Current Penalty May Be Assessed For Prior Acts

This newsletter has devoted many issues to the issue of penalties. The appellate courts keep addressing this issue with regularity. This most recent case also deals with a Compromise and Release (C&R) and a penalty, which is this newsletter has discussed in a previous issue.

The applicant stipulated to a 31-1/2 per cent permanent disability with need for further medical treatment for a cumulative trauma. The employer agreed to adjust reasonable treatment liens and pay $1088 in full and final settlement of all penalties incurred to date pursuant to section 5814. The applicant required and incurred further medical care after the stipulation was approved.

The applicant later entered into a C&R for $25,000. The C& R contained the normal language that disputes of unpaid costs of self-procured medical treatment, medication costs or claims of penalty and interest were resolved.  However, the employer did agree to adjust certain outstanding medical bills.

Eleven months later the applicant requested the employer to immediately pay an unpaid pharmacy bill. When the employer did not pay the bill the applicant filed for a penalty. The employer indicated mat they paid the pharmacy $341.23 and considered the remaining balance of $78.39 an appropriate official medical fee schedule reduction for which they were not liable.

The workers’ compensation judge found the employer liable for a penalty against all medical treatment subsequent to the C&R. The judge found it unreasonable that the employer had waited eleven months to pay the pharmacy. The applicant petitioned for reconsideration contending that the penalty should attach to all medical benefits paid voluntarily without delay or prior to a C&R The Appeals Board ruled in favor of the employer stating that the C&R settled all prior claims and the parties now had to operate with a “clean slate”.

The appellate court disagreed. The appellate court stated that “once the C&R was approved by the WCJ, it resulted in an award. Included in the award were other medical treatment costs, some of which had been paid and some of which had not. Delay in paying even a de minimus amount is subject to a 5814 penalty. The section 5814 penalty should have been assessed against the entire amount ultimately awarded for the class of compensation in which the payment was delayed-medical treatment costs-including those benefits paid prior to and in anticipation of an award.”

So the penalty applies to the medical costs prior to the C&R (including the medical benefits on which a prior penalty was paid settling that penalty issue). This decision requires the employer or carrier to expeditiously negotiate liens prior to or immediately after a settlement.

Rebutting Treating Physician Presumption

A recent Court of Appeal case discussed the proper way to rebut a treating physician’s presumption under Labor Code section 4062.9.

Under Labor Code section 4061 when you do not agree with the permanent disability rating and under Labor Code section 4062 when you do not agree with the permanent and stationary status of the treating physician either side may obtain a qualified medical examiner’s (QME) report.

Li this case the applicant had a 2.25 percent disability from the treating physician. The applicant disagreed and got a QME report. The referee believed the applicant’s QME report did not rebut the presumption as opinioned in Minniear v. San Antonio Community.College District, Minniear was an Appeals Board en banc decision which has now been given legitimate authority in this appellate decision. The appellate decision concurs with the following principles enunciated in Minniear. The presumption in section 4062.9 affects the burden of proof. “ The presumption requires the party against . whom it operates to show, by a preponderance of medical opinion, that a different level of impairment exists….  The presumption applies to any and all medical issues covered by section 4061 and 4062. Thus, Minniear states that a preponderance of indicating a different level of impairment may rebut the treating physician’s view on the appropriate medical treatment and whether the disability is temporary or permanent at a given time,”

The appellate court indicated that Minniear indicated that evidence from a lay person is not substantial evidence; medical proof is required on diagnosis, prognosis and treatment which are beyond the bounds of ordinary knowledge. Li the present case, however, the appellate court accepted testimony of the applicant that his condition had worsened since he had seen the treating physician. This testimony in conjunction with the QME report in the present case to overcome the presumption of the treating physician. The court stated that unless the treating physician’s opinion is clearly no longer valid, it will not be considered of lesser value than the QME report. “Allegations that the treating physician’s position is out of date must be specific, in accordance with Board Rule 10616, and supported by substantial evidence, not mere conjecture.

Thus, it would appear the presumption could also be rebutted by showing the applicant’s condition had improved since the treating physician’s report. This would have to be supported by medical evidence.  One such piece of evidence the court has suggested is that the prior X-rays the treating physician relied upon were equivocal.

