Settlement of Vocational Rehabilitation (CCR 10131.2)

Saturday, October 26, 2002 | 0

It appears that the proposed regulation to implement L.C. section 4644(b)(c) will read as follows:

A represented employee who was injured on or after January 1, 2003 can settle prospective vocational rehabilitation services for an amount not to exceed $10,000 in self directed vocational rehabilitation when the following conditions have been met;
(a) The settlement of the employee's rights to prospective vocational rehabilitation services shall be set forth on the DWC Form RU-122;
(b) Prior to entering into any settlement agreement, the attorney for the represented employee shall fully disclose and explain to the employee the nature and quality of the rights and privileges being waived; and
(c) The "Settlement of Prospective Vocational Rehabilitation Services" shall be submitted on the DWC Form RU-122 for employees with a date of injury on or after January 1, 2003 to the correct Rehabilitation Unit office with copies to all parties.
The Rehabilitation Unit may only disapprove a settlement agreement upon a finding that receipt of rehabilitation services is necessary to return the employee to suitable gainful employment. If disapproval is not made within ten (10) days of the Rehabilitation Unit's receipt of a fully executed agreement, the agreement shall be deemed approved.

Since the Rehabilitation Unit is exercising virtually no guidance over the settlement process, the parties must fend for themselves. This could lead to some simple but very costly errors.

For example, let us suppose that the injured employee becomes P&S and QIW and the attorney immediately sends a standard letter to the claims administrator indicating the applicant wishes to utilize VR services. The attorney meets with the applicant and explains the VR options as required by L.C. 4646(c) and CCR 10131.2(b). The employee indicates a desire to settle his/her right to VR services, which the attorney immediately communicates by telephone to the claims administrator. Since VR is to be settled, there is no referral to a QRR. A year letter, the case in chief is settled along with prospective VR for an additional $10,000. The attorney then demands payment of VRMA at the TD rate from the date of request to the date of settlement. Does the defense owe the retro VRMA?

The answer is "Yes" unless the claims administrator took the appropriate step when the attorney first advised that the employee wished to settle prospective VR. Upon receipt of that information, the claims administrator should immediately issue a Notice of Interruption indicating an agreement to interrupt service pending settlement as well as a "VR End" notice indicating that VRMA is ending and PDA's are starting. Keep in mind that information about a desired settlement does not, by itself, document an agreement to stop VR services or end payment of VRMA. Overlooking this documentation requirement could cost the defense up to $33,000 at next year's TD rate.

In coming issues, we will look at other potential problems with VR settlements for both injured employees and employers/insurers and ways to address those problems.

Contributed by Allan Leno, Leno & Associates, (818) 370-8859. E-mail: allanleno@leno-assoc.com.