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February 12, 2013
NOTE: A Board Panel Decision issued on 7-24-12 in the case Anderson v. Jaguar ADJ716686 on this issue. The Board determined that estimating future SAWW increases at 3% each year was in the best interest of the injured worker.
Labor Code Sec. 4453(a)(10) provides for certain increases to the statutory AWE structure for TD payments and Labor Code Sec.4659(c) provides for certain increases in life pension and total permanent disability payments based upon the "state average weekly wage" (SAWW). SAWW is a number compiled by the United States Department of Labor based on the average weekly wage of California employees covered by unemployment insurance for the 12 months ending March 31 of the calendar year (preceding the year in which the injury occurred).
As of March 31, 2006, the SAWW for the 12 months preceding was $880.00 per week. As of March 31, 2005, the SAWW was $838.42. This results in a 4.96% increase in SAWW from 2005 to 2006.
Labor Code Sec. 4453(a)(10) provides that for injuries occurring on or after 1-1-05, for purposes of computing temporary disability indemnity, earnings shall be taken at not less than $189.00, nor more than $1,260.00. (There was no change in this structure for injuries on or after 1-1-06) However, this subsection further provides:
"Commencing on January 1, 2007, and each January thereafter, the limits specified in this paragraph shall be increased by an amount equal to the percentage increase in the state average weekly wage as compared to the prior year."
The effect of this (4.96%) increase is that for injuries occurring on or after 1-1-07, for purposes of computing temporary disability indemnity, AWE shall be taken at not less than $198.37 (1.0496 x $189.00), nor more than $1,322.50 (1.0496 x $1,260.00). This results in a so-called "Minimum TD Rate" of $132.25 per week ($198.37 x 2/3), and a "Maximum TD Rate" of $881.67 per week ($1,322.50 x 2/3)).
The SAWW as of 3-31-07 was $914.60 reflecting a 3.93% increase over 3-31-06. This 3.93% increase becomes effective 1-1-08. As of then, for purposes of computing temporary disability indemnity rates, AWE shall be taken at not less than $206.18 (1.0393 x 198.37) and not more than $1,374.47 (1.0393 x 1,322.50). These changes result in so-called "Minimum TD Rate" of $137.45 / wk and a so-called "Maximum TD Rate" of $916.32.
Of course, these increases in the statutory AWE structure may affect temporary disability indemnity rates for "older" injuries also. See Labor Code Sec. 4661.5.
While the SAWW increased the statutory AWE structure in Labor Code Sec. 4453(a)(10), it actually increases the amount of the life pension or total permanent disability payment under Labor Code Sec. 4659(c).
This subsection provides:
"For injuries occurring on or after January 1, 2003, an employee who becomes entitled to receive a life pension or total permanent disability as set forth in subdivisions (a) and (b) shall have that payment increased annually commencing on January 1, 2004, and each January 1 thereafter, by an amount equal to the percentage increase in the "state average weekly wage" as compared to the prior year."
Past SAWW increases were 1.97% effective 1-1-05 and 4.01% effective 1-1-06. There was no SAWW increase effective 1-1-04.
As an example, assume an employee with real life earnings of $904.00 per week was injured 1-2-03. His statutory AWE for TD was $903.00/wk [Labor Code Sec. 4453(a)(8)], yielding a TD rate of $602.00/wk. If he was declared 100% PD as of 12-31-03, his permanent total disability indemnity rate would be $602.00 [L.C. 4453(a)(8)]. Note that if his injury had occurred prior to 1-1-03, this would have been his weekly rate for life. Crutcher v. WCAB 46 CCC 843. However, for this 1-2-03 injury, Labor Code Sec. 4659(c) applies.
As there was no SAWW increase effective 1-1-04, his weekly rate remained $602.00/wk throughout 2004. As of 1-1-05, the weekly rate would have had to increase to $613.86/wk (1.0197 x $602.00); as of 1-1-06, the weekly rate would have had to increase to $638.48 (1.0401 x $613.86); and as of 1-1-07, the weekly rate had to increase to $670.15/wk (1.0496 x 638.48). As of 1-1-08, the weekly rate will have to increase to $696.49 (1.0393 x 670.15).
For injuries after 1-1-03, where the permanent disability is less than 100%, but 70% or more, life pension payments would not yet have commenced.
If you have any questions, please email them to tbyrne@hannabrophy.com.
For the past several years, partner Tony Macauley has authored a workers' compensation article for the ABA Tort Trial & Insurance Practical Law Journal. This year's article, Recent Developments in Workers' Compensation and Employers' Liability Law, was co-authored by Hanna Brophy associates Darren Chan and Natasha Dighe. The piece provides an overview of recent case law across twenty different states.
