The Problem
Oh no! California has, yet again, another split decision!
Remember the confusion last year? After years of following the apportionment rules set down 30-plus years ago in Fuentes v. Workers’ Comp. Appeals Bd. (1976) 16 Cal.3d 1 (Fuentes) 1, the various Courts of Appeal interpreted the impact of SB 899 on this issue with different results. Some concluded we were to continue to apportion by subtracting percentages (Formula A). Others concluded that we were to apportion by subtracting money (Formula C). Faced with conflicting instructions from the courts above, the WCAB punted, refusing to issue apportionment decisions until the California Supreme Court weighed-in. 2
It has happened again!
This time the issue relates to whether the 1997 Permanent Disability Rating Schedule (PDRS) or the 2005 PDRS is to apply to a pre-1/1/05 date of injury (DOI).
The problem relates to Labor Code 4660(d). This section tells us that the new (and, typically, much less expensive) 2005 PDRS will apply to pre-1/1/05 DOIs “when there has been either no comprehensive medical-legal report or no report by a treating physician indicating the existence of permanent disability…” that has issued prior to 1/1/05. Specifically, the Courts of Appeal disagree about the phrase “indicating the existence of permanent disability…” In a nutshell, there is disagreement as to whether an injury must be permanent & stationary (P&S) (aka “maximum medical improvement”) in order for the pre-1/1/5 comprehensive medical-legal or treating physician report to be able to indicate “the existence of [PD].” This issue was made pivotal in many pre-1/1/05 cases because of the thousands of medical reports that were issued near the end of 2004 (largely at the request of applicant’s counsel), stating that, although the patient was not yet P&S/MMI, there would be PD sometime in the future.
The First Answer
This issue was initially addressed by the Fourth District of the Court of Appeals, which held that for a report by a treating physician 4 to indicate the “existence of [PD]” within the meaning of LC 4660(d), the injured worker’s condition must be permanent, stationary, and ratable before January 1, 2005 [Vera v. WCAB (8/2/07, ordered published 8/30/07) Cal. App. 4th (72 Cal. Comp. Cases)]. In so doing, the Fourth District adopted the reasoning Commissioner Cuneo had provided when Vera was decided by a WCAB panel. Stated Commissioner Cuneo, a report that purports to find “existence of [PD]” in an injured body part and finds that the same body part is temporarily totally disabled (TTD) is “internally inconsistent.” An “internally inconsistent” is, by definition, “not substantial evidence” and, as such, “cannot be relied upon to support a decision.”
Stated the Court of Appeals: “We thus conclude that in drafting section 4660, subdivision (d) to refer to ‘a treating physician[‘s report] indicating the existence of permanent disability,’ the Legislature was making use of the interchangeable terms employed by the regulations, and intended to provide that the old schedule applies to a claim arising before January 1, 2005, when a treating physician’s report indicates that the claimant’s ratable disability has reached the status of permanent and stationary.”
The Second (and Conflicting) Answer
Two Courts of Appeal have subsequently disagreed with Vera. On January 3, 2008, the California Court of Appeals, Second Appellate District, issued a decision in Genlyte Group, LLC v. WCAB. (Zavala) (B198100, January 3, 2008) Cal.App.4th [73 Cal.Comp.Cases] [2008 Cal.App.LEXIS 6]. In Zavala, the Second Appellate District stated:
Recognizing permanent disability may exist before permanent and stationary status has been reached under the statutory scheme… is fully consistent with existing case law. In instances of insidious and progressive occupational diseases, for example, from exposure to asbestos-permanent disability may be rated and indemnity advances ordered before the employee is permanent and stationary; jurisdiction is reserved pending permanent and stationary status or permanent total disability. Permanent disability before permanent and stationary status may also be found in cases involving serious injuries such as severe bums or the loss of sight or limbs.
That permanent disability may exist prior to the worker’s condition reaching permanent and stationary status is also illustrated by the role of vocational rehabilitation benefits in the workers’ compensation scheme for injuries prior to January 1, 2004. …Therefore, a recommendation for vocational rehabilitation before the worker’s condition reaches permanent and stationary status…suggests the existence of permanent disability prior to the injured worker’s condition reaching permanent and stationary status.
