Changes to the California Workers’ Compensation laws in 1991 required insurance carriers follow specific timeframes when determining the compensability of a claim and to have proper documentation for the denial of any claim within 90 days from the employer’s date of knowledge of the injury.

The issue of potential fraudulent psychiatric claims resulting from stress on the job created a toilsome task for the employer or his/her insurance carrier. What should the claims’ adjuster look for when investigating an allegation of an injury due to stress? 

Here is a list of initial factors to consider when reviewing a workers’ compensation claim for stress on the job, followed by a portion of the California Labor Code Sections outlining the threshold for the compensability of a psychiatric injury.

Facts to Consider

A) The claim was filed after termination or layoff.

B) The claim was filed following a legitimate termination for violation of company policy that is documented in the claimant's Personnel file.

C) The claimant would have remained working at the company if he or she had not been terminated or laid off.

D) The claimant filed for unemployment benefits and immediately began looking for another job following a termination and/or layoff.

E) The claimant filed a Workers' Compensation claim and began receiving State Disability Benefits after using up Unemployment Benefits. .

F) There is a significant time span of at least two or three months between the time of the claimant’s alleged injury and the time that the claimant files his or her stress claim.

G) The presence of numerous subjective complaints in the absence of any specific objective findings.

H) The claimant's subjective complaints are markedly out of proportion to the claimant's reported activities of daily living.

I) Evidence of malingering or the intentional production of false physical or psychological symptoms, motivated by external incentives such as obtaining financial compensation, avoiding work, evading criminal prosecution or securing better living conditions.

J) The existence of a pre-existing psychiatric condition with evidence of disability that is documented by the medical.

K) Evidence of drug and alcohol use before, during and after the alleged time of a claim.

L) Evidence or history of significant personal psychosocial stressors that exist outside the employment experience.

M) Evidence or history of progressive job dissatisfaction and a lack of motivation to return to that job.

O) The claimant has filed a previous Workers' Compensation Claims.

P) The claimant has had a history of intermittent employment.

Q) Claimant has a history of co-workers from the same company filing similar claims for similar injuries with the same attorney and same doctor.

Threshold of compensability for Psychiatric Injury

Labor Code §3208.3 (a) A psychiatric injury shall be compensable if it is a mental disorder which causes disability or need for medical treatment, and it is diagnosed pursuant to procedures promulgated under paragraph (4) of subdivision (j) of Section 139.2 or, until these procedures are promulgated, it is diagnosed using the terminology and criteria of the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders, Third Edition–Revised, or the terminology and diagnostic criteria of other psychiatric diagnostic manuals generally approved and accepted nationally by practitioners in the field of psychiatric medicine.

(b) (1) In order to establish that a psychiatric injury is compensable, an employee shall demonstrate by a preponderance of the evidence that actual events of employment were predominant as to all causes combined of the psychiatric injury.

(2) Notwithstanding paragraph (1), in the case of employee whose injuries resulted from being a victim of a violent act, the employee shall be required to demonstrate by a preponderance of the evidence that actual events of employment were a substantial cause of the injury.

(3) For the purposes of this section “substantial cause” means at least 35 to 40 percent of the causation from all sources combined.

(c) It is the intent of the Legislature in enacting this section to establish a new and higher threshold of compensability for psychiatric injury under this division.

(d) Notwithstanding any other provision of this division, no compensation shall be paid pursuant to this division for a psychiatric injury related to a claim against an employer unless the employee has been employed by the employer for at least six months. The six months of employment need not be continuous. This subdivision shall not apply if the psychiatric injury is caused by a sudden and extraordinary employment condition. Nothing in this subdivision shall be construed to authorize an employee, or his or her dependents to bring an action at law or equity for damages against the employer for a psychiatric injury, where those rights would not exist pursuant to the exclusive remedy doctrine set forth in Section 3602 in the absence of the amendment of this section by the act adding this subdivision.

(e) Where the claim for compensation is filed after notice of termination of employment or layoff, including voluntary layoff, and the claim is for an injury occurring prior to the time of notice of termination or layoff, no compensation shall be paid unless the employee demonstrates by a preponderance of the evidence that actual events of employment were predominant as to all causes combined of the psychiatric injury and one or more of the following conditions exist:

(1) Sudden and extraordinary events of employment were the cause of the injury.

(2) The employer has notice of the psychiatric injury under Chapter 2 (commencing with section 5400) prior to the notice of termination or layoff.

(3) The employee’s medical records existing prior to notice of termination or layoff contain evidence of the psychiatric injury.

(4) Upon a finding of sexual or racial harassment by any trier of fact, whether contractual, administrative, regulatory, or judicial.

(5) Evidence that the date of injury, as specified in Section 5411 or 5412, is subsequent to the date of the notice of termination or layoff, but prior to the effective date of the termination or layoff.

(g) A notice of termination or layoff that is not followed within 60 days by that termination or layoff shall not be subject to the provisions of this subdivision, and the subdivision shall not apply until receipt of a later notice of termination or layoff. The issuance of frequent notices of termination or layoff to an employee shall be considered a bad faith personnel action and shall make this subdivision inapplicable to the employee.

(h) No compensation under this division shall e paid by an employer for a psychiatric injury if the injury was substantially caused by a lawful, nondiscriminatory, good faith personnel action. The burden of proof shall rest with the party asserting the issue.

For more information on workers’ compensation see the following;