CASE LAW UPDATE

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					                                            I.

                                       AOE/COE

PEOVICH v. COUNTY OF CONTRA COSTA (May 6, 200),
Decision After Reconsideration, 30 CWCR 128

Inference that an unexplained death arose out of employment and evidence of usual
activities is sufficient to show work contribution.

Deceased employee employed as a custodian had chest pains while at work. The
employee was diagnosed with an aorta tear and died two days later. There were no
witnesses to the employee’s activities before the problem started (he started at 6:00
a.m. and the problems developed at approximately 8:30 a.m.). Defendant denied
liability. At trial on the death benefits witnesses testified they couldn’t say what
applicant had actually done on the morning of his problems, but did discuss his usual
duties, custodial duties, cleaning, lifting, etc. The applicant’s QME felt that the duties
the employee usually performed were strenuous enough to raise blood pressure and
accelerate an aortic rupture. Defendant’s QME felt that the aorta problems were
spontaneous. The WCJ found the injury/death non-industrial. Applicant filed for
reconsideration.

Decision: Reconsideration granted. The WCJ’s belief that the employee’s duties
were “relatively light” overlooked lifting at times up to 32 lbs., etc., which would be
“heavy lifting”. The Panel felt that the applicant’s QME’s opinion that the employee’s
duties were sufficiently strenuous enough to cause the dissection was substantial
evidence. Here the evidence of what the employee’s customary duties were was
sufficient to show that the work was strenuous enough to cause the problem. There is
still an “inference” that an unexplained death in the course of employment arose out of
it, but, there must still be a preponderance of evidence per Labor Code §3202.5 to
support an industrial finding.
Case Law Update
June 12, 2002
Page 2


ATASCADERO UNIFIED SCHOOL DISTRICT v. WCAB (May 28, 2002),
Court of Appeal Decision, 30 CWCR 121, 67 CCC 519

Gossip about personal life not a part of the employment relationship.

Applicant had an extramarital affair with a co-worker which became the subject of
gossip, spread mainly by another co-worker and his wife. Applicant complained to her
supervisor who in turn met with the parties and ordered it to stop. The gossip stopped,
but applicant filed a stress claim alleging a psychiatric injury due to a hostile work
environment. The WCJ at trial found no industrial injury and felt that the gossip
concerned a personal matter unrelated to applicant’s employment. Reconsideration
was granted, the Board felt that the gossip was an actual event of the employment that
occurred in the work place. Defendant appeals.

Decision: Annulled. A finding of industrial causation cannot be made when a
worker’s duties merely provided a stage for the injury. The employment must not be a
mere passive element focused on by a non-industrial condition – it must play an
“active” role in the development of the psychological condition. There must be some
“work connection” to establish compensability. There must be a link in some causal
fashion. Gossip about an employee’s personal life is not part of the employment
relationship. Although applicant and the other employee were both employed by
defendant, and although the gossip occurred at work, the nature of applicant’s duties
had nothing to do with her injury – it only provided a stage for the incident, and did
not contribute to the injury.

[The California Supreme Court has denied review of the Court of Appeals decision.]
Case Law Update
June 12, 2002
Page 3



LAND v. WCAB (September 25, 2002), Court of Appeals Decision, 2002 DJDAR
11203

College student injured during field portion of cattle breeding course not entitled to
workers' compensation benefits.

Applicant was a full time student at a California college and enrolled in an elective
course in animal husbandry which provided practical hands-on experience in
commercial cattle breeding. The course was administered by a non-profit
corporation/foundation and the animals, tools, and equipment for the class were
provided by the foundation. Students paid a tuition to attend the year long class and
signed an agreement which included a provision that students who had at least 70
hours in the class would be eligible to receive a portion of any net profits from the sale
of the cattle at the end of the year. Applicant sustained an injury to her knees while
checking cattle one day. She filed a workers' compensation claim alleging that she was
an employee of the foundation. At trial, the WCJ concluded that applicant was not
entitled to workers' compensation benefits because she was not paid wages and the
purpose of the class was to provide students with hands-on experience, not monetary
gain. A Petition for Reconsideration was denied as was a Petition for Writ of Review.
However, the Supreme Court granted the Petition and transferred the case back to the
Appellate Court.

Decision: Petition denied. Under Labor Code §3351 a covered employee is “every
person in the service of an employer under any appointment or contract of hire or
apprenticeship, express or implied, oral or written, whether lawfully or unlawfully
employed”. Labor Code §3357 augments this definition by stating that “any person
rendering service for another, other than as an independent contractor, or unless
expressly excluded herein, is presumed to be an employee”. Applicant here was not an
employee! The applicant was not working with paid workers, the participants in the
project were all students in the same position as the applicant and the applicant was
not working in an established business or institution. The project was created
exclusively for an educational purpose. Although the applicant received a portion of
profits from the project, she did not receive wages and would have received nothing if
the project had not made any money. The crucial question is whether the student is
whether the student is “rendering service” for the university in participating in its
educational programs. Here, the court concluded that the university was actually
rendering service to the student by providing educational services for the student’s use.
Case Law Update
June 12, 2002
Page 4


                                          II.

