I recently attended the Workers’ Compensation Section 2016 Spring Conference at the State Bar of California. One speaker, the Honorable Judge Cliff Levy, presented “Oops: Mistakes, Errors, and Petitions to Set-Aside.” His insights are well worth sharing.
As careful as we are, some mistakes are bound to happen. The mistake may be clerical. Other times, it may be more egregious. In any case, it is good to know the proper procedure for correcting errors. It is important to understand how to properly petition to set aside an Award, Order, etc. and how to lay an evidentiary foundation supporting such a petition.
Setting-aside an Order, Award, etc., is difficult. For one thing, a C&R is a contract. Once executed, it becomes legally binding on the parties. (Russell Light v. Summit Drilling and Productions Company, and U.S. Fidelity and Guarantee Company) (1979) (Appeals Board En Banc) 44 CCC 1083. Stipulations entered into by the parties are also legally binding on the parties (Huston v. WCAB) (1979) 44 CCC 798. Written agreements of the parties that are memorialized in the Minutes of Hearing also constitute formal agreements, and are thus enforceable (Huston, above). These agreements are to be respected. If not, there would be little incentive to enter into settlements and resolve cases. The law favors finality. Attorneys are expected to use due diligence and avoid rescission whenever possible.
Some of the more common mistakes and reasons for requesting rescission include:
- The C&R contains the wrong amount of PD advances to be deducted from the lump sum;
- Stipulation contains wrong earnings information and/or indemnity rate for TD or PD;
- Settlement documents do not list all case numbers, dates of injury and/or body parts;
- Stipulations do not list start date of payment of PD;
- Dollar amount for percentage of PD is wrong;
- Wrong occupational group number is used to calculate PD;
- Medical report or witness is not listed on Pre-Trial Conference Statement;
- Civil case or claim was or was not intended to be included in the settlement;
- Attorney’s fee requested inaccurate;
- Balance listed as owing on C&R does not equal the lump sum less deductions;
- Settlement was or was not supposed to include retraining voucher;
- Injured worker has changed his/her mind; does not want settlement;
- Injured worker dies and carrier wants to have the recently issued Order approving C&R rescinded;
- Settlement documents do not identify who is responsible for unpaid medical expenses;
- No provision was made for division of attorney’s fee between the current and prior attorneys;
- EDD paid when TD was paid and there is no provision addressing;
- Case caption on the Order or Award was correct, but case number was wrong;
- Case number on Order or Award was correct, but case caption was wrong;
Labor Code sections 5803 and 5804, read together, give the WCAB jurisdiction to review, terminate, increase, diminish, rescind, alter or amend any Orders, Awards, or decisions, for good cause, within five years from the date of injury, after notice to the parties and the opportunity to be heard.
If it is more than five years from the date of injury, the WCAB has jurisdiction only if a petition to set aside has been filed within the five year period. If timely, WCAB jurisdiction can be extended beyond five years from the date of injury, until a final Order has issued resolving the petition.
Therefore, your first question is always: are you within the five-year period? And your second question should be: if it is close to five years post-injury, do I need to file a petition to set aside to maintain jurisdiction? Generally, the answer is yes.
Correction of Errors – CCR 10858
As long as it is within five years from the date of injury, and before a petition for reconsideration is filed, CCR 10858 permits a judge to correct a “decision” for clerical, mathematical or procedural errors and to amend the decision for good cause. Labor Code §5313 refers to “decisions” broadly, to include “findings, decision, order or award.” (also see CCR 10348).
Note that CCR §10858 refers to the period “before a petition for reconsideration is filed…” This is because once a timely petition for reconsideration has been filed, the judge’s options are significantly reduced CCR 10859.
Power to undo Decision, Finding, Order, or Award – CCR 10859
Within 15 days following the filing of a timely petition for reconsideration, the judge can amend or modify or rescind the Order, Decision, or Award. After 15 days has elapsed, the judge cannot take any action until the Appeals Board has denied or dismissed the petition for reconsideration or issued a decision after reconsideration.
“Mistakes” vs. Lack of Due Diligence
Negligence of a party is usually not good cause to set aside an Order Approving C&R. (Smith v. WCAB) (1985) 50 Cal. Comp. Cases 311. It is a unilateral mistake. A mutual mistake may constitute good cause. A petition to set-aside an Order Approving Compromise and Release is, in effect, a Petition to Reopen. It requires a showing of good cause. It is not uncommon that one party alleges “mutual mistake,” while the other party asserts the mistake was unilateral. This is ultimately decided by the trier of fact.
A mutual mistake of fact may exist if there is legitimate confusion over who will pay disputed medical legal costs. (Smith, above). Also if there is legitimate confusion over who will pay outstanding liens. (Gooch v. WCAB) (1977) 42 CCC 521 (writ denied). In one case, both parties thought that private health insurance would pick up the cost of the applicant’s future medical treatment. The C&R was rescinded when it was learned the health insurer would not provide coverage. (City of Beverly Hills v. WCAB) (Dowdle) (1997) 62 CCC 1691 (writ denied).
In another case, the WCAB ruled that a misunderstanding about whether Medicare would cover the applicant’s future medical care constituted good cause to set aside the C&R. (Santa Maria Bonita School District v. WCAB) (Recinos) (2002) 67 CCC 848 (writ denied).
The most common situation leading to a petition to set aside a C&R is a dispute over the amount of PD advances credited against the settlement. One party usually argues the amount in the C&R did not contemplate deduction of PD advances or that it inaccurately reflects the amount of actual PDAs. Whether a mutual mistake has been made in such situations depends on the facts of the case, but case law reflects that the WCAB is reluctant to set-aside a C&R on these grounds. (World Mark Resorts v. WCAB) (Ramsey) (2005) 70 CCC 1616 (writ denied).
How might the problem be avoided? Write on the C&R that the amount of credit for PDAs is “subject to proof”.
A C&R may be set aside on the grounds of fraud. Intrinsic fraud is enough to set aside a C&R if the petition to set aside is filed within five years from the date of injury. (Johnson v. WCAB) (1970) 35 CCC 362, 369. Intrinsic fraud is a deception that relates to the original action and includes perjury. (Home Insurance Company v. Zürich Insurance Company (2002) 96 Cal.App. 4th 17, 26).
In one case, the WCAB set aside a C&R for fraud when a Deputy Sheriff resolved his claims by C&R. After settlement, the employer learned applicant had conceded to the fact that he had been working during the period he claimed TD. The WCJ found applicant made fraudulent statements at deposition and ordered the C&R be set aside and applicant “take nothing”. The appeals court upheld the decision, but also noted that the WCJ’s order that the applicant take nothing was insufficient, and awarded restitution. (Plass v. WCAB) (1997) 62 CCC 705 (writ denied).
Mistakes may happen. So do perjury and fraud. Numerous such facts could constitute good cause to set aside an Order, Award, or Finding. Such petitions are often preferable to a petition for reconsideration since it affords you an opportunity to conduct a hearing and build a record so the judge can find good cause. If the judge fails to find such good cause, you still have the statutory period for filing for Reconsideration.
Good luck correcting those mistakes!
Randall P. Stoddard is an Associate Attorney in Bradford & Barthel’s Oakland office. His background include the areas of workers’ compensation, civil litigation and franchise and corporate law. Mr. Stoddard can be reached at (510) 268-0061 or via email at email@example.com.
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