With all the trepidations of  “You said what … ” and  “Boy we’re you off base …” I am going to re-print every once in a  while articles that I posted in “Adjusting World”.  I have written articles there for almost five years.  So here we go .. from July, 2008:

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Stop the Presses!

Okay so by the time your reading this, the case won’t be as hot as it is tonight … but it still makes for some very interesting analysis.

The Third District Court Of Appeals in a published decision, Barr v WCAB, decided on June 23, 2008, to interpret Labor Code §5811(a). The pertinent part of that section states, “In all proceedings under this division before the appeals board, costs as between the parties may be allowed by the appeals board.”

So what are allowable costs?     This has been a challenging question as some applicant attorney’s have engaged out-of-work vocational rehabilitation consultants to render an opinion trying to rebut the presumption of the 2005 Permanent Disability Schedule.

In the Barr case, the Subsequent Injury Fund (SIF) sought to have a vocational rehabilitation expert’s costs disallowed.  They argued that since the matter was resolved by Stipulation with no testimony and that the report was not admitted into evidence, they should not have to pay for these costs.

According to the Justices, “Because these costs are not defined by statute, the WCAB and Subsequent Injury Fund (SIF) venture far and wide to resolve our narrow issue.”  They chastised the SIF for its impassioned arguments which they felt were asking the Court to be the Legislature and not the arbiter of the law.

The Court affirmed that the WCAB has discretion to award costs pursuant to the aforementioned Labor Code section.  They continued “Labor Code §§ 5708 and 5709 do provide the context within which it exercises its discretion.”  Thus, the discretion is not unfettered.

Specifically, “Section 5708 provides that the WCAB ‘shall not be bound by the common law or statutory rules of evidence and procedure, but may make inquiry in the manner, through oral testimony and records, which is best calculated to ascertain the substantial rights of the parties and carry out justly the spirit and provisions of  this division.”

“Similarly, section 5709 provides:  “No informality in any proceeding or in the manner of taking testimony shall invalidate any order, decision [or] award [of the WCAB].  No order, decision, [or] award [of the WCAB] shall be invalidated because of the admission into the record, and use as proof of any fact in dispute, of any evidence not admissible under the common law or statutory rules of evidence and procedure.”

When these sections are taken together, the WCAB has considerable discretion to conduct its business in a manner quite unlike civil litigation; in fact, the WCAB is unencumbered by formality or traditional rules of evidence and procedure.”  Thus, the discretion given to the Judges is fairly broad, but not unlimited.

SIF argued “that the WCAB’s en banc decision in Costa v. Hardy Diagnostic (2007) 72 Cal.Comp.Cases 1492 (Costa) demonstrates the danger of according the WCAB unfettered discretion.”  The Justices said quite the contrary, Costa shows how the WCAB has limited its discretion.

The Court agreed with the WCAB’s Costa, ruling that costs are tempered by the same principles that guide medical-legal costs. For example, “medical- legal costs are not recoverable with respect to reports, for example, that are incapable of proving or disproving a disputed fact, or whose conclusions are totally lacking in credibility, reports and testimony of a vocational rehabilitation expert must at least have the potential to affect a permanent disability rating in order for their costs to be recoverable.”

Thus, SIF completely failed in its argument and the resulting published opinion expands the opportunity for applicant mischief making with Labor Code §5811 costs.

However, all was not discordant with the rulings this month.  The First District Court of Appeals upheld the 24 visit limit for chiropractic treatments against a constitutional challenge in the Facundo-Guerrero v. WCAB, 73 Cal Comp Cases —–.

Most importantly, the WCAB, en banc, ruled in the Boughner v WCAB case that when the 2005 Permanent Disability Rating Schedule Guidelines was created by the Administrative Director, she did not act in an arbitrary or capricious manner as San Francisco Judge Duncan had ruled last year.  Consequently, the 2005 Schedule withstands, at least at the WCAB level, any challenge to the Administrative Director’s enactment of the Schedule based on her actions.  Next stop according to CAAA sources will be the First District Court of Appeals. The battle rages on.

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FYI — on April 7, 2009, the First District Court of Appeals denied the Petition for Writ of Review in Boughner.

The DWC announced that the California  Office of Administrative Law has adopted the new regulations updating the medical treatment guidelines.  The  new guidelines will become effective on July 18th.