Thereafter, on 1/31/08, in the matter of Virginia Surety v. WCAB, No. B197490 (1/31/08), the Second Appellate District Court of Appeal, in an unpublished decision, adopted the logic of Genlyte in its ruling that a physician’s 12/04 report evidenced the “existence of [PD]” without declaring the applicant P&S. The pre-1/1/05 report stated the applicant was not yet permanent and stationary, but that he would have some “permanent residual disability.”
The Real Answer
With these most recent decisions (Zavala and Virginia Surety), is “the writing on the wall”? Is there a trend suggesting that the defense is going to lose this battle?
NO!
Believe it or not, the California Supreme Court has already told us whether an injury must be P&S for PD to existence…over 30 years ago!
In 1977, the Supreme Court issued its seminal opinion in the matter of Wilkinson v. WCAB (19 Cal.3d 491) (05/25/77). In that case, the Court ruled that whenever a worker, while working for the same employer, sustains successive injuries to the same part of his body and these injuries become permanent and stationary at the same time, the worker is entitled to an award based on the combined disability. This decision involved the interpretation of the now-repealed Labor Code 47506). 5 The Court explained that its decision was:
“…consistent with the language of section 4750, which requires apportionment only when the employee ‘is suffering from a previous permanent disability or physical impairment.’ Thus the section does not require apportionment in all cases of successive injuries, but only in cases of successive permanent disabilities. If the worker incurs successive injuries which become permanent at the same time, neither permanent disability is ‘previous’ to the other, and section 4750 hence does not require apportionment.”
In short, if an injury had to be permanent and stationary for PD to “exist” as of the 1977 Wilkinson decision, the same reasoning is applicable today!
Keep up the good fight. At MSC and Trial, cite Vera and Wilkinson reasoning. (You can bet CAAA will be referencing Zavala and Virginia Surety). Good luck!
Don Barthel is a Founding Partner of Bradford & Barthel, LLP and founder of B&B Rating Services.
1 In Fuentes, the court instructed that we apportion permanent disability by subtracting the percentage of PD (as opposed to the weeks or money valued associated with the percentage of PD) caused by factors other than the current industrial injury from the overall percentage of PD.
2 Happily the California Supreme Court acted quickly. On 5/3/07, the Court issued its opinion in Brodie v WCAB, 40 Cal. 4th 1313, 72 CCC 565, holding that the Fuentes formula (Formula A), remained the correct one to apply in apportioning compensation between causes of disability. Note, however, that the WCAB need not have “punted.” Where a conflict exists between published opinions of different Courts of Appeal, the WCAB is free to choose between the conflicting lines of authority until either the Supreme Court resolves the conflict or the Legislature clears up the uncertainty by legislation. (Auto Equity Sales v. Superior Court (1962) 57 Cal.2d 450, 456; People v. Hunter (2005) 133 Cal.AppAth 371, 382; McCallum v. McCallum (1987) 190 Cal.App.3d 308,315, fn. 4; Maples v. Aetna Cas. & Surety CO. II (1978) 83 Cal.App.3d 641, 650, fn. 5.)
3 By 2005, studies demonstrated a greater than 50 percent reduction permanent disability benefits. See California Commission on Health & Safety’s Permanent Disability Rating Schedule Analysis (2/23/06).
4 The Court’s holding in Vera is specific to a treating physician’s report indicating the existence of PD. However, the requirement that the worker’s condition be permanent, stationary, and ratable before the existence of PD can be indicated in a report would appear to apply equally to a pre-2005 comprehensive medical-legal report that is to serve as an exception to application of the 2005 PDRS for injuries occurring before January 1, 2005. (See also Baglione v Hertz Car Sales (2007) 72 Cal.Comp.Cases 444 [Appeals Board en banc]; Costco Wholesale Corp. v WCAB (Chavez) (2007) 151 Cal.App. 4th 148 [ 72 Cal. Comp. Cases 582).
5 Although the results of Wilkinson were recently changed by way of an en banc decision (Benson, the logic has not.
6 4750 provided, “An employee who is suffering from a previous permanent disability or physical impairment and sustains permanent injury thereafter shall not receive from the employer compensation for the later injury in excess of the compensation allowed for such injury when considered by itself and not in conjunction with or in relation to the previous disability or impairment. The employer shall not be liable for compensation to such an employee for the combined disability, but only for that portion due to the later injury as though no prior disability or impairment had existed.
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