June 2010

Employers’ Right to AOE/COE Medical Exams is Restored

The WCAB struck down Rule 30(d)(3).  Mendoza v. Huntington Hospital & Sedgwick CMS (WCAB en banc). The rule prohibited employers and insurers from requesting a panel QME exam to address compensability after either denial of a claim or else the running of the 90-day period to investigate a claim.

The rule was routinely used by the DWC Medical Unit to deny a defendant’s request for a medical-legal opinion to address AOE/COE if the claim had already been denied.  The rule was especially troubling in cases where a prior denial was reasonably based on a legal or factual defense and a treating physician’s report is later obtained by the applicant finding industrial causation. Under the strict application of Rule 30, the defendant was prohibited from objecting to the new evidence and commencing the AME/QME process.  In this way, the rule allowed unscrupulous parties to game the system.

Rule 30 put employers in the unfortunate position of having to initiate the panel QME process in cases where there was no medical evidence of injury, or else risk losing the right to do so in the future.  The Rule seemed to deny California employers a basic due process right while creating unnecessary litigation and increasing costs.

The WCAB voted unanimously to invalidate the rule, noting that it conflicted with Labor Code sections 4060 and 4062.2 and exceeded the scope of section 5402.  None of those statutes provide that only the employee may request a QME panel after an employer has denied compensability, as argued by the applicant.

The WCAB confirmed that an administrative rule is invalid if it is inconsistent with statute.  The administration argued that the rule was valid because it merely required that the defendant decide whether to use the AME/QME process before it denies the claim.

The rule was impractical because it basically required the employer to develop the medical record for every applicant’s claim of injury, or else risk litigating medical-legal causation questions without any impartial medical-legal opinion.

The WCAB noted that the only time limit applicable to the AOE/COE medical-legal process comes once either party requests a compensability exam, whereupon the parties have a limited time (generally 10-days) within which to agree on an AME.

WCAB Again Denies an Ogilvie PD Increase

The WCAB denied another applicant’s effort to rebut the standard diminished future earning capacity modifier in the rating schedule.  In Ochoa v. Liberty Insurance Corp a WCAB panel upheld the Judge’s rejection of applicant’s attempt to rebut the rating schedule through self-serving testimony that future earnings would have been greater absent the injury.  The applicant relied on the Ogilvie case, but produced no substantial evidence of earnings loss based on similarly situated employees.

The case follows another WCAB panel decision (reported in last month’s Newsflash) overturning a Judge’s PD award with an Ogilvie increase because the Judge did not consider the applicant’s unwillingness to work.  Shini v. Farmers.

Read together, the cases seem to establish that an applicant’s testimony alone is insufficient evidence to overcome the rating schedule and that even when there is sufficient evidence, an individual should not be allowed to manipulate the earnings loss calculation under Ogilvie by malingering or otherwise minimizing post-injury earnings.

Fraud Elements Outlined

The Court of Appeal has outlined the five elements needed to prove a workers’ compensation fraud case: (1) making a written or oral statement; (2) knowing that the statement is false; (3) the statement is material in that it deals with an important and relevant subject of the claim, such as the extent of PD; (4) the statement was made with specific intent to obtain those benefits; and (5) the statement was made with specific intent to defraud.  People v. Waterman.

In this case, a jury convicted the applicant after he lied in his deposition about his inability to turn his head and neck while driving.  In surveillance videos, he was seen taking a 130-mile, five-hour motorcycle trip that markedly contrasted with statements made under oath.

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