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Decision Time: When does the 90-day investigation period begin?

(October 8, 2020)

by Claudia Peterson – 

Labor Code Section 5402(b) provides a presumption of compensability if liability is not rejected within 90 days after the date a claim form is filed under Section 5401.

If the claim is not denied within 90 days, the injury is presumed compensable. The presumption of compensability can be overcome, after the 90 days, only with evidence that could not have been discovered within the delay or investigation.

The start of the investigation period is clear when the employer has knowledge of the injury, either directly or indirectly, where the employer witnesses an injury or where the applicant reports a claim. The employer is obligated to provide a claim form to the applicant within one working day of receiving notice or knowledge of an injury. (Labor Code Section 5401(a)).

Determining the beginning date of the 90-day investigation period becomes more difficult if it is the applicant’s attorney who first gives the employer the notice of injury. Labor Code Section 5401(c) allows for a claim form to be filed with the employer by the injured employee, or in the case of a death, the dependent of the injured employee or an agent of the employee or defendant. Delivering the claim form to the employer either personally or by mail, constitutes filing the claim form with the employer.

Labor Code Section 5402(a) establishes the knowledge of injury as being obtained from any source on the part of an employer with knowledge sufficient to afford opportunity for the employer to make an investigation into the facts. Therefore, the 90-day investigation period starts when an employer receives notice of the injury. If the first notice of the injury is received from an applicant’s attorney, the 90-day presumption period begins when the notice of injury is received by the employer.

The leading case on the 90-day presumption is Honeywell v. WCAB (Wagner) where the California Supreme Court provided a four-step process for the start of the 90-day investigation period. This would apply where an employer did not have actual knowledge of the work injury:

    1. The employee bears the burden of notifying the employer of an injury.
    2. The employer then bears the burden of informing the employee of his or her rights and provides the employee with a claim form.
    3. It is then up to the employee to return the completed claim form to the employer or “file the claim form” with the employer.
    4. Upon receipt of the filed claim form, the employer, or its carrier, must promptly investigate the claim and determine whether there is liability. The investigation must be completed within 90 days.

But what happens if an employer fails to give a claim form to an applicant? For instance, what if:

  • the employer is aware of the claim of injury,
  • but does not give the claim form to the employee.

When that happens, when does the 90-day investigation period begin? In that situation, the running of the 90-day investigation period does not start until the claim form is completed by the applicant and provided to the employer. However, in this particular situation, the board concluded that the applicant’s claim of injury was supported by substantial medical evidence and his credible testimony, so the 90-day decision timeframe was moot. (Ellmann v. Capstone Logistics, (2018) Cal. WRK.Comp P.D. LEXIS 350).

Since the 90-day investigation period begins with the filing of the claim form, and that claim form can be deemed filed when received by the employer by first-class mail or certified mail (LC5401(c), what happens if the employer alleges they never received the claim form?

In the case of McCommon v. WCAB (1998) 63 CCC 328 (writ denied), and Cortez v. WCAB (2003) 68 CCC 327 (writ denied), the court determined that Labor Code Section 5402 presumption did not apply, even where the injured worker or his representative has proof of service indicating a mailing date. In the McCommon case, the claim form was sent to the incorrect address and a defense witness testified as to the date the claim form was received.

It should also be noted that the insurance company or third-party administrator stands in the shoes of the employer. If the insurance company and third-party administrator receives notice of the claim, the 90-day presumption would extend from the date the insurance company or third-party administrator receives the Claim form.

WHAT IF THE EMPLOYER ONLY RECEIVES THE APPLICATION FOR ADJUDICATION OF CLAIM, BUT NOT THE CLAIM FORM?

In the 2013 case of Azbill v. Fators Motorcycles (2013) Cal. Wrk. Comp. P.D. LEXIS 240, the Appeals Board reversed the trial judge and ruled that the Application for Adjudication of claim is not equivalent to the filing of a claim form under Labor Code Section 5402(b). The filing of a claim form is a prerequisite for the start of the 90-day investigation. The 2015 case of Salas v. Carter’s, Inc. (2015) Cal. Wrk. Comp. PD. LEXIS 360, also found that the filing of the Application for Adjudication of claim did not trigger the 90-day investigation period where there was no evidence that the claim form was provided to the employer.

TIMELY DENIAL

Generally speaking, the denial date is the date the carrier or administrator mails out the denial letter. But what happens if an employer decides to deny a claim, but fails to give notice of the denial to the employee?

In the case of Rodriguez v. WCAB (1994) 59 CCC 857, the Court of Appeal found the denial timely when the employer made a decision to reject the claim, not the date the employer gave the notice of the denial to the employee. However, I would caution against relying on the Rodriguez case as a way to get around the failure to issue the denial letter to the applicant, within the 90-day period following receipt of the notice of claim and claim form.

THE BOTTOM LINE

When receiving notice of the claim by mail, it is the best practice to start the 90-day investigation period from the date of the letter forwarding the claim form. Otherwise, you may be litigating the presumption of compensability for failure to issue a denial letter to the applicant within 90 days of the filing of the claim form pursuant to Labor Code Section 5402(b).

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