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OVERVIEW OF LIENS IN PERSONAL INJURY CASES

WHAT IS A LIEN?

A lien is a claim of a right to payment.  It is common that liens are asserted in personal injury cases.  The “personal injury lien” represents a claim of a right to payment from the proceeds received from any resulting settlement or judgment.  Liens in personal injury cases are usually asserted by a medical provider or an insurance carrier.  There are two types of liens that may be asserted: (1) Contractual Liens, and (2) Statutory Liens.  

Provisions for reimbursement are also considered liens, which will also require repayment only if there is a recovery.  In contrast, subrogation allows for a right to directly sue the third party tortfeasor (i.e. the party that caused the accident).  There must be statutory authority for an insurance company or healthcare provider to have subrogation rights.  Statutes that allow for subrogation include: California Civil Code section 3045.1 for Hospital Liens, California Labor Code section 3856 for workers’ compensation benefit reimbursements, California Government Code section 23004.1 for County Hospitals, and California Government Code section 13963 for victims of violent crimes.

WHAT ARE CONTRACTUAL LIENS IN A PERSONAL INJURY CASE?

Contractual medical liens are claims for repayment based on an agreement between the injured party and the medical provider.  These claims usually include: health insurance reimbursement, medical treatment provided on lien basis, and Med-Pay provisions for reimbursement.    

WHY IS HEALTH INSURANCE REIMBURSED IN A PERSONAL INJURY CASE?

Health insurance companies have a claim for reimbursement when the injuries that are treated are caused by a third party based on the contractual language in the injured victim’s health insurance policy.  Many Health Maintenance Organizations (HMOs) like Kaiser Permanente, health insurance companies, including Preferred Provider Organizations (PPOs) like Blue Cross and Blue Shield, and other health care plans will utilize boilerplate language in the patient contracts for a lien against any recovery by the insured for personal injuries from a third party tortfeasor (i.e. the party that caused the accident).  The lien provides for repayment of the medical expenses made on behalf of the injured party.  Because there is no statutory authority allowing for the insurance company or health care plan to obtain an assignment of the tort cause of action from the injured party or allowing for subrogation rights to directly pursue a cause of action, the lien is purely contractual.     

CAN A HEALTH INSURANCE LIEN ASSERTED IN A PERSONAL INJURY CASE BE REDUCED?

Yes, a health insurance lien can be reduced pursuant to statute.  

CALIFORNIA CIVIL CODE SECTION 3040 INSURANCE LIEN REDUCTION

California Civil Code section 3040 provides for reductions and a cap on the health plan’s contractual lien amount.  The statute is very extensive and also applies to disability insurance lien claims.   The California Civil Code section 3040 codifies: (1) Comparative Fault Reduction; (2) Common Fund Doctrine; and (3) Caps.    

California Civil Code section 3040 states:

(a) No lien asserted by a licensee of the Department of Managed Care or the Department of Insurance, and no lien of a medical group or an independent practice association, to the extent that it asserts or enforces a lien, for the recovery of money paid or payable to or on behalf of an enrollee or insured for health care services provided under a health care service plan contract or a disability insurance policy, when the right of the licensee, medical group, or independent practice association to assert that lien is granted in a plan contract subject to the Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code) or a disability insurance policy subject to the Insurance Code, may exceed the sum of the reasonable costs actually paid by the licensee, medical group, or independent practice association to perfect the lien and one of the following:

(1) For health care services not provided on a capitated basis, the amount actually paid by the licensee, medical group, or independent practice association pursuant to that contract or policy to any treating medical provider.

(2) For health care services provided on a capitated basis, the amount equal to 80 percent of the usual and customary charge for the same services by medical providers that provide health care services on a noncapitated basis in the geographic region in which the services were rendered.

(b) If an enrollee or insured received health care services on a capitated basis and on a noncapitated basis, and the licensee, medical group, or independent practice association that provided the health care services on the capitated basis paid for the health care services the enrollee received on the noncapitated basis, then a lien that is subject to subdivision (a) may not exceed the sum of the reasonable costs actually paid to perfect the lien, and the amounts determined pursuant to both paragraphs (1) and (2) of subdivision (a).

(c) If the enrollee or insured engaged an attorney, then the lien subject to subdivision (a) may not exceed the lesser of the following amounts:

(1) The maximum amount determined pursuant to subdivision (a) or (b), whichever is applicable.

(2) One-third of the moneys due to the enrollee or insured under any final judgment, compromise, or settlement agreement.

(d) If the enrollee or insured did not engage an attorney, then the lien subject to subdivision (a) may not exceed the lesser of the following amounts:

(1) The maximum amount determined pursuant to subdivision (a) or (b), whichever is applicable.

(2) One-half of the moneys due to the enrollee or insured under any final judgment, compromise, or settlement agreement.

(e) Where a final judgment includes a special finding by a judge, jury, or arbitrator, that the enrollee or insured was partially at fault, the lien subject to subdivision (a) or (b) shall be reduced by the same comparative fault percentage by which the enrollee or insured’s recovery was reduced.

(f) A lien subject to subdivision (a) or (b) is subject to pro rata reduction, commensurate with the enrollee’s or insured’s reasonable attorney’s fees and costs, in accordance with the common fund doctrine.

(g) This section is not applicable to any of the following:

(1) A lien made against a workers’ compensation claim.

(2) A lien for Medi-Cal benefits pursuant to Article 3.5 (commencing with Section 14124.70) of Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions Code.

(3) A lien for hospital services pursuant to Chapter 4 (commencing with Section 3045.1).

(h) This section does not create any lien right that does not exist at law, and does not make a lien that arises out of an employee benefit plan or fund enforceable if preempted by federal law.

(i) The provisions of this section may not be admitted into evidence nor given in any instruction in any civil action or proceeding between an enrollee or insured and a third party.

NO CO-PAYS INCLUDED IN HEALTH INSURANCE LIEN

All health plan lien claims should be reviewed carefully to determine if they also include co-pay for the services rendered.  The co-pays made by the injured party should not be included in the lien.  

LIMITS ON NON-CAPITATED AND CAPITATED SERVICES

There are limits on the amount of the lien based on whether the healthcare provider billed for services as they were incurred (which is known as non-capitated) or whether the healthcare provider billed a flat fee (which is known as capitated).  

If the services are provided on a non-capitated basis, the injured party will receive an itemized bill.  The health plan carrier will pay all or portion of the bill.  California Civil Code section 3040 limits the lien recovery for non-capitated services to the amount actually paid.  

If the services are provided on a capitated basis, the injured party will receive no itemization of the bill.  This applies to Kaiser Permanente beneficiaries.  California Civil Code section 3040 limits the lien recovery for capitated services to “80% of the usual and customary charge for the same services by medical providers that provide health care services on a non-capitated basis in the geographic region in which the services were rendered.”  That is, the gross capitated lien claim is reduced by 20%.  However, when the health care provider that provides capitated services pays for a non-capitated service such as an outside emergency room bill, that specific lien repayment is considered to be a reasonable cost charged and is not included in the reduction.  

COMPARATIVE FAULT REDUCTION

In addition, a lien amount may be reduced pursuant to the insured’s comparative fault.  California Civil Code section 3040 provides: “Where a final judgment includes a special finding by a judge, jury, or arbitrator, that the enrollee or insured was partially at fault, the lien shall be reduced by the same comparative fault percentage by which the enrollee or insured’s recovery was reduced.”  It is important to note that there must be a finding of comparative fault.  Therefore, the percentage of comparative fault should be negotiated with the lien claimant prior to agreeing to a settlement in the personal injury case.  If there is no special finding and the lien claimant is not willing to negotiated, the plaintiff’s personal injury attorney can request that the third party insurance adjuster put in writing that the settlement offer is made with consideration of a specific percentage of comparative fault assigned to the plaintiff.

COMMON FUND DOCTRINE

California Civil Code section 3040 provides for a pro rata percentage reduction based on the insured’s reasonable attorney’s fees and costs.  This codifies the Common Fund Doctrine.  Essentially, the third party recovery effectively creates a “common fund” where not only will the injured party receive a benefit for having created the fund, but also the lienholder can draw from that same fund.  Therefore, the lienholder should not get the benefit of free legal services required for obtaining the fund.  The lienholder is required to share in the expenses and the lien amount is therefore reduced accordingly.

LIEN RECOVERY CAP

California Civil Code section 3040 provides for a cap on the amount recoverable on the lien.  When an attorney is retained by the injured party, the health plan’s lien claim may not exceed one-third of the money due to the injured party.  When the injured party does not have an attorney, the lien claim may not exceed half of the money.

THE MADE WHOLE EQUITABLE DOCTRINE

The Made Whole Doctrine is an common law equitable principle that limits the ability of the insurer to exercise its right of subrogation because the injured plaintiff has not been fully compensated for their injuries and pain and suffering.  In this situation, the injured plaintiff has not been “made whole.” The application of this equitable principle varies depending on the jurisdiction.  This principle comes into play when the insurance policy is not sufficient enough to make the injured plaintiff “whole” by the settlement.  

HOW IS MEDICAL TREATMENT PROVIDED ON A LIEN BASIS?

Many times, the injured party may not have health insurance coverage.  Nonetheless, the injured party is in need of medical care.  Depending on the state law in the jurisdiction, many health care providers will provide treatment to the injured party provided they sign a lien to reimburse the expenses once a third party recovery is obtained.  Some states prohibit health care providers from treating on a lien basis when there may be third party liability.  For example, New York does not allow treatment on a lien; whereas, in California, receiving treatment on a lien is an effective way to obtain the necessary care.  Generally, the provider is not affiliated with any health insurance provider, and usually includes individual medical practitioners, chiropractors, small health clinics, and x-ray facilities.  Physical therapy, chiropractic treatment, orthopedic care, and surgeries may be provided on a lien basis.  

The lien is purely contractual.  An agreement is signed by the injured party and the health care provider. If the plaintiff’s attorney also signs the agreement, the attorney has created a fiduciary duty with the lienholder to satisfy the claim.  

Moreover, California Civil Code section 3040 does not apply to individual medical providers.  In this situation, the Made Whole Doctrine and the Common Fund Doctrine cannot be applied to reduce the lien amount.

WHAT IS MED-PAY?

A lien is a contractual right based on a provision in an agreement that allows for reimbursement if a monetary recovery is obtained from a third party.  Many times, an individual’s own insurance policy agreement may provide for a lien owing to the insurance carrier for any amounts paid for medical expenses on behalf of the insured.  The provision will require reimbursement if the insured obtains a monetary recovery from a third party.  This type of provision is known as a Med-Pay lien.  There is no statute permitting reimbursement or subrogation rights to an insurance carrier.  Therefore, Med-Pay provisions are purely contractual and must be set forth in the insurance contract.    

AUTOMOBILE INSURANCE MED-PAY

Many automobile insurance policy contracts provide for the payment of medical expenses for injuries resulting from an accident while driving in an insured vehicle, or while in a non-insured vehicle, or while in a non-owned vehicle, or as a pedestrian.  

For example, a passenger who does not own the vehicle and suffers an injury while in the vehicle which has Med-Pay coverage may be able to obtain medical payments from that vehicle’s insurance.  The passenger is considered a third party beneficiary to the insurance contract.  However, the passenger will be obligated to repay the insurance carrier for the payments received pursuant to the insurance contract provisions.

NON-AUTO MED-PAY

Many non-automobile insurance policies may have a right to reimbursement even though the injured party does not make any recovery from a third party tortfeasor (i.e. the party that caused the accident). Essentially, the Med-Pay provision provides for a credit to the insured which will be a debt owed to the insurance carrier.  The injured party’s attorney will have a fiduciary duty to the lien claimant upon execution of a contract providing for the lien.  Because the lien is a contractual right obligation, partial payment of the lien amount may not relieve the injured party from the still owing amount.  If only partial payment can be made, it is necessary to have a stipulation in writing that this will satisfy the total obligation.  

CAN A MED-PAY LIEN BE REDUCED?

Med-Pay liens may be reduced based on the Common Fund Doctrine as codified in California Civil Code section 3040 and also based on the Made Whole Equitable Doctrine.  

COMMON FUND DOCTRINE

California case law permits attorney fees and costs to be deducted from the lien repayment.  See Lee vs. State Farm Mutual Ins. Co. (1976) 57 Cal. App. 3d 562.  This is known as the Common Fund Doctrine, which requires a pro rata share of fees and expenses so that the insurance company is not unjustly enriched by the legal services of the plaintiff’s attorney that obtained the recovery not only for the injured party but also for the insurance company.  California Civil Code section 3040 codifies the Common Fund Doctrine.  The lien party must reduce its claim by its pro rata share of reasonable attorney fees and court costs required to prosecute the injured party’s claim against the third party tortfeasor.

MADE WHOLE EQUITABLE DOCTRINE

Before a lien is considered equitable and fair, the injured party must be fully compensated for the total injury by the third party recovery.  If a policy limit recovery does not fully compensate the injured party for the entire injury claim, then the injured party has not been made whole.  The purpose of personal injury damages is to make the plaintiff whole; that is, put the injured party back in a position had they not been injured by awarding monetary compensation for the total loss.  If the injured party has not been made whole by the third party recovery, the insured is not obligated to repay the medical payments made by the insurance carrier pursuant to the Med-Pay provision.  

However, the insurance policy contract may grant the carrier priority rights to the third party recovery, which may preclude the Made Whole Doctrine and allow the carrier to obtain repayment of the entire Med-Pay lien before the injured party receives any distribution from the recovery.  Even when priority rights are stated in the insurance policy contract, as a matter of law the attorney’s fees still have priority over medical liens regardless of when the rights were created.

WHAT ARE STATUTORY LIENS IN A PERSONAL INJURY CASE?

Pursuant to State law, certain claims for right of payment are presumed by statute.  These claims include: Workers Compensation Benefits, Hospital Emergency Services, and Government Benefits, which includes Medicare and Medicaid benefits.  If statutory liens are not resolved, the settlement disbursement will be delayed.  

WHAT IS WORKERS’ COMPENSATION?

The law requires each employer to provide a safe place of employment. When an employee is injured during the course and scope of employment, the injured worker is entitled to workers’ compensation benefits (also referred to as “workman’s comp”).  The workers’ compensation program is an insurance program mandated by the State to provide compensation to employees who suffer injury or illness as a result of the job.  Even temporary or part-time workers may be eligible to receive benefits. Even if the worker is called an “independent contractor,” the worker may still be covered by workers’ compensation as an employee.      

WHAT ARE WORKERS COMPENSATION LIENS?

When an individual is injured while on the job, the injured party may have both a claim for workers’ compensation benefits and a claim for civil damages resulting from the personal injury caused by a third party.  In this type of situation, the workers’ compensation insurance provider will have a statutory lien on the proceeds from the personal injury matter.  Any amount that the employee recovers from the third party is subject to the employer’s right of reimbursement for compensation already paid or credit against future compensation paid to the employee, or to the employee’s dependents in a death claim, on account of the injury.  

Moreover, practically speaking, if a third party has caused injury to an employee and caused the employer to pay for the injured worker’s medical care and pay benefits, then the employer has also been damaged by the third party.  Therefore, the employer also has a claim against that other third person or entity.  This is known as subrogation.  Pursuant to California Labor Code section 3852, statutory subrogation is the independent right of an employer, or an employer’s insurance carrier, to recover compensation paid to the employee against a third party, by whose fault the employee has sustained an industrial injury.

In addition, the workers’ compensation carrier has an actual lien against any verdict or settlement arising from any right to recover damages that the employee has against any other party for the injury.  The lien is automatic and notice does not have to be given.  If the employee receives any proceeds from a settlement or verdict and the employer’s lien is not satisfied, then the employer will get a credit against any future worker’s compensation benefits to be provided to the injured worker.  The employer may also file a civil lawsuit against the employee for the full amount of the lien.  Moreover, if settlement occurs without considering the compensation lien or without notifying the employer/carrier, then the injured worker may not be able to receive any future benefits.  It may be considered malpractice for the personal injury attorney to settle the case if the worker’s compensation carrier or the employer does not expressly approve the settlement.  

The reason for the workers’ comp lien is so that the injured worker does not obtain a double recovery.  However, many times, the larger the worker’s compensation lien from the workers’ comp insurance adjuster, the more valuable damages in the personal injury claim.  Every item claimed as a worker’s compensation benefit may also be asserted as being caused by the third party defendant.  Also, workers’ compensation will only award a portion of the lost wages.  The remainder of the wages may be asserted in the personal injury claim.  In a personal injury claim, the injured party is entitled to recover all resulting damages, including lost earnings, lost earning capacity, medical bills, future medical bills, permanent impairment, pain and suffering, and loss of enjoyment of life.

When the personal injury case reaches a settlement, the workers’ compensation lien may be negotiated and reduced.  It is important to review the itemization of the lien, as administrative costs, manager fees, and defense attorney fees should not be included in the lien amount.  Many times, if the workers’ compensation lien cannot be reduced, there will be no incentive for the injured worker to settle the personal injury claim and the plaintiff’s personal injury attorney is left no other option but to file a lawsuit.

For instance, the plaintiff’s attorney may settle the personal injury case and satisfy the worker’s comp lien, which will be reduced based on a prorated amount of the attorney fees and litigation costs.  In this situation, the workers’ compensation claim will still be pursued by the injured worker because the injured worker is still entitled to the continued benefits but now at a reduced rate.  The carrier or self-insured employer is responsible for all future benefits at the rate for which the attorney fees and costs in the personal injury case bear to the entire recovery until the net third party recovery is exhausted.  As a specific example, if a personal injury case settles for $150,000.00 and the attorney fees and costs equal 34% of the settlement, then the attorney will receive $51,000.00.  If there is also a worker’s compensation lien of $40,000.00, the workers’ compensation carrier will only be able to recover $26,400.00 to satisfy the lien.  This is because the $40,000.00 lien is reduced by 34%.  The client will net $72,000.00 from the total recovery of the third party personal injury claim, after deducting the attorney fee, litigation costs, and the satisfaction of the workers’ comp lien.  However, this net recovery does not consider the injured worker’s future benefits.  As a further example, if the injured worker’s doctor charges $1,000.00 for a future treatment, the injured worker must now first pay out of pocket the full amount charged and then submit a request to the workers’ compensation carrier for the portion it is responsible to provide as determined by the reduced calculation.  In the example, the workers’ compensation carrier will be responsible for providing $340.00 of the charge.  This procedure also applies to the injured worker’s lost wages.  This process will continue until the injured worker’s $72,600.00 is completely exhausted.  The accounting required in these situations is very difficult.  As a result of the administrative costs and burden on the workers’ comp carrier, there is an incentive to simply settle the worker’s comp claim at the same time the personal injury claim is settled.  

In practice, the personal injury attorney should settle the workers’ compensation claim before settling the personal injury claim.  If a prospective personal injury client already has the worker’s comp claim settled, the personal injury attorney must carefully review the workers’ comp settlement documents, paying particular attention to the judge’s Order Approving Compromise and Release or the Award made pursuant to the Stipulated Finding and Award.  There should be language in the workers’ comp settlement documents that state that the amount is fixed as of the date the settlement Order is entered, and that there is a limit or cap on the amount of the worker’s comp lien asserted in the personal injury settlement.  Often if the workers’ comp carrier anticipates that the injured worker will incur future medical bills and lost wages, the carrier may agree to waive the worker’s comp lien and pay a lump sum of $10,000.00, of which 20% will be paid to the attorney as fees for making a recovery in the worker’s comp matter and the net would go to the injured worker in exchange for giving up any future workers’ comp benefits.  A petition, order, and affidavit by the injured worker will need to be approved by the Workers’ Compensation Appeals Board.  

In the example above, if the personal injury settlement is $150,000.00 with attorney fees and costs of 34% and a reduced workers’ comp lien of $26,400.00, after waiver of that lien and agreement of lump sum for future benefits, the injured worker will now net $107,000.00 as combined settlement of both the personal injury matter and the workers’ comp matter.  To note, the workers’ comp attorney cannot be fully compensated on the lien amount of $26,400.00 which would be $5,280.00.  This is because the Workers’ Compensation Appeals Board will not approve fees on the portion of a lien that was waived.

“SETTLING AROUND THE EMPLOYER” AND ESTABLISHING EMPLOYER FAULT

If the injury to an employee during the course and scope of employment is caused by a third party, the employer has the right to recoup the worker’s compensation benefits paid to the injured worker out of any third party settlement or verdict.  The employer can assert a lien or file a “complaint in intervention” in the third party lawsuit to protect its right to reimbursement.  Usually in these situations, the injured worker and the employer form an alliance to establish liability against the third party.  

However, there are times when the liability of the employer may also be at issue.  In this situation, generally the amount of the lien asserted by the worker’s comp subrogation attorney is in dispute.  If liability on the part of the employer is established, the plaintiff’s personal injury attorney should seek to have the employer reduce its lien or make other concessions.  In cases where the employer is not willing to compromise, the plaintiff’s personal injury attorney may attempt to “settle around the employer.”  The employer’s right of recovery for its asserted lien can be adjudicated in the trial court or the Worker’s Compensation Appeals Board at the election of the workers’ comp carrier.  

Many worker’s comp subrogation attorneys believe that the right to recovery of its lien is absolute.  The subrogation attorney will essentially extort its lien amount from the personal injury settlement, thereby holding up and stalling any settlement negotiations in the personal injury matter.  The subrogation attorney and the employer may also put financial pressure on the injured worker by asserting a credit in the worker’s comp matter and stop paying disability payments and medical costs.  The subrogation attorney will rely on California Labor Code section 3869 to support its position that the plaintiff is not authorized to settle the claim with the parties without the express consent of the subrogation attorney.  The subrogation attorney will also rely on case law to support the position that the employer is also entitled to attorney fees based upon the actual benefit conferred upon the plaintiff from the settlement.  See Draper vs. Aceto, (2001) 26 Cal 4th 1086.  However, such reliance by the subrogation attorney is misplaced and misleading.  In fact, the worker’s comp lien may have little to no value depending on the extent of the employer’s fault in causing the employee’s injury.  

In practice, “settling around the employer” is a complicated process.  The first step in the process is to serve the initial complaint against the third party on the employer by personal service or certified mail with a proof of service, which must then be filed with the court in the initiated civil lawsuit.  See California Labor Code section 3708.5.  The employer must have statutory notice of the civil lawsuit, or else the plaintiff will be exposed to a lawsuit by the employer to recover the worker’s comp benefits already paid.  See Board of Administration vs. Glover, (1983) 34 Cal 2d 906.  Failure to provide statutory notice may be considered malpractice by the plaintiff’s attorney.  Once the third party responds with an answer to the complaint, the personal injury attorney should review the answer for any asserted affirmative defenses alleging the employer was at fault or negligent.  The answer should also be served on the employer.  During the discovery process, the plaintiff’s personal injury attorney should attempt to discover evidence supporting the employer’s fault.  Getting this information should be done with caution, as the employer is typically an ally of the plaintiff early on in the litigation for establishing the third party liability.  Therefore, proper timing of uncovering this evidence is essential.  

Discovery should be conducted into certain facts and evidence.  To note, California Code of Regulations Title 8, Section 3203 imposes an obligation upon employers to establish a workplace injury and illness prevention program (“IIPP”).  In addition, the employer must perform periodic inspections to identify unsafe work conditions, provide training and instruction to employees, and maintain records of inspections for at least one year.  The failure to meet these obligations may be considered negligence per se and impose liability on the employer.  See Board of Administration vs. Glover, (1983) 34 Cal 2d 906.  Discovery into these critical facts establishes the standard of care to be applied against the employer and also possibly against the third party defendant.  

In order to settle the personal injury case with the third party when the subrogation attorney is not cooperating, i.e. “settling around the employer,” the third party defendant will need to be assured that the employer will not seek to obtain an additional recovery against the third party after the settlement.  Therefore, in practice, the plaintiff’s personal injury attorney will most likely have to: (1) agree to defend, indemnify, and hold harmless the third party against the employer in its complaint in intervention; (2) establish a separate trust account for the settlement proceeds to protect the worker’s comp lien in the event that no employer fault is established; (3) agree to represent the third party defendant at trial on the issue of employer fault; (4) obtain a “conflict of interest waiver” allowing the plaintiff’s attorney to represent the third party defendant concerning the issue of employer fault; (5) obtain an assignment of the third party defendant’s costs incurred in defending the lawsuit; (6) serve a Notice of Third Party Settlement on the employer and include the initial complaint and answer alleging employer fault; (7) serve discovery on the employer, particularly Requests for Admissions relating to employer fault; and (8) serve separate Offers to Compromise to the employer on behalf of the plaintiff and the third party defendant.