Thus, the treating physician’s presumption may be rebutted by showing that it is outdated.

Lien Claimant Must Prove Injury After Thomas Finding

A Workers’ Compensation Appeals Board Panel made a determination that self-procured lien claimants must prove an industrial injury after a case has been settled by a compromise and release with a Thomas finding.

The applicant settled his case by way of compromise and release with a Thomas finding. There was also a hold harmless clause releasing the applicant from any potential liability to lien claimants. Lien claimants, thereafter, filed a Declaration of Readiness To Proceed. When the case was heard by the Workers’ Compensation Judge he awarded a chiropractor reimbursement on his self-procured medical treatment, even though injury was never proven.  Defendant filed a petition for reconsideration and the Board panel overturned the Judge’s finding. The Board Panel indicated that lien claimant must first prove injury arising out of and in the course of employment before self-procured medical payments may be awarded.

In practicality what this means is that if defendant settles with the applicant with a Thomas finding there may still be an AOE-COE trial with all the incumbent witnesses on the issue of injury. The lien claimant has the burden of proving mere was an industrial injury. A lien claimant may try and do this by merely submitting their own medical. A good defense attorney will not let this happen without a fight.  First, the attorney has not had a right to cross-examine the applicant. Therefore, the defense attorney could argue this is merely hearsay testimony and a denial of due process. The Board usually sends out a notice mat applicant need not appear for lien issues. Therefore, if the defendant wants the applicant to appear, the defendant should subpoena the applicant or send out a notice to produce to the applicant’s attorney.

However, in most cases the defendant will not want the applicant to appear.  This is so the defendant can have only defense witnesses testify. Then the only credible evidence the judge could rely on would be defense witnesses. This would result in a finding of no industrial injury.

Therefore, the self-procured lien claimant would receive nothing. A smart judge may make sure all lien claims are resolved at the time the Compromise and Release is approved with a Thomas finding to prevent a later AOE-COE trial on the lien issues.

There may also be a potential problem for applicant’s attorneys who never show up at lien trials. If no hold harmless clause was given in the Compromise and Release the applicant may find the lien claimant pursuing the claim in civil court if no injury was found in the workers’ compensation proceeding.

Supreme Court Reviews One Week Delay For Penalty

The California Supreme Court has reviewed a claim for a penalty under Labor Code section 5814 and indicated there was no penalty for a one week delay due to a clerical error.

State Compensation Insurance Fund was issuing temporary, disability checks to the applicant. The adjuster handling the case went on vacation. While the adjuster was gone, another adjuster covering the adjuster’s mail inadvertently changed the applicants mailing address instead of the applicant’s attorney’s firm address Therefore, the applicant’s temporary disability check went to the attorneys office causing a one week delay in receiving the temporary disability check to the applicant. The workers’ compensation judge awarded a 10 per cent penalty for unreasonable delay.

The Appeals Board upheld the WCJ.  The Court of Appeal issued a writ and found the one week delay was unreasonable.

The Supreme Court reviewed Kampner v. WCAB and disagreed with the WCJ, The Appeals Board, and the Appeals Court who had differentiated the case with the present case.

The court stated “ Thus, irrespective of whether the delay in Kampner was 26 days (as SCIF argues) or only as little as 1 day (as the WCJ opined) Kampner held a short delaying payment, occasioned by the realities of the business of processing claims for benefits, is not unreasonable.” “The Kampner court recognized that a short delay caused by the realities of business cannot, standing alone, be unreasonable.” “Of course, the length of the delay, as well as the size of the late payment, should be considered by the Board when addressing reasonableness of the delay. In addition, although a short delay caused by business realities may be reasonable, the Board may consider other factors, such as whether the employer or workers’ compensation insurance carrier is adequately staffed for the anticipated workload.” The Supreme Court distinguished the Kerley case, saying that case was a case where benefits were intentionally delayed. The present case dealt with a clerical error and there was no intentional delay. The Supreme Court also indicated that to the extent Jensen v. WCAB suggests an inadvertent delay is unreasonable, it is disapproved.

