June 2011 Case Law Update

Monday, June 6, 2011 | 0

By Michael Sullivan
Sullivan & Associates

The following is a summary of important updates to California workers' compensation law.

JURISDICTION AND SUBROGATION
In Brown v. Desert Christian Center (2011) 193 Cal. App. 4th 733, the 5th District Court of Appeal held that a trial court has jurisdiction to award costs to a defendant as a prevailing party pursuant to CCP 1032 for successfully raising the issue of workers' compensation exclusivity to defend a civil claim. The court found that a defendant prevailing on the merits of its jurisdictional defense did not bring a complete victory in the lawsuit, as it extinguished the trial court's power to award costs incurred in achieving victory. Instead, when the issue of workers' compensation exclusivity was raised as an affirmative defense under the pleadings, decided on the merits through resolution of disputed facts and became a basis for the dismissal, the trial court has the power to award costs following entry of the resulting judgment of dismissal.

THE BUSINESS OF INSURANCE
In Edward Carey Construction Co. v. SCIF (2011) 76 CCC 299,  the 1st District Court of Appeal concluded that, "An employer can sue its workers' compensation insurance carrier for breach of contract and the implied covenant of good faith and fair dealing, where the carrier has failed to provide benefits under the policy and has done so in bad faith." The court held that the exclusive remedy rule did not bar an employer's claim against an insurer because the employer is not seeking workers' compensation benefits; it is seeking to recover economic damages allegedly incurred because of the insurer's failure to provide the employer benefits to which it was entitled under the policy. It also held that an insurer may be liable for legal fees and costs incurred by the employer in enforcing its rights under the policy, and the premiums it was required to pay another insurer to obtain benefits for the employee.

In United States Fidelity & Guarantee Co. v. Lee Investments, LLC,  (2011) 39 CWCR 101, the 9th U.S. Circuit Court of Appeals upheld an award of restitution to an insurer based on misrepresentations made by the employer in purchasing the policy. It held that the federal court had subject-matter jurisdiction over the insurer's claim and was not barred from hearing the claim by the exclusive remedy rule.

EMPLOYMENT
In Iversen v. California Village Homeowners Association (2011) 194 Cal. App. 4th 107, the 2nd District Court of Appeal held that an independent contractor could not claim a violation of Cal/OSHA in a tort action against a homeowner because the California Occupational Safety and Health Division (Cal/OSHA) applies only to employment relationships in the workplace.

INJURY
In two panel decisions, Lee v. State of California, California Highway Patrol, 2010 Cal. Wrk. Comp. P.D. LEXIS 485 and Stephens v. City of Los Angeles 2010 Cal. Wrk. Comp. P.D. LEXIS 507, the Workers' Compensation Appeals Board concluded that if a statutory presumption applies, LC 4663(e) provides that no apportionment is allowed, not even apportionment pursuant to Benson v. WCAB (2009) 74 CCC 113.

In a panel decision, Dykes v. E. & J. Gallo Winery (2010) 39 CWCR 99 [2010 Cal. Wrk. Comp. P.D. LEXIS 622], the Appeals Board concluded that a medical report must state that actual events of employment were predominant as to all causes combined. It is not enough for the doctor to discuss nonindustrial factors when he or she addresses apportionment, because causation of injury and apportionment of disability are separate issues. For a proper evaluation of whether actual events of employment were predominant as to all causes combined of the psychiatric injury, a reporting physician must discuss all causes in the context of his or her determination on causation. The physician must also explain his or her reasoning that the psychiatric injury was predominantly caused by the employment.

In Chauhan v. WCAB (2011) 76 CCC 360 (writ denied), the appeals board concluded that an infection and renal failure caused by an applicant's surgery in 2010, which resulted from industrial injuries occurring in 1991, was not a new industrial injury but a compensable consequence of the original injuries.

STATUTE OF LIMITATION
In a panel decision, Popovich v. Folsom State Prison, State of California Department of Corrections 2010 Cal. Wrk. Comp. P.D. LEXIS 498, the appeals board concluded that although it has the authority in cases of insidious, progressive diseases to make a tentative permanent disability rating and reserve jurisdiction over the final permanent disability rating beyond the five-year limitation period, the appeals board does not have the same authority to reserve jurisdiction to award temporary disability.

MEDICAL TREATMENT
In a panel decision, Dixon v. Falcon Trading Co., Inc. 2010 Cal. Wrk. Comp. P.D. LEXIS 469, the appeals board concluded that after a request for treatment is denied following the UR process, an injured worker is not precluded from obtaining an order directing a defendant to provide reasonably prescribed medical treatment when the defendant waives the issue of alleged noncompliance with LC 4062 and proceeds to a hearing on the merits of the treatment requested.

TEMPORARY DISABILITY
In Academy of Arts College v. WCAB (Zedd) (2011) 76 CCC 352 (writ denied), the appeals board concluded that an employer could not terminate temporary total disability based on an assertion that the applicant was terminated for cause; the employer must prove that termination was for good cause. The WCJ reasoned that "if unsubstantiated allegations of 'discharge for cause' were all that were necessary in order to cut off an injured worker's right to disability benefits, then employers throughout the state could terminate employees under the guise of just cause without ever having to demonstrate that such actions were not merely a sham carried out for the wrongful purpose of thwarting payment of legitimate benefits to injured workers."

