This is the kind of question that needs to be answered by your workers compensation attorney who would know all of the background and issues in your case. If you do not have one, get one immediately. You should not be in this process alone. If you have one, as him or her about this because only the attorney can give you an informed response.
Good luck to you.
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Even if your case is not scheduled or set for trial, the defense will likely want to depose you so that they know all the facts concerning your employment, injury, and possible claims. It is important to note that even if your case is denied by the insurance company, this is the defense's position. Often, there is disagreement as to whether the denial was appropriate.
Thus, you should likely (1) attend your deposition if it was noticed properly; (2) make sure you have a workers compensation attorney representing you at the deposition; and (3) make sure that you have adequately prepared for the deposition with your WC attorney.
If you do not have a workers compensation attorney, you should find one immediately. Most applicant-side WC attorneys will offer a free consultation, and will likely get reimbursed for fees regarding the deposition (meaning you aren't paying out of pocket for representation at the depo). Good luck.
Any post of discussion above is general in nature and is not intended to should not be construed as legal advice. Furthermore, the above posting does not create or establish any attorney-client relationship. Contact an attorney as soon as possible to discuss your legal options. [John D. Wu is licensed to practice law before all California federal and state courts]
I agree that this is a question for your attorney. Your case may end up at trial. Since it`s denied, you may need to go to court to fight for your benefits.
A deposition is routine, both in accepted case and denied cases. Don't read too much into this development.
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See my legal guide to preparing for a deposition, posted here on AVVO. Depositions are FACT gathering tools for the other side of a case. They have a right to gather info for your claim and about you.