Category: Daily News

Taking umbrage at Texas Gov. Rick Perry’s campaign to lure California businesses, the Sacramento Bee swiped at Texas in an editorial stating that among its shortcomings, Texas is last in workers’ compensation coverage.

The radio ad by the Texas governor said “Building a business is tough, but I hear building a business in California is next to impossible,” the Republican governor says in the ad. “This is Texas Gov. Rick Perry, and I have a message for California businesses: Come check out Texas.”

And the Sacramento Bee editorial responded by saying “Yes, come check out Texas. Check out a state that ranks dead last in the percent of its population with high school diplomas. Come check out a state that is last in mental health expenditures and workers’ compensation coverage. Come check out a state that ranks first in the number of executions, first in the number of uninsured, first in the amount of carbon dioxide emitted and first in the amount of toxic chemicals released into water.”

Fact checkers soon joined the battle.

Stuart Leavenworth, who edits the Bee’s editorial page, offered as a basis for this claim a February 2011 report, “Texas on the Brink,” issued by a Texas House caucus called the Legislative Study Group. The basis for the report’s ranking on “workers’ compensation coverage” was 2006 data on the percentage of workers covered in each state that came from the National Academy of Social Insurance, a Washington, D.C., nonprofit group that researches such issues.

And herein lies an important anomaly: Texas is the only state that does not require all employers to obtain workers’ compensation coverage. Experts we consulted agreed this is the reason why Texas consistently ranks last and well behind other states in the proportion of workers covered.

There are exceptions; the National Federation of Independent Business says in an online comparison of such state laws that those include government construction contracts. In those cases, workers can file compensation claims, a right that employees usually give up in workers’ compensation agreements, “if they think they have a genuine case and the employer is still refusing to pay monetary benefits,” the summary says. And other states exempt certain employers.

The academy’s most recent data on the percentage of workers covered in each state comes from 2010. As charted in an August 2012 report, it shows that while Texas had 78.6 percent of workers covered, no other state had less than 94.9 percent covered. Thirteen states — including California — had 100 percent covered.

Jennifer Wolf, executive director of an association representing state and provincial workers’ compensation systems in the U.S. and Canada, said there can be “quite a bit of difference” between states, especially “when you are comparing different types of benefits (temporary, permanent partial, permanent total).” Wolf’s group, the International Association of Industrial Accident Boards and Commissions, is based in Madison, Wis.

Wolf and Amy Lee, a Texas Department of Insurance expert on workers’ compensation at the Texas Department of Insurance said that most states’ systems have gradually come into line with a set of federal recommendations issued in 1972. Wolf said the most recent check on compliance with those guidelines was a Jan. 1, 2004, report from a branch of the U.S. Department of Labor. States averaged compliance with 12.83 of the 19 recommendations, the report said; Texas’ compliance was slightly below average, at 12.5.

On September 21, 2011, the Appeals Board initiated an action against lien hearing representative Daniel Escamilla citing 11 cases in which Mr. Escamilla was sanctioned for misconduct, which demonstrated a pattern of behavior with no attempt to reform. Several of the example cases reflect sanctions for verifying and filing a frivolous petitions for reconsideration that were totally without merit.

Workers’ compensation administrative law judge (WCJ) David Hettick was appointed to act on behalf of the Appeals Board as the hearing officer to conduct prehearing conferences and take testimony. There were five prehearing conferences and on June 5, 2012, WCJ Hettick conducted an evidentiary hearing at which Mr. Escamilla testified, documentary evidence was introduced and witness declarations were submitted. At Mr. Escamilla’s request, a second hearing took place on September 24, 2012, before the Commissioners of the Workers’ Compensation Appeals Board sitting en banc. Despite the fact that Mr. Escamilla did not comply with orders regarding the timing of his submission of evidentiary exhibits and witness declarations. Because of the seriousness of these proceedings, the WCAB considered all of the exhibits and declarations offered by Mr. Escamilla. These documents include pleadings filed by Mr. Escamilla in the underlying cases in which sanctions were ordered, as well as the declarations of Michael Smalley, David M. Bautista, Lori Milas, Nathan Deschnes, David E. Bresler, Thomas Hewko, and Edward Wood.

