Insurance Agent Allegedly Pockets Premiums; Issues False Certificates of Ins.

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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…

3rd Party Credit? Not so Fast…

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Happy Monday, dear readers! 

Your humble blogger breaches no duty of confidentiality and betrays to national secrets to disclose that he is a very big fan of Seinfeld.  One scene in particular comes to mind… the double dip!

In short, double dipping is bad.  It’s so bad, in fact, that in Workers’ Compensation, we tend to discourage it by allowing for subrogation and third-party credit.  Basically, whatever goes in the pocket for applicant from a third-party civil suit, with some exceptions, can be the basis of petition for credit before the WCAB. 

Labor Code section 3861 provides that “[t]he appeals board … shall allow, as a credit to the employer to be applied against his liability for compensation, such amount of any recovery by the employee for his injury…” 

Well, in a recent panel decision, Diaz v. Black Rock Milling Co., the WCAB had occasion to review the scope of the credit.  Specifically, the WCJ had issued an allowance for third-party credit “against any and all indemnity workers’ compensation benefits due…” 

But what about non-indemnity costs? Such as medical, mileage, etc.-?  Well defendant appealed this very deficit and reconsideration was granted by the WCAB to further develop the record regarding the scope of the order granting credit.

But, looking at the plain language of LC 3861, it appears the Labor Code uses the term “shall” in directing the WCAB, meaning that this is not subject to discretion, and the credit is to apply “against [the employer’s] liability for compensation…” Where is the authority to limit liability for compensation solely to indemnity?

Other cases have applied this credit to medical-legal costs (SCIF v. WCAB (76 Cal.App.3d 136)); In SCIF v. WCAB (Borges), a 1997 Court of Appeals decision, it was held that “[c]ompensation in this context, is given a broad, expansive meaning … every benefit payable to or on behalf of the employee that is enumerated in division 4 of the Labor Code is to be considered compensation liability which may be offset by the employer’s credit.”

So, what’s going on?

The WCAB is given a mandatory directive by the Labor Code to grant credit (LC 3861).  The Court of Appeal has already ruled that the credit is to be applied to all benefits (Borges).  But now the defendant has to go through a reconsideration and a rehearing on this issue.  What’s more, there is no apparent remedy to the delay in justice or the resources of litigation.  Meanwhile, without an order to the effect of credit against all species of benefits, defendant is required to continue paying for medical benefits pending the determination of this issue.

Such is life, dear readers, such is life.

Does this mean you should not seek credit? Of course not!  But getting the credit you deserve may take longer than you would like, unfortunately.

On “Knowledge” and Timely Filing of Claims

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As some of my beloved readers may know, your humble blogger is an escapee from the Soviet Union.  Being such makes one a relative expert in Propaganda.  Thus, I can tell you two things that you can take to the proverbial bank on this subject:

  1. A real propaganda is when a British person takes a good look at something (syntax: “Be a good chap and take a proper gander at my tea collection.  Cheerio!”);
  2. In California workers’ compensation law, what is good for the goose is not necessarily good for the gander.

Admittedly, that set-up for a dad joke was pretty long, not unlike the neck of a goose since we’re on the subject, but I hope you’ll bear with me while we get to the point your humble blogger is trying to make.  In a recent panel decision, the WCAB relied on the fact that applicant had the guidance of an attorney to determine that he waited too long to pursue SIBTF benefits.

The case is that of Roberts v. Perkins and Will Group.  Applicant had a case from 2007 which resolved via stipulated award for 41% PD in 2012.  He had another stipulated award for a 2009 CT injury which resulted in a separate stipulated award of 53%, also in 2012.  He then waited until 2019 to file an application for Subsequent Injuries Benefit Trust Fund benefits. 

The parties proceeded to trial on whether applicant was permanently totally disabled and whether the statute of limitations barred his SIBTF claim.  Applicant was represented for his original two claims but testified at trial that he did not become aware of the existence of SIBTF until late 2018.  The trial judge found that “applicant did not file his claim against SIBTF within a reasonable time from when he knew or should have known that he had a probable claim, and that his claim was thus barred as untimely.”   On appeal, applicant argued that the WCJ erred in “taking applicant’s representation into account” in concluding applicant should have known about his eligibility for SIBTF benefits.

