WCDefenseCA

There are few things that make the frozen, black heart of a defense attorney hum with warmth and mirth.  The sound of a “take nothing” as it is retrieved from an enveloped from the WCAB; the smell of arrest warrants for workers’ compensation fraudsters; and, of course the inexplicably sweet atmosphere and ambiance of liens being mercilessly crushed underfoot.

2017 is the dawn of a new era for many reasons – from Washington, D.C., to San Francisco, a lot of stuff is going to be very different in the coming years.  Among them, even if not the most significant, is the treatment of liens.

I respectfully direct the attention of my cherished readers to the 2017 version of Labor Code section 4903.05.

Liens filed on or after 1/1/17 will require additional documentation, or suffer the sweetest justice of all: “dismissal of the lien with prejudice by operation of law.”  (Labor Code section 4903.05(c)(3).  And, just to make things interesting, it’s not only the post 1/1/17 liens – “[l]ien claimants shall have until July 1, 2017, to file a declaration pursuant to paragraph (1) for any lien claims filed before January 1, 2017.”  (4903.05(c)(2)).

So, what is it that will have to be declared, under penalty of perjury, for all liens, past and future?  Aside from declaring that the lien is not subject to independent bill review and/or UR, AND one of the following:

(A) Is the employee’s treating physician providing care through a medical provider network.

(B)  Is the agreed medical evaluator or qualified medical evaluator.

(C)  Has provided treatment authorized by the employer or claims administrator under Section 4610.

(D)  Has made a diligent search and determined that the employer does not have a medical provider network in place.

(E)  Has documentation that medical treatment has been neglected or unreasonably refused to the employee as provided by Section 4600.

(F)  Can show that the expense was incurred for an emergency medical condition, as defined by subdivision (b) of Section 1317.1 of the Health and Safety Code.

(G)  Is a certified interpreter rendering services during a medical-legal examination, a copy service providing medical-legal services, or has an expense allowed as a lien under rules adopted by the administrative director.

How many times have we had to deal with lien claimants that KNOW they are not in the MPN because this is lien number 3,561 as between Defendant A and Lien Claimant 1

How many times do we have to deal with lien claimants that subjectively understand that they are not entitled to reimbursement but think that they can get SOMETHING just for filing a lien and inflicting litigation costs on a defendant?

Well, those litigation costs might be disappearing soon – if the lien does not have the required declaration, under penalty of perjury, then it SHALL be dismissed by operation of law, with prejudice.  If it does have such a declaration, and you’re pretty sure that the declarant has committed perjury, list the declarant as a witness for trial or depose him or her – perhaps sanctions and costs will be ordered after the lie is exposed.

Current proposed regulations for section 10770.7 will operate to dismiss all liens filed prior to January 1, 2017, by operation of law, if there is no supplemental declaration filed with the WCAB on or before July 1, 2017.

To help lien claimants comply with these new rules, the DWC has prepared a form, but is appears to be only available to JET and e-filers, so it is not linked on here.

So, be wary, dear readers, and hold up this additional hoop for lien claimants to jump through before getting out your checkbook instead.  As for me, I feel that cold, dark heart of mine warming up already.

Put down that pen! Step off that ledge! Do not cave in on that medical treatment dispute!

From the looks of it, the Dubon matter may have a new twist in the works – the WCAB recently granted Reconsideration to consider the issues raised by SCIF, which means there may be a new opinion coming down soon that will close the lid on the Pandora’s Box of issues opened by the original opinion.

Before we get too excited, we should all note that “the Appeals Board’s February 27, 2014 en banc opinion in Dubon shall remain in effect and binding.”

On the other hand, there are more than a few reasons to be optimistic.  For starters,  After Dubon, a new commissioner joined the panel – Katherine Zalewski.  Commissioner Zalewski brings particularly persuasive expertise on this issue because she was instrumental in the drafting of SB-863, which brought the embattled IMR process to California.  As someone who was in the proverbial kitchen while the even-more proverbial meal was being prepared, she can speak with considerable authority as to the intent of the Legislature in drafting and passing SB-863 and IMR with it.

