Archive for October, 2016

Non-Disclosure Agreements for WC C&Rs?

October 31st, 2016 No comments

Hello dear readers and happy Halloween!

Your humble blogger wishes you a very happy Monday morning.  By chance, did I cross paths with any of you wonderful folks on Friday, at the California Self-Insured Association conference in Walnut Creek?  If you haven’t attended one of these yet, I highly recommend them.  It is an informative conference and the presenters are excellent.

Anywho, at one point, one of the presenters was discussing the theoretical approach of settling cases by way of Compromise and Release even when the coverage/employment relationship continued.  In her experience, a C&R released reserves, reduced administration costs, and the feared consequence of the injured worker filing for another right to medical treatment or another 104 weeks of TTD was minimal.

One of the event attendees asked about what efforts are made to keep the injured and still-employed employees from bragging to co-workers and encouraging additional claims?  After all, in our deepest and darkest fears, we all imagine this conversation:

Worker 1: “Jim, is that your new Tesla out back?  How the heck can you afford a $100,000 car on our wages?”
Worker 2: “Easy, Marty – remember when I hurt my back helping my sister move last year?  I just told the boss it happened at work, got a big fat settlement check, and now I’ve got my Tesla!”
Worker 1: “If it’s that easy, I bet I can do it too!  I’m going to buy a llama farm with my settlement check!”

And then we wake up in a cold sweat and our loved ones remind us that everything is okay and it was only a dream…

Talk about a workers’ compensation spooky story!

Anywho, I got to thinking: can you enforce some sort of confidentiality agreement in a C&R?  I have seen such language inserted into the compromise and release, noting that confidentiality is a “material provision of this settlement” and that “breach of this material provision shall entitle defendant-employer to damages and the resignation of the injured worker.”  I’ve also seen separate agreements that are signed by the parties and not presented to the WCJ as part of the agreement.

How enforceable is this?  Do you think if the injured worker blabs to his co-workers about how much money he got, the WCJ would order a resignation?  Or perhaps disgorgement of the settlement proceeds?  What if a separate line item was specifically inserted into the C&R “of the $85,000 C&R, $10,000 is specifically allocated as part of the confidentiality clause, the sum of which will be disgorged for breach of this agreement…”

How would you even prove disclosure, absent a willingness on the part of the co-worker to testify?

Your humble blogger asked around, but the defense attorneys I consulted seemed to consider preparing separate non-disclosure or confidentiality agreements as a tool for the employer.  Perhaps a breach could result in some sort of disgorgement or termination in the civil arena.

What is your experience, dear readers?  If you C&R with a still-active employee, how do you keep him or her from telling tall tales and encouraging more claims, baseless or otherwise?  Are you prepared to litigate the resulting 132a claims for terminating an employee for discussing litigation in the workplace?  What if it was discussed over coffee before or after work started?

This is a legitimate question that needs to be properly addressed: the employer doesn’t want to be a piñata, but at the same time, there’s benefit to be gained from a C&R with a still-active employee.  It just might not be worth it if the injured worker is free to paint the employer as an easy mark for fraudsters.

Your humble blogger very much appreciates his readers for reading, but would also very much appreciate input.  What do you think, dear readers?

Folks on another note – please remember that some trick-or-treaters and their parents decide that very dark costumes are a good idea for going out at night.  Drive carefully!

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AB2883 Goes Into Effect 1/1/17; Escaping WC Becomes Harder…

October 21st, 2016 No comments

Happy Friday, dear readers!

Remember that wacky bill I wrote about previously, AB 2883 – The one that makes it harder for officers and business owners to opt out of workers’ compensation coverage? Well, California is a magical place.  In some states, bad ideas get shrugged off – state legislatures might even splash cold water on their faces and say “Come on, Phil, get it together – this is bush league!”  Well, in California, bad ideas are nurtured and grown into horrible ideas, at which point they are harvested and processed into laws.

Now that AB 2883 is law, going into effect January 1, 2017, the Department of Insurance has issued a press release advising insurers of the additional documentation necessary to maintain the opt-outs of owners and officers.  Presumably, failure to comply would make the owner or officer an illegally uninsured employer of him or herself.  Absent a falling out or a very disgruntled officer… who would file the claim?

Anywho, in light of other news, namely the $34.9 million issued as grants to fight workers’ compensation fraud, it made your humble blogger realize something: there are a whole lot of people that would prefer to opt out of workers’ compensation.

