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Workers' Compensation

California: Exploring the Limitations on the WCAB’s Authority to Develop, Augment, and Reopen the Record Pursuant to Labor Code Sections 5701 and 5906

Introduction: The primary purpose of this article is to explore the conflicting tensions related to the legislative policies and purpose between the Workers’ Compensation Appeals Board’s power and authority to develop the evidentiary record pursuant to Labor Code sections 5701 and 5906 (all references are to the Labor Code unless indicated otherwise) and the pre-trial mandatory settlement conference closure of discovery and, with certain exceptions, the prohibition of admitting evidence not listed or disclosed on the pretrial conference statement as mandated by Labor Code section 5502(d)(3). Also involved in the analytical equation are other considerations related to constitutional due process, the mandate to accomplish substantial justice in workers’ compensation proceedings, burden of proof, and fundamental fairness.

As will be discussed in detail hereinafter, there is a considerable body of relevant case law on the topic. Both the applicant and defense bar should have an equal interest in this issue since the Appeals Board’s exercise of its power to develop or reopen the record in certain situations may manifest itself in rescuing either party from a failure of proof or “bailing out” a party who has not adequately prepared their case and being given a second chance to prove up their case in an AOE/COE scenario or another opportunity to try to meet their burden of proof on other issues such as apportionment, parts of body injured, and the nature and extent of permanent disability. (see, San Bernardino Community Hospital v. Workers’ Comp. Appeals Bd. (McKernan) (1999) 74 Cal.App.4th 928). In McKernan the Court of Appeal, while acknowledging that the Board has wide latitude to use its powers under sections 5701 and 5906, annulled the WCAB’s erroneous decision to allow development of the record, holding that sections 5701 and 5906 cannot be applied or operate in a manner that would negate or eviscerate the express discovery cutoff provisions of section 5502(d)(3).

Statutory Overview:  A basic overview of the applicable statutes is essential in order to understand the inherent conflict and tension between the WCJ’s and Appeals Board’s authority and duty to develop the record based on sections 5701 and 5906 and section 5502 (d)(3)’s closure of discovery at the mandatory settlement conference.

Labor Code Sections 5701 and 5906 both deal with development of the record but in different situations. Section 5701 applies at the trial level and authorizes the trial judge and the WCAB to require additional testimony and to initiate other discovery and also “to direct an employee claiming compensation to be examined by a regular physician.”

Section 5906 applies to proceedings on reconsideration before the Appeals Board. Pursuant to section 5906, the Board has the authority to “…..affirm, rescind, alter, or amend the order, decision, or award…..on the basis of the evidence previously submitted in the case, or may grant reconsideration and direct the taking of additional evidence.” (emphasis added).

Other Considerations:  There are also other factors and considerations that are frequently cited that operate in conjunction with the development of the record provisions of sections 5701 and 5906. One is the liberal construction rule of workers’ compensation laws in favor of the employee found in section 3202. However, the liberal construction rule is not a substitute for proof and does not extend to ignoring applicant’s burden of proof. (Lab. Code 3202.5.)

Additional factors include procedural due process and the right to present evidence as well as the California constitutional mandate for the Appeals Board to “accomplish substantial justice in all cases expeditiously, inexpensively, and without incumbrance of any character....” (Cal. Const., art. XIV, § 4.) There are also references in many cases to the assertion that the Board “may not leave undeveloped matters which its acquired specialized knowledge should identify as requiring further evidence.” (Telles Transport, Inc. v. Workers’ Compensation Appeals Bd. (2001) 92 Cal.App.4th 1159, 1164, 66 Cal.Comp.Cases 1290, 2001 Cal.App LEXIS 808).

Burden of Proof:  Tempering the constitutional mandate of the goal of accomplishing substantial justice is that in workers’ compensation proceedings the applicant has the burden of proving causation of injury AOE/COE by a preponderance of the evidence. (Lab. Code, §§ 3600(a), 3202.5, 5705, see also, South Coast Framing v. Workers’ Comp. Appeals Bd. (Clark) (2015) 61 Cal.4th 291, 297-298, 302 [80 Cal.Comp.Cases 489].