The authority for a nonattorney representative to appear in workers’ compensation proceedings is conferred by section 5700, which states that a party may be represented “by attorney…or by any other agent…” and by section 5501, which states that an application may be filed by an applicant’s “attorney….or other representative authorized in writing.” As explained by the Supreme Court, the rationale for allowing lay representation of litigants in WCAB proceedings was “that numerous claimants for compensation are indigent and their claims are of such character and the compensation allowed by the Commission is so small as not to justify the engagement or service of a member of the bar, and that without the right to have a lay representative the claimant would ofttimes be unrepresented.” (Eagle Indem. Co. v. Industrial Acc. Com. (Hernandez) (1933) 217 Cal. 244, 249.) However, the Court also recognized that the use of lay representatives could result “in inexperienced and inexpert advice and assistance to a deserving claimant to the latter’s detriment.”

The Appeals Board is vested with the power under section 4907 to remove, deny, or suspend the privilege of a nonattorney hearing representative appearing before the WCAB after a hearing for “good cause.” Given hearing representatives’ lack of legal education and training, and given that they are not held to the same standard of care as licensed attorneys for purposes of malpractice or breach of fiduciary duty section 4907 is an important bulwark for protection of the public and the WCAB adjudicatory system. “Good cause” is a term that frequently appears in statutes and contracts and dozens of California cases have expounded upon its meaning. “Good cause” essentially connotes “a fair and honest cause or reason, regulated by good faith on the part of the party exercising the power.” Good cause means “real circumstances, substantial reasons, objective conditions, palpable forces that operate to produce correlative results, adequate excuses that will bear the test of reason, just grounds for action, and always the element of good faith.”

Based upon the above, the WCAB in the case of In Re Daniel Escamilla (En Banc) concluded that “Mr. Escamilla has repeatedly violated our regulations, misrepresented facts either intentionally or with reckless disregard for the truth, filed frivolous petitions and engaged in other sanctionable conduct in violation of section 5813 and WCAB Rule 10561. He has been warned about and sanctioned for his behavior repeatedly. In two of the cases cited in the NOH, Mr. Escamilla was sanctioned the maximum amount of $2,500 and in one case he was ordered to pay fees and costs to opposing counsel in excess of $44,000.”

“Mr. Escamilla’s conduct has wasted valuable court time, delayed proceedings, burdened the Appeals Board with frivolous petitions, inconvenienced other parties and exposed his clients to monetary sanctions. Even though Mr. Escamilla has been sanctioned repeatedly, he persists in engaging in a pattern of conduct which evidences no intent to reform. Thus it is apparent that sanctions are ineffective and consequently we exercise our authority under section 4907.”

The WCAB ordered that Mr. Escamilla be suspended from appearing before the Workers’ Compensation Appeals Board as a hearing representative on behalf of any party or lien claimant for a period of 90 days. During this time Mr. Escamilla is prohibited from performing any acts in furtherance of representation of clients before the WCAB including, but not limited to, drafting and/or filing pleadings or other documents before the WCAB, negotiating and settling claims relating to workers’ compensation proceedings, appearing at depositions, appearing at WCAB hearings, and engaging in discovery or responding to discovery requests. This suspension will commence 45 days after the date of the filing of this order.

