Ways to Protect your Business In Workers’ Compensation

Small business owners are the backbone of the American economy.  Over half a million new businesses are started every month, and there are almost 28 million small businesses in the United States.  Small business owners all take great pride in building their venture and growing their business.  Any business owner, regardless of the size of the company, wants to protect the business from threats and risks.  Business owners need to be especially aware of how to protect their business during a workers’ compensation case.

One important way to protect your business is to properly investigate every claim.  Business owners should take immediate steps to gather evidence about how the injury happened.  Clearly you will want to make sure to interview witnesses and collect written statements.  However, you should also consult another, neutral employee about the facts surrounding how the injury happened.  Another employee may be able to provide insight that will show how to keep employees safe in the future or even can show that the injury could not have happened in the way the injured employee reported.

Another essential step to protect your business is to make sure that the managers of each department are trained in the proper and immediate steps to take in the event of a work place accident.  Managers need to understand the proper notices and forms that must be provided to the employee, that they cannot refuse to accept a claim, and that it is essential to make sure an injured employee gets medical attention as soon as possible.  Failure to ensure that your staff is properly trained can result in inadvertent violations of important workers’ compensation regulations.

Third, you should be familiar with some common signs of fraud and be on the lookout for red flags.  One common red flag is when there are no witnesses to the incident, or the only witness is a close friend of the injured employee.  Another sign that the claim could be fraudulent is if the employee is inconsistent about the details of the incident that led to the injury.  If the employee refuses medical treatment or tests to confirm the injury, this could also be a sign the employee’s injury is not legitimate.

Finally, small businesses need to make sure to carry workers’’ compensation insurance in accordance with state law.  They also need to report any injuries immediately to their carrier and be truthful at all times.

We are well versed in the workers’ compensation laws in California.  Call us today to talk about how we can help you protect your business

First Steps After your Worker is Injured

It is essential for employers to take all reasonable steps to reduce the risk for injury to their employees.  Keeping your employees safe is not only the right thing to do, it will keep your business running smoothly and make sure your business does not run afoul of state and federal safety regulations.  Almost all employers with very few exceptions are required to carry workers’ compensation insurance.  Although employers have taken the precautions to prevent injuries and purchased insurance in case these measures fail, injuries will inevitably happen eventually.  It is important for business owners to know the first steps to take after a worker is injured.

A workers’ compensation claim starts when an employee notifies the employer of a work-related injury.  The employer is then required to provide the employee with a Workers’ Compensation Form, also known as DWC-1.  The employee will need to fill out the form and return it to the employer.  An employee providing verbal notice is not sufficient to trigger the employer’s obligation to start paying benefits.

After the employer receives the completed claim form from the employee, the employer has fourteen days to accept, reject, or delay a decision concerning the claim.  If the employer delays a decision, it has ninety days to make a final determination.  During those ninety days, the employer must provide up to ten thousand dollars of medical care for the employee.  However, the employer does not have to pay temporary benefits during this time.

The injured employee will need to be assessed by a medical professional.  The employer has the right to select the first doctor.  However, the employee does not have to keep seeing that physician.  The employer is obligated to provide the employee with notification of the Medical Provider Network, which is a list of medical providers that the employee may choose from.  If the employer does not have a MPN, the employee can switch medical providers after thirty days, and can choose any doctor who accepts workers’ compensation insurance.

It is essential that the employer notify his or her workers’ compensation insurance provider as soon as the injury occurs.  If the employer does not have insurance, the employer needs to seek assistance from an experienced attorney, as there can be severe penalties for failure to carry the required insurance.

We have extensive experience with all types of workers’ compensation litigation.  Call us today for an appointment so we can discuss your business and what we can do to help you at the beginning of a workers’ compensation case.

Do I HAVE to Buy Workers’ Compensation Insurance?

There are a variety of expenses associated with running your own business.  From inventory to lease payments to taxes, there are many expenditures included in your total overhead.  In California, workers’ compensation needs to figure into this computation.  Especially in the case of small businesses, many business owners wonder if it is necessary to purchase workers’ compensation insurance, as the cost can be extensive.  It is very important for business owners to understand the different permissible options under California law, as well as the consequences of not acting pursuant to the relevant regulations.

The option that is most common is purchasing a workers’ compensation insurance policy.  Pursuant to California Labor Code § 3700, a business must provide workers’ compensation benefits to its employees if it employs one or more employees.  Recent changes to the law provide that executive officers and directors of corporations are no longer exempt from the requirement that all employees must be covered, with some limited exceptions.  California Labor Code § 3351 defines “employee,” and it should be noted that “every person in the service of an employer under any appointment or contract of hire or apprenticeship, oral or written, whether lawfully or unlawfully employed” is included under the definition.  Moreover, other people such as minors, handymen, aliens, nannies, and several others are also included.

