the proper test.

This court concluded that even if mistakes were made in the process of the demotion of the applicant it was still a good faith personnel action within the meaning of section3208.3.  Based on the particular facts of this case the appellate court indicated that the only conclusion is that this was a good faith personnel activity according to 3208.3. “Good faith personnel action” they indicated may elude a precise set of rules or definitions. But here a regular and routine employment event was carried out in a reasonable manner with no hint of improper motive. Therefore, the WCJ and the Board were overturned.

In this case the applicant’s own testimony proved the good faith personnel action.


Penalty Against An Insolvent Carrier

Generally this newsletter deals with eases that have been decided by the Court of Appeals.  However, this edition deals with a Writ denied case. Lately, it seems as if there are multiple carriers going into or on the verge of liquidation.  Therefore, this case is important if you are a codefendant on a cumulative trauma case with a carrier that is border line insolvent.

The applicant alleged a cumulative trauma against his employer. The case went to hearing and the Workers’ Compensation Judge (WCJ) issued a Findings and Award and Opinion on Decision. The WCJ found the applicant 100% disabled.  During the period of the cumulative trauma the employer was insured by two insurance carriers.

The WCJ did not issue a joint and several award, but apportioned between the carriers. The WCJ apportioned 75% of the liability to California Compensation and 25 % of the liability to Golden Eagle.  California Compensation was ordered to pay and administer the award and seek contribution from Golden Eagle.

California Compensation failed to pay portions of the award. Applicant then sought multiple penalties for California Compensations failure to pay. California Compensation then became insolvent. It was placed in liquidation. The California Insurance Guarantee Association (CIGA) assumed control of the cases being administered by California Compensation.

The insurer who is primarily responsible for payment of an award is solely responsible for penalties that result from nonpayment of the award.  They are not entitled to contribution from the codefendant who was not ordered to pay.

In Carter v, WCAB (1990) 217 Cal.App.  3d 1359, it was decided that CIGA was liable for penalties for acts that occurred before the carrier became insolvent This case apparently involved a specific injury.

This case involves a cumulative trauma. Therefore, Insurance Code Section 1063.1 ©(9) comes into play.  Since there is more than one carrier Golden Eagle now has to pay the underlying benefits. CIGA would be dismissed pursuant to Insurance Code section 1063.1 ©(9). Therefore, it would appear Golden Eagle is left holding the bag. Golden Eagle will then be responsible for paying the penalty that California Compensation created by not paying timely. It would appear there is no way to alleviate this problem except assuming liability and administering an award in every situation when a carrier feels the other carrier may be on the verge of insolvency.


Rico Allegations Allowed Against Carrier

This is a different type of case than is normally reported in this newsletter. Generally the newsletter deals with cases that originate before the Workers’ Compensation Appeals Board(WC AB). In general the WorkersCompensation Act’s (ACT) exclusive remedy provisions will not allow certain actions that can be presented before the WCAB.

This case involved licensed medical groups that provide medical-legal services and medical management companies under license to the medical groups. The defendants were 28 insurance carriers. “At a meeting in 1991, defendants decided to put plaintiffs out of business by delaying payment or refusing to pay for services rendered by plaintiffs to injured workers.” They agreed to keep the meeting secret.

Later they made up “hit-lists”. The appeals court in this case analogized this to the carrier in the John Grisham novel “The Rainmaker”, Great Benefit Insurance Company. The defendants accused plaintiffs publicly of being “fraud mills” and advised other insurance companies not to pay the ‘ plaintiff’s lien claims. The tactics proved quite effective.

Plaintiff’s filed suit alleging a number of actions including fraud and RTCO.  The Defendants tried to have the case thrown out alleging the exclusive remedy provisions of the ACT. A judge eventually agreed and that is how this case came up on appeal.

The appeals court looked at each allegation. The court determined mat the abuse of process and fraud claims are within the jurisdiction of the WCAB. However, these may constitute crimes under Insurance Code sections 1871 and 1871.4.

The Cartwright Act “makes unlawful any trust”: “Because a Cartwright Act claim requires a motive mat violates a fundamental public policy rooted in a statutory provision, it is not encompassed within the compensation bargain. Therefore, the exclusive remedy does not apply.

The court next determined that the pattern of racketeering that is needed to establish a RICO allegation also falls outside the compensation bargain and the exclusive remedy does not apply. The court indicated RICO claims are never subject to the exclusive remedy provisions.

The court then looked at plaintiffs claims of tortious interference with business relations and unfair competition law. The court determined this allegations were barred by the exclusive remedy where they were individual acts of ah individual insurance carrier. However, acts where more man one defendant conspire are not covered by the exclusive remedy provisions. The viability of these claims was not determined Just their right to proceed.


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