As a workers’ comp attorney, your clients look to you for support in getting the compensation they need and deserve after suffering an on-the-job injury. And since not all parties act in good faith, you must stay on your toes, looking for insurance companies to minimize or avoid payouts. On top of that, you must be willing to file penalty petitions at the first sign of unreasonable delay or other violations to your workers’ comp case to ensure excellent outcomes for your clients. Wondering just how that works? Here’s what you need to know.
Workers’ compensation penalties hit the insurance carrier with a fine for violating key labor codes and other regulations. Ideally, by doing that, the penalties encourage the carrier to move the case forward appropriately or consider settling with a lump-sum payment. Since the fines go to your client, the penalty petitions benefit them by increasing their potential payout.
You cannot just raise penalties and hope that encourages them to do right by your client. Filing a penalty petition with the court is the only way to get the ball rolling. Otherwise, the insurance company will know that you have no real recourse until you file the petition.
In the end, filing penalties not only helps your current client but all your future ones as well. The insurance companies keep track of which lawyers regularly file penalty petitions and manage their cases with much more oversight.
When you file a penalty petition, you will need to determine which labor codes or other rules the insurance company violated, such as:
When your client’s case gets unreasonably delayed or refused under unjust grounds, you’ll want to file penalties under Labor Code 5814. The penalty will potentially net your client up to $10,000 or 25% of the total amount delayed.
When doing so, citing the case, Kerley v. Workmen’s Comp puts the burden on the defendant to show their delay was reasonable. Don’t forget to use Labor Code 5814.5 to enact the attorney fee provision and get paid for all the extra time getting the insurance carrier to follow the laws.
If you have to file penalty petitions repeatedly, go for Labor Code 5814.6 to hit the insurance company with a massive penalty. Although the money goes to the state instead of you or your client, it opens the doors for audit penalties.
If you feel like the insurance company is not acting in good faith, you cannot simply sue on those grounds. Instead, you want to cite Rule and Regulation 10109, which states that the carrier must perform a good faith investigation. Beyond that, they’re not allowed to limit their research just enough to dispute liability.
Labor Code 5813 revolves around penalties for bad faith, but getting the courts to award is discretionary and challenging. Since the penalties hit the defense attorney and could potentially get them reported to the bar, it’s not a good look either.
But sometimes, it’s necessary. When doing so, however, it’s best to cite Rule and Regulation 10561, which states that the carrier acted in bad faith by failing to comply with regulations.
In some cases, the insurance company may self-impose a penalty to buy themselves more time. To do that, they cite Labor Code 4650D, a 10% self-imposed penalty. To keep them from doing that, watch for chances to file your penalty petitions early and often – or they could avoid their obligations and end up paying less than they would otherwise.
If you’d like more information about managing workers’ compensation cases, contact our team at Michael Burgis & Associates. We’re available at 888-287-4471 whenever you have questions about penalty petitions or other aspects of managing your cases.
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