An employer, who mailed a $17,000 settlement check to the address erroneously designated by the claimant in a Compromise & Release Agreement (C&R) settling claimant’s workers’ compensation case, is still responsible for paying the agreed $17,000 to claimant where claimant had actually moved from the designated address prior to the execution of the C&R and the original check was intercepted, forged, and cashed by another person, held a California appellate court yesterday (March 22) in Barrett Bus. Servs., Inc. v. Workers’ Comp. Appeals Bd. (Rivas), 2012 Cal. App. LEXIS 337 (Mar. 22, 2012).
Rivas was injured in 2005, when he lived at a particular address in San Bernardino. He retained counsel to represent him in his workers’ compensation proceeding and executed a power of attorney authorizing his attorney to sign any documents that might be in Rivas’ best interests. Sometime before April 2007, Rivas moved to another residence in San Bernardino and the attorney filed a notice of the change of address. At that time, the employer utilized a claims adjusting agent to handle its cases, but later in 2007, the employer brought the process in-house. No notice of that change, however, was placed in the WCAB’s workers’ compensation file.
Rivas moved to Texas in June 2008, and soon thereafter his attorney filed a change of address form. A copy was forwarded to the employer’s counsel and to the claims agent, which was no longer handling the claim. No copy was apparently sent to the employer itself.
The parties settled the case and Barrett prepared and forwarded a C&R to Rivas’ attorney. The C&R bore the old San Bernardino, California address. The documents were signed by Rivas’ attorney, on his behalf, and then approved by a Workers’ Compensation Judge. Subsequently, the employer sent Rivas’ attorney the agreed fee of $3,000 and mailed a $17,000 check to the San Bernardino address. The $17,000 check was fraudulently endorsed by “Rafal Rivas” and cashed at American Check Cashing in Rancho Cucamonga, California. The fraudulent endorser presented a permanent address residence card from Mexico with a date of birth different from Rivas’s date of birth. Rivas denied having any permanent residence card and presented an El Salvador driver’s license instead.
Three months after the check was cut, Rivas informed the employer that he had not received the settlement proceeds. The employer tried to stop payment on the check, but it had already been paid by the employer’s bank. A WCJ found that the employer was still responsible for the payment of the $17,000 settlement amount and the WCAB affirmed.
Court of Appeal Decision
The appellate court affirmed. The court indicated that where the issuer of the check did not deliver the check to the payee, the issuer remained liable to the payee on the underlying obligation. The court indicated that in spite of the address indicated in the settlement documents, Rivas had not “directed” the employer to perform its obligation in any particular manner. Mailing the check did not extinguish the employer’s obligations. Rivas had never received the check. He was not a holder and was not in a position to seek payment from those who had dealt with the forger.