WCDefenseCA

Under Labor Code § 3600(a)(7), California Workers’ Compensation defendants have a rarely used defense against applicants who get hurt at work from fights they themselves started.  This section came up in a recent writ denied case (2011 Cal. Wrk. Comp. Lexis 75).

Engaged in the heist of the century, a shoplifter attempted to steal several 12-packs of soda.  The applicant, a uniformed security guard, passed over his cape and mask in favor of his self-issued pepper spray, springing into action!  After spraying the would-be thief from six feet away, the security guard sustained injury to his left shoulder, left upper extremity, left hand, wrist and fingers.  Even Batman gets bruises from time to time.

The defendant invoked § 3600(a)(7), claiming that the security guard was the initial physical aggressor, and in fact, although qualified for super-hero status, was exceeding the scope of his job requirements.  His duties were, in fact, simply “observing, reporting, and being a visual deterrent and physical presence in the parking lot of Defendant’s store.”

The WCAB rejected this “scarecrow” job description and rejected each defense as quickly as it was brought up: (1) it matters not that the applicant was acting outside of his job duties, or even in direct opposition to specific instructions from his supervisors, the test is “whether the work was done of benefit” to the employer; likewise (2) a security guard aggressive with shoplifters, an initial physical aggressor does not make.  § 3600(a)(7) is instead intended to punish horseplay amongst employees, and so is inapplicable to this case.

A contrary example comes from a recent reconsideration-denied case, Anderson v. G-3 Enterprises (ADJ7357811).  [Full disclosure: Thomas Harbinson (my boss) and Laura Lachman of Harbinson Tune Kasselik, handled this one]. There, the applicant was the initial physical aggressor in a spat with a co-worker.  The defense evidence consisted of the written statement of the gentleman applicant fought with and the testimony of a neutral third employee.  Both said that Mr. Anderson had started the fight.   § 3600(a)(7) was invoked and completely blocked the applicant’s claims.

That being said, employers retaining security guards find themselves in the unique position of providing a safety net for super heroes with day jobs.  Employers must concern themselves with employees that could hurt shoplifters/customers as well as themselves.  My suggestion – label each job posting with “loose cannons need not apply.”

Who could have thought that a medical office could possibly defraud insurers in a California Workers’ Compensation scam?  Fortunately, the insurance company and the Orange County District Attorney did.  Recently, several sources confirmed that Dr. Sim Carlisle Hoffman of Newport Beach, and three others from his office, were engaged in a $17 million Workers’ Compensation insurance fraud scheme.

Ibtimes.com, Patch.com and Adjuster.com confirm that Hoffman has been accused of over-billing, hoping that insurance companies, or self-insured entities, would let the unnecessary charges go unnoticed.  These involved both unnecessary procedures and procedures never performed.

The facilities involved?  Advanced Professional Imaging, Advanced Management Services and Better Sleeping Medical Center (all in Buena Park).  Amongst those indicted is a neurologist, a radiologist and a hearing representative who would press for these bills to be paid in lien trials.

I, for one, extend a heartfelt thanks to Orange County District Attorney Tony Rackauckas and the deputy district attorneys that, under his leadership, are seeing this matter through.  Although I practice in San Francisco, I salute these efforts to curb the fraud that, sooner or later, unnecessarily brings up costs for consumers.  Far too often self-insured employers and insurance companies are defrauded by false billing practices and over-treating physicians.

In such cases, it seems unlikely that prosecutors or the insurance company will find $17 million worth of goods to recover for their loss, although I would check under the mattresses just to be safe.  Nor will the D.A.’s office or the insurance company recover the costs of investigation, reporting and prosecution, which in such cases is a lengthy, difficult and therefore expensive process.

The only hope insurers and self-insurers have of curbing their losses is through vigilance, bill review, and cooperation with law enforcement to catch the frauds and (hopefully) put them out of business.

Other ways to defend against this are the use of Utilization Review procedures and a Medical Provider Network.  But these have their own limitations.

If a fraudster becomes familiar with the allowable treatments under UR, he need only bill for procedures that would be allowed, even without performing them.  Similarly, an MPN can eliminate a doctor who commits fraud, but only after the fraud has been committed.  The very nature of fraud is that, for the longest time, it is not detected.

In the meantime, we can all enjoy the bite of increased premiums and costs due to fraud.  Cheers!

In the last post, we set the stage for the breakdown in co-defendant cooperation in cases where the bulk of the liability should (but, of course, doesn’t) fall on the liability-immune Federal government.  The California Workers’ Compensation system and California case-law offers us a silver lining to this scenario.

In the case of Cloristeen Collins v. Plant Insulation Company (185 Cal. App. 4^th 260 (2010)), the Court of Appeals found that when our dear monarch proudly declared that the King can do no wrong, his loyal subjects had, all along, correctly noted that the King had no clothes!

Essentially, the Court held that fault for personal injury should be apportioned amongst the parties, regardless of the sovereign immunity defense, and that each party must only pay for their percentage of fault.  So if the Federal government is 50% at fault, although it is immune to actual liability, the plaintiff can expect to receive only 50% of his or her recovery, and the defendants need dread only paying the same.

So how does this help Joe Business or Jane, Inc.?  Well, let’s say an asbestos applicant wins an award of $1,000,000.00 in a civil claim against a group of defendants, including the Federal Government.  If the jury assigns 40% of the fault to the federal government, and only 10% of the fault to Joe Business, that means that Joe Business gets a credit against Workers Compensation liability.

Why not 100% of the award credit?  Under Labor Code § 3861 a defendant employee’s credit is related to its relative fault.  So, what does that mean in the Workers’ Compensation case?

