Welcher/Brodie Apportionment Cases

As advised in my earlier brief email update, the California Supreme Court has issued its unanimous decision in the 5 consolidated cases commonly known as Welcher/Brodie.  The Court has issued an unequivocal decision validating the continued use of the so called Formula A methodology for calculating the value of Permanent Disability after Apportionment.  The Supreme Court had considered the issue of how to calculate the monetary impact of apportionment first in its landmark decision in Fuentes v W.C.A.B.  The Court drew no distinction between apportionment under Labor Code § 4664 (apportionment to a prior award of PD) or Labor Code § 4663 (apportionment to causation).  In making this decision the Court has instructed lower courts to calculate PD after apportionment by subtracting the percentages of PD (Formula A) rather than the dollar value of a prior award (Formula C) or the number of weeks associated with a prior PD award (Formula B).  The Supreme Court specifically indicated in its opinion that the prior holdings of the Appellate Courts in the Dykes v W.C.A.B. and Nabors v W.C.A.B. were disapproved.

In arriving at its decision the Court considered multiple factors in deciding whether the Legislature intended to alter the methodology of calculating the monetary value for apportionment.  Noting that:

"Certainly nothing in current section 4663 or section 4664 expressly requires formula A, B, C, modified C, or any other approach to calculating compensation.  Nor does anything in the language implicitly do so.  We thus agree with the Courts of Appeal in Brodie and Dykes insofar as they recognized that "[i]n adopting Sen[ate] Bill 899, the Legislature did not outline any particular method for apportioning either a permanent disability award or a life pension."  (Dykes, supra, 134 Cal.App.4th at p. 1552.)  Contrary to the arguments of both sides, the plain language of these provisions considered in isolation does not resolve the problem.  However, as we shall explain, neither does the repeal of section 4750 (which did implicitly compel application of formula A) now require rejection of that formula."

However the most important factor considered by the Court appears to be the complete absence of any indication by the Legislature that it intended to alter the existing scheme outlined by the Court in the Fuentes decision, almost 30 years ago.  The Court observed that much of SB 899 was accompanied by very specific language giving the courts instruction on the legislative intent. The Court found a clear intent on the part of the legislature to dramatically revise the rules on the kinds of factual and legal circumstances that would justify apportionment.  However when it came to the calculation of apportionment, the Court concluded:

"If the Legislature had intended a departure from formula A, one would expect to find some trace of this intent in the legislative history, just as the legislative history explicitly identifies more than two dozen other intended reforms enacted by Senate Bill No. 899 (2003-2004 Reg. Sess.), including numerous intended changes to the apportionment scheme.  As the facts of these five consolidated cases demonstrate, a change from formula A to formula B or either version of formula C would have dramatic fiscal consequences for employers and insurers (as well as, of course, for employees).  Such a change, if intended, would likely have been remarked upon.  Instead, one hears only silence.

. This silence offers no reason to believe the Legislature intended to abandon the settled application of formula A."

The Court also commented upon and considered the legislative intent to address the perceived crisis in workers' compensation  costs pointing out that is would be illogical to address that concern by adopting a new scheme for apportionment calculations that would have substantially increased the value of overall permanent disability benefits after apportionment.  The Court also took into account the difficulties with applying the Formula C method advocated by the Applicants' representatives for apportionment under both sections and again found nothing in the legislative history that suggested there was intent to treat apportionment under the two sections differently.

"In cases of apportionment for causation, however, the notion of a "first" 30 percent and a "second" 30 percent will frequently not apply.  Where an industrial cause and nonindustrial cause simultaneously interact and are equally responsible for a 60 percent injury, there is no first 30 percent or second 30 percent.  There are two possible resolutions to this conundrum, each problematic.  Either (1) the original or Brodie-modified formula C applies here as well, despite there being no logic or equity to making the employer liable for the more expensive second 30 percent, the range from 30 to 60 percent; or (2) formula C does not apply, in which case either formula B applies, or perhaps formula A still applies, despite the fact that nothing in the statutes suggests the Legislature intended a complicated partial override of the old rule and adoption of a new formula only for a certain subset of apportionment cases."