Labor Code 5502(d)(3) Closure of Discovery:  As will be discussed in detail hereinafter, in cases that evolved in the late 1990’s, the WCAB’s long standing and at times seemingly unfettered authority and power to develop and reopen the record under the amorphous language of sections 5701 and 5906, was found in certain situations to be circumscribed by the clear and express conflicting provisions of Labor Code section 5502(d)(3) prohibiting the admission of evidence after the close of discovery at the mandatory settlement conference.

Section 5502(d)(3) expressly mandates that “[d]iscovery shall close on the date of the mandatory settlement conference” and that any evidence “….not disclosed or obtained thereafter shall not be admissible unless the proponent of the evidence can demonstrate that it was not available or could not have been discovered by the exercise of due diligence prior to the settlement conference.”

Section 5502(d)(3) was enacted by the Legislature with the intended purpose “to minimize delays and efficiently expedite case resolution by making sure parties are prepared for hearing.” (Kuykendall v. Workers’ Comp. Appeals Bd. (2000) 79 Cal.App.4th 396, 404).

The Court of Appeal in another case also stated that “[t]he purpose of the disclosure requirement in section 5502 is obvious: ‘ “to guarantee a productive dialogue leading, if not to expeditious resolution of the whole dispute, to thorough and accurate framing of the stipulations and issues for hearing.” ’ ” (San Bernardino Community Hospital v. Workers’ Comp. Appeals Bd. (McKernan) (1999) 74 Cal.App.4th 928, 932, see also State Compensation Ins. Fund v. Workers’ Comp. Appeals Bd. (1995) 37 Cal.App.4th 675, 685, quoting from Zenith Insurance Co. v. Ramirez (1992) 57 Cal.Comp.Cases 719.)

The Declaration of Readiness to Proceed:  Even more important than minimizing delays, expediting case resolution and ensuring the parties are prepared for hearing, is that the parties consistent with due process and fundamental fairness have acted diligently to complete all necessary discovery before they request a mandatory settlement conference and subsequent trial. The cut off of discovery at the MSC mandated by section 5502(d)(3) is buttressed and enhanced by the necessity of filing a Declaration of Readiness to Proceed (DOR) in order to obtain a hearing. A party filing a DOR must state under penalty of perjury “…that he or she is presently ready to proceed to hearing…” on the issues specifically enumerated and, more importantly, under penalty of perjury the filing party must state that …“[u]nless a status or priority conference is requested, that I have completed discovery on the issues listed above….”. (emphasis added).

The combination of section 5502(d)(3)’s cut off of discovery and the declaration under penalty of perjury that the party filing a DOR has completed discovery should operate to define a due process and fundamental fairness line that clearly limits the Board’s power to develop the record in order to cure a defect or rescue the party who filed the DOR but failed to exercise due diligence in completing discovery. As indicated by the WCAB in its en banc decision in McDuffie v. Los Angeles County Metropolitan Transit Authority (2002) 67 Cal.Comp.Cases 138; 2002 Cal.Wrk.Comp. LEXIS 1218 (en banc):

“the record may properly be further developed with new evidence where….neither side has presented substantial evidence on which a decision could be based, but not where a decision could be rendered on the existing record and the party seeking to introduce new evidence had failed to show, as required by Labor Code section 5502(d)(3) that such evidence ‘was not available or could not have been discovered by the exercise of due diligence prior to the [mandatory] settlement conference.’ ” (McDuffie, supra, at p. 142, fn.4.).

The Evolution of Applicable Case Law:  Up until the late 1990’s, both WCJ’s and the WCAB in a variety of scenarios ranging from AOE/COE to nature and extent of disability, were unconstrained from exercising their broad power and perceived duty to develop and reopen the record based on sections 5701 and 5906 where the existing record and evidence was deemed to be insufficient, unclear, or conflicting. From a historical perspective it is important to note that the legacy cases discussed below preceded the enactment of the statutory mandate that discovery closes at the time of the mandatory settlement conference under section 5502(d)(3) (previously 5502(e )(3)).