Well, Joe Business first must pay out 10% of applicant’s civil trial recovery – that’s after applicant (at that point a plaintiff) pays his or her attorney, after the costs, and after the reduction due to the Federal government’s sovereign immunity.  Assuming an attorney fee of 33%, and pretending that there are no costs to be paid out as well, Joe recovered $198,000.00 ($1,000,000.00 [base award] x 50% [federal immunity] x 66% [recovery after attorney fee]).

Joe Business will first have to pay up to $19,800.00 in the Workers’ Compensation arena. (See Rodgers v. Workers’ Comp. Appeals Bd. (1984) 36 Cal.3d 330, 336.)  But after that, Joe gets a credit for $178,200.00.  Pretty nifty, right?  More on practical application at a later date.  For now, let’s re-form the phalanx and stop playing the whipping boy for Uncle Sam tort-happy history.

Just a caveat: I’m not aware of any case where this theory has been put to the test.  So, just like the first back-yard distillery, there’s no way of knowing if it will be the cause of a huge mess or a huge celebration.  In either case, good hunting!

We’ve all been there.  What began with a firm row of phalanx shields facing an advancing asbestos applicant devolved into a crowded hearing room with a dozen or more other defense attorneys, glancing left and right while getting ready for the feeding frenzy to begin.  None of our clients are truly at fault – the culprit employer, with the most years of exposure, the highest degree of fault, and the § 5500.5 liability for exposure is clear to everyone.  Or rather, the would-be exposure, fault and liability.  The attorney for this employer sits comfortably in the hearing room, swapping chuckle-inducing text-messages on her blackberry or twittering away on his laptop.  This attorney, who by all accounts of fairness or decency should be preparing to bite the bullet and lead the defense against the applicant’s claims, feels not the slightest degree of pressure.

The applicant, of course, worked for some aspect of the Federal Government, building ships or delivering mail.  The lawyer, without looking up from her calendar as she scribbles down lunch plans, merely says the magic words that keep her from lifting a legal finger:  sovereign immunity.  You see, after all, the King can do no wrong.

Left at this point, California Workers’ Compensation law sometimes leaves the unlucky employers that have their shops set up along Applicant’s Memory Lane, in some extreme cases responsible for 1% of the exposure amongst themselves, to foot the entire bill.  Soon comes the puffery of settlement and the melee of negotiation.  “Cough up the money! I know your client’s got it!”  “We’re just ten grand away from settling this thing, pay your fair share.”  Suddenly, the bonds of brotherhood uniting defense attorneys against the flood of applicants coming for their clients is gone, as the equally blameless defendants scatter to avoid being the “target.”

I’ve talked about a tool you can use to put some pebbles in the boots of lien-claimants.  With the stage now set, on Tuesday I’ll tell you about a big rock to toss in the shoe of an asbestos (or other) applicant.

UPDATE (6/23/11):  The bill has been signed and is now law.  Will this signal a trend that other states will follow?  Only time will tell.

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It appears that Florida might be riding to the rescue to ease some of the burden on California’s Workers’ Compensation system.  While taking a break from hunting alligators and providing the single most popular way of getting out of serving on a criminal case jury (trust me, just tell the judge or prosecutor that you watch CSI: Miami and you’ll be home in time for the intro sequence), the Florida legislature has presented a bill for Governor Rick Scott’s signature.

This new bill would require all employees of Florida companies injured while working  for the employer (temporarily) in another state to press their claims in Florida and under Florida’s Workers’ Compensation laws.

Why would someone from Florida want to have their Workers’ Compensation claim adjudicated under the laws of another state, such as California?  To put it gently, California is somewhat more generous with employers’/insurers’ coffers, than many of the other states, Florida included.

If Governor Scott signs this bill, claims ranging from boredom-induced psyche injuries for visiting convention attendees all the way to training and game injuries (fantasy league pride-stinging included) for professional football and hockey players will have their claims adjudicated in their home states, where their employers and their employer’s insurance companies can retain counsel with previously negotiated and volume-based reduced hourly rates and keep the costs of adjusting the claim to a minimum based on already-possessed knowledge and expertise.

As a California defense attorney, I hate to see less business walk through my doors, especially business glowing with Florida tans and generous with Disney World tickets.  But at the same time, I would be glad to see a less cluttered and overburdened calendar down at the Board, and I am also happy to see employers treated fairly within their own state.  Do I dare dream that California’s will one day experience the same?

In the event that Governor Scott doesn’t sign this bill, or some angry mob of applicant’s attorneys threatens to boycott Florida Orange Juice, I will still happily help any out-of-state defendants run the gauntlet of California’s Workers’ Compensation system.

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.

Keith Goble of Land Line Mag has an interesting article today on the freezing of a new bill which would have effectively stopped the owner-operator business model of drayage trucking:  Assembly Bill 950.  AB 950 would “deem drayage truck operators as employees of those persons who arrange for or engage their services, with the exception of public agency employers.”

With employment, of course, come various forms of liability, including workers’ compensation liability under Labor Code § 3700.  No doubt this increased liability would translate to higher consumer prices and lower contract amounts for the individual drivers.

By falling under the category of independent contractors, drayage truck owner-operators escape the jurisdiction of the California workers’ compensation system.  The independent contractor exception is one of the last few safe harbors remaining for individuals to retain control over their small businesses.

Fortunately, this bill has been ordered to the “inactive” file.  Hopefully, it will be some time indeed before there is another encroachment from Sacramento onto the interactions between private citizens doing business.