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Ever since the en banc opinion in Aldi v. Carr, McClellan, et al, (2006) 71 CCC 783 (W/D 71 CCC 1822), it has been clear that the revised permanent disability rating schedule adopted January 1, 2005 applies to injuries sustained prior to January 1, 2005, UNLESS the injured worker can establish that one of the exceptions set forth in the third sentence of 4660(d) is applicable. This sentence reads: The revised schedule will apply to pre-January 1, 2005 injuries:
"when there HAS BEEN either no comprehensive medical-legal report or no report by a treating physicianindicating the existence of permanent disability, or when the employer IS not required to provide THE notice required by Section 4061 to the injured worker." (Emphasis added)
The principles of Aldi were reaffirmed in a published opinion from the Third Appellate District in Chang v. WCAB (7-24-07) 72 CCC 921.
This third sentence of 4660(d) has fostered much litigation over the last several years. Issues included the question whether a "comprehensive medical-legal report" could be any such report or only one which indicates the existence of permanent disability. Another major issue was: what does "is not required to provide the notice required by Section 4061" mean? But perhaps a bigger question was what does “indicating the existence” mean.
DEFINING THE EXCEPTIONS
On April 6, 2007, the WCAB issued two en banc (4-3) decisions addressing two questions. In the first of these,Baglione v. Hertz 72 CCC 444, the question analyzed was what kind of medical report had to be written before 1-1-05. Would “any” comprehensive medical legal report, e.g. L.C. 4060, suffice? The Board found that not just "any" comprehensive medical-legal report before 1-1-05 would suffice to trigger the 1997 Schedule. In the battle over "to comma or not to comma", it was determined that to invoke this exception, the medical-legal report must also "indicate the existence" of permanent disability.
Also on April 6, 2007, the Board issued its decision in Pendergrass v Duggan Plumbing 72 CCC 456. This case concerned the "notice required by Section 4061". Some had argued that the duty to provide a 4061 notice arose with the first payment of temporary disability indemnity. The argument continued that therefore if TDI was paid before 1-1-05, a 4061 notice was required before 1-1-05, and therefore the 2005 Schedule for Rating Permanent Disability should NOT apply. The majority disagreed. Where payment of temporary disability indemnity starts before 1-1-05 and continues until 1-1-05 or later, there is no requirement to provide a 4061 notice until the last payment of TDI is made, the majority stated:
"...[I]f the last payment of temporary disability indemnity was made for any period of temporary disability ending before January 1, 2005, then the 1997 Schedule applies to determine the extent of permanent disability, pursuant to section 4660(d), because section 4061 requires the employer to provide the injured worker with a notice regarding permanent disability "[t]ogether with the last payment of temporary disability indemnity ...," (Emphasis added)
The principles of Baglione and Pendergrass have been reaffirmed in two published cases. On May 23, 2007, the decision in Costco v. WCAB (Chavez) 72 CCC 582 issued from the First DCA. On July 24, 2007, the decision inEnergetic Painting v. WCAB (Ramirez) (7-24-07) 72 CCC 937 issued from the Third DCA. Also see W/D and non-published cases: Bryer (9-27-07); City of Galt (Ramos) (9-21-07); Lyngso Garden Materials v. WCAB (Ruiz) 72 CCC 1097; Zenith v. WCAB (Watts) 72 CCC 1135.
A couple of questions not addressed by any of these decisions are:
WHAT EXACTLY DOES “INDICATING THE EXISTENCE OF PERMANENT DISABILITY MEAN?
The first case decided by a DCA on this issue was Vera v.WCAB 72 CCC 1115. The court had concluded that a medical condition had to be permanent and stationary before there could be an "indication".
In an opinion from the 2nd DCA in Genlyte Group v. WCAB (Zavala), 73 CCC 6, certified for publication on January 3, 2008, that Court stated:
“[T]he Vera court’s conclusion miss[es] the mark. ... The language of the statute is not limited to what the Vera court properly describes as the typical final or permanent and stationary report....
[I]n an appropriate case a physician is not precluded from reporting that permanent disability exists prior to the time the injured worker (sic) has reached permanent and stationary status or the extent of ratable permanent disability is known....”
The Court went on to cite several circumstances where the existence of permanent disability may be indicated before the injured worker’s condition becomes permanent and stationary. These included cases of insidious and progressive occupational disease, or severe burns or loss of sight or limbs, or where the injured worker becomes entitled to vocational rehabilitation.