In affirming the WCJ’s finding, the WCAB panel reasoned that applicant had 5 years from the date of his second injury to file for SIBTF benefits, as the original injury was already more than 35% PD.  But, what’s more important to your humble blogger (as a defense attorney, I rarely if ever have to address SIBTF issues), is that the WCAB found no error in imputing knowledge of SIBTF claims to applicant because applicant was represented.

Well, if such logic is good for the goose, why not share that sauce with the rest of the flock?

When an applicant retains counsel, knowledge of that attorney SHOULD be imputed to the injured worker, but not just about SIBTF: about cumulative traumas as well.  Any applicant attorney who claims to not know that cumulative traumas exist or constitute potential claims should hang up his or her spurs, and turn in his or her State Bar card.  Of course, the AA Bar is intimately familiar with cumulative trauma claims.

If that’s the case, why does so much of the WCAB resist settlements for specific injuries that include resolution of potential but unclaimed cumulative traumas through that date?  Why doesn’t the date of injury for any subsequently filed CTs tie into when applicant became represented?

Knowledge of what a CT is should absolutely be imputed to applicants upon becoming represented, whether that representation is for a specific injury or a cumulative trauma.  And if there are applicant attorneys out there that really are keeping the existence of CT claims a secret from their clients, shouldn’t that be an issue between those attorneys and the State Bar?

Just for context, as you curse your humble blogger for his harsh demands for applicants and their attorneys, your humble blogger asks you – what is necessary for an applicant to claim a CT?  Does the applicant first have to get a report from a physician confirming that there is, in fact, an industrial CT?  Or is it enough for applicants to simply make the allegation?  If there is no requirement to first obtain a medical report of this sort, then why is there this fantasy that applicants could not possibly have known that there was a CT until there was such a medical report?

Your humble blogger would love to see the same reasoning as described in Roberts applied to cumulative traumas and the questions of date of injury and the statute of limitations defense.  If it were so done, perhaps we would see fewer cases of the applicant bar skirting the post-termination defense by alleging the very same injury that would otherwise be barred by alleging a CT instead.  Perhaps we would finally see world peace and all the ills that plague the human experience vanish before our eyes.  Too much, dear readers?

What is WFM Worth to You?

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Well, dear readers, here we are yet again!

So you’ve decided to read this blog post, but your humble blogger just as to ask the question: where are you reading these most humble workers’ compensation words from?

Are you bristling in your cubicle at the office?  Are you lounging in your pajamas at home?  Or, are you grumbling as you endure your commute from the one to the other?

We were blindsided by COVID19, and we were likewise blindsided by the lockdowns.  But we’re not fully back to February 28, 2020 either.  A lot of the work-force remains remote, or partially remote.  Even in the comp system, our depositions are almost all over ZOOM, our MSCs, Priority Conferences, and Status Conferences are over the phone, and some of our trials are via LifeSize.

Some employers want their employees to come back to work in person full time.  Some are willing to let employees work remote.  Since employers are competing for labor, which side will win out?  Can employers offer enough to employees to lure them back into the office?

Your humble blogger brings to your attention this article from USA Today, citing research by Nicholas Bloom of Stanford that suggests employees would be willing to forfeit up to 8% of annual pay for full or partial remote work. 

So, if employers can outbid their competitors for the price of employee labor by offering remote work instead of free lunches, nice facilities, etc., we can draw at least one prediction from this: we will continue to see employees working from home.   Perhaps not even a majority, but a significant minority of employees will remain remote, partially or fully.

Now, you  might be saying to yourself, “I opened my e-mail inbox to read this nonsense?”  Well hold on there, before you cut yourself a generous slice of “let’s spend Monday hurting Greg’s feelings,” think about this – how prepared are you to investigate and litigate injuries allegedly sustained while working at home?