From the DWC News Release: “In addition to adding the new sections for chronic pain and postsurgical treatment, the clinical topics format allows us to make future updates on a chapter by chapter basis,” said DWC acting Deputy Administrative Director Destie Overpeck.  “In this way, we can continuously incorporate quality, evidence-based treatment for injured workers, which help them recover quicker and keep costs down for employers.”

The News Release continues, “the chronic pain section provides for treatment of close to 200 chronic conditions.  The section is based on the ODG, but contains an introduction written with input from the MEEAC.  It also contains additional treatment recommendations based on EBRs.  The section is evidenced-based and stresses the importance of returning patients to work through the use of treatments that show functional improvement and independence.”

Future Blog entries will look into those guidelines in greater detail. Can’t wait … here’s the link to the new regulations:

http://www.dir.ca.gov/dwc/DWCPropRegs/MTUS_Regulations/MTUS_Regulations.htm

This Friday is the SBICA Lunch and my Legal Update at Bella Mia in San Jose at 11:30 a.m.   Hope to see you there.

— Steve

In a sharp commentary on the recent WCAB en banc opinions on Almarez / Guzman / Ogilve, a very creative Applicant’s Attorney put this video on YouTube:

Somebody Hates Almaraez

Labor Code §4607 provides that if a party initiates an action to terminate a WCAB award for continuing medical treatment and loses, the WCAB may make the losing defendant pay the winning applicant’s reasonable attorney fees for resisting the termination proceeding.  The reasonable fee is determined by the time involved multiplied by an hourly rate and rather than a percentage of the benefit.

But what about a situation where an applicant asked for a certain type of medical treatment and it is disputed by the carrier.  Later that treatment is determined to be  reasonable and necessary, can the applicant get reasonable hourly attorney’s fees?

First the WCAB said no, but the Court of Appeal said yes.   The California Supreme Court granted review to look at the issue.  Meanwhile applicant attorneys lined up to challenge every post Award medical treatment dispute with the threat of the hourly attorney fee burden.

On May 11, 2009, the California Supreme Court in the case of Smith & Amar v WCAB reversed the Court of Appeal with the ruling that,  “In light of the statute’s unambiguous language, …  An employer or insurer that disputes a specific treatment request cannot be said to have ‘institute[d] proceedings to terminate an award . . . for continuing medical treatment . . .’”  Thus, the prevailing applicant did not get attorney fees as a bonus.

The Supreme Court clearly set out the distinction between terminating a continuing Award for medical treatment and the denial or dispute over a specific treatment request. There is a clear difference between disputing a specific medical request and challenging the validity of the entire Award.  The former does not carry with it the burden of the hourly attorney’s fee.

But what would happen if the defendant denied all of the specific requests for treatment?  The Supreme Court shot down the applicant’s horror story argument by reminding them that Labor Code § 5814.5 would permit the WCAB “to award fees when benefits have been unreasonably delayed or refused.”

The unanimous decision re-iterated the Supreme Court’s earlier approval of the utilization review process with its dispute resolution schemes to solve disputed medical issues.

The threat by applicant attorneys that if a defendant denied or disputed medical treatment after the issuance of an Award has been laid to rest.  Again, common sense prevails.  Blanket denials are not favored.  Legitimate disputes are to be resolved by the utilization review process.  At the highest level of the judiciary, sanity prevails.

— Steve Kline

Just heard this  … A person who was answering tech support related calls for a Superior Court received a frantic call from a court clerk that all of her day’s work which consisted of about 20 different Hearing Minute Orders were missing from her computer. She couldn’t find them anywhere. The Tech support person calmly told the clerk to go to the Recycle bin and look there.  The Tech support person waited patiently as more than 10 minutes went by without a word from the other end of the phone.

Finally, a voice was heard on the phone as the Clerk said, “Okay, I went through the Recycle bin and while I found lots of garbage, I didn’t see any of my work.”

And you think the Electronic Adjudication Management System (EAMS) is a nightmare?

For the California employer paying some of the highest premiums in the nation for workers’ compensation, the new wave of accountability is taking hold.  They are asking the questions where does the money go and how much is the injured worker actually receiving in benefits.