The Legacy Cases:  In many of the cases prior to the enactment of 5502(d)(3), where the WCAB or its predecessor the IAC failed to develop the record and as a consequence found no injury AOE/COE, they were reversed on appeal. In Lundberg v. Workmen’s Comp. Appeals Bd. (1968) 69 Cal.2d 436, 33 Cal.Comp.Cases 656, the Supreme Court reversed the Appeals Boards finding of no industrial injury and held that the record needed to be developed where there was equivocal evidence from both reporting physicians as to the cause of applicant’s back injury. With respect to causation of injury, the Supreme Court indicated that where the board has any doubts as to the cause of an injury the board may resolve those doubts by directing the taking of additional evidence pursuant to section 5906 or directing the employee to be examined by a physician based on section 5701. However, when Lundberg was decided there was no statute similar to current section 5502(d)(3) cutting off discovery at a pre-trial MSC.

With respect to the cases involving issues of AOE/COE predating Lundberg, they were also based on the same analysis. In Raymond Plastering Co. v. Workmen’s Comp. Appeals Bd. (King) (1967) 252 Cal.App.2d 748, 253, 32 Cal.Comp.Cases 287, 291, 1967 Cal.App. LEXIS 1564, the Court of Appeal held that the WCAB “…..may not leave undeveloped matters as which its acquired specialized knowledge should identify requiring further evidence.” Seventy four years ago the Court of Appeal in West v. Industrial Acc. Com. (Best) (1947) 79 Cal.App.2d 711, 719, 12 Cal.Comp.Cases 86, 89, in reversing the IAC, found that the IAC did not properly discharge and exercise its duty to develop the record in a case where the record was inadequate and incomplete. “…[T]he IAC may not leave undeveloped matters which its acquired, specialized knowledge should identify as requiring further evidence. In this case the resolution of the issues of injury and disability was not patent. Medical evidence thereon was therefore required. Under these circumstances the IAC had the responsibility of seeing to it that such evidence was reasonably complete, whether by use of its own medical experts or otherwise.”

It is important to reemphasize that the analysis and rationale in the old legacy cases that involved sections 5701 and 5906 pre-dated the enactment of the section 5502(d)(3) discovery cut off provisions. However, even after section 5502(d)(3) was enacted, the same rationale and analysis in the old legacy cases continued to be relied upon in the Tyler, McClune, and M/A Com-Phi line of cases. As a consequence this created an unrecognized and unresolved tension between the Board’s power to develop the record and the constraints on that power inherent in section 5502(d)(3)’s discovery cut off provisions until the Court of Appeal’s decision in San Bernardino Community Hospital v. Workers’ Comp. Appeals Bd. (McKernan) (1999) 74 Cal.App.4th 928.

The Flawed Trifecta of the Tyler, McClune, and M/A Com-Phi (Sevadjian) Cases:  With respect to the majority of the decisions from WCJ’s and the WCAB issued over the last few decades, in numerous cases the authority primarily relied upon and cited by the Board to justify development, augmenting and reopening of the record are three cases all decided in 1997 and 1998. The cases are Tyler v, Workers’ Comp. Appeals Bd. ((1997) 56 Cal.App.4th 389, 62 Cal.Comp.Cases 924, 1967 Cal.App LEXIS 562; McClune v. Workers’ Comp. Appeals Bd. (1998) 62 Cal.App.4th 1117, 63 Cal.Comp.Cases 261, 1998 Cal.App. LEXIS 282; and M/A Com-Phi v. Workers’ Comp. Appeals Bd. (Sevadjian) (1998) 65 Cal.App.4th 1020, 63 Cal.Comp.Cases 821, 1998 Cal.App. LEXIS 670. All three decisions affirmed the WCAB’s traditional, longstanding broad and at times seemingly unlimited and unfettered authority and discretion to develop, augment, and to reopen the record to obtain additional evidence, including medical reporting at any time during the proceedings.

The WCAB continues to rely on these same three cases from the late 1990’s which has been manifested in numerous cases to become a mantra of sorts frequently expressed or formulated in almost the exact same or similar language with little variation as exemplified in the recent case of Davanon v. Oakland Athletics, 2019 Cal. Wrk. Comp. P.D. LEXIS 377, quoting from Kuykendall v. Workers' Comp. Appeals. Bd. (2000) 79 Cal.App.4th 396 [65 Cal.Comp.Cases 264]:

Based on the constitutional mandate to accomplish substantial justice, the WCJ has a duty to develop an adequate record. (See Swezey, Cal. Workers' Compensation Practice (Cont.Ed.Bar 1985) § 1.9, pp. 6-7, id. (Cont.Ed.Bar Supp. 1999), § 8.27, at p. 176 and see Tyler v. Workers' Comp. Appeals Bd., supra, 56 Cal.App.4th at pp. 392-394; McClune v. Workers' Comp. Appeals Bd. (1998) 62 Cal.App.4th 1117, 1120 [72 Cal. Rptr. 2d 898, 63 Cal. Comp. Cases 261]; M/A Com-Phi v. Workers' Comp. Appeals Bd., supra, 65 Cal.App.4th at p. 1025.)