Owners, officers, and employees, often enough, would prefer not to be stuck in the comp system.  Think about it – why do officers and employees opt out?  Probably because the money used to ensure coverage can be more efficiently used for general health insurance and as savings.  Perhaps that money could be used to keep the lights on in the business – officers and owners of various ventures might realize that if they had to pay to insure themselves under the comp system, they might be out of the job.

While, previously, the law afforded ample opportunity to get out of Dodge for the business owners, the same was not the case for employees.  How often have you had a file land on your desk where the employer protests that the alleged employee was an independent contractor?  Sometimes, the ONLY Borello factor was that the parties agreed, at the time of hire, to an IC status arrangement.

So, with all this “fraud” and misclassification of employees going on, WHY do so many employees agree to be labeled independent contractors (at least, until they file their claims for WC or whatever else)?  It’s because the employees, employers, officers, managers, owners, etc. are all in the exact same boat: there are only so many dollars, and owners and employees both would rather have the money in hand than the benefits of the workers’ comp system (until they get hurt, of course).  Many jobs can offer higher wages or employee status but not both.

Your humble blogger submits that with AB 2883, California is headed in the wrong direction.  Instead of allowing more Californians to have choice and control, California is creating more headaches (at best) and more ruin (at worst) for smaller businesses.  In a state large and diverse enough to have industries practicing the ancient trades of farming and the futuristic developments of Silicon Valley, is Sacramento really competent to make rules to serve everyone?

And on that lovely note – have a good weekend!

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1 Minute of Human Labor Per Amazon Order Shipped

October 19th, 2016 2 comments

Happy Wednesday, dear readers!

We are all familiar with economics, right? The management of scarce resources, supply and demand, all that, yes?

Well, it looks like economics is once against making its presence felt in the workers’ compensation world.  I recently had occasion to read this article put out by CNN Money, which reports that the average order from Amazon involves approximately one minute of human labor.

Perhaps similar statistics are out there for other industries… paving maybe?construction-dog

I don’t know what the value of each order is for Amazon, but given the sheer volume of Amazon’s business, we can probably agree that the average worker is processing 60 orders per hour (the rest of the work being done by robots and automation).  Little Amazon Jr. is likely being put through medical school just on the orders from my home and my neighbors…

While a college student, your humble blogger worked several jobs to help cover the bar tab, and one of them was as a simple shipping clerk in a warehouse.  I can attest that 0% of the work was performed by automation, and 100% of the work done by starving-college-student labor.  Amazon is reaching the same goals as before, using only a tiny fraction of the manpower.

Forget about the number of human jobs eliminated; forget about the amount of human labor now freed up to be used more efficiently in the market.  The total hours of human labor times the total number of humans working in Amazon’s warehouses is less now for the same production goals.  That means fewer instances of industrial exposure and fewer opportunities for specific injuries to occur – there are fewer people and fewer hours (total) worked.
That money can go into higher wages, better working conditions, and lower costs for the consumers.

There was a time before workers’ compensation, and California, in its infinite wisdom, decided that the wonderful system we have today is the best way to protect workers in the face of industrial injuries (does anyone remember buy llama farms in Mexico as part of vocational rehabilitation?  Or perhaps that’s just a legend the gray-haired comp practitioners told to your humble blogger as they laughed and laughed…).  Perhaps California’s workers’ compensation system is becoming obsolete? Perhaps workers have a better chance of avoiding injury, or surviving after being injured (based on higher wages and lower costs of living), because of employers and technology (rather than gubmn’t and bureaucracy).

To remain relevant, California’s workers’ comp system – which means the laws and the administration of the laws – need to adapt and incorporate this brave new world.

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On Unilaterally Rescinding Coverage…

October 17th, 2016 No comments

While still a legal tadpole, that is, a law student, your humble blogger took a class called contract law.  Therein, I learned that part of a contract is a “meeting of the minds.”  That is, at least at formation, the parties have to agree on what’s going on. Right?

Well, that becomes tricky when there is a dispute between the employer and the insurer about the nature and extent of the policy covering (or allegedly covering) an injury.

For example, when Bob’s Brick Layers and Heavy Demolition Company gets a workers’ comp policy and lists 5 employees, all engaged in clerical work, XYZ Insurance Company may be a bit surprised when it gets a claim on the same policy for a worker crushed by bricks at a construction site or blown to bits doing demolition work.  After all, mail clerks and secretaries typically don’t lay brick or engage in demolition work.  (If this is not true, I may need to assign new tasks to my own staff).