Once a settlement is reached in the personal injury case, the plaintiff’s attorney must serve notice of the settlement on the employer.  See California Labor Code section 3860(a).  If the matter was “settled around the employer” without the employer’s consent, the following language should be included in the Release: (1) plaintiff will defend, indemnify, and hold harmless the third party from the lawsuit brought by the employer-intervenor; (2) plaintiff’s counsel will substitute into the action brought by the employer-intervenor to represent the third party defendant; (3) the third party defendant will assign its recoverable costs in the lawsuit; and (4) the third party defendant waives any actual or potential conflict of interest in the action.  Moreover, case law supports the position that where employer fault is established, the employer’s attorney fees are deducted from the amount the employer recovers if any.  See Summers vs. Newman, (1999) 20 Cal. 4th 1021.  Also, if the subrogation attorney does not prevail, the employer may be responsible for paying litigation costs and statutory costs.

Generally, the issue of employer fault will proceed to trial.  The personal injury attorney will announce its readiness to represent both the plaintiff injured worker and the third party defendant.  The intervenor employer will most likely not be prepared to adequately present a case at trial to rebut its fault and prove the third party liability.  The goal for the personal injury attorney is to present enough facts to prove sufficient employer liability to allow for substantial future workers’ comp benefits.  At the time of trial, the personal injury attorney should be in a better position to negotiate a settlement with the employer, who may rather not have the matter be decided by a jury.

The plaintiff’s personal injury attorney should set up a Qualified Settlement Fund for the settlement money received by the third party.  Once the employer learns of the third party settlement, it is likely that the employer will stop paying worker’s comp benefits, including future permanent disability and medical costs.  In order to preserve the injured worker’s right to receive these benefits, the injured worker must not actually receive its net recovery from the third party settlement.  Instead, the settlement will be placed in a qualified account until the worker’s comp lien is resolved.  In doing so, the injured worker does not in fact receive any settlement funds and the employer cannot stop paying benefits.  Pursuant to United States Treasure Regulation section 1.468B-1(c)(1), a Qualified Settlement Fund must be established pursuant to a court order.  The plaintiff’s personal injury attorney should file a petition with the court, indicating that the Qualified Settlement Fund is being established to prevent the injured worker from being in constructive receive of any amounts placed in the account prior to an agreement between the account’s administrator and the injured worker, and the petition should state that the account is being created to allow for financial and legal planning.  The employer’s lien interest is protected by the Qualified Settlement Fund by setting aside sufficient funds to cover the lien in the event that no employer fault is established.  

WHAT ARE HOSPITAL LIENS?

Pursuant to the California Hospital Lien Act, codified in California Civil Code sections 3045.1 to 3045.6, a hospital may have a claim of repayment for all “emergency and ongoing” services provided to a person who was injured in “an accident, or negligent or wrongful act.”  In addition, pursuant to California Government Code section 23004.1, county hospitals may also have a claim.  The county hospital’s lien will be considered first priority and must be settled before all other liens.  The hospital lien is generally limited to only third party recoveries and not from Uninsured Motorist or Underinsured Motorist insurance policies.  The hospital lien usually arises when the hospital provides emergency care to the injured victim after an accident, and the injured party does not have health insurance to pay for the treatment, or the injured party has health insurance but it will not cover all of the hospital bill, or the hospital refuses to submit the bill to the injured party’s health insurance because a third party is liable.

PERFECTING THE HOSPITAL LIEN  

Pursuant to California Civil Code section 3045.3, the hospital must provide written notice in order to enforce its lien and there are limits on the amount a hospital may recover from the third party settlement.  The Notice of Lien must be sent by registered mail, return receipt requested, and must be sent to the responsible third party and their insurer prior to the payment of funds to the injured person.  The statute of limitations for the hospital to file a lawsuit to enforce its lien is within one year from the date of payment to the injured party.   

HOSPITAL LIEN REDUCTION

Pursuant to California Civil Code section 3045.4, if the third party pays the injured party a settlement without satisfying the lien, then the third party is liable to the hospital for the amount claimed in the hospital lien.  Usually, third parties will not release a settlement check until they have written confirmation that the hospital lien has been satisfied.  Pursuant to California Civil Code section 3045.4, the hospital’s lien may be reduced by deducting the attorneys fees from the gross settlement amount and any other prior liens, and then the hospital is capped at recovering up to 50 % of the remaining net settlement amount.  It is important to remember that county hospital liens must receive first priority.           

HOSPITAL BALANCE BILLING

Many times, the hospital and the separate emergency room physicians may attempt to charge the injured party the difference between the hospital’s “charge rate” and the amount the injured party’s health insurance paid as the “contract rate.”  This is known as “balance billing.”  Pursuant to Title 42 of the United States Code section 1395CC, balance billing is prohibited when the hospital accepts payments from Medicare or Medicaid.  In addition, California case law establishes that when a hospital accepts payments from the injured party’s private health insurance as payment in full for the hospital bills, then the hospital cannot charge for its balance.  See Parnell vs. Adventist Health System West (2005) 35 Cal. 4th 595.  However, the California courts have not restricted the hospitals and the private health insurers from entering into a contract to preserve the right to obtain the balance billing.          

WHAT IS MEDICARE AND MEDICAID LIENS?

The Medicare and Medicaid programs provide public assistance benefits from the government.  If any medical bills were submitted and paid by public assistance benefits, there is an automatic right of repayment when the injured party recovers from a third party for personal injuries.  

WHAT IS MEDICARE?

Pursuant to the federal Social Security Act, Medicare is a federally funded insurance program for the elderly and disabled.  It provides health insurance for Americans aged 65 and older who have worked and paid into the system through the payroll tax. Younger people with disabilities, end stage renal disease, and amyotrophic lateral sclerosis may also qualify as beneficiaries for Medicare.  

There are five parts to the Medicare statutes – Part A, B, C, D, and E.  Medicare Parts A and B are fee-for-service insurance that will provide coverage for portions of the cost for hospital and health care services.  Part D provides coverage for prescription drugs.  Part E provides coverage for the cost of miscellaneous services.  

Medicare Part C provides for the Medicare Advantage program, which allows the Medicare beneficiary to enroll in a Medicare Advantage Organization (MAO).  This operates similar to a Health Maintenance Organization (HMO).  Instead of the fee-for-services program under Medicare Parts A and B, the beneficiary may elect to participate in a MAO in order to obtain the necessary services.  The federal government will pay a fixed amount to the MAO for each enrolled Medicare beneficiary.  That is, Medicare pays a capitated amount to the MAO.  The MAO assumes the risk that the government payment may not be enough to cover the cost of care for enrolled Medicare beneficiaries.  

WHAT IS MEDICARE SUBROGATION?

Subrogation is the term used to allow a healthcare provider to directly sue a third party tortfeasor.  Subrogation is defined as the substitution of one person or group by another in respect of a legal right or claim against a third person, accompanied by the transfer of any associated rights and duties.  That is, the right to file the lawsuit against the wrongdoer is assigned to a different party than the injured party.

The Medicare Secondary Payer (MSP) Act established that the Medicare program is the secondary payer of the Medicare beneficiary’s health care costs after other various sources of payment which are considered the primary payer.  These sources of primary payment include worker’s compensation, automobile insurance, liability insurance, self-insured policy, or no-fault insurance plans.  Only when a primary plan has not made or cannot reasonably be expected to make payment with respect to such item or service promptly, Medicare will then provide a conditional payment to cover the costs of the Medicare beneficiary’s health care services pursuant to Medicare Part A and B, which covers the bills for hospital and health care services.  However, in the case of a personal injury lawsuit, Medicare will require the amounts paid to be reimbursed if the plaintiff obtains a settlement from a third party automobile insurance or liability insurance carrier.  The payment by Medicare is conditioned on reimbursement.  The process of reimbursing Medicare and Medicaid is known as subrogation, and the procedure allows Medicare and Medicaid the right to directly sue the third party tortfeasor.  

The Centers for Medicare and Medicaid Services (CMS) will administer the subrogation.  Because the CMS lien is a lien by the government it is considered a “super lien” and it takes priority over all other liens.  Other government liens that take precedent include health care benefits covered by the Veteran’s Administration.  Moreover, CMS has a six-year statute of limitations period to seek reimbursement, and therefore any settlement monies must be set aside to satisfy any government lien.  The personal injury lawyer must be aware and inform the client that in the case of a disputed liability claim and substantial Medicare conditional payments, the plaintiff may not obtain any net recovery.  Moreover, if the government lien is not paid, the client may be subject to penalties under federal law which may include being responsible to pay back double the original lien amount.

The Courts have yet to clarify whether Medicare is entitled to reimbursement when settlement is obtained from a third party if the Medicare beneficiary is enrolled in Medicare Part C.  However, the trend indicates that Medicare Part C beneficiaries will have to reimburse the MAOs for the cost of health care for injuries sustained in a personal injury case.  The plaintiff’s attorney should request a list of charges for the care which are claimed to be related to the injuries at issue in the personal injury case, and before any settlement discussions commence the charges should be updated and clarified.  The process of clarifying the charges by the MAOs to a Medicare Part C beneficiary cannot be done via the Medicare website, as compared to Part A and B beneficiaries.  Instead, correspondence must be sent directly to the MAO.    

WHAT IS THE MEDICARE SECONDARY PAYER RECOVERY PORTAL?

The Medicare Secondary Payer Recovery Portal (MSPRP) is a web-based tool designed to assist in the Medicare recovery process in which liability insurance, no-fault insurance, and workers’ compensation are involved.  MSPRP can expedite the reporting of a claim and updating lien information.   MSPRP is used to obtain conditional payment information, to obtain current and final conditional payment letters, to dispute claims, and to upload settlement documents.  

Likewise, the California Department of Health Care Services has an online portal to report claims.

HOW TO REPORT A CLAIM TO MEDICARE?

In every personal injury case, once the defendant’s liability insurance is discovered, both Medicare and Medi-Cal should be put on notice of the claim regardless of whether the plaintiff is a beneficiary.  A letter from both programs stating that the plaintiff is not a beneficiary will expedite the settlement process.  Both Medicare and Medi-Cal allow for online reporting, however it may be best to keep a paper-trail by mailing letters.  

The mailing address for Medicare to send the Notice of Claim is:

 

Benefits Coordination and Recovery Center (BCRC)

Medicare – Data Collections

Non-Group Health Plan (NGHP)

P.O. Box 138897

Oklahoma City, OK 73113-8897

Telephone: 1-855-798-2627

Fax: (405) 869-3309; (405) 869-3307

 

An Authorization and a Request for Lien Amount should then be sent to the BCRC approximately two weeks thereafter.  

The mailing address for Medi-Cal to send the Notice of Claim is:

 

Department of Health Care Services

Medi-Cal Program

Third Party Liability and Recovery Division

Casualty Insurance Section – MS 4720

P.O. Box 997425

Sacramento, CA 95899-7425

Telephone: (916) 445-9891; (916) 650-0572

 

The beneficiary information should be included in the Notice of Claim, including: the client’s full name, Medicare Health Insurance Number (HICN), gender, date of birth, mailing address, telephone, date of injury or accident, description of the injury, type of claim (liability insurance, no-fault, or worker’s compensation), insurer or worker’s compensation name and address, lawyer’s name / address / telephone, and lawyer’s proof of representation.  If the client is not a Medicare or Medi-Cal beneficiary, a request for confirmation that no lien exists should be made in the Notice of Claim which should state the assertion that the client is not a beneficiary, and include the client’s social security number instead of a HICN.    

The BCRC will issue a Rights and Responsibilities (RAR) letter which states what information is needed from the beneficiary and what to expect during the Medicare Secondary Payer (MSP) recovery process. BCRC ensures that Medicare is repaid for any conditional payments made by Medicare for which another payer may be responsible.  Medicare conditional payments are made so that the beneficiary does not have to use their own money to pay the bill.  The conditional payments must be repaid to Medicare when a settlement, judgment, award, or other payment is made.  

The BCRC will then send a Conditional Payment Letter (CPL) which identifies the payments that Medicare has made.  The CPL will also include information on how to dispute a payment for not being related to the injuries that are the subject of the claim.  This is important particularly with clients who have chronic health care conditions.  The attorney should request that unrelated charges be deleted from the CPL before settlement discussions occur.  Moreover, the CPL is not considered a final notice charges, as Medicare may still make conditional payments pending the conclusion of the claim.  If the client has completed treatment, an Interim Conditional Payment Letter must be requested in order to commence settlement discussions.  BCRC will not issue a formal demand letter detailing the final primary payment responsibility until BCRC is put on notice of a final judgment, award, or other payment.  If the client’s treatment is ongoing, the final demand is the only conclusive determination of the amounts that must be repaid to Medicare.  

IS THERE A DUTY TO PROTECT MEDICARE’S INTEREST?

When negotiating a settlement from a third party liability claim, Medicare’s interest must be protected or penalties will result.  Settlement documents must reflect that Medicare’s interest was protected.  If Medicare’s interest is not documented, the beneficiary, the third party insurance company, the plaintiff’s lawyer, the medical providers, and any other party receiving money from the third party payment will be liable for Medicare’s interest.  Medicare may also suspend the beneficiary’s coverage.  It is critical to ensure Medicare’s interests are protected, as Medicare has the right to seek double damages for reimbursement of conditional payments.  

IS THERE A DUTY TO PROTECT MEDICARE’S FUTURE PAYMENTS?

Although not required, it is strongly suggested that a Medicare Set-Aside (MSA) also be created to consider Medicare’s interest for future medical expenses that are likely to be incurred by the plaintiff.  CMS will review any proposed MSA.  If the MSA is approved, Medicare’s interest will be deemed to properly have been considered by the settling parties.

In addition, to support the parties’ consideration of Medicare’s interest, a professional company such as the Garretson Group or the Blackburn Group may be hired.  This is highly suggested in cases where there is a substantial settlement and there is a significant need for ongoing medical care related to the injuries for which Medicare may provide payment.  Otherwise, if the client’s treatment is completed, the treating healthcare providers should state so in the records so that CMS does not challenge whether Medicare’s future interest was considered in reaching a settlement.  If the settlement includes funding for the plaintiff’s future medical care, documentation should give clear notice to the plaintiff’s lawyer and the beneficiary that the settlement includes future medicals and they are obligated to protect the Medicare Trust Funds.  Again, Medicare has six years to seek recovery of any payments.  

CAN MEDICARE LIENS BE REDUCED?

MEDICARE PRO-RATA REDUCTION

Pursuant to Title 42 of the Code of Federal Regulations section 411.37, Medicare will make a pro-rata reduction based on the amount it cost for the beneficiary to obtain a settlement or judgment. The amount of the reduction will be determined by the attorneys’ fees which can be up to 40% and the costs incurred divided by the total settlement.  This will equal the percentage amount of the total settlement for which Medicare will reduce its lien. However, there are situations where the client may receive no net recovery despite a Medicare reduction.  For example, if a Medicare lien is $100,000.00 and the settlement is also for $100,000.00 and the attorneys’ fees are 40% and costs are $10,000.00, then Medicare will reduce its lien by 50%.  Nevertheless, after attorneys’ fees and costs and the reduced Medicare lien, the client will not receive any net recovery.  

When a liability settlement is $5,000.00 or less, there is a Fixed Percentage Payment option available in which the beneficiary can elect to resolve Medicare’s interest by paying 25% of the gross settlement.  The beneficiary must elect this option before Medicare issues a demand letter or requests reimbursement.  

On settlements of $300.00 or less, the beneficiary does not have to make any payment to Medicare.   

WHAT IS MEDICAID?

Medicaid was authorized in order to provide health coverage for low income people.  The Medicaid program is administered by the separate States, and therefore there are variations in coverage from State to State.  Moreover, the federal Affordable Care Act, also known as “Obamacare,” provides funds to States in order to expand Medicaid coverage.  However, not all States have opted to participate in Obamacare.  

Medi-Cal is California’s Medicaid program and it is administered by the California Department of Health Care Services (DHCS) and the federal Centers for Medicare and Medicaid Services (CMS).  

CAN MEDI-CAL LIENS BE REDUCED?

In every personal injury case, once the defendant’s liability insurance is discovered, both Medicare and Medi-Cal should be put on notice of the claim regardless of whether the plaintiff is a beneficiary.  A letter from both programs stating that the plaintiff is not a beneficiary will expedite the settlement process.  Both Medicare and Medi-Cal allow for online reporting, however it may be best to keep a paper-trail by mailing letters.

The mailing address for Medi-Cal to send the Notice of Claim is:

 

Department of Health Care Services

Medi-Cal Program

Third Party Liability and Recovery Division

Casualty Insurance Section – MS 4720

P.O. Box 997425

Sacramento, CA 95899-7425

Telephone: (916) 445-9891; (916) 650-0572

 

Medi-Cal is obligated to recover the payments made when a third party tortfeasor is responsible for causing the injuries to the Medi-Cal beneficiary.  Unlike Medicare, there are restrictions on the amount Medi-Cal can recover in a third party liability case.  

MEDI-CAL 25% RULE

Pursuant to the so-called “25% Rule,” the California Department of Health Care Services’ Medi-Cal claim for reimbursement must be reduced by 25%.  This reduction is for Medi-Cal’s share of attorneys’ fees and its pro rata share of the costs.    

MEDI-CAL 50% RULE  

Pursuant to the so-called “50% Rule,” California Welfare and Institutions Code section 14124.78 states: “[I]n no event shall [the California Department of Health Care Services] recover more than the beneficiary recovers after deducting, from the settlement, judgment, or award, attorneys’ fees and litigation costs.” If the 50% Rule applies to the personal injury case, the beneficiary does not also get the advantage of the 25% Rule.  

Moreover, the United States Supreme Court has ruled that the State may only recover its Medicaid lien from the damages in the settlement representing compensation for past medical expenses.  Once a settlement is reached, DHCS should be provided an itemization of the attorneys’ fees and costs.  A Request for Statutory Reduction in writing should also be provided to DHCS.  

In addition to the 50% Rule, pursuant to California Welfare and Institutions Code section 1412.4.71(b), DHCS is authorized to compromise, settle, or release its claim in whole or in part if the collection of the claim would result in undue hardship to the injured plaintiff.  The plaintiff’s attorney should request both a statutory reduction in addition to a compromise, waiver, or release of the claim due to hardship.  Particularly, in cases in which there are multiple liens with Medi-Cal and Medicare, obtaining full or partial waivers may be the only option for the plaintiff to recover any compensation for their injuries.         

IS THE VETERANS ADMINISTRATION ENTITLED TO REIMBURSEMENT?

When a third party is liable for the injuries suffered by a veteran who then receives treatment for those injuries through the United States Veterans Administration (VA), the VA is entitled to reimbursement from any amounts obtained by the veteran when pursuing a claim against the third party.  The amount of reimbursement is the fair value of medical care.  The VA’s right to reimbursement is pursuant to the Federal Medical Care Recovery Act (42 U.S.C.A. § 2651), which provides the United States the right to seek recovery.  The United States will normally send a Notice of Lien to the injured veteran or the attorney of record.  The responsibility is on the injured veteran to resolve the government lien.   

Accordingly, the Common Fund Doctrine allows for the veteran’s attorney to argue that the VA’s claim should be reduced by the same percentage of the attorney’s contingency fee so that the VA also pays its fair share of the veteran’s litigation costs in obtaining the recovery from the third party.  Applicable case law supports this Common Fund Doctrine argument.        

If the government lien cannot be resolved, the veteran’s attorney can file a Federal civil lawsuit on behalf of the veteran in Federal District Court in order to obtain a declaratory judgment determining the amount of the veteran’s special damages and the amount the government is entitled to recover pursuant to the Federal Medical Care Recovery Act.  

WHAT IS ERISA?

The federal Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. 1001, et seq., regulates the creation, operation, maintenance, and termination of employee welfare benefit plans.  ERISA was created to ensure financial soundness of employee welfare benefit plans and to ensure that the payment obligations to plan members were satisfied.  As such, many employee health plans are governed by ERISA. 

ARE ERISA BENEFITS ENTITLED TO REIMBURSEMENT?

ERISA plans rely on federal preemption as support for the position that the lien must be paid in full and not allowed to be reduced when there is a third party liability recovery.  ERISA liens are very difficult to negotiation and reduce. Whether an ERISA plan can be reduced depends on the whether the plan is self-funded or insured and what is stated in the actual contract.  Moreover, pursuant to section 502(a)(3) of ERISA, a civil action may be filed by the plaintiff’s attorney to obtain equitable relief to redress violations or enforce any provisions of the employee’s health plan.  See 29 U.S.C. section 1132(a)(3).

SELF-FUNDED VS. INSURED PLANS

There are generally three methods that an employer may fund a health care plan.  These include: (1) “unfunded plans” in which the employer purchases a group insurance policy from a commercial insurance company; (2) “self-funded plans” in which the employer is self-insured and absorbs the entire risk of loss; or (3) “partially funded plans” in which the employer self-insures up to a certain monetary amount and then purchases from an insurance company a “stop-loss” policy to cover any claim in excess.  

As a general rule, the federal law that governs ERISA plans pre-empt the state law.  An exception to the general is pursuant to the “Savings Clause” contained in 29 U.S.C. 1144(b)(2)(A), which states that “nothing in this title shall be construed to exempt or relieve any person from any law of any State which regulates insurance.”  Therefore, if the ERISA plan is insured, then the state may regulate it.  Self-funded ERISA plans are exempt from state laws.  Self-funded plans include any plan that is solely funded by the employer.  The “Deemer Clause” contained in 29 U.S.C. 1144(b)(2)(B) states that an employee benefit plan governed by ERISA shall not be deemed an insurance company, an insurer, or engaged in the business of insurance for purposes of State laws regulating insurance companies and insurance contracts.  The United States Supreme Court has further ruled that an employee benefit plan must be self-funded for it to be out of reach of state laws.  See FMC Corp. vs. Holliday (1990) 498 U.S. 52. The Supreme Court further ruled: “[I]f a plan is insured, a State may regulate it indirectly through regulation of its insurer and its insurer’s insurance contracts; if the plan is uninsured, the State may not regulate it.” Id, at 64.  However, The Supreme Court has yet to address whether a partially insured plan is exempt from state insurance laws.     

Simply put, if the plan is self-funded, then only ERISA will govern.  If the plan is an insured plan, then state law will govern.  Therefore, in California, if the plan is insured, then California Civil Code section 3040 will apply limiting the amount the lien claimant can recover from a third party liability settlement.  

California Civil Code section 3040 provides for a pro rata percentage reduction based on the insured’s comparative fault, reasonable attorney’s fees, and costs.  This codifies the Common Fund Doctrine.  Essentially, the third party recovery effectively creates a “common fund” where not only will the injured party receive a benefit for having created the fund, but also the lienholder can draw from that same fund.  Therefore, the lienholder should not get the benefit of free legal services required for obtaining the fund.  The lienholder is required to share in the expenses and the lien amount is therefore reduced accordingly.  California Civil Code section 3040 provides for a cap on the amount recoverable on the lien.  When an attorney is retained by the injured party, the health plan’s lien claim may not exceed one-third of the money due to the injured party.  

In contrast, if the plan is self-funded, then the employer has a right to reimbursement under the federal law of ERISA.  Moreover, the United States Supreme Court held that the employer could pursue an equitable action to recover the amount of the reimbursement against the person holding the funds under a theory of constructive trust or equitable lien.  See Sereboff vs. Mid Atlantic Medical Services, Inc., (2006) 547 U.S. 356.  In such situations, the plaintiff’s attorney may only be left with arguing that the injured client may stop pursuing the claim if the ERISA plan does not reduce their lien.

CONTRACT LANGUAGE CONTROLS

The contract language of the employee health plan must be read very carefully.  The contract must first be determined in fact to be an ERISA plan, as the lien claimant will argue.  The plan may in fact be determined an HMO or a PPO.  The plan language will also indicate whether it is self-funded or an insured plan, whether the lien can be collected from the third party liability settlement, whether the lien can be collected from a first party liability settlement such as an uninsured motorist or underinsured motorist recovery, and whether the plan expressly waives the make whole doctrine or the common fund doctrine.     

