Serious & Willful Misconduct: A Sixty-Second Seminar in Workers’ Compensation Claims Handling

Whenever a catastrophic injury occurs, it is quite common for an applicant’s attorney to seek a penalty against the employer by filing a Petition for Serious and Willful Misconduct (S&W). This is just their way of trying to squeeze a little extra money out of the employer. Unfortunately, many employers do not fully understand exactly what an S&W is. It is not negligence, nor is it gross negligence. To establish an S&W an injured worker must prove the employer was aware of a dangerous condition most likely to result in injury, but chose to do nothing about it. It’s tantamount to intentional misconduct. It’s as if an employer said, “We have insurance so we don’t care if someone gets hurt.” The California Supreme Court states an employer commits willful misconduct “…when (the employer) ‘turns his mind’ to the fact that injury to his employees will probably result from his acts or omissions, but he nevertheless fails to take appropriate precautions for their safety.”

Multiple penalties may be assessed if an employer is guilty of S&W, including a 50% increase in all compensation benefits, plus costs and expenses not to exceed $250, along with various OSHA penalties and possible criminal prosecution. An S&W can be devastating to an employer as there is no insurance for this exposure. Depending on the value of the comp case, an S&W penalty can bankrupt an employer. In addition, attorney fees and costs to defend an S&W claim are not covered by insurance as well. However, some insurance companies do offer a work comp endorsement that provides up to $100,000 coverage per policy to pay for legal fees and costs in S&W actions.

Below please find a few quick defense tips for employers when dealing with S&W claims:

1. Verify the petition was timely filed. The statute of limitations for an employee to file an S&W claim is one year from the date of injury. It is not extended five days for mailing.
2. Don’t be too quick to hire an S&W defense attorney. First ask the claims administrator to request dismissal of the S&W action as a condition of settlement in the underlying comp case, which is a common occurrence and often successful.
3. Consider filing a counter-S&W petition against the employee as allowed per LC 4551. If the injured worker filed their S&W petition first, then a counter-petition may be filed at any time, even beyond one-year from the date of injury. A counter-petition provides an opportunity for both sides to later drop their respective penalty actions against each other during settlement negotiations. Also, a counter-S&W makes it much easier for the judge to play “King Solomon” by ruling against both parties, instead of demanding the employer issue a monetary offer to resolve the case.
4. Lastly, be advised an employee cannot be guilty of S&W if any of the following conditions exist:

(a) Where the injury results in death.

(b) Where the injury results in a permanent disability of 70 percent or over.

(c) Where the injury is caused by the failure of the employer to comply with any provision of law, or any safety order of the Division of Occupational Safety and Health, with reference to the safety of places of employment.

(d) Where the injured employee is under 16 years of age at the time of injury.