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California: Due Diligence Is the Key

July 11, 2016 (9 min read)

I. How NOT to Request That the Record Be Developed

In the Noteworthy Panel Decision (NPD) of Quintero v. PBC Holding Corporation dba Commercial Cleaning Systems, 2015 Cal. Wrk. Comp. P.D. LEXIS 610 [2015 Cal. Wrk. Comp. P.D. LEXIS 610], applicant, Ms. Quintero, was extremely disappointed after her AOE/COE trial (i.e., a trial as to whether her injury arose out of or occurred in the course of employment). On 7/20/2015, the judge issued a “take nothing,” while she was hoping for an award of industrial injury to her hands, back, knees, lower extremities, feet, and shoulders.

How did this happen?


(Publisher’s Note: Citations link to; bracketed cites link to Lexis Advance.)

Lack of credibility? Post termination defense? Lack of substantial evidence? Turns out credibility was not an issue. Neither was the post-termination defense. And apparently the judge found the medical reports submitted into evidence did constitute substantial evidence, since he relied upon them for his finding of “take nothing.”

The crux of the issue for applicant was her argument that the record had not been sufficiently developed. She asserted that the medical evaluators should have been provided with additional medical records to consider. On the day of trial, applicant asked for a continuance, so that the record could be developed to allow the medical evaluator an opportunity to review the additional records and issue a supplemental report in support of her claim. The judge denied this request. The trial went forward and a “take nothing” issued.

Applicant filed a Petition for Reconsideration requesting that the finding of “Take Nothing” be vacated and that the record be developed so that more favorable medical reports could be submitted to the judge at a subsequent trial.

The WCAB denied this request.

By way of explanation, the WCAB stated,

“Here, applicant's Petition is basically a stream of consciousness—there is not one specific reference to the record, nor one reference to legal authority to support her factual and legal contentions. Applicant's petition is therefore skeletal in that it is unsupported by the necessary references to the case record and relevant principles of law, and therefore, we will deny the Petition. (See Cal Code Regs tit. 8 §10846 [R10846].) We also decline to vacate the Order and return this matter to the trial level for further development of the medical record.”

II. Always Comply With the Regulations When Filing a Petition for Recon Requesting the Record Be Developed

Petitions for Reconsideration are often viewed as a second chance to “get it right.” But the WCAB has been consistent in ruling that, unless good cause justifies otherwise, the record must be fully developed prior to the Mandatory Settlement Conference per Labor Code § 5502(d)(3) [LC 5502], and most certainly before trial.

When filing a Petition for Reconsideration on this issue (or on any issue for that matter), it is essential to comply with the following regulations:

    • •  8 Cal. Code Reg. § 10842(a) [R 10842]: “Clearly [and succinctly] set forth” your position. A long winded “stream of consciousness” petition will most likely be denied, as occurred in the Quintero case.
    • •  8 Cal. Code Reg. § 10842(a): “Fairly state all of the material evidence relative to the … points at issue.” Include aspects that are not favorable to your position, and explain why your position should still prevail, despite the unfavorable aspects.
    • •  8 Cal. Code Reg. § 10842(b): Support your position with “specific references to the record.” This makes it easier for the WCAB Commissioners to rule in your favor by helping them find the evidence in the record that you are relying on. For guidance on complying with this EXTREMELY important mandate, see the multiple examples provided in this regulation.
    • •  8 Cal. Code Reg. § 10846 [R 10846]: Cite applicable Labor Code sections and case law and explain how these relate to the facts in your case.
    • •  8 Cal. Code Reg. § 10852 [R 10852]: If applicable, respectfully explain in specific, but succinct detail, how and why the findings of the judge are not justified by the evidence presented. Then, respectfully explain in specific, but succinct detail, how and why findings more favorable to your position are justified by the evidence.

If applicant had complied with these regulations, would her result have been different? Perhaps not, but her odds of success would have been exponentially increased. Over the past several decades, the courts have issued opinions interpreting the conflict in the law between judge’s duty to close discovery at the Mandatory Settlement Conference (MSC) (Lab. Code § 5502(d)(3) [LC 5502]) and the judge’s duty to develop the record to ensure all decisions are based on substantial evidence (Lab. Code §§ 5701 and 5906 [LC 5701, LC 5906]), but there is still no consensus.

III. How Do Judges Balance Their Duty to Develop the Record With Their Duty to Close Discovery?

The most recent case law, including the Quintero case, seems to turn on one simple question. Did the party asserting the argument to develop the record exercise due diligence prior to the trial? In the Quintero case, the WCAB acknowledged the above conflict, but found the following evidence of lack of due diligence on behalf of applicant, weighed heavily against allowing the applicant to develop the record.