Additionally, whereas the original Dubon opinion had the benefit of the parties’ respective arguments, since Dubon, the internet, the lecture circuits, and even the smokey rooms where benefits are poker chips and all the big wigs of the big firms play for keeps, have been filled with opinions, analysis, and arguments for and against the reasoning behind allowing the WCAB to decide whether or not a particular medical dispute is confined to Independent Medical Review.

Now, in all likelihood, if you’re an adjuster with an attorney on the file, you’re getting an e-mail after every UR decision with a “Dubon analysis” which provides not only confirmation of the timeliness of your UR report, but its validity for other weak points, which I will decline to list here in appreciation for the three applicants’ attorneys that read this blog (But your honor, the humble blogger said the UR report was defective because…)

That being said, a WCAB en banc opinion returning all medical disputes to UR and IMR will not only eliminate the need for this analysis (and the associated billables), but also the resulting litigation – after all, an applicant’s attorney playing the scorched Earth campaign is more than happy to inflict a needless IMR bill on the defense while also filing for an expedited hearing to perform a Dubon challenge.

So, here’s hoping for a favorable result from the WCAB soon.  In the meantime, don’t cave on the medical treatment awards, even in the face of some UR defect or another: in a best-case scenario, help is on the way, and in a worst-case scenario… well… just look around, because this is it.

 

 

 

California Code of Regulations section 9767.5 lays out the “access standards” for a Medical Provider Network.  Among those standards is the distance or travel time requirement of a treating physician – “A[n] MPN must have a primary treating physician and a hospital for emergency health care services, or if separate from such hospital, a provider of all emergency health care services, within 30 minutes or 15 miles of each covered employee’s residence or workplace.”

So, what do you think, dear readers, does the “or” mean “or” or does the “or” mean “and”?  Now, I know that some of the applicants’ attorneys that end up here by accident are screaming at their computers right now: “It means AND! Just asking the question entitles my client to 132a damages! Medical Provider Networks are a violation of human rights!  I AM ABOVE THE LAW!!!”

As for the rest of us, I would venture to guess that the word “or” typically means the word “or” and not “and” or “ponies” or another other word.

This issue became the subject of some judicial review in the case of Miguel Robles v. Evolution Fresh Inc., which was recently denied review by the Court of Appeal.

Mr. Robles enjoyed the benefit of 3 spinal orthopedic primary treating physicians located a stone’s throw from his place of work, but only 1 from his place of residence.  His reading of section 9767.5 lead him to the conclusion that defendant’s MPN was defective.  Defendant, naturally, did not agree with Mr. Robles’ (or his attorney’s) interpretation of the law.

The matter was presented to the workers’ compensation Judge with a request for judicial guidance, and the WCJ found that the defendant was correct – “[t] the use of the conjunction ‘or’ is indicative of the use of an option for purposes of meeting the conditions of the regulation.”

The WCAB concurred and the Court of Appeal denied review.

Now, this case took place in the Los Angeles area… so the fact that the employee lived fifty miles away from his place of employ was not that unusual.  But, as an employer, can you imagine trying to have an MPN which has at least three of every type of physician within 15 miles or 30 minutes of each of your employees?  That would be unreasonable, if not impossible.

The WCAB made another point upon which all of us on the defense side should keep our sharp, hawk-like eyes – there is a conflict between section 9767.5(b) and Labor Code section 4616(a)(1).  While the former allows a choice for the employer/insurer – 3 physicians of each type 15 miles from home or residence (and conceivable, one from one point, and two from another), section 4616(a)(1) requires the provider network to “include an adequate number and type of physicians … to treat common injuries experienced by injured employees based on the type of occupation or industry in which the employee is engaged, and the geographic area where the employees are employed.”  (Emphasis belongs exclusively to your humble blogger).

The panel held that “to the extent [section 9767.5(b)] exceeds the scope of the statute, section 4616(a)(1) controls.”

This reasoning says that the legislature did not intend to give the employer/insurer the option of providing physicians at applicants’ residence, but only at his place of employ, and the regulation is therefore invalid as to allowing employers to provide physicians near the employee’s home instead of his job.

