Corruption Alleged in Workers’ Comp System : Investigation: State looking into claims that O.C. judges have accepted gifts from lawyers and doctors.

State authorities are investigating whether workers’ compensation court judges in Orange and Los Angeles counties have been accepting expensive gifts from private attorneys and doctors whose clients’ cases regularly appear before the court.

For the last several months, the state Department of Industrial Relations has been looking into complaints of corruption within the legal system that resolves claim disputes between injured workers and the insurance companies that compensate them for medical expenses and disabilities resulting from work-related injuries.

“We have an investigation underway related to allegations of corruption and misconduct among a number of workers’ compensation judges in Southern California,” said John Duncan, a spokesman for the Department of Industrial Relations. “We are taking these allegations very seriously.”

Duncan declined to comment further. But sources familiar with the investigation, who requested anonymity, said the investigation is wide-ranging and has focused on a substantial number of judges, clerks, doctors and the private attorneys representing injured workers who contest the amounts their employers’ insurance companies are willing to pay for their injuries.

Among other things, state authorities are looking into whether judges and court employees received gifts, honorariums for speeches and expensive trips furnished by private attorneys and doctors who specialize in workers’ compensation cases.

At the workers’ compensation courts in Santa Ana and Anaheim, relationships between certain attorneys or medical clinics and at least five of 13 judges, including presiding judges Ellen L. Flynn and Adolph U. Molina, have come under scrutiny, sources said.

In Los Angeles County, it is not known how many judges and court staff are part of the investigation.

Flynn, the presiding judge in Anaheim, could not be reached for comment Wednesday. But Molina, who oversees the workers’ compensation court in Santa Ana, denied any impropriety and said he has not been interviewed by any state investigators.

Molina said he went to the Hawaiian Islands at his own expense two years ago to speak to a group of attorneys about workers’ compensation law. The trip, he added, was a combination of work and pleasure.

“I paid for my own vacation. I have the checks, just in case anything like this ever occurred,” Molina said. “I was never paid an honorarium, and I made it clear I did not want anyone to pay for me. There was nothing illegal about it as far as I was concerned. . . . This is really a surprise to me.”

So far, no conclusions have been reached during the state inquiry, said Casey L. Young, the administrator for the workers’ compensation division of the Department of Industrial Relations. He cautioned that a lot of rumor and innuendo surround the investigation, which could result in criminal charges or disciplinary action if evidence of wrongdoing is found.

“Certainly, there is a degree of hysteria within workers’ compensation because of the cost concerns,” Young said. “Judges do tend to take the heat and get a lot of unfair criticism between the warring parties. I would not be assuming there is anything to this right now. Until we get the facts, I cannot make any judgments.”

According to information obtained by The Times, Young hired a retired state Department of Justice agent several months ago to investigate complaints that judges and court staff might be accepting bribes and substantial gifts from attorneys and medical clinics that specialize in handling workers’ compensation cases.

Since then, the inquiry has centered on allegations that some lawyers and medical clinics in Southern California have consistently managed to get their workers’ compensation cases before judges whom they have bribed to render decisions favorable to the workers they represent and contrary to the interests of employers and their insurance companies.

Furthermore, sources said, the investigation is looking into allegations that court clerks or administrators have been improperly arranging court dockets or calenders to ensure that certain lawyers get their claims sent to the judges they want.

The cases in question usually involve disagreements between insurance companies and injured workers over the types of treatment received by workers and the amounts of medical bills.

Sources said the items purportedly given to judges and court staff include tickets to sporting events, lavish parties, cash payments and weekend outings to Las Vegas, as well as expensive vacations.

In addition, the investigation has looked into whether judges have had business relationships with lawyers who appear before them, or have been hired by those same attorneys to perform legal work when they are not serving on the bench.

Suspected loans from attorneys and doctors to judges have been scrutinized, sources said, as well as honorariums and conference fees purportedly received by judges who appear at functions hosted by workers’ compensation attorneys and owners of medical clinics.

Of lesser importance, sources said, is a state look at other reports of widespread violations of court ethics and legal procedure. They include judges who make key decisions without proper hearings or discuss important matters in a case with only one side present.

“There is an internal investigation going on,” Young said. “Obviously, we are concerned enough about the allegations to hire an investigator. I want to stress, though, that this is an investigation, not a conclusion.”

The investigation comes at a time when the state Legislature is considering proposals to revamp California’s $12-billion-a-year workers’ compensation system, which is widely criticized for its comparatively high cost to employers and low benefits for seriously injured workers.

Insurance companies and employers, who pay for workers’ compensation insurance, also contend that the system is riddled with abuse because few safeguards exist to prevent fraudulent medical bills and psychological stress claims.

The state’s increasingly costly program to compensate employees injured at work has been singled out by employers as a major barrier to reducing joblessness and restoring economic vitality to the state.

California’s Workers Claim Process

Not all workers’ compensation claims are contested. In some instances employers accept liability and claims are paid. But when an employer and/or the insurance company reject a claim, it is the beginning of a what could be a five-step process.

1. Employee files claim to start appeal process.

2. Settlement is made or worker and employer/insurer negotiate.

3. If there is no agreement, claim goes before workers’ compensation judge.

4. Either side may appeal judge’s decision to Workers’ Compensation Appeals Board, composed of seven gubernatorial appointees.

5. Either side may appeal board’s decision in appellate court, from which there is no appeal.

JUDGES’ CASELOAD

During 1992, workers’ compensation judges presided over thousands of cases. The average caseload in both Orange County districts compared to Los Angeles and statewide:

Average Number Average District offices caseload of judges caseload Anaheim 27,949 5 5,590 Santa Ana 42,791 8 5,349 Los Angeles 59,496 9 6,611 Statewide 647,879 140 4,628

Source: California Department of Industrial Relations

Researched by APRIL JACKSON / Los Angeles Times

Judgeship Job Description

Applicants for the position of presiding workers’ compensation judge must be practicing lawyers or judges specializing in compensation law and already employed by the Department of Industrial Relations. Other qualifications include:

* Either one year of experience as a workers’ compensation judge or five years of practicing workers’ compensation law, including at appellate court level

* No written test required

* Must be current member of American Bar Assn.

* Must be willing to travel

* Salary range: $5,723 to $6,924 a month

What Judges Must Know

* Proper trial court procedures

* Principles and provisions of the Labor Code as it pertains to workers’ compensation

* Medical, physiological, anatomical and occupational terminology in relation to industrial injury

Source: Department of Industrial Relations

Researched by APRIL JACKSON / Los Angeles Times