Both Tyler and McClune are disputed AOE/COE cases. In Tyler, the WCJ and the WCAB erroneously found no injury AOE/COE since the defense report was not credible and applicant’s medical report was in the wrong medical specialty field due to the alleged negligence of applicant’s prior counsel. The WCJ believed he did not have the authority to appoint an IME due to recent reform legislation. The WCAB annulled the WCAB’s decision on the basis that sections 5701 and 5906 authorized “the WCJ and the WCAB to obtain additional evidence including medical evidence at any time during the proceedings.”

In McClune the WCJ and the WCAB found no injury AOE/COE based on the fact that both the defense and applicant medical reports did not constitute substantial evidence because they were incomplete and unpersuasive and therefore applicant did not meet his burden of proof. However, the Court of Appeal reversed the WCAB based on sections 5701 and 5906. In annulling the Board’s decision the Court held the Board had the authority to order the taking of additional evidence when the record lacks substantial evidence to support a finding of industrial causation and, as a consequence, the WCAB’s decision violated applicant’s due process rights. The court distinguished the facts in McClune where neither doctor’s opinion constituted substantial evidence from those in Tyler where the WCJ found neither doctor credible.

Unlike Tyler and McClune, M/A Com-Phi was an admitted injury case. At issue was the nature and extent of permanent disability. The WCJ, while rejecting applicant’s medical reports which included a review of sub rosa film, relied instead on the defense reports even though the defense evaluators had been deprived of viewing sub rosa film of the applicant taken after trial. The Court of Appeal, relying on sections 5701 and 5906, annulled the WCAB’s decision on the basis that development of the record in this situation violated the employer’s due process rights and that 5701 and 5906 are not specific and applicable only to employees.

The Critical Shared Flaw:  While there are factual differences between Tyler, McClune and M/A Com-Phi, they all are share one critical deficiency. All three cases fail to recognize, consider and analyze the clear inherent conflict and tension between the express mandatory cut off of discovery at the MSC in section 5502(d)(3) and the Board’s power to develop and reopen the record permitted by sections 5701 and 5906.

As reflected in a significant number of the WCAB’s decisions in disputed AOE/COE cases since 1998, the analysis the WCAB repeatedly relies on in numerous cases seems to be frozen in time beginning and ending in 1997 and 1998. The WCAB seems disinclined in certain situations to acknowledge subsequent significant case law that holds that the Board’s exercise of their power to develop the record especially in disputed AOE/COE cases may operate to undercut, circumvent, and to negate both the clear legislative intent and unambiguous language of section 5502(d)(3) by failing to analyze the interplay of 5502(d)(3) and sections 5701 and 5906, and more importantly the friction, tension, and conflicting legislative mandates embodied in these statutes.

The Court of Appeals Decisions in San Bernardino Community Hospital v. Workers' Comp. Appeals Bd. (McKernan) (1999) 74 Cal.App.4th 928 and Telles Transport, Inc. v. Workers' Comp. Appeals Bd. (2001) 92 Cal.App.4th 1159, 66 Cal.Comp.Cases 1290:

Both of these cases stand for the proposition that the WCAB’s broad and amorphous powers to “develop the record” pursuant to Labor Code sections 5701 and 5906 cannot be used in certain situations, especially disputed AOE/COE cases, to circumvent the clear intent and language of Labor Code section 5502(d)(3) closing discovery at the mandatory settlement conference absent a showing of certain clearly defined exceptions.

McKernan: The facts in McKernan are fairly straightforward. The case involved a denied psychiatric injury. At the MSC applicant, who was listed as a witness, also listed medical reports from an MFCC. There were no medical reports from a licensed psychologist or psychiatrist listed by applicant. The defense listed several witnesses. The case came up for trial about four months after the MSC. Applicant failed to appear and the trial was continued.

