Court Upholds WCAB Discretion to Award Expert Report Costs

Wednesday, June 25, 2008 | 0

By Richard M. "Jake" Jacobsmeyer

The 3rd Appellate District has issued a published decision that addresses the W.C.A.B.'s discretion to award costs for Vocational Expert evidence (and presumably any other comparable expert evidence).  This case in many  respects follows and validates the W.C.A.B.'s en banc decision in Costa I & II regarding the criterion the W.C.A.B. should use to determine if costs for  such rebuttal testimony should be awarded under Labor Code § 5811.

The issue in Barr v. W.C.A.B. was  presented in a rather unusual manner. At trial the parties agreed to a settlement of applicant's case.  Defendant agreed to reimburse applicant for the costs associated with his retention of a vocational expert except for the cost of the report prepared by the expert. Defendant argued that that since the report was not admissible under Labor Code § 5703 that it was not a recoverable cost.  The trial judge, relying in a prior decision in Barratt v. W.C.A.B. ruled that since the report of a VRC was not admissible, the cost of the report was not recoverable...  In Barrett the W.C.A.B. had ruled that only live testimony of an expert was admissible because of the language of Labor Code § 5703, which listed admissible evidence. The trial judge therefore felt that he did not have the discretion to award the costs for the VR report, only for the testimony or activities related to presenting the testimony at trial.  The W.C.A.B. affirmed the WCJ's ruling.

In a companion case (Dorigo v W.C.A.B.), argued at the same time and under similar facts a WCJ awarded costs for the VR report and his decision was also affirmed by the W.C.A.B.  In that case defendant appealed the award of costs using the same arguments presented by the same defendant in Barr (the Subsequent Injuries Fund is the defendant in both cases).

The Appellate Court took a remarkably pragmatic approach to this issue, substantially agreeing with the W.C.A.B.'s analysis of the provisions of Labor Codes § 5708, 5709, 5811 and 5703 and the Board's broad discretion:

"Second, we agree with the WCAB that sections 5708 and 5709 do provide the context within which it exercises its discretion.  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."  Thus, taken together, sections 5708 and 5709 allow the WCAB 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."

SIF argued that Labor Code § 5703 provided limits on the W.C.A.B.'s  ability to admit documentary evidence.  The Court disagreed but also felt that it did not have to rule on that issue as all that was before them was the issue regarding payment of the costs, not admissibility.

"Nothing in the language of section 5811 suggests the W.C.A.B.'s  discretion is circumscribed by the rules of admissibility.  Indeed, reports that are inadmissible for any number of reasons might be valuable in preparing for a hearing or to further settlement negotiations.  Given that the WCAB is accorded generous flexibility by sections 5708 and 5709 to achieve substantial justice with relaxed rules of procedure and evidence and that SIF concedes the use of vocational rehabilitation experts is unregulated, we can find nothing in the Labor Code or general principles of due process to limit the W.C.A.B.'s discretion to award costs in accord with the broad language used in section 5811..."

The Court emphasized that costs may not be recovered for evidence that is not relevant:

"...as with medical-legal costs, reimbursement will not be allowed if the report and/or testimony is premised on facts or assumptions so false as to render it worthless. (See Penny v. Workers' Comp. Appeals Bd. (1983) 48 Cal.Comp.Cases 468 (writ den.); Pacific Medical Associates, Inc. v. Workers' Comp. Appeals Bd. (Rodarte) (1995) 60 Cal.Comp.Cases 526 (writ den.).) Furthermore, as 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 (see Cal. Workers' Comp. Practice (Cont. Ed. Bar, 4th ed., June 2007 Update) § 3.52, pp. 232-233), 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."  (Costa, at pp. 1498-1499,  
fn. omitted.)"

However in the final analysis the Court substantially agrees with the holding in the Costa en banc decisions and remanded Barr back to the W.C.A.B. to consider its discretion to award the costs and upheld the decision to award the expenses in Dorigo.
 
Commentary

SIF had sought a bright line to differentiate between those costs which were reimbursable and those which are not based on whether the actual information generated was admissible (the VRC report).  The line it sought to draw was frankly one which might have dire consequences if adopted.  The report of the VRC in many of these cases provides the parties with the 
substance of the expert's testimony.  IF reports are not to be reimbursed, there would be no reason to generate them and the only way to discovery the substance of the expert's testimony would be through testimony (either deposition or at trial).  Deposing an expert without their report and conclusions makes the process much longer and more expensive.  The reports also provide the parties with the outside limits of the proposed evidence and allow consideration of how well the expert has prepared their arguments.
 
This allows for more careful consideration of the information, for whatever value it might provide and more meaningful consideration of the parties for settlement.  I am not certain that it would have served anyone's interest to draw the bright line on payment of costs at the expert's report.

The Court declined to consider the report as a bright line to draw on awarding of costs.  The endorsement of the W.C.A.B.'s language in Costa II, that an award of costs while discretionary, does have to meet some criterion for recovery does provide some guidance for the use of the court's discretion.  The trial judge in Costa, post Costa II, had little difficulty in exercising his discretion deny awarding the costs for testimony he felt did not meet the criterion for reimbursement set out in the  W.C.A.B.'s en
banc decision.  As long as WCJ's will exercise their discretion within the criterion set out in Costa II, defendants have at least a fighting chance of only paying for such expert testimony that is properly prepared and presented and not every piece of schlock that gets dumped into the W.C.A.B.'s files.

To read the Barr decision, click the case title in the sidebar at right.

 Defense Attorney Richard "Jake" Jacobsmeyer is a partner in the firm Shaw, Jacobsmeyer, Crain, Claffey & Nix and can be reached at jakejacobsmeyer@shawlaw.org.