California: Incompetency and Proceedings Before the WCAB

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

Among the varied duties of the Workers’ Compensation Appeals Board (WCAB) is the determination of the competency of an injured employee or dependent. (Lab. Code, § 5408). Upon a finding of incompetency, the WCAB may appoint a guardian-ad-litem or conservator, and until such appointment, any limitation period is statutorily tolled. (Id.). On its surface, that responsibility sounds straight forward enough. But exactly what does incompetence mean in the parlance of workers’ compensation law and how is it established? A recent Appeals Board panel decision explains just that and provides a handy review of pertinent case law. The case is Valdez v. Southern California Gas Company, 2024 Cal. Wrk. Comp. P.D. LEXIS 13.

The Facts

Annette Valdez (applicant) was employed by Southern California Gas Company (defendant) as a meter mechanic and claimed a cumulative trauma injury to her psyche due to alleged harassment.

Applicant, while represented by an attorney, settled her claim by a Compromise and Release (C&R) for $2,500. The C&R reflected the opinions of applicant’s qualified medical evaluator (QME), Dr. Perry Maloff, and defendant’s QME, Dr. Carl Marusak. Both QMEs agreed that applicant’s claim of psychiatric cumulative trauma was non-industrial. Dr. Marusak diagnosed applicant with paranoid schizophrenia, post-traumatic stress disorder, and borderline personality disorder. He noted that applicant was able to function quite well but often found herself in bizarre and inappropriate interpersonal relationships. He felt she could work with ongoing psychopharmacologic management and some interpersonal involvement. Although Dr. Maloff disagreed with the diagnosis of borderline personality disorder, he was otherwise in general agreement with Dr. Marusak.

The C&R was approved on February 28, 2002. Fifteen years after the Order Approving Compromise & Release (OACR) issued, applicant dismissed her attorney. On August 13, 2021, she filed a petition for reconsideration, which the Appeals Board panel chose to treat as a petition to set aside the OACR.

A trial was held on February 28, 2022, on the sole issue of whether the OACR should be set aside.

At trial applicant testified that she was not in her right mind when she signed the C&R. She also testified that at that time, she was taking a medication that put her to sleep, but now she is taking Haldol and is better. Further, she testified that when she signed the C&R, she was paranoid and schizophrenic and fearful of pursuing her case because her coworkers might get mad at her and they knew where she lived.

In addition to her testimony, applicant submitted four exhibits. Exhibit 1 is a benefit verification letter from the Social Security Administration dated October 15, 2021, that verifies applicant’s entitlement to monthly disability benefits. Exhibit 2 is a termination of leave of absence form dated December 31, 2002, that indicates applicant was discharged by defendant either 12/20/02 or 12/21/02. It does not discuss incompetence. Exhibit 3 is a letter from defendant to applicant dated December 30, 2002, that states applicant’s termination from her job on 12/20/02 was pursuant to the terms of her disability benefit plan. Exhibit 4 is a letter from defendant to its counsel enclosing copies of letters regarding applicant’s long-term disability.

Following trial, the WCJ found that applicant failed to sustain her burden of proof as to her competency at the time the C&R was executed and the OACR issued.

The Panel’s Analysis

The panel begins its analysis with the definition of “incompetence,” which it notes is “not insanity, but rather inability to properly manage or take care of oneself or property without assistance.” (County of Santa Clara v. Workers’ Comp. Appeals Bd. (McMonagle) (1992) 57 Cal. Comp. Cases 377, 379 (writ den.).). The panel observes that the term, “incompetence,” does not apply to a physical disability but to a mental incapacity. (Fox v. Indus. Aci. Com. (1943) 8 Cal. Comp. Cases 194 (writ den.).

Next, the panel addresses proof of incompetence, and cites to decisions which held that incompetence is established by substantial medical evidence. (Lamin v. City of Los Angeles Police Department (2004) 69 Cal. Comp. Cases 1002 (Board panel decision); Lamb v. Workmen’s Comp. Appeals Bd. (1974) 11 Cal. 3d 274, 39 Cal. Comp. Cases 310). Once proof of incompetence is established by substantial medical evidence, the statute of limitations is tolled (County of San Bernardino v. Workers’ Comp. Appeals Bd. (Spencer) (1996) 61 Cal. Comp. Cases 860 (writ den.); Feely v. Southern Pacific Transportation Co. (1991) 234 Cal. App.3d 949)). However, in the absence of substantial medical evidence of the injured employee’s inability to properly manage of take care of themselves or their property without assistance, they are presumed competent, and the applicable statutory limitations period is not tolled.

The panel then applies these standards to the evidence presented. It first looks to the medical reports of Dr. Marusak and Dr. Maloof. While both physicians diagnosed applicant with paranoid schizophrenia, neither of them stated that applicant was incapable of handling her affairs or taking care of her personal needs. In fact, Dr. Marusak opined that applicant would be able to return to work with psychopharmacologic management and minimal support. Dr. Maloof did not disagree with Dr. Marusak. Both physicians evaluated applicant during a period more contemporaneous with the execution of the C&R.

The panel also reviewed the four exhibits offered by applicant. Of significance they note that none of the four exhibits address applicant’s mental capacity or lack thereof at the time she executed the C&R. The exhibits reflect the fact that applicant currently receives monthly disability benefits and in 2002 was terminated by defendant in accordance with the terms of her long-term disability policy. Based on all the evidence, the panel concludes applicant failed to establish by substantial medical evidence that she was incompetent at the time she signed the C&R. It found no good cause to set aside the OACR.

The Key Points on Incompetency

Because any limitation period (e.g., filing an application for adjudication of claim, or a petition for reconsideration, for instance) is statutorily tolled if the party is incompetent, it behooves any practitioner with a suspicion that a party might be incapable of taking care of their self or their property without assistance to address that issue as soon as possible. Medical records and reports, such as from a primary care physician or a hospitalization, may contain information relevant to the issue of incompetence. However, as the Valdez panel emphasizes, a psychiatric diagnosis alone is not tantamount to proof of incompetence. What is required is substantial medical evidence that the party is not able to take care of their self or their needs absent assistance. Factors that are relevant to the issue may include: (1) whether the party is able to live independently and manage their daily personal and financial needs; (2) whether any psychiatric diagnosis is appropriately managed by medication and/or therapy; and (3) whether the party is able to obtain and sustain employment. Absent clear documentation of such inability in medical records, a medical-legal evaluation to assess a party’s competence will be necessary.

Reminder: Board panel decisions are not binding precedent.

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