Q & A from CWCI's Ask the Experts Webinar on the COVID-19 Presumption
The following is a list of Q&As from CWCI’s May 7, 2020 “Ask the Experts” Webinar on the COVID-19 presumption of compensability granted by Governor Newsom in his Executive Order N-62-20.
PAID LEAVE
Q. Can you please clarify the requirement of exhausting leave before TTD commences. Sounds like this does not refer to taking available PTO through the employer before qualifying for TTD.
Q. What specific types of leaves must be exhausted first before TD is owed? Is there a list of the leaves/benefits that should be exhausted first?
Q. Does the emergency FMLA for COVID-19 that entitles an employee to 30 days of paid leave for employers under 250 employees apply before we start TTD?
Q. Our agency offered staff up to 14 days of Administrative Leave for COVID-19 related leave. Would this need to be exhausted first?
Q. Are EDD benefits in play (i.e., does a claimant have to seek/exhaust EDD)?
The way the Order is drafted, #5 defines the sick leave in question as “paid sick leave benefits specifically available in response to COVID-19.” That points to benefits such as the additional paid sick leave made available under the Families First Coronavirus Response Act. That new COVID-specific and COVID-related federal law has two components, the Emergency Family and Medical Leave Expansion Act (providing qualified workers with two weeks of paid sick leave if they are ill, quarantined, or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members) and the Emergency Paid Sick Leave Act (providing 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus). Also on the list would be the Governor’s April 16 Executive Order (N-51-20) providing paid sick leave benefits for food sector workers impacted by COVID-19.
Paid leave that would not be required to be exhausted before TD entitlement would likely include ordinary accrued sick time, EDD disability, standard PTO, and ordinary FMLA. These benefits were not made available specifically in response to COVID-19.
Notably absent from the Executive Order is any guidance as to how the employer or Claims Administrator is supposed to track the exhaustion of benefits, whether they have to provide information and assistance to the injured worker trying to obtain the COVID-specific benefits, or whose burden it is to provide evidence that such benefits have, in fact, been exhausted. The absence of any guidelines is troubling inasmuch as the injured worker with a presumptively compensable claim is left without TTD benefits until the condition has been satisfied. Possibly, DWC regulations will address this conundrum.
Q. Does the mandated sick leave that has to be used before TD starts count towards the 104 weeks TTD max allowed on any claim?
Q. If an employer provides paid sick leave due to COVID-19 for a period of time, does that period count towards the 104-week TTD period or the 1-year cap for §4850?
Only TTD benefits count toward the 104-week limit on TTD. However, paid sick leave due to COVID-19 would likely fall within the benefit category that must be exhausted before TTD entitlement kicks in. Public employees entitled to §4850 time present a more complex question, and advice should be sought from counsel.
Q. Do those COVID-19 sick leave benefits have to be exhausted before we pay Ed Code?
Unfortunately, the Executive Order did not address benefits available under the Education Code. Other than TD and §4850 time payable under the Labor Code, the Order is silent. Benefits under the Education Code are often compared to TD benefits. But without explicit direction from the Governor, the question raised is something that is going to have to be battled in the courts before we have a definitive answer. Until then, there is no authority for the employer to require exhaustion of other benefits prior to payment of Education Code benefits. Keep in mind that the Order applies only to employees not working from home. The Division is planning to implement regulations as an adjunct to the Executive Order. It is possible that the Education Code benefits could be addressed there, particularly if brought to the Division’s attention in advance.
Q. Do the benefits that need to be exhausted under Section 5 include those provided for under the Federal CARES Act?
The CARES Act provides economic impact payments to individuals based on income. While it is a benefit that is available in response to COVID-19, it does not seem to qualify as “paid sick leave.” Rather, it is more in the nature of economic stimulus unconnected to any illness of the individual. For that reason, it is unlikely to qualify as a benefit that needs to be exhausted under #5 of the Executive Order.
EVIDENCE
Q. What is the “presumption” actually worth? That is, what evidence would be necessary to overcome a presumption? If the employer can only show that the employee COULD have been exposed elsewhere, is that sufficient to rebut the presumption? Or does the “tie go to the runner”?
The presumption created by the Executive Order was created with public policy interests in mind, including reduction of the spread of COVID-19 and mitigating the effects of COVID-19 among all Californians. The presumption appears to be one affecting the burden of proof (as opposed to merely the burden of producing evidence). One view is that the presumption here is nearly equivalent to requiring the employer to disprove that the employee actually contracted the virus at work.