At the second trial setting, applicant’s attorney asked for the record to be reopened for the purpose of admitting an additional medical legal report from the MFCC not listed at the MSC and to allow testimony from a witness that was not listed or disclosed at the MSC. Defendant objected but the WCJ admitted the medical report into evidence and allowed a witness not previously disclosed or listed to testify. The WCJ allowed defendant an opportunity to obtain a rebuttal report to the additional evidence which they declined to exercise. The WCJ found injury AOE/COE with ongoing TTD and medical treatment but deferred the issue of permanent disability. Defendant filed a petition for reconsideration with the WCAB that was denied. Defendant’s writ to the Court of Appeal was granted.

The first problem the Court of Appeal identified was that they could not discern that applicant ever complied with 5502(d)(3) by showing good cause to keep discovery open after the MSC. Applicant’s post MSC medical report from the MFCC was obtained just before the second trial date, which was 6 months after the MSC, and was also a detailed and comprehensive AOE/COE causation report that could have been easily obtained prior to the MSC.

The WCAB filed a brief with the Court of Appeal predictably citing the trifecta of Tyler, McClune and M/A Com-Phi in support of the WCJ permitting post-MSC discovery by the applicant and justification for the WCJ’s development of the record by admitting the MFCC medical report and testimony of a witness not disclosed at the MSC. However, the WCAB in their brief failed to acknowledge let alone respond to the 5502(d)(3) pivotal closure of discovery issue raised by defendant.

Tyler  Distinguished:  The Court of Appeal indicated that both McClune and M/A Com-Phi were easily distinguishable from the instant case. However, the Court expressed serious doubts and concerns about the holding in Tyler, characterizing the decision as “troublesome.” The Court stated that Tyler is a “pure example of the Board’s use of its power to ‘develop the record’ to bail out an employee whose previous attorney did not adequately prepare the case.” The Tyler court did not consider the tension created by section 5502(d)(3). “However, in our view the clear and explicit language of section 5502(d)(3) should prevail over the more amorphous powers given by sections 5701 and 5906 where the former statute applies.”

From a practice and procedural standpoint this means that “when a party appears a trial and asks the WCR (WCJ) to permit the introduction of evidence which was not disclosed at the time of the MSC, the party must explain why the evidence was not available earlier or why it could not have been discovered in the exercise of due (reasonable) diligence.”

The Labor Code 3202 Rule of Liberal Construction:  The Court of Appeal in McKernan noted that the courts in Tyler, McClune, and M/A Com-Phi all relied on the section 3202 rule of liberal construction of the workers’ compensation laws in favor of the employee. However, the Court did not find the rule of liberal construction to be controlling based on the facts of this case and more importantly the explicit provisions of section 5502(d)(3).

The second principle expressly noted in McClune is that of liberal construction in favor of the employee, as codified in section 3202. This principle extends to statutory construction as well as to factual determinations. (Gross v. Workmen's Compensation Appeals Bd. (1975) 44 Cal.App.3d 397, 402 [118 Cal. Rptr. 609, 40 Cal. Comp. Cases 49].) However, it does not extend to ignoring a statutory mandate which happens to work unfavorably to the employee. (See Nuelle v. Workers' Comp. Appeals Bd. (1979) 92 Cal.App.3d 239, 249 [154 Cal. Rptr. 707, 44 Cal. Comp. Cases 439].)

In our case, the Legislature has provided for MSC’s in workers' compensation matters and also explicitly provided for the preclusion of evidence which is not disclosed in accordance with section 5502, subdivision (d)(3). Doubtless an employee's case may be seriously damaged by the application of this statute. However, the Legislature did not limit its sanction to employers. Diligence and good faith are required of both sides. (emphasis added).

At the time McKernan was decided in 1999, Labor Code section 3202.5 had not been enacted. Section 3202.5, which related to respective burdens of proof enacted as part of SB 899 in 2004, lends further support to the holding in McKernan that the section 3202 liberal construction rule cannot be used to override the express provisions of section 5502(d)(3). “All parties and lien claimants shall meet the evidentiary burden of proof on all issues by a preponderance of the evidence in order that all parties are considered equal before the law.” (Lab. Code § 3202.5).