A lot of the methods we use to defend or mitigate conventional workers’ compensation claims are simply not available to us with WFM injuries.  Unless your employees are operating certain side businesses which are not exactly family friendly, we should not expect to have regular video recordings of their remote work sites, unlike the employer-premises work facility. 

There are typically no co-worker witnesses either. 

Litigating work-from-home injuries is an entirely different challenge and if employees are willing to give up almost a tenth of their salary for the opportunity to work from home, you can bet your bottom dollar employers are going to compromise with their employees to get that done.  In other words, work-from-home, though not universal, is here to stay, and so is the need to litigate those work-from-home injuries.

Your humble blogger is ready for this brave new world… are you?

County Employee Charged w/ WC Fraud – Semper Vigilans!

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Well there dear readers, we made it to another Friday!  What better way to end another week than with a post on workers’ compensation fraud?

Well, in this case, it’s only alleged fraud.  My long-time readers will recall that your humble blogger doesn’t like to name names when there has been no conviction. 

But, even the fact that charges have been filed can provide an educational moment for us in the workers’ compensation world.

As alleged, the criminal defendant committed workers’ compensation fraud going back several years.  Some of the related news reports allege up to $500,000 in fraudulently received benefits, and, of course, there was the cost of the investigation itself, which included several hours of surveillance and obtaining and reviewing medical reports.

Let’s just say, hypothetically, that there is some guilt on the part of the criminal defendant – exaggerating symptoms to receive TD and medical benefits or lighter work duties, what have you.  What’s the best defense for employers when this happens?  In this case, the alleged fraudster was a former correctional deputy in the employ of Tehama County.

Well, the reason that there was an investigation is that a source within the Sherriff’s department noticed the defendant’s activities and reported them as she was out on industrial leave at the time.

Sometimes we catch fraud by a gut feeling or intuition that tells us to conduct sub rosa.  When that gut feeling isn’t there, however, co-workers, employees, and honest community members can often be the cape-less heroes in spotting and reporting workers’ compensation fraud.

Certainly, we should let justice take its course and see if there will be a guilty plea, a conviction, or an acquittal.  However, whether the criminal defendant in this case is guilty or not, this instance serves as a reminder for us all to remain vigilant and investigate leads when they come our way.  If those involved in law enforcement can engage in actions that give rise to charges of fraud… who couldn’t?

Have a great weekend, dear readers!

Gov. Vetoes AB1213 – Safe for Now?

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Hey there dear readers, how is your week going?  Shall your humble blogger sweeten it with some good news?

A while back, your humble blogger had the pleasure to discuss the poison AB1213 with you because Sacramento was intent on squeezing even more out of California’s battered and besieged employers.  What AB1213 intended to do was extend temporary disability for the period between Utilization Review denial and IMR reversal.  In other words, if applicant was on TD for two months between the UR denial and the ultimate IMR reversal, those two months of TD would not count towards the 104-week TD cap, and applicant could potential received 2 years and 2 months of TD. 

AB1213 passed in the in the Senate 62 to 8 on May 26, 2023, and then in the Assembly 30 to 9 on September 11, 2023. 

Now, dear readers, you might be asking yourself… where’s the good news?  Well, the good news is that on October 8, 2023, Governor Newsom vetoed AB1213, which means that, despite all the effort, it will NOT become law any time soon.

Now that I’ve lured you in with the good news, not unlike Pennywise with a paper boat, let’s take a look at some unfortunate realities.  The California Legislature overwhelmingly passed this monstrosity of a bill and will likely do so again in the near future.  When it does, will Governor Newsome’s resolve remain firm?

Mark my words, dear readers, at the rate we’re going, your humble blogger’s April Fools’ post might become reality before too long!

Straight on till Friday, dear readers!

What’s Included in that S&W Penalty?

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Happy Monday, dear readers!

Your humble blogger has a riddle for you… when is a door, NOT a door?  Well, when it is a jar.  Get it?

Ok, how about this one, when is industrial disability leave NOT compensation?  Well, when the WCAB is calculating potential Serious and Willful Penalties.

