Category Archives: Sanctions

Reconsideration or Removal? Part 1 of 3

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California’s Workers’ Compensation system is one with a lot of gray areas and vague notions.  Rules of evidence and civil procedure apply, but not really.  Regulations govern the proper issuance of evaluator panels, but the Medical Unit does not have to follow them.  Defendants are entitled to due process, but only sometimes.  (For some of the harshest language on this point, I direct you to the case of Fidelity and Casualty Company of New York v. Workers’ Compensation Appeals Board [“If this case is a measure, the board — despite its sheaf of rules of practice and procedure — operates in an essentially structureless environment where the vigilance of the petitioning and responding parties provides the only insurance against the arbitrary and capricious denial of due process.”]).

Well, one truth that we can all agree on, one that is constant and unyielding, is this:  sometimes the Workers’ Compensation Judges get it wrong.  And when they do, it is up to the zealous among us to make sure these errors do not go unanswered – we must appeal!

The appeal takes the form of a Petition for Reconsideration.  An alternative is a Petition for Removal.  The former is from final orders, while the latter is from orders not considered final, but resulting in prejudice and irreparable harm.  (8 Cal. Code Regs. § 10843.)

Removal and Reconsideration are two very different procedures, but their distinction is often lost on attorneys who file both in order to cover their proverbial bases.

A petition for reconsideration is filed to seek the Workers’ Compensation Appeals Board’s intervention from a final order of a WCJ.  (Labor Code § 5900.)  A final order is one which determines any substantive right or liability of those involved in the case.  (Maranian v. Workers’ Comp. Appeals Bd..) Under Labor Code section 5910, the aggrieved party has 20 days from the service of the order to file its petition for one or more of the following reasons:

(a) The WCJ or the appeals board acted without or in excess of its, his or her powers;

(b) The order, decision, or award was procured by fraud;

(c) The evidence does not justify the findings of fact;

(d) Newly discovered information not previously available;

(e) The findings do not support the order, decision, or award.

(Labor Code § 5903)

One of the immediate effects of a petition for reconsideration (as opposed to a petition for removal) is that the filing of it suspends the order of the WCJ for 10 days.  (Labor Code § 5910.)  Furthermore, the WCJ is stripped of all jurisdiction 15 days after filing.  (8 CCR § 10859.)

This means that when a WCJ issues a non-final order, the case should proceed.  But once a petition for reconsideration is filed, under the Labor Code and the Code of Regulations, the order is suspended and the jurisdiction is taken away from the WCJ.

In other words, while an attorney is just “covering his bases,” the case grinds to a halt and a good amount of legal resources go into dealing with his or her petition.

But what about the process for a Petition for Removal?  I’m glad you asked: come back tomorrow morning for Part 2 of 3!

On Vexatious Litigants

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The life-time claimants.

Most of us have at least one of these applicants in our past.  You know the ones – no matter how slight or serious their injuries, they refuse to move on with their lives.  Often enough, their own attorneys have had enough of them and they find themselves living out that old proverb about having oneself for a client.

All of a sudden, everything becomes “sanctionable” conduct, Defense lawyers are reported to the bar by the applicants for anything and everything.  The Workers’ Compensation Judge has to hear about the laundry list of abuses practiced by the defense.

Before you know it, the applicant starts relying on such relevant authority as Federal Rules of Civil Procedure, the Constitution of the State of Idaho, and probably some United States Resolution regarding water rights.

Meanwhile, the defense attorneys are racking up a bill reading and responding to every pointless 30 page brief the applicant files.  Soon you start suspecting the method to the madness is the expense inflicted upon the defendant in defending its position.

Well, one remedy the defense has at its disposal is that of California Code of Regulations section 10782, which allows a self-represented applicant to be declared a “vexatious litigant.”  If successful, the applicant can only file documents which the presiding judge has approved, filtering out a lot of the meaningless gibberish the defense would otherwise have to waste time on.

This is a very difficult maneuver to pull off and the standard is fairly high.  But, in a recent writ denied case, defendant was successful in doing just that!

Sylvia Santos filed four applications for three specific injuries and one (3-day) cumulative trauma.  Unrepresented she fought the defense tooth and nail on routine issues like release of medical records.

Defendant’s investigation revealed that Santos had filed an application for the same body parts against almost every employer she has had.

In response to defendant’s petition to have applicant declared a vexatious litigant, applicant filed a petition to have defendant declared a vexatious litigant, too!

The insanity continued, with applicant accusing the WCJ of bias against the applicant, and claiming the vexatious litigant regulation is unconstitutional.

The WCJ found applicant a vexation litigant, and the Workers’ Compensation Appeals board denied applicant’s petition for reconsideration.

In denying applicant’s petition for writ of review, the Court of Appeal reasoned that:

“a review of this record shows that Santo’s multiple filings do not serve the interest of her moving her cases forward toward decision on the essential issues, but, instead, a great deal of court time has been required to understand, organize and respond to the pleadings and other documents.  The designation of vexatious litigant will not prevent Santos from proceeding with her claims or from having the opportunity to be heard, but will allow the [presiding judge] to examine her conditionally filed documents to determine which documents may be appropriately organized and filed in order to mover [sic] her case to adjudication.”