Alleged Denial of Applicant’s Due Process:  In terms of due process the McKernan Court stated:

The essence of due process is simply notice and the opportunity to be heard. (Oberholzer v. Commission on Judicial Performance (1999) 20 Cal.4th 371, 392 [84 Cal. Rptr. 2d 466, 975 P.2d 663], and cases cited.) The two workers’ compensation cases on which Tyler relied do not support the principle for which that case apparently stands—that due process requires that every indulgence be given to the employee and all efforts made to obtain evidence in support of a claim. Fidelity& Cas. Co. of New York v. Workers' Comp. Appeals Bd. (1980) 103 Cal.App.3d 1001, 1014–1016 [163 Cal. Rptr. 339, 19, 45 Cal. Comp. Cases 381] simply confirmed the parties' right to be informed of the issues to be heard, and to present supporting and rebuttal evidence, while Kaiser Co. v. Industrial Acc. Com. (1952) 109 Cal.App.2d. 54, 57–58 [240 P.2d 57] overturned the Board’s refusal to allow the employer to obtain out-of-state evidence. Thus, both of these cases represent routine applications of the principles of due process.

The constitutional right to due process does not prohibit the enactment of reasonable rules of procedure or restrictions on evidence. (See Washington v. Texas (1967) 388 U.S. 14, 23 at fn. 21 [18 L. Ed. 2d 1019, 87 S. Ct. 1920]; Agard v. Portuondo (2d Cir. 1997) 117 F.3d 696, 702.) It is also well-established that restrictions on the introduction of evidence which arise, for example, from a party's failure to comply with discovery rules are not inherently repugnant to the Constitution. (See Unger v. Los Angeles Transit Lines (1960) 180 Cal.App.2d 172, 186–188 [4 Cal. Rptr. 370].) Furthermore, it is often said that the paramount concern of the due process clause is simply fairness. (See 2 Rotunda & Nowak, Treatise on Constitutional Law, § 17.8, p. 656.) There is nothing fundamentally inequitable in requiring a party to comply with established procedural rules which are designed to improve the overall fairness and efficiency of an adjudicatory procedure. Applying the strict terms of section 5502, subdivision (d)(3) to Applicant does not deprive her of due process. (emphasis added).

In annulling the WCAB’s decision, the Court. while acknowledging that the Board has wide latitude to use its powers under sections 5701 and 5906, held these sections cannot operate in a manner that would negate or eviscerate the express, discovery cutoff provisions of section 5502(d)(3). It stated:

In this case, the Board’s use of its undoubted powers under sections 5701 and 5906 improperly undercut the clear intent of section 5502, subdivision (d)(3). By using the former two statutes to afford relief from the disclosure requirements, the Board effectively pulled the teeth from the latter section. We agree that the Board may act to develop the record with new evidence if, for example, it concludes that neither side has presented substantial evidence on which a decision could be based, and even that this principle may be appropriately applied in favor of the employee. (See, e.g., Adams v. Workmen's Comp. Appeals Bd. (1971) 22 Cal.App.3d 214, 218 [99 Cal. Rptr. 269, 36 Cal. Comp. Cases 784].) However, it abuses its discretion when it purports to exercise this power to relieve a party from the sanctions of section 5502, subdivision (d)(3) in the absence of a showing of statutory good cause.

Even though the court in McKernan had good reason to question the holding in Tyler, it is important to remember that the Tyler court, in a portion of its decision that has been overlooked and seldomly quoted, stated that sections 5701 and 5906 did not provide the WCAB with unfettered power to develop the record. “It is not the purpose of Labor Code sections 5701 and 5906 to allow the WCJ to step in and cure a defect in one party’s case to the detriment of the other party. Rather, the sections are to be utilized “to enable a complete adjudication of the issues consistent with due process.” (Tyler v. Workers’ Comp. Appeals Bd., supra, 56 Cal.App.4th at p. 394.)

The Telles Case:  Two years after McKernan was decided, the Court of Appeal in Telles Transport, Inc. v. Workers’ Compensation Appeals Bd. (2001) 92 Cal.App.4th 1159, 66 Cal.Comp.Cases 1290, annulled a decision from the WCAB where the WCAB on reconsideration remanded the case to the WCJ in order to develop the record even though applicant’s attorney as a trial tactic purposely failed to disclose or list at the MSC relevant hospital records he possessed. When the tactic backfired at trial and the WCJ found applicant did not meet his burden of proving injury AOE/COE and issued a take nothing, applicant filed for reconsideration, brazenly arguing that the WCJ should have admitted the records at trial even though they were not listed or offered at the MSC in order “to complete the record.”