On the other hand, one can see how an insurance company receiving $X in premiums and now facing $X-times-100 in benefits exposure might want to make sure it wasn’t bamboozled into providing coverage for risks grossly disproportionate with the premiums charged.  The hazards visited on a mail room clerk and a brick layer, tend to be different in the likelihood and extent of harm, no?

Recently, the Court of Appeal denied review in the case of Berrios v. EJ Distribution Corporation, after the WCAB adopted and incorporated an Arbitrator’s finding that the insurer could not unilaterally rescind coverage for the defendant-employer.  Therein, the employer obtained a workers’ compensation policy and specifically listed that his truck drivers do NOT operate outside of the state of California.  Of course, the claimed injury occurred when a truck driver hurt his back while in Tennessee.


In response, the insurer refunded the entirety of the premium, rescinded the coverage contract, and denied the claim, which, of course, got the Uninsured Benefit Trust Fund involved.  The matter was referred to arbitration, and the arbitrator found that, even though “the employer’s representations denying out-of-state work were false,” the arbitrator also found fault with the insurer for failing to investigate the employer’s operations.  The arbitrator went further to note that “[t]here cannot be an exclusion under the California Insurance Code unless one is recognized under an endorsement addendum and approved by the Department of Insurance.”

The insurer’s remedies, according to the arbitrator, were to increase policy premiums to reflect out-of-state work, or to cancel the policy going forward and sue the employer for fraud and damages (and possibly declaratory relief that the policy was invalid at its inception).  However, the unilateral rescission of the policy was invalid.

Another point of persuasion for the arbitrator was that the insurer offered no proof that, at the time of the inception of the insurance policy, the employer was involved in out-of-state operations.  Surely, a deposition of the injured worker or a subpoena of mileage records for the trucks (you know, like the type of logs meticulously kept to list as a deductible expense during tax time) would have answered this question.

Is it really fraud when, at the time the statement was made, it was true, but subsequent events rendered it no longer true?  Isn’t that more of a breach of contract, or some other allegation, rather than fraud?

If you have a chance, this is a great opinion to review because of the summary of case-law pertaining to rescission of coverage.  There are even some great points not made in the opinion that your humble blogger will keep under his hat for a later post.  This is an issue that comes up now and then, and sometimes even triggers the ever-expensive process of arbitration.

Happy Monday!

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Gov Brown Vetoes Gender-Based Apportionment Bill

October 14th, 2016 No comments

Happy Friday, dear readers!

And happy it is, indeed – lately your humble blogger appears to be delivering nothing but good news to the embattled and oppressed defense community of California.  Today is no exception, although I lay awake at night sometimes, terrified by the terrible price that may come due to employers for their recent spate of good fortune.

Governor Brown has vetoed AB1643 a proposed law that would have made employers the general insurers for certain conditions that affect women, under the guise of preventing apportionment to conditions such as menopause or child birth.

Governor Brown’s veto message it got it completely right: “On the issue of apportionment, this bill creates broad, gender-based exceptions to the rule that employers are liable only for the percentage of permanent disability directly caused by a work-related injury.  As written, the bill would prohibit apportionment to, and thus require employers to pay for, a permanent disability that actually resulted from pregnancy or menopause, or from osteoporosis or carpal tunnel syndrome where these are preexisting conditions or unrelated to work.”

What can I say? Good news indeed.

But, believe it or not, for most people involved this situation is a win-win.  Governor Brown gets to appear as the cool, reasonable head of the state; employers get their feet pulled from the fire of having yet another burden heaped upon them; and the proponents of this bill get to portray themselves as martyrs and crusaders knowing full well that this is bad law – so at least the constituents will be happy.

Make no mistake, dear readers, this kind of thinking – let’s rob the employers just a little bit more – is not going anywhere.  Unfortunately, it is as much a part of California as surfing, guacamole, and the reefer.

They’ll be back!  But, then again… so will your humble blogger.

Have a good weekend!

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WCAB Majority: 3 PTPs TOTAL Enough For MPN Validity

October 12th, 2016 No comments

Hello dear readers!

Your humble blogger bids you a happy Wednesday and hopes that Columbus day saw you enjoying time off rather than scrambling to deny benefits and outwit the vile interpretations of the law that seek to deprive employers of justice and their hard-earned income.