                COMPROMISE AND RELEASE AGREEMENTS

JEFFERSON v. CALIFORNIA DEPARTMENT OF YOUTH AUTHORITY,
(July 1, 2002), Supreme Court Decision, 30 CWCR 169, 67 CCC 727

Wording in a Compromise and Release may preclude workers’ suits against
employers.

Applicant filed a workers' compensation psychiatric claim alleging the injuries were
caused by sexual harassment, hostile work environment, etc. Seven months later she
also filed a claim with the DFEH against the employer, co-employees, etc. The DFEH
issued her a “right to sue” letter. Approximately 28 months after filing the workers'
compensation claim, the parties agreed to a Compromise and Release. Applicant was
represented at this time as well. The standard Compromise and Release was signed
which in part states that the settlement “releases and forever discharges said employer
. . . from all claims and causes of action whether now known or ascertained or which
may hereafter arise or develop as a result of said injury”. An attached typewritten
Addendum also indicated applicant was releasing the employer from all potential
claims, including those under the Civil Code. The Compromise and Release was
approved by a WCJ. Three weeks later, applicant filed a lawsuit against the defendant
alleging sex discrimination. Summary judgment in favor of the defendant was
granted. Applicant appealed and the Appeals Court affirmed. The Supreme Court
granted applicant’s Petition for Review.

Decision: Affirmed. The Addendum, if nothing else, demonstrates the parties’ intent
to settle all issues including those outside of the scope of workers' compensation and
there was nothing shown to indicate that the worker wanted to exclude the DFEH case
from the settlement. Applicant should have realized the words “all claims and causes
of action” encompassed every claim. To not allow this settlement would cause
employers to be disinclined to settle, not knowing what the extent of future liability
might be. Furthermore, the WCJ who approved the settlement also had sufficient
information to access the fairness of the release. Furthermore, the fact that the words
“all claims and causes of action” is pre-printed in the Compromise and Release
appears to encourage comprehensive settlements that will bring a close to all possible
litigation. The typed Addendum further supports the conclusion that the parties
intended to close all possible future litigation. The Addendum also released all of the
Case Law Update
June 12, 2002
Page 5


defendants’ employees so when the applicant signed it she knew she would be
releasing both the employer and its employees – as co-employees are not subject to
workers' compensation only civil actions, this also showed the applicant’s intent to
settle all claims. Further, even though the attached Addendum was “boilerplate”, and
not created for the specific cause that was not controlling nor did it diminish its effect
in this case.
Case Law Update
June 12, 2002
Page 6



                                           III

                                       CREDIT

WILSON v. NATIONAL UNION FIRE INSURANCE CO., (July 5, 2002), Order
Denying Reconsideration, 30 CWCR 217

Credit for overpayment of permanent disability against future treatment when
applicant’s conduct and symptom magnification contributes to cause.

Applicant’s sustained an industrial back injury. On September 26, 1997 applicant
received a Findings and Award of 26%, $12,172.35. At that time the defendant had
already advanced more than that amount. The defendant subsequently did provide
vocational rehabilitation services and paid vocational rehabilitation maintenance
allowance benefits from May 13, 1998 through July 15, 1999. In July of 1998, an
Agreed Medical Examiner reported that a Functional Capacity Evaluation might be
necessary and that applicant could have a disability up to between heavy work and
light work. Applicant filed a Petition to Reopen and demanded additional permanent
disability and also raised penalties for unreasonable delay of payment of benefits. The
defendant resumed permanent disability advances. However, a functional capacity test
concluded that applicant was exaggerating his disability. The Agreed Medical
Examiner then submitted a supplemental report indicating that permanent disability
was not much different than the original award of 1997. A WCJ issued a Findings and
Award that permanent disability had increased from 26% to 33-1/4%, and that
applicant had been overpaid in excess of $11,000.00 which he allowed as credit
against all future benefits including further medical care. Applicant filed a Petition for
Reconsideration.

Decision: Denied. The WCJ on reconsideration had written that applicant had
“unclean hands”. Applicant created the overpayment by his own actions and should
not benefit from his actions. Although applicant didn’t ask for the additional
permanent disability advances, filing for penalties for unreasonable delay of payment
of benefits was in essence a claim for additional permanent disability. Furthermore,
the Board felt that the advances were made because of applicant’s “significant
symptoms magnification”. Denying credit here would award applicant’s behavior and
penalize the defendant.
Case Law Update
June 12, 2002
Page 7


                                          IV.

