Category: Daily News

The Court of Appeal upheld the constitutionality of the IMR process in one of the most closely watched cases in California workers’ compensation. The case of Stevens v WCAB involved Frances Stevens who tripped and broke her foot as she carried boxes of magazines. She was diagnosed with chronic or complex regional pain syndrome and claims to be mostly confined to a wheelchair and was awarded total permanent disability.

For several years she had the assistance of a home health aide. In late 2012, the aide was injured. This led the PTP to submit an RFA to SCIF for a replacement aide which was submitted to UR and denied. The request was also denied after the IMR process. Stevens appealed the IMR decision, but the WCJ found there was no provision for a reversal since the labor code provides only limited circumstances upon which IMR can be reversed.

Stevens challenged constitutionality of the IMR process. In response the WCJ said “section 3.5 of article III of the Constitution withholds from administrative agencies the power to determine the constitutional validity of any statute.” The WCAB denied reconsideration and agreed that it could not rule on the constitutional issue saying “In sum, for purposes of appeal to the WCAB it does not matter whether the reasons given for an IMR determination support the determination unless the appealing party proves one or more of five grounds for appeal listed by the Legislature in section 4610(h) by clear and convincing evidence. Applicant did not do that in this case.

The First District Court of appeal concluded “that her state constitutional challenges fail because the Legislature has plenary powers over the workers’ compensation system under article XIV, section 4 of the state Constitution (Section 4). And we conclude that her federal due process challenge fails because California’s scheme for evaluating workers’ treatment requests is fundamentally fair and affords workers sufficient opportunities to present evidence and be heard.”

Although Stevens may have lost the war, she may not have lost the battle since she was given a second chance to prove her case on the merits. The Court stated “we also conclude that the Workers’ Compensation Appeals Board (the Board) misunderstood its statutory authority in one respect when it reviewed Stevens’s appeal. The Board concluded that it was unable to review the portion of the IMR determination that found, “Medical treatment does not include . . . personal care given by home health aides . . . when this is the only care needed.” Under the 2013 reforms, however, the Board is empowered to review an IMR decision to consider whether care was denied without authority because the care is authorized under the MTUS. (§ 4610.6, subd. (h)(1) & (5).) We therefore remand this matter to the Board to consider whether Stevens’s request for a home health aide was denied without authority.”

The SunLine Transit Agency, a government body that oversees buses and taxis in the Coachella Valley, could be fined more than $300,000 for allegedly committing insurance fraud by lying about a workplace injury.

According to the report in the Desert Sun, SunLine is being sued under the California Insurance Fraud Prevention Act by an employee who claims that his supervisor saw him suffer an injury on the job but lied to cover it up. The alleged culprits are being sued by Juan Armenta, a longtime Rancho Mirage labor attorney who represents the injured employee

The SunLine supervisor insists he never saw any injury, but a witness account that surfaced later supports the employee’s story, and has strengthened the case against SunLine.

SunLine refused to provide comment for this story. General Manager Laura Skiver said it would be “inappropriate” to discuss the insurance fraud lawsuit because it is ongoing. The supervisor in question, Gerald Hebb, also refused to comment, referring all questions to Skiver.

The SunLine lawsuit springs from the injury of Mahmoud “Mark” Alzayat, a former employee who worked on a maintenance crew in charge of bus stops. Alzayat claimed he was injured in the SunLine yard when Hebb demanded that he lift a 90-pound bag of concrete. The next day, Alzayat filed a worker’s compensation claim, stating that had reinjured his back lifting the bag. Hebb responded with a report of his own, saying that he was present while Alzayat “carried” the bag, but that he had no information about any injury. Hebb’s report did not mention the bag being dropped or the argument with Alzayat. As a result of Hebb’s report, Alzayat’s worker’s compensation claim was denied.

Later, a new witness, Paul Gordon, another SunLine employee, said in a sworn court deposition that he was also working in the SunLine yard on the day Alzayat was injured. Gordon overheard Alzayat and Hebb’s argument over a concrete bag, then saw the spilled concrete crumbled on the ground. Hebb may have denied it, but the argument happened, Gordon said. “It probably went on for 10 minutes,” Gordon said, according to his deposition.

After Gordon came forward, Alzayat was paid about $93,000 for his disability and medical bills, according to settlement documents obtained by The Desert Sun.

Alzayat has taken his case a step further. His attorneys filed the insurance fraud lawsuit in 2012, after the Riverside County District Attorney’s Office declined to prosecute the case against SunLine. The suit was initially dismissed by a Riverside County judge, who said SunLine could not commit insurance fraud because it participates in a self-insured risk pool. In September, an appeals judge issued a tentative ruling overturning the dismissal, which means the lawsuit will likely return to local court for arguments. If the suit is successful, SunLine will be fined three times the initial worker’s compensation claim, plus attorneys fees and an additional $5,000 to $10,000 penalty.

The case against SunLine is uncommon because the California Insurance Fraud Prevent Act is generally used to target fraudulent claimants, like employees who pretend to be hurt or doctors who fake diagnosis, but not employees who unfairly deny claims. Cases against government agencies are even rarer.

John Larkin sustained injuries while employed as a police officer by the City of Marysville. The WCJ determined that Larkin’s earnings to be $1,008.47 per week and that he was not entitled to the maximum indemnity levels available under Labor Code 4458.2.