That second one probably isn’t as clever, but follow me on this.

Labor Code section 4553 provides that “the amount of compensation otherwise recoverable shall be increased one-half … where the employee is injured by reason of the serious an willful misconduct…”

So let’s take a look at a recent Court of Appeal decision, California Department of Corrections and Rehabilitation v. WCAB, Michael Ayala.  Therein, the Court of Appeal was asked to address the question of whether the “compensation” that could potentially be increased by one half as per LC 4553 includes industrial disability leave.

Applicant, Mr. Ayala, was a correctional officer at Lancaster State Prison when he was severely injured due to an attack by inmates.  The PD was ultimately resolved for 85%, but applicant’s Serious and Willful petition was not resolved until a split WCAB panel found the defendant had engaged in Serious and Willful Misconduct.  Applicant contended that the compensation to which he was entitled was his full salary, as that is what he received, while defendant contended that applicant’s compensation should be calculated based on the TTD rate alone.

The trial judge sided with defendant, limiting applicant’s 4553 increase to the TD rate, while the WCAB reversed, finding that the industrial leave supplemental bringing applicant to full salary should be included in any S&W penalty.  On appeal, the WCAB sided with defendant. 

The Court of Appeal reasoned that “compensation” under Labor Code section 3207 refers to “every benefit or payment conferred by [division 4 of the Labor Code]…”  However, the Court of Appeal traced industrial disability leave to Government Code 19871 which is not part of Division 4 of the Labor Code.   

Accordingly, the calculation of Serious and Willful penalties is limited to consideration of those benefits that would be payable under Division 4 of the Labor Code, and no other benefits. 

As per this Court of Appeal decision, it seems that any benefit that enters he calculus for Serious and Willful exposure must be traced to somewhere in Division 4.  Otherwise, the Ayala Court of Appeal would have us excluded it.

Now, dear readers, your humble bloggers puns and dad jokes are obviously pure gold.  Should an applicant claim to have received such gold by reading my blog, you can confidently exclude the value of said puns and dad jokes from the S&W exposure analysis.

Straight on till Wednesday!

On Fast Food and Minimum Wage

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And here we are again dear readers!  Friday has come at last, and the weekend awaits.  This isn’t any ordinary Friday though – today is Friday the 13th!  Halloween is coming up at the end of the month, and today is a good practice run on spooky circumstances.    But your humble blogger can’t let you go into those two days of respite without giving you something to contemplate.

As we all know, temporary disability benefits are based on average weekly wages as laid out in Labor Code section 4453, typically taken at the time of injury.  Post-injury increases to earnings can typically increase the AWW calculation.

So, why is your humble blogger bothering you with things you already know?  Well, Governor Newsome has signed into law Assembly Bill 1228, which has, among other effects, plans to set minimum wage for fast food restaurant employees at $20 per hour, effective 4/1/2024. 

So, what does that mean?   The current minimum wage in San Francisco, for example, is $18.07, so an employee of a qualifying fast food restaurant with a date of injury of  3/15/2024 might calculate TTD based on $18.07 per hour x average hours worked.  But now, effective 4/1/24, the new hourly rate would be $20.00 per hour.

Here’s a good formula to use to figure out the new AWW:  $20 (new minimum wage) / $X (pre 4/1/24 hourly rate) = Y.  Y x old AWW = new AWW.

So, we will all need to watch 4/1/24 to see which of our TD rates will need to go up.  We will also need to thank Governor Newsome and the good folks of Sacramento for, again, increasing the cost of operating in California and making both automation and abandonment of California that much more economically viable.

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Have a great weekend, dear readers!

On Unearned 5710 Fees

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Happy Wednesday dear readers!

Here we are again, working hard on getting those claims denied and those files closed.  So, let’s talk Labor Code section 5710 fees for a minute. 

Applicant attorneys will demand the defense pay their time under LC 5710 for preparing applicants for depositions and sitting in on the deposition as well.  Sometimes we get crazy demands for things like reviewing the notice of deposition or preparing to prepare the applicant for the deposition and so on and so forth.