Several decisions since January 2008 have favored the Genlyte rationale over Vera while none have favored Veraover Genlyte. In fact, the Genlyte decision was considered a change in the law and "good cause" to reopen a ces previously decided based on Vera, Avila - Gonzalez 75 CCC 1069. See Tenet v. WCAB (Reddick) 73 CCC 329 (in 10-04, QME advised: P&S if no surgery; expected PD if surgery done); Virginia Surety v. WCAB (Wragg) 73 CCC 75 (In 12-04, PTP advised: Wragg "will be left with some measure of permanent residual disability and limited functional capacity resulting from said industrial injury.); Zenith v. WCAB (Cugini) 73 CCC 81 (On remand to WCAB, instruction to follow Genlyte rationale). There were also numerous Board Panel decisions following Genltye.
Prior to Genlyte, there were there were a variety of Board Panel decisions and Writ Denied cases with similar views as to the meaning of "indicating the existence of permanent disability". The following is a sampling of these and related earlier decisions. In a W/D of 6-14-07 in Xerox v. WCAB (Blair) (6-14-07) 72 CCC 1044, where there had also been a 4061 notice issued before 1-1-05, the WCJ found that a PR-2 reporting loss of cervical motion after surgery was "an indication" of the existence of permanent disability. Also, presumed medical-QIW status [L.C. 4636(c)] was another "indication". As for QIW status, see also Panel Decisions in Compton (8-14-06); Mancinas (3-8-06); andCamacho (11-20-05). In Zurich v. WCAB. (Nunes) (W/D 3-1-07) 72 CCC 368, the WCJ had used the 2005 Rating Schedule. On reconsideration, the WCAB determined that a medical report of 9-27-04 showing that the IW had a herniated disc, footdrop, used a cane, and needed surgery constituted an "indication" of the existence of PD, and therefore the 1997 schedule should apply.
What about a surgery already done prior to 1-1-05? In Owens (2007)(W/D) 72 CCC 148 and in Helm (2007)(W/D) 72 CCC 962, carpal tunnel surgery done in 2003 did not "indicate" PD, but in Conroy (BPD 10-13-06), the Board held that virtual ACL reconstruction surgery itself (done 10-21-04) was an indication of the existence of PD, in part, because there was some indication in the AMA Guides that such a procedure would probably result in ratable permanent disability. And in Santa Rosa School District v. WCAB (Hagle) (W/D 8-29-07) a total hip replacement done in 5-04 (which would yield a WPI of 15-30 under the AMA Guides) was determined a sufficient "indication" of the existence of permanent disability to apply the 1997 schedule even though the condition had not become P&S before 1-1-05. Also, in City of Vacaville v. WCAB (Lee) (W/D) 71 CCC 1853, when the PTP reported on 12-30-04 that indeed the IW would have permanent disability, but his condition would not become P&S for 2-4 months, the Board found this report to be an "indication", and the 1997 schedule applicable. On the other hand, in SCIF v. WCAB (Echeverria) 72 CCC 33, the Court of Appeal found the WCAB decision to apply the 1997 schedule not supported by substantial evidence where the PTP signed a statement prepared by the IW's attorney on 12-15-04, to wit: "I believe permanent disability is within reasonable medical probability emanating from this injury." Similary, in HSR, Inc. v. WCAB (Mariscal) (non-published 9-24-07), the Sixth DCA found a "check the box" report before 1-1-05 inadequate to establish an "indication".
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The California Third District Court of Appeal, following oral argument, granted Defendant County of Sacramento’s Petition for Writ of Review on a Labor Code section 3208.3 good faith personnel action defense argued by Elizabeth Trimm of the Sacramento office on April 22, 2013.
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Hanna Brophy Attorney Christian Kerry wins Appellate Court Decision - Labor Code §4850 benefits are subject to the 104-week cap set forth in Labor Code §4656(c)(2) County of Alameda (Knittel) v. WCAB - Read more about this significant victory for California public entities here.
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Senate Bill 863 was signed into law by Governor Brown on Sept. 18, 2012,. Many of its provisions take place January 1, 2013. The bill makes wide-ranging changes to California's workers' compensation system, including increased benefits to injured workers and cost-saving efficiencies. Click on our Power Point Presentation in the Updates Section of our website for a complete discussion of the changes. Hanna Brophy Clients: please contact your local Hanna Brophy office or email this website for the next Hanna Brophy in-person presentation of SB 863 changes and strategies http://www.hannabrophy.com