The United States Supreme Court held that when the contract language excludes equitable defenses the employer may pursue an action to recover the reimbursement amount based on an equitable lien theory.  The Supreme Court stated that unjust enrichment, the make whole doctrine, or the common fund doctrine cannot override the contract language.  See U.S. Airways vs. McCutchen, (2013) 133. S. Ct. 1537.  However, when the plan language is silent in this regard, equitable defenses such as the make whole doctrine and the common fund doctrine may still apply.         

UNRELATED CHARGES NOT RECOVERABLE AND CREDIT FOR CO-PAYS

The charges covered by the ERISA plan should be itemized.  The itemization should not include unrelated charges or double billing charges.  A careful review of the itemization is required, including the reasonableness of the charges.  When negotiating the amount of the ERISA lien, the reasonableness of the charges should be considered and raised by the plaintiff’s personal injury attorney.  Moreover, the plaintiff should be given a credit for the co-pays that were paid out of pocket and therefore should be deducted from the lien amount.

MEDICAL BILL REDUCTION

If the recovery is not sufficient to compensate for the total amount of medical bills, it can be argued that the ERISA lien should be reduced by the amount of medical bills.  In addition, if the insurance coverage policy limits for the liable third party defendant is smaller than the value of the personal injury case, then it can be argued that the medical bills have not been recovered and the lien cannot include reimbursement for the same amount of medical bills. This is particularly a good argument if the wage loss incurred by the injured plaintiff makes up a substantial portion of the amount permitted by the policy limits.  Even more, if the policy limits are so minimal so as to not be enough to compensate for pain and suffering, it can be argued that a portion of the medical bills have not been recovered and therefore should not be included in the lien amount.  See Wos v. E.M.A., (2013) 133 S. Ct. 1391.

INTRODUCTION

Traumatic Brain Injuries (TBIs) are serious injuries that impact the life of the victim and the lives of the victim’s family and friends. TBIs can significantly impact the injured victim’s cognitive, physical, and psychological skills. The scope of the harm to the brain can be difficult to determine and is often difficult to prove in court.

TBIs have come to the forefront due to the widespread discussion of injuries in contact sports such as professional Football and Boxing. Studies have found that a remarkable proportion of athletes who played at the highest level develop neurodegenerative diseases as a consequence of a brain injury.

Brain injuries can frequently be deceptive, so it is important to be extra-cautious about any accident that causes a blow to the head.

The implications of traumatic brain injuries and the legal challenges which may arise when attempting to recover compensation for the harm will be discussed herein.

AUTHORITATIVE PUBLICATIONS

The current authoritative publications on Traumatic Brain Injuries (TBIs) are essential when proving the existence of a TBI to a jury. It is important to educate the jurors on the extent of harm caused by a TBI. The following are good resources:

The Center for Disease Control and Prevention (CDC) Reports to Congress, including:

Report to Congress on Traumatic Brain Injury Epidemiology and Rehabilitation: Recommendations for Addressing Critical Gaps (March 2015)

Report to Congress on Traumatic Brain Injury in the United States: Understanding the Public Health Problem among Current and Former Military Personnel (June 2013)

Report to Congress on Mild Traumatic Brain Injury in the United States: Steps to Prevent a Serious Public Health Problem (September 2003)

Traumatic Brain Injury in the United States: A Report to Congress (December 1999)

Litigating Brain Injuries, Vols. 1 and 2, Stern, Bruce. Thomson-West Publishing. 2006.

Neuropsychological Assessment, Lezak, et al., 5th Edition, Oxford University Press. 2012.

The Handbook of Clinical Neuropsychology, Gurd, et al. Oxford University Press. 2012.

The Handbook of Functional Neuroimaging of Cognition. Cabeza, et al, Second Edition.

Plaintiff organizations:

The American Association for Justice (AAJ) has a Traumatic Brain Injury Group that sponsors conferences. www.justice.org.

The North American Brain Injury Society (NABIS) is a society of professionals involved in the issues surrounding brain injury. www.nabis.org.

Defense organizations:

The Defense Research Institute (DRI) sponsors seminars for defense counsel dealing with the issues in traumatic brain injury litigation. www.dri.org.

GUARDIAN AD LITEM

If the brain injury victim has impaired decision-making abilities or is at risk of undue influence from others, then an appointment of a guardian may be considered. In attempting to pursue a lawsuit to recover compensation for the brain injury suffered by injured victim, a guardian ad litem may need to be applied for with the court if it is in the best interest of the client. A guardian ad litem is a temporary form of guardianship that must be appointed to protect the litigant’s best interests during the legal proceeding.

WHAT IS A TRAUMATIC BRAIN INJURY?

A Traumatic Brain Injury is a trauma to the brain caused by an external force, such as a fall, an assault, or a motor vehicle accident. TBI does not include stroke, aneurysm, insufficient oxygen, poisoning, or infections – these are known as non-traumatic brain injuries. Many times non-TBI injuries may cause similar deficits as a TBI.

Traumatic Brain Injury is frequently referred to as the “silent epidemic” because the problems that result from it often are not visible. Traumatic Brain Injury is an injury to the brain characterized by five elements:

1. TBI is an injury to the brain caused by biomechanics forces. TBI is not ischemia or stroke! These forces can be direct or indirect.
2. TBI results in regional and temporal cellular alterations and may produce cell death. The victim may not see the effects of the injury for a couple of weeks.
3. TBI produces a state of energy crisis and subsequent metabolic diaschisis.
4. TBI changes the priorities for fuel in the victim’s body.
5. TBI can contribute to the acquisition of Post Traumatic Stress Disorder (PTSD) and more chronic neurological degeneration related diseases.

Generally, a traumatic brain injury is a non-degenerative, non-congenital injury to the brain caused by an external mechanical force, potentially leading to permanent or temporary impairment of cognitive, physical, and psychosocial functions. This impairment is often accompanied by a diminished or altered state of consciousness. It has also been defined as “an alteration in brain function, or other evidence of brain pathology, caused by an external force.” TBI’s are usually classified by use of the Glasgow Coma Scale as either severe (GCS 3-8), moderate (GCS 9-12), or mild (GCS 13-15).

WHAT PARTS OF THE BRAIN ARE AFFECTED IN A TRAUMATIC BRAIN INJURY?

The brain floats in cerebrospinal fluid within the hard skull cavity. Portions of the interior of the skull against which the brain is situated are irregular and sharp, which is an added danger when the brain impacts the interior of the skull during trauma. The brain cerebrum is an organ with the consistency of gelatin that is situated within the skull. The cerebrum has an outer layer of tissue known as the cerebral cortex which surrounds the gray matter. The cerebrum is sectionalized into main regions known as lobes. The major lobes are the frontal lobe, temporal lobe, parietal lobe, occipital lobe, cerebellum, and brainstem. Each of these lobes controls different brain functions. Each part is susceptible to injury from trauma. Damage to a particular lobe can cause impairment of functions controlled by it. It is also understood that certain lobes are within a network of interconnected structures, and damage to one such structure can affect brain functions controlled by other structures within that network.

The Frontal Lobe is the “filter” – it is the emotional and personal control center for the human-being. Frontal Lobe injuries impact the victim’s personal filter and cognitive functions. The frontal lobe controls attention, motivation, emotional and social control, verbal expression, judgment, spontaneity, problem solving, movement, thinking initiation, reasoning, judgment, behavior, emotions, memory, and speaking. Frontal lobe injury victims display perseveration – repeating a word or phrase insistently or redundantly. The Frontal Lobe is almost always injured due to its large size and its location near the front of the cranium, which is the part of the skull that encloses the brain.

The Temporal Lobe controls the short-term memory, receptive language, comprehension, selective attention, auditory processing, face recognition, behavior, emotions, understanding language, and hearing.

The Parietal Lobe controls touch, spatial orientation, understanding spatial relationships, eye-hand coordination, distinguishing left from right, sensation, and reading.

The Occipital Lobe controls perception, visual procession, vision, color blindness, reading, perception and the recognition of printed words. It is in the very back of the head. This area of the brain is most likely impacted when the victim experiences a sensation described as “seeing stars.”

The Cerebellum is known as the “little brain.” The Cerebellum controls voluntary movement coordination, balance, and fine muscle control.

The Brainstem controls heart rate, breathing, body temperature, blood pressure, heartbeat, alertness, sleep regulation, swallowing food and fluid, digestion, balance and movement. It is automatic – the things we do not think about but we do automatically.

DIFFERENT TYPES OF BRAIN INJURIES: SEVERE, MODERATE, AND MILD

TBIs can be either: severe, moderate, or mild. The severity of the brain injury is determined by a common scale, the Glasglow Coma Scale.

Severe traumatic brain injuries are the easiest to prove. It is defined as a brain injury resulting in loss of consciousness for more than 6 hours and a Glasglow Coma Scale score of 3 to 8.

Moderate traumatic brain injuries have by definition objective signs which serve as evidence to support its existence. A person suffering from a moderate TBI will have lost consciousness for 20 minutes to 6 hours, and score a 9 to 12 on the Glasglow Coma Scale.

Mild traumatic brain injuries (mTBI) have a name that is misleading. A mTBI can have severe impacts on the injured victim’s life. Even more, a mTBI cannot always be seen using standard imaging devices such as an MRI or CT scan. The Report to Congress on Mild Traumatic Brain Injuries by the Center for Disease Control and Prevention (CDC) states that the impact of a mild traumatic brain injury is in fact not “mild.” The report also states that a mild traumatic brain injury is a serious public health problem and there is evidence that these injuries can cause significant life-long impairment. Moreover, the U.S. Department of Health and Human Services states that mild traumatic brain injuries have an impact on an individual’s ability cognitively, emotionally, and psychiatrically. The Center for Disease Control also states that 15% of these injuries result in persistent disabling effects. Furthermore, the U.S. Military and the Federal government have conducted many studies and have released many publications discussing the results of explosion blast incidents.

Fortunately, it is possible for people to get better after suffering a Traumatic Brain Injury. But the recovery process may be long and slow. Moreover, even mild traumatic brain injuries can have severe impacts. For example, a concussion is defined as a Mild Traumatic Brain Injury. Once a certain amount of work is impacted on the brain, then a certain flow of potassium is released causing a concussion. There is nothing “mild” about this type of traumatic brain injury. About 75% to 80% of all brain injuries are considered “mild.” There can be lasting harmful effects. The victim may not be able to perform their job functions as they had in the past, which has an impact on the victim’s psyche and the victim’s ability to provide support to family and loved ones. The common signs and symptoms of a concussion include loss of consciousness (LOC), post traumatic amnesia (PTA), headache, confusion, dizziness, fatigue, drowsiness, nausea, vomiting, hypersensitivity to loud noise and bright lights, and irritability. The neurocognitive impairments associated with a concussion include memory impairment, slower reaction time, slower processing speed, poor attention, and poor concentration.

WHAT IS A MILD TRAUMATIC BRAIN INJURY (mTBI)?

The American Congress of Rehabilitation Medicine defines a mild Traumatic Brain Injury (mTBI) as:

A patient with mild traumatic brain injury is a person who has had a traumatically induced physiological disruption of brain function, as manifested by at least one of the following:

1. Any period of loss of consciousness;
2. Any loss of memory for events immediately before or after the accident;
3. Any alteration in mental state at the time of the accident (eg, feeling dazed, disoriented, or confused); and
4. Focal neurological deficit(s) that may or may not be transient; but where the severity of the injury does not exceed the following:
• Loss of consciousness of approximately 30 minutes or less;
• After 30 minutes, an initial Glasgow Coma Scale (GCS) of 13–15; and
• Post-traumatic amnesia (PTA) not greater than 24 hours.

This definition includes:
1. The head being struck,
2. The head striking an object, and
3. The brain undergoing an acceleration/deceleration movement (ie, whiplash) without direct external trauma to the head.

It excludes stroke anoxia, tumor, encephalitis, etc. Computed tomography, magnetic resonance imaging, electroencephalogram, or routine neurological evaluations may be normal. Due to the lack of medical emergency, or the realities of certain medical systems, some patients may not have the above factors medically documented in the acute stage. In such cases, it is appropriate to consider symptomatology that, when linked to a traumatic head injury, can suggest the existence of a mild traumatic brain injury.

In short, the American Congress of Rehabilitation Medicine defines a mTBI as a traumatically induced disruption of brain function, consisting of loss of consciousness or altered mental status, that may have resulted from a blow or no-blow to the head. Other organizations that provide definitions of mTBI include the Centers of Disease Control, the World Health Organization, and the Department of Veterans Affairs.

The Demographics and Clinical Assessment Working Group of the International and Interagency Initiative toward Common Data Elements for Research on Traumatic Brain Injury and Psychological Health formed an expert group who proposed the following definition:

TBI is defined as “an alteration in brain function, or other evidence of brain pathology, caused by an external force.”
a) Alteration in brain function is defined as one of the following clinical signs:
1) Any period of loss of or decreased level of consciousness;
2) Any loss of memory for events immediately before (retrograde amnesia) or after the injury (PTA);
3) Neurologic deficits (weakness, loss of balance, change invision, dyspraxia paresis/plegia (paralysis), sensory loss, aphasia, etc); or
4) Any alteration in mental state at the time of the injury (confusion, disorientation, slowed thinking, etc).
b) or other evidence of brain pathology:
Such evidence may include visual, neuroradiologic or laboratory confirmation of damage to the brain.
c) Caused by an external force may include any of the following events:
1) The head being struck by an object;
2) The head striking an object;
3) The brain undergoing an acceleration/deceleration movement without direct external trauma to the head;
4) A foreign body penetrating the brain;
5) Forces generated from events such as a blast or explosion; or
6) Other force yet to be defined.

Moreover, concussions are considered to be mild Traumatic Brain Injuries. Concussions are caused when the brain receives trauma from an impact, sudden momentum or movement change. The blood vessels in the brain may stretch and cranial nerves may be damaged. A person may or may not experience a brief loss of consciousness (not exceeding 20 minutes). They may remain conscious, but feel “dazed.”

WHAT IS THE MECHANISM OF A TRAUMATIC BRAIN INJURY?

There are two types mechanisms that cause head injuries: a coup injury and a contrecoup injury. Coup and contrecoup injuries are associated with cerebral contusions, a type of traumatic brain injury in which the brain is bruised. The contusion may have resulted from a strong blow to the head, causing the brain to slam against the inside of the skull. A coup injury occurs under the site of the impact from an object. A contrecoup injury occurs on the side opposite the area that was hit and causes the brain to impact the side the of the skull opposite of the point of impact.

A coup-contrecoup injury occurs when the brain ricochets inside the skull, which results in widespread damage to the brain. The brain can be compared to jello, in that when it shakes it will not be in tact.

There are two classifications of traumatic brain injury: open and closed. Open head injury is when the skull is penetrated by an external instrument such as a sharp knife or explosive. Closed head injury is caused by a blunt impact or blow to the head, which more commonly leads to brain damage.

A laceration occurs when there is tearing of the brain, usually from a skull fracture or gunshot wound, ruptures large blood vessels causing bleeding into the brain and subarachnoid space. This can result in hematomas, edema and increased intracranial pressures. Objects like bullets can also ricochet within the skull, which can widen the area of damage.

Hematoma occurs when the wall of a blood vessel, artery, vein, or capillary has been damaged and blood has leaked into tissues where it does not belong. Hematoma is swelling or a mass of blood in the brain caused by a break in a blood vessel. A collection of clotted blood in the brain is usually due to a severe TBI and may be life threatening.

Anoxic brain injury occurs when the brain does not receive any oxygen. Cells in the brain need oxygen to survive and function.

Hypoxic brain injury results when the brain receives some, but not enough oxygen.

WHAT HAPPENS INSIDE THE BRAIN DURING A TRAUMATIC BRAIN INJURY?

Traumatic Brain Injuries are either diffuse or focal.

Diffuse injuries are characterized by microscopic damage to many areas of the brain; whereas, focal injuries occur in a specific location of the brain.

Focal injuries with localized damage to the brain may result when the brain bounces against the skull. The areas of the brain that are most likely affected by focal injury are the brainstem, frontal lobe, and temporal lobes because their locations are close to bony protrusions.

As a result of the traumatic brain injury, the brain may experience: chemical cascade, energy crisis, and diffuse axonal injury.

Diffuse Axonal Injury (DAI) is one of the most common and devastating types of TBIs. The damage is done in the form of lesions in white matter tracts over large areas. DAI occurs when the nerve cells in the brain are torn apart. Diffuse axonal injury is the “hallmark” of mTBI and concussion. However, diffuse axonal injury can occur in every degree of severity, and with severe DAI, the outcome is often a coma with over 90 percent of patients never regaining consciousness. Those who do are usually significantly impaired. DAIs are often the result of traumatic shearing forces or strong rotational forces, which occur when the head is accelerated or decelerated very quickly, such as in car accidents. The unmoving brain lags behind the movement of the skull, causing the brain to tear. When there is extensive tearing of nerve tissue throughout the brain, the brain’s regular communication and chemical processes can be disrupted. This “chemical cascade” can cause additional injury.

Damage to neuronal firing in the brain can also result. The brain is comprised of billions of cells. The basic cell is the neuron, which conducts electrochemical impulses that transmit information in the brain and throughout the central nervous system. Neurons are comprised of the cell nucleus with multiple branching dendrites that receive information from other neurons, and the axon that carries the electrical nerve impulses for transmission to connecting neurons. Information from one neuron flows to another neuron across a synapse. The synapse contains a small gap separating neurons. The synapse consists of: a presynaptic ending that contains neurotransmitters, mitochondria and other cell organelles.

Abnormal neuronal firing can occur when the signals between neurons are disrupted. This occurs when there is “axonal shearing” which involves the connection of the axon being “sheared” from the cell body by trauma forces.

As a result of the damage to neuronal firing, the symptoms of Diffuse Axonal Injury include slow mental processing, in which the injured victim requires increased time to hear what is being said, increased time to process that information, and increased time to formulate and articulate a response.

Image of Neuron and Synapse:

MEDICAL TESTING

The Glasgow Coma Scale (GCS) is a neurological scale used to objectively record the conscious state of a person, often by first responders to head injuries to determine level of consciousness. However, it not that useful after the initial assessment of the injury because brain function fluctuates and changes across time. GCS is also affected by alcohol and drugs. The GCS is a quick assessment of the level of brain function at a single moment. Unfortunately, the GCS cannot tell if the injury is mild, moderate, or severe.

The Glasgow Coma Scale score for a patient is based upon clinical assessment at the time of the injury. It is a 15 point assessment of eye-opening response, verbal response, and motor response. The accuracy of the results of the assessment depends upon when and by whom it was conducted. This classification system can be misleading as all traumatic injuries to the brain are serious and even those classified as “mild” under this system can result in catastrophic and life-long consequences.

The Rancho Los Amigos Levels of Cognitive Functioning Scale is another test. While the Glasgow Coma Scale will be the first tool used, it is not useful after the initial injury. When the injured victim emerges from his coma, the Rancho Los Amigos Scale is used. The Rancho Los Amigos Scale measures the levels of awareness, cognition, behavior and interaction with the environment on an eight level scale. The rate at which an injured victim progresses from level to level after coma emergence is difficult to predict, as every brain injury is unique. Sometimes the admission criteria for a rehabilitation facility is based on the Rancho scale.

COMMON SYMPTOMS

The large number of possible symptoms of TBIs makes the injury difficult to really understand. Having any combination of these symptoms may be indicative of a TBI. Common symptoms include:

NEUROLOGICAL SYMPTOMS: Nausea, dizziness, balance, headaches, fatigue, sleep disturbance, musculoskeletal issues such as TMJ, neck and back pain.

SENSORY SYMPTOMS: Pain, altered or absent taste/smell (geusia/olfaction), changes in hearing (e.g. tinnitus), changes in vision (e.g. scanning, perception, reading comprehension).

COGNITIVE SYMPTOMS: Amnesia, inability to speak or understand language, mental confusion, difficulty concentrating, difficulty thinking and understanding, inability to create new memories, or inability to recognize common things.

Concussions have a variety of immediate symptoms, including but not limited to: confusion, loss of consciousness, headache, nausea and vomiting, slurred speech, tiredness, balance problems, ringing of the ears, irritability, convulsions, dizziness, and amnesia surrounding the event. Concussion victims also experience delayed symptoms that may not arise for weeks to months. This includes the inability to concentrate, prolonged headaches, disturbed sleep, depression, moodiness, sensitivity to light and sound, feeling sluggish or groggy, prolonged nausea or vomiting, double vision, dilated pupils, slowed reaction times, extreme emotional feelings, loss of sense of smell or taste, or trouble with memory.

Post-traumatic headache (PTH) is defined by the International Headache Society as “a headache developing within seven days of the injury or after regaining consciousness.” The most common PTH resembles a migraine. It is critical to know the location of the pain as well as the type of headache in order to properly provide effective treatment. Medications like anti-inflammatories and pain medicines are generally used in the first few weeks. If headaches persist, preventative medicines like antidepressants, blood pressure pills, and anti-seizure medicine can be used to prevent rebound headaches.

Chronic Traumatic Encephalopathy (CTE) is a progressive degenerative disease of the brain found in people with a history of repetitive brain trauma (often athletes), including symptomatic concussions as well as asymptomatic subconcussive hits to the head that do not cause symptoms.

WHAT IS THE TREATMENT FOR A TRAUMATIC BRAIN INJURY?

In medical terms, there is no single treatment plan that is the same for all Traumatic Brain Injuries. In fact, there is no medication or surgery that can correct a Traumatic Brain Injury. However, the victim can “re-train” their brain and cognitive functions.

Every TBI is different. Children are different than adults. Women are different than men – women have a different bio-mechanical function than men. In fact, women mature faster than men. Therefore, each incident involving a brain injury requires a unique plan of recovery. In general, it takes about 30 days to recover from the first concussion, and about 45 days after the second concussion.

WHAT IS THE RECOVERY AND REHABILITATION PROCESS FOR A TRAUMATIC BRAIN INJURY?

Recovery from a TBI depends on both the severity of the brain injury and the individual himself. Every brain injury is different so recovery can take a few months to even years after the initial injury, and you may never see recovery for some injuries. Initially, recovery is aimed at saving cells and preventing further damage. Acute care is an option that can be very expensive.

Acute care is a branch of secondary health care where a patient receives active but short-term treatment for a severe injury or episode of illness, an urgent medical condition, or during recovery from surgery. In medical terms, care for acute health conditions is the opposite from chronic care, or longer term care.

Outpatient therapy for traumatic brain injury patients can cost from $600.00 to $1,000.00 per day, and hospital-based rehabilitation can cost $8,000.00 a day or more. Those who suffer a traumatic brain injury leading to chronic care or permanent disability will require a substantial verdict or settlement to cover a lifetime of medical expenses and related costs. Costs associated with a traumatic brain injury can ultimately be several million dollars over a lifetime.

To facilitate rehab, a patient will see a neurologist or a rehabilitation physician known as a physiatrist. The neurologist will oversee the care for the patient, in terms of medication and neurological care. The neurologists will also oversee the rehabilitation process.

Patients may also see a rehabilitation physician who combines physical medicine and rehabilitation. Commonly referred to as a physiatrist, this care provider combines neurologists and orthopedics to focus on function and quality of life. Physiatrists can make recommendations that can be the basis for and included in a restorative life care plan.

Physical therapists may be employed if the brain injury is causing physical impairments in the individual. TBI patients may need to retrain their body to move or do something as simple as clenching a fist.

TBIs can impact the injured victim’s ability to speak and communicate. It common to undergo speech therapy. If the TBI hinders the victim’s ability to perform daily living functions, like grooming, the injured victim may see an occupational therapist. Brain injuries harm people in expansive ways, so it is important to know how this all affects the injured victim’s life in order to accurately assert a claim for damages.

WHAT MEDICAL PROVIDERS ARE NEEDED TO DETERMINE A TBI?

Neurological Examination

Following a TBI, an injured victim should see a neurologist for a neurological examination. A neurologist is a medical doctor trained in diagnosing disorders of the brain. The neurologist will evaluate and document the injured victim’s loss of consciousness, amnesia and confusion, and any other symptoms the victim may be experiencing. The neurologist will examine brain function and assess a person’s mental state to determine appropriate medical treatment. A neurologist may recommend a neuropsychological evaluation to assess cognitive status for a neuroradiological examination to quantify the resulting deficits in the victim’s brain function.