Anywho, I’ve got a good one for you today and it’s about everyone’s favorite topic, Medical Provider Networks.  As well all know, MPNs can be a wonderful tool to provide injured workers with effective care and mitigate costs for defendants.  Employers can craft MPNs with doctors that are determined to see the injured worker treated effectively and returned to productive labor, rather than medicated into numbness and maimed with unnecessary surgery, just to line the pockets of the less-honorable of the applicants’ attorneys and the medical practitioners with more expensive tastes.


The frequent challenge to MPNs has been rooted in a (flawed) interpretation of California Code of Regulations section 9767.5, interpreting subsection (a)(1) to mean that, for an MPN to be valid, a defendant must provide three treating physicians in each specialty within 15 miles of the applicant’s home or workplace.  So if you have 1 chiropractor, 1 physiatrist, and 1 orthopedist within 15 miles of applicant’s home, the theory would go that the MPN is not valid, as you actually need 3 of each.

Well, the recent split panel decision in Luna v. The Home Depot runs contrary to this logic.  Mr. Luna needed an orthopedist to treat his CT, but the MPN only offered 1 orthopedist within 15 miles of his home (even though it boasted 17 within 30 miles of the same).  Applicant argued that the MPN was invalid because defendant’s MPN did not have at least 3 orthopedists within 15 miles of his home to assume the duties of primary treating physician.

The WCJ found for defendant, reasoning that because applicant failed to “produce any evidence indicating that there are not at least three available primary treating physicians within 30 minutes or 15 miles of applicant’s residence or workplace” the MPN is valid.

The WCAB majority agreed – if you want a primary treating physician, the regulations require the defendant to provide you with at least three PTPs of a relevant specialty.  One of each of three different but relevant specialties is sufficient to maintain the validity of the MPN.  By contrast, if applicant wants a specialist, the defendant is entitled to 30 miles or 60 minutes, rather than 15/30.

The string of panel decisions on this topic has been finding the other way, unfortunately, typically invalidating panels if the defense could not provide at least 3 pain management, or 3 chiropractic medicine physicians within 15 miles of the relevant reference point.  But it looks like there is good reason to take this fight up again – the WCAB seems at least to be receptive to this argument.

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AB1244 Signed Into Law – Medical Fraud Liens Now Even Weaker

October 7th, 2016 No comments

Happy Friday, dear readers!

Your humble blogger brings you a tiny bit of news from Sacramento.  AB1244 has been signed into law and will take effect on January 1, 2017.

The bill, signed into law by Governor Brown on September 30, 2016, holds that “[t]he administrative director shall promptly suspend … any physician, practitioner, or provider from participating in the workers’ compensation system as a physician, practitioner, or provider if the individual or entity meets any of the following criteria…” which primarily focus on felony or misdemeanor convictions having to do with fraud or abuse of Medi-Cal, Medicare, workers’ comp, or a patient.

Other reasons for suspension include financial crimes, or fraud related to qualifications, functions, or duties of a provider of services.

Basically, when there is a plea or conviction for medical-treatment related fraud, all of  the fraudster’s liens will be consolidated for a special hearing, across all WCAB venues, and be heard at one hearing at a particular venue, where there will be a presumption that all the liens are based on fraud.

So, what are we going to do on the defense side?

When you get a lien, and especially when you get a notice of hearing on a lien, do some research on the lien claimant to determine if there was a conviction for fraud.  Usually these things make the news.  After that, it just becomes an issue of informing the administrative director.  In many cases, the AD will probably be on this already.

Previously, the conviction for fraud would have already dealt a blow to any lien claimant’s credibility.  And, given the defenses already available, would make it even harder for lien claimants to recover.  However, now, it looks like the State of California may absorb some of the administrative costs (in the sense that the money employers already pay to fund the DIR will now be used to help them fight off liens) in getting rid of some lien claimants.

It’s a good thing, dear readers.  Happy Friday!

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UBER Starts Testing Self-Driving Cars in San Francisco

October 5th, 2016 No comments

Happy Wednesday, dear readers!

As you may recall, your humble blogger reported that Uber was to deploy self-driving cars for a test run to Pittsburg.  Well, this has been done and my diligent research is having a hard time finding any reports of incidents or accidents or the sky falling or even dogs and cats living together as a result.

But it looks like the UBER chickens are coming home to roost – sort of.  More like robot chickens and they’re not really roosting… you know what? Forget the analogy altogether: UBER is testing self-driving cars on the lean, mean streets of San Francisco.  So far, these cars cannot be hailed, but before you know it, you’ll be able to use your smart phone to get from point A to point B without having to interact with a single person!

