State Compensation Insurance Fund v. Workers' Compensation Appeals Board

Opinion

CROSBY, J. I

Daniel Adame claims to have injured his lower back while working as a carpenter. The applicant and his employer’s workers’ compensation carrier disagreed on whether Adame actually sustained an industrial injury and the nature and extent of his injuries. Before any evidence was taken at the hearing, the parties submitted a handwritten form compromise and release to the workers’ compensation judge for approval. The parties agreed “[a] serious and good faith issue exists [on the issue of industrial injury] which if decided against the applicant would defeat all his rights to benefits . . .,” but did not detail any facts to support this conclusion. The proposed settlement included applicant’s release of the employer’s liability for rehabilitation benefits. Applicant has never disavowed the stipulation and supported the employer’s carrier’s position at oral argument.

Without hearing, the workers’ compensation judge approved the compromise and release, but not the proposed settlement of rehabilitation benefits. State Compensation Insurance Fund, the employer’s workers’ compensation carrier, petitioned the Workers’ Compensation Appeals Board (WCAB) for reconsideration. In denying the petition, the WCAB simply adopted and incorporated the “Opinion and Recommendation of Workers’ Compensation Judge on Petition for Reconsideration,” which concluded the workers’ compensation carrier failed to show “a bona fide issue of injury” existed, and [652]in any event he was precluded by Labor Code section 5100.61 from approving a settlement of rehabilitation benefits. For the reasons discussed below, this order must be annulled.

II

First, despite Labor Code section 5100.6, the employer’s mandatory duty to provide rehabilitation benefits (Lab. Code, § 139.5, subd. (c)) may be compromised and released where “a serious and good faith issue exists ... as to the validity of the claim which if resolved against the applicants would result in a denial of all benefits.” (Thomas v. Sports Chalet, Inc. (1977) 42 Cal.Comp.Cases 625, 633.) The WCAB’s authority under Thomas to release the employer from future liability for rehabilitation benefits was later codified in California Administrative Code, title 8, section 108702 and recently affirmed in Burbank Studios v. Workers’ Comp. Appeals Bd. (Yount) (1982) 134 Cal.App.3d 929 [184 Cal.Rptr. 879]. The WCAB’s authority is limited, however; it may not rewrite the parties’ agreement by striking the proposed settlement of rehabilitation benefits and approving the balance of the compromise and release.3 (Burbank Studios, supra, at p. 937.)