Jacobsmeyer: Appeals Court Provides Bright-Line Limitation to Hikida Application

Tuesday, June 2, 2020 | 0

Since the early days after passage of Senate Bill 899 in 2004, the California Legislature’s intent in overhauling the statutes governing apportionment of permanent disability and the issue of direct causation and apportionment have been the subject of multiple decisions of the WCAB and the appellate courts.

Richard Jacobsmeyer

One of the early litigated issues involved the question of whether apportionment of pathology was applicable in cases where injured workers received total joint replacement. It is rather rare (not unheard of, but uncommon) for the effects of an industrial injury by itself to result in a total joint replacement. 

Typically, total joint replacements are a result of an industrial injury superimposed on significant pre-existing degenerative changes that will accelerate the need for definitive medical treatment. Early cases over this issue were often references as Steinkamp decisions based on the initial case, where the Workers' Compensation Appeals Board held there was no basis for apportionment to pre-existing degenerative changes when there was a total joint replacement.

The theory being, once the joint was replaced, the degenerative changes no longer existed and the results of the surgery were “directly” a result of the industrial injury.  Subsequently, the board issued multiple decisions on this issue going both ways on apportionment. However, over time, the trend went away from the Steinkamp analysis rejecting apportionment, with multiple decisions of the WCAB providing that there could be a basis for apportionment to underlying degenerative joint change even where there had been a joint replacement surgery.

The issue of apportionment to pre-existing pathology in cases involving joint replacement appeared to have been fairly well settled for the past decade until the decision in Hikida v. WCAB. In Hikida, the Court of Appeals reversed WCAB trial and reconsideration holdings finding apportionment to pathology where the applicant developed complex regional pain disorder subsequent to industrially provided carpal tunnel surgery. 

The court in Hikida held that where medical treatment causes disability solely related to medical treatment for the industrial injury, apportionment is not appropriate under either Labor Code 4664 or 4663. The question of whether the rationale of Hikida could be applied to total joint replacement surgeries has been a question mark since that case issued.

Apportionment to pre-existing pathology in joint replacement surgeries is now the subject of a decision of the 6th Appellate District in County of Santa Clara v. WCAB (Justice), which was issued on May 27, 2020. In Justice, the Court of Appeal reversed a WCAB decision finding no apportionment to significant pre-existing pathology where the applicant underwent a total knee replacement surgery. 

In doing so, the Court of Appeals has drawn a bright-line distinction limiting the holding in Hikida, which should provide guidance on a multitude of circumstances and not just total joint replacement cases.

In Justice, the applicant had a 15-year history of employment with the County of Santa Clara as a claims adjuster. On Nov. 22, 2011, she fell at work, suffering an injury to her left knee with later development of symptoms in the right knee attributed as a compensable consequence of the original injury. She underwent total knee replacement in both knees.

The parties arranged for her to be examined by Dr. Mark Anderson in the capacity of agreed medical examiner. Anderson prepared an initial report, five supplemental reports and was deposed twice. He reported and testified that the applicant’s knees showed marked osteoarthritis on a bilateral basis. A scan taken in mid-January of 2012 showed that she had medial and lateral meniscal tears, which were attributed to the fall at work, but also significant multicompartmental degeneration, which Anderson concluded predated the fall at work. 

Based on the medical evidence demonstrating significant pre-existing pathology, Anderson apportioned 50% of her complaints to the specific injury in November 2011 and 50% to the long-standing, pre-existing degenerative changes in her bilateral knees. Anderson further agreed that the total knee replacement was not required because of the meniscal tear but was rather a result of the underlying arthritis, which was lit up by the work injury. 

He did offer that the fall at work hastened the need for total knee replacement surgery by lighting up the underlying pathology. He further agreed that, absent the underlying arthritis, it is likely she would not have required TKR in either knee.

The workers' compensation judge issued an opinion based on the rationale in Hikida, without apportionment to applicant’s pre-existing pathology. The judge noted that the applicant’s disability under the AMA Guides was rated using the total knee replacement metrics in the Guides' 5th Edition. He reasoned the TKR was medical treatment provided to cure and relieve the effects of the industrial injury. 

The judge appeared to reluctantly agree that the decision Hikida precluded the ability to apportion even though he also indicated that the reports of Anderson provided substantial medical evidence for apportionment. The judge concluded he was not able to apportion in light of the holding in Hikida, since the total knee joint replacement was a result of the applicant’s surgery to cure and relieve in the effects of the industrial injury. The WCAB, while making minor modifications to the findings and award, upheld the decision on apportionment.

The 6th District Court of Appeals, however, disagreed with the analysis of Hikida, finding the interpretation was overly broad. The court, while not disputing the holding in Hikida, found the application of that case in error and found that the cases of City of Petaluma v. WCAB and Acme Steel v. WCAB to be much more applicable than the holding in Hikida.

The appellate court drew the distinction between Hikida and the other authorities by noting the injured worker in Hikida suffered from carpal tunnel syndrome and, as a result of medical treatment, developed the new “more disabling condition” of CRPS.  