The Division of Workers’ Compensation has posted an updated fact sheet for injured workers online which provides answers to questions about permanent disability indemnity. The division is providing a grace period until March 18, 2013 to use the revised fact sheet as required for issuance of benefit notices. Only the text of the fact sheet is required for compliance. Specific changes to the fact sheet: include:

• Information is provided to confirm the claims administrator for an employer
• The potential modification of the PD rating in accordance with Labor Code §4658(d) is clarified as applicable to injuries occurring prior to Jan. 1, 2013. PD for injuries occurring on or after Jan. 1, 2013 will be increased by a Whole Person Impairment factor of 1.4%. 
• There is an explanation for the basis for delaying the payment of PD in accordance with Labor Code §4650(b)(2).
• Information is provided about the Department of Industrial Relation’s Special Earnings Loss Supplement Program for workers who feel that they are not adequately compensated for their earnings loss.

DWC has also received questions about the effect of SB 863 on the current benefit notice requirements, particularly as to the requirement to pay permanent disability before an award is issued.

The Division is in the process of significantly redrafting the benefit notice regulations to incorporate the changes required by SB 863 and streamline the current notice requirements.

The current notice requirements remain in effect until the updated regulations are adopted. However, a claims administrator could include an explanation of Labor Code section 4650(b)(2) in the initial Permanent and Stationary with PD notice required by Title 8, California Code of Regulations, section 9812(g)(2) to explain if PD benefits will not be paid to the injured worker.

The benefit notice regulations prescribe the required content of each notice. The sample benefit notices set forth in the benefit notice manual contain suggested language for complying with the benefit notice regulations. Unless specific notice language is required by a Labor Code section or a DWC regulation, a claims administrator can rephrase the notice language in the model notices so long as the content required by the regulations is accurately given.

In the case of Felix Nino Mota v Allgreen Landscape and National Insurance Company ADJ2567272 (ADM 0105012), the Court of Appeal issued an order denying defendant’s petition for writ of review and found under section 5801 that “there is no reasonable basis for the petition.” Therefore the Court remanded this case to the Appeals Board to make a supplemental award of “reasonable attorney’s fees [to applicant’s attorneys] based upon services rendered in connection with the petition for writ of review.”

Applicant’s attorneys then submitted three unitemized declarations claiming a section 580 I attorney’s fee in the total amount of $51,900, i.e., 62 hours at $500 per hour for Susan E. Kaplan, Esq.,16 hours at $550 per hour for R. Jeffrey Evans, Esq., and 22 hours at $550 per hour for Gary R. Kaplan, Esq.

The WCAB indicated the request for fees was “inadequate.” First,”the declarations do not cite to itemized billings or, indeed, anything that might indicate the time expended on (and the dates of) each specific task” and, therefore, “the declarations of time expended are essentially completely unsupported.” Second, “although the declarations claim a total of 100 hours of attorney time rendered in connection with defendant’s petition for writ of review, the declarations give no indication of why so many hours were reasonably required.” Third, “the declarations include statements that the attorneys’ ‘usual and customary’ rates are $500 to $550 per hour, but the statements are not supported by such potential factors as the attorneys’ status as certified workers’ compensation specialists, if any, or the degree of care exercised and the effort required because of the legal or factual issues involved. Furthermore, a mere declaration that the stated rates of $500 and $550 per hour actually represent applicant’s attorneys’ ‘usual and customary’ rates for appellate work does not establish that those rates are reasonable.” Fourth, “Ms. Kaplan’s declaration also claimed $500 per hour for time she spent performing clerical tasks. However, section 5801 provides for ‘a reasonable attorney’s fee for services rendered in connection with the petition for writ of review.’ We interpret ‘services’ in this context to mean legal services rendered by the attorney, not clerical services the attorney may have performed..

The WCAB went on to say “we ordinarily determine a reasonable fee based on our independent review of the record. Moreover, in the absence of the $51,900 fee claimed, we would have determined that a fee award in the range of $14,000 to $16.000 would have been “reasonable” based on our independent review.”

“However, based on an extensive discussion of California and corresponding federal case law, we emphasized that “where the original request for a “reasonable” attorney’s fee is unreasonably inflated, we may award less than what would otherwise be a “reasonable” fee or even allow no fee at all.”

