Controversial Workers’ Comp Ruling Upheld by State Board

A sweeping ruling that threw out workers’ compensation claims filed by a group of 10 laid-off employees has been largely upheld by California’s Workers’ Compensation Appeals Board.

But the Long Beach judge who issued the ruling, Frank S. Falero, also was mildly chastised by the appeals board for overstepping his authority. The board said it was “not persuaded” that it was “appropriate” for Falero to order the employer and insurance company involved in the cases to seek a fraud prosecution against the 10 former employees.

The appeals board decision this week stemmed from a ruling Falero rendered in April against 10 employees laid off by International Rectifier Corp., a semiconductor firm in El Segundo. Falero’s ruling attracted attention for its scope, denying 10 claims in one stroke, and for taking the unusual step of declaring the claims “another too-frequent example of the rampant fraud and abuse” in the workers’ compensation system.

While business groups cheered Falero’s action, legal experts noted that workers’ compensation judges lack the authority to allege fraud. The appeals board, while suggesting that the cases should be referred to the California Department of Insurance for investigation, said Falero appeared to be “unnecessarily explicit” on that score.

The board also ordered Falero to reconsider the part of his ruling ordering the workers to reimburse International Rectifier and its insurance company, Argonaut Insurance Co., for their legal costs. Among other things, the board suggested that Falero might want to consider whether the workers’ lawyers and doctors should contribute to the reimbursement.