The Board granted applicant’s petition for reconsideration and found that the WCJ had a duty to develop the record by admitting the relevant hospital records. In support of remanding the case back to the WCJ to develop the record, the WCAB specifically cited to the recent decisions of Tyler and McClune cases as authority for “its affirmative duty to develop the record when necessary to achieve a fair and just result” at any time during the proceedings.

Defendant filed a writ arguing that the WCAB erred in finding that the WCJ’s duty to develop the record superseded the parties’ obligation to disclose all relevant evidence at the MSC as required by section 5502(d)(3). The Court of Appeal granted the writ and annulled the Board’s decision.

The Court of Appeal discussed the conflict between the WCAB’s duty to develop the record under sections 5701 and 5906 and the mandatory cut off of discovery at the MSC under 5502(d)(3) related to evidence and witnesses not listed and disclosed unless the proponent of the evidence obtained thereafter is able to demonstrate that it was not available or could not have been discovered by the exercise of due diligence prior to the settlement conference. The court also specifically commented on the fact that while the WCAB cited to the recent court decision of Tyler and McClune, the Board, in erroneously remanding the case back to the WCJ for further development of the record, failed to acknowledge the existence of the McKernan decision notwithstanding the fact that both parties brought the McKernan opinion to the WCAB’s attention in their respective petitions for reconsideration!

The Court of Appeal indicated that, just as in McKernan (San Bernardino), the key issue presented to both the WCAB and to the Court in the writ “…was the interplay between section 5502, subdivision (d)(3) and sections 5701 and 5906. San Bernardino’s holding that the parties’ specific duty to disclose all available evidence at the time of the MSC supercedes the WCAB’s general duty to supplement the record is dramatically opposed to the WCAB’s current finding. By ignoring San Bernardino, the WCAB abused its discretion and exceeded its powers.”

In addition to finding the WCAB abused its discretion and exceeded its powers, the Court found that the doctrines of waiver and invited error were applicable since applicant’s counsel’s own conduct caused or induced the error and therefore he was estopped from appealing whether the hospital records were properly excluded.

In accord with the holding by the Court in McKernan, the Court in Telles held that:

In summary, we find the WCAB abused its discretion and exceeded its powers in ordering the WCJ to admit the UMC records. As San Bernardino concluded: “In this case the Board’s use of its undoubted powers under sections 5701 and 5906 improperly undercut the clear intent of section 5502 subdivision (d)(3). By using the former two statutes to afford relief from the disclosure requirements, the Board effectively pulled the teeth from the latter section.” (San Bernardino, supra, 74 Cal.App.4th at p. 937.)

Given the holdings in both McKernan and Telles it is difficult to comprehend why these cases are rarely cited, discussed, or analyzed by WCJ’s and the WCAB especially in disputed AOE/COE cases where the burden of proof as to injury rests with applicant. As stated previously, it is as if in development of the record cases decided by the Board that the interplay and tension between sections 5701 and 5906 with 5502(d)(3) remain frozen in time in 1997 and 1998 when the Tyler, McClune, and M/A Phi-Com cases were decided by the Court of Appeal. With respect to two of the most significant cases involving development of the record issues, it seems as if the Court of Appeal’s decisions in McKernan and Telles have been ghosted by the WCAB!

The WCAB’s en banc Decision in McDuffie:   In 2002, three years after the Court of Appeal’s decision in McKernan, the WCAB issued an en banc decision in McDuffie v. Los Angeles County Metropolitan Transit Authority (2002) 67 Cal.Comp.Cases 138; 2002 Cal.Wrk.Comp. LEXIS 1218 (en banc). Before the Board’s en banc decision in McDuffie, there were no clearly defined uniform statutory or regulatory guidelines for WCJ’s and practitioners to use with respect to the preferred procedures WCJ’s should follow to develop the record properly pursuant to Labor Code sections 5701 and 5906 as well as sections 4061, 4062, 4620, et seq.

