Common Adjusting Mistakes, Part 4: CT Disputes

Saturday, October 11, 2003 | 0

Our fourth article in this series deals with the failure to provide benefits in a compensable continuous trauma (CT) case where there are multiple defendants.

Labor Code section 5500.5 provides that the date of exposure for a CT claim is for one year preceding the last date of exposure. This rule has been modified by case law to provide the broadest application possible. For instance, the date of injury will run from either the actual last date of injury, or the last date of injurious exposure (Western Growers).

The statute itself gives the employee the right to pick and choose defendants, and it is up to the defendants to straighten out contribution between them selves. Labor Code section 5275 mandates that such disputes be arbitrated, and in fact the right to arbitrate the issue of contribution can be waived if not timely raised (County of Ventura v. WCAB).

Yet, with all of these potential pitfalls, a serious problem continuously arises where none of the defendants picks up liability for the claim, typically because none of the carriers wants to get stuck with the expense of administering the claim, thus placing all of the carriers into a penalty situation.

The Labor Code and interpretive case law clearly requires at least one carrier to pick up claim administration in such cases. Where the carriers cannot agree as to who is going to be responsible, the smart applicant will typically wait until the feuding defendants have placed themselves into a penalty situation, and will then make an election. All carriers at that point are then liable for penalties, which will attach to all species of benefits, and one unhappy carrier is unwittingly placed into the position of protecting the rights and liabilities of the other carriers.

The better practice is to immediately reach some type of agreement early in the claim, within the first 14 days after receipt of the claim form, as to who will be responsible for the claim administration. The carriers can then go to arbitration per LC 5275.

This solution also avoids another potential problem, that of an employer ultimately settling out its liability exclusive of the other employers. McDonnell Douglas Aircraft Co. vs. WCAB held that a settling employer will not be liable to the other carriers in a CT case unless the others can prove that the settlement was entered into in bad faith, an unlikely circumstance to prove.

Thus, where a valid CT claim has been filed, and it is clear that there is going to be some liability, the carriers that are clearly exposed to liability should immediately reach an agreement relative to claims administration. Barring that, one of the carriers should voluntarily pick up liability, then seek contribution through an arbitration proceeding.

The other articles in this series are:

Common Adjusting Mistakes, Part 1: Adjust TTD

Common Adjusting Mistakes, Part 2: LC 4050

Common Adjusting Mistakes, Part 3: Treating.