Protecting the Employer: A Sixty-Second Seminar in Workers’ Compensation Claims Handling

It is a sad but unfortunate fact that catastrophic injuries resulting in serious injury or loss of life do occur in the workplace. Such tragedies are often investigated by Cal-OSHA and may even draw the attention of the local criminal prosecutor/district attorney should the incident be attributed to gross negligence.  It is at this time that a claims administrator needs to be extremely careful, in that they may at some point be required to reveal the contents of their files. Further in a criminal proceeding against the employer, the adjuster handling the claim may be required to provide testimony in that case and can be questioned about what they learned about the cause of the incident.

To compound the foregoing, an attorney representing an injured worker, or the dependents thereof, may subpoena the administrator’s file to aid in the pursuit of a petition asserting that the employer engaged in Serious and Willful Misconduct.  With that said, this blog offers suggestions to assist claims administrators in protecting the employer.

Whenever a catastrophic injury occurs, it is typical that the claims administrator will conduct a full investigation. At the risk of appearing to be self-serving it is our view that the very first action an administrator should do after having been put on notice of catastrophic injury is to engage a lawyer, even if litigation has not yet been initiated. When legal counsel directs an investigation, it does so under the auspices of attorney work-product. By virtue of this, the findings of the investigation are deemed privileged and are shielded from forced disclosure to any third party.

In instances where defense counsel is not engaged to direct the investigation, the administrator should closely consider what aspects of the investigation need to be memorialized in writing.

The adjuster may wish to initially obtain only a verbal report from the investigator before deciding if the results should be formally documented. If the results are detrimental to the employer, then a written report should be avoided to the extent that the law allows. Instead, the adjuster need only enter a note in the file documenting that the accident was fully investigated and determined to be compensable. Conversely, if the claims handling instructions require every investigation to be thoroughly documented, then we suggest a review of those instructions to determine when exceptions to the rule can be made. By over-documenting the results of a detrimental investigation involving a catastrophic injury, the administrator may substantially prejudice the interests of their client, in the worst case leading to a criminal conviction and/or the assessment of a substantial fine by Cal-OSHA and/or a 50% increase in all work comp benefits payable to the injured worker, as allowed for under Labor Code 4553.

In conclusion, if an administrator insists on fully documenting an investigation, they should do so only after retaining counsel, thus allowing the defense attorney to direct and oversee the entire investigation to render the results privileged.