STOP “Developing” the Record!

Are you tired of locking down evidence at the Mandatory Settlement Conference, proving your case at trial, and then being told to start over again by “developing the record?”

Again and again, California Workers’ Compensation defense attorneys witness judges helping applicants take a second or third shot at the target, often being told specifically what evidence needs to be added to the second trial to justify an award (or a bigger award).

Two recent Workers’ Compensation Appeals Board panel decisions seem to be starting the trend away from this practice.

In the cases of Bates v. Valley Vintners Wine Company (2011) and Elias v. Saticoy Lemon Association (2011) [Full disclosure: the former case was handled masterfully by Thomas J. Harbinson and Laura K. Lachman] the panel put a stop to this “develop the record” trend.

In Bates, after the MSC and trial, the Workers’ Compensation Judge disregarded defendant’s references to apportionment evidence and the rater’s use of an incorrect occupational group number for the applicant, finding him permanently and totally disabled based solely upon the Le Boeuf expert’s independent opinion without backup support.

Following defendant’s petition for reconsideration, the WCJ rescinded the Findings and Award, and instructed the parties to appear for further trial proceedings to “develop the record” to allow additional testimony from applicant’s vocational rehabilitation expert on the issues of “vocational feasibility, labor market survey, and/or necessity for vocational testing.”  Defendant responded by filing a petition for removal.

Citing Labor Code § 5502(e)(3), the WCAB held that discovery closes at the MSC.  Furthermore, once “the record is supported by substantial evidence from which a decision can properly be made, there is no basis to order development of the record.”  (Citing San Bernardino Community Hosp. v. Workers’ Comp. Appeals Bd.)

Similarly, in Elias, the WCJ vacated the submission of evidence and ordered development of the record on the issue of causation, also demanding the production of an additional opinion from the treating physician.

Defendant petitioned for reconsideration (which the WCAB held was improper, and instead ordered removal).  The WCAB again held that, absent a “showing that there was evidence applicant could not have discovered or obtained in the exercise of due diligence prior to the MSC,” Labor Code § 5502(e)(3) [the statute is erroneously cited as (d)(3) in the opinion] prohibits the admission of new evidence.

My favorite quote from the Elias opinion?  “In ordering parties to obtain [additional evidence] the WCJ is, in effect, doing applicant’s attorney’s job.”

Both WCJs were instructed to issue a decision on the present record.

Of Broken Hearts and Broken-down Benefits

Jack and Jill fall in love and get married.  Jill hurts herself coming down the well and makes a Workers’ Compensation claim.  Because Jill fell in 1992 and this occurred under the California Workers’ Compensation system, this was going to be a long, drawn-out affair.

Jill’s injury left her unable to work, and, in 2002, she received a lump sum award of just over $172,000 (after her lawyer was paid).  In 2005, Jack and Jill decided to go their separate ways, but there was some dispute as to how, exactly, they ought to split the sheets.

Jill, of course, maintained that the Workers’ Compensation award was her separate property!  Jack, on the other hand, claimed that it was community property and should therefore be split between them, in accordance with Family Code § 760.

So what is the right answer?  Are Workers’ Compensation benefits community property?  Or do they stay with the injured spouse?  That was the issue in the case of In re the Marriage of Flora S. and George L. Ruiz (2011).  [Practitioners, be careful – not all parts of this case are certified for publication.]

The trial court held, and the Court of Appeals affirmed, that the portions of a lump-sum Workers’ Compensation award that are meant to cover out-of-pocket expenses for medical treatment and to replace the lost earning capacity during marriage are community property.  The rest sits comfortably in the injured spouse’s pockets.

But here’s the catch – the burden of proof lies squarely on the injured spouse to prove that this property is separate.  Without some proof as to how the lump sum was calculated, the injured spouse is out of luck.  Otherwise, the Family Code presumption kicks in and the community wins.

The implications of this case are something to look out for when the injured worker wants to itemize his or her benefits award (Yes, I’ll waive reimbursement for medical treatment if you note in detail that all benefits are for lost earning capacity…)

Defining the Scope of the Good-Faith Personnel Action Defense

In a recent case, County of Sacramento v. WCAB (Michael Brooks) (2011) 13 WCAB Rptr. 193 , the Workers’ Compensation Appeal Board interpreted the good-faith personnel action defense, further clarifying its scope.  (Sorry folks, no good news is headed our way on this one…)

In California Workers’ Compensation practice, recent years have seen a growing number of psyche claims tacked on to other injuries, but sometimes as stand-alone injuries as well.  In both cases , the insurer/employer should look closely at the good-faith personnel action defense of Labor Code § 3208.3(h).

Essentially, an otherwise compensable psychiatric injury shall not be compensable for an injury “substantially caused by a lawful, nondiscriminatory, good faith personnel action.”