Neuropsychological Examination

Neuropsychologists will evaluate the injured victim’s neurological dysfunction. While psychologists will look at the emotional disorder; neuropsychologists will look at the cognitive functions within the brain and conduct testing, which will usually take all day to complete. The test giver must take into all the factors of the testing into consideration when coming to a conclusion. The evaluation can cost thousands of dollars. It is important to to note that the extent of brain injuries are not picked up by an MRI. Neuropsychological testing picks up the nuances of the injury. The neuropsychologist will take an in-depth history, review all medical records, review neuroimaging studies, and conduct numerous standardized tests that measure memory, complex or sequenced tasks, I.Q., reasoning, emotional response, vision, and other brain functions. If possible, the neuropsychologist will compare pre-morbid levels (the victim’s condition preceding the occurrence of symptoms of a disease or disorder) to determine the reduction in brain function due to the TBI.

In the context of litigation, a neuropsychologist plays the role of establishing the presence of a neuropsychological disorder or injury, determining causality related to a specific event/accident, indicating probable prognosis, and advising as to the medical necessity of treatment and disability status.

Likewise, the Defense will also retain a forensic neuropsychologist to determine whether the deficits found are the result of brain impairment from this accident, as opposed to psychological trauma, physical (peripheral) injury, malingering, a pre-existing condition, or some combination of these causes.

Neuroradiological Evaluation

The injured victim will need to undergo various neuroimaging studies. Certain studies will reveal the injured victim’s neuroanatomical abnormalities, as well as cellular and metabolic dysfunction on the microscopic level.

WHAT DIAGNOSTIC TOOLS ARE USED TO VERIFY A TRAUMATIC BRAIN INJURY?

Scientific advances in neuroimaging have enabled objective verification of many of the injuries. However, it is important to note that even so called “mild” traumatic brain injuries may go undetected during emergent care of the acute injury and can still have lifelong debilitating effects.

CT Scan: Computed Tomography is capable of detecting skull fracture and subarachnoid hemorrhage, and can differentiate acute hemorrhage of the parenchyma from edema or swelling. However, a CT Scan is not reliable to show specific deficits related to regional damage to the brain. CT Scans and MRIs are great tools if looking for structure – not for functioning. Many times the CT Scan will come back negative.

Image of CT Scan:

MRI: Magnetic Resonance Imaging is the preferred imaging technique for detecting sub-acute and chronic TBI. However, just like a CT Scan, traditional MRI is not reliable to detect mild TBI microscopic shear injury or metabolic dysfunction on the microscopic level. MRI uses magnetic and radio waves to look at the brain. For brain injuries, one should use a 3.0 Tesla MRI.

MRI Image of Brain:

FLAIR: Fluid Attenuated Inversion Recovery uses a pulse to selectively reduce signal from cerebrospinal fluid (CSF). FLAIR imaging increases the detection of contusions, white matter injuries, and subarachnoid hemorrhages. It also improves the detection of diffuse axonal injuries.

Image of FLAIR:

DTI: Diffusion Tensor Imaging measures the random motion of water molecules in brain tissue. The white matter tracts are clearly shown by DTI. It also shows disruption in those tracts and is an excellent technique for showing diffuse axonal injury. DTI can reveal pathology where a conventional MRI is negative or normal in appearance.

Images of DTI:

SPECT: Single Photon Emission Computed Tomography measures cerebral blood flow in the brain tissue. Measuring blood flow is an indirect measurement of brain metabolism. SPECT is highly sensitive for detecting regional blood flow disturbances in patients with TBI. SPECT is more effective than CT or an MRI when dealing with mild TBI. SPECT also analyzes brain functioning by creating 3-D pictures to look at blood flow to the brain.

Image of SPECT:

PET: Positron Emission Tomography evaluates the glucose metabolism in various regions of the brain. Slowed glucose metabolism indicates neuronal dysfunction in that region of the brain. PET is good for illustrating regional brain dysfunction. Essentially, a PET Scan examines the glucose consumption to analyze the brain functioning. This evaluation can determine if the brain is processing its fuel.

Image of PET:

NeuroQuant: NeuroQuant is an FDA-approved method of analyzing MRI data in measuring brain volume of a patient and comparing it to normal controls. Brain atrophy or shrinkage is associated with damage to the brain. NeuroQuant measures atrophy to various areas of the patient’s brain which can then be correlated to the patient’s TBI symptoms.

EEG: Electroencephalogram detects electrical activity in the brain using electrodes attached to the scalp. Brain cells communicate using electrical impulses at all times, even during sleep, so an EEG can be used to record the impulses.

ENG: Electronystagmography is a diagnostic test to record involuntary movement of the eyes. The test is performed by attaching electrodes around the nose. ENG can also be used to diagnose dizziness by testing the vestibular system.

VNG: Videonystagmography testing is designed to document a person’s ability to follow visual objects with their eyes and see how well their eyes respond to information from the vestibular system. The test also checks the functionality of each ear and if a vestibular deficit is causing dizziness.

When considering the results of a neuropsychological evaluation to look at brain functioning, it is important to take into account the environment of the test taker. Was it noisy? Were there distractions? Is this on par with the day to day environment where there may be distractions and things occurring?

In addition to diagnostic testing, a Neuro Psychiatrist is good to obtain for assessment of any potential injuries. It is important to obtain an expert’s opinion to prove the existence of injuries.

WHAT EXPERTS ARE NEEDED IN A TBI CASE?

It is important to employ experts to support a claim for traumatic brain injury. The existence of the injury, its cause, the extent of the injury, and past and future damages resulting from the injury can each require expert testimony. Without expert testimony, it is unlikely a jury will be persuaded that the existence and extent of the damage is fact. Effective presentation of these expert witnesses is critical to achieving a favorable outcome.

The injured victim’s treatment may include seeing a neurologist, neuropsychologist, and/or a neuroradiologist. Being evaluated by these qualified experts is key to establishing the existence of the injury, the cause of the injury, and the extent of the damage.

In addition to the injured victim’s treating healthcare providers, the injured victim may need to present testimony from the following experts:

A biomechanical engineer will give testimony regarding the mechanical forces generated from a given impact and the probable disruption caused to anatomical regions of the human body. The biomechanical engineer can give an opinion to the jury as to whether or not the subject incident probably caused the victim’s diagnosed traumatic brain injury.

A life care planner will give testimony regarding the current and future needs with associated costs for individuals who have experienced catastrophic injury or have chronic health needs. The life care planner should be experienced with TBI and understand that TBI is a disease process, not like a normal finite injury process. The expert may be certified in life care planning by the Commission on Health Care Certification

Vocational/Economic experts will give testimony about how the deficits the injured victim is experiencing has and will impact their employment by comparing the victim’s earning capacity before the incident to after. The expert may be certified from the American Board of Vocational Experts, International Association of Rehabilitation, and the American Rehabilitation Economics Association.

An Economist will give testimony about the injured victim’s lost future earning capacity, lost profits, and medical expenses. The economist will be qualified to give an opinion as to the present value of the costs.

WHAT ARE THE DEFENSE STRATEGIES IN A TBI CASE?

During litigation to recover compensation for a brain injury, the Defense Counsel may apply numerous tactics to discredit the victim and the injury. Such strategies include:

Emphasizing the lack of reporting of the brain injury in early medical records,
Emphasizing the fact that the victim may have said they were okay at the scene of the incident,
Emphasizing the fact that the incident may not have been sufficiently violent, or
Emphasizing the fact that there may be a prior history of brain trauma.

In order to refute the fact that there was no early reporting of the brain injury in medical records, Plaintiff’s counsel should introduce publications by the Center for Disease Control, which expressly state that patients must be specifically questioned as to whether they have had an injury or accident. This is important because some patients may not mention the injury-causing accident to their physician at all. The publication can be admitted as evidence if the Plaintiff’s expert establishes it as a reliable authority. The publication can also be used in cross-examination of the Defendant’s expert. The Federal government’s publication may also be admitted by judicial notice.

Defense counsel may also point to prior educational and work records to show there is no serious impact from the alleged brain injury. Defense counsel may claim the injured victim’s doctors are “hoodwinked” and cannot be trusted.

Similarly, Defense counsel will have its retained neuropsychologist testify that the plaintiff had premorbid functioning. Defense counsel will show plaintiff’s poor educational transcripts (such as repeating of grades or failure to obtain a General Education Development diploma or “GED”), occupational levels, present ability measures, and evidence of preexisting deficits (learning disabilities).

The defense will attempt to introduce sub rosa and surveillance evidence to expose an allegedly dishonest plaintiff by using advanced video editing technology to make a truly injured plaintiff appear to be not injured, or less injured. Defense counsel will also attempt to “break down” the injured victim at a video deposition.

Defense counsel may attempt to show that the plaintiff was taking certain medications that can have a “masking” effect which can alter the result or outcome of certain neuropsychological tests and make them faulty. This is an important challenge facing plaintiffs who take certain neuroleptics and antidepressants.

Overall, the Defense counsel may try to show the jury that the injured victim is “malingering” and lying about the injury. However, in order to prove malingering, elements must be satisfied. If injured victim’s own treating physicians have never suspected the victim of malingering, then Plaintiff’s counsel can argue that the treating doctors’ opinions should be persuasive and controlling.

The Defense counsel’s tactics can be overcome if the Plaintiff’s counsel takes the necessary steps to show the jury that the injured victim plaintiff is credible, the event was violent, the mTBI criteria are satisfied, and the impact on the injured victim’s life before as compared to after the injury. Plaintiff’s counsel should also present collateral witnesses and corroborative medical evidence. It is important for the Plaintiff’s counsel to present the case in a way that grabs the jury’s attention to build momentum throughout the trial and to show that the defense is cynical.

WHAT IF THE INJURED VICTIM HAS A PRE-EXISTING CONDITION?

Many times when pursuing a personal injury claim for a traumatic brain injury, the Defense Counsel will try to argue that the plaintiff had a pre-existing condition that included the same symptoms and complaints as the current brain injury that is the subject of the litigation. In doing so, the Defense will attempt to limit the damages recoverable for the plaintiff. In dealing with this argument, the legal doctrines of an “eggshell” plaintiff, exacerbation of a prior condition, and substantial causation are on point. Also important to note, the Federal government’s Acute Concussion Evaluation (ACE) states that prior history of anxiety or depression is a risk factor for protracted recovery. Plaintiff’s Counsel should present to the jury that the injured victim was an unusually susceptible plaintiff and therefore prone to being injured. The foundational legal principle is: “the Defendant takes its Plaintiff as he finds him.” Simply, the Plaintiff should not be prejudiced for being in a condition that makes him more susceptible to being injured.

DEFENSE MEDICAL EXAMS

The Defense will often demand a neuropsychological examination of the injured victim by a neuropsychologist of their choosing to discredit the injured victim. The injured victim will be required to submit to hours of adversarial examination outside the presence of counsel. Audio taping the examination is permissible, but no attorney or third parties are allowed to be present during the examination. Moreover, unless the parties agree, leave of Court is required to obtain a neuropsychological examination. However, a motion shall be granted for good cause, which requires a showing of relevancy and specific facts justifying the discovery.

The parameters of the examination should be clearly defined, either through agreement by counsel or by a Court order. An order helps minimize potential misunderstandings. It is important to establish clear time frames and other limiting parameters to protect the plaintiff’s privacy.

There must be an agreed list of the tests to be performed. The defense is not entitled to a psychological test without a Court order. Any non-standard testing should not be allowed. It is important to consult the victim’s own neuropsychologist on what tests should be agreed to.

The doctor may want to perform the Minnesota Multiphasic Personality Inventory (MMPI) test. However, the MMPI is a bad test. It will come back that the victim is exaggerating the injury. In fact, people with severe brain damage can score high on the test.

Within 30 days of the examination, the plaintiff may demand the neuropsychologist to produce a detailed report setting out the history, the examination findings, test results, diagnosis, prognosis, and conclusions. The defense psychologist’s raw testing data is sent to your psychologist for review, including the scoring, interpretation and computerized print-outs.

DEPOSITION OF DEFENSE EXPERT

To cross examine the defendant’s neuropsychologist, you should research the expert and obtain all their published material because many times they will contradict their own opinions. It is also important to obtain what the defendant’s neuropsychologist believes is authoritative on the issue. If the neuropsychologist refuses to disclose this information at the deposition, it is practical to just look around the deponent’s office to see what publications are in the office and read it into the record during the deposition. Obtain all the defendant’s neuropsychologist’s past depositions and for what party, plaintiff or defendant. Also, Plaintiff’s Counsel should consult with the plaintiff’s expert in order to be prepared for taking the deposition of the defendant’s expert.

In addition, it is always good to question the expert during deposition whether they have played any sports in the past and whether they are aware that injuries can result, that people can get hurt. The rationale is to paint the expert as a “dangerous person to society” because they are reporting people are not hurt when in fact they actually are, for the purpose of being paid money. Also, it is good to question the expert if they have in fact ever seen the Plaintiff and for how long. Many times the doctor may not have even seen or cannot recognize the Plaintiff particularly after time has passed since conducting the examination. The expert should be questioned on how much they are paid per hour – if videotaped, the silence after asking this question is very powerful to the jury. These type of questions should be asked at the end of the deposition so that the expert is not closed-off early on during the deposition.

A powerful line of questioning to ask the expert is:

Is it true that by definition a mild traumatic brain injury will not show up on film?
Loss of consciousness is not required for a traumatic brain injury?
You do not need physical impact to cause traumatic brain injury?
Do you agree that the plaintiff suffered a mild traumatic brain injury?

Essentially, the real argument in a traumatic brain injury litigation is over the residual damage to the injured victim. A residual injury is one that is long-lasting or has a permanent effect on the victim. If the injured victim has lingering or permanent residual injuries, the settlement value or verdict may be higher, particularly if the injury impacts the victim’s ability to earn an income.

A key inquiry in the litigation will be: What is the “industry standard” for believing an expert’s report over the treating physicians? Moreover, during the defense expert’s deposition, the expert should also be questioned about the Hippocratic Oath. Do you owe the Hippocratic Oath to the Plaintiff who you are not in fact treating? The implication is that the expert is being paid big dollars to make up an opinion. Other questions to the expert that should be considered include: Have you ever had your own work peer reviewed by someone above you at any time in your career? Is it okay to disagree with these reports? Has your work ever been disagreed with?

HOW TO PROVIDE DAMAGES: FAMILY MEMBERS AND FRIENDS ARE BETTER TO TESTIFY TO THE BRAIN INJURY VICTIM’S CONDITION

The injured victim is in fact brain injured and may not be able to testify to the full extent of their condition. The family members and friends can testify to the the injured victim’s work ability, affect on life, symptoms and complaints of the injured victim. The family members and friends can also testify as to how the injured victim’s condition also affects them. The family members and friends should be able to tell stories and personal accounts about these facts.

LOSS OF CONSORTIUM CLAIM

If there is a traumatic brain injury and the victim has a spouse, a loss of consortium claim should be asserted. This will allow evidence from the spouse’s perspective admitted into evidence whereas without the loss of consortium claim the same evidence may not be admitted.

WHAT EVIDENCE IS NEEDED TO PROVE A TRAUMATIC BRAIN INJURY?

It can be beneficial to submit the following into evidence:

Accident report
Scene photographs
Ambulance/EMT records and interviews
ER records
Medical records
Prior medical records
Educational records
Employment records
Drug use history, long term prescription abuse (with brain injuries all the psychiatric evidence will be considered relevant such as arrest and conviction records, employment records)
Before vs. after evidence (must show the difference between before the injury and after the injury)
Accident witnesses
Collateral witnesses
Corroborative medical records

PROVING DAMAGES IN TRAUMATIC BRAIN INJURY CASE

The brain is the repository for the soul. The brain controls the emotions. The injured victim may not be able to experience emotions, joy, and passion. The jury must be shown the science behind a mild traumatic brain injury and that it involves sending signals that will never connect. Currently, modern science and medicine do not have a way to show the mis-connections. Therefore, the attorney must be able to convey this to the jury.

Also, when litigating a mild traumatic brain injury case, the defendants must concede that physical impact is not necessary and that loss of consciousness and concussion satisfies the diagnosis of a mild traumatic brain injury. Moreover, mild traumatic brain injury will always have negative MRI and CT Scans by its very definition. The issue then becomes only residual damage.

It is always advisable to only present the injured victim client toward the end of hearing all the witness testimony in the case. Doctors, family members, co-workers, and friends should set the stage before the injured victim’s testimony. TBI cases are generally supported through the testimony of friends and family – as many people as possible who knew the victim before and also knew the victim after the injury, and can therefore testify to the specific problems and changes in the victim’s life. Generally, less testimony from the injured victim may be more in such cases.

Proving damages is different for mild, moderate, and severe traumatic brain injury.

In mild TBI cases, it is critical in the opening statement to explain that it is mild because the doctors chose to define it as such to distinguish it from moderate and severe. But mild traumatic brain injuries can be devastating and catastrophic. The jury must be educated from the beginning why it is called “mild.” After the opening statement, the condition should not be referred to as “mild” throughout the rest of the trial. Instead, plaintiff’s counsel should refer to the injury only as a traumatic brain injury.

Moderate and severe traumatic brain injuries are easier to prove. The key is the future – a lifetime of suffering and damages. Big settlements are not obtained unless there is future harm and damage. For moderate TBIs, the jury must see the films, artist renderings of the films, and walk the jury through the depiction. For severe TBIs, a day in the life video is key to allow the jury to see the impact on the life of the victim.

Large awards are given when there is future attendant services and future pain and suffering. California Civil Jury Instructions CACI 3932 for life expectancy which provides the bases for the calculation for future damages.

Plaintiff’s counsel should also educate the jury on the value of money in society when requesting large awards. Compensation must be provided for the life expectancy of the Plaintiff. The injured victim will suffer every day until their life expectancy. Compare the price of an expensive object or a celebrity who makes large annual earnings as an example of the value of money. Or, consider the comparison to a fighter jet going down, and the pilot is presented with the dilemma to eject and save his life or try to save the expensive jet. The life is more valuable than the expensive jet. Society values a person’s life more. Although these are extreme examples, the comparison to the client’s injury is also an extreme injury because he will suffer for the rest of his life. No human being should have to go through this amount of pain.

In these type of traumatic brain injury cases, a juror who is more educated and intelligent may be a good member of the jury panel because they can understand the value of memory and brain functioning.

FOOTBALL CONCUSSIONS

Concussions are common in athletics, notably football injuries. The athletes in the National Football League (NFL) commonly suffer concussions. In addition, the repetitive more minor head trauma that occurs regularly in football pose the greatest risk to the athletes. The regular impact when playing football increases the chance of the athlete having cognitive dysfunction and brain disease. Concussions may produce unconsciousness or bleeding in or around the brain. During a severe blow or hit, the brain bounces within the cavity, causing neurons (brain cells) to stretch and tear. The primary affected areas are the frontal lobe and temporal lobe.

In 2012 a lawsuit was first brought in the Eastern District of Pennsylvania by the unified NFL players concerning concussions and Chronic Traumatic Encephalopathy (CTE). CTE is a disorder in people who have experienced brain trauma or repeated hits to the head. Its symptoms include many brain related issues including lack of impulse control, aggression, depression, impaired judgment, memory loss, paranoia, confusion and progressive dementia. Petitions have been made to the United States Supreme Court concerning concussions in the NFL. Many times the players in the NFL experienced multiple concussions, but were not provided the proper information regarding the medical terms used by the examining doctors that were hired by the NFL. In the process, many NFL players and their families have been improperly denied benefits.

Any condition of public property that is the cause of an injury can be proven as dangerous. To do so while prosecuting a personal injury claim requires an understanding of the statutory basis of liability and any potentially applicable government immunities. There are also important time deadlines to file a notice of claim with the public entity responsible for the dangerous property.

NOTICE OF CLAIM TO PUBLIC ENTITY

With limited exception, no lawsuit for monetary damages may be brought against a public entity unless a written claim has been properly filed within six months of the date of injury. When injured by the fault of a government entity, even if you do not intend to sue, it is important to file a claim to protect your rights and keep your options open.

The California Tort Claims Act outlines the procedures for filing a claim. If the public entity is a county or local government entity, a claim should be filed directly in person or by certified mail return receipt requested with the entity’s governing board or clerk.

Pursuant to California Government Code section 910, a claim against a public entity must contain the following:

The claimant’s name and post office address;
The post office address for notices;
The date, place, and circumstances of the occurrence giving rise to the claim (that is, describe what happened and how you were injured);
A general description of the injury, damage, or loss;
The name(s) of the government employee(s) causing the injury, if known;
If the amount is less than $10,000, the dollar amount claimed (including an estimate of future injury) and the basis for computing the amount; and
If the amount is greater than $10,000, you do not have to set out a specific amount on the claim form. You must, however, indicate whether the case would be a “limited civil case.” A “limited civil case” is where the amount in dispute is less than $25,000.

BASIS OF A CLAIM FOR DANGEROUS CONDITION OF PUBLIC PROPERTY

The statutory requirements to pursue a liability claim for a dangerous condition of public property is laid out in California Government Code section 835:

“Except as provided by statute, a public entity is liable for injury caused by a dangerous condition of its property if the plaintiff establishes that the property was in a dangerous condition at the time of the injury, that the injury was proximately caused by the dangerous condition, that the dangerous condition created a reasonably foreseeable risk of the kind of injury which was incurred, and that either:

(a) A negligent or wrongful act or omission of an employee of the public entity within the scope of his employment created the dangerous condition; or

(b) The public entity had actual or constructive notice of the dangerous condition under Section 835.2 a sufficient time prior to the injury to have taken measures to protect against the dangerous condition.”

In short, a public entity may be liable for injury if the entity either created a dangerous condition on its property or neglected to fix a known dangerous condition prior to the injury.

A DANGEROUS CONDITION

There is no strict interpretation as to what constitutes a “dangerous condition.” Ultimately, each case depends upon its own facts and circumstances. A single remedy for one claim may not be appropriate for another claim. Here are the governing rules of what constitutes a dangerous condition:

“‘Dangerous condition’ means a condition of property that creates a substantial risk of injury when such property or adjacent property is used with due care in a manner in which it is reasonably foreseeable that it will be used.” (Gov. Code Section 830 subd. (a).);

“Public property is in a dangerous condition within the meaning of section 835 if it is physically damaged, deteriorated, or defective in such a way as to foreseeably endanger those using the property itself.” (Cordova v. City of L.A. (2015) 61 Cal. 4th 1099, 1105.);

Public property may also be in a dangerous condition “because of the design or location of the improvement, the interrelationship of its structural or natural features, or the presence of latent hazards associated with its normal use.” (Bonnano v. Central Contra Costa Transit Auth. (2003) 30 Cal.4th 139, 149.)

RETAIN AN EXPERT EARLY TO IDENTIFY THE DANGEROUS CONDITION

To identify a dangerous condition, one should employ an expert whose expertise relates to the potential dangerous condition. The right expert is immensely important, as not only can he or she identify the dangerous condition, the expert can also identify theories to pursue, recommend evidence to obtain, and suggest preemptive measures to avoid likely asserted immunities.

LIABILITY

Dangerous condition liability is first and foremost dependent on the ownership of the property. Generally, a public entity will confirm ownership in response to a letter requesting ownership information.

Beyond simple ownership, there may be cases in which control of a dangerous condition is an issue. The public entity’s relationship to the dangerous property does not necessarily imply control to protect against or warn of potential hazards. It is important to determine who has the power to rectify the dangerous condition.

This is often an issue in cases involving adjacent property. “Adjacent property’ as used in the definition of `dangerous condition’ refers to the area that is exposed to the risk created by a dangerous condition of the public property. A public entity may be liable only for dangerous conditions of its own property, but its own property may be considered dangerous if it creates a substantial risk of injury to adjacent property or to persons on adjacent property; and its own property may be considered dangerous if a condition on the adjacent property exposes those using the public property to a substantial risk of injury.” Bonanno v. Central Contra Costa Transit, 30 Cal.4th 139, 148 (Cal. 2003)

An easy and standard example to illustrate this concept is the case of a tree on private property obstructing the view of a stop sign. Although the tree is on private property, the public entity which controls the roadway may be liable for the obstructed stop sign.