In addition to resolving the issue of calculation of PD after apportionment, the Court also provided dicta that validates several prior cases on specific issues involving apportionment included the recent decision in Yeager Construction Co v WCAB (Gatten), as well as the W.C.A.B. en banc  decision in Escobedo v Marshalls, (apportionment to asymptomatic prior conditions and/or pathology); and Kopping v WCAB  along with the WCAB en banc decision in Sanchez v County of L.A. (both involving medical rehabilitation evidence as  not rebutting the existence of prior awards of PD).  The validation of these decisions, especially Escobedo and Yeager should help to direct the development of case law to support the application of apportionment based on the new statutory scheme.

Practice Commentary:

Now that the Court has definitively determined the methodology of calculating apportionment, the hard work of continuing to develop case law on the factual and legal standards can continue.  It is becoming clear from recent case law that the circumstances where apportionment is available to defendants has expanded substantially.  Both Yeager Construction Co case referenced by the Supreme Court and the more recent Anderson v WCAB (See my April 19, 2007 email update), gave guidance on what information must be provided to support a finding of apportionment.  In both cases the Appellate Courts noted that apportionment is available more often under the current statutory scheme and that absolute precision on the part of the physician is not required.  In both cases the opinion on apportionment was substantially more than is seen in the typical QME or even AME report.  Both cases support the concept that the actual ability to obtain apportionment in those expanded circumstances still requires that defendants pay careful attention to complete development of the record to support apportionment.  Defendants are still being held to a high standard to prove apportionment and cannot rely upon conclusory statements of physicians without adequate development of the basis for the doctors' opinion to support a decision on the issue.

Apportionment is clearly more available to defendants, but it is not necessarily much more easily achieved.  Given the holding in the Welcher/Brodie decision, taking the time, effort and expense to develop the record to support a finding on the issue has become much more worthwhile for defendants.  Failing to take the steps necessary to fully develop the record on apportionment risks giving away the opportunity to take advantage of this favorable case law.  It has been my experience that in order to obtain sufficient information from a physician to meet the legal justification for apportionment frequently requires intensive effort to get the physicians to provide the required commentary to support their conclusions on the issue.

Continued Viability of Wilkinson v W.C.A.B.

An additional issue that was not addressed by the Court, but which comes into sharp focus with this decision, is the continued viability of the line of cases following the Supreme Court's decision in Wilkinson v W.C.A.B.  If the Court had adopted Formula C and PD after apportionment for all cases was calculated based on subtraction of dollars, the net effect would have been to make all apportionment "Wilkinsonized".   The holding in Wilkinson applies the Formula C (dollar subtraction of prior PD award) calculation methodology for a large subset of cases involving apportionment where there are sequential industrial injuries involving the same body part that are P & S at the same time.

While the Court did not address the continued viability of Wilkinson, it is certainly arguable that the same silence the Court found on changing from Formula A to a different method of calculation of apportionment, would also apply to this issue.   Wilkinson was in part predicated on the difficulty in apportioning between sequential injuries where they all became P & S at the same time and that issue exists under both the new and old apportionment schemes. 

It is also arguable that since Labor Code § 4664 provides; "(a) The employer shall only be liable for the percentage of permanent disability directly caused by the injury arising out of and occurring in the course of employment.", there may be a limitation that Wilkinson should now be applied only in single employer cases in order to meet the mandate that employers only pay for the PD caused by their injuries.

There have been several decisions of the W.C.A.B., all with defendant's Petitions for Writ of Review denied by the Appellate Courts^[1] applying the Wilkinson holding to post SB 899 cases but several of these cases also relied upon the holding in Dykes v W.C.A.B.  now disapproved by the Supreme Court.  

It is my opinion that the courts are less likely to determine that Wilkinson is no longer viable at least in part based upon the Supreme Court's reliance on the lack of specific legislative intent to reverse this decision.  The public policy behind limiting an award of PD where all of the disability is work related and the combined effects of the multiple injuries has a synergistic effect  on the overall level of PD is much less compelling than the arguments for percentage subtraction to non-industrial disability.

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Richard M. Jacobsmeyer

Certified Specialist, Workers' Compensation Law

The State Bar of California Board of Legal Specialization

 

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jakejacobsmeyer@shawlaw.org