So, if an applicant wants out of an MPN, he need only check if there is a physician around his job site… even if every single orthopedist licensed to practice medicine sets up shop across the street from his house, if he lives more than 15 miles from where he works, the MPN is invalid… or so says the non-binding panel opinion.

There may be more developments on this theory later, but employers should beware of this argument, especially when setting up an MPN.

In yesterday’s post, we talked about the problems defendants encounter when facing an injured worker who has yet to file an application.  One approach to this problem, when the injury or causation itself is contested, is to withhold benefits until an application is filed, but there are other options that don’t come with the same risks and liabilities.

There are, after all, times when filing an application for adjudication of claim will not (or at least, should not) trigger Labor Code § 4064.  California Code of Regulation § 10878 states that “[t]he filing of a compromise and release agreement or stipulations with request for award shall constitute the filing of an application.”

However, § 10400(b) states that “[a] case opening Compromise and Release Agreement, a case opening Stipulations with Request for Award, and a Request for Findings of Fact under section 10405 are each an ‘application’ for purposes of invoking the jurisdiction of the Workers’ Compensation Appeals Board, but none of these documents shall be deemed an application for purposes of Labor Code section 4064(c).”

Therefore, at least in theory, filing settlement documents without having first filed an application for the unrepresented applicant, should not trigger future liability for applicant’s yet-to-be-hired attorney.  But, it appears that there were different results in the case of Monument Car Parts v. WCAB (Teach) (2007), in which the Workers’ Compensation Judge ruled that defendant’s filing of a compromise and release agreement for approval triggered a duty to pay attorney’s fees.  However, the facts of that case reflect a defendant somewhat unresponsive to the Judge’s inquiries regarding the adequacy of the proposed settlement.

Another alternative course of action is simply roll over and pay out for all treatment and permanent disability in accordance with the treating physician’s report.  But then the defense loses many of the benefits of discovery, including possible grounds for apportionment (Labor Code §§ 4663 and 4664) or defenses based on Arising Out of Employment/Course of Employment (AOE/COE).

So what happens if the defense files an application for the unrepresented applicant?  Check back tomorrow for Part III!

The work of an applicant’s attorney in California’s Workers’ Compensation system is rarely a venture in charity – applicant’s attorneys are paid a fee out of the applicant’s recovery.  But there are factual circumstances under which the employer must pay the applicant’s attorney’s fees in addition to, rather than out of, applicant’s benefits.

This can happen when the self-insured employer or the insurer over-advances without reserving funds for attorney fees, which is a subject of an article written by Lisa Kasselik of Harbinson Tune Kasselik.  The defendant can also be required to pay applicant’s attorney’s fee if the defendant files the application for applicant.

Usually, an employee is injured and fills out a claim form.  The employer decides to conduct some form of discovery, such as deposing the applicant or witnesses.  But the cases of Donna Yee-Sanchez v. Permanente Medical Group and Natalie Piatt v. Eureka Union School District tell us that discovery is prohibited, (see 8 C.C.R. § 10403), and even sanctionable, before the commencement of a case, and a case is only commenced by the filing of an application for adjudication of claim.  (Labor Code § 5500.5)

If applicant has not retained an attorney and has not filed an application him or herself, how is the defendant to proceed?  One option, when injury is in dispute, is to withhold benefits, forcing the employee to lawyer-up or file an application.  Of course, when injury is NOT in dispute, this comes with a 10% delay penalty (or 25%, depending on the facts).  (Labor Code § 5814).

Whatever the benefits withheld may be, the employer faces a 10-25% penalty only on those benefits already due and withheld.  On the other hand, by filing an application for the employee, defendant exposes itself to 15-18% of all permanent disability benefits in attorney’s fees.

However, there is a danger in using this tactic.  If an applicant retains an attorney in response to withheld benefits and there is no dispute as to the injury, any attorney worth his salt would file a petition for penalties with his notice of representation.  This would bring the penalties to 25% of the withheld benefits (or a maximum of $10,000).  This could also bring upon the insurer or self-insured employer administrative penalties under California Code of Regulations § 10111.1.

Another disadvantage to this tactic is the fact that, when the injury is not in dispute, the defense is essentially using bad-faith delay tactics.  This is inappropriate, unethical, and will likely result in long-term self-injury such as damage to reputation and ability to maintain an insurance certificate.