INVESTIGATE BEFORE FILING A LAWSUIT

As there is limited time to file a lawsuit against a public entity, it is critical to correctly identify the defendant which controls the dangerous condition property. If a report of the incident exists, such as a police report or a traffic collision report, it can help identify the responsible entity. If further investigation is required before filing, a retained expert should be able to help determine the responsible entity.

The maximum amount of information about the location should be obtained, including but not limited to design history, accident history, and previous complaints. Most of this information can be obtained directly from the public entity by submitting a California Public Records Act request. By law, with the exception of records exempt from disclosure, every state or local agency must promptly make requested records available.

This information can be used to prove the existence of a dangerous condition. Accident history can be used as evidence if and only if the conditions under which the previous accident occurred were the same or substantially similar to the one in question. (Mixon, supra, 207 Cal.App.4th at 137-138.)

However, this does not work conversely, although a public entity will likely try to argue so. The lack of similar accidents neither provides evidence that the condition is not dangerous nor definitively establish non-dangerousness absent other evidence. (Lane v. City of Sacramento (2010).

It is important to note that valuable information can be obtained by simply searching the internet. You may find articles or blogs regarding the location and any prior incidents. Moreso, you may find a study commissioned by the municipality addressing the dangers of the location prior to your incident, displaying the municipality’s failure to take action.

Furthermore, it is critical to photograph and videotape the location as soon as possible. The last thing you want is for an entity to correct the defect before it is documented.

DUE CARE

Many times, the defendant will focus on the conduct of the involved individuals. However, by law, the due care requirement does not require the plaintiff to prove that the property was used with due care at the time of the injury, either by himself or by a third party. (Lane, supra, 183 Cal.App.4th at p.1347) If the condition poses a substantial risk of injury to someone exercising due care, the condition may be considered dangerous. The entity is not liable if the property is safe when used with due care and the risk of harm exists only when one does not exercise due care. By the same token, the public entity is not liable if the condition becomes dangerous only when misused. (Gov. Code, Section 830 subd. (a))

TRIVIAL RISK

Often in dangerous condition cases involving conditions such as uneven sidewalks or potholes, the defendant will argue that the defect is “trivial.” Pursuant to California Government Code section 830.2, the court may determine that the risk created by the condition was of such a minor, trivial or insignificant nature that no reasonable person would conclude that the condition created a substantial risk of injury when the property is used in a reasonably foreseeable manner.

However, this defense is not a true affirmative defense. Instead, the burden of proof falls on the plaintiff to establish that the defect caused the injury and was not trivial. The plaintiff must satisfy its duty by a preponderance of the evidence – that it is more likely true than not true based on the evidence presented that the condition was dangerous. Additional factors are first considered, including the weather, lighting and visibility conditions at the time of the accident, the existence of debris or obstructions, and plaintiff’s knowledge of the area. If these factors are not enough to indicate that the defect was sufficiently dangerous to a reasonably careful person, the court will deem the defect trivial.

Beyond these additional factors, the court must look at whether the defect was conspicuous enough to put the entity on notice, which includes consideration of the defect’s seriousness, visibility, frequency with which the area is traveled, and the likelihood that a reasonable inspection would have revealed the defect. (Stathoulis v. City of Montebello, (2008) 164 Cal.App.4th 559, 567-568)

It is important to note that there is no fixed standard in height, size, etc. as to what makes a defect trivial. When a defendant asserting that the defect was trivial focuses exclusively on the type and size of the defect, it is effective for the plaintiff to argue that additional applicable factors and the totality of the circumstances prove the defect to be more than trivial.

NEGLIGENCE

To proceed under a negligence theory, the plaintiff must prove that the public employee’s conduct was unreasonable in light of the foreseeable risk of harm. Evidence that a public employee deviated from well-accepted standards, or did not use standards at all, will support a dangerous condition claim based upon negligence.

Pursuant to California Government Code section 835.4, a public entity is not liable for a dangerous condition if:

(1) The act or omission was reasonable
(2) The action taken to protect against the risk, or the failure to act, was reasonable

The reasonableness of the action or inaction of the public entity shall be determined by taking into consideration the time and opportunity it had to take action and by weighing the probability and gravity of potential injury to persons and property foreseeably exposed to the risk of injury against the practicability and cost of protecting against the risk of such injury.

As this defense is unique to public entities, it is important to note that this is a separate defense that applies even if the plaintiff has established that the defendant entity’s conduct was unreasonable.

SUFFICIENT NOTICE

Pursuant to California Government Code section 835.2, in order to prove dangerous condition liability the public entity must have notice of the dangerous condition and have had subsequently failed to take corrective action. A public entity has “actual notice” if it has substantial knowledge that the condition exists and knew or should have known of its dangerous character. A public entity has “constructive notice” if it has been established that the condition existed and was of such an obvious nature that the public entity should have discovered the dangerous condition.

Sufficient notice is a difficult element for the plaintiff to prove. The use of photographs, records showing requests for repairs, inspection plans, and prior complaints can all show the obviousness of the defect. Another strategy worth pursuing is speaking with local businesses and residents about how long the dangerous condition has existed, complaints that have been made, and visits to the location by public entity personnel.

Constructive notice may also be shown under the “reasonable inspection test.” The plaintiff can attempt to demonstrate that the dangerous condition of the property would have been revealed had public employees exercised due care when operating under an inspection system that is “reasonably adequate to inform the public entity whether the property was safe for the intended use…” (Gov. Code Section 835.2 subd. (b)(1).) It is important to note, through the civil discovery process the inspection systems used by the entity should be disclosed. The public entity can and should be challenged to explain all of its reasons for failing to use its own inspection system, or a retained expert can identify the inspection system that should have been in place.

CAUSATION

Furthermore, a causal connection between injuries and the dangerous condition must be shown.

However, the dangerous condition does not need to be the sole cause and does not need to be solely responsible for the injury. Even if negligent action by a third person aided in producing the injury, a dangerous condition can still be a “substantial cause.” A public entity may be liable for a dangerous condition if some physical characteristic of the property exposes its users to increased danger from third party conduct. (Cerna v. City of Oakland (2008))

A common example is a public parking structure with a poorly lit staircase, allowing criminal activity to take place. While the criminal activity by a third party is the definite cause of the injury, the poorly lit staircase created a dangerous condition and caused an increased danger of the activity. It is important to note, the California Supreme Court held that a plaintiff is not required to prove that the alleged dangerous condition also caused the third party conduct. (Cordova, supra, 61 Cal.4th at p.1099.)

Ultimately, if the dangerous condition case involves conduct by a third party, the third party conduct must be linked to a physical aspect of the property for which the public entity has some control. Otherwise, a public entity cannot be liable for a third party’s misconduct.

IMMUNITIES

Public entities have many statutory immunities. These statutory immunities are codified in the California Government Claims Act as affirmative defenses which must be specifically pleaded. To combat the asserted immunities, it is critical for the plaintiff’s counsel to send discovery and obtain the information upon which the pleaded immunities rely on. The defendant may file a dispositive motion based upon these immunities, so it is important to send exhaustive discovery to assess the evidentiary basis for each of the asserted immunities.

DESIGN IMMUNITY

One of the most commonly asserted immunities in response to a dangerous condition claim based upon roadway conditions or construction on public property is “design immunity.” Pursuant to California Government Code section 830.6, a public entity claiming design immunity must show:

1) A causal relationship between the plan and the accident;
2) Discretionary approval of the plan prior to construction; and
3) Substantial evidence supporting reasonableness of the plan or design.

Only if the facts are undisputed can the first two elements be resolved as issues of law. Even if evidence of reasonableness is disputed, the third element only requires evidence of solid value that reasonably inspires confidence. The court determines the third element as to whether there is substantial evidence supporting that a reasonable public employee could have adopted the plan or that a reasonable employee could have approved the plan or the standards for the design. (Alvis v. County of Ventura (2009) & Laabs v. City of Victorville (2008).)

Plaintiff’s counsel should request any and all applicable plans related to the design of the location, including all updates and changes after the initial design. Furthermore, counsel should request for all standards that were used in the design and construction. After careful review, plaintiff’s counsel should set depositions of those persons involved in the design and approval to determine if standards were not followed in the design or construction.

It is effective to pursue whether changed circumstances may impact application of the immunity. Design plans which may have met demands in the past may no longer be applicable because of a change in circumstances. For a plaintiff to show a loss of design immunity under changed conditions, they must show three things:

1) The plan or design has become dangerous because of a change in physical conditions;

2) The public entity had actual or constructive notice of the dangerous condition thus created;

3) The public entity had a reasonable time to obtain the funds and carry out the necessary remedial work to bring the property back into conformity with a reasonable design or plan, or the public entity, unable to remedy the condition due to practical impossibility or lack of funds, had not reasonably attempted to provide adequate warnings.

(Alvis, supra, 178 Cal.App.4th at p. 554.)

It is important to note, when pursuing the changed circumstances exception to design immunity, the change must be one to the physical condition.

TRAFFIC SIGNS

There is no liability on behalf of the public entity for failure to provide traffic signs or signals. A condition is generally not dangerous because of the failure to provide regulatory traffic control signals, stop signs, yield right-of-way signs, speed restriction signs or roadway markings as described in the Vehicle Code. (Gov. Code Section 830.4.) However, there exists a “concealed trap” statute which provides for the existence of liability for failure to provide a signal or device when the condition “constitutes a trap to a person using the street or highway with due care.” (Law Rev. Com. Comment to Gov. Code section 830.8.) “This ‘concealed trap’ statute applies to accidents proximately caused when, for example, the public entity fails to post signs warning of a sharp or poorly banked curve ahead on its road or where a design defect in the roadway causes moisture to freeze and create an icy road surface, a fact known to the public entity but not to unsuspecting motorists, or where road work is being performed on a highway.” (Chowdhury v. City of L.A. (1995).)

NATURAL CONDITIONS IMMUNITIES

If the incident occurred in a natural setting, the circumstances may constitute the “natural conditions immunity.” California Government Code section 831.2 states:

“Neither a public entity nor a public employee is liable for an injury caused by a natural condition of any unimproved public property, including but not limited to any natural condition of any lake, stream, bay, river, or beach.”

The immunity has been applied to many conditions and has been broadly construed to provide immunity even when the natural conditions have been affected by human activity or improvements. (Knight v. City of Capitola (1992).)

It is important to note that this immunity is unlike others in that it is absolute and applies regardless of whether the public entity had knowledge of the dangerous condition or failed to give warning.

“Trail immunity” is another absolute immunity which applies regardless of failure to warn. Pursuant to California Government Code section 831.4, the trail immunity applies to unpaved roads and trails used for access to outdoor recreation areas for fishing, hiking and other recreation, so long as the road or trail is not a public street or highway. The immunity may also apply to paved trails, walkways and paths providing access to unimproved property when the public entity has reasonably attempted to provide adequate warnings of hazards. Determining whether a property is a trail depends on a few considerations, including the definition of the property, the purpose for which it is designed and used, and the purpose of the immunity statute. (Amberger-Warren v. City of Piedmont (2006).)

Another common immunity is the “weather condition immunity.” A public entity is immune for an injury caused by “the effect on the use of streets and highways of weather conditions such as fog, wind, rain, flood, ice or snow.” The immunity does not apply if the effect “would not be reasonably apparent to, and would not be anticipated by, a person exercising due care,” or where the weather conditions “resulted in physical damage to or deterioration of the street or highway. (Gov. Code. section 831.) To fight a public entity asserting the weather condition immunity, it is effective to link the weather condition to a defect of the roadway and ultimately establish that a reasonable person would not have anticipated the effect of the combined conditions.

CONCLUSION

There are many legal challenges in obtaining compensation for damages caused by dangerous conditions existing on public property. There exist even more immunities for the public entities that can be asserted in their defense. As every claim for dangerous condition of public property is unique, it is important to work with an attorney familiar with these laws to prosecute a claim and obtain maximum compensation for the injured victim.

In California, the following workers’ compensation benefits are available: (1) Medical and Hospital benefits; (2) Temporary Disability and Lost Wages; (3) Permanent Disability; (4) Supplemental benefits; and (5) Death benefits.

Medical and Hospital Benefits

 The employer has an obligation to provide injured workers the medical care that is scientifically proven to cure or relieve the effects of the injury.  The medical and hospital benefits are unlimited as to time and amount.  Moreover, medical care must be paid for by the employer regardless of whether or not the employee misses any time from work.

Pursuant to California Labor Code section 4600, expenses covered by the benefits include: medical, surgical, chiropractic, acupuncture, and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches and apparatus, including orthotic and prosthetic devices and services.  However, the injured worker is limited to twenty-four (24) chiropractic appointments, twenty-four (24) physical therapy appointments, and twenty-four (24) occupational therapy appointments.  The claims administrator may provide written authorization for additional appointments.

Medical treatment is subject to the Utilization Review (UR), which is the process required by employers or claims administrators in reviewing the injured worker’s medical treatment to determine if it is “medically necessary.”  The treatment must be “reasonably required to cure or relieve” the effects of the injury.  The medical care must follow scientifically-based medical treatment guidelines, which in California includes the Medical Treatment Utilization Schedule (MTUS) published by the California Division of Workers’ Compensation.  Treatment not in the MTUS may be paid by the claims administrator if it follows other scientifically based guidelines that are generally recognized by the national medical community.

The employer will arrange treatment for the injured worker with the employer’s selected physician or medical facility within the Medical Provider Network (MPN), or with the employee’s pre-designated personal physician or medical group.  The employee must have provided the employer with written notification of the name of the pre-designated physician or medical group prior to the date of injury, and the physician must have indicated a willingness to provide treatment in the event of an industrial injury or illness.  A DWC Form 9783 may be used to provide notification to the employer and also be signed by the physician evidencing the physician’s agreement to the designation to treat a work injury.

The physician must be provided notice that the treatment is for a work-related injury.  It is illegal for a physician or medical facility to bill the worker if there is knowledge that the injury is work-related.

Moreover, the physician must submit reports to the claims administrator describing the nature of the injury, the cause of the injury, the necessary treatment plan, and the type of work that the injured worker is able to perform while recovering from the injury.  Generally, the physician and claims administrator must produce copies of these reports to the injured worker upon request.

If there is an issue with the treatment prescribed by the injured worker’s treating doctor, the injured worker’s attorney must send a written letter to the claims administrator stating the disagreement in the doctor’s medical report.  The letter must be sent by the attorney within twenty (20) days after receiving the doctor’s report in order to challenge the doctor’s opinion.  The injured worker’s attorney and the claims administrator may then agree on a doctor referred to as an Agreed Medical Evaluator (AME).  If the attorney and claims administrator cannot reach an agreement, then the attorney or claims administrator may submit a request to the California Division of Workers’ Compensation for a panel list of three (3) Qualified Medical Examiners (QME), which are doctors who are certified by the California Division of Workers’ Compensation to conduct medical evaluations in workers’ compensation cases.  The QME or AME will examine the injured worker and write a “medical-legal report.”  It is important for the attorney to select the doctor with the appropriate medical specialty to provide a description of the injury, permanent disability rating, the cause of disability, future treatment, and the facts of the dispute.  The medical-legal report will affect the benefits available to the injured worker.

Temporary Disability Benefits and Lost Wages

If the injured worker cannot return to work while recovering from the injury, the injured worker may receive temporary disability payments for a limited period.  The time when the injured worker cannot work is known as the disability period.  Temporary disability benefits are payments for lost wages paid to the injured worker while they are recovering from the injury or illness and are unable to return to work.  Temporary disability benefits are paid only while the injured worker is recovering.

Essentially, temporary disability benefits are payments to the injured worker if the injured worker loses wages because:

  • The injured worker’s treating physician reports that the injured worker is unable to do their usual job for more than three (3) days; or
  • The injured worker is hospitalized overnight; and
  • The injured worker’s employer does not offer other work to the injured worker that pays the injured worker’s usual wages while the injured worker recovers.

It is the responsibility of the injured worker to inform their employer of the treating physician’s recommendation not to return to work responsibilities.  The injured worker has a duty to report the time absent from work.  All time off related to the work injury must be reported by the injured worker on the Absence and Additional Time Worked Report Form (STD 634 Form).  Temporary disability payments may change or stop when the treating physician reports that the injured worker is able to return to work.  A statement from the treating physician is required each time the injured worker is seen regarding the work-related injury.  All physician statements must be attached to the STD 634 and be provided to the injured worker’s employment supervisor.

Furthermore, although no time is charged against leave credits on the day of the injury, the injured worker must still submit a STD 634 Form with a notation identifying the date of injury.  Generally, Administrative Time Off (ATO) is granted for any time lost on the day of injury.

Before the temporary disability benefits start, the injured worker will serve a waiting period of three (3) days, which do not need to be consecutive.  However, the waiting period is waived if the injured worker is hospitalized, the injury was caused by a criminal act of violence, or if the injured worker is disabled for more than fourteen (14) days.  Essentially, temporary disability payments are not made for the first three (3) days the injured worker is out of work unless the injured worker is hospitalized overnight or it is determined the injured worker cannot work for more than fourteen (14) days.  Pursuant to California Labor Code section 4650, payments must begin within fourteen (14) days of the employer’s knowledge that a work-related injury or illness occurred, unless the employer contests the claim for workers’ compensation benefits.  Payments should be made by the claims adjuster within fourteen (14) days of the injury so long as the treating doctor reports that the injury prevents the worker from performing their job.  Payments shall then be paid every two weeks so long as the injured worker is eligible.  The payments will be made directly from the California State Compensation Insurance Fund.

The State of California offers various types of temporary disability benefit programs under workers’ compensation: Temporary Disability, Industrial Disability Leave, with or without supplementation.

Temporary Disability

There are two types of temporary disability:

  • Temporary total disability payments are paid when the injured worker cannot work at all while recovering; and
  • Temporary partial disability payments are paid if the injured worker can do some work while recovering and the employer offers this work to the injured worker, and the injured worker’s wages while recovering are below a maximum limit set by law

Temporary Total Disability

Generally, temporary total disability payments are equal to two-thirds (2/3) of the injured worker’s average weekly gross pre-tax wages at the time of the injury, within minimums and maximums set by state law. The injured worker cannot receive more than a maximum weekly amount or less than a minimum weekly amount as set by law according to date of injury.  If the injured worker was earning more than that amount of wages before the injury, the injured worker could receive less than two-thirds (2/3) of that amount.  For example, pursuant to the California Department of Industrial Relations, for injuries that occur in 2016 and the injured worker’s gross wages before injury were not more than $1,692.64 per week, the maximum amount of total temporary disability payments will be $1,128.43 per week.  For injuries that occur in 2016 and the injured worker’s gross wages before injury were less than $253.89 per week, the minimum amount of total temporary disability payments will be $269.26 per week.

Temporary Partial Disability

Temporary partial disability payments may be available if the employer offered the injured worker different work that can be done safely while the injured worker recovers. If the injured worker does not earn as much as before the injury, the injured worker may be able to receive temporary partial disability payments.  The employer may also provide the injured worker a reduced work schedule.  Generally, the payments are two-thirds (2/3) of the injured worker’s lost wages.  For example, if the injured worker was making $300.00 per week before the injury, and is now back at work earning $210.00, then the injured worker’s lost wages are $90.00 per week – the temporary partial disability payments will be $60.00 per week.  The law sets limit on the maximum and minimum amounts to be paid.

Temporary disability benefits are tax-free – the injured worker does not pay federal, state, or local income taxes on temporary disability payments.  In addition, there are no Social Security taxes, union dues, or retirement fund contributions on temporary disability payments.  Furthermore, California state employees are permitted to supplement temporary disability payments with accrued leave credits up to the amount of the injured worker’s full pay.

Industrial Disability Leave

If the injured worker is an active member of the California Public Employees’ Retirement System (CalPERS) or the California State Teachers’ Retirement System (Cal STRS), then the injured worker may receive industrial disability leave (IDL) payments.  Industrial disability leave is paid in lieu of temporary disability payments.  IDL is a salary continuation program that is significantly better than the standard temporary disability benefit. IDL is available to employees for fifty-two (52) weeks within a two-year period from the first day of disability. IDL payments are based on the injured worker’s full net pay for the first twenty-two (22) working days of disability and thereafter calculated at two-thirds of the injured worker’s gross pay.  The injured worker can supplement IDL payments with accrued leave credits up to the amount of their approximate full net pay.

Supplementation

While receiving temporary disability benefits, the injured worker will earn leave credits as if actually working.  The injured worker may supplement the temporary disability benefit up to the injured worker’s full net salary with any accrued leave credits.  Injured workers who have sufficient leave credits can supplement the temporary disability payments, but the temporary disability payments plus the supplemental check cannot be more than the injured worker’s net salary.

Leave credits needed for supplementation will be drawn in the following order:  (1) sick leave, (2) compensated time off, (3) vacation or annual leave, (4) and other leave credits.  The injured worker may specify a different order.  The amount of leave credits necessary to supplement the temporary disability payments depends on many variables including the injured worker’s monthly salary, the number of days on temporary disability, the number of days in the pay period, and other pay that the injured worker receives during the pay period.

Temporary disability payments are issued by the California State Compensation Insurance Fund and sent directly to the injured employee.  Temporary disability payments have no mandatory or voluntary deductions withheld.  On the other hand, the supplementation payments are issued by the California State Controller’s Office.  The supplementation payments are paid by the injured worker’s employer and are subject to all mandatory deductions including taxes, retirement contributions, garnishments, and union dues.  Voluntary deductions, such as health, dental, and vision benefits or life insurance, may also be withheld.  However, deductions can only be made so long as there are sufficient leave credits.  Mandatory deductions will have priority over voluntary deductions.  Nonetheless, the injured employee is entitled to the continuation of health, dental, and vision benefits even if the injured worker chooses not to supplement the temporary disability payments.

When do temporary disability payments end?

Temporary disability payments will end once the injured worker’s treating physician reports that the patient can return to the usual job, regardless of whether the worker in fact returns or not.  Temporary disability payments will also end once the injured worker returns to the usual job or to modified or alternate work at the worker’s regular wages or wages associated with the maximum limit of temporary total disability payments.  Furthermore, temporary disability payments will end if the treating physician reports that the injured worker’s condition is “permanent and stationary,” which means that the injured worker is not improving and not getting worse.

If the injured worker’s treating physician reports that the patient will never recover completely, then the injured worker may receive permanent disability benefits or a supplemental job displacement benefit.

Permanent Disability Benefits

Permanent disability benefits are recoverable when the injured worker cannot recover completely or the injury causes a permanent loss of physical or mental functions as measured by a doctor.  Payment for permanent disability will be provided if the treating doctor reports that the injured worker will always be limited in the work that the injured worker can perform.  The amount of permanent disability payments will depend on the type of injury, date of injury, the medical condition as described in the Permanent and Stationary Report or in a Medical-Legal Report, the extent of impairment, the injured worker’s age, occupation, and wages before the injury, the apportionment of how much the disability was caused by the job as compared to other factors, and a multiplication by an adjustment factor (i.e. if the injury occurred in 2013 or later, the adjustment factor is 1.4).

Generally, the injured worker’s primary treating physician will be a Qualified Medical Examiners (QME), which are doctors who are certified by the California Division of Workers’ Compensation to conduct medical evaluations in workers’ compensation cases.  The primary treating physician must report that the injured worker is “Permanent and Stationary” (P&S).  This means that the injured worker’s condition has stabilized and will not get better or worse.  The injured worker has then reached maximal medical improvement (MMI). The P&S report must describe the lasting effect of the industrial injury or illness.  The P&S report should describe: the injured worker’s specific medical problems, the injured worker’s “work restrictions” (i.e. the limits on the work that the patient can perform), the injured worker’s necessary future medical care, whether the injured worker may return to their old job, and an estimate of how much the injured worker’s disability is caused by the job as compared to other factors.  It is important for the injured worker to actively communicate with the primary treating physician, the employer, and the claims administrator about: (1) the work the injured worker did before the injury; (2) the injured worker’s medical condition and the type of work that the injured worker can now perform; and (3) the type of work that the employer could make available to the injured worker.

Essentially, the P&S report must rate the injured worker’s impairment, which is how much the injured worker has lost the normal use of the injured body parts at issue.  The physician must follow the guidelines published by the American Medical Association (AMA) when making the rating.  In addition, a disability rater may be requested to make a rating based on the P&S report.  The primary treating physician must then submit the P&S report to the claims administrator.

