Five Workers’ Compensation Judges Warned

In a report that instantly prompted calls for further investigation into the workers’ compensation courts, state officials announced Friday that they have warned five of the system’s judges about possible misconduct and vowed to tighten regulations to prevent any future wrongdoing.

Wrapping up a yearlong inquiry, the state Division of Workers’ Compensation found no evidence of criminal activity. But the agency concluded that three Orange County judges appear to have “unwittingly” violated ethics rules related to a trip to Hawaii while two other Southland judges broke state law by improperly accepting speaking fees from groups that appear before the courts.

“I am pleased that the most serious allegations proved to be unfounded rumor and innuendo,” said Casey L. Young, administrative director of the Division of Workers’ Compensation, referring to charges of bribery and money-laundering. “The most valuable lesson of this ordeal is the realization that the line between what is acceptable behavior and what is unacceptable is not always as clear as it should be.”

But a key state lawmaker immediately called Young’s promised regulation-tightening an inadequate response and said he would call for a criminal investigation, if Young does not take the action himself. Young had said he was not planning to refer the matter to authorities for a criminal probe.

The lawmaker--state Sen. Bill Leonard (R-Big Bear), co-author of a workers’ compensation reform measure passed last year--argued that “strong accountability” is needed in the workers’ compensation courts.

Referring to statements that two judges “appear to have violated” state law and that three others “may have breached” the state code of judicial conduct, Leonard added: “It’s weasel language that the public doesn’t enjoy.”

Stanley R. Zax, chairman and chief executive of Zenith Insurance, one of the state’s biggest workers’ compensation insurers, added, “I don’t think that Casey Young, who apparently found violations, can think that the matter is closed.

“We can’t have a system where people are perceived to have violated the law, and there are facts to support it, and then it’s excused,” Zax said. “That doesn’t equate to equal justice under the law to me.”

Each of the five judges singled out in the report received “counseling letters,” Young said, to clarify the applicable ethical rules and to warn them against doing anything that might create the perception of improper activity. He said the letters will become part of the judges’ personnel records, adding that he could not release the names of the five judges because it was a personnel matter that, under state law, must remain confidential.

The Division of Workers’ Compensation began investigating last year after receiving a number of complaints about workers’ compensation judges in Los Angeles and Orange counties. By the time the inquiry was complete, Young said, the agency had reviewed numerous documents and interviewed dozens of witnesses related to 26 allegations of wrongdoing.

The charges included receiving bribes or improper compensation in the form of gifts, money and speaking fees from insurance company representatives, attorneys or doctors involved with cases pending before some of the judges.

Investigators also looked into the allegation that some members of the bench had outside business relationships with attorneys, lien collectors and physicians that created the potential for conflicts of interest.

Another part of the inquiry centered on whether Ellen L. Flynn, the presiding judge of the Anaheim workers’ compensation court, Adolph U. Molina, who heads the Santa Ana court, and at least two other Orange County judges, Andrew H. Nash and David L. Zimmerman, had improperly accepted a trip to Hawaii from a doctor whose cases regularly went before their courts.

The judges, who went to Hawaii to appear at a workers’ compensation seminar, have repeatedly denied any wrongdoing. Molina has said that he paid for his own trip to avoid any conflict of interest, and Young noted that he has commended Molina for trying to follow proper procedures. Young wouldn’t comment specifically about any of the other Orange County judges, but he called the trip to Hawaii inappropriate.

“Doctors taking judges to Hawaii shouldn’t happen,” Young said. “It doesn’t look good.”

According to a summary of the investigation, only one judge reimbursed the doctor for all expenses related to the trip. Three others reimbursed the physician only for air fare and accepted hotel accommodations from him. In addition, the spouses of the judges accepted free air fare and accommodations paid for by the doctor.

Investigators noted that the Fair Political Practices Commission had advised the judges they were under no obligation to report the trip on their state-mandated financial disclosure statements. But the FPPC also had warned the judges that if any of them received transportation or other gifts worth more than $250, they may have a conflict of interest.

The judges could not be reached for comment Friday.

Young said he would specifically recommend that the regulations be tightened for accepting accommodations and travel expenses from those involved in cases pending before workers’ compensation courts.

Still, Young said that the judges who went on the trip made an effort to ensure that they were acting properly and sought advice from the FPPC on whether taking the excursion would be proper.

Young blamed the conduct of the judges on ethical rules that are not clearly defined, particularly for speaking fees and conflicts of interest. “We need more standards to address these issues specifically,” he said. “The law on conflicts of interest are too fuzzy. We are going to create these standards.”

Young promised that his agency would draft a more specific code of conduct for workers’ compensation judges with the help of the nationally known Josephson Institute of Ethics. The standards, he said, should be established by the end of the year.

The investigation extended all the way up to the top judge in the workers’ compensation system, Mark L. Kahn, who from his office in Van Nuys oversees the 27 district courts.

Kahn, who carries the title of assistant chief of the Division of Workers’ Compensation, was scrutinized for outside income he drew by giving speeches for a legal seminar firm he co-owns. Records show that in 1992, Kahn received profits of $70,000 from the firm.

But Kahn’s lawyer, Fred J. Kumetz, said the judge was cleared of any wrongdoing and was not among the five singled out in the report. “My client has been fully vindicated,” said Kumetz, who charged that insurance companies “instigated” the state investigation to intimidate judges that they oppose.

The Worker’s Compensation Division is a unit of the state Department of Industrial Relations. Its statewide district courts resolve disputes between workers seeking benefits for on-the-job injuries and insurers and employers responsible for covering those costs.