In February, 2009 the Commissioners issued an en banc opinion, Ogilve v San Francisco.  This decision which is binding upon all the trial judges throughout the state, until the Commissioners or a Court of Appeal makes a change, is to lay out a fairly complicated formula where cases with lower permanent disability (PD) ratings can be significantly increased.

And who pays for the experts needed by the injured worker to increase his/her PD rating?   You guessed it … the defense, (i.e. the insurance carrier or the employer).

These hidden costs of litigation for example are reported to be as high as $3500 for the experts to wend their way through complicated data analysis as to the future earning capacity of the injured worker and how it has been diminished as a result of the injury.  If you didn’t know it, the defense pays for experts on both sides.

Interestingly the Commissioners have disregarded the explicit language of the statute regarding that Future Earning Capacity is solely within the jurisdiction of the administrative director. The word ‘shall means mandatory.

Labor Code §4660 (b)(2) states,

“For purposes of this section, an employee’s diminished future earning capacity shall be a numeric formula based on empirical data and findings that aggregate the average percentage of long-term loss of income resulting from each type of injury for similarly situated employees.  The administrative director shall formulate the adjusted rating schedule based on empirical data and findings from the Evaluation of California’s Permanent Disability Rating Schedule, Interim Report (December 2003), prepared by the RAND Institute for Civil Justice, and upon data from additional empirical studies.” (bold italics added for emphasis)

The Commissioners feel that since the Schedule is rebuttable, then everything within it can be challenged.  But what about the principles of certainty and speed?

It is reported at WorkCompCentral that at yesterday’s California Workers’ Compensation Institute held in Long Beach that several defense attorneys raised arguments and methods to challenge the implementation of the new formula.  Each one has an added cost.

From a business perspective in challenging economic times, some of these costs may be prohibitive.  Can you really afford to spend $1000 to save $100?

Thanks for your attention.

— Steve Kline

The talk throughout the halls of the Workers’ Compensation Boards in recent days,  center on the actions of the WCAB Commissioners with respect to the Almaraz / Guzman / Ogilve Petitions for Reconsideration.  Attorneys and Judges are speculating as to what they will do next.  It’s too bad that we don’t have the betting parlors like they have in Britain where the odds on those kind of matters would be publicly posted for all to see and perhaps, even profit.

The practical effect  of the Commissioners’  earlier decisions,  as interpreted by many Trial Judges, was to decimate the 2005 Revised Permanent Disability Schedule which came about as part of the 2004 Reforms known as SB 899.  The purpose of those reforms, lest we forget, was to stop the escalating cost of workers’ compensation which was out-of-control.  The California  Supreme Court has already affirmed many of those reforms and the reason for their implementation.

On another front, the  Insurance Commissioner has been requested to approve a pre-Reform type rate hike to the  workers’ compensation insurance premium rate.  While most of the rate-hike was caused by the increase in medical costs, there is a  portion attributable to the aforementioned  WCAB’s decisions earlier this year.  There is a delay in the Insurance Commissioner’s decision. Thus, the cost factor is clearly back into the equation of permanent disability.  State Fund has raised that issue  in its Petition.

But as we now wait for the Reconsideration decision which may return sanity and stability to the system, there are other cases being decided and bills before the Legislature to talk about.  In the coming days, we will write about those subjects as they develop.  Soon, a Resource Page will be created which will give you useful links.  We are also planning a Page that has a draft title of ‘CA WorkComp 101′ which will provide you with translations for  the lingo and language of the system. Our goal is to help you understand the system without a lot of code words.  We look forward to building this resource for you.

Your comments and ideas are welcome as we build this resource for your use. Click on the hyperlink below that says either “Comments” or “No Comments” to add a comment to this post. Thanks for your attention.

— Steve Kline

But …. We’re not open quite yet … We’ll be ready on Monday May 4, 2009 for the launch of this valuable new resource  for California employers and the workers compensation community.

We look forward to providing you clear, concise information about the California Workers’ Compensation System.  We’re going to help employers and the community understand the ever-changing system by providing you with usable current news, facts & resources.

We’ll also be starting a dialogue exchange for employers and the community to cope with the struggles of workers’ compensation in these economically challenged times.

We know you can’t wait  … but subscribe today to Planet WorkComp by using the RSS feeder at the top of the right column and we’ll see you back here on the 4th.