The Disability Evaluation Unit of the Division of Workers’ Compensation will then determine the injured worker’s “permanent disability rating.”  The Disability Rating Determination describes the injured worker’s percentage of disability based off of the Schedule for Rating Permanent Disabilities.  A rating of 100% means that the injured worker has a permanent total disability, which is very rare.  If the rating is between 1% and 99%, then the injured worker has a permanent partial disability.  Generally, the ratings are between 5% to 30%.  The benefits are set by law and will not be reduced by any of the injured worker’s other income.  The injured worker is entitled to permanent disability payments even if the injured worker returns to work.  However, unlike temporary disability payments, the permanent disability payments may not be supplemented with leave credits.

The injured worker has the right to request in writing to the claims administrator or treating physician to obtain a copy of the P&S report and all medical records.  If there is a disagreement with the P&S report, the injured worker may challenge the report by submitting a letter to the claims administrator within twenty (20) days after receiving the report.  If the letter is not sent timely, the injured worker risks losing the right to challenge the report.  Furthermore, the injured worker’s attorney may negotiate with the claims administrator the correct rating of the disability.  If the parties cannot agree on a rating, the matter can be submitted to the workers’ compensation judge to make a decision.

If the injured worker is determined to have a permanent partial disability, the injured worker will receive the total amount of the permanent disability benefits over a fixed number of weeks.  If the injured worker is determined to have permanent total disability, the injured worker will receive the permanent disability payments for the rest of the injured worker’s life.  The permanent disability payments will commence within fourteen (14) days after the final temporary disability payment.  If the injured worker was not receiving temporary disability payments, then the first permanent disability payment will commence within fourteen (14) days after the claims administrator is notified of the permanent disability.  The permanent disability payments will then be made every fourteen (14) days.  However, if the employer offers the injured worker employment that pays at least 85% of the wages and benefits, or if the injured worker obtains employment that pays at least 100% of the wages and benefits, then the permanent disability payments must be approved by a workers’ compensation judge.  The permanent disability payments will end when the injured worker reaches the maximum amount allowed by law or the workers’ compensation case reaches a lump sum settlement.  Generally, the lump sum settlement will be reduced by the amount of permanent disability benefits that were already received.

It is common that once the injured worker’s disability is rated, a settlement of the workers’ compensation case may be negotiated.  If a settlement is reached, a worker’s compensation judge must review it to determine its fairness.  If no settlement can be reached, the case can be presented to a workers’ compensation judge to give a Findings and Award which decides what benefits the injured worker will receive.  To settle the case, the injured worker and the claims administrator may enter into stipulations concerning the amount of payments, medical care, and future changes.  For example, it will be stipulated that the injured worker is to receive a certain amount of permanent disability payments for a certain amount of time.  In addition, it will be stipulated that the claims administrator will continue to pay for the injured worker’s medical care as long as necessary.  It can also be stipulated that if the injured worker’s condition worsens, then the injured worker has the right to request an additional increase in workers’ compensation benefits.  Meanwhile, if the condition improves, the claims administrator may then also request that the benefits are lessened. Alternative to stipulations, the injured worker may enter into a Compromise and Release, which will include a one-time lump sum payment that will include payment for the permanent disability benefits not yet received.  The claims administrator will no longer pay for the injured worker’s medical care.  Instead, medical payments will be the responsibility of the injured worker.  There will also be no right to request an increase in benefits if the injured worker’s condition worsens in the future.

If the injured worker is determined to have a permanent disability, the injured worker may also be eligible to receive medical care for the injury, a supplemental job displacement benefit, and Social Security disability benefits and other benefits that may be offered by the employer or union.

Supplemental Job Displacement Benefits

Supplemental Job Displacement Benefits may be available to help pay for retraining or skill enhancement if: (1) the worker qualifies for permanent disability, (2) the employer does not offer the worker their job back, or (3) the worker does not return to their former employer.  The injured worker must have at least a permanent partial disability and is awarded regardless of the injured worker’s permanent disability rating.  Furthermore, in order to obtain the Supplemental Job Displacement Benefit, the employer must not have offered the injured worker any regular, modified, or alternative work within sixty (60) days after the claims administrator received the Form DWC-AD 10133.36 Physician’s Return-to-Work and Voucher Report.  The claims administrator must offer the voucher to the injured worker within twenty (20) days from the last date the employer may offer regular, modified, or alternative work.

The claims administrator will send the voucher by the Form DWC-AD 10133.32 Supplemental Job Displacement Non-Transferable Voucher. The voucher is redeemable for up to $6,000.00 and cannot be redeemed as part of any settlement.

The Supplemental Job Displacement Benefit is a voucher that serves as a promise to pay for the educational retraining and skill enhancement offered by eligible schools, which includes California public schools or a provider listed on the California Employment Development Department’s Eligible Training Provider List (ETPL).  The voucher will pay for the tuition, fees, books, supplies, tools, and other related expenses.  The voucher will also pay the fees for professional licenses, certification, exam preparation courses, and exam testing.  The injured worker should contact an Information and Assistance Officer at the Division of Workers’ Compensation to obtain a list of qualified vocational and return-to-work counselors.  The injured worker must submit the voucher to the school or counselor, which will then receive payment directly from the claims administrator.  If the injured worker personally pays for the services, the receipts and the signed voucher must be submitted to the claims administrator within forty-five (45) days of paying the bill in order to receive reimbursement.  The voucher will expire the later of two (2) years after being issued or five (5) years from the date of injury.  All expenses and receipts must be submitted before the expiration.

Return to Work Supplement Program

The goal of the workers’ compensation program is to help the injured worker avoid financial losses from being off work.  The treating doctor will submit a Physician’s Return-to-Work and Voucher Report.  If the treating doctor reports that the injured worker is able to work, the doctor should report the “work restrictions” which are the clear and specific limits on the job tasks while the injured worker is recovering so as to protect the injured worker from further injury.  The doctor should also report any necessary changes to the injured worker’s schedule, assignments, equipment, or work conditions while recovering.

If the employer offers the injured worker employment after the injury, the claims administrator must send the injured worker the Form DWC-AD 10133.35, entitled Notice of Offer of Regular, Modified, or Alternative Work.  The claims administrator must send the Notice within sixty (60) days after learning that the injured worker’s permanent partial disability has become “Permanent and Stationary.”  The employment must comply with the work restrictions in the doctor’s report, last at least twelve (12) months, and be within a reasonable commuting distance.  The type of employment may be regular, modified, or alternative.  “Regular work” must include the injured worker’s usual job position at the time of injury and pay the same wages and benefits that were paid at the time of the injury.  “Modified work” includes the injured worker’s old job with compliant work restrictions and must pay at least eighty-five percent (85%) of the wages and benefits that were paid at the time of the injury.  For example, compliant work restrictions may include: changing certain job tasks, time required on certain tasks, workstation environment, equipment, and location.  “Alternative work” includes different work from the old job position and is compliant with work restrictions.  Alternative work must pay at least eighty-five percent (85%) of the wages and benefits that were paid at the time of injury.

Once the Notice of Offer of Work is made, the injured worker has thirty (30) days to accept the offer.  After that time period, the employer has the right to withdraw the offer.  Moreover, if the employer makes an offer of work, the claims administrator is then not required to provide the injured worker a Supplemental Job Displacement Benefit regardless of whether the injured worker accepts or rejects the offer.

If the employer does not make an offer of modified or alternative work and the injured worker is reported to have permanent partial disability, then the claims administrator is required to provide a Supplement Job Displacement Benefit, which is essentially a voucher.  In addition, the California Department of Industrial Relations administers the Return-to-Work Supplement Program (RTWSP), which is a one-time $5,000.00 payment to workers who have received the voucher and still experience a disproportionate loss of earnings.  The supplemental payment is made to workers whose permanent disability benefits are disproportionately low in comparison to their earnings losses.  The application for the one-time payment must be submitted to the RTWSP within one (1) year from when the voucher was sent to the injured worker.  If the injured worker disagrees with the eligibility determination, the injured worker may appeal to the Workers’ Compensation Appeals Board (WCAB) within twenty (20) days.  The injured worker must file a Petition for Reconsideration and serve a copy on the RTWSP (address 1515 Clay Street, 17th Floor, Oakland, CA 94612).

Death Benefits

If the job-related injury or illness causes death, payments may be made to the deceased worker’s spouse, children, and other relatives or household members who were totally or partially financially dependent on the deceased worker.  The amount of the payment is determined by the number of eligible dependents: $250,000 for one total dependent, $290,000 for two total dependents, and $320,000 for three or more total dependents.  If there is one or more totally dependent minors, after payment of the amounts specified, death benefits will still continue until youngest minor’s 18th birthday.  Disabled minors will receive benefits for their entire life. Death benefits are paid at the total temporary disability rate, but not less than $224.00 per week. If the death occurs within one (1) year from the date of injury, application for death benefits must be submitted: within one (1) year from date of death; or within one (1) year from the date the last benefit was furnished to the deceased worker; or within one (1) year from the date of death which occurred more than one (1) year from the date of injury.  Application for death benefits may not be submitted more than 240 weeks from the date of injury.

In addition, reasonable burial expenses are also paid, not exceeding $10,000.00.

Compensable Consequences

A “compensable consequence” is a new health problem that is caused by the original injury.  In this situation, the injured worker is entitled to the same medical coverage and disability benefits provided by workers’ compensation as the injured worker was receiving for the first original injury.  The injured worker is entitled to all benefits for the consequences of the work-related injury.  Examples of compensable consequences may include: a subsequent fractured wrist caused by a fall that was a result of an injured knee from a work related incident; injury from an automobile accident while traveling to a doctor’s appointment for a work-related injury; injury from medical malpractice committed during the treatment of a work-related injury; or a back injury caused by a limp compensating for a work-related injury to the knee or ankle.

Other Financial Benefits Available

In addition to workers’ compensation benefits, there is other possible financial assistance available to an injured worker.  For example, State Disability Insurance (SDI) and Unemployment Insurance (UI) benefits from the Employment Development Department may be paid when the workers’ compensation benefits are delayed or denied.  It is good practice to file a claim for SDI or UI benefits if the worker is not able to work the job.  This serves as a precaution in case there may be issues in the workers’ compensation claim.  The Employment Development Department should be notified of the workers’ compensation claim.

The United States Social Security Administration (SSA) will also pay for Social Security disability benefits for total disability.  The amount of the benefits may be reduced by the workers’ compensation payments received.

In addition, many employers and unions offer benefits such as sick leave, group health insurance, long-term disability insurance, and salary continuation plans.

The injured worker may also have a third party liability claim in cases where the injury was caused by a party other than the employer.

Employment Discrimination

It is important to note, if the employer does not offer the injured worker the employment position desired due to the fact that the worker experienced a job-related injury or because the injured worker requested workers’ compensation, then the employer may be in violation of California Labor Code section 132a for employment discrimination.

In addition, if the employer denies the worker the desired employment position because of the fact that the worker has a serious and permanent disability despite the capability of performing the job with reasonable accommodation, then the employer may be in violation of the federal Americans with Disabilities Act (ADA) and the California Fair Employment and Housing Act (FEHA).

WHAT IS WORKERS’ COMPENSATION?

The law requires each employer to provide a safe place of employment. When an employee is injured during the course and scope of employment, the injured worker is entitled to workers’ compensation benefits (also referred to as “workman’s comp”). The workers’ compensation program is an insurance program mandated by the State to provide compensation to employees who suffer injury or illness as a result of the job. Even temporary or part-time workers may be eligible to receive benefits. Even if the worker is called an “independent contractor,” the worker may still be covered by workers’ compensation as an employee.

HOW TO FILE A CLAIM FOR WORKERS’ COMPENSATION BENEFITS?

When the employee is injured or becomes ill as a result of the employment, the employee must first report the injury to the employer immediately.  In California, the employer must provide the injured employee with the Workers’ Compensation Claim Form (DWC 1 Form) and Notice of Potential Eligibility (e3301) within one working day of the injury being reported. A description must be provided by the injured worker of how, when, and where the injury or illness occurred. If the employer is not given notice of the injury within thirty (30) days, the injured worker could lose the right to receive workers’ compensation benefits. The injured worker should submit the claim form to the employer in person or by certified mail return receipt requested so there is a record of when the claim was received by the employer.

In California, all employers are required to provide workers’ compensation benefits to their employees. Employers in California may purchase workers’ compensation insurance from a licensed insurance company or through the State Compensation Insurance Fund, which is a state-operated entity that exists in order to transact workers’ compensation on a non-profit basis. Employers may also self-insure for workers’ compensation. The benefits are available to the injured worker through the California Division of Workers’ Compensation (DWC), a division of the California Department of Industrial Relations.

Pursuant to California Labor Code section 5402(c), once a completed Workers’ Compensation Claim Form (DWC 1) and Notice of Potential Eligibility (e3301) is submitted by the employee, authorization for medical treatment must be given within one (1) working day.  The employer is required to pay up to $10,000.00 in medical treatment while investigating the claim and until the claim is denied.  However, if the claim is accepted, the employer will be required to continue to pay for the worker’s medical treatment.  A claims administrator must decide within a reasonable time whether to accept or deny the claim, usually if a denial letter is not received within ninety (90) days from the date the injury was reported then the claim is generally accepted. The claims administrators are insurance carriers who self-administer claims, third party administrators, and self-insured self-administered employers. If the claims administrator does not authorize treatment timely, and the injured worker has private health insurance, then the injured worker should obtain medical care covered by the private health insurance, which will then seek reimbursement from the claims administrator. The Employer’s Report of Occupational Injury or Illness (e3067) form must be completed and submitted by the employer to the State Fund within five (5) days of being given notice of the worker’s injury or illness. The employer must provide prompt medical care to the employee by coordinating treatment by either the employer selected physician or the employee’s pre-designated physician or medical group.

It is important to note that it is illegal for an employer to punish or terminate an employee for having a job injury or for requesting workers’ compensation benefits for an injury that is believed to have been caused by the job. In addition, pursuant to California Labor Code section 132a, it is considered discrimination if an employer punishes or terminates any co-workers who testify in the workers’ compensation case. Also, if the injured worker does not fully recover, pursuant to the federal Americans with Disabilities Act (ADA) and the California Fair Employment and Housing Act (FEHA), it is illegal for an employer to discriminate against a worker because of a serious disability.

If an employer is illegally uninsured for workers’ compensation, an injured worker may apply for benefits from the California Uninsured Employers Benefits Trust Fund.

To officially file a workers’ comp claim, the injured worker must file the DWC-1 claim form, an Application for Adjudication of Claim, a Declaration Pursuant to Labor Code 4906(g), include a Document Cover Sheet, and Document Separator Sheets.

The WCAB Form 1, Application for Adjudication of Claim, must be filed with the Workers’ Compensation Appeals Board (WCAB). The employer’s insurance company must be included on this form. The DWC-1 claim form returned by the employer will include the name of the carrier. In addition, the Workers’ Compensation Insurance Rating Bureau (WCIRB) maintains the listing of all California employers’ workers’ compensation insurance carriers. The WCAB form may be personally served at the local WCAB district office. The declaration must state that the injured worker has not requested a doctor, hospital, or medical facility to submit any fraudulent information to the DWC. The coversheet and separators can be obtained through the DWC website.

CAN AN INJURED WORKER SUE THEIR EMPLOYER?

Workers’ compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment. In exchange, the employee relinquishes their right to sue the employer for negligence. Therefore, when an injury falls within the coverage of workers’ compensation, then a claim for benefits is the employee’s exclusive remedy, and the employee cannot file a lawsuit against the employer.

DOES IT MATTER WHO IS AT FAULT FOR CAUSING A WORK-RELATED INJURY?

Generally, when an employee suffers a work-related injury or illness, workers’ compensation benefits are available regardless of who was at fault or responsible for causing the injury. It is not relevant whether the accident was caused by the employee, the employer, a co-worker, a customer, or another party. Generally, the employee’s fault in causing the accident does not bar that employee from recovering workers’ compensation benefits. Since it does not matter who is at fault in a workers’ compensation claim, generally the injured worker can receive immediate compensation for medical care and lost wages without waiting for a trial or settlement.

WORKERS’ COMPENSATION IS A NO FAULT SYSTEM

The workers’ compensation system allows for recovery without regard to who is at fault for the accident. Workers’ comp is considered a “no-fault” insurance system. This means that the injured worker can claim benefits regardless of whether the accident was caused by defective equipment and machinery, negligent instructions by a supervisor, the negligence of a third-party such as a co-employee, or even by the carelessness of the injured worker himself. The fact that the injured worker was hurt as a result of their own mistake will not preclude the injured worker from receiving workers’ comp benefits.

Simply, liability is never at issue in claims for workers’ comp benefits. The injured worker is relieved of the burden of proving that another party was at fault for the accident before receiving worker’s comp benefits. As a result, the workers’ comp claim is processed much more quickly and the injured worker can receive money sooner and with much less difficulty.

WHAT ARE WORKERS’ COMPENSATION BENEFITS?

Workers’ compensation is designed to provide the injured worker with: (1) the necessary medical treatment for the work-related injury; (2) partially provide for lost wages from the injury; and (3) help the injured worker return to work.

Hospital and medical bills, disability payments while out of work, vocational rehabilitation, and re-training expenses are generally covered by workers’ compensation. The insurance claims administrator will pay all reasonable and necessary medical care provided to the injured worker. Medical benefits are subject to approval and may include treatment by a doctor, hospital services, physical therapy, lab tests, x-rays, medicines, equipment and travel costs. The claims administrator will pay the costs of approved medical services directly. The injured worker is not responsible for paying the bills. However, there are limits on chiropractic, physical therapy, and other occupational therapy visits.

WHAT WORKERS’ COMPENSATION BENEFITS ARE AVAILABLE IN CALIFORNIA?

In California, the following workers’ compensation benefits are available: (1) Medical and Hospital benefits; (2) Temporary Disability and Lost Wages; (3) Permanent Disability; (4) Supplemental benefits; and (5) Death benefits.

Medical and Hospital Benefits

The employer has an obligation to provide injured workers the medical care that is scientifically proven to cure or relieve the effects of the injury. The medical and hospital benefits are unlimited as to time and amount. Moreover, medical care must be paid for by the employer regardless of whether or not the employee misses any time from work.

Pursuant to California Labor Code section 4600, expenses covered by the benefits include: medical, surgical, chiropractic, acupuncture, and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches and apparatus, including orthotic and prosthetic devices and services. However, the injured worker is limited to twenty-four (24) chiropractic appointments, twenty-four (24) physical therapy appointments, and twenty-four (24) occupational therapy appointments. The claims administrator may provide written authorization for additional appointments.

Medical treatment is subject to the Utilization Review (UR), which is the process required by employers or claims administrators in reviewing the injured worker’s medical treatment to determine if it is “medically necessary.” The treatment must be “reasonably required to cure or relieve” the effects of the injury. The medical care must follow scientifically-based medical treatment guidelines, which in California includes the Medical Treatment Utilization Schedule (MTUS) published by the California Division of Workers’ Compensation. Treatment not in the MTUS may be paid by the claims administrator if it follows other scientifically based guidelines that are generally recognized by the national medical community.

The employer will arrange treatment for the injured worker with the employer’s selected physician or medical facility within the Medical Provider Network (MPN), or with the employee’s pre-designated personal physician or medical group.  The employee must have provided the employer with written notification of the name of the pre-designated physician or medical group prior to the date of injury, and the physician must have indicated a willingness to provide treatment in the event of an industrial injury or illness. A DWC Form 9783 may be used to provide notification to the employer and also be signed by the physician evidencing the physician’s agreement to the designation to treat a work injury.

The physician must be provided notice that the treatment is for a work-related injury. It is illegal for a physician or medical facility to bill the worker if there is knowledge that the injury is work-related.

Moreover, the physician must submit reports to the claims administrator describing the nature of the injury, the cause of the injury, the necessary treatment plan, and the type of work that the injured worker is able to perform while recovering from the injury. Generally, the physician and claims administrator must produce copies of these reports to the injured worker upon request.

If there is an issue with the treatment prescribed by the injured worker’s treating doctor, the injured worker’s attorney must send a written letter to the claims administrator stating the disagreement in the doctor’s medical report. The letter must be sent by the attorney within twenty (20) days after receiving the doctor’s report in order to challenge the doctor’s opinion. The injured worker’s attorney and the claims administrator may then agree on a doctor referred to as an Agreed Medical Evaluator (AME). If the attorney and claims administrator cannot reach an agreement, then the attorney or claims administrator may submit a request to the California Division of Workers’ Compensation for a panel list of three (3) Qualified Medical Examiners (QME), which are doctors who are certified by the California Division of Workers’ Compensation to conduct medical evaluations in workers’ compensation cases. The QME or AME will examine the injured worker and write a “medical-legal report.” It is important for the attorney to select the doctor with the appropriate medical specialty to provide a description of the injury, permanent disability rating, the cause of disability, future treatment, and the facts of the dispute. The medical-legal report will affect the benefits available to the injured worker.

Temporary Disability Benefits and Lost Wages

If the injured worker cannot return to work while recovering from the injury, the injured worker may receive temporary disability payments for a limited period. The time when the injured worker cannot work is known as the disability period. Temporary disability benefits are payments for lost wages paid to the injured worker while they are recovering from the injury or illness and are unable to return to work. Temporary disability benefits are paid only while the injured worker is recovering.

Essentially, temporary disability benefits are payments to the injured worker if the injured worker loses wages because:

(1) The injured worker’s treating physician reports that the injured worker is unable to do their usual job for more than three (3) days; or
(2) The injured worker is hospitalized overnight; and
(3) The injured worker’s employer does not offer other work to the injured worker that pays the injured worker’s usual wages while the injured worker recovers.

It is the responsibility of the injured worker to inform their employer of the treating physician’s recommendation not to return to work responsibilities. The injured worker has a duty to report the time absent from work. All time off related to the work injury must be reported by the injured worker on the Absence and Additional Time Worked Report Form (STD 634 Form). Temporary disability payments may change or stop when the treating physician reports that the injured worker is able to return to work. A statement from the treating physician is required each time the injured worker is seen regarding the work-related injury.  All physician statements must be attached to the STD 634 and be provided to the injured worker’s employment supervisor.

Furthermore, although no time is charged against leave credits on the day of the injury, the injured worker must still submit a STD 634 Form with a notation identifying the date of injury. Generally, Administrative Time Off (ATO) is granted for any time lost on the day of injury.

Before the temporary disability benefits start, the injured worker will serve a waiting period of three (3) days, which do not need to be consecutive. However, the waiting period is waived if the injured worker is hospitalized, the injury was caused by a criminal act of violence, or if the injured worker is disabled for more than fourteen (14) days. Essentially, temporary disability payments are not made for the first three (3) days the injured worker is out of work unless the injured worker is hospitalized overnight or it is determined the injured worker cannot work for more than fourteen (14) days. Pursuant to California Labor Code section 4650, payments must begin within fourteen (14) days of the employer’s knowledge that a work-related injury or illness occurred, unless the employer contests the claim for workers’ compensation benefits. Payments should be made by the claims adjuster within fourteen (14) days of the injury so long as the treating doctor reports that the injury prevents the worker from performing their job. Payments shall then be paid every two weeks so long as the injured worker is eligible. The payments will be made directly from the California State Compensation Insurance Fund.

The State of California offers various types of temporary disability benefit programs under workers’ compensation: Temporary Disability, Industrial Disability Leave, with or without supplementation.

Temporary Disability

There are two types of temporary disability:

(1) Temporary total disability payments are paid when the injured worker cannot work at all while recovering; and
(2) Temporary partial disability payments are paid if the injured worker can do some work while recovering and the employer offers this work to the injured worker, and the injured worker’s wages while recovering are below a maximum limit set by law

Temporary Total Disability

Generally, temporary total disability payments are equal to two-thirds (2/3) of the injured worker’s average weekly gross pre-tax wages at the time of the injury, within minimums and maximums set by state law. The injured worker cannot receive more than a maximum weekly amount or less than a minimum weekly amount as set by law according to date of injury. If the injured worker was earning more than that amount of wages before the injury, the injured worker could receive less than two-thirds (2/3) of that amount. For example, pursuant to the California Department of Industrial Relations, for injuries that occur in 2016 and the injured worker’s gross wages before injury were not more than $1,692.64 per week, the maximum amount of total temporary disability payments will be $1,128.43 per week. For injuries that occur in 2016 and the injured worker’s gross wages before injury were less than $253.89 per week, the minimum amount of total temporary disability payments will be $269.26 per week.

