Who Pays for PMK Depositions in California Workers' Compensation Cases?

The Dispute: Employer Refuses to Pay for PMK Depositions

 

A recent case in our practice highlighted an important issue that frequently arises in workers' compensation litigation: who bears the cost of deposing the employer's Person Most Knowledgeable (PMK) witnesses?

 

In this case, the defense attorney flatly stated that "her client declines to pay any costs for the PMK depositions" and asserted that "defendants are not required to pay costs for depositions set by applicant." The PMK witnesses in question were employers, managers, and operators whose testimony was needed to establish liability in a case where the employer had denied responsibility.

 

This scenario raises important questions about deposition costs in workers' compensation cases, particularly when an employer appears to be denying liability in bad faith.

 

The General Rule: Applicant Bears the Cost of Deposing Employer Representatives

 

The general rule in California workers' compensation cases is that costs for deposing lay witnesses, including employer representatives, are typically not paid by the defendant/employer. The Workers' Compensation Appeals Board (WCAB) has consistently held that "costs for depositions and subpoena fees for lay witnesses are not uniformly allowed against employers." (Labor Code § 5811; 8 Cal. Code Regs. § 10545)

 

Unlike depositions of injured workers, which are explicitly governed by Labor Code section 5710(b) (requiring employers to pay all reasonable expenses when they depose an injured worker), there is no parallel statutory provision requiring employers to pay costs when applicants depose employer representatives.

 

Labor Code § 5710(b) states:

"Where the employer or insurance carrier requests a deposition to be taken of an injured employee, or any person claiming benefits as a dependent of an injured employee, the deponent is entitled to receive in addition to all other benefits:

(1) All reasonable expenses of transportation, meals, and lodging incident to the deposition.

(2) Reimbursement for any loss of wages incurred during attendance at the deposition.

(3) One copy of the transcript of the deposition, without cost.

(4) A reasonable allowance for attorney's fees for the deponent, if represented by an attorney licensed by the State Bar of this state. The fee shall be discretionary with, and, if allowed, shall be set by, the appeals board, but shall be paid by the employer or his or her insurer."

 

The WCAB has specifically held in *Christensen v. WCAB* (1999) 64 CCC 559 that costs for taking defense witnesses' depositions are generally not allowed to be charged to the employer/defendant.

 

The Financial Burden on Injured Workers

 

When deposition costs are not paid by the employer, they are typically advanced by the applicant's attorney and later reimbursed through deduction from the applicant's award. This means that while the applicant's attorney typically fronts these costs during litigation, they are ultimately paid by the injured worker through a reduction in their compensation award. (Labor Code § 5811)

 

This cost structure explains why applicant attorneys rarely take depositions of employer representatives unless absolutely necessary to prove the case. The financial burden ultimately falls on either the injured worker (through reduction of their award) or the applicant's attorney (if they choose not to bill these costs against the award).

 

The Bad Faith Exception: A Powerful Tool for Applicants

 

However, there is a significant exception to the general rule: when an employer denies liability in bad faith and depositions become necessary to prove liability. In such cases, the WCAB has authority to impose sanctions under Labor Code section 5813, which states:

 

  "The workers' compensation referee or appeals board may order a party, the party's attorney, or both, to pay any reasonable expenses, including attorney's fees and costs, incurred by another party as a result of bad-faith actions or tactics that are frivolous or solely intended to cause unnecessary delay." (Labor Code § 5813(a))

 

The WCAB has broad authority to impose sanctions that can include the costs of depositions when they become necessary due to an employer's bad faith denial of liability. (Labor Code § 5813; 8 Cal. Code Regs. § 10421)

 

In one notable case, *Reischl v. Illumination Dynamics* (2018) 83 CCC 1523 (panel decision), the appeals board sanctioned a defendant for denying an applicant's psychiatric claim in bad faith when unrebutted medical evidence supported the claim.

 

The WCAB specifically explained that "when the unrebutted medical evidence supports a claim, a defendant is required to proceed accordingly. It must either promptly seek rebuttal evidence or accept the claim and provide benefits." (*Reischl v. Illumination Dynamics* (2018) 83 CCC 1523)

 

In another case, *Alvarez v. WCAB* (2010) 75 CCC 817, 187 Cal. App. 4th 575, "the appeals board awarded costs and sanctions against a defendant who disputed payment of attorney fees under LC 5710 for the applicant's deposition, even though the defendant asserted that it had a good-faith belief that the applicant committed fraud."

 

The WCAB's Authority Over Depositions

 

The WCAB has extensive authority to control depositions and related costs:

 

1. "The appeals board has the authority to hear discovery disputes and compel answers to deposition questions or determine that a deponent is not required to answer certain questions." (Labor Code § 5710; 8 Cal. Code Regs. § 10564)

 

2. The WCAB "may even compel the deposition of a nonparty witness" and its "jurisdiction in such nonparty cases is not limited to the employees of the parties." (Labor Code § 5710; 8 Cal. Code Regs. § 10564)

 

3. In cases where a party engages in bad faith conduct during the deposition process, the WCAB can impose sanctions under Labor Code section 5813. (Labor Code § 5813; 8 Cal. Code Regs. § 10421)

 

Strategic Considerations for Practitioners

 

Given these rules, workers' compensation practitioners should consider the following strategies:

 

1. **Evaluate necessity carefully**: Before scheduling depositions of employer representatives, carefully evaluate whether the testimony is essential to proving the case.

 

2. **Consider alternative discovery**: Explore less costly discovery methods such as interrogatories, requests for production of documents, and subpoenas.

 

3. **Document bad faith**: If an employer appears to be denying liability in bad faith, document all evidence of bad faith to support a potential petition for sanctions under Labor Code § 5813.

 

4. **Petition for sanctions**: When depositions become necessary due to bad faith denial of liability, petition the WCAB for sanctions under Labor Code section 5813 to shift these costs to the employer.

 

5. **Discuss costs with clients**: Have clear discussions with clients about how litigation costs may impact their ultimate recovery, as these costs may be deducted from their award under Labor Code § 5811.

 

Conclusion: Challenging Blanket Refusals

 

The defense's blanket assertion that "defendants are not required to pay costs for depositions set by applicant" is generally correct as a baseline rule under *Christensen v. WCAB* (1999) 64 CCC 559. However, this general rule is subject to an important exception when an employer denies liability in bad faith.

 

When an employer denies liability in apparent bad faith, and depositions of employer representatives become necessary to prove liability, the WCAB has the authority under Labor Code § 5813 to impose sanctions that can include ordering the employer to pay the costs of those depositions.

 

Therefore, while the defense's position in our recent case has some basis in general workers' compensation practice, it fails to acknowledge the important exception for bad faith conduct established in cases like *Reischl v. Illumination Dynamics* (2018) 83 CCC 1523. Practitioners should be prepared to challenge such blanket refusals when the circumstances warrant.

 

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*This blog post is provided for informational purposes only and does not constitute legal advice. Every case is unique, and outcomes may vary based on the specific facts and circumstances involved.*