California Workers’ Compensation Lawyer

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:

• 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, 17^th 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 4^th 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. 4^th 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.

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