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Should I Settle My California Worker’s Compensation Claim?

An increasingly prevalent challenge in California’s workers’ compensation landscape involves claims related to cumulative trauma, where establishing causation can be dubious. These claims often arise after the worker has left their job, and additional diagnoses may be added by the claimant’s physician at a later stage.

Discussions at various sessions during last week’s annual Workers Compensation and Risk Conference highlighted the dilemma facing employers: whether to settle or contest such claims. While there’s a growing consensus that settling could be advantageous for these “runaway” claims, experts caution that certain warning signs may indicate a viable defense.

“As we’re aware, these claims tend to worsen over time,” noted Anthony Culpepper, a partner at Michael Sullivan & Associates LLP in El Segundo, California.

Michael Sullivan, the firm’s general managing partner, suggested that settling might often be the prudent choice, considering the escalating costs of litigating claims in California, particularly with the introduction of new regulations concerning medical record review expenses. He emphasized that some cases are challenging to defend without an exhaustive examination of records detailing pre-existing conditions or prior injuries.

California’s exorbitant fees for reviewing medical records, with costs ranging from $3 per page beyond the initial flat rate of $2,015 for the first 200 pages, have long been a point of contention among legal experts. Given that many cases involve thousands of pages, these costs can quickly escalate.

Another pitfall lies in underestimating the value of a claim. Mr. Culpepper highlighted a case where a cumulative trauma injury claim initially requested $50,000 but was settled for a maximum of $35,000. Years later, the ongoing claim had accumulated costs nearing $3 million due to inadequate valuation.

Recognizing early signs of potential complications is crucial. Steven Cox, partner and president of Cox and Associates P.C., stressed the importance of identifying problematic claims at the outset. He outlined several red flags, including discrepancies between reported injuries and observed body mechanics, early recommendations for surgery, unusual diagnoses not typical in workers’ comp cases, and changes or additions to the claimed injuries.

Establishing a dedicated team to assess claims and the claimant’s medical history is essential for effective communication and swift decision-making, according to Karen Saturday, Associate Vice President and Program Claims Director at Falls Lake Insurance Cos.

“The longer a claim remains open, the more complex it becomes,” she cautioned. “Building a strong team ensures prompt information exchange and facilitates efficient communication.”

Identifying potential challenges early on can mitigate risks and potentially reduce costs in the long run, emphasized Mr. Cox.

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