Temporary Partial Disability

Temporary partial disability payments may be available if the employer offered the injured worker different work that can be done safely while the injured worker recovers. If the injured worker does not earn as much as before the injury, the injured worker may be able to receive temporary partial disability payments. The employer may also provide the injured worker a reduced work schedule. Generally, the payments are two-thirds (2/3) of the injured worker’s lost wages. For example, if the injured worker was making $300.00 per week before the injury, and is now back at work earning $210.00, then the injured worker’s lost wages are $90.00 per week – the temporary partial disability payments will be $60.00 per week. The law sets limit on the maximum and minimum amounts to be paid.

Temporary disability benefits are tax-free – the injured worker does not pay federal, state, or local income taxes on temporary disability payments. In addition, there are no Social Security taxes, union dues, or retirement fund contributions on temporary disability payments. Furthermore, California state employees are permitted to supplement temporary disability payments with accrued leave credits up to the amount of the injured worker’s full pay.

Industrial Disability Leave

If the injured worker is an active member of the California Public Employees’ Retirement System (CalPERS) or the California State Teachers’ Retirement System (Cal STRS), then the injured worker may receive industrial disability leave (IDL) payments. Industrial disability leave is paid in lieu of temporary disability payments. IDL is a salary continuation program that is significantly better than the standard temporary disability benefit. IDL is available to employees for fifty-two (52) weeks within a two-year period from the first day of disability. IDL payments are based on the injured worker’s full net pay for the first twenty-two (22) working days of disability and thereafter calculated at two-thirds of the injured worker’s gross pay. The injured worker can supplement IDL payments with accrued leave credits up to the amount of their approximate full net pay.

Supplementation

While receiving temporary disability benefits, the injured worker will earn leave credits as if actually working. The injured worker may supplement the temporary disability benefit up to the injured worker’s full net salary with any accrued leave credits. Injured workers who have sufficient leave credits can supplement the temporary disability payments, but the temporary disability payments plus the supplemental check cannot be more than the injured worker’s net salary.

Leave credits needed for supplementation will be drawn in the following order: (1) sick leave, (2) compensated time off, (3) vacation or annual leave, (4) and other leave credits. The injured worker may specify a different order. The amount of leave credits necessary to supplement the temporary disability payments depends on many variables including the injured worker’s monthly salary, the number of days on temporary disability, the number of days in the pay period, and other pay that the injured worker receives during the pay period.

Temporary disability payments are issued by the California State Compensation Insurance Fund and sent directly to the injured employee. Temporary disability payments have no mandatory or voluntary deductions withheld.  On the other hand, the supplementation payments are issued by the California State Controller’s Office. The supplementation payments are paid by the injured worker’s employer and are subject to all mandatory deductions including taxes, retirement contributions, garnishments, and union dues.  Voluntary deductions, such as health, dental, and vision benefits or life insurance, may also be withheld.  However, deductions can only be made so long as there are sufficient leave credits.  Mandatory deductions will have priority over voluntary deductions. Nonetheless, the injured employee is entitled to the continuation of health, dental, and vision benefits even if the injured worker chooses not to supplement the temporary disability payments.

When do temporary disability payments end?

Temporary disability payments will end once the injured worker’s treating physician reports that the patient can return to the usual job, regardless of whether the worker in fact returns or not. Temporary disability payments will also end once the injured worker returns to the usual job or to modified or alternate work at the worker’s regular wages or wages associated with the maximum limit of temporary total disability payments. Furthermore, temporary disability payments will end if the treating physician reports that the injured worker’s condition is “permanent and stationary,” which means that the injured worker is not improving and not getting worse.

If the injured worker’s treating physician reports that the patient will never recover completely, then the injured worker may receive permanent disability benefits or a supplemental job displacement benefit.

Permanent Disability Benefits

Permanent disability benefits are recoverable when the injured worker cannot recover completely or the injury causes a permanent loss of physical or mental functions as measured by a doctor. Payment for permanent disability will be provided if the treating doctor reports that the injured worker will always be limited in the work that the injured worker can perform. The amount of permanent disability payments will depend on the type of injury, date of injury, the medical condition as described in the Permanent and Stationary Report or in a Medical-Legal Report, the extent of impairment, the injured worker’s age, occupation, and wages before the injury, the apportionment of how much the disability was caused by the job as compared to other factors, and a multiplication by an adjustment factor (i.e. if the injury occurred in 2013 or later, the adjustment factor is 1.4).

Generally, the injured worker’s primary treating physician will be a Qualified Medical Examiners (QME), which are doctors who are certified by the California Division of Workers’ Compensation to conduct medical evaluations in workers’ compensation cases. The primary treating physician must report that the injured worker is “Permanent and Stationary” (P&S). This means that the injured worker’s condition has stabilized and will not get better or worse. The injured worker has then reached maximal medical improvement (MMI). The P&S report must describe the lasting effect of the industrial injury or illness. The P&S report should describe: the injured worker’s specific medical problems, the injured worker’s “work restrictions” (i.e. the limits on the work that the patient can perform), the injured worker’s necessary future medical care, whether the injured worker may return to their old job, and an estimate of how much the injured worker’s disability is caused by the job as compared to other factors. It is important for the injured worker to actively communicate with the primary treating physician, the employer, and the claims administrator about: (1) the work the injured worker did before the injury; (2) the injured worker’s medical condition and the type of work that the injured worker can now perform; and (3) the type of work that the employer could make available to the injured worker.

Essentially, the P&S report must rate the injured worker’s impairment, which is how much the injured worker has lost the normal use of the injured body parts at issue. The physician must follow the guidelines published by the American Medical Association (AMA) when making the rating. In addition, a disability rater may be requested to make a rating based on the P&S report. The primary treating physician must then submit the P&S report to the claims administrator.

The Disability Evaluation Unit of the Division of Workers’ Compensation will then determine the injured worker’s “permanent disability rating.” The Disability Rating Determination describes the injured worker’s percentage of disability based off of the Schedule for Rating Permanent Disabilities. A rating of 100% means that the injured worker has a permanent total disability, which is very rare. If the rating is between 1% and 99%, then the injured worker has a permanent partial disability. Generally, the ratings are between 5% to 30%. The benefits are set by law and will not be reduced by any of the injured worker’s other income. The injured worker is entitled to permanent disability payments even if the injured worker returns to work. However, unlike temporary disability payments, the permanent disability payments may not be supplemented with leave credits.

The injured worker has the right to request in writing to the claims administrator or treating physician to obtain a copy of the P&S report and all medical records. If there is a disagreement with the P&S report, the injured worker may challenge the report by submitting a letter to the claims administrator within twenty (20) days after receiving the report. If the letter is not sent timely, the injured worker risks losing the right to challenge the report. Furthermore, the injured worker’s attorney may negotiate with the claims administrator the correct rating of the disability. If the parties cannot agree on a rating, the matter can be submitted to the workers’ compensation judge to make a decision.

If the injured worker is determined to have a permanent partial disability, the injured worker will receive the total amount of the permanent disability benefits over a fixed number of weeks. If the injured worker is determined to have permanent total disability, the injured worker will receive the permanent disability payments for the rest of the injured worker’s life. The permanent disability payments will commence within fourteen (14) days after the final temporary disability payment. If the injured worker was not receiving temporary disability payments, then the first permanent disability payment will commence within fourteen (14) days after the claims administrator is notified of the permanent disability. The permanent disability payments will then be made every fourteen (14) days. However, if the employer offers the injured worker employment that pays at least 85% of the wages and benefits, or if the injured worker obtains employment that pays at least 100% of the wages and benefits, then the permanent disability payments must be approved by a workers’ compensation judge. The permanent disability payments will end when the injured worker reaches the maximum amount allowed by law or the workers’ compensation case reaches a lump sum settlement. Generally, the lump sum settlement will be reduced by the amount of permanent disability benefits that were already received.

It is common that once the injured worker’s disability is rated, a settlement of the workers’ compensation case may be negotiated. If a settlement is reached, a worker’s compensation judge must review it to determine its fairness. If no settlement can be reached, the case can be presented to a workers’ compensation judge to give a Findings and Award which decides what benefits the injured worker will receive. To settle the case, the injured worker and the claims administrator may enter into stipulations concerning the amount of payments, medical care, and future changes. For example, it will be stipulated that the injured worker is to receive a certain amount of permanent disability payments for a certain amount of time. In addition, it will be stipulated that the claims administrator will continue to pay for the injured worker’s medical care as long as necessary. It can also be stipulated that if the injured worker’s condition worsens, then the injured worker has the right to request an additional increase in workers’ compensation benefits. Meanwhile, if the condition improves, the claims administrator may then also request that the benefits are lessened. Alternative to stipulations, the injured worker may enter into a Compromise and Release, which will include a one-time lump sum payment that will include payment for the permanent disability benefits not yet received. The claims administrator will no longer pay for the injured worker’s medical care. Instead, medical payments will be the responsibility of the injured worker. There will also be no right to request an increase in benefits if the injured worker’s condition worsens in the future.

If the injured worker is determined to have a permanent disability, the injured worker may also be eligible to receive medical care for the injury, a supplemental job displacement benefit, and Social Security disability benefits and other benefits that may be offered by the employer or union.

Supplemental Job Displacement Benefits

Supplemental Job Displacement Benefits may be available to help pay for retraining or skill enhancement if: (1) the worker qualifies for permanent disability, (2) the employer does not offer the worker their job back, or (3) the worker does not return to their former employer. The injured worker must have at least a permanent partial disability and is awarded regardless of the injured worker’s permanent disability rating. Furthermore, in order to obtain the Supplemental Job Displacement Benefit, the employer must not have offered the injured worker any regular, modified, or alternative work within sixty (60) days after the claims administrator received the Form DWC-AD 10133.36 Physician’s Return-to-Work and Voucher Report. The claims administrator must offer the voucher to the injured worker within twenty (20) days from the last date the employer may offer regular, modified, or alternative work.

The claims administrator will send the voucher by the Form DWC-AD 10133.32 Supplemental Job Displacement Non-Transferable Voucher. The voucher is redeemable for up to $6,000.00 and cannot be redeemed as part of any settlement.

The Supplemental Job Displacement Benefit is a voucher that serves as a promise to pay for the educational retraining and skill enhancement offered by eligible schools, which includes California public schools or a provider listed on the California Employment Development Department’s Eligible Training Provider List (ETPL). The voucher will pay for the tuition, fees, books, supplies, tools, and other related expenses. The voucher will also pay the fees for professional licenses, certification, exam preparation courses, and exam testing. The injured worker should contact an Information and Assistance Officer at the Division of Workers’ Compensation to obtain a list of qualified vocational and return-to-work counselors. The injured worker must submit the voucher to the school or counselor, which will then receive payment directly from the claims administrator. If the injured worker personally pays for the services, the receipts and the signed voucher must be submitted to the claims administrator within forty-five (45) days of paying the bill in order to receive reimbursement. The voucher will expire the later of two (2) years after being issued or five (5) years from the date of injury. All expenses and receipts must be submitted before the expiration.

Return to Work Supplement Program

The goal of the workers’ compensation program is to help the injured worker avoid financial losses from being off work. The treating doctor will submit a Physician’s Return-to-Work and Voucher Report. If the treating doctor reports that the injured worker is able to work, the doctor should report the “work restrictions” which are the clear and specific limits on the job tasks while the injured worker is recovering so as to protect the injured worker from further injury. The doctor should also report any necessary changes to the injured worker’s schedule, assignments, equipment, or work conditions while recovering.

If the employer offers the injured worker employment after the injury, the claims administrator must send the injured worker the Form DWC-AD 10133.35, entitled Notice of Offer of Regular, Modified, or Alternative Work. The claims administrator must send the Notice within sixty (60) days after learning that the injured worker’s permanent partial disability has become “Permanent and Stationary.” The employment must comply with the work restrictions in the doctor’s report, last at least twelve (12) months, and be within a reasonable commuting distance. The type of employment may be regular, modified, or alternative. “Regular work” must include the injured worker’s usual job position at the time of injury and pay the same wages and benefits that were paid at the time of the injury. “Modified work” includes the injured worker’s old job with compliant work restrictions and must pay at least eighty-five percent (85%) of the wages and benefits that were paid at the time of the injury. For example, compliant work restrictions may include: changing certain job tasks, time required on certain tasks, workstation environment, equipment, and location. “Alternative work” includes different work from the old job position and is compliant with work restrictions. Alternative work must pay at least eighty-five percent (85%) of the wages and benefits that were paid at the time of injury.

Once the Notice of Offer of Work is made, the injured worker has thirty (30) days to accept the offer. After that time period, the employer has the right to withdraw the offer. Moreover, if the employer makes an offer of work, the claims administrator is then not required to provide the injured worker a Supplemental Job Displacement Benefit regardless of whether the injured worker accepts or rejects the offer.

If the employer does not make an offer of modified or alternative work and the injured worker is reported to have permanent partial disability, then the claims administrator is required to provide a Supplement Job Displacement Benefit, which is essentially a voucher. In addition, the California Department of Industrial Relations administers the Return-to-Work Supplement Program (RTWSP), which is a one-time $5,000.00 payment to workers who have received the voucher and still experience a disproportionate loss of earnings. The supplemental payment is made to workers whose permanent disability benefits are disproportionately low in comparison to their earnings losses. The application for the one-time payment must be submitted to the RTWSP within one (1) year from when the voucher was sent to the injured worker. If the injured worker disagrees with the eligibility determination, the injured worker may appeal to the Workers’ Compensation Appeals Board (WCAB) within twenty (20) days. The injured worker must file a Petition for Reconsideration and serve a copy on the RTWSP (address 1515 Clay Street, 17th Floor, Oakland, CA 94612).

Death Benefits

If the job-related injury or illness causes death, payments may be made to the deceased worker’s spouse, children, and other relatives or household members who were totally or partially financially dependent on the deceased worker. The amount of the payment is determined by the number of eligible dependents: $250,000 for one total dependent, $290,000 for two total dependents, and $320,000 for three or more total dependents. If there is one or more totally dependent minors, after payment of the amounts specified, death benefits will still continue until youngest minor’s 18th birthday. Disabled minors will receive benefits for their entire life. Death benefits are paid at the total temporary disability rate, but not less than $224.00 per week. If the death occurs within one (1) year from the date of injury, application for death benefits must be submitted: within one (1) year from date of death; or within one (1) year from the date the last benefit was furnished to the deceased worker; or within one (1) year from the date of death which occurred more than one (1) year from the date of injury. Application for death benefits may not be submitted more than 240 weeks from the date of injury.

In addition, reasonable burial expenses are also paid, not exceeding $10,000.00.

Compensable Consequences

A “compensable consequence” is a new health problem that is caused by the original injury. In this situation, the injured worker is entitled to the same medical coverage and disability benefits provided by workers’ compensation as the injured worker was receiving for the first original injury. The injured worker is entitled to all benefits for the consequences of the work-related injury. Examples of compensable consequences may include: a subsequent fractured wrist caused by a fall that was a result of an injured knee from a work related incident; injury from an automobile accident while traveling to a doctor’s appointment for a work-related injury; injury from medical malpractice committed during the treatment of a work-related injury; or a back injury caused by a limp compensating for a work-related injury to the knee or ankle.

Other Financial Benefits Available

In addition to workers’ compensation benefits, there is other possible financial assistance available to an injured worker. For example, State Disability Insurance (SDI) and Unemployment Insurance (UI) benefits from the Employment Development Department may be paid when the workers’ compensation benefits are delayed or denied. It is good practice to file a claim for SDI or UI benefits if the worker is not able to work the job. This serves as a precaution in case there may be issues in the workers’ compensation claim. The Employment Development Department should be notified of the workers’ compensation claim.
The United States Social Security Administration (SSA) will also pay for Social Security disability benefits for total disability. The amount of the benefits may be reduced by the workers’ compensation payments received.
In addition, many employers and unions offer benefits such as sick leave, group health insurance, long-term disability insurance, and salary continuation plans.

The injured worker may also have a third party liability claim in cases where the injury was caused by a party other than the employer.

Employment Discrimination

It is important to note, if the employer does not offer the injured worker the employment position desired due to the fact that the worker experienced a job-related injury or because the injured worker requested workers’ compensation, then the employer may be in violation of California Labor Code section 132a for employment discrimination.

In addition, if the employer denies the worker the desired employment position because of the fact that the worker has a serious and permanent disability despite the capability of performing the job with reasonable accommodation, then the employer may be in violation of the federal Americans with Disabilities Act (ADA) and the California Fair Employment and Housing Act (FEHA).

WHY IS PAIN AND SUFFERING NOT RECOVERABLE IN WORKERS’ COMPENSATION?

Unlike a civil lawsuit for personal injuries, pain and suffering is not recoverable in a claim for workers’ compensation benefits. There is no remedy in workers’ compensation cases for pain and suffering, inconvenience, or change in quality of life. In contrast, a personal injury claim allows for recovery of pain and suffering. It is important to note, once a workers’ compensation claim is filed, the workers’ compensation benefits are considered to be the injured party’s exclusive remedy.

Even more, any mental anguish or emotional distress that occur at work or may be considered to be caused by the work environment must be filed as a workers’ compensation claim. These type of mental and emotional injuries are regularly denied. On the other hand, a stronger case to recover workers’ compensation benefits can be made if the injuries have developed into a mental or emotional disorder supported by medical evidence, such as a diagnosis of depression resulting from chronic pain caused by on the job injuries or a diagnosis of a sleep disorder due to being up at night from the pain associated with job injuries. These type of injuries are not considered to be pain and suffering and may have separate grounds for filing workers’ compensation claims for benefits.

To summarize, it is near impossible to recover for pain and suffering in a workers’ comp claim. However, some states, such as California, allow for emotional distress claims, as distinguished from pain and suffering. These claims are difficult to win and many times it must be proved that the employer deliberately caused the harm.

In certain type of factual situations, a third party may be responsible for the injuries. In this type of case, the injured worker may be able to receive compensation for pain and suffering by filing a civil lawsuit against the third party. To be clear, a “third party” is defined as someone other than the employer who may be liable, such as a co-worker, an independent contractor, or possibly the manufacturer of the equipment that caused the injury.

WHAT IF WORKERS’ COMPENSATION BENEFITS ARE DENIED?

If there is a disagreement regarding liability for any of the benefits entitled to the injured worker, an attorney may assist the injured worker in filing an Application for Adjudication of Claim with the Workers’ Compensation Appeals Board. Filing an Application gives the Workers’ Compensation Appeals Board (WCAB) jurisdiction to decide any disputed issue which may arise in the injury claim. The time period to file the Application is within one (1) year from the date of the injury if the injured worker’s claim is denied. If the injury claim was accepted, the Application must be filed within five (5) years of the date of injury. Discovery into the injured worker’s private medical history is permitted once an Application is filed. This will allow the insurance company to obtain medical records and depositions. Even so, the injured worker may want to file an Application because it is important that the injured worker obtain the maximum benefits entitled to them and prevent the insurance company from denying any benefits without a proper legal basis. If the insurance company has denied the claim or is not paying for benefits, then the injured worker may want to file the Application. Furthermore, if the insurance company files the Application, then the insurance company is responsible for the injured worker’s attorney fees.

There is a procedure allowing the injured worker to challenge the claims administrator’s decision to deny treatment for the injured worker. A Physician Reviewer is a qualified physician who evaluates the recommended treatment approved by the claims administrator in the Utilization Review process. If a Physician Reviewer denies treatment recommended by a treating physician on the grounds that there is no scientific basis for the treatment, the injured worker may request an Independent Medical Review (IMR) to challenge the decision. This must be submitted within thirty (30) days from receiving the decision to deny treatment.

Furthermore, penalties are imposed if the claims administrator wrongly delays or denies payment to the injured worker. The claims administrator must pay the injured worker an additional ten percent (10%) of the payment if the claims administrator sends a payment late and the injured worker filed a claim form for the injury more than fourteen (14) days before the payment was due. However, there is no 10% penalty if the claims administrator sends a delay letter explaining the situation.

Moreover, if the claims administrator unreasonably delays or denies authorizing treatment, the injured worker may be awarded a penalty payment of up to twenty-five percent (25%) of the value of services wrongly denied or delayed – an amount up to a maximum of $10,000.00. The injured worker must submit a complaint to the Audit Unit of the California Division of Workers’ Compensation, which will then investigate and impose penalties. Large penalties are imposed if the claims administrator unreasonably denies or delays medical care with a “frequency that indicates a general business practice.”

IS A PERSONAL INJURY CLAIM AGAINST A THIRD PARTY ALSO AVAILABLE EVEN THOUGH THE INJURED WORKER IS RECEIVING WORKERS COMP BENEFITS?

The acceptance of the benefits does not preclude the injured worker from also pursuing a claim against a third party if the accident was caused by the third party’s negligence rather than the employer’s negligence. The injured worker may simultaneously pursue a civil lawsuit against a third party for damages and also file a claim for workers’ compensation benefits for the same injury. However, the employer or the workers’ compensation carrier will have a statutory right of reimbursement pursuant to the California Labor Code section 3852 for the compensation already paid or credit for future compensation paid to the injured worker due to the injuries. This ensures that the injured worker will not obtain a double recovery.

It is advisable that the injured worker not give up the workers’ compensation benefits. However, because there is no pain and suffering awarded in workers’ compensation claims, the injured worker may be able to receive more money by filing a personal injury claim against the liable third party, particularly if there is no contributory or comparative fault of the injured worker. Even so, because workers’ compensation is a “no-fault” system, the injured worker can get immediate medical treatment and lost wages without going through the time-consuming litigation process. Whenever possible, both the workers’ compensation claim and the personal injury claim should be pursued for the best interest of the injured worker. If the injured worker’s attorney fails to pursue both claims, it may be considered malpractice.

WHAT ARE THE ATTORNEY FEES IN WORKERS’ COMP CASES?

Generally, attorneys will take workers’ compensation cases on a contingency basis. This means that the attorney does not get paid legal fees unless a recovery is made. In submitting a claim for workers’ compensation benefits, the attorney will be paid a percentage of only certain benefits awarded to the injured worker. In workers’ compensation claims, only certain benefits are considered in calculating attorney fees. The attorney will share a percentage of any settlement negotiated or of a permanent disability award. The attorney will not share in any portion of the medical costs. The attorney will also not share in any temporary disability payments. However, if the attorney assisted in obtaining a recovery for any lump sum payment for past-due temporary disability benefits, the attorney may take a contingency share in that recovery.

Moreover, the percentage of the contingency fee is regulated by state law. In California, the attorney’s fee must be ordered approved by a Workers’ Compensation Administrative Law Judge, who may approve 10% to 15% depending on the complexity of the case, the amount of time spent on the case by the attorney, whether multiple employers were involved in the case, whether complicated legal issues were disputed, and the outcome the attorney secured for the injured worker. If permanent disability is awarded, the judge generally approves 15%.
The injured worker will be responsible for the legal costs incurred by the attorney in representing the client. These costs include: costs associated with the production of medical records, filing fees, court reporter fees, deposition costs, transcription and translation costs, independent examinations by physicians, expert witness fees, attorney travel expenses, and postage, copying, and printing costs. These costs may be advanced by the attorney who will then seek reimbursement for the costs from the insurance company at the end of the matter. In California, these costs are typically not deducted from the injured worker’s award or settlement.

The employer’s insurance carrier may request to take the deposition of the injured worker. A deposition is when the insurance company’s attorney will ask the injured worker questions under oath while a court reporter records the injured worker’s responses. If a deposition has been noticed, the injured worker’s attorney will be paid an hourly fee for attending the injured worker’s deposition. The fee for attending the deposition will be paid by the employer’s insurance company, not by the injured worker.
There are also situations in which the employer must pay for the fees of the injured worker’s attorney. The employer will have to pay the applicant’s attorney’s fees in addition to the applicant’s benefits. In certain factual circumstances, the fees for the attorney will not come out of the injured worker’s benefits. This situation arises if a self-insured employer or if the insurance company over-advances without reserving funds for attorney fees. In addition, on rare occasions, the defendant employer may be obligated to pay the injured worker applicant’s attorney’s fees if the employer files the application for the injured worker. An employer may file on behalf of the injured worker if the employer wishes to depose the injured worker or witnesses. In fact, discovery is prohibited and sanctionable before the filing of a case commencing with the Application for Adjudication of Claim. See Donna Yee-Sanchez v. Permanente Medical Group and Natalie Piatt v. Eureka Union School District; 8 C.C.R. section 10403; California Labor Code section 5500.5.

