California: Defendant’s Liability for Post-Award Compensable Consequence Injuries

By Hon. Susan V. Hamilton, Former Assistant Secretary and Deputy Commissioner, California Workers’ Compensation Appeals Board

Even carefully crafted stipulations that purport to limit an employer’s liability for medical treatment to conditions or body parts not specifically listed in the stipulations will not insulate the employer from liability for future medical treatment even more than five years after the date of injury says a recent Appeals Board panel. The case is Shaw v. Automobile Club of Southern California, 2023 Cal. Wrk. Comp. P.D. LEXIS 253 (Appeals Board noteworthy panel decision). The panel’s decision is a helpful reminder of well-established case law on the WCAB’s jurisdiction to award medical treatment for new conditions that are a compensable consequence of the original injury, notwithstanding language purportedly to the contrary in approved stipulations.

The Facts

Lynn Shaw (applicant) claimed an industrial injury to her cervical spine, bilateral wrists, and psyche in the form of an adjustment disorder. On January 14, 2016, the parties agreed to Stipulations with Request for Award (Stipulations) to resolve the dispute. The Stipulations included the following statement: “This Stipulated Award specifically limits the defendant’s liability for future medical care to only the body parts of psyche/adjustment disorder, cervical spine, and bilateral carpal tunnel syndrome post release surgery.”

In June 2022, more than five years after the Stipulated Award issued, applicant’s treating physician made a Request for Authorization (RFA) requesting defendant’s approval of further treatment. The RFA identifies the diagnosis as bilateral knee pain and a gait disorder. On June 21, 2022, defendant issued a timely notice deferring utilization review on the RFA. The deferral notice was served upon the treating physician and applicant’s attorney, and it stated that the only accepted orthopedic body parts are the cervical spine and the bilateral wrists.

In September 2022, the treating physician issued a supplemental report addressing the questions raised by defendant about the diagnosis of bilateral knee pain and a gait disorder. In that supplemental report the treating physician explained that applicant’s injury to her cervical spine had resulted in the partial loss of use of her lower extremity, which, in turn, caused a “severe” gait disorder. He went on to explain that the gait disorder has caused applicant to drag her right leg during ambulation and that has caused progressively worsening symptoms particularly around the right knee. The treating physician also stated that X-rays of applicant’s right knee confirmed significant medial joint space narrowing. Again, the treating physician opined applicant’s gait disorder was caused by a spinal cord injury that resulted from her cervical spine surgery. The treating physician recommended approval for an evaluation by a specialist to determine whether an ankle-foot orthosis (brace) would be appropriate, and he also recommended a mobility scooter to enable applicant to ambulate safely in the community.

On October 28, 2022, applicant’s attorney sent the treating physician’s supplemental report to defendant, along with a cover letter requesting that defendant withdraw its deferral of UR and approve the RFA based on the treating physician’s explanation that the knee pain and gait disorder were caused by applicant’s accepted cervical spine injury.

In response, on October 31, 2022, defendant issued another deferral of UR, stating that the only accepted body parts per the Stipulations are the cervical spine and bilateral wrists.

Applicant requested a hearing before the WCAB on her claim of entitlement to treatment as recommended by her treating physician and she also claimed entitlement to penalties and attorney fees. A hearing was then held and the WCJ found jurisdiction to determine applicant’s entitlement to medical treatment, and awarded the requested treatment but made no findings on penalties and attorney’s fees.

Defendant sought reconsideration, arguing that the requested treatment should be found non-industrial; that the issue of medical necessity of the recommended treatment should be submitted to UR; and, in the alternative, that defendant should be allowed to obtain a supplemental report regarding the requested treatment from the QME. Applicant also sought reconsideration, asserting her entitlement to attorney fees and penalties.

The Panel’s Analysis

At the outset, there may be a question as to the authority of the WCJ to award medical treatment since Lab. Code § 4610 requires in no uncertain terms that every employer establish a utilization review process whereby requests for medical treatment of industrially injured workers are decided by a UR physician based on medical necessity and are not to be determined by a WCJ. However, the time limits within which a UR decision must be made, as well as when it must be communicated, and the manner of transmittal, are mandatory. (See Dubon v. World Restoration, Inc. (2014) 79 Cal. Comp. Cases 1298 (Appeals Board en banc opinion) (Dubon II). The WCAB has the authority to determine the timeliness of UR and where UR is untimely, the UR decision is invalid, and the WCAB can determine the medical necessity of the recommended treatment. (Dubon II, supra).

In this case, the panel observes that while Lab. Code § 4610(1) permits a defendant to defer UR when it disputes liability for injury or treatment, Cal. Code Reg., tit. 8, § 9792.9.1(b) requires the deferral to be served upon the applicant where the applicant is represented by counsel. Applicant in this case was and is represented by counsel. Finding no indication that applicant in this case was served with either notice of deferral, the WCJ found the two notices of deferral defective and untimely and proceeded to determine the medical necessity of the recommended treatment. The panel unanimously affirmed the WCJ’s finding that the notices of deferral were defective, and accordingly acknowledged the WCJ’s jurisdiction to determine the medical necessity of the requested treatment.

Next, the panel addresses the substantiality of the treating physician’s RFA and supplemental report. It concurs with the WCJ’s assessment that the treating physician’s explanation of the nexus between knee pain/gait disorder and her prior award is clear and logical and supports his opinion that applicant’s knee pain and altered gait are a compensable consequence of her accepted cervical spine injury, which he characterized as a severe spinal injury.

The panel is also in agreement with the WCJ’s finding that the 2016 Stipulations do not limit defendant’s liability for future medical treatment to only those body parts/conditions listed in the Stipulations. Such a holding would be contrary to well-settled authority that a defendant is liable for medical treatment to cure or relieve the effects of new conditions that are a compensable consequence of the initial industrial injury, even if the condition was not part of the original award and even if the employee first requests medical treatment for the condition more than five years after the date of injury. (See, Pirelli Armstrong Tire Co. v. Workers’ Comp. Appeals Bd. (Van Zant) (2003) 68 Cal. Comp. Cases 970 (writ den.)).

As to applicant’s entitlement to penalties and attorney fees, since the WCJ’s decision did not make any findings as to those issues, the panel found applicant’s petition premature.

Shaw’s Importance

Admittedly, the panel’s decision in Shaw, supra, does not break any new ground or venture into previously unresolved matters. It simply stands for a very simple and well-established point—that the employer is liable for future medical treatment to cure or relieve the effects of a new condition that is a compensable consequence of the original industrial injury, even where prior stipulations purport to place limitations on the scope of further medical treatment and even where medical treatment for the new condition is first requested more than five years after the date of injury.

Reminder: Board panel decisions are not binding precedent.

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