If you’re dealing with one of these life-time cases, perhaps § 10782 is something to look into as a possible strategy.  If you have any luck with it, let me know – your humble editor would love to hear the story.

Another One (Could Possibly) Bite the Dust

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I think it is no secret that lien claimants and their representatives are not all on Santa’s “nice” list.  Some of them engage in what I would call, in an act of unfathomable generosity, ethically questionable tactics.

Often enough, sanctions are not awarded against them (although there are exceptions), and even then not with enough frequency to make the tactics unprofitable.

But then, there are cases like those of one hearing representative, who shall remain nameless.

In this en banc opinion, the Workers’ Compensation Appeals Board ordered a hearing on whether or not this hearing representative should be stripped of the privilege of appearing before the Board.  The WCAB provided a long list of the hearing representatives’ bad faith tactics, including the filing of frivolous petitions, failing to appear, making false statements of fact, and others.  This sanctionable conduct goes back as far as 2003.

Just as an aside, the fact that the first actual sanction was imposed in 2003 suggests to me that there may be other actions which were never sanctioned, inflating the frequency and longevity of this history of conduct.

For eight years, this hearing representative was sanctioned again and again.  A hearing is ordered on this matter and hopefully there will be no more defendants harassed, shaken down, or bullied by this person.  Of course, this can only serve as a personal deterrent to him, taking his ability to do these things away, and somewhat of a scare tactic to others.

Overall, however, the Workers’ Compensation Judges and the WCAB seems reluctant to punish bad behavior on the part of lien representatives (or applicants’ attorneys), so if anything is ever to be done about the unethical amongst us, be sure to contribute to a record to help document who-did-what-wrong.

Excluding a Co-Defendant From QME Communications

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Ever since the decision in Alvarez v. Workers’ Compensation Appeals Board  the issue of ex parte communication with a qualified or agreed medical evaluator, as prohibited by Labor Code § 4062.3 has been a cloudy one.  The very language of the Alvarez opinion (“an ex parte communication may be so insignificant and inconsequential that any resulting repercussion would be unreasonable”) leaves nothing more to grasp at than mist when one puts himself to the task of defining what is, and what is not, ex parte communication.

In the recent case of Morales v. Workers’ Compensation Appeals Board, the Court of Appeals denied a petition for writ of review of a decision touching on this topic.

The skinny:  providing the remedy of a replacement panel for applicant’s act of sending medical records to the a Qualified Medical Evaluator and only one of two defendants does not prejudice the applicant, nor is it a final order.

In this case, after the Workers’ Compensation Judge ordered a new panel to issue on defendant’s motion, applicant’s attorney petitioned for reconsideration or removal.  The petition for reconsideration was denied as the ordering of a replacement panel was not a final order.  The petition for removal was denied because applicant failed to show any prejudice from the WCJ’s order.

The facts of this scenario present some interesting questions regarding the right to a new panel.

The ideal outcome for co-defendants can be mutually beneficial, such as a favorable judgment regarding causation, extent of impairment or apportionment.  For co-applicants, such as competing dependents in a death claim, there is only one pie, and it can only be sliced so many times.

Let’s assume the last QME standing after the panel selection process is known to the defense community to issue high-rating reports.  Seeing that this panel QME is not good for either defendant, could one of them send an ex-parte communication to allow the other to demand a new panel?  Or, without planning it, could one defendant accidentally forget to serve the other, the way an applicant might not serve a second defendant, as appears to be the case in Morales?

The ethical implications of this tactic are questionable at best, but the thought does present an interesting question regarding the inner workings of the new-panel remedy.

In any case, absent a settlement, I expect we will see the case of Morales v. Workers’ Compensation Appeals Board again.

Sanctions for a Bad UR Report? Not in My CA!

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Utilization Review, as previously discussed here and here, is an effective tool in filtering out unnecessary treatment.  However, Labor Code § 4610 has its own requirements to make Utilization Review reports valid, including deadlines and qualifications for reviewing physicians.

If a denial of medical treatment is based on UR, and the UR report does not comply with § 4610, can the denial give rise to sanctions?

Labor Code § 5813 provides that sanctions may be imposed “as a result of bad-faith actions or tactics that are frivolous or solely intended to cause unnecessary delay.”

Recently, an applicant took this issue up on appeal, finding no sympathy from the Workers’ Compensation Judge, the Workers’ Compensation Appeals Board or, ultimately, the Court of Appeal (Dominguez v. Workers’ Compensation Appeals Board).

There, the applicant claimed that defendant’s denial of dermatologic treatments based on a UR report was sanctionable conduct because the UR report was not timely and was prepared by an anesthesiologist, rather than a dermatologist or an orthopedist (the underlying industrial injury was an orthopedic one).

The WCJ and the WCAB both found that applicant’s contentions regarding the validity of the UR report were without merit.  But, even if applicant was correct on both counts, the denial does not rise to the level of § 5813 sanctions.  The applicant kept saying sanctions, and the courts responded with…

In other words, go with your gut, and stick to the UR report – at the most, you’ll end up paying the treatment, but no sanctions should be forthcoming.

