WCAB Reform Did Not Alter Apportionment Formula

Friday, May 4, 2007

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WCAB Reform Did Not Alter Apportionment Formula—S.C.

By KENNETH OFGANG, Staff Writer

Legislation reforming California’s workers’ compensation system did not alter the formula for apportionment of permanent disability, the state Supreme Court unanimously ruled yesterday.

In a ruling favoring employers, the justices said the Legislature did not intend to supersede the formula adopted in Fuentes v. Workers’ Comp. Appeals Bd. (1976) 16 Cal.3d 1. Under that formula, when a worker suffers a permanent injury on the job, a disability rating is assigned, then the degree of disability attributable to prior industrial injuries or non-industrial injuries is subtracted; the result is then used to determine the benefit amount according to a table adopted by the Legislature.

In other words, a worker whose degree of disability increased from 25 percent to 50 percent receives the same benefit as a previously non-disabled worker who became 25 percent disabled.

In so holding, the justices upheld the position taken by a divided Workers’ Compensation Appeals Board, and by the Court of Appeal in four of the five consolidated cases covered by the decision. The court rejected a formula suggested by the Court of Appeal in the fifth consolidated case, as well as another version adopted in two previous Court of Appeal decisions, both of which would have been more favorable to injured workers.

The workers whose cases were decided yesterday all were awarded benefits by the workers’ compensation judge and WCAB under the Fuentes formula.

They were:

•Stan Brodie, a Contra Costa County firefighter determined to be 74 percent disabled after a 2000 injury. He had previously been rated 44.5 percent disabled, and was awarded nearly $21,000 in benefits based on the 29.5 percent difference between the two figures.

•Kenneth Dee Welcher, a laborer who was rated 62.5 percent disabled after a previous accident. His subsequent injury increased that rating to 71 percent; the difference between the two resulted in an award of less than $4,000.

• Jack Strong, a City and County of San Francisco engineer whose 1995 knee injury resulted in a 34.5 percent permanent disability rating. A 1999 accident injured the same knee and other parts of the body, resulting in permanent disability of 42 percent.

In 2002, he sustained a third industrial injury, to his back, resulting in a new disability determination of 70 percent. Based on evidence from a disability evaluation specialist, the WCJ determined the current injury caused permanent disability of 10 percent, with the remaining 60 percent attributable to the previous injuries, and awarded $4,235.

•Aurora Lopez, a Department of Social Services employee, injured her back and lower extremities; the parties stipulated she was 100 percent permanently disabled and stipulated further that 79 percent of this was attributable to the industrial injury and 21 percent to nonindustrial causes. The WCJ awarded Lopez permanent disability benefits of $80,910.73, plus a small life pension based on disability in excess of 70 percent.

•Henry L. Williams Jr., an airline mechanic who injured his lumbar spine and received a 28 percent permanent disability rating. Thereafter, he injured his spine again, and the parties stipulated to a 43 percent permanent disability rating. The WCJ awarded $9,296.25 in permanent disability benefits based on the difference, 15 percent.

The apportionment issue in Fuentes arose in the context of a 1972 legislative change in the benefits formula.

Under the old formula, benefits increased proportionately at higher levels of disability, thus a worker with a 90 percent rating received nine times as much as one with a 10 percent rating. Under the 1972 law, however, benefits increased exponentially, giving a worker with a 90 percent rating more than 17 times as much as one with a 10 percent rating.

In Fuentes, the worker was judged 58 percent disabled, with 33.75 percent attributable to his industrial accident and 24.25 percent to non-work-related causes. His attorney argued unsuccessfully that rather than simply basing his award on the 33.75 percent rating, his benefits should be calculated by taking the benefits due a 58 percent disabled worker and subtracting those due at 24.25 percent.

The court sided with the employer over the lone dissent of Justice Stanley Mosk, who argued for an in-between approach.

In the cases decided yesterday, however, attorneys for the injured workers argued that because the statute under which the Fuentes formula had been adopted was repealed in part by the new law, a new formula was required, and that the most appropriate approach was that argued by the worker’s lawyer in Fuentes.

But Justice Kathryn M. Werdegar, writing for the high court, said the Legislature’s intent was not to supersede Fuentes, but to adopt a strict “apportionment by causation” approach and override past decisions that had enabled workers to avoid the effects of high prior disability ratings.

She cited the case of a worker with a new disability rating of 78 percent and a prior rating of 65 percent, who was permitted to show that through rehabilitation, he had reduced his degree of disability to 39 percent prior to the most recent accident, entitling him to new benefits at the 39 percent rate rather than at 13 percent.

“If the Legislature had intended a departure from [Fuentes], one would expect to find some trace of this intent in the legislative history,” the justice said, especially given the “dramatic fiscal consequences for employers and insurers.”

The workers’ approach, the justice acknowledged, has some “intuitive appeal” in a case where a worker has suffered a second industrial injury that increases the degree of disability. But this is not the only type of case requiring apportionment.

She cited for example the case of “an industrial cause and nonindustrial cause [that] simultaneously interact and are equally responsible for a 60 percent injury.” Application of the workers’ proposed formula, she explained, would make the employer liable for more than a 30 percent disability “despite there being no logic or equity” to imposing such a requirement.

The deference owed the WCAB’s interpretation of the laws it enforces is an additional factor in favor of keeping the Fuentes formula, she said.

Attorneys who argued before the Supreme Court were Mark E. Gearheart of Pleasant Hill, Susan R. Borg of San Mateo, and David J. Froba of Modesto for the employees and San Francisco Deputy City Attorney Danny Chou and Elwood Lui of Jones Day’s Los Angeles office for the employers.

The case is Brodie v. Workers’ Compensation Appeals Board, 07 S.O.S. 2305.