All in all, this course of action is a gamble and brings with it a slew of its own risks.  But there are other options available to the defense in such cases.  Check back tomorrow for Part 2 of 3.

Hey there dear readers! How was your Halloween?  Did you put on the costumes and do the trick or treating?

Your humble blogger took his lovely children door to door trick or treating.  The sad thing is, of course, the futility of it all.  Every family in my neighborhood went to Costco and bought the same bag of candy, and, of course, all our respective children collected each others’ candy.  The end result? I have the same candy I put out in front of my house. 

Anywho, as spooky and scary as Halloween can be for the kids, California celebrates Halloween every day when it comes to terrifying its poor, wretched, disenfranchised employers.

Not only is there no way to opt out of the workers’ compensation system, which, in California, so effortlessly delivers benefits to vendors, attorneys, treaters, and lien claimants, but also when trying to obtain said necessary insurance, employers can also fall prey to fraud.

Your humble blogger doesn’t like to name names absent convictions, as accusations are so easy to make and so hard to prove.  Your humble blogger has been accused of the world’s most handsome man in a bow tie, although the charges are yet to stick.  So, an insurance agent has been accused of pocketing insurance premiums and producing false certificates of insurance for businesses.

What happens when an employer with one of those dummy policies has a claim brought against it before the WCAB?  While this might be good cause to avoid the criminal penalties and sanctions, the WCAB is not going to force any insurance company to pick up coverage.  In California, this isn’t throwing an employer into the water without a life jacket… this is throwing an employer out of a plane without a parashoot.

What can employers do to combat the sort of fraud as is alleged in the linked story?  Well, for one thing, you can always check on coverage by doing an information WC Coverage Inquiry here.   Upon receiving the insurance certificate, employers should also verify coverage by reaching out directly to the insurance company listed on the policy to verify the policy number and locations covered.

So you see dear readers?  If you’re an employer in California, it’s Halloween all year round and it’s never “treat,” just “trick” or “horribly crippling costs driving you towards bankruptcy or to leave the state.”

In other words, dear readers, your humble blogger suggests that you keep on the sunny side of life!

Till Friday…

Happy Monday, dear readers!

Your humble blogger homes you are staying dry and not being blown away by the crazy winds.  It can be dangerous driving in these stormy conditions, especially when you are busy reading these blog posts or thinking of new ways to deny benefits.  Accordingly, you might consider taking an Uber or Lyft to get from point “A” to point “your claim is denied.”

Speaking of… have you heard the good news out of the California Court of Appeal?  In a published decision in the case of Castellanosi v. State of California, the majority panel declined to strike down Proposition 22 as unconstitutional.  Remember Proposition 22?  It was the ballot initiative that effectively excluded various gig economy entities from the ravages of AB-5.  In short, it allowed for the preservation of the “independent contractor” relationship rather than the effective presumption of employment brought about by AB-5. 

With Prop 22 in effect, individuals who choose to use software provided by such companies to engage in gig work would not be entitled to status as “employees” and remain independent contractors. 

Well, several of these individuals unhappy with the option of simply not engaging in an agreement to such terms decided to sue, and a Superior Court ruled that Proposition 22 was unconstitutional.  That ruling was met with an appeal and now we see Prop 22 survives to fight another day.

Likely this will go to the California Supreme Court, but let’s toy with the idea for a second that the Supreme Court affirms and, by initiative, California’s can carve out exemptions to the heavy presumption of employment vs. independent contractor status.  Can the results be replicated in other areas of California’s industry?

For example, could a coalition form of various somewhat related industries to exempt their respective employees in the same way?  What if enough restaurant groups cobbled together a bill allowing workers to “opt out” of employment for some higher salary?  If a waiter if offered minimum wage plus tips as an employee or $5 per hour above minimum wage to “opt out” and buy his or her own insurance for health and disability, would any waiters take the deal?

Depending on the ultimate fate of Prop 22, perhaps this is a model for California’s long besieged employers to escape the invariably expensive and borderline punitive workers’ compensation system.