The Hikida court reasoned that the employer was responsible for the new consequential condition that was directly related to medical treatment. Without disputing the holding in Hikida, the court noted, as similarly found in both Acme Steel and City of Petaluma, that the applicant’s disability was the result of a combination of factors and not solely the result of surgery with a new and different medical condition.

The court comments as follows:

Both of these principles are correct statements of law. However, it does not follow that an employer is responsible for the consequences of medical treatment without apportionment, when that consequence is permanent disability. Sections 4663 of 4664 make it clear that permanent disability “shall” be apportioned and that an employer “shall” be liable only for the percentage of permanent disability “directly” caused by the industrial injury.  There is no case or statute that stands for the principle that permanent disability that follows medical treatment is not subject to the requirement for determining causation and thus apportionment, and in fact, such a principle is flatly contradicted by §4663 and §4664.

The court further notes:

… Although parts of the Hikida opinion can be read to announce a broader rule that there should be no apportionment when medical treatment increases or proceeds permanent disability, it is clear that the rule is actually much narrower. Put differently, Hikida precludes apportionment only where the industrial medical treatment is the sole cause of the permanent disability.

The court then proceeded to note, as in City of Petaluma and Acme Steel, that there were significant pre-existing factors that contributed to the applicant’s need for the specific surgery. The results of the surgery were not a new and different injury, but the combination of the direct cause for the industrial injury and the indirect cause by the pre-existing pathology.

Justice also argued that since there had never been a prior discussion of the need for TKR surgery, and the procedure was directly caused by the work injury, there should be no basis for apportionment. However, the court found applicant’s arguments to be “misplaced” and, as noted in multiple appellate opinions, the question of whether the pre-existing condition was asymptomatic, or could have even been argued to have become symptomatic in the absence of the industrial injury, is immaterial.

While it is true that the employer is responsible for the portion of the permanent disability directly caused by the industrial injury, the court notes it is implied in that inquiry includes whether there are nonindustrial factors that are indirectly causing the permanent disability. In the instant case, the report of the agreed medical examiner was substantial evidence that significant, pre-existing nonindustrial knee degeneration contributed to the applicant’s disability, and the opinion regarding apportionment was found by the trial judge to be substantial evidence. 

The court provided the following for the comment regarding apportionment and direct causation:

… whether or not the workplace injury “directly caused” the need for surgery, the apportionment statutes nevertheless demand that the disability be sorted among direct and indirect causal factors. In this case, there was unrebutted substantial medical evidence that Justice's permanent disability was caused, in part, by the extensive pre-existing knee pathology. Apportionment was therefore required.

The matter was remanded to the WCAB with directions to issue an award apportioning permanent disability at 50% to nonindustrial causes and 50% to industrial causes.

Comments and conclusions

This case, hopefully, puts the brakes on much of the effort to expand the holding in Hikida beyond the actual facts of that particular case. Hikida is, in many respects, a unique case, with the applicant developing a specific medical condition unrelated to pre-existing pathology and directly resulting from surgery. 

In the vast majority of cases that deal with apportionment, there is pre-existing pathology that also contributes to either the need for surgery or to the resulting disability. The holding in this case provides a bright-line distinction between cases where medical treatment directly causes additional disability unaffected by pre-existing factors and those cases where there is a more traditional apportionment, even if it is the pre-existing asymptomatic pathology for which medical treatment is required.

In my opinion, the holding in Justice goes well beyond cases involving pre-existing degenerative joint disease and joint replacement surgeries. The analysis in this case should also apply in many cases where the applicant has a pre-existing condition that combined with the effects of the industrial injury and results in a significantly more serious condition. This would include pre-existing diabetic conditions that lead to or contribute to the need for amputations or other significant residuals from injuries that would otherwise be relatively minor.

Similarly, conditions such as phlebitis, which may be a combination of applicant’s surgery and a pre-existing pathology, would appear to be apportionable. We have a host of conditions for which medications for the work injury can aggravate a pre-existing condition (heart disease, GERD, etc). The key is whether there is a pre-existing condition or other pathology that is contributing to the applicant’s disability. In those circumstances, based on Justice, apportionment would appear to be mandated.

There is some very good language in this case also regarding the “requirement” to apportion where there are multiple causes. The court notes that the employer shall be required to pay for permanent disability only related to the effects of the industrial injury and not to disability attributed to other factors. This case, therefore, stands in line with the holdings not only in the City of Petaluma and Acme Steel, but also the prior cases — i.e., Yeager, Brodie and Escobedo — all of which are cited as indicating apportionment is required where there are multiple causes to the applicant’s permanent disability. 

It is clear that this case is a much closer interpretation of the Legislature’s intent in enacting Labor Codes 4663 and 4664 than the holding in Hikida and, hopefully, will significantly limit the application of that decision in future claims.

Richard M. "Jake" Jacobsmeyer is a founding partner of the Shaw, Jacobsmeyer, Crain and Claffey workers' compensation defense law firm, based in Oakland, California.