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Michael Ramrakha was employed as a correctional officer by the California Department of Corrections and Rehabilitation. He filed three applications for adjudication of claims. Benefits were paid in all three cases that involved internal medical injury issue. Two of the cases were specific injuries, and the third a continuous trauma.

Defendant requested to take credit for $13,835.88 that was paid from ADJ4508242 to ADJ1415534 and $13,997.37 paid from from ADJ4508242 to ADJ8919366.1

The main issue for this WCJ to decide in this matter was whether or not SCIF was entitled to take credit for overpayments from one industrial injury claim for permanent disability in another claim for permanent disability. In both cases, the WCJ denied to allow credit.

Reconsideration was granted in one of the two cases in the joint panel decision of Ramrakha v State of California Department of Corrections – ADJ8919366-ADJ4508242-ADJ1415534 (March 2023)

In her Opinion on Decision and in her Report, the WCJ faults defendant for failing to file a petition for credit pursuantWCAB Rule 10555(a). (Cal. Code Regs., tit. 8, § 10555(a).)

Subdivision (a) of the rule states: “When a dispute arises as to a credit for any payments or overpayments of benefits pursuant to Labor Code section 4909, any petition for credit shall include: (1) A description of the payments made by the employer; (2) A description of the benefits against which the employer seeks a credit; and (3) The amount of the claimed credit.”

The WCAB panel noted that SCIF did provide to applicant’s attorney a petition for credit that complied with Rule 10555(a), albeit not until the day of trial on January 15, 2020. It concluded however that the better practice is to submit a petition for credit “when [as soon as] a dispute arises as to a credit for any payments or overpayments of benefits pursuant to Labor Code section 4909.”

However, the rule includes nothing that authorizes or requires disallowance of credit for failure to comply with the rule’s requirements regarding the content of “any petition for credit.”

Thus the panel concluded that “defendant’s alleged failure to timely comply with WCAB Rule 10555(a) is not a basis for disallowing its claim for credit.

But the panel went on to say that the “WCJ is correct that the determination of whether to allow defendant credit for benefits voluntarily paid in error, pursuant to Labor Code section 4909, is within the WCAB’s discretionary authority. The Board may consider a weighing of the equities between the parties, as well as whether the applicant’s compensation award will be seriously impaired if credit is allowed.”

“In this case, there is no evidence that applicant improperly collected undue compensation without notifying defendant of the possibility that excess payments were being made. On the other hand, defendant was in control of the manner in which it paid permanent disability indemnity benefits, so the extent to which defendant’s actions resulted in significant overpayment of permanent disability indemnity is defendant’s responsibility.”

“Nevertheless, the balance of equities between the parties is not the only factor to be considered. The purpose of Labor Code section 4909 must be considered as well. The statute was intended to encourage employers to make voluntary payments to injured employees and, in appropriate circumstances, to obtain a subsequent reduction in the amount of workers’ compensation benefits determined to be due the employee. (Appleby v. Workers’ Comp. Appeals Bd. (1994) 27 Cal.App.4th 184, 191 [59 Cal.Comp.Cases 520].)”

Defendant’s payment of permanent disability indemnity for the two specific injuries was consistent with the intent of section 4909: to encourage employers to voluntarily pay compensation and, where appropriate, to obtain a subsequent reduction of compensation ultimately determined to be due the employee. Accordingly, we will amend the WCJ’s decisions to allow defendant credit in ADJ1415534 for permanent disability indemnity paid in ADJ4508242.”

However the panel affirmed the WCJ’s denial of credit for permanent disability indemnity owed by defendant on the cumulative trauma in ADJ8919366, noting that defendant’s “administration of benefits in the cumulative trauma case has resulted in defendant claiming a credit of almost $14,000.00 on a permanent disability award of $67,907.50, which represents an approximately 20 percent curtailment of applicant’s permanent disability indemnity benefits.”

“Although defendant voluntarily paid benefits on the cumulative trauma claim and eventually claimed credit as envisioned by section 4909, defendant did so in a manner and under circumstances that resulted in a material impairment of applicant’s permanent disability award in ADJ8919366. (See State Comp. Ins. Fund v. Workers’ Comp. Appeals Bd. (Dunehew) (2011) 76 Cal.Comp.Cases 1251 (writ den.) [allowing defendant credit for compensation paid for 2003 injury would be destructive of purpose of permanent disability award for 2007 injury].)”