WCDefenseCA

Happy Monday, dear readers!  Your humble blogger welcomes you to the start of a new week. 

Imagine you’re in a particular situation – applicant wants to C&R a claim, and neither you nor the applicant can know with certainty what the cost of lifetime medical care will be.  Pretty common, right?  When we C&R a case, both parties are knowingly taking a gamble that the injured worker will be able to cover those costs with the proceeds of the C&R.  The WCAB probably processes several hundred C&Rs every workday and no one bats an eye.

If the WCAB is willing to allow applicant to assume the risk that the medical portion of the C&R is not adequate… what other risks will the WCAB allow applicant to take on?

For example, let’s take a scenario where the parties agree to a value for a C&R, but CMS finds the proposed MSA inadequate by some significant figure – like $500,000.  Well, defendant might take the position that a C&R is not worth it and propose stipulations instead.  If applicant is highly motivated to have cash on hand, can applicant stipulate that he will hold defendant harmless as to any action by CMS regarding the C&R?

In other words, can applicant tell the WCAB “look, I know that this C&R might end up costing me Medicare benefits in the future, but I’m willing to take the risk”?

Well, that’s what happened in the case of Villalpando vi Doherty Brothers.  Applicant resolved his claim for a 2002 injury in 2011, with language in the C&R that “released defendants from liability to Medicare related to the named injuries, and for any failure to create and correctly administer the MSA and any failure to obtain Medicare’s approval of any allocation or set aside arrangement.”

But your humble blogger isn’t polluting your in-box with old news from 11 years ago.  The case came up recently because applicant decided he wanted to change administrators from the agreed-upon vendor in the C&R to himself.  Yes, applicant declared that he wanted to move from California to Mexico and that administration in Mexico would be particularly burdensome.

The WCAB made basic inquiries and ultimately ruled that since there is defendant would not be harmed by the change of administrator, since no further liability or benefits could be due, it was not inappropriate to change administrators to make the MSA fund self-administered.

Now mind you, dear readers, it’s not that applicant MOVED to Mexico.  Applicant announced his intent to move to Mexico and that appeared sufficient. 

The reason there was a WCAB decision at all was because defendant contested rendering the MSA self-administered.

So, zooming back to our every-day C&Rs, can we apply this approach to all of our C&R settlements?  If applicant in the Villalpando case was able to absolve defendant of any liability with respect to CMS, and he can also choose to take on the risks of mismanaging his future medical funds, why can’t every applicant?

Take, for example, the cost of getting an MSA and the cost of professional administration.  What if defendant’s were to tell applicants that so long as applicant agrees to self-administer and release defendant from any CMS-related liability, the parties could split that money.

The result in the Villalpando matter certainly raises those questions, which, of course, raise an even more important one – to quote Clint Eastwood: “Do you feel lucky?”

Well, do you, dear readers?  If you’ve had any luck bypassing CMS by inviting applicant to agree to assume the risk, please let your humble blogger know.  The Villalpando case certainly seems to set a precedent and provide authority for the proposition that such arrangements should be approved by the WCAB so long as the parties are in agreement.