Anyone who practiced before the McDuffie en banc decision in 2002 can confirm that it was the “wild west” at the various WCAB District Offices in terms of predicting when and how a particular WCJ would exercise his or her discretion to develop the record. The underlying facts in McDuffie provide an excellent example.

McDuffie involved an AOE/COE trial with applicant alleging injuries to is bilateral knees and hypertension. Both parties used QME’s in orthopedics and internal medicine. Following trial the WCJ found that the applicant suffered injury to his knees and hypertension but found that “the present orthopedic record is lacking” based on her opinion that both orthopedic medical reports were defective. As a consequence the WCJ exercised her discretion and, on her own motion, appointed a medical evaluator in orthopedics to examine the applicant and to submit a report, the cost of which ordered payable by defendant without consulting with the parties. The issues of TTD, PD, apportionment and need for medical treatment were deferred pending receipt of the report.

Defendant filed a petition for reconsideration alleging multiple issues, including whether applicant’s internal medicine reports constituted substantial medical evidence, and more importantly defendant challenged the manner in which the WCJ ordered the record to be developed and that the WCJ should not have appointed a medical evaluator as “the…first action in furthering the medical record.”

The WCAB granted reconsideration and affirmed the WCJ’s finding of injury AOE/COE and that the medical record was incomplete and required further development on the extent of applicant’s orthopedic permanent disability, including the issue of apportionment.

However, the Board rescinded the WCJ’s appointment of a new medical examiner as the first and best option who was unfamiliar with the case to develop the record and remanded for further development of the medical record by the WCJ in conformity with the detailed procedures and guidelines specified by the Board. Since McDuffie is an en banc decision, these procedures and guidelines should also be followed by all WCJ’s in the future in order to justify and ensure proper development of the record.

The WCAB’s Power to Develop the Record Is Not Unlimited:  Before enumerating the specific preferred procedures to be followed to develop the record by WCJ’s, the Board in McDuffie discussed applicable case law related to development of the record including Tyler, McClune, M/A Com-Phi as well as McKernan. With respect to McKernan, the WCAB in footnote four emphasized that the WCJ’s and WCAB’s power to develop the record under sections 5701 and 5906 “cannot be used to circumvent the clear intent and language of Labor Code section 5502(d)(3).” In that regard the Board stated that: “…the record may properly be further developed with new evidence where, as here, neither side has presented substantial evidence on which a decision could be based, but not where a decision could be rendered on the existing record and the party seeking to introduce new evidence has failed to show, as required by Labor Code section 5502(d)(3), that such evidence “was no available or could not have been discovered by the exercise of due diligence prior to the [mandatory] settlement conference.” (emphasis added by author).

The preferred procedures set out by the WCAB’s en banc decision in McDuffie for a WCJ to properly develop the record:

  1. Both medical reports must have some critical/fundamental defect in order to justify development and augmentation of the record.
  2. The WCJ must identify with specificity on the record or by minute order the reason or reasons that support the WCJ’s decision to develop the record.
  3. The preferred procedure to develop the record is to “allow supplementation of the record by the same physicians who have already reported in the case. Each side should be allowed the opportunity to obtain supplemental or additional reports and/or depositions with respect to the area or areas requiring further development, i.e., the deficiencies, inaccuracies or lack of completeness previously identified by the WCJ and/or the Board.”
  4. Only if the supplemental opinions of the previously reporting physicians do not or cannot cure the need for development of the medical record, should other physicians be considered by the WCJ.
  5. “If the use of physicians new to the case becomes necessary, the selection of an agreed medical evaluator (AME) by the parties should be considered at this stage of the proceedings.”
  6. “Moreover, where the medical record requires further development, the parties’ selection of an AME, rather than each side choosing a new QME, is consistent with the goal of expediting the resolution of the case while keeping additional medical-legal costs to a minimum.”
  7. “Finally, if none of the procedures outline above is possible, the WCJ may resort to the appointment of a regular physician, as authorized by Labor Code section 5701. If such an evaluation is appropriate, its cost, as those of the other evaluations previously discussed, are properly payable as a medical-legal expense under Labor Code sections 4620 et seq.”

Copyright © 2021 Raymond F. Correio, Workers’ Compensation Judge (retired)-Pearlman, Brown & Wax. All rights reserved. Reprinted with permission.