PERMANENT DISABILITY
In City of Irvine v. WCAB (Hansen) (2011) 76 CCC 366 (writ denied), the appeals board found that an applicant's industrial injuries to his heart, with resultant stroke and paralysis, resulted in 100% disability based on the opinions of a panel qualified medical evaluator and vocational expert.

RETURN TO WORK
In Kings County v. WCAB (Revious) (2011) 76 CCC 378 (writ denied), the Appeals Board found no merit to an employer's contention that an applicant was not entitled to a 15% increase pursuant to LC 4658 because he voluntarily retired, as there was no evidence that the employer offered the applicant regular, modified or alternative work within 60 days after his condition became P&S. The appeals board found that the applicant intended to continue working in the open labor market after his retirement from the employer.

In Cuiellette v. City of Los Angeles (2011) 194 Cal. App. 4th 757, the 2nd District Court of Appeal found that even if an injured police officer could not perform all of the essential functions of his job after an industrial injury, he could perform the essential functions of the permanent, light-duty court desk position in which he was placed after requesting a reasonable accommodation. Because the officer could perform the essential functions of the court desk position, the court held that the city violated the accommodation provisions of GC 12940(m) when it removed the officer from that position based on the 100% permanent disability.

DEATH BENEFITS
In a panel decision, Afolayan v. State of California, Dept. of Corrections (2010) 39 CWCR 97 [2010 Cal. Wrk. Comp. P.D. LEXIS 614], the Appeals Board concluded that if there are adult children who are total or partial dependents, upon a showing of good cause under LC 4704, they may be entitled to workers' compensation benefits even though the widow elected to receive PERS benefits. The panel added that the adult children who were so entitled should be awarded the difference between the amount the widow would have received within the maximum benefit and the amount that would have been paid based on the total number of dependents.

PENALTIES AND SANCTIONS
In a panel decision, Muskrat v. California Men's Colony 2010 Cal. Wrk. Comp. P.D. LEXIS 492, an employer did not unreasonably delay medical treatment when medial branch blocks were denied by utilization review, an agreed medical evaluator found that the requested treatment should be provided as part of the applicant's future medical care but did not explain his opinion, and the employer wrote to the AME asking him to supply evidence to support his recommendation for trial of the medial branch blocks but the AME did not respond. The WCAB concluded that the employer was not liable for a penalty and acted reasonably by asking the AME for a further explanation of his opinion.

DISCOVERY AND SETTLEMENT
In a panel decision, Lenier v. Brookdale Living Communities, 2010 Cal. Wrk. Comp. P.D. LEXIS 423, the Appeals Board concluded that a panel QME's reports were admissible even though he served the final version of his reports only on the defendant. The appeals board found that even if the panel QME's service of his reports could be deemed an ex parte communication, it fell within the "insignificant and inconsequential" exception set forth in Alvarez.

In a panel decision, Johnson v. Federal Express Corp., 2010 Cal. Wrk. Comp. P.D. LEXIS 417, the Appeals Board concluded that a failure to abide by the time limits established in LC 4062.3 regarding notice of records provided to a panel QME did not constitute an ex parte communication. The panel found that the alleged ex parte communications fell within the Alvarez court's comment that not every conceivable ex parte communication permits a party to obtain a new evaluation from another panel QME.

In a panel decision, Stein v. State of California, Department of General Services 2010 Cal. Wrk. Comp. P.D. LEXIS 506, the appeals board denied an employer the right to send unsworn statements of defense witnesses to a panel QME after the applicant timely objected to service of them. Additionally, the panel QME had sent the applicant a "Written Self-report Questionnaire" prior to the examination, and the Appeals Board concluded that the applicant did not violate LC 4062.3(b) by failing to serve on the employer her written history of events 20 days before the medical appointment.

LITIGATION
In a panel decision, Anthony v. Beaulieu Vineyards, Diageo North America, Inc. 2010 Cal. Wrk. Comp. P.D. LEXIS 457, the Appeals Board held that it was unnecessary to raise the issue of increased benefits under LC 4650 because it is a self-executing, strict liability penalty provision requiring payment of 10% penalty for delay in payment of temporary disability indemnity without application by applicant.

In a panel decision, Martinez v. Cottage Bakery, 2010 Cal. Wrk. Comp. P.D. LEXIS 426, the Appeals Board concluded that Evidence Code 776 permits an applicant to call a defendant's expert witness out of order only if the expert is also a party or a person identified with a party.

Complete discussion of these topics can be found in Sullivan On Comp available to WorkCompCentral subscribers at http://www.workcompcentral.com/sullivan.

Michael Sullivan is the founder of Michael Sullivan & Associates, a workers' compensation defense firm with four offices in Southern California, and author of "Sullivan on Comp," a treatise on California workers' compensation law.