In the Brooks case, the applicant, a Supervising Deputy Probation Officer with the County of Sacramento Probation Department filed a complaint against a subordinate for excessive force in subduing a juvenile inmate.  An investigation followed, during which Mr. Brooks perceived a total lack of support from his supervisors and employers, and the over-enthusiastic employee filed a grievance against the applicant..

After filing an application, the parties used an Agreed Medical Evaluator who found that applicant’s psychiatric impairment, Adjustment Disorder with Depressed and Anxious Mood, was caused, in equal parts, by (1) the filing of the grievance; (2) defendant’s investigation; and (3) his feelings of being unsupported.

The Workers’ Compensation Judge found that the defense of good-faith personnel action was not met and made an award in favor of applicant.  Defendant filed for reconsideration.

On reconsideration, the WCAB affirmed the WCJ’s decision, finding two of the components causing the impairment did not qualify as good-faith personnel actions, so only 33% of the causation qualified for the defense, rendering the § 3208.3(h) inapplicable.

As the WCAB reasoned, the term “personnel action” as used in § 3208.3(h) is “conduct attributable to management in managing its business.”  The WCAB expressly rejected the position that the scope of “personnel action” encompasses “all actions by any level of personnel in the employment situation.”  (13 WCAB Rptr. 193, 194).  Among those actions not covered by the defense are the actions of one employee against a fellow or lesser employee, unless authorized or ratified by management.

Therefore, the WCAB concluded, while the investigation was a good faith personnel action, the grievance filed by applicant and applicant’s own feelings in response to his perceptions regarding management were not good-faith personnel actions.

Defendant has filed a Petition for Writ of Review, which was issued on June 23, 2011.

In reading these facts, I can’t help but think that the Board erred in its conclusion.  I agree that the process of filing a grievance might not be covered by the defense of § 3208.3, and no one is contesting the finding that management’s investigation falls well within the scope of the same.

But defendant’s approach to handling this matter, and the degree of support provided to applicant throughout the process, is a good faith personnel action in and of itself.  Therefore, applicant’s reactions to this good faith personnel action should be folded into the personnel action, and thereby be covered by the defense.

After all, every time the good faith personnel action defense has been used successfully, there must have been some reaction from the applicant to the action itself.  Perhaps the Court of Appeals shall see it the same way as does your humble author?

New Mileage Rate Increase as of July 1, 2011

I’m sure you’ve seen/heard this already, but a friendly reminder never hurts.

As of July 1, 2011, the mileage reimbursement rate for medical treatment and medical-legal evaluations went up to 55 cents (from 51 cents).  Labor Code § 4600 (e)(2) requires the reimbursement of an injured worker’s reasonable expenses of transportation.  This is usually simple mileage for driving to and from appointments, but can also include flights and driving services.

The mileage rate is set by the Director of the Department of Personnel Administration, pursuant to Government Code § 19820.  Generally, this tracks the rate set by the Internal Revenue Service, which announced on June 23, 2011, the increase to 55 cents.

This is a relatively minor difference, but it cause a headache to deal with and give applicants more grounds to perceive themselves as wronged, especially when considering the potential for 25% penalties under Labor Code § 5814.

Fingering Subsequent Injury Fund for Liability

California Workers’ Compensation provides a fund for serious subsequent injuries where a previous injury combines with a more recent one to cause permanent disability (PD).  (See Labor Code section 4751)

Subsequent Injury Fund’s (SIF) coffers present an additional pocket for the injured worker.

In the case of Becerra v. WCAB (2011), an applicant filed a claim for a 1999 injury to his back and psyche.  He already had a past injury that resulted in the amputation of one joint of the right index finger.  The parties used Agreed Medical Evaluators for both injuries, resulting in 67% PD for the back and 44% PD for the psyche.

Under the 1997 rating schedule (see page 7-16), these two values combine to 86% permanent disability.  The WCJ did not find applicant 100% permanently disabled on medical grounds alone.

The dueling vocational experts did not find the finger injury a factor in applicant’s lost ability to compete in the labor market.  Applicant was found 100% permanently disabled based on the medical and vocational evidence, attributed solely to the 1999 injury.

After settling his case in 2009, applicant filed a claim for SIF benefits, claiming that the amputated finger joint and back injury combined to create a greater disability – the back/psyche injury of 1999 did not make him 100% disabled, but rather 97% permanently disabled (the finger, as the theory went, did the rest).

The WCJ rejected applicant’s theory, reasoning that nothing in the record suggested any portion of applicant’s permanent disability, or vocational rehabilitation analysis, came from the missing finger joint.

The WCJ found for SIF, the Workers’ Compensation Appeals Board denied reconsideration.  The Court of Appeals’ response?  Writ of review denied.

Defendant didn’t benefit much from SIFs involvement in this case.  However, if you have an applicant with a past injury, bringing SIF in as a secondary target should always be explored.  If nothing else, more settlement money in the room means less settlement money out of your pocket!