  1.  In the February 18, 2015 report of Panel Qualified Medical Evaluator (PQME), Dr. Tsou had stated that “there were necessary medical records missing from applicant's December 6, 2013 right knee    arthroscopic surgery in Tijuana, Mexico.” Therefore, applicant was aware of this “defect” with the PQME’s report as soon as this report was received. However, applicant failed to provide the PQME with the    requested medical records, nor did applicant follow up with either a request for a supplemental report or by scheduling the PQME’s deposition.
  2.  On April 16, 2015, defendant filed a Declaration of Readiness to Proceed (DOR). Applicant did not object to the DOR based on the need to develop the record to provide the PQME with the missing medical  report and to obtain a supplemental report.
  3.  At the Mandatory Settlement Conference (MSC) on May 15, 2015, both parties listed the evidence they planned to rely on at trial. On the MSC statement, the defendant listed the reports of the PQME, Dr.  Tsou and the applicant’s family doctor, both of whom opined applicant’s injuries were not industrial.
  4.  At the MSC, applicant did not request a continuance based on the need to develop the record to provide the PQME with the missing medical report and to obtain a supplemental report. This issue was not  brought to the court’s attention until the day of trial on July 8, 2015.

The WCAB concluded,

“Although applicant was in possession of the February 18, 2015 PQME Dr. Tsou report, and the medical records of Dr. McCoy for months before the mandatory settlement conference, and knew from the Pre-Trial Conference Statement that defendant intended to use them to defeat AOE/COE, applicant did nothing to cure the medical evidence on her own. Given that applicant was in a position to obtain her own medical records from Mexico, and defendant was not, the failure to obtain those records to ‘cure’ the report of PQME Dr. Tsou is irreconcilable with applicant's own best interest. In addition, if the report of PQME Dr. Tsou is not substantial evidence, as applicant claims, then it was not substantial evidence at the time it issued. Even so, we find nothing in the record that indicates applicant took the deposition of PQME Dr. Tsou or requested a supplemental report from him.

It is a maxim of jurisprudence in California that, ‘No one can take advantage of his wrong.’ (Civ. Code, § 3517 [CC 3517.]) We therefore find that applicant has not shown good cause for an order to further develop the record. (See County of Sacramento v. Workers’ Comp. Appeals Bd. (1999) 68 Cal.App.4th 1429 [68 Cal.App.4th 1429].)”

The result seems harsh, considering that a lack of review of all pertinent medical records, as in this case, would normally render the evaluating physician’s report inadmissible as evidence, or at the very least might be deemed as not constituting “substantial evidence.” Labor Code § 4628(a)(2) [LC 4628] requires that the evaluating physician shall review and summarize pertinent “prior medical records.” 8 Cal. Code Reg. § 10606 [R 10606] has a similar provision.

NOTE: Curiously, there is a conflict between the Labor Code and the Regulations as to what is the recourse for failure to comply with the minimum mandatory standards for a medical-legal report. Labor Code § 4628(e) states that failure to comply with the requirements of this section shall make the report inadmissible as evidence…,” while 8 Cal. Code Reg. § 10606 states, “… failure to comply with the requirements of this section will not make the report inadmissible but will be considered in weighing the evidence.” (emphasis added) Normally, the Labor Code will trump a regulation in the event of a conflict, but it didn’t seem to do so in the Quintero case. However, even if the regulation trumps the Labor Code and the report is admitted into evidence, if it lacks the minimum mandatory elements, it will be difficult for a judge to rely on the report for any legal determinations, even though the judge did so in the Quintero case.

IV. Conclusion

Best practices dictate that parties be mindful of medical evidence that is not properly developed. Parties should be scrutinize reports to make sure that all requests from the evaluating physician (such as for additional medical records, or for diagnostic tests) have been provided promptly. In addition, if a physician has been ambiguous on a relevant issue, such as the determination of whole person impairment, that issue should be addressed and clarified, either through a supplemental report or the doctor’s deposition.

If caught unaware after opposing counsel files a DOR, make sure to lodge your objection promptly with the court. Bring the issue to the court’s attention at the MSC. If the judge agrees to continue the case to develop the record, the party asserting the position of developing the record might want to request a finding that there was no lack of due diligence on their behalf. Likewise, if the judge denies the motion to continue the trial to develop the record, the party in opposition to developing the record may want to request a finding that there was a lack of due diligence. Either way, a finding on this issue might well be helpful to the WCAB commissioners in determining whether to uphold or reverse a judge on this issue, in the event a Petition for Reconsideration is filed.

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