Labor Code section 4458.2 provides workers’ compensation benefits to certain peace officers injured in the line of duty. The terms of the statute apply to any “active peace officer of any department as described in Section 3362 [who] suffers injury or death while in the performance of his or her duties as a peace officer.” (§ 4458.2.) The statute likewise provides benefits to those injured while performing services as part of a so-called posse comitatus – a group of citizens convened by law enforcement authorities for certain limited law enforcement purposes, in accordance with section 3366 – and to certain reserve peace officers as described in section 3362.5. (§ 4458.2.)

Larkin argued in his petition for reconsideration that the plain language of the statutes entitled regularly sworn, salaried peace officers to maximum indemnity levels. The Board disagreed, finding the WCJ’s reasoning persuasive and denying Larkin’s petition. In affirming the Board’s order, the Court of Appeal interpreted section 4458.2 to avoid what it deemed an “absurd result.” It concluded that the policy considerations underlying section 4458.2 and section 3362 reflected a legislative interest in encouraging volunteer service to support police and fire agencies.

The California Supreme Court granted review to determine whether the benefits provided under section 4458.2 extend to both volunteer peace officers and to regularly sworn, salaried officers. It affirmed the Court of Appeal in the case of Larkin v WCAB.

In light of the text of sections 4458.2 and 3362, their place in the structure of the statutory scheme, and the Workers’ Compensation Appeals Board’s interpretation of the statute, the Supreme Court concluded that section 4458.2 does not extend maximum indemnity levels to regularly sworn, salaried officers. This conclusion is bolstered by a review of the legislative history governing the relevant statutory provisions. The Court of Appeal’s judgment was affirmed.

Estela Chanchavac filed a Continuous Trauma Claim against LB Industries Inc., and its two industrial carriers, Sentry Insurance and Twin City Fire Insurance Company. There was no election against either carrier, both remained active defendant participants in the case. Thus it was the view of the WCJ that “It should be noted at the outset that the employer is no longer a party to this action. Its carriers have entered their appearances in this case, so the employer is effectively dismissed as a party. cf. L.C. section 3757”.

One of the carriers, Twin City, had already obtained a chiropractic PQME with the applicant. Sentry sought to obtain its own PQME in orthopedics. Applicant objected contending that jointly, the two carriers can only obtain one PQME. The WCJ ruled that Sentry Select had been properly assigned a QME panel in orthopedics, and that applicant and Sentry should utilize the doctor remaining after the striking process to resolve any disputes between them. Applicant petitioned for Reconsideration and/or Removal which was denied by the WCAB in the case of Chanchavac v LB Industries.

The Petitions were dismissed without considering the merits. However, the WCJ noted that most of the exhibits introduced by applicant which relate to the selection procedure show that Sentry was entirely shut out from that process.

Applicant argued that permitting each defendant to obtain its own QME evaluations will result in “dueling reports” that will complicate the proceedings. In response the WCJ said “That is certainly true, which is why the legislature provided a simple expedient to avoid the problem. As noted in the Opinion, applicant could simply have elected against Twin City, thereby stopping Sentry from conducting any discovery at all. Cf. Kelm v Koret of California (1981) 46 CCC 113.”

As noted in that decision, the election process under L.C. section 5500.5 is specifically designed “for the purpose of ameliorating the procedural morass which has faced the board in multiple defendant cases”, and to “avoid the confusion and delay inevitable where multiple defendants are involved.”

The WCJ went on to note that “Although this option was presented to applicant on the morning of trial, she steadfastly refused to avail herself of it. She has instead insisted that Sentry remain an active party defendant in this case, while simultaneously attempting to prevent it from acting. The undersigned believes she cannot have it both ways. If she does not wish to designate one carrier with whom she wishes to litigate, she must litigate with all of them, all of whom must in turn be permitted to defend their own interests as they see fit. There is simply no basis or precedent for designating one carrier as some sort of “lead carrier” which other carriers must follow, or the carrier in which all other carriers are in “privity” and therefore bound by its decisions and actions.”

In August, California amended workers’ comp benefit notice regulations that govern the DWC-1 claim form/Notice of Potential Eligibility (NOPE), posting notices and other notices that employers and claims administrators use to inform employees of their rights and obligations under state law.

The regulations address statutory changes enacted in 2012, and require additions to notices including Medical Provider Network (MPN) information that replaces the requirement for a separate MPN poster, new language on electronic service of notices, advice that medical services are subject to approval, a revised permanent disability description and new language on timely reporting.

The state made the regulations effective January 1, 2016 to allow claims operations and employers time to obtain and distribute revised notices, so they may continue to use current versions until the end of 2015, after which they should begin using updated materials. With the January 1 effective date less than 3 months away, the community must gear up quickly.

Private entities may publish the required workers’ comp posting notices and new hire pamphlets if they are approved by the state, and many insurers and employers rely on the California Workers’ Compensation Institute (CWCI) to produce these materials and keep them up to date. After the state amended the regulations in August, CWCI updated its new hire pamphlet and posting notice, obtained state approvals, translated them into Spanish and printed them along with the new DWC-1/NOPE, which as of January will consist of a 3-page NOPE attached to four copies of the claim form, printed on NCR paper to eliminate the need to photocopy. In addition to the changes adopted in August, CWCI added information to its pamphlet and posting notice on the state’s $120 million Return to Work Supplement Program to reflect regulations adopted in April, and updated its “Facts For Injured Workers” pamphlet, which many claims administrators use to provide information to injured workers early in the life of a claim, and to meet the notice requirement about fraudulent receipt of temporary disability and the notice requirement for victims of workplace crime.

CWCI now has the revised materials in stock and ready to ship. Claims operations or employers that wish to obtain revised notices so they can update their claim kits before the January 1 deadline, or who need more details, can visit www.cwci.org/store.html or call (510) 251-9470.