Grinberg: WCAB Allows Applicant to Self-Administer Over Defense Objections

Tuesday, August 30, 2022 | 0

Imagine you’re in a particular situation: Applicant wants to compromise and release a claim, and neither you nor the applicant can know with certainty what the cost of lifetime medical care will be. Pretty common, right?

Gregory Grinberg

When we C&R a case, both parties are knowingly taking a gamble that the injured worker will be able to cover those costs with the proceeds of the C&R. The Workers' Compensation Appeals Board probably processes several hundred C&Rs every workday, and no one bats an eye.

If the WCAB is willing to allow applicant to assume the risk that the medical portion of the C&R is not adequate, what other risks will the WCAB allow applicant to take on?

For example, let’s take a scenario where the parties agree to a value for a C&R, but the Centers for Medicare and Medicaid finds the proposed set-aside inadequate by some significant figure, like $500,000. Well, defendant might take the position that a C&R is not worth it and propose stipulations instead. If applicant is highly motivated to have cash on hand, can applicant stipulate that he will hold defendant harmless as to any action by CMS regarding the C&R?

In other words, can applicant tell the WCAB, “Look, I know that this C&R might end up costing me Medicare benefits in the future, but I’m willing to take the risk”?

Well, that’s what happened in the case of Villalpando v Doherty Brothers. Applicant resolved his claim for a 2002 injury in 2011, with language in the C&R that “released defendants from liability to Medicare related to the named injuries, and for any failure to create and correctly administer the MSA and any failure to obtain Medicare’s approval of any allocation or set-aside arrangement.”

But I'm not polluting your inbox with old news from 11 years ago. The case came up recently because applicant decided he wanted to change administrators from the agreed-upon vendor in the C&R to himself. Yes, applicant declared that he wanted to move from California to Mexico and that administration in Mexico would be particularly burdensome.

The WCAB made basic inquiries and ultimately ruled that since defendant would not be harmed by the change of administrator and since no further liability or benefits could be due, it was not inappropriate to change administrators to make the MSA fund self-administered.

Now mind you, dear readers, it’s not that applicant MOVED to Mexico. Applicant announced his intent to move to Mexico, and that appeared sufficient. 

The reason why there was a WCAB decision at all was because defendant contested rendering the MSA self-administered.

So, zooming back to our everyday C&Rs, can we apply this approach to all of our C&R settlements? If applicant in the Villalpando case was able to absolve defendant of any liability with respect to CMS and can also choose to take on the risks of mismanaging his future medical funds, why can’t every applicant?

Take, for example, the cost of getting an MSA and the cost of professional administration. What if defendants were to tell applicants that so long as applicant agrees to self-administer and release defendant from any CMS-related liability, the parties could split that money?

The result in the Villalpando matter certainly raises those questions, which, of course, raise an even more important one: To quote Clint Eastwood, “Do you feel lucky?”

Well, do you? If you’ve had any luck bypassing CMS by inviting applicant to agree to assume the risk, please let me know. The Villalpando case certainly seems to set a precedent and provide authority for the proposition that such arrangements should be approved by the WCAB as long as the parties are in agreement.

Gregory Grinberg is managing partner of Gale, Sutow & Associates’ S.F. Bay South office and a certified specialist in workers’ compensation law. This post is reprinted with permission from Grinberg’s WCDefenseCA blog.