                              FIREFIGHTER’S RULE

MC ELROY v. STATE COURT OF APPEAL (June 28, 2002),
Court of Appeal Decision 30 CWCR 203, 67 CCC 879

Firefighter’s rule bars police officers’ damages.

Plaintiff, a police officer, was in a pursuit. A CHP officer returning to his station
observed the pursuit ahead of him and joined the chase without knowing what the
pursuit was about and without making radio contact with the City police department.
The CHP car ultimately hit plaintiff’s car injuring the plaintiff. Plaintiff sued the CHP
contending that the CHP officer caused his injuries. Summary judgment granted
pursuant to a Firefighter’s Rule. Plaintiff appealed.

Decision: Affirmed. The exception to the Firefighter’s Rule does not apply to officers
in a different public entity “jointly engaged” with the injured officers in police or
rescue activities. To do otherwise would impair the ability of separate agencies to
coordinate or for the individual officers involved to make judgment calls when
responding to rapidly developing emergencies.
Case Law Update
June 12, 2002
Page 8


                                         V.

                       LABOR CODE SECTION 3208.3(h)

CITY OF OAKLAND v. WCAB (June 11, 2002), Court of Appeal Decision,
30 CWCR 151, 67 CCC 705

Correct standard must be applied for an employer to meet the burden for good faith
personnel actions.

Applicant worked for the defendant and rose through the ranks to an administrative
position. In 1998 applicant was informed his position would probably be eliminated in
the following years due to budgetary issues. Applicant was advised to think about a
different position such as management assistant and for the first half of 1999 he
worked in that position for which he was assured budgetary authority existed. In mid-
1999 as part of a reduction in the work force, applicant was demoted to a lesser
position without warning. Applicant left work, obtained psychological counseling and
filed a workers' compensation stress claim. Medical reports stated that applicant’s
distress was related to the demotion. A WCJ held that the demotion coupled with the
assurances that applicant’s position was “safe” substantially caused a psychiatric
injury. The WCJ also concluded that the city had failed to carry its burden of proving
that its actions were in good faith. Defendant filed for reconsideration which was
denied. The defendant appealed and defendant’s Writ was granted.

Decision: Award vacated. The court indicated that employers must have some
freedom in making regular and routine personnel decisions, including transfers,
demotions, discipline, layoffs, and terminations. As long as the act is done with
“subjective good faith” and the employer’s conduct meets “the objective
reasonableness standard”, the exemption under Labor Code §3208.3 applies. Here the
demotion was the result of an honest and sincere attempt to streamline the City budget
and there was no evidence suggesting deception or unlawful collusion. Budget cuts
should be allowed without an employer having to defend psychiatric claims by
workers whose jobs are eliminated. The promise made to the applicant, although not
being kept, was not broken in bad faith.
Case Law Update
June 12, 2002
Page 9


                                            VI

                           LABOR CODE SECTION 9785

DETKA v. OCTAGON RISK SERVICES (June 3, 2002),
Administrative Director’s Decision, 30 CWCR 198

Bitterness between an attorney and a chiropractor alone is insufficient for a change of
treating physicians.

Applicant chose a chiropractor as her PTP. An attorney for the claims administrator
sent the chiropractor a letter pursuant to California Code of Regulations § 9785. The
letter was addressed “Dear Chiropractor Hamby”. The chiropractor took offense at the
“salutation”, and called the attorney, and, that call ended up in a heated conversation
deteriorating to the point where the chiropractor referred to the attorney as a “little
skank”. Defendant petitioned the AD for a change of treating doctors contending that
the chiropractor had a clear bias that could significantly interfere with disability to the
extent that he could not be objective and impartial in making medical decisions.

Decision: Denied. Bias had not been shown. Chiropractors are allowed to be referred
to as “doctor”, or use the preface “Dr.” provided they add the word “chiropractor”, or
the letters “D.C.” following their name. Both chiropractor and the attorney were guilty
of unprofessional behavior and as the applicant had no apparent dissatisfaction with
the treatment, there was no basis for the change.
Case Law Update
June 12, 2002
Page 10


SANCHEZ v. THE TRAVELERS INDEMNITY CO., June 4, 2002,
Administrative Director Decision, 30 CWCR 199.

PTP must detail treatment.

Applicant designated a PT P. The defendants provided the doctor with a 9785 letter
before he began treatment. The first exam was on December 19, 2000. However, the
doctor did not submit his first report until January 3, 2001. Thereafter, he submitted
timely progress reports, but they only contained brief, 1 or 2 word references to the
type of treatment being provided. The defendant filed a Petition for a Change of
Treating physicians with the AD.

