Following an accepted injury, the Labor Code obligates the defendant to issue benefits. In some instances, an applicant also receives payments from the employer’s sponsored disability plan. The defendant may then assert a right to excess credit when the total payments exceed the benefits owed under the Labor Code. Before asserting a credit, the defendant must:
secure the necessary evidence;
clearly communicate the intention to seek a credit;
prepare a detailed petition for excess credit;
attempt to informally resolve the issue; and,
prepare for trial.
Are the plan payments voluntary?
Labor Code §4909 permits the Board to use its discretion to determine whether voluntary payments create an excess credit. The courts have determined that a payment is voluntary when it is not compulsory under the law. An example of such a voluntary payment is one based on a freely negotiated and voluntarily entered contract.
Therefore, payments from an employer’s disability plan are voluntary when the plan’s adoption follows negotiations between the employer and union representatives. The Board may then exercise its discretion on the potential credit issue following plan payments.
Is it time to file the petition?
Before a petition for credit is filed, an attempt should be made to resolve the issue informally. Should efforts at resolution fail, then a petition for excess credit must be filed. Code of Regulation §10555(a) notes the minimum requirements for a credit petition. However, as the credit is disputed, all relevant evidence and facts supporting the petition should be included.
Know the facts, secure the evidence and show functional equivalence.
The petitioner must demonstrate that the plan was funded by the employer without contribution from the applicant. This can generally be shown through the applicant’s pre-injury paychecks or documentation from the employment file.
Furthermore, the post-injury paychecks or plan distribution printouts will demonstrate the amount of benefits issued. Should this matter be brought before the trier of fact, these records will establish the foundation for the petition.
Additionally, all written communications to the applicant giving notice that a credit will be sought is of great importance. This makes clear that the payments were not a gift, which would not be subject to claims of credit entitlement.
Finally, the benefits issued under the disability plan must be the functional equivalent of those available under the Labor Code. This can be demonstrated by the language of the plan wherein the character benefits are defined. Failure to establish the functional equivalence of the plan’s benefits will likely result in an adverse finding.
Give informal resolution another shot before litigation.
As cost mitigation is always a serious consideration, further efforts should be made to informally resolve the issue. Should the parties again fail to reach an accord, it is best to have the petition filed and all requisite evidence made available for trial. Witnesses must then be prepared to testify on defendant’s behalf.
Conclusion
Effectively asserting an entitlement to excess credit against potential benefits owed to an applicant requires a diligent approach. Absent agreement, it should never be presumed that excess credit will be granted. The defendant must prepare a valid petition supported by substantial evidence and be ready to litigate the issue, if necessary.
By maintaining open and direct communication, collecting the necessary evidence, and being ready to litigate, defendants have the best opportunity to successfully present their argument for entitlement to an excess credit.
This post provides a brief overview of the steps needed to assert an entitlement to excess credit in California Workers’ Compensation claims. Each case is different and therefore, due consideration should be given to the specific facts. For more information and a detailed review of your case, contact Naveed Karbassyoon at: NaveedK@KarbassyoonLaw.com or by telephone at: (949) 617-1757.
Should there be a specific topic you want discussed, please send you request to: Topics@KarbassyoonLaw.com.