The situation may arise in which the worker’s comp insurance carrier will withhold benefits and force the injured worker to retain an attorney. In this situation, the carrier will be penalized by 10% of the benefits due for the delay in providing those benefits. The penalty can be as much as 25% depending on the facts and circumstances of the delay. See California Labor Code section 5814. In comparison, if the employer files the application for the injured worker, the employer will be responsible for about 15% to 18% of all permanent disability benefits in legal fees due to having to pay for the injured worker’s attorney fees. Generally, this cost will be more than the penalty in delaying. However, the tactic of withholding benefits is risky for the carrier because as soon as the injured worker retains a competent worker’s comp attorney, the attorney will immediately file a petition for penalties with its notice of representation. The petition will request a penalty of 25% of the withheld benefits or the maximum amount allowed of $10,000.00. In addition, the carrier or self-insured employer could also be liable for administrative penalties pursuant to the California Code of Regulations section 10111.1.

WHAT ARE WORKERS COMPENSATION LIENS?

When an individual is injured while on the job, the injured party may have both a claim for workers’ compensation benefits and a claim for civil damages resulting from the personal injury caused by a third party. In this type of situation, the workers’ compensation insurance provider will have a statutory lien on the proceeds from the personal injury matter. Any amount that the employee recovers from the third party is subject to the employer’s right of reimbursement for compensation already paid or credit against future compensation paid to the employee, or to the employee’s dependents in a death claim, on account of the injury.

Moreover, practically speaking, if a third party has caused injury to an employee and caused the employer to pay for the injured worker’s medical care and pay benefits, then the employer has also been damaged by the third party. Therefore, the employer also has a claim against that other third person or entity. This is known as subrogation. Pursuant to California Labor Code section 3852, statutory subrogation is the independent right of an employer, or an employer’s insurance carrier, to recover compensation paid to the employee against a third party, by whose fault the employee has sustained an industrial injury.

In addition, the workers’ compensation carrier has an actual lien against any verdict or settlement arising from any right to recover damages that the employee has against any other party for the injury.  The lien is automatic and notice does not have to be given. If the employee receives any proceeds from a settlement or verdict and the employer’s lien is not satisfied, then the employer will get a credit against any future worker’s compensation benefits to be provided to the injured worker. The employer may also file a civil lawsuit against the employee for the full amount of the lien. Moreover, if settlement occurs without considering the compensation lien or without notifying the employer/carrier, then the injured worker may not be able to receive any future benefits. It may be considered malpractice for the personal injury attorney to settle the case if the worker’s compensation carrier or the employer does not expressly approve the settlement.

The reason for the workers’ comp lien is so that the injured worker does not obtain a double recovery. However, many times, the larger the worker’s compensation lien from the workers’ comp insurance adjuster, the more valuable damages in the personal injury claim. Every item claimed as a worker’s compensation benefit may also be asserted as being caused by the third party defendant. Also, workers’ compensation will only award a portion of the lost wages. The remainder of the wages may be asserted in the personal injury claim. In a personal injury claim, the injured party is entitled to recover all resulting damages, including lost earnings, lost earning capacity, medical bills, future medical bills, permanent impairment, pain and suffering, and loss of enjoyment of life.

When the personal injury case reaches a settlement, the workers’ compensation lien may be negotiated and reduced. It is important to review the itemization of the lien, as administrative costs, manager fees, and defense attorney fees should not be included in the lien amount. Many times, if the workers’ compensation lien cannot be reduced, there will be no incentive for the injured worker to settle the personal injury claim and the plaintiff’s personal injury attorney is left no other option but to file a lawsuit.

For instance, the plaintiff’s attorney may settle the personal injury case and satisfy the worker’s comp lien, which will be reduced based on a prorated amount of the attorney fees and litigation costs. In this situation, the workers’ compensation claim will still be pursued by the injured worker because the injured worker is still entitled to the continued benefits but now at a reduced rate. The carrier or self-insured employer is responsible for all future benefits at the rate for which the attorney fees and costs in the personal injury case bear to the entire recovery until the net third party recovery is exhausted. As a specific example, if a personal injury case settles for $150,000.00 and the attorney fees and costs equal 34% of the settlement, then the attorney will receive $51,000.00. If there is also a worker’s compensation lien of $40,000.00, the workers’ compensation carrier will only be able to recover $26,400.00 to satisfy the lien. This is because the $40,000.00 lien is reduced by 34%. The client will net $72,000.00 from the total recovery of the third party personal injury claim, after deducting the attorney fee, litigation costs, and the satisfaction of the workers’ comp lien. However, this net recovery does not consider the injured worker’s future benefits. As a further example, if the injured worker’s doctor charges $1,000.00 for a future treatment, the injured worker must now first pay out of pocket the full amount charged and then submit a request to the workers’ compensation carrier for the portion it is responsible to provide as determined by the reduced calculation. In the example, the workers’ compensation carrier will be responsible for providing $340.00 of the charge. This procedure also applies to the injured worker’s lost wages. This process will continue until the injured worker’s $72,600.00 is completely exhausted. The accounting required in these situations is very difficult. As a result of the administrative costs and burden on the workers’ comp carrier, there is an incentive to simply settle the worker’s comp claim at the same time the personal injury claim is settled.

In practice, the personal injury attorney should settle the workers’ compensation claim before settling the personal injury claim. If a prospective personal injury client already has the worker’s comp claim settled, the personal injury attorney must carefully review the workers’ comp settlement documents, paying particular attention to the judge’s Order Approving Compromise and Release or the Award made pursuant to the Stipulated Finding and Award. There should be language in the workers’ comp settlement documents that state that the amount is fixed as of the date the settlement Order is entered, and that there is a limit or cap on the amount of the worker’s comp lien asserted in the personal injury settlement. Often if the workers’ comp carrier anticipates that the injured worker will incur future medical bills and lost wages, the carrier may agree to waive the worker’s comp lien and pay a lump sum of $10,000.00, of which 20% will be paid to the attorney as fees for making a recovery in the worker’s comp matter and the net would go to the injured worker in exchange for giving up any future workers’ comp benefits. A petition, order, and affidavit by the injured worker will need to be approved by the Workers’ Compensation Appeals Board.

In the example above, if the personal injury settlement is $150,000.00 with attorney fees and costs of 34% and a reduced workers’ comp lien of $26,400.00, after waiver of that lien and agreement of lump sum for future benefits, the injured worker will now net $107,000.00 as combined settlement of both the personal injury matter and the workers’ comp matter. To note, the workers’ comp attorney cannot be fully compensated on the lien amount of $26,400.00 which would be $5,280.00. This is because the Workers’ Compensation Appeals Board will not approve fees on the portion of a lien that was waived.

“SETTLING AROUND THE EMPLOYER” AND ESTABLISHING EMPLOYER FAULT

If the injury to an employee during the course and scope of employment is caused by a third party, the employer has the right to recoup the worker’s compensation benefits paid to the injured worker out of any third party settlement or verdict. The employer can assert a lien or file a “complaint in intervention” in the third party lawsuit to protect its right to reimbursement. Usually in these situations, the injured worker and the employer form an alliance to establish liability against the third party.

However, there are times when the liability of the employer may also be at issue. In this situation, generally the amount of the lien asserted by the worker’s comp subrogation attorney is in dispute. If liability on the part of the employer is established, the plaintiff’s personal injury attorney should seek to have the employer reduce its lien or make other concessions. In cases where the employer is not willing to compromise, the plaintiff’s personal injury attorney may attempt to “settle around the employer.” The employer’s right of recovery for its asserted lien can be adjudicated in the trial court or the Worker’s Compensation Appeals Board at the election of the workers’ comp carrier.

Many worker’s comp subrogation attorneys believe that the right to recovery of its lien is absolute. The subrogation attorney will essentially extort its lien amount from the personal injury settlement, thereby holding up and stalling any settlement negotiations in the personal injury matter. The subrogation attorney and the employer may also put financial pressure on the injured worker by asserting a credit in the worker’s comp matter and stop paying disability payments and medical costs. The subrogation attorney will rely on California Labor Code section 3869 to support its position that the plaintiff is not authorized to settle the claim with the parties without the express consent of the subrogation attorney. The subrogation attorney will also rely on case law to support the position that the employer is also entitled to attorney fees based upon the actual benefit conferred upon the plaintiff from the settlement. See Draper vs. Aceto, (2001) 26 Cal 4th 1086. However, such reliance by the subrogation attorney is misplaced and misleading. In fact, the worker’s comp lien may have little to no value depending on the extent of the employer’s fault in causing the employee’s injury.

In practice, “settling around the employer” is a complicated process. The first step in the process is to serve the initial complaint against the third party on the employer by personal service or certified mail with a proof of service, which must then be filed with the court in the initiated civil lawsuit. See California Labor Code section 3708.5. The employer must have statutory notice of the civil lawsuit, or else the plaintiff will be exposed to a lawsuit by the employer to recover the worker’s comp benefits already paid. See Board of Administration vs. Glover, (1983) 34 Cal 2d 906. Failure to provide statutory notice may be considered malpractice by the plaintiff’s attorney. Once the third party responds with an answer to the complaint, the personal injury attorney should review the answer for any asserted affirmative defenses alleging the employer was at fault or negligent. The answer should also be served on the employer. During the discovery process, the plaintiff’s personal injury attorney should attempt to discover evidence supporting the employer’s fault. Getting this information should be done with caution, as the employer is typically an ally of the plaintiff early on in the litigation for establishing the third party liability. Therefore, proper timing of uncovering this evidence is essential.

Discovery should be conducted into certain facts and evidence. To note, California Code of Regulations Title 8, Section 3203 imposes an obligation upon employers to establish a workplace injury and illness prevention program (“IIPP”). In addition, the employer must perform periodic inspections to identify unsafe work conditions, provide training and instruction to employees, and maintain records of inspections for at least one year. The failure to meet these obligations may be considered negligence per se and impose liability on the employer. See Board of Administration vs. Glover, (1983) 34 Cal 2d 906. Discovery into these critical facts establishes the standard of care to be applied against the employer and also possibly against the third party defendant.

In order to settle the personal injury case with the third party when the subrogation attorney is not cooperating, i.e. “settling around the employer,” the third party defendant will need to be assured that the employer will not seek to obtain an additional recovery against the third party after the settlement. Therefore, in practice, the plaintiff’s personal injury attorney will most likely have to: (1) agree to defend, indemnify, and hold harmless the third party against the employer in its complaint in intervention; (2) establish a separate trust account for the settlement proceeds to protect the worker’s comp lien in the event that no employer fault is established; (3) agree to represent the third party defendant at trial on the issue of employer fault; (4) obtain a “conflict of interest waiver” allowing the plaintiff’s attorney to represent the third party defendant concerning the issue of employer fault; (5) obtain an assignment of the third party defendant’s costs incurred in defending the lawsuit; (6) serve a Notice of Third Party Settlement on the employer and include the initial complaint and answer alleging employer fault; (7) serve discovery on the employer, particularly Requests for Admissions relating to employer fault; and (8) serve separate Offers to Compromise to the employer on behalf of the plaintiff and the third party defendant.

Once a settlement is reached in the personal injury case, the plaintiff’s attorney must serve notice of the settlement on the employer. See California Labor Code section 3860(a). If the matter was “settled around the employer” without the employer’s consent, the following language should be included in the Release: (1) plaintiff will defend, indemnify, and hold harmless the third party from the lawsuit brought by the employer-intervenor; (2) plaintiff’s counsel will substitute into the action brought by the employer-intervenor to represent the third party defendant; (3) the third party defendant will assign its recoverable costs in the lawsuit; and (4) the third party defendant waives any actual or potential conflict of interest in the action. Moreover, case law supports the position that where employer fault is established, the employer’s attorney fees are deducted from the amount the employer recovers if any. See Summers vs. Newman, (1999) 20 Cal. 4th 1021. Also, if the subrogation attorney does not prevail, the employer may be responsible for paying litigation costs and statutory costs.

Generally, the issue of employer fault will proceed to trial. The personal injury attorney will announce its readiness to represent both the plaintiff injured worker and the third party defendant. The intervenor employer will most likely not be prepared to adequately present a case at trial to rebut its fault and prove the third party liability. The goal for the personal injury attorney is to present enough facts to prove sufficient employer liability to allow for substantial future workers’ comp benefits. At the time of trial, the personal injury attorney should be in a better position to negotiate a settlement with the employer, who may rather not have the matter be decided by a jury.

The plaintiff’s personal injury attorney should set up a Qualified Settlement Fund for the settlement money received by the third party. Once the employer learns of the third party settlement, it is likely that the employer will stop paying worker’s comp benefits, including future permanent disability and medical costs. In order to preserve the injured worker’s right to receive these benefits, the injured worker must not actually receive its net recovery from the third party settlement. Instead, the settlement will be placed in a qualified account until the worker’s comp lien is resolved. In doing so, the injured worker does not in fact receive any settlement funds and the employer cannot stop paying benefits. Pursuant to United States Treasure Regulation section 1.468B-1(c)(1), a Qualified Settlement Fund must be established pursuant to a court order. The plaintiff’s personal injury attorney should file a petition with the court, indicating that the Qualified Settlement Fund is being established to prevent the injured worker from being in constructive receive of any amounts placed in the account prior to an agreement between the account’s administrator and the injured worker, and the petition should state that the account is being created to allow for financial and legal planning. The employer’s lien interest is protected by the Qualified Settlement Fund by setting aside sufficient funds to cover the lien in the event that no employer fault is established.

If you have been seriously injured in an accident, contact The Sterling Firm today for help (310) 498-2750. We will take your personal injury case on a contingency fee. This means you pay no fees unless we win your case!  

RULES FOR READING AN INSURANCE CONTRACT

An insurance policy is a very unique contract in the sense that when the contract is fully performed it is considered a “loss”.  The concept of “loss” has evolved as a term of art created by the insurance companies.  Here are a few simple Rules when reviewing your insurance contract:

  1. Copy the contract so that you can make notes and mark it up;
  2. Confirm with the insurance company that the policy is complete; that is, the contract includes all endorsements;
  3. Read the Declarations Page, which gives a summary of the contract including the key terms and provisions such as the specifically named insured, address, policy period, location of premises, policy limits, and other key information that may vary among insurance contracts;
  4. All the forms and endorsements included with the contract should be compared to the information on the Declarations Page so there is no misunderstandings;
  5. It should be specifically determined who in facts qualifies as an “insured,” because in some situations individuals not identified may also qualified as an insured, such as an employee of the insured corporation, etc.;
  6. The limits of coverage should be clearly determined whether it is “burning,” which means that the amount will be reduced by the costs of defending the policyholder from claims;
  7. The insuring agreement (“grant of coverage”), which is the provision in the contract that indicates what is actually being covered by the insurance, must be read carefully;
  8. Exclusions and exceptions to exclusions must be fully understood (Exclusions will also be in Endorsements; an Endorsement is an additional provision that makes a change to the insurance contract);
  9. Referenced sections must immediately be understood (if there are gaps in the insurance contract and referenced terms without additional information, clarification from the insurance company must be sought);
  10. Understand the defined terms fully; and
  11. Key words and phrases must be carefully read and its effect must be fully understood.

WHAT IS A BURNING POLICY?

A Burning Policy is an insurance policy that provides limits of coverage but also includes the amount of money spent on defending the policyholder.  Therefore, when a policy limit demand is made, the actual amount available to recover is reduced by the amount spent on defense attorney fees to date.  The policy limit demand must indicate that whatever is available is being sought as recovery and acknowledges that the amount may be reduced by any amounts spent on defense costs thus far.  Failure to provide this language may be an obstacle in pursuing an insurance bad faith claim in the future, and accordingly may also be considered legal malpractice by the plaintiff’s counsel. Furthermore, the plaintiff’s attorney should ask the policyholder during a deposition if they are “aware” that a policy limit demand was made on the claim.  The attorney defending the deposition may object based on attorney-client privilege, but the information is not in fact protected because the question is not asking what was discussed with the policyholder’s attorney.  Rather, the question merely asks whether the policyholder is “aware” that a policy limit demand was made.  This sets the groundwork for an insurance bad faith claim in the future.  In addition, the policyholder, even as a named defendant, is also able to assign their rights under the policy to the plaintiff.  Although, the policyholder will be bound to cooperate with the insurance company throughout the litigation process.

KEY WORDS AND PHRASES IN AN INSURANCE CONTRACT

Key Words and Phrases to be mindful of within the insurance contract include:

  • And (inclusive, conjunctive – which means that the policyholder must have all of the things indicated in the contract in order to have coverage
  • Or (exclusive, disjunctive – which means that the policyholder may have either of the things indicated in the contract)
  • However
  • Except
  • Unless
  • Only if
  • Subject to
  • Includes
  • Must
  • Regardless
  • First

HOW TO INTERPRET THE INSURANCE CONTRACT?

Certain rules of interpretation have been established by the Courts when considering an insurance contract.

For example, provisions that provide coverage (e.g. the insuring agreement, exceptions to exclusions) are interpreted broadly and in favor of providing coverage to the policyholder.  However, the policyholders bear the burden to establish that coverage applies.

Likewise, provisions that limit or restrict coverage (e.g., exclusions, definitions used to take away coverage) are interpreted narrowly and against the carrier.  The carriers bear the burden to establish that an exception or exclusion applies.  Exclusion must be conspicuous, plain, and clear.

TRIAL

To resolve a dispute, the Court must: (1) Determine the facts of the dispute (decide what actually happened), and (2) Apply the appropriate law to the facts.

A Trial is the formal judicial examination of the parties’ evidence and the determination of legal claims in the adversarial proceeding.  The Trial is a public hearing in which each side presents evidence backing its version of the facts.

The length of the Trial varies depending on how many witnesses will be called to testify and the amount of evidence that will be introduced. The Trial can be either a Bench Trial or a Jury Trial.  The Jury (or the Judge if there is no Jury) decides the questions of fact. The Judge decides the questions of law, such as which laws apply to the facts. Each party must provide legal arguments to the Judge about which laws apply to the case.

APPEAL OF THE TRIAL COURT’S DECISION

A decision by the California Superior Court can be reviewed by the California Court of Appeal.  The party appealing the Trial Court’s decision is known as the Appellant, and the other party to the lawsuit is known as the Appellee.  Generally, only Judgments and Orders After Judgment (such as an Order on a Motion for Attorney Fees) are appealable. Generally, Orders Before Judgment, such as Orders from Motions ruled on before Trial, or during Trial before there is a Judgment, may only be reviewed by the Court of Appeal by a Petition for Writ.  An Order on a Demurrer, Motion for Summary Judgment, a Motion resulting in a Dismissal, or a Final Judgment after a Trial are appealable.

NOTICE OF APPEAL

A Notice of Appeal must first be filed in the Superior Court that decided the case.  The Notice of Appeal can be filed as soon as the Trial Court files on the record the Order or Judgment for which is appealable.  In California Superior Court, the Notice of Appeal and a Proof of Service of the Notice on the other party in the civil lawsuit must be filed the earlier of:

(1) Sixty (60) days after either the Trial Court Clerk or the other side serves you with Notice of Judgment or a copy of the filed Judgment, or

(2) 180 days after the Entry of Judgment.

A filing fee is also required by the Court.  It is important that the Notice of Appeal is filed timely.  The Appeal will be dismissed if the Notice is filed late.

When the Notice of Appeal is filed, the Superior Court Clerk will send a notice of the filing to the Attorneys of record.  Within fifteen (15) days after the Superior Court Clerk sends the notification, the Appellant must serve and file in the reviewing Court a completed Civil Case Information Statement (Form APP-004), attaching a copy of the Judgment or appealed Order that shows the date it was entered.

DESIGNATING THE RECORD

Generally, ten (10) days after the Notice of Appeal is filed, the Appellant must “designate the record” by indicating to the Trial Court what documents and transcripts should be included in the record that will be sent to the Appellate Court.  Fees for producing the record are required to be paid.  In California Superior Court, the Trial Court that heard the case will prepare a packet for the District Court of Appeal, usually consisting of the Clerk’s Transcript, the Court Reporter’s Transcript, and a Settled Statement or Agreed Statement describing what took place in the disputed case.

THE APPEAL PROCESS

California has six (6) Appellate Courts known as District Courts of Appeal.  The Appeal will be presented to a panel of three (3) Judges who will review the record in the Trial Court.  The Judges will decide if any legal mistakes were made that affected the final outcome of the Trial.  The Court of Appeal does not provide a re-Trial or a new Trial of the case.  Generally, the Court of Appeal will not consider new witnesses or new evidence.  Rather, the Court of Appeal reviews the case to determine if the law was correctly applied by the Trial Court, usually involving material errors in the Trial’s procedure or errors in the Judge’s interpretation of the law.

The Appellant must file an Appeal Brief, which is a written argument containing the facts and the legal authority upon which supports a reversal of the Trial Court’s decision. The Appellee then may file an Answering Brief responding to the Appellant’s brief. The Appellant may file a second brief responding to the Appellee’s Answering Brief.

The Appellate Court may make a decision based on the briefs.  Or, the Appellate Court may schedule a hearing for oral arguments. In addition, either party may request a hearing.  The Attorneys will present their case to the Court and answer questions by the Judges.

If it is determined that an error of law was committed by the Trial Court, the lower Court’s Judgment will be reversed.  However, if the error was harmless, the Judgment will not be reversed.  Harmless error is one which does not prejudice the rights of the parties to a Fair Trial.  An example of a prejudicial error may include the admission of improper evidence and therefore be considered a reversible error.

If the Trial Court’s Judgment is affirmed, the losing party may still appeal to a higher Court.  If the Trial Court’s Judgment is reversed, the case will be remanded back to the Trial Court with an order, such as:

(1) Hold a new trial,

(2) Modify or correct the Trial Court’s Judgment, or

(3) Reconsider the facts, in light of additional evidence and recent Appellate Court decisions.

The Trial Court’s Judgment is still enforceable despite the filing of an Appeal.  However, the Appellant can file with the Court a Supersedeas Bond, also known as the “Defendant’s Appeal Bond,” which is a surety bond that stays the execution of a Judgment while the Appeal is pending.  The filing of this bond guarantees that the Appellant will satisfy the Judgment if affirmed.

CALIFORNIA SUPREME COURT

The California Supreme Court is the highest Court in the State of California and is responsible with reviewing the decisions made by the Courts of Appeal.  The California Supreme Court consists of seven (7) Judges.  Four (4) of the Judges must agree to form a decision, which must be followed by all other lower State Courts in California.

UNITED STATES COURTS OF APPEALS

The United States District Courts are organized into twelve (12) Circuits which cover a particular region.  Each Circuit has a designated Court of Appeals, which hears appeals from the District Courts within the region.  In addition, the Court of Appeals can hear appeals from decisions of Federal administrative agencies.  Moreover, the Federal Circuit Court also has a designated Court of Appeals for matters involving specialized cases such as patent law, international trade, and civil claims against the Federal government.

UNITED STATES SUPREME COURT

The United States Supreme Court is the highest Court in the United States. A Writ of Certiorari must be granted in order for the U.S. Supreme Court to review a decision.  A Writ of Certiorari is a request to the U.S. Supreme Court to order a lower Court to send up the record of the case for review. The U.S. Supreme Court can only choose a limited number of cases from the cases it is asked to decide. The cases may come from the Federal or State Court system, typical from the U.S. Court of Appeals or the highest State Court. The U.S. Supreme Court usually only hears cases with national significance or that involve important questions about the United States Constitution or Federal law.


Let a West Hollywood Civil Litigation & Personal Injury Lawyer Assist You

Have you or someone you love been seriously injured in an accident? Are you involved in civil litigation or would like to pursue a claim or lawsuit? Contact an experienced West Hollywood Civil Litigation and Personal Injury Attorney at The Sterling Firm!

Call (310) 498-2750 to speak with an Attorney