Good Business Sense: Part 4

Saturday, May 7, 2005 | 0

This is the fourth in a series of six by Pamela W. Foust. Earlier installments can be read by clicking on the article title in the side-bar at right.

"A system that's easy to game destroys human character."
- Charles Munger

Part Four: The Settlement Conference

Much to his chagrin, the machine operator's case was the only appearance on the defense attorney's calendar on the morning of the Mandatory Settlement Conference. If he had several appearances at the same Board, he could bill the entire time he spent out of the office on each of the cases which would help immensely in terms of his monthly quota. He didn't bother to review the file, figuring he could do that while he was waiting for opposing counsel to take care of other cases. However, when he arrived in the hearing room, his opponent was waiting for him. Counsel immediately handed him a document that looked like a statement taken by an investigator and asked him why his client hadn't paid anything on an admitted injury. The defense attorney looked over the document, but couldn't remember if he had seen it before. Apparently the foreman had confirmed the machine operator's story that he promptly reported the injury. He had already read the permanent and stationary reports of the PTP and the psychiatrist that together rated out to 73 percent permanent disability. This translated into almost $90,000 and there was an additional claim for $24,000 in temporary disability over and above the EDD benefits for which a lien had been filed. He hadn't had a chance to take a deposition or get his own permanent and stationary reports and now it was too late unless he could somehow convince the judge that the insurance company hadn't dragged its feet which, of course, wasn't the case.

The two attorneys waited in line for twenty minutes before it was their turn to see the conference judge. With twenty-five cases on the calendar and other attorneys waiting to see the judge on cases that weren't on calendar, there was no time for any meaningful discussion of the issues. They finally sat down in the judge's office and waited while the judge briefly glanced through the Board file.

"Your Honor," began the applicant's attorney. "My client has been without benefits for the last two and a half years, in spite of the fact that his own foreman confirmed in writing that he reported the injury. We are therefore requesting that the case be set for trial on the earliest available date."

The judge looked at defense counsel for a response. "We object," he said, trying to sound confident. "And we're requesting that the case go off calendar in order to allow the defendants an opportunity to complete discovery. We need to take a deposition and have the applicant evaluated by our QMEs." Rolling his eyes, opposing counsel observed that if the carrier hadn't gotten its act together by the MSC, it was certainly too late now.

The judge took off his glasses and carefully cleaned them before speaking. Surely counsel realized, he said, that discovery after the Mandatory Settlement Conference was prohibited unless it could be shown that the party exercised due diligence. Was there some reason why the carrier hadn't taken a deposition and obtained medical evaluations? Before he could respond, the applicant's attorney broke in.

"I'll tell you what," he said. "I still want that trial date, but I'll let you take your deposition. I'll agree to leave discovery open but just for the depo. If you schedule your medical exams, I'll tell my client to go but I won't agree to let them into evidence and I won't agree to take the case off calendar."

"You can't argue with that," said the judge. "Go ahead and take your depo. Then you can get your medicals and the trial judge can rule on admissibility." Without waiting for a response, he wrote the instructions to the Calendar Clerk on the appearance sheet and handed the file to the attorneys. "Fill out stipulations and issues before you go to Calendar for a date. And tell whoever's next in line to come in."

The machine operator had some difficulty finding the defense attorney's office, which was located on an upper floor of a high-rise in an upscale area of town. He looked around the waiting room for his attorney and was surprised when a young woman introduced herself and told him that his attorney had asked her to represent him at the deposition. The defense attorney's secretary showed them into the conference room where the court reporter was busy setting up her machine. Then she went to the defense attorney's office and told him that everyone was present for the deposition. The defense attorney was not at all surprised that his opposing counsel had sent a contract attorney in his place. In fact, he had expected it. Contract attorneys earned their living by making appearances for other attorneys at the WCAB and at depositions. They generally appeared in cases on a one-time-only basis and were paid for their time at an hourly rate. The good contract attorneys charged $100 per hour to represent injured workers in depositions, although some inexperienced and less skilled practitioners were willing to work for as little as $50 an hour.

The deposition was not productive. The machine operator had no prior back injuries or claims. He only went to a doctor as a last resort and he didn't even have a family doctor whose records could be subpoenaed. On a few occasions in the past, he had gone to clinics in his area for minor illnesses, but he couldn't remember the names of any of them. He hadn't worked since his layoff. His story regarding the circumstances surrounding the pipe-lifting incident corresponded exactly with the statement that the investigator took from the foreman. There was the usual testimony about constant pain in the parts of his body that he claimed he injured. The contract attorney did absolutely nothing but sit and listen. She asked no questions herself and didn't pose a single objection. When the deposition was over, the defense attorney asked her if she wished to make a demand for a deposition attorney fee but she told him that the attorney of record would be filing and serving a petition for this purpose.

Applicants' attorneys were entitled to be paid for the time they expended in representing their clients in depositions taken on behalf of insurance companies. The underlying rationale was that if the attorneys were not compensated for their time, insurance companies would take long depositions in each and every case in order to discourage lawyers from representing injured workers in workers' compensation claims. The hourly rate was discretionary with the judge and many judges awarded fees as high as $250 per hour. Thus it was a common occurrence that the attorney who was taking the deposition was earning half as much money as the attorney who was sitting and listening or, in some cases, handling paperwork on other files. When a contract attorney was used, the attorney taking the deposition was often earning less than the employee's attorney of record who wasn't even present. This obvious inequity served to widen the rift between the defense attorneys and the insurance companies they represented.

The machine operator's attorney, who was on the golf course while the deposition was being taken, filed a petition with the judge requesting that he order the insurance company to pay him a fee of $1,385. This amount was based on 5-1/2 hours at $250 per hour which included 15 minutes to review the file, 45 minutes to prepare the machine operator for the deposition, 1-1/2 hours for the deposition itself, 2 hours of travel time, 1 hour to review the deposition transcript with the client and $10 for parking. The machine operator had been prepared for his deposition by watching a videotape in his attorney's office and the paralegal had spent about 15 minutes going over the transcript with him. When he received the conditional order signed by the judge, allowing the requested fee in the absence of an objection with good cause, the defense attorney sent it to the claims adjuster with a recommendation that it be paid in full. It was the least he could do since his opponent had graciously allowed him to take the deposition after the MSC. When the applicant's attorney received the check, he paid the contract attorney $385 for the time she actually spent plus the parking, and kept $1,000 for himself.

The defendant's orthopedic QME re-evaluated the machine operator. This time the claims adjuster provided him with a thick medical file as well as the deposition transcript. His record reviewer summarized the medical reports and deposition in a document that was incorporated into the doctor's report. Otherwise, the doctor simply copied his original report word for word and inserted a couple of additional paragraphs in which he briefly discussed the interim history and noted the therapy and diagnostic procedures performed by the PTP. He again concluded that there was nothing wrong with the machine operator; that he had not suffered any injuries; and that he had neither permanent disability nor a need for any further medical treatment.

The machine operator was also evaluated by a psychiatrist selected by the claims adjuster from the QME list. He underwent extensive psychological testing which was accomplished by having him read questions and mark his answers on forms with the help of the doctor's assistant who also asked him questions and wrote down his responses. The actual interview with the psychiatrist was brief and mostly involved the doctor asking him specific questions to clarify some of the information that was contained in the forms. When he wrote his report, the psychiatrist listed a diagnosis of "malingering." Like the other QME, he concluded that the machine operator had not been injured and that he had neither permanent psychiatric disability nor any need for psychiatric treatment other than what he might wish to obtain for his own personal development.

Next in the series: Going to Trial



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