Decision: Granted. First, the doctor failed to comply with 9785(e)(1) which requires
the PTP to submit his first report to the claims administrator within 5 working days
following the PTP’s initial examination. The PTP’s report was a week late!
9785(f)(8) requires progress reports discussing in part methods, frequency, duration
and planned treatment. These must be “detailed”. Failure to adequately detail this
information in the progress report was also a violation of 9785.
Case Law Update
June 12, 2002
Page 11


                                         VII.

                             MEDICAL TREATMENT

PARK MEDICAL PHARMACY v. SAN DIEGO ORTHOPEDIC ASSOCIATES
MEDICAL GROUP (June 11, 2002), Court of Appeal Decision, 67 CCC 770

Medical group may dispense medication for profit for the conditions for which they
are treating their patients.

The defendant, a medical group and its physicians, dispensed drugs for profit to their
workers' compensation patients. Patients were advised that they could get the
medication from the defendant or go to a pharmacy. The drugs were maintained in a
separate area in the medical office. Plaintiffs operate a pharmacy in the same building
where the defendant’s offices are located and contend that the defendant’s dispensing
of drugs violates the Business and Professions Code, that they were unlawfully
operating a pharmacy, and that its business had dropped because of the dispensing of
medication. The defendant’s Motion for Summary Judgment was granted and the
plaintiffs appealed.

Decision: Affirmed. The Business and Professions Code, specifically Section 4170
lays out the provisions under which a physician can dispense drugs. The defendants
were not operating a “pharmacy” which, in essence, is defined as a drug store where
items are sold to the general public. The defendant’s physicians may dispense
medication to their own patients, for profit, for the medical conditions for which they
are being treated.
Case Law Update
June 12, 2002
Page 12


                                           VIII.

                            STATUTE OF LIMITATIONS

AMERICAN HOME ASSURANCE CO. v. WCAB (May 30, 2002), Writ Denied
67 CCC 822

Statute of Limitations is no bar to a claim if the applicant is not fully informed of
workers' compensation rights.

Applicant sustained an industrial injury on February 22, 1994. The defendants paid
temporary disability and provided medical treatment. Applicant was released to
modified duty on January 6, 1995 and filed a Claim Form with the employer on
January 11, 1995. The defendant sent applicant a letter acknowledging the claim and
enclosing a pamphlet of workers' compensation benefits. Temporary disability ended
on January 18, 1995 and applicant was advised in a letter of that fact and was provided
with a statement that the applicant may be entitled to other workers' compensation
benefits. On April 14, 1995 a letter was sent to the applicant that pursuant to the
treating physician, applicant was permanent and stationary, there was no permanent
disability, and that applicant could obtain a Panel QME, and enclosed the request form
and advised the applicant that they could also obtain a consultation with an attorney.
Applicant filed an Application for Adjudication of Claim on May 30, 2000 and the
defendant contended that the claim was barred by the Statute of Limitations per Labor
Code §5405 and 5410. The WCJ found no Statute of Limitations. The defendant filed
a Petition for Reconsideration contending that the applicant had adequate notice of her
rights to workers' compensation benefits and how to seek them. The WCJ wrote that
the material sent to the applicant did not set forth any time limits for the applicant to
pursue her remedies. The WCAB granted reconsideration and issued its own decision
that the Statute of Limitations barred applicant’s case. Applicant then filed a Petition
for Reconsideration and the WCAB again granted reconsideration, this time reinstating
the WCJ’s decision. The defendants appealed.

Decision: Affirmed. The defendant had failed to advise the applicant that any further
action on her part was necessary to continue to receive benefits and had failed to
provide any notification to the applicant of any time limitations within which the
applicant could pursue further workers' compensation benefits or that she would be
barred if she would not pursue the benefits within those time frames.
Case Law Update
June 12, 2002
Page 13


                                           IX.

                                WCAB PROCEDURE

MARRIOTT INTERNATIONAL v. WCAB (June 12, 2002)
Appellate Court Decision, 30 CWCR 156, 67 CCC 713

Service by fax not valid unless parties expressly agree to it.

After an expedited hearing, the record reflects service on the parties of a decision.
Defendant claimed that it never received it. Applicant’s attorney faxed a copy
thereafter to the defendant’s counsel and followed up with a copy by mail. The
defendant filed a Petition for Reconsideration 23 days after receipt of the fax, and 21
days after receipt of the mailed copy. The Petition was dismissed. The WCAB felt it
had to be filed within 20 days after the fax which they deemed as “personal service”,
thereby not allowing for the additional five days for mailing. The defendant appealed.

Decision: Decision annulled. Per CCP 1013, unless service by fax is “agreed to by the
parties” it does not constitute personal service.

				
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