Exceptions to the $10,000 Rule: A Sixty-Second Seminar in Workers’ Compensation Claims Handling

Pursuant to LC 5402(c) an injured worker is entitled to up to $10,000 in medical benefits when compensability of a claim is on delay and/or under investigation. However, this entitlement is not automatic. There are conditions and exceptions to the $10,000 Rule.

First of all, a DWC-1 Claim Form must be on file before even a penny of that $10,000 is paid. Although most administrators are aware of the DWC-1 prerequisite, they are unfamiliar with three exceptions that exist. Let’s take a few moments to review all three.

1. When “employment” is in dispute, the $10,000 Rule does not apply. Actually, when you think about it, this requirement makes sense. The $10,000 rule is intended to pay medical care in behalf of an injured employee, which presupposes that one must first be an employee to be entitled to this benefit. Therefore, either an “admission” or “finding of employment” must exist before any portion of the $10,000 is due.
2. The $10,000 Rule does not apply in a psych claim where the “6-Month Rule” under LC 3208.3(d) is raised as a defense. WCAB case law implies that the $10,000 is inapplicable pursuant to the first sentence of LC 3208.3(d) which states: “Notwithstanding any other provision of this division, no compensation shall be paid pursuant to this division for a psychiatric injury related to a claim against an employer unless the employee has been employed by that employer for at least six months.” (LC 3208.3(d) and LC 5402(c) are both found under Division 4 of the Labor Code.)
3. The $10,000 Rule does not apply in a psych claim where a defense is raised under the “Non-Discriminatory, Good Faith Personnel Action Rule” pursuant to LC 3208.3(h). Once again, WCAB case law implies that the $10,000 Rule is inapplicable as the first sentence of LC 3208.3(h) states: “No compensation under this division shall be paid by an employer for a psychiatric injury if the injury was substantially caused by a lawful, nondiscriminatory, good faith personnel action.” (LC 3208.3(b) and LC 5402(c) are both found under Division 4 of the Labor Code.)

Most claims administrators are only aware of the DWC-1 exception to the $10,000 Rule. Now, after reading this sixty-second blog they are aware of three additional exceptions. As a side note, each of the three $10,000 exceptions mentioned above, also act as an exception to the 90-day time limit to issue a compensability decision, regardless of whether a DWC-1 is on file.