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SACRAMENTO, Calif. -- A court's recent modification of an earlier decision will not force the reopening of thousands of California workers compensation claims involving disputed vocational rehabilitation settlements.

California's 2nd District Court of Appeal's original Nov. 5 decision in Miguel A. Estrada vs. Workers' Compensation Appeals Board essentially outlawed the inclusion of cash settlements for disputed vocational rehabilitation benefits.

Such settlements reached with employees and contained within compromise and release agreements have been a standard industry practice permitted for more than a decade by the state Workers' Compensation Appeals Board, according to the California Workers Compensation Institute in San Francisco. Under the practice, an employee accepts a lump-sum payment in exchange for releasing an employer from further liability.

The Los Angeles court had applied its ruling retroactively to such cases. But on Nov. 25, the court modified its order, saying it did not intend its decision to apply retroactively.

Employer groups were "very much concerned about the retroactive application of the decision, but the revision seems to have diminished the concern," said Joseph Markey, president of the Sacramento-based California Self Insurers Assn.

Among other things, retroactive application could have led to new litigation over previously closed cases and forced the recalculation of losses and experience modifications, according to the Assn. of California Insurance Cos. and the American Insurance Assn.'s regional office in Sacramento.

The court decision still is not favorable for employers, but if it applies only to cases going forward, then employers and insurance companies know what to expect and can make adjustments, said Mark Webb, assistant vp for the AIA in Sacramento. "Had it been a retroactive application, it would have truly opened a Pandora's Box."

Estrada applies in cases where there is a dispute over benefit levels but not whether an employee was injured or is entitled to receive benefits, experts say.

The ruling does not preclude settlements for vocational rehabilitation benefits under cases covered under a finding that questions the existence of an injury, said ACIC President Barry Carmody.

Other facts of Mr. Estrada's claim are unremarkable, observers said. He was a lithographer employed by Corporate Graphics when he filed an adjudication of a claim with the Board in 1989, court records show. He suffered repetitive stress injuries to his head, neck, back and legs and demanded rehabilitation.

The claim was contested, and Mr. Estrada signed a compromise and release agreement, settling claims for VRTD, or vocational rehabilitation temporary disability.

That led to a later dispute questioning whether the vocational rehabilitation aspects of the C&R were enforceable.

The appeals court agreed with an earlier ruling by a workers compensation judge that the vocational rehabilitation aspects were not enforceable.

Miguel A. Estrada vs. Workers Compensation Appeals Board; California Court of Appeal, 2nd Appellate District; No. B107353, Nov. 5, 1997.