Self-Insurance can also be an option for some businesses.  Businesses or employers who want to be self-insured must fulfill very particular financial requirements.  In addition, the business must apply to the Office of Self-Insurance Plans for Approval.  The business or employer must provide 1) three calendar years in business in a legally authorized business form; 2) three years of a certified, independently audited financial statements; and 3) acceptable credit rating for three full calendar years leading up to the application.  Employers should note that subsidiaries must apply separately.

If you choose not to provide workers’ compensation insurance, the consequences could be severe.  Not only could you and your business face stiff fines, there is a possibility you could even face criminal prosecution.  The first offense could result in a fine of $10,000 and a year and jail, and subsequent offenses carry even stiffer penalties.

If you have questions about whether you are required to carry workers’ compensation insurance for your business, contact us today.  We can discuss your business and what we can do to protect its future.

What Is Cumulative Trauma?

The legal system includes a variety of terminology that can seem confusing to non-lawyers, and the workers’ compensation system is no exception.  It is important to understand some of the basic terminology used in the workers’ compensation system to best defend your business.  One important different to understand is the difference between specific trauma and cumulative trauma.  Specific trauma is the kind of injury that typically comes to mind when you think of workers’ compensation, such as a broken arm in a car accident or a concussion from a fall from a ladder.  Cumulative trauma is a bit more nuanced.

Cumulative trauma, also referred to as a “repetitive stress injury,” is an injury sustained from repetitive stress or motions over time.  Carpal tunnel syndrome is the classic example of cumulative trauma, as it takes repeated motion, performed over time, in order to actually develop carpal tunnel.  Another example is the Chronic Traumatic Encephalopathy sustained by professional football players as a result of sustaining multiple concussions.  Cumulative trauma is a compensable injury under the workers’ compensation system, just like specific trauma.

Like specific trauma injuries, workers must bring a claim for cumulative trauma within a specific time frame.  Under California Labor Code § 5412, the worker must bring a claim within one year of discovering the claim or within a year of when the claim should have been discovered, had he or she been exercising reasonable diligence and care.

The California Workers’ Compensation Institute found that on average, cumulative trauma injuries were 53% more expensive than specific trauma cases.  In addition, workers claiming a cumulative trauma injury were much more likely to be independently represented by their own attorneys.  The institute also found that cumulative trauma is most prevalent in the manufacturing industry, which is attributable to the repetitive manual motions typically required of the workers.  Moreover, the study found that a worker claiming a cumulative trauma is ten times more likely to claim another injury.  With these types of statistics, it is clear that it is essential that you have a firm understanding on cumulative trauma and how to protect your business and your workers from these types of injuries and claims.

We have extensive knowledge in helping our clients understand cumulative trauma and the potential impact on their business.  Call us today for a consultation.

Borello and Independent Contractor Inquiry

California law is quite clear about an employer’s responsibility to carry workers’ compensation insurance. With very few exceptions, California employers of almost any size are required to carry workers’ compensation insurance for all employees. There can be complicating issues, however, as not everyone who works for a business is considered an “employee” for purposes of this requirement. For example, independent contractors are not employees, and therefore employers do not have to carry workers’ compensation insurance that would cover independent contractors or their work-related injuries. Employers will sometimes misclassify an employee as an independent contractor, which can result in harsh penalties for the business and its owner. Unfortunately, there is not a statutory definition of “independent contractor” that is applicable to workers’ compensation. Instead, California courts have set out a list of factors to consider. Although labor code section 3357 makes the presumption that a worker is an employee, courts will look at other realities to determine if this is accurate. The California Supreme Court adopted a test in S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations that is still important law concerning how to determine if a worker is an employee or an independent contractor.

In Borello, the California Supreme Court was met with the question of whether agricultural workers who were engaged to harvest cucumbers through a “sharefarmer” agreement were independent contractors or employees. The Borello court created an “economic realities” test. Under this test, the most important issues is the control that the employer or principal may exercise over the worker. The focus on what kind of control pivots on not only the type of work that is to be done, but also the manner and way in which it is actually done. In other words, if the employer is telling a worker that he or she must perform the work during certain hours and in a certain location, it makes it more likely that worker is actually an employee, and not an independent contractor. There is  a long list of other factors to consider, including whether or not the type of work to be done is the type usually done by the employer, whether the work done requires a special skill set, and whether the worker is to be paid according to the job or the time spent.

If you have concerns or questions about properly classifying your employees, contact me today at (714) 516-8188. I look forward to answering your questions and discussing your business.

Why Do We Have Workers’ Compensation and How Does it Benefit My Business?

