09 Apr 2019

California: Is the Good Faith Personnel Action Defense Exempt From the Presumption of Compensability?

Split panel holds it is, but is that the last word?

The recent panel decision, Khachatrian v. State of California, Attorney General’s Office, Dept. of Justice (March 6, 2019) 2019 Cal. Wrk. Comp. P.D. LEXIS ___, is the third decision to hold that the good faith personnel defense to a claim of psychiatric industrial injury (Lab. Code, § 3208.3(h)) is exempt from the Labor Code section 5402(b) presumption of compensability. Two previous cases reached the same conclusion (see Insalaco v. Workers’ Comp. Appeals Bd. (1999) 64 Cal. Comp. Cases 1407 (writ den.) and Carrasco v. Cal. Dept. of Corrections and Rehab. (2018) 20 Cal. App. 5th 796, 83 Cal. Comp. Cases 193.) Each of these decisions allows the defendant, in a case in which psychiatric injury is presumed compensable because of untimely denial (Lab. Code, § 5402(b)), to present evidence of a good faith personnel action defense by evidence obtained beyond the 90-day period from receipt of the DWC-1 Claim Form even if that evidence could have been reasonably obtained within that 90-day period. What distinguishes Khachatrian from Insalaco and Carrasco is the dissent of Commissioner Sweeney.

The dissent emphasizes that Labor Code section 5402(b) was enacted to expedite the workers’ compensation claims process by limiting to 90 days the time within which the employer can investigate the claim of an injured worker without being penalized for a delay. The penalty for a delay is a rebuttable presumption of compensability, the effect of which is to limit the evidence that can be presented to dispute the claim of injury. Thus, section 5402(b) creates an evidentiary presumption, which is a procedural rather than substantive rule. Even absent an explicit statement of statutory intent or express language to that effect in Labor Code section 3208.3, the majority holds that the substantive rules for proving or disproving a psychiatric claim in section 3208.3 impliedly modified the procedural rules in section 5402(b). Such implication, the dissent argues, is contrary to long-standing principles of statutory construction. (See Brodie v. Workers’ Comp. Appeals Bd. (2007) 40 Cal. 4th 1313 [72 Cal. Comp. Cases 565].)

Acknowledging her disagreement with the court’s decision in James v. Workers’ Comp. Appeals Bd. (1997) 55 Cal. App. 4th 1053 [62 Cal. Comp. Cases 757] but conceding that she is constrained to follow it, the dissenting Commissioner finds James, supra, distinguishable because it only concerned the section 3208.3(d) defense of less than six months employment to a claim of psychiatric injury instead of the good faith personnel action defense in subdivision (h), which is the subject of the instant dispute. For these reasons, the dissenting Commissioner would have denied defendant’s petition.

Is Khachatrian the last word on the whether the good faith personnel action defense to a claim of psychiatric injury is exempt from the presumption of compensability in section 5402(b)? It is hard to say, but for now, one should continue to watch this case for further action in the appellate courts.

The PDF for Khachatrian is located at the end of this post.

Practitioners should check the subsequent history of any cases before citing to them.

Any information or opinions contained in this commentary are not necessarily endorsed by LexisNexis® or its affiliates.