This was a 5 to 2 decision. There was a dissent by Justice Mosk. He indicated that while a one week delay may seem of little consequence, it may be significant to an applicant who has to pay rent, medical, or food bills to properly survive.

These penalty issues will be reviewed on a case by case basis. The court will look to see if there is a clerical error.  The court will analyze the business realities of the delay. The amount of time involved will be decided on a case by case basis. A factor will also be the size of the amount delayed.

Good Faith Personnel Action Upheld By Court

There have not been a great deal of cases that have dealt with the affirmative defense of a good faith personnel action in a stress case. An appellate court has recently dealt with this issue.

The applicant filed an application for adjudication alleging a psychiatric injury. The case revolves around the applicants six-month performance report. The applicant received a rating of “meets standards”. The applicant was unhappy with this rating. The applicant became agitated and asked a supervisor to review the rating. A higher rating would mean a raise in salary. The next day the applicant was given a higher rating of” exceeds standards”. This still did not satisfy the applicant who wanted a rating of “outstanding”. The applicant became very upset. The applicant started “to lose it”. The applicant asked for medical assistance and an ambulance.  The supervisor called 911. The supervisor did not request the police, but several deputies responded to the 911 call.

The applicant and the deputies expressed different versions of what transpired. The applicant was eventually restrained, was pepper sprayed, handcuffed and removed from the employers premises. He was taken to a hospital. He filed for a psychiatric injury which was denied by the employer. The Workers Compensation Judge found an industrial injury and the Appeals Board adopted the Judges opinion.

The appellate court reviewed Labor Code section 3208.3 and its history.  The court stated that injury could nor be substantially caused by a good faith personnel action. “’(s)substantial cause’ means at least 35 to 40 per cent of the causation from all sources combined.” The court indicated that section 3208.3 was amended in 1991 and 1993.  Thel993 legislation no longer defined “personnel action”.  The court stated that “it is fairly clear that the legislature intended to include actions which are a normal part of the employment relationship, such as demotions, promotions, criticism of work practices, and frictions in negotiations as to grievances.”

The court stated that the determination to be made was whether the police action substantially caused a good faith “personnel action”. The court used the “but for” test. But for the personnel action the applicant would not have become agitated; would not have requested medical attention; no one would have dialed 911; and the police would not have come and the altercation would not have occurred.  Therefore, the claim was not compensable.

Court Reaffirms When VRTD Commences

An appellate court has revisited what has previously been ruled on.  The question of when vocational rehabilitation benefits begins has been the subject of many court rulings. It is somewhat surprising that the issue keeps presenting itself.  Obviously, some individuals or entities wish to continue to test this opinion.

The facts in this opinion do not seem to be explained by the dates given in the opinion adequately. Many appellate opinions only give brief summaries of the facts and it is assumed that this opinion did not give all the factual background of this case. This injury was a 1989 injury. Therefore, the law was interpreted for the pre-reform legislation. The applicant entered into a stipulation to 46 ¼ percent permanent disability.

Thereafter, the applicant apparently filed a timely petition to reopen. There was a new finding of 66 percent permanent disability. The opinion does not inform us if this was a finding by the worker’s compensation judge or a stipulation between the parties. We are informed mat the Petition to Reopen was a valid request for vocational rehabilitation temporary disability (VRTD) benefits. However, we are not informed whether the petition to reopen specifically requested vocational rehabilitation. It would seem this would be an important fact to know. The opinion does not inform us if the petition has to specifically request rehabilitation.

The opinion then revisited old cases. In the original application of adjudication of claim the applicant checked off the box requesting vocational rehabilitation. The Board and the appellate court determined this constituted a timely request for vocational rehabilitation. The issue then became when VRTD was to commence and this is what was litigated. The defendant argued that there was no prima facie evidence of the applicant’s entitlement to VRTD benefits. Although the opinion is convoluted as to the facts it would appear many of the doctors did not even comment on the applicant’s qualified injured worker (QIW) status.  The defendant also argued that because of the extent of the applicant’s disability there was a question as to the applicant’s feasibility to participate in rehabilitation. They appear to be arguing that because the applicant is not feasible VRTD benefits are not owed during this determination period.