The workers’ compensation system is firmly entrenched in both federal and state laws in the United States. At its core, workers’ compensation is a form of protection afforded to the employee to make sure that he or she receives compensation for a work-related injury. The first employer liability laws were passed in the United States in 1855, and by 1949, every state had created and enacted its own workers’ compensation statutes. The first employer liability statutes made it possible for an employee to sue the employer for injuries resulting from the employer’s negligent or intentional conduct. Today, workers’ compensation is a “no fault” system. This means that the employee is not required to prove any negligence on the employer’s part before being entitled to workers’ compensation benefits. Although it seems at first glance like it might not be “fair” that an employee does not have to prove the injury was a result of wrongful conduct by an employer, this can actually benefit your business. Having to prove fault can make a case last much longer and make it much more complicated. Protracted litigation is not good for your business, so removing the negligence issue can greatly benefit an employer. Workers’ compensation also means that the employee relinquishes the right to sue the employer. An injured employee may file a claim for workers’ compensation to receive medical treatment and, in some cases, salary replacement. In exchange, however, the employee cannot then also file a law suit. This keeps the employee from being able to “double dip,” meaning he or she cannot get paid twice for the same injury. This provision is good for your business because, again, it will help keep you out of court. If you do end up in a workers’ compensation dispute, California has a special court system set up for workers’ compensation, which helps to speed the process. Workers’ compensation will also benefit your business because it provides a powerful incentive to make sure your employees are properly trained and safe. It also encourages the frequent review and revision of safety protocols, and hopefully reduces the number of injuries suffered by your employees.

If you have questions about workers’ compensation and your business, contact me today at (714) 516-8188. I can help walk you through the process and answer your questions about your business.

How Important Are Documents in the Workers’ Compensation Process?

Lawsuits invariably involve a large amount of paperwork. The initial complaint, the response, discovery work, and motions can all contribute to the large volume. Workers’ compensation is no exception to this rule. In fact, meticulous and detailed documentation are essential to the workers’ compensation process. Documents that carefully detail processes and injuries both before, during, and after a work-related injury can drastically alter the course of a workers’ compensation case.

Before a work-related injury ever happens at your place of business, it is vital to make sure you provide accurate information to your workers’ compensation insurance company. Providing the required paperwork to the company in terms of the number of employees and the nature of your business will help make sure that in the event a work-related injury occurs and you have to file a claim on behalf of your business, the claim will not be denied because of inaccurate or incomplete information.

When an employee actually sustains a work-related injury, it is then vital to complete paperwork related to that injury as soon as possible. This paperwork will include the Claim Forms that you must provide to the insurance company. Providing detailed information about how the injury happened, as well as when and where, will arm the insurance company with important information allowing them to identify any red flags for fraud, malingering, or a pre-existing injury. Witness statements from other employees as well as a statement from the injured employee should be secured as quickly as possible to help nail down the details of what actually happened.

Medical documents from the injured employee’s health care provider are also very obviously central to the workers’ compensation system. The medical providers will determine the percentage of an employee’s injury, necessary course of treatment, and whether the injury is temporary or permanent. All of these will be instrumental in determining the amount and length of benefits an injured worker will receive. Moreover, these medical documents will allow for careful review of whether treatment is appropriate for the injury or whether an insurance company may need to call for an independent medical review.

If you have questions about the documents your business will need during a workers’ compensation suit, contact me today at (714) 516-8188. We can talk about your business and its workers’ compensation procedures.

Premium Fraud and AA Buffet

Fraud in the workers’ compensation system comes in many forms. It can come from employees, medical providers, and even employers. All types of fraud have a detrimental impact not only on those directly impacted by the case but also on the entire system at large. Fraud costs tax payers millions of dollars and can drive insurance premiums for workers’ compensation even higher. As a result, California takes steps to crack down on fraud, including from employers. Workers’ compensation fraud involving employers can mean that the employer is lying about the nature or number of its workers or about the nature of the work performed. In a March 2017 case, an employer pled guilty to charges arising out of workers’ compensation fraud.

The defendant, Chang Tai Lin, was the owner of AA Buffet. In May 2015, the fraud unit began an investigation into the defendant’s business after receiving a tip from the district attorney. The fraud unit began conducting surveillance, obtaining documents from the police department, health department, insurance companies, and other state agencies. In March 2016, a search warrant was executed not only on the AA Buffet but also at the defendant’s home. As a result of the investigation, it was discovered that from April 2010 through April 2016, the defendant had been underreporting the number of employees working at AA Buffet as well as falsely reporting payroll wages, as he actually paid many of his employees in cash. It was also discovered that the defendant had been committing tax evasion from October 2010 through April 2016 because he failed to accurately report employee wages or payroll taxes to the Employment Development Department. After the investigation, the defendant pled guilty to two counts of making a material misrepresentation in order to obtain a workers’ compensation insurance premium as well as one count of willfully failing to file payroll tax returns with intent to evade tax. Employers are required to accurately report the number of employees to their workers’ compensation insurance company. Failure to accurately disclose the workers or the type of work performed by the company can clearly result in harsh penalties, including both fines and jail time, for offending business owners. It is essential that employers understand and live up to their disclosure obligations to their insurance carriers.

