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California: Settlements: WCALJ's Role in Determining Adequacy Is More Important Than Ever

January 15, 2021 (2 min read)

In Atkins v. Santa Barbara Metropolitan Transit District, 2020 Cal. Wrk. Comp. P.D. LEXIS 366, the WCAB, rescinding the WCJ's Joint Order Approving Compromise & Release (OACR), found good cause to set aside the OACR, when parties entered into a Compromise & Release agreement to resolve the issues of injury AOE/COE, temporary disability, permanent disability, and future medical treatment for the sum of $17,500. But the WCAB found that the medical evidence in this case did not support a finding that the settlement amount was adequate, when the reporting of the orthopedic panel qualified medical evaluator revealed the possibility of right shoulder surgery, which could result in periods of temporary disability and/or permanent disability, and did not address the applicant's permanent disability for either shoulder in his reports. Consequently, it was unclear from the record whether applicant had permanent disability resulting from his injuries and, if so, the value of any indemnity owed for such disability. Since the settlement amount did not adequately account for potential costs of indemnity or future medical treatment posed by applicant's claim, the OACR could not stand.


In pre-pandemic days, a Workers' Compensation Administrative Law Judge (WCALJ) would be presented with settlements at his/her conference calendar, at trial or through mailed in settlements that were "tasked" to the judge by the Electronic Adjudication Management System (EAMS). If you happened to observe a settlement presented to a judge at a conference, a common refrain was, "I know there is an incomplete medical record, but my client just wants out of the system".

There is no question, since 2004, and most significantly in 2013, the politicians and administrators at the Department of Industrial Relations (DIR) have done their level best to limit the medical benefits available to injured workers. These "reforms" unfortunately have had the unintended effect of enabling what could sometimes only be considered inadequate settlements.

This appears to have happened in Atkins. Here, the QME had not addressed the question of impairment, had found an industrial injury to the shoulders and had recommended shoulder surgery. 

There is no question that the WCALJ in Atkins should not have approved the settlement without the benefit of the QME reports. However, the more troubling reality presented by Atkins is the increasing frequency in which the WCAB is being presented with settlements that are based on incomplete QME evaluations, non-permanent stationary treating reports, or no medical reports at all. 

In conclusion, Atkins underscores why the role of the WCALJ in carefully reviewing settlements is so critical. It is not hyperbole to say that the WCALJ's responsibility to inquiry into the adequacy of settlements has become crucial to the protection of the integrity of the workers' compensation process.

Noteworthy panel decisions are not binding authority.

Practitioners should check the subsequent history of any cases before citing to them.

Any information or opinions contained in this commentary are not necessarily endorsed by LexisNexis® or its affiliates.

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