But 5710 fees are due for a deposition, what happens when applicant’s counsel demands 5710 fees for a deposition that didn’t happen, or hasn’t happened yet?

Early settlement of a claim is often desirable, so imagine a scenario where applicant’s counsel threatens, or impliedly threatens, to hold up settlement unless there is a payment of 5710 fees.  After all, if there is a settlement without a deposition, applicant’s counsel will be out those fees, no?

Well, your humble blogger was forwarded an Order Suspending Action, issued by a judge in Sacramento, which provides an excellent analysis of this practice of applicant’s demand 5710 fees without a deposition, and, equally inappropriate, defendants paying 5710 fees without a deposition.

Per the OSA, “[w]hat appears to be entirely inappropriate is that defendant proposes to pay applicant’s attorney an additional $800 for negotiating the settlement of this matter.  This appears to be an unearned attorney’s fee.”  The WCJ also cites the Rules of Professional Conduct prohibiting an attorney from developing an interest adverse to his or her client.

How does this all pan out?  Well, if defendant offers $X for a C&R, and the applicant attorney would recommend $X for a C&R, that should be the end of the transaction.  But if applicant’s counsel refuses to communicate or recommend the C&R unless the attorney is PAID to do so, such as with a promise of unearned 5710 fees, then the applicant attorney has an unavoidable conflict because the AA’s interests (of getting 5710 fees) might conflict with the applicant’s interest (of a reasonable C&R).

The WCJ’s OSA was not particularly fond of either AA or the DA in this case, for coming to this arrangement.  The same thing could happen on the defense side too, of course – what happens if a disreputable defense attorney declines a settlement demand that is within his authority in order to bill more hours?  Such an unethical breach of duty to one’s client is completely unacceptable, whether it happens on the defense side or the applicant side.

Ultimately, the WCJ provided additional instruction to the parties, and gave a stern warning that “[p]aying an attorney an unearned fee as inducement to settle a workers’ compensation case is a fraud.  I would further note to defense counsel that where there is extrinsic fraud, i.e. fraud upon the court, the Appeals Board may alter or rescind an award at any time.”

So, what do we do when applicant’s counsel offers a C&R demand contingent on paying unearned 5710 fees?  This might be very tempting, especially as $800 in 5710 fees is a lot cheaper than $2,000 in QME fees and a lot faster too.  Don’t you do it!

Such a suggestion, as pointed out by the WCJ in the OSA, is not ethical, and could be the basis for sanctions.  The attorneys so engaged could be reported to the State Bar for ethical violations.  Such demands should be confirmed in writing, and, potentially, should be referred to the state bar and brought to the attention of the WCAB.

Be on the look out for these instances, and don’t fall into the trap of playing along!

Till next time, dear readers…

Happy Columbus Day 2023!

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Hey there readers! Did you miss me?

Well, not unlike Gandalf in The Two Towers, your humble blogger returns to you to be of humble service once more.  Now, you might ask, “HB [which is what the cool kids use to say humble blogger], where have you been these past few weeks?”  Well, I’ll tell you but it’s going to be a “choose your own adventure” sort of explanation, including any of the following scenarios:

  1. Jail;
  2. Conference circuit;
  3. Defending the world against Killer Klowns from outer space;
  4. Just really busy;
  5. On a 6-week Caribbean cruise lecturing powerful CEOs about California Workers’ Compensation.

Whatever you choose, guess what? You’re absolutely and 100% right!

Anywho, today isn’t just any other day, but it’s actually Columbus day, or, in some cases, sometimes also referred to as Indigenous Peoples Day!  A lot of schools are closed today, and we might be juggling work and childcare since many offices remain open.  However, as my beloved and well-informed readers may recall from prior posts, Columbus Day is not a holiday for purposes of extending deadlines for filing. 

So, if you have anything due today, do NOT rely on it being Columbus Day to extend the deadline until tomorrow. 

If you have the day off, your humble blogger wishes you rest and  recuperation on this day off.  If you’re down in the trenches like your humble blogger, huzzah!

Until next time, dear readers…