So what is it that the employer actually has to prove under this Executive Order? Does the employer have to prove that the disease could not have been contracted at work? Or does the employer only have to prove that the disease was contracted at some place other than work? In this case, it is likely the former statement: the employer must prove the non-existence of the presumed fact. Rebuttal evidence in this regard could include the nature and extent of precautionary measures put into action by the employer (i.e., the safety protocols put into place such as plexiglass shields, hourly sanitization of work areas and nightly deep cleaning, limitation on the number of customers, mandated use of masks by both employees and customers, requiring non-cash payments, etc.). The rebuttable nature of the presumption allows a well-intentioned employer who made good faith efforts to prevent infection the opportunity to fight the presumption.
Q. What is the date of injury for a COVID case like this?
One of the impossible aspects of coverage for an infectious disease is the question of DOI. Is it the exposure? First symptoms? Diagnosis? Testing date? Receipt of test results triggering the presumption? Each of these presents a valid possibility. Under Labor Code §5412, the date of injury for occupational diseases is that date upon which the employee first suffered disability therefrom and either knew, or in the exercise of reasonable diligence should have known, that such disability was caused by their employment. There is a complex array of case law which addresses this conundrum in other situations, and the WCAB could rely on those cases as it grapples with this question. Alternatively, we might see the DWC promulgate regulations that define the DOI for the presumption under #1(a) of the Executive Order – i.e., the date of injury is the date of the positive test or diagnosis that qualifies the employee for the presumption in the first place.
Q. Since this is retroactive to March 19, what are the parameters for subrogation for health care claims that have already been paid?
Where treatment has been provided with DOS after March 19, and the claim is thereafter deemed presumptively compensable, the group health provider may have a basis to seek reimbursement from the Claims Administrator. It is an open question whether the provider can avail itself of a presumption that the employee did not use. In any event, the Executive Order did not directly address the question of retroactive subrogation of treatment expenses, so this will be up to the courts.
TIME TO INVESTIGATE CLAIM
Q. If we have to go retroactive to 03/19/2020, our 30-day window of rebuttable presumption is exhausted based on the date the governor signed the order. Is this injury presumed compensable now?
Q. If a claim is currently on delay and 90 days has not expired, but the new 30-day timeframe has, do we need to make a comp decision today? If we deny, is that considered a late denial?
Q. How do we deal with situations where we are beyond 30 days from the date of knowledge but not yet at the 90th day. How will that issue be addressed by the WCAB?
Q. I’m being asked if the 30-day compensability timeframe is retroactive. I don’t think so because it’s not discussed in the Executive Order AND that would seem to be a fundamental denial of due process. The hypothetical we’re facing is where the employer receives a duly filed DWC-1 on 3/25/2020 alleging COVID-19 and we have until 6/23/2020 to issue a decision. If the Executive Order is retroactive the claim is now presumed compensable. It seems to me the 30-day time frame is effective today.
The question here is obviously one that was not contemplated when the Executive Order was drafted. The Order is written in mandatory language by which this hypothetical employee is presumed compensable under a strict reading of #3. But that raises a huge due process obstacle for the employer. Since courts are bound to harmonize conflicts such as this, it seems likely that the rule will be interpreted so that the 30 days started in all cases on May 6. The parties may end up arguing this hypothetical point in court (because who doesn’t want a presumption of compensability?) but if the employer can also demonstrate good faith and an affirmative investigation then it probably stands a better chance of prevailing on the 30-day issue (whether the presumption of compensability still applies on its own is a different question based on the strength of the rebuttal evidence).
Q. May we assume that a claim decision can still be placed in delay status post 30 days until a final decision is made (of course medical is payable during the delay up to $10K…)?
Q. We have some concerns about when to start our time clock for investigation since the Executive Order went retroactive: Does a claim form have to be signed and returned by a claimant to initiate our 30 days to investigate? Or is it going to be based on when the employer had knowledge of a positive test regardless of a claim form being returned? If the employer provides the employee a claim form but it is never returned, do we as the insurance carrier have to issue a denial so the claim is not presumed compensable?
Labor Code §5402(a) tells us that knowledge from any source constitutes service under LC §5400, so that knowledge will trigger the obligation to provide a Claim Form. The obligation to deny the claim under §5402(b) is only triggered when that Claim Form is returned. In other words, under the usual circumstances, it is the filing of a claim form that triggers the 90-day period under §5402 for the employer to investigate and evaluate the claim. During that time, the employer must provide medical treatment (likely including the cost of testing) up to $10,000. If the employer does not reject liability within that period, the injury is presumed compensable, and the presumption is only rebuttable by later discovered evidence.
Now, while the period for investigation has been shortened under the Executive Order from 90 to 30 days – everything else about what constitutes knowledge and what the employer’s obligations are will likely still be interpreted in the usual manner.
The next part of the question about the employer having knowledge of a positive test – well, that’s a puzzle. Ordinarily, knowledge of a positive test alone is probably not sufficient to trigger the obligation to provide a Claim Form under the Supreme Court ruling in Honeywell v. WCAB (Wagner) (2005) 70 CCC 97. But with this new Executive Order, an eligible employee with a positive test is entitled to a presumption of compensability that the illness is work-related. But the employee may nevertheless not want to file a comp claim. So what is the employer to do?