Allow your humble blogger to attest, from personal experience, to the fact that if a robot can be programmed not to go on a murderous rampage after driving around San Francisco for a while then self-driving cars really SHOULD replace me behind the wheel.

Well, it’s not just your crackpot humble blogger that is excited about self-driving cars: Jeffrey Zients, director of the National Economic Council and Anthony Foxx, secretary of the United States Department of Transportation, seemed to speak very highly of the benefits of self-driving cars.

Already, we are seeing nay-sayers, such as this Op-ed doing the chicken-little routine, claiming that self-driving cars will “cost” 5 million jobs.  As if sprinklers in homes “cost” us the jobs of homebuilders, modern medicine “cost” us the jobs of grave diggers, and light bulbs “cost” us the jobs of candle-makers.  Certainly, laws against smashing windows on the street “cost” us the jobs of glaziers too.

Ultimately, what this will mean is that transportation will become more reliable and cheaper.  Unfortunately for us in the comp industry, that means fewer claims, but let’s hope that the decreased risk of being hit by drunk or tired or distracted drivers makes up for it.

Full speed ahead, dear readers – Friday is just around the corner!

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AME’s Apportionment Applied to Psyche Case… But Only After Recon

October 3rd, 2016 No comments

And a good day to you, dear readers!

Your humble blogger recently read the case of K.  v. Caletti Jungsten Construction (it’s kind of a sensitive nature case, dear readers, hence only the first initial.  If you need the full case name for citation purposes, please drop your humble blogger a line.)

The basic story here is that applicant sustained orthopedic injuries and an injury to the psyche in 2011.  While the parties apparently had no dispute to the rating of the orthopedic AME’s report, which resulted in 62% PD, the psyche AME found 11% WPI which rated to 23% PD, but only 15% PD after apportionment.  At trial, the WCJ did not sustain the apportionment analysis of the psyche and awarded a full 23% PD for the psyche to applicant.  When combined with the 62% of the orthopedic injury, resulted in 71% PD.

On recon, defendant pointed out that the AME apportioned 35% of the psyche claim to prior trauma that was non-industrial, and continued to plague applicant.

The commissioners started their discussion by pointing out that “[t]he parties presumably choose an AME because of the AME’s expertise and neutrality … [w]e will follow the opinions of the AME unless good cause exists to find his opinion unpersuasive.”  And there you have it – the AME’s opinions are sacrosanct – only through a very serious flaw in the opinion or reasoning will the WCJ and WCAB disturb the AME’s opinions, and for very, very good reason.

The name of the game is, of course, judicial economy.  There are injured workers who are waiting to get an order to pay TTD so that they can eat.  There are defendants who are paying huge premium increases based on temporary experience modifications because there is claim lingering.  There are injured workers waiting to get a hearing on their medical treatment request so that they don’t suffer permanent (but preventable) injury.   These are real, substantive issues which have legitimate claim on the time and mental dexterity of attorneys, judges, and commissioners.

Instead, we’re dealing with panel disputes!  Which panel specialty is correct? Which opinions should control (PTP or QME)? Is the report late? How much time did the QME really spend during the exam?  The attitude of the WCAB, from the standpoint of judicial economy, is that AMEs resolve all these disputes – from whether the panel issued timely from the Medical Unit to whether that communication was ex parte as contemplated by Labor Code section 4602.3.

So when an AME says the psyche claim is only 65% industrial, there needs to be a good reason to disturb that opinion.  Otherwise, there’s no good reason to go to an AME.

The commissioners awarded the apportionment and reduced the final PD to 68%.

So what’s the big deal? Did the defendants really win anything? A measly 3%?  Well, yes, it is a victory.  This was a 2011 DOI, so if you’re applying the 15% increase for not making an offer of Regular, Modified, or Alternative Work, the actual PD value presents a gap of almost $30k.  But that’s not all! 68% puts applicant just under the cut-off for a life pension.   That means all the headaches of COLA and commutation, not to mention a whole lot more cash.

Your humble blogger sends his congrats on a job well done!

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Happy Sunday and Shana Tova 2016!

October 2nd, 2016 No comments

Hello dear readers!

I know it’s Sunday and you’re all probably wondering why you would allow a humble blogger to pollute your screens and invade your in-box on such a glorious, workers-comp-free Sunday.

Today, at sundown, as we all brace ourselves to go, once more unto the breach, the Jewish New Year, Rosh Hashanah, will start.  Challahs will be round and bread will be eaten with honey.


Your humble blogger wishes a very happy and sweet new year to all his readers.

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