New Proposed Regulations

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The Department of Workers Compensation has announced that it is proposing new regulations, mostly having to do with lien claimants.  You can see the notice and read the new regulations here.

The proposed changes include a process for dismissing liens that have been inactive for the last year, similar to the dismissal of cases for lack of prosecution.

The new proposed regulations also limit the filing of liens to new or opening liens, and lifts the requirement to file (but not to serve) the itemized list that make up the basis for the lien.

Also, it appears that defendants will have grounds to argue that an improperly filed lien is not filed and not binding, even if it is served.   The new proposed regulations even seem to allow for sanctions and attorney’s fees for violations of the new procedures.  (The threat of sanctions is a useful tool in curbing the advances of lien claimants.)

I, for one, am eager to see how much of this survives and becomes the law of the land.  It looks like, before too long, defendants might have a new set of maneuvers to ward off the Lien Pirates!  Even for a cynical workers’ compensation defense attorney, hope springs eternal.

Three pennies for your thoughts?

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Would you go to the mattresses over three cents?

In a recent Sacramento case that went up on petition for reconsideration before the Workers’ Compensation Appeals Board, a defendant petitioned for reconsideration on what was, essentially, a clerical error of $0.03.

The facts are essentially these: defendant took credit for over-payment of $13,113.36 in applicant’s upper extremity claim.  The judge then sanctioned defendant $2500 for taking the credit without a judicial determination, but allowed the credit for equitable reasons.  Then it got interesting.

In the minutes of hearing, a clerical error shorted defendant by three cents, providing for $13,113.33 in credit.

The defendant in this case was self-insured (some of the many benefits of which are discussed here) and was administered by a Third Party Administrator.

Before I go any further, I want to make clear that I have not spoken to any parties or their attorneys in this case, and this post is based entirely on the opinion of the WCAB.  If the WCAB overlooked a fact or something didn’t make it into the record, then consider this post incomplete.

The WCAB noted that a request to correct a clerical error would have been the appropriate course of action for defendant’s counsel, rather than a petition for reconsideration.  The WCAB further noted that the minutes of hearing actually reflected two sums, one correct and one erroneous, and this escaped the defendant’s attorney’s notice as well.

Ultimately, the petition for reconsideration was granted, but an additional $500 fine was imposed on the defendant, the defense attorney and her firm (joint and several liability).

Being a California Workers’ Compensation defense attorney, I can sympathize with the defendant in this case.  So often do the defendants find themselves with the deck stacked against them, even three cents can feel like a victory!

In this industry, probably more so than in many others in the legal profession, it is important not to turn cynical or bitter.

It’s not very likely that the outside world will know what happened in this case.  Was it the client, driven by principle?  Was it the TPA, instituting a policy of thousands for defense but not three pennies for tribute?

Ultimately, this is a case for the record books, and a reminder to us all that we mustn’t let all these trees block our view of the forest.  Peek your head out of the foxhole, hold the line, and leave the Pyrrhic victories to King Pyrrhus.  And, as always, good hunting!

Using Sanctions to Restrain Lien Claimants

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A recent writ denied opinion highlights an important tool that is often neglected in curbing the costs of lien negotiation and settlement.  In Escamilla v. WCAB (2011 Cal. Wrk. Comp. Lexis 67; behind a Lexis pay wall), the Workers Compensation Judge’s award of sanctions and costs against a lien claimant and its hearing representative was upheld.

The essential facts are that the lien claimant was forced to wait for the lien hearing to begin, roughly 90 minutes, because the defense attorney was in a trial.  Ultimately the parties settled, including in the settlement all claims to penalties and interest.   A year later, the lien claimant filed a petition for cost and sanctions for that 90 minute wait.  After arriving late for a trial date, requesting and receiving a continuance, and arriving late for the second trial date, the WCJ denied the lien claimant’s petition, while also awarding almost $2,500 in costs to the defense attorney (pursuant to the defense attorney’s Labor Code § 5813 petition, among other penalties.

In this case, the attorney pursued a § 5813 petition and recouped the costs of his billed hours for his client.  But too often the remedy of § 5813 is not invoked.  Lien claimants have a very low operating cost, while defendants have to pay their adjusters and their attorneys.  This is effectively leveraged by lien claimants threatening “scorched earth” against defendants – pay us our Danegeld, even on an unreasonable claim, or we’ll cripple you with attorney fees.

§ 5813 gives defendants a chance to fight back, and to raise the cost of doing business on the lien claimants.  Without § 5813, the operating costs are limited to small amounts of time and boiler plate pleadings used repeatedly.  With § 5813, the lien claimant and its hearing representative suddenly find themselves paying the defendant’s attorney fees.  If used judiciously, § 5813 can stem the flow of unreasonable lien claims and provide some real leverage in negotiating a token settlement.

But, just like peeking inside a van parked by the river to claim the “free candy” promised in spray-paint on the van’s side, § 5813 comes with its own dangers.  A careless and knee-jerk habit of sanction filing will eventually get an attorney or even a defendant on the “ignore” list of the WCJ.