In a recent panel decision, the Workers’ Compensation Appeals Board (WCAB) offered a cautionary tale for claims administrators and insurance carriers on how a seemingly straightforward denial can inadvertently fail to trigger the one-year statute of limitations (SOL). Although Bracy v. State of California is not binding precedent, it provides valuable insights into best practices when issuing a denial of a workers’ compensation claim—particularly regarding how to ensure the denial is sufficiently clear and unequivocal.
Factual Background
- Applicant’s Claim
The applicant alleged a cumulative trauma to his psyche through March 8, 2022, while employed by the State of California. He filed a DWC-1 Claim Form on March 31, 2022, believing his psychological issues were caused by work-related stressors. - Initial Denial (June 7, 2022)
After receiving the Claim Form, the defendant issued a denial letter stating that it was “denying all liability,” yet the same letter went on to state that a Panel QME had been requested and that a final decision on liability would follow the QME report. - Second Denial (October 7, 2022)
Several months later, the defendant issued a second letter that unequivocally disclaimed liability for the claim. - Application Filing
The applicant filed his Application for Adjudication of Claim on October 6, 2023—less than one year after the October 2022 letter but more than one year after the initial (June 2022) letter.
Key Legal Issues
- Statute of Limitations & Unequivocal Denial
Under Labor Code § 5405, an injured worker generally has one year from the date of injury (or the last furnishing of benefits) to file a workers’ compensation claim. However, once an employee submits a DWC-1 Claim Form, the statute of limitations is tolled until the employer issues an unequivocal denial. The WCAB found that the June 7, 2022 “denial” was ambiguous because it invited further medical evaluation by a QME. As a result, it did not stop the tolling of the limitations period. Only the October 7, 2022 letter—which entirely disclaimed liability—was deemed sufficient to trigger the one-year SOL. - Substantial Medical Evidence
The defendant also challenged the Qualified Medical Evaluator’s (QME) opinion on the grounds that the evaluator lacked the applicant’s complete personnel file. However, the WCAB rejected this argument as speculative. The Board noted that the defendant had not identified any specific information in the personnel file that might alter the QME’s opinion, nor had it sought further discovery from the QME.
Practical Takeaways for Claims Professionals
- Clarity in Denial Letters
- If you intend to deny a claim, ensure that the letter explicitly states the basis of the denial and unequivocally disclaims liability. Phrasing that suggests the claim is still under investigation or awaiting further evaluation can leave the door open for a later finding that the SOL never began to run.
- Effective Communication
- A denial letter that references “further testing” or “additional reports” may inadvertently suggest that the determination of liability remains pending. Such language can toll the statute, allowing an employee to file an Application months—or even years—later without being barred by the SOL.
- Documenting Investigations and Records
- When disputing the conclusions of a QME, be prepared to identify specifically how additional documentation (e.g., personnel files, internal records) might alter the medical opinion. A vague or cursory challenge is unlikely to be persuasive.
- Follow Up Promptly
- If additional evaluations or records are needed before finalizing a decision, implement a clear timeline. Waiting months to issue a definitive denial can undermine a potential statute-of-limitations defense.
- Double-Check Dates
- Always verify the “date of injury” for a cumulative trauma claim (Labor Code § 5412) and whether the employee has received any medical treatment or disability benefits that may restart or toll the SOL.
Conclusion
The Bracy decision underscores the importance of issuing unequivocal denial notices in a timely manner. While panel decisions are not binding on other judges or WCAB panels, they highlight how nuanced language in denial letters can prevent the statute of limitations from running. For claims adjusters and insurance carriers, the lesson is clear: communicate definitive decisions, avoid mixed signals, and bolster medical causation challenges with specific documentation or supplemental reporting.
If your team needs assistance drafting clear, unequivocal denial letters or defending complex workers’ compensation claims, please contact our attorneys. Visit www.rjylaw.com to learn more about our services and how we can help your organization navigate California’s workers’ compensation system effectively.
Disclaimer: This post is for informational purposes only and does not constitute legal advice. For specific guidance on handling claims or drafting denial notices, please consult with legal counsel.
