November 30, 2006
Yet Another Labor Code § 4663/4664 Decision
The Sixth Appellate District has now weighed in on yet another couple of cases involving the application of Labor Code §§ 4663 and 4664 and the calculation of apportionment under those sections in the post-SB 899 world. This issue is currently pending before the California Supreme Court in a series of consolidated cases commonly known as the Welcher cases, as well as Brodie v. WCAB.
The Mary Davis v. WCAB and Moises Torres v. WCAB cases were consolidated for hearing in the Sixth Appellate District. In the Mary Davis case, the applicant was deemed to be permanently and totally disabled. She had previously suffered a work-related injury with an Award of permanent disability of 35 percent. As a result of the provisions of Labor Code § 4664 she was awarded partial permanent disability of 65 percent. In the second case, Torres, the injured worker had an overall disability of 52 percent with a prior Award of 24 percent. Again, the WCAB awarded benefits based on the prior decision in Nabors v. Piedmont Lumber (en banc) and subtracted the prior percentage of PD.
The Court of Appeals extensively reviewed the prior history of this issue going back to the Fuentes v. WCAB (1976) 16 Cal 3d 1, which set the standard for how to calculate apportionment for pre-existing disability. As noted by this Court, the foundation for the decision in Fuentes was Labor Code § 4750, which was repealed as part of SB 899. However, the court also noted:
"Although the Legislature repealed former § 4750 in 2004, it also repealed two related sections pertaining to apportionment and ?recast' the substance of all three provisions in new §§ 4663 and 4664."
The court then went on to review the current law as reflected in SB 899. The court noted that the changes in apportionment were intended to "repeal and recast" existing law with respect to apportionment of permanent disability. They noted:
"We have set out the former law and the new code sections side by side in the appendix. As shown by that table, the Legislature has completely rewritten the law. Where former law allowed apportionment in only three circumstances (former § 4463, 4750, 4750.5) new § 4663, subdivision (a) now simply states: ?Apportionment of permanent disability shall be based on causation.'"
The court then notes that the WCAB has interpreted the changes in the apportionment statutes to indicate that the intent of the Legislature was to expand the range of potentially apportionable factors but not to change the method of calculation.
The Court also noted that neither Labor Code § 4663 nor 4664 provides specific language on how to calculate apportionment but found in Labor Code § 4664 an implied instruction based on the statutory language:
".The employer shall only be liable for the ?percentage of permanent disability' directly caused by the work injury. ?Percentage of permanent disability' is the phrase used in § 4658 to describe the level of permanent disability for which a specified number of benefit weeks may be paid. ?Where the same word [or phrase] is used in more than one place in a legislative enactment, we presume the same meaning was intended in each instance.' (Citation omitted) Thus we presume that when the Legislature stated that an employer's liability is limited to a ?percentage of permanent disability' the Legislature was referring to the measure used to calculate the weekly benefit under § 4658. Formula A is the only calculation that yields a result in terms of ?percentage of permanent disability'."
The court noted that the decision in Dykes was largely based upon the Legislature's repeal of Labor Code § 4750 and the enactment in § 4664(b) indicating that if the injured worker has a prior disability award, the disability must be conclusively presumed to exist at the time of the injury. Dykes concluded that the combined effect of these two was to require compensation calculation taking into account the current level of disability and subtracting the dollar value.
The Court pointed out again that the Legislature did not simply repeal these sections, but it completely redrafted them to reflect a completely different way of looking at apportionment:
".The new law is plainly intended to protect the employer from paying for that portion of the disability that is not the direct result of the industrial injury. Fuentes was concerned with the same issue. But in light of the change to causation-based apportionment, the new law could not import the language of § 4750 verbatim. It would be ambiguous and possibly inaccurate to instruct the WCAB to compensate the employee for the injury ?considered by itself'."
The court also reviewed the legislative history of SB 899 noting the skyrocketing costs of workers' compensation and the need to reduce the overall cost of the system as a fundamental goal of the legislation. The court notes that it was beyond question that SB 899 was intended, overall, to reduce workers' compensation costs for employers. Either formula B or formula B would result in much larger awards than those calculated under formula A as outlined in the Fuentes case. The court therefore concludes:
".That being so, it is inconceivable that the Legislature intended to abandon formula A in favor of either alternate formula because to do so would be inconsistent with the goal of SB 899."
This analysis is actually quite consistent with the concurring opinion in the Welcher cases from the Third Appellate District. In the concurring opinion it was noted that the legislative intent was to reduce the costs of workers' compensation and that application of the principles in the Dykes case would have the exact opposite effect.
Finally, the court notes that the purposes of encouraging hiring of the disabled would be more properly served through use of formula A and also that the continued existent of the Subsequent Injuries Fund is an expression of the Legislature's ongoing interest in promoting the employment of disabled persons. The use of the formula C would in effect make Subsequent Injuries Fund benefits almost irrelevant, as virtually everything that could go wrong from a medical perspective could be substantially compensated through the overall level of permanent disability. The court further rejected the arguments presented by counsel for applicant and the California Applicants' Attorneys Association that Labor Code § 3202 required application of the most liberal interpretation of the statute in order to extend benefits to injured workers. The court viewed the language of the Legislature and its intent as paramount to § 3202:
"The policy underlying § 3202 cannot supplant the intent of the Legislature as expressed in a particular statute." (Fuentes v. WCAB at 16 Cal 3d p. 8)
The court finally concludes that there is no legislative intent to abandon formula A as adopted by Fuentes and therefore the decisions of the WCAB denying applicants' petitions for reconsideration in both of these cases were upheld.
These cases throw yet another opinion into the mix of cases currently pending at the California Supreme Court. It is interesting that the court, knowing that the Supreme Court has this issue under review, as decided to go ahead and issue its own decision. Clearly they intend to have some influence (or at least have their say) on this particularly thorny issue. There is little doubt that the applicant attorneys in these cases will take the matters up to the California Supreme Court and there is certainly a fairly strong likelihood that the Supreme Court will grant the petitions for hearing and consolidate these matters with the other five cases currently pending. The other possibility is that the Supreme Court could simply de-publish these opinions and wait for the other cases to become final. That seems less likely than a grant in consolidation.
The one thing we have to hope is that there are not too many more of these cases in the pipeline to be granted and consolidated, which might serve to further delay the Supreme Court issuing a final opinion in this matter. The W.C.A.B. policy expressed in the Memorandum by Commissioner Miller to defer decisions on calculation of apportionment until the issue resolves looks like a necessary step to provide the Appellate Courts some relief from having to continue grant and consolidate additional appeals.
The WCAB has indicated that it intends to request the Supreme Court to accelerate the process for review of this issue because of its importance and encouraged interested parties to express their support for the concept. However, one must always recognize that virtually everything that shows up before the California Supreme Court is considered to be important and it is difficult to determine whether the court will decide that this issue is more important than the other issues that are presented for it. However, the court may give some deference to the request by a fellow state agency, indicating that this is an area of importance involving certainly thousands of cases over the next several years.
A copy of the decision can be located by clicking on the link above.
Richard M. Jacobsmeyer
Certified Specialist, Workers' Compensation Law
The State Bar of California Board of Legal Specialization
SHAW, JACOBSMEYER, CRAIN & CLAFFEY
475 – 14th Street, Suite 850
Tel: (510) 645-7172
Fax: (866) 563-0092