The appellate court found against the defendant and again reiterated that VRTD is to be paid during the determination period.

There Is A Duty To Investigate And Defend Claims With Good Faith

This newsletter has discussed cases on prior occasions that refer to an employer’s or carrier’s duty to investigate. An appeals court has commented again on this area.

State Compensation Insurance Fund (SCIF) appealed a judgement against it by an employer for $300,000.00 for breaching the implied covenant of good faith and fair dealing by refusing to permit the insured access to claims files, etc. They lost at the appellate level and the court discussed several causes of action that may be maintained against carriers.

SCIF contended that they could not be liable for breach of an express contract.

When an insured takes out a policy of worker’s compensation with an insurance company this is an express contract. This court found that where SCIF did not follow up on claims or failed to deny claims timely this was a breach of the express provisions of the contract.

The court then discussed the implied covenant of good faith and fair dealing. There were different allegations as to SCIF breaching this covenant. One of the allegations was that SCIF was over reserving. SCIF was reserving to the “maximum probable potential”. The court found this policy gave no consideration to the interests of the insured. The Insurance Code section 923.5 discusses reserves. The court indicated that SCIF’s policy meant the adjuster would reserve the case at the absolute most SCIF would have to pay. The court indicated this is not in the best interest of the insured. SCIF was attempting to get guaranteed profits through a no risk business enterprise without disclosing the change in their reserve policy to the insured.

The court found this was a breach of the implied covenant of good faith and fair dealing. SCIF also attempted to argue that they did not improperly handle claims. The appellate court would not listen to this argument because it would be a reweighing of the evidence. Appellate courts will not reweigh the evidence.  The court would not listen to SCIF’s argument as to damages and found that damages in this instance are proper. SCIF also appealed as to the trial courts finding on denial of the insured to inspect their claim files.  The appellate court agreed with the trial court that as a matter of law despite any privacy interests the indiscriminate refusal to deny access was a breach of the implied covenant of good faith and fair dealing. The court then addressed the issue of damages awarded by the trial court and found the damages were not excessive.

Statute Of Limitations May Be Tolled By Notice Failure

This is the latest in a line of decisions interpreting the statute of limitations. This case gives a synopsis of current case law.

In September 1991 the applicant had an admitted specific injury to his elbow. He received workers compensation benefits after surgery.  After surgery he complained of neck pain and an evaluating physician found no ongoing elbow disability, but did find a cumulative trauma industrial in nature to the neck.

The claims adjuster sent the applicant a claim form in April 1993 and a follow-up letter in June 1993 to file a claim for the neck. The applicant claims he did not know that he needed to file a separate claim for the neck because of his sixth grade education and not receiving an attorney’s advice until November 1994. The applicant had been previously represented by counsel for a 1989 compensation claim. The workers compensation judge found the employer was estopped to raise the statute of limitations because the applicant was not advised of his rights under the Labor Code. The Appeals Board reversed saying the applicant knew or should of known of his rights and the employer should not be estopped.

Labor Code section 5405 states a claim must be filed within one year of the date of injury. Labor Code section 5412 defines date of injury, which includes the language mat the applicant knew or should have known that his injury was industrially caused with reasonable diligence. This language is important because it could be argued that the applicant should have known he had to file a claim within the prescribed time.

Labor Code section 138.4 defines the notice requirements the employer is to give the injured worker for the statute of limitations to be applicable. The appellate court cites the Reynolds case stating that the statute is tolled until the employee receives such notice.  However, at the time of the Reynolds decision the statute was different and now the statute is much stronger in terms of the notice requirements.

In this case the appellate court had to decide when the applicant knew or should have known of his industrial neck injury, April 1993 or November 1994. The appeals court agreed with the WCAB that there was facts to indicate that the applicant knew as of April 1993 but indicated that was not the end of the analysis. The appellate court indicated that the notice of the time limit to wasn’t provided to him and even though he filed two previous claims this was not enough to acquaint him with the time parameters because in April 1993 he was unrepresented. It is believed that is the key to this case. If applicant had been represented by an attorney at the time the outcome of this case might be different.