The answer is, the obligation is only to provide a Claim Form. If it’s not returned, the 90-day clock never starts to run. Since this is one of the rules that will carry over to this presumption, you can read it as “the 30-day clock never starts running.” There is no need to issue a denial if the Claim Form has been properly provided and not returned.
Q. Regarding the reduced 30-day time to deny a claim, is the claim presumed compensable if it’s not denied within 30 days? What if we are waiting for a test result that comes back negative on Day 31?
First answer is yes, the claim would be presumed compensable if not denied by Day 30. But the Day 31 scenario you’ve described is exactly the kind of “newly discovered evidence” that Labor Code §5401 and §5402 are talking about. Assuming due diligence, the evidence could not have been discovered ahead of time, and thus should be admissible to contradict and rebut the presumption.
Q. Wouldn’t the employer have to be informed by the employee that the COVID was contracted at work before the obligation to provide the claim form arises?
The answer here may depend on whether the employee falls within the presumption of compensability. If so, knowledge of the disease automatically includes the presumption that the disease was contracted on an industrial basis. That is likely sufficient to trigger the obligation to provide a Claim Form. But if the employee is not within the presumption as outlined in the Executive Order, knowledge that the employee has contracted the virus, standing alone, likely would not trigger the same obligation. Every situation is different, and advice should be sought from corporate counsel.
Q. If an employer knows an employee tested positive do they have to report the claim on the employee’s behalf? Or does the employee have to make a claim for benefits?
Under the Executive Order, while the employer would need to provide a Claim Form to the employee with a presumed compensable claim, there is no requirement that the employer must also file the claim on the employee’s behalf.
Q. What if an employee is an essential worker but tested positive for COVID-19 on March 15 and filed the claim form on March 30?
You’re looking at an ordinary workers’ compensation claim here. You are not facing a presumption of compensability, because the Executive Order only applies retroactive to March 19. So the employee was already infected and tested positive prior to the effective date of the presumption. But even though the presumption does not apply in this circumstance, the employee can still make a standard AOE/COE claim by showing that their work exposed them to a greater risk of contracting COVID-19 as compared to the general population. The Claims Administrator would want to look carefully at whether the employment placed this worker at an increased risk of contracting the disease, or whether there is a more likely source of infection that is unrelated to the employment.
Q. What if the employee is unable to get tested?
The presumption does require a positive test for COVID-19. Testing is in short supply, but it is reportedly going to ramp up. That’s especially true as the state begins to enter Phase 2 and then Phase 3 of this pandemic. For now, in that situation, the employee may want to look at the alternative option for a Physician diagnosis, and then seek a confirming test within 30 days. Again, even if the presumption is not triggered by a positive test under the time limits, the employee may nonetheless pursue a claim of industrial causation – just without the benefit of a presumption of compensability.
CONSTITUTIONALITY & LEGALITY
Q. Is there precedent for an Executive Order modifying available WC benefits? Or is this the first time?
Q: Is this Order constitutional?
Someone is bound to challenge the constitutionality of this order and maybe a few others. An Executive Order in Illinois requiring a presumption for workers’ comp claims was ruled unconstitutional, but the California Order is quite different from that one. Governor Newsom was very careful to make the presumption rebuttable, and to require things like a positive test rather than just exposure. Under the California Emergency Services Act, the Governor has very broad powers to suspend pretty much any regulation or statute as necessary to mitigate the emergency. The Order itself references Gov. C. §§8567, 8571, and 8627.
Having said that, the Governor does not have the power to suspend the California Constitution. And we know that Art. XIV §4 gives plenary (roughly translated as “complete” and “absolute”) power to regulate workers’ compensation not to the Governor but to the Legislature. The Legislature has another power: Under the Emergency Services Act itself the Governor is required to end a state of emergency “at the earliest possible date that conditions warrant,” and if the Governor fails to do so, the Legislature has the power to terminate a state of emergency by concurrent resolution.
Q. What will happen when/if the various bills are passed which differ from the governor’s order?
We should certainly have faith that any legislation passed will not conflict with the already-existing Executive Order from the Governor. But if we’re not that lucky, we may need to look at the effective dates of the laws. The Order is set to expire after July 5, while normal legislation will not take effect until January 1 – so the timing may solve any conflicts. Even if legislation is passed on an urgency basis (which requires a …” approval in each house) and thus takes effect immediately upon signing, courts will use ordinary legal principles controlling conflict of laws – the operative word being “courts.”
Q. Would a police recruit in the training academy class be covered under this presumption?
Police recruits in training are considered employees for workers’ compensation purposes. So if the employer directed the recruit to report to the place of employment, then that individual would fall within the presumption of compensability under this Executive Order. But remember, it is a rebuttable presumption.