“Therefore, for the limited purpose of assisting us in determining what fee, between $0 and $16,000, should be awarded, our NIT allowed applicant’s attorneys to file properly itemized declarations. We were not allowing applicant’s attorneys a “second bite of the apple” at justifying the original $51,900 inadequate and defective fee request.”

“On November 2, 2012. applicant’s attorneys filed a response and three supplemental declarations consequent to our October 15, 2012 NIT. Based on our review of the three latest fee declarations, together with our review of the prior declarations and the appellate record. we conclude that the latest fee declarations are not credible and, instead, represent an inaccurate and inadequate after-the-fact attempt to justify the original un-itemized fee request.”

“In concluding that the three supplemental declarations represent a non·credible. inaccurate, and inadequate after-the-fact attempt to justify the original un-itemized fee request, we observe that all three declarations claim that legal services were rendered in connection with the petition for writ of review before (according to its proof of service) it was even mailed and before the petition presumably would have been received by the attorneys in the course of ordinary mail.”

“Because we conclude that the declarations are not credible, and possibly even perjurious, and we will entirely disregard them.”

“Therefore, even though their original fee request was unreasonably inflated, and even though their response to our NIT is inadequate for the reasons specified above ( among others), we will allow a section 5801 fee of $2500.”

“We emphasize that our decision on fees is expressly intended to deter applicants attorneys from making future unreasonably inflated fee requests that are not supported by adequate and accurate time itemizations (or. worse, that are based on non-credible and possibly even perjurious declarations). We specifically observe that our intent is to deter them not only from making unreasonably inflated fee section 5801 requests, but also any other type of “reasonable” attorney’s fee request, including but not limited to deposition attorney’s fees (Lab. Code, § 5710(b)(4)), fees for compensation unreasonably delayed subsequent to the issuance of an award (Lab. Code. § 5814.5), and even fees claimed as a lien against ordinary benefits (Lab. Code, § 4906 (esp., subd. (d)], Cal. Code Regs., tit. 8, § 10775). Moreover) we caution applicant’s attorneys that if they do make such improper fee requests in the future, not only do they risk being allowed a $0 attorney’s fee. but they also risk sanctions under section 5813 and WCAB Rule 10561. (Cal. Code Regs.) tit. 8, § 10561.)”

The Division of Workers’ Compensation has issued notices of public hearings for the electronic document filing and lien filing fee rules. The proposed rulemakings are to permanently adopt the emergency regulations which became effective Jan. 1, 2013. A public hearing on the proposed regulations has been scheduled at 10 a.m., March 26 in the auditorium of the Elihu Harris Building, 1515 Clay Street, Oakland, CA, 94612. Members of the public may also submit written comment on the regulations until 5 p.m. that day.

Senate Bill (SB) 863 has created substantial changes to how liens are filed within the workers’ compensation system. Specifically, any liens filed pursuant to Labor Code section 4903(b) or claims of costs must be filed electronically. Also, a fee of $150 is now required prior to filing for most liens filed after Jan. 1, 2013, and a $100 activation fee is required for most liens filed before then, but activated for a lien conference after Jan. 1, 2013. This activation fee is required to be paid at the time a lien claimant files a declaration of readiness or appears at a lien conference. This rulemaking implements these changes.

There are some proposed revisions to the emergency regulations. Specifically, the definitions of “cost,” “lien conference,” “mandatory settlement conference” and “party” have been amended for clarity. The definition of “section 4903(b) lien” is amended to delete reference to “interpreters’ fees incurred in connection with medical treatment (Labor Code section 4600)” because those fees are subject to a petition for costs under Labor Code section 5811. The EAMS E-Form Filing Reference Guide has been revised to reflect that lien claimants will now be given uniform assigned names to use when filing electronically.

DWC will consider all public comments, and may modify the proposed regulations for consideration during an additional 15-day public comment period. The notices of rulemaking, text of the regulations, and the initial statements of reasons can be found at on the DWC rulemaking page.