Additional Evidence Okay When There Is A Conflict

Sometimes it seems an issue has to be addressed repeatedly for the workers’ compensation community to understand. Another appellate court had to tackle the issue of whether a workers’ compensation judge (WCJ) could order additional evidence by way of an independent medical exam.

The applicant worked for his employer from 1991 to 1996. The applicant did not miss one day from work when the applicant filed a cumulative trauma to his leg and hip. The employer denied the claim on the grounds of a pre-existing condition which rendered the applicant’s condition non-industrial.  The WCJ found the condition nonindustrial. However, the WCJ pinioned that an independent medical examiner would be appropriate in this case, however, the present procedures do not allow for the appointment of one.

In a previous issue of this newsletter the case of Tyler v. WCAB was discussed.  In the newsletter it was suggested that the WCAB would now have the opportunity to refer cases out to independent medical examiners. Many practioneers and WCJ’s believed Tyler was an isolated case based on its peculiar facts. In fact in this case it was argued that Tyler was not binding because the WCJ found neither doctor credible. It was further argued that in McClune that the WCJ did not reject the evidence but merely found the applicant did not sustain an injury.

This appellate court rejected the distinction. “Indeed, as Tyler acknowledged, the ‘ principle of allowing full development of the evidentiary record to enable a complete adjudication of the issues is consistent with due process in connection with workers’ compensation claims-.’”

It was further argued that appointment of an independent medical examiner was inappropriate at this stage of the proceedings, or after discovery cut-off and trial. The appellate court was not having any part of this argument either. The court cited a pre-1989 amendment case as still good authority. Citing Zozaya v. WCAB,”…{Accordingly, where the medical evidence is in conflict, WCAB does not exceed its statutory powers when it grants reconsideration to direct the taking of additional evidence.”

In 1997, in the Tyler newsletter, the editor gave the advice that it may be prudent in certain cases that when there is a conflict in the medical evidence it may behoove both parties to go to an agreed medical examiner. Otherwise, you may find yourself in a situation where you go through a whole trial to have the WCJ end up referring the applicant out to doctor without either party having a choice in the determination of that doctor. It seems choosing an agreed medical examiner is the more prudent choice.

Mistake In Date Alleged May Not Defeat The Claim

In this case the applicant filed a specific injury. The applicant failed to prove a specific injury, but showed there was a cumulative trauma. The appellate court indicated that was sufficient even though no claim form was ever filed for a cumulative trauma.

The applicant filled out a claim form for a specific injury on August 8,1994 for injury to the left wrist. A doctor told the applicant he had carpal tunnel syndrome and should not work. The claim was not denied and temporary disability was paid.

Thereafter, the applicant obtained an attorney and filed an application for adjudication alleging a back and left upper extremity injury. An amended application indicated the date of injury as August 8, 1994, but indicated that the injury was due to constant writing on a daily basis.

The Worker’s Compensation Judge (WCJ) found there was no injury once all of the medical evidence indicated that there was a cumulative trauma and not a specific.

The appeals court reversed this finding indicating that the defendant in this situation was never mislead.  Approximately one week after the reporting of the specific injury the defendant was aware that the applicant was suffering a cumulative trauma from repetitive activities. Since the defendant had knowledge they could not be prejudiced by the misstatement as to the date of injury.

This court also addressed the issue of the 90-day presumption under Labor Code section 5402. The court found that the presumption did apply under these facts since the defendant had notice of the cumulative nature of the applicant’s injury 8 days after he reported the specific injury.

The Court then went on to differentiate the Crawford v. WCAB (54 CCC 411) (1989) case. In that case the applicant was not allowed to amend his claim on the date of trial from a cumulative trauma to a specific injury. This appeals court really does not differentiate the two cases but implies that it has to do with the applicant’s ability to amend the claim years earlier. This court merely indicates that for these facts the defendant had sufficient knowledge of the details.

When analyzing this type of fact pattern you should look at the facts of both of these cases and compare them to your own facts. The most prudent course of action is to prepare and defend any potential claim as a defendant. This is a good example of better to be safe than sorry from a defendant’s perspective.

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