APPORTIONMENT
Q. CWCI’s memorandum that issued immediately after the Governor’s Executive Order said that apportionment still applies to permanent disability. If the presumption isn’t rebutted, and the injury is presumed compensable, how can apportionment apply?
The presumption applies to ONE aspect of the comp claim, AOE/COE. All other parts of the claim are handled by the book, and that includes apportionment. So just like any other claim, if any part of the TD or need for medical treatment is related to the COVID-19 diagnosis, then it must be provided on an industrial basis because TD and medical treatment are never apportionable. But permanent disability is different. Permanent disability is apportionable under either Labor Code §4663 if there are non-industrial causes of the present disability at play, or Labor Code §4664 if there is a prior Award to the same region of the body. This is different from almost any other presumption in the Labor Code. Most of them have anti-attribution clauses, meaning that the disability may not be attributed to any cause other than the industrial injury. But the Executive Order actually goes out of its way to preserve apportionment and specifically states that the usual rules on apportionment apply. Bottom line, if you can prove apportionment, you get it.
DEATH BENEFITS
Q. CWCI issued a memorandum to members indicating that death benefits are not payable where there are no dependents. I reviewed the Executive Order and don’t see where this section of CWCI’s summary is addressed. Can you point me to where you see that in the Executive Order or clarify how you’ve come to this assumption?
In the Executive Order, under #9, it says: “The Department of Industrial Relations shall waive collection on any death benefit payment due pursuant to Labor Code section 4706.5 arising out of claims covered by this Order.”
Labor Code §4706.5 addresses payment of death benefits where there is no surviving dependent. Usually, a lump sum is payable to the Death Without Dependents Unit in the amount equivalent to that payable for a surviving spouse ($250,000). With the mandated waiver contained in the Executive Order, the employer apparently doesn’t have to make any death benefit payments at all in claims falling within the presumption where there are no dependents.
EMPLOYER’S DIRECTION
Q. If an essential employer has allowed its employees to come into the workplace or to work from home, does the presumption apply to those who do come to the workplace to perform essential functions per the original stay-home Order? Does the answer change if it is not an essential employer?
Most likely, the presumption does not apply under those circumstances. The Order requires that the employer direct the employee to perform services at the place of employment. The scenario you are describing makes it volitional.
If the business is not deemed essential, it’s likely still the same answer. The intent of the March 19 Order was to limit work away from home to essential services only, and the intent of the new Order is to protect those workers. But if you have an employer who is not essential but still allowed the employees to decide whether they wanted to work from home or from the office, then the presumption is not going to apply.
Now query, if a non-essential business opened in violation of the stay-at-home order and compelled employees to work at the place of employment, are the employees covered? The answer here is probably Yes, because the new Order does not limit the presumption to a particular class of essential workers. It just says, if your employer made you come into work, then you’re entitled to the presumption. So we may have some “he said / she said” litigation over whether the employee was directed to go to work. Presented with this scenario, the WCAB may look to case law that governs off-duty recreational activities – did the employer truly give the employee a choice?
An interesting corollary to this question is whether, in light of the presumption’s extension to all sectors of employment and not just essential businesses, an employer might delay its re-opening phase until after July 5, in order to avoid the reach of the presumption? Unless the Executive Order is extended (which very well might happen), the presumption will expire after July 5, and will not apply to any employees. As employers cautiously move toward re-opening, the presumption could be a factor to consider.
Q. Is there a potential liability to family members of an employee who was directed to report to work, and contracts COVID-19, and who then passes the infection on to family members?
The grand bargain that supports the entire workers’ compensation system does not extend to family members or other third parties. Workers’ compensation benefits would not be available to anyone other than the employee. Liability under Part B of the workers’ compensation policy is a separate issue that should be discussed with counsel. Civil liability in a negligence lawsuit against the employer could still be a viable option for the family members and other third parties, assuming causation could be established.
Q. Does the language “at the direction of their employer…” open up Serious & Willful claims for those employers who are not necessarily essential businesses?
Although not directly related to the presumption created by the Executive Order, this is an interesting proposal. S&W claims are notoriously difficult to prove, but a WCJ might be inclined to take an unfriendly view of employers who openly flouted the stay-at-home restrictions and left their employees vulnerable during a pandemic. Indeed, the potential for S&W violations extends to essential business that are deemed to have failed to provide a safe working environment.
Q. Is there a contradiction between the two Executive Orders, with one encouraging everyone to stay home and the other providing an incentive to go to work at least once, in order to trigger the presumption just in case you start feeling sick?
Yes. Are you an attorney?
ESL/by
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The information contained in this document provides a broad, general overview of a rapidly changing subject matter. The document is intended for general informational purposes only, and is not intended as legal advice. Contact your corporate counsel for answers to your specific questions.