Technological hurdles have complicated the settlement walk-through process during the pandemic, but there are ways to avoid them and get settlements approved.
WCAB offices have been closed for over a year. The lack of in-person accessibility to the workers’ compensation judges has presented challenges for defendants and their counsel in obtaining approval of settlements. While the WCAB has implemented a virtual walk-through calendar, many of the settlements that are currently being submitted for review are filed electronically through EAMS.
Unlike in-person walkthroughs, defendants are at a disadvantage because questions and concerns that the WCAB may have regarding a settlement cannot easily be answered. Benefit notices cannot be pulled from a file to prove correct indemnity payments, and any questions that could be answered easily at an in-person walk-through are now subject to lengthy delays and orders suspending.
Bearing in mind this new paradigm, defendants, now more than ever, should carefully review all settlement documents before submission to the WCAB. The judge is tasked with reviewing the adequacy of settlements, but the parties are often at a loss to precisely explain the valuation of permanent disability and future medical care when there is a dispute. Having reached an agreement, the parties are required to demonstrate to the WCAB that the settlement is adequate. Like beauty, adequacy is sometimes in the eye of the beholder.
In the recent decision of Atkins v. Santa Barbara Metropolitan Transit District, 2020 Cal. Wrk. Comp. P.D. LEXIS 366, the WCAB explained the importance role the judge plays in determining the adequacy of settlements. In that case, the judge approved a Compromise and Release which included language denying injury AOE/COE. The judge reviewed the settlement, which was sent via email, but the settlement documents were not accompanied by any medical records.
After approval of the Compromise and Release, applicant changed attorneys and his new counsel filed a petition for reconsideration of the order, alleging that applicant felt “pressured” into accepting a Compromise and Release that did not encompass all the body parts at issue. The judge set the order aside and the matter proceeded to trial. The judge ruled that applicant had failed to demonstrate good cause to set aside the order approving.
On appeal, the WCAB reversed the judge’s decision. The WCAB began by noting that when presented with a Compromise and Release agreement, the WCJ must inquire into the adequacy of the settlement and may set the matter for hearing to take evidence when necessary to determine whether the agreement should be approved or disapproved. (Cal. Code Regs., tit. 8, former § 10770(b); see also Lab. Code, § 5001.)
In cases where compensability is not in dispute, the WCJ must consider whether the amount of the settlement includes consideration for (among other issues) permanent and temporary disability that is reasonably within the range of medical evidence based on the medical reports submitted, and a reasonable estimate of future medical expenses.
In cases dealing with threshold issues, including injury AOE/COE, the judge must evaluate the viability of those issues in addressing the adequacy of a settlement. In other words, does the evidence strongly support a viable affirmative defense or fatal defect in applicant’s claim that would support a finding that there was no compensable injury?
In Atkins, the settlement was not submitted with any medical reporting. When reviewed, the medical reports indicated that there was a possibility of surgery, which the WCAB noted could result in additional temporary and permanent disability. Also, the medical reports did not address impairment for the shoulder, thus making it impossible to determine value of the indemnity.
The Atkins case is a reminder that settlements should always be accompanied by medical reports, even when issues such as permanent disability and apportionment are in dispute. If the settlement is based upon a value dispute, the parties should submit a cover letter to the WCAB explaining why the particular issue is being settled. Often times, an explanation is sufficient for the WCAB to understand that the parties have reached a compromise on a disputed issue.
If there is an issue concerning potential surgery and its effect on the amount of a Compromise and Release, the medical record should be carefully reviewed, as there may be indications that the applicant either does not want surgery or, for whatever reason, cannot undergo surgery. This is helpful in explaining why the settlement provides a lower amount for future medical care.
Regarding the SJDB voucher, unless the voucher was or will be issued, the judge will require an explanation as to why it has not been issued. Again, this can be explained in a cover letter to the WCAB, which should always be accompanied by supporting documents.
By carefully reviewing the entire medical record and submitting relevant portions to the WCAB, defendants can avoid the delays that accompany orders suspending. Additionally, letters to the WCAB explaining why the particular sums in the settlement documents have been calculated are also highly recommended. This is also important when explaining why the SJDB voucher has not been issued.
Until defendants are able to walk through settlement documents in person, delays are to be expected. However, taking the time to explain to the WCAB the how’s and why’s of a particular settlement is an investment worth making.
Michael P. Burns is a Partner at Bradford & Barthel’s San Jose location. Before joining B&B, Michael practiced civil litigation and employment law. If you have questions about the supplemental job displacement voucher or any other workers’ compensation defense issues, feel free to contact Michael at firstname.lastname@example.org or (408) 392-8202.
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