Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Benefits newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360 (December 11, 2020, 4:51 PM EST) --
 |
| Michael Sullivan |
This is among the most important decisions to be made in the life of any claim.
It is especially tough in COVID-19 claims where there are some grounds for denial; the consequences are far-reaching either way. This article discusses the landscape of this decision.
In a claim that does not involve COVID-19, the consequences of failure to deny a claim on time are severe.
The claim may still be denied, but a late denial means a presumption that the claim is compensable, and case law has established that the presumption may only be rebutted by evidence that could not reasonably have been discovered within the 90-day period.[2]
Just about all evidence usually could have been discovered in the 90-day period, including all defense witnesses, a deposition of the applicant, subpoenaed records, and a medical-legal evaluation. And so often a late denial means acceptance of the case.
Denial carries with it other consequences as well. In California the employer has the ability to set up a medical provider network and to pick the doctors that are in it.[3]
The applicant in an accepted case is obliged to pick a physician within the network, thus providing the employer with medical control of sorts.
If a case is denied however, an applicant may find a doctor of his or her own to treat with, and such a selection can have significant consequences for the development of the case.
Denial therefore is usually only chosen where the defense thinks it can win or, at least, feels that it can follow up the denial with a quick settlement.
Be that as it may, denial is an important tool for the employer. Where there are grounds for a finding that there was no work-related injury, or an affirmative defense barring compensability applies, the denial is a necessary component of avoiding unnecessary liability.
Also, California law provides that after a claim is filed the employer must pay up to $10,000 in medical care expenses while it is deciding whether or not to deny.[4] The issuance of a denial stops that obligation and expense.
In response to COVID-19, California has for the first time in its centurylong history changed the 90-day rule.
Senate Bill 1159 lays out three presumptions of compensability in COVID-19 claims. That is, a worker's claim of COVID-19 injury will be presumed compensable if there is a positive test and other right conditions are met. The three presumptions may be broadly identified as follows:
- Where a worker before July 5 was physically at work;[5]
- If a worker after July 5 is a firefighter, peace officer or health care worker;[6] or
- Where after July 5 there is an "outbreak" at the place of employment.[7]
In the first two instances the investigation period is 30 days, not 90. Where there is an outbreak the investigation period is limited to 45 days. The employer accordingly has very little time to do the required investigation, and if the denial is late, the consequences remain the same — the presumption of compensability and the barring of evidence.
COVID-19 cases are unique in that there is not a question of whether a worker got hurt — there is a test that can settle that quickly and easily. Therefore, denial of a case usually does not require the use of a medical-legal evaluation — that is, a doctor does not need to see the applicant and make judgments as to whether an injury came from work.
The question of exposure becomes isolated, and this gets down to witness testimony; it is all about contact tracing. Can the employer show that (1) there was no exposure at work at all, and (2) that there was exposure in the injured worker's personal life? If the employer cannot show both of these things and a presumption applies, it will lose.
For example, I recently consulted on a case where an applicant tested positive and was hospitalized. While the applicant did not die, the medical bills are likely to be very high. The applicant reported hugging another worker in the parking lot, and then spending time with him at work.
The investigation revealed that he had been in close proximity with people at a political rally, and at church, without a mask in sight.
The investigation however could not locate a person at either of these events that had COVID-19. In that case there was little choice but to accept the injury as industrial. It could not be shown that he was exposed at these personal activities, but he was at work.
There are many considerations for the employer when there are grounds for denial. Just because an employer can does not mean it should. The evidence is scarce, but if COVID-19 is like most flu viruses, in the vast majority of cases no hospitalization will be required, and at this juncture we are seeing less than 1% of cases result in death. Why not accept the case?
The employer will have to pay nothing more than minimal medical care in all likelihood. Also, there is likely to be no more than a week or so of sick leave required, and with a complete recovery, there will be no indemnity exposure.
The Insurance Commission in California has indicated that it will not count COVID-19 cases when calculating the employer's experience modification rate, and so premiums should not be affected. Finally, taking care of sick workers during a pandemic can be the action of an employer who is concerned about its workers, in both perception and reality.
The problem of course is that a few of the cases can be very severe and very expensive, and a failure to deny can place the employer in a position of incurring unwarranted liability. In California a death case, depending on the number and types of dependents, carries a usual price tag of $250,000 or more. In serious cases, a person can be on a ventilator for weeks, which is a very expensive proposition.
Finally, there is mounting evidence that in many cases, there may be residual disability. This is especially true in cases where the patient has a comorbidity, e.g., a preexisting breathing disorder like asthma. A permanent aggravation of an underlying condition can burden the employer with all care necessary to treat that condition, for life.
The good news is that it should be relatively easy to judge how severe a COVID-19 case might be within the 30 or 45 days allotted. An employer can do the needed contact tracing and see if there is a defense. In the meantime, up to $10,000 of medical is being provided. As the deadline approaches the employer can observe the progress of the worker and make a judgment.
Michael Sullivan is the general managing partner at Michael Sullivan & Associates LLC.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] Labor Code section 5402.
[2] Honeywell v. WCAB (Wagner)(2005) 70 CCC 97.
[3] Labor Code 4616 through 4616.7.
[4] Labor Code 5402(c).
[5] Labor Code 3212.86.
[6] Labor Code 3212.87.
[7] Labor Code 3212.88.
For a reprint of this article, please contact reprints@law360.com.