Now, you might be thinking “humble blogger, you handsome devil, are you talking yourself out of a job?”  Well, not necessarily.  Work will continue to get done.  Injuries will continue to happen.  Fraud will continue to abound.  If more industries took the Proposition 22 route, coverage for these injuries will continue, but the policy holders could very well become the independent contractors rather than the employers.  It’s a crazy new world your humble blogger is imagining, but not one entirely different than the one we know now.

What do you think, dear readers?  Will more industries push through initiatives to carve out an escape from workers’ comp?  Or is this Prop 22 to be a stand-alone-Stan for the gig economy?

Welcome back dear readers! Your humble blogger hopes the three-day weekend was marvelous and restful.

But, since you’re reading this, either the break wasn’t that engaging or you’re back to work, so please allow me to use the mighty soap box that is this most humble of blogs to denounce the machinations of our friends in Sacramento once again.

Now, I know full well that if I denounce “what they’re doing” in Sacramento, a LOT of things come to mind without narrowing the scope, so feel free to let your imagination run wild.

But since I’ve taken the trouble to write this blog, perhaps you will allow your humble blogger to impose upon you to finish reading it?  In this particular instance of outrage and angst, your humble blogger rails against proposed Senate Bill 216.

What does BS 216 SB 216 have to do with workers’ comp, you might ask?  Well, everything.

Workers’ compensation insurance is only required for those that have employees (although there are some exceptions, such as roofers).  Self-employed individuals can opt out having insurance, as can business entities without employees.  Why would anyone want to opt out of having insurance?  Well, as your humble blogger has learned through the process of becoming an adult and then even more so through the process of becoming a cynical adult, most questions that begin with “why” can be answered with “money.”

If a licensed contractor doesn’t have any employees, the pressure is there to keep costs as low as possible to be as competitive as possible on quotes for services.  Being required to purchase workers’ compensation insurance means increasing the cost of bids, rendering the independent contractor less competitive.  In a similar vein, requiring a licensed contractor to purchase volcano insurance would have a similar effect.

To be fair, the reasoning for the law is sound: many licensed contractors claim to have no employees, then hire workers off the books and leave their clients holding the bag when an injury occurs.  But the remedy in this case appears to be worse than the cure – adding another “tax” to licensed contractor operations, in this case requiring workers’ compensation insurance when there are no employees, is just going to drive more licensed contractors into the underground economy.

After all, the more expensive the cost of compliance with the law, the more incentive to risk breaking the law, no?

Your humble blogger sincerely hopes that the Legislature in Sacramento declines to turn this proposal into law.  Navigating California’s business environment is difficult enough, and living in California is expensive enough, without bearing these additional and unnecessary costs. 

Till Friday, dear readers!

It’s no secret, dear readers, that your humble blogger enjoys hearing about the march towards automation.  Technology trends towards making jobs safer, products cheaper, and allows for the refocusing of labor towards other ends.

Humans have limitations that machines can avoid, allowing for more productive hours in a day at a lower cost and without the risk of injury visited on human workers.

Farm labor is no exception.  The DIR regularly gives reminders and warnings to agricultural employers about the dangers of heat and dehydration.  Heat stroke, skin cancer, and a variety of orthopedic injuries from twisted ankles to ruined backs await the workers toiling on most of California’s square miles.

So meet Iron Ox, a California company that has launched America’s first autonomous robot farm.  The robot farm grows plants, monitors them for pests and disease, and then performs the harvest.  The space saving is intense too – 30 acres of real farming is supposedly equivalent to 1 acre of robo-farming.

So, what does that mean for us in California?  For the next few weeks (or months or years) probably not much.  But if this catches on, the company can produce more food with less: less space, less labor, less overhead.

How will a farm’s experience modification for its insurance rates change when it goes from having 200 season and/or regular agricultural employees to 15 engineers and technicians to monitor the machines and keep them running?

How will this shiny robotic future impact California’s next legislative reform?

Although California, unlike Texas and Oklahoma, won’t let employers opt out of the workers’ compensation system, technological advances are allowing employers to carve their own opt out – fewer workers and fewer injuries.

I, for one, welcome our robotic overlords, dear readers.  How about you?

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!