Understanding your insurance obligations is essential to making sure you and your business are not running afoul of the law. Call me today at (714) 516-8188 if you wish to  discuss your business’s obligations.

Liens and Angelotti Chiropractic

When a worker sustains a work-related injury, he or she is entitled to seek medical treatment for the initial injury as well as an on-going basis. Workers’ compensation is meant to cover the costs of the treatment, including equipment, therapy, surgery, prescription medication, and a number of other costs. A provider who has supplied services, products, or medicines to an injured worker in a workers’ compensation case can file a lien against the workers’ compensation benefits of the worker. This allows the provider to make sure he or she gets paid. In 2012, a bill came into effect that required lien holders to pay an “activation fee.”  The purpose of this fee was an attempt to clear the large backlog of small liens that were bogging down the system, as well as discouraging providers from filing small claims by making the fee large enough as to render the lien worthless. A case called Angelotti Chiropractic v. Baker challenged the constitutionality of the activation fee. The case claimed that the activation fee was a violation of the Equal Protection clause of the United States Constitution because large institutional lien holders such as union trusts and health care plans were exempt from having to pay the activation fee. The plaintiffs alleged that this was unfair, and either all or no lien holders should have to pay the fee. The court ultimately agreed.

In November 2013, the court approved the request for a preliminary injunction, which prevented the DWC from collecting the activation fee for the liens from before 2013 as well as preventing enforcement of a provision of the new law that would have allowed for dismissal of liens by December 31, 2013 if the activation fee had not been paid.

The Ninth Circuit United States Court later determined that the activation fees were, in fact constitutional. The court dismissed the injunction put in place by the trial court. The court determined that any affected lien claimant who filed a declaration of readiness or attended a lien conference between November 9, 2015 and December 31, 2015 must pay the activation fee. It also determined that pursuant to labor code 4903.06(a)(5). After December 31, 2015, activation fees were no longer accepted by the DWC. Providers should note that the fee for filing liens was completely unaffected by this case.

If you have questions about how workers’ compensation claims are paid, you need an experienced attorney to discuss it with you. Contact us today at (714) 516-8188 for a consultation to discuss your business and how workers’ compensation will impact your business.

The Gregory Formula

Workers’ compensation benefits are designed to help an employee who has sustained a work-related injury by paying for related medical expenses.  The injured employee may receive a large variety of treatments including, but not limited to, physical therapy, prescription medication, chiropractic care, psychological services, or the use of durable medical equipment.  An employer may very well be on the hook for the costs of these services.  When providing medical care to an injured employee, medical providers and group health insurance providers may file liens against the workers’ compensation recovery in order to ensure reimbursement for care provided to the employee.  Ultimately an employer and an employee may agree to settle the workers’ compensation claim by a compromise and release agreement.  In a case styled Kaiser Foundation Hosp. v. Workers’ Comp. App. Bd., the WCAB addressed the issue of what happens when the medical providers who have filed liens do not agree with the amount settled on in the compromise and release agreement.

In that case, four separate cases were consolidated for consideration by the WCAB.  The issue revolved around how much a lien claimant should recover in a denied case.  It was proposed that the Lien Claimant should be eligible for the same ratio of recovery that the injured worker accepted as settlement of the case.  Where the lien claimant does not agree with the amount of the settlement compromise, the workers’ compensation referee shall “determine the potential recovery and reduce the amount of the lien in the ratio of the applicant’s recovery to the potential recovery in full satisfaction of its lien claim.”  The court stated that the phrase “potential recovery” means “the amount of recovery which is reasonably probable” in a contested trial, examining the entire record.  The proposed settlement should include the formula for determining the reduction of the lien, called “the Gregory Formula,” and the computation of the potential recovery needs to include a variety of figures, including the percentage of disability, medical expenses, and the duration of future medical expenses.  In the simplest terms the proposed recovery is a fraction, where the actual settlement amount is the top number (numerator), and the total reasonable case value if Worker won at Trial is the bottom number (denominator).  Basically, if the Injured Worker accepted 25% of the potential case value as settlement, that number could be attributed to the lien claimants.  These need to be set forth in specific detail for the judge.  These figures have to be disclosed to the lien holder to allow it to examine the basis on which the settlement would reduce the award against it.  If the Lien Claimant objects to the formula after notice, the WCAB may withhold that lien from resolution, and give the Lien Claimant an opportunity to independently prove up an injury.  The lien claimant then runs the risk of zero recovery if they fail to independently prove an injury.

If you have a question about how the Gregory Formula could help reduce the financial liability of your business during a workers’ compensation case, contact me today at (714) 516-8188.  We can discuss your business and your options.

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