Echeverria and the Exceptions Under Labor Code Section 4660(d)

Saturday, February 24, 2007 | 0

By Linda F. Atcherley

INTRODUCTION

I was kindly asked to write an article on Echeverria, the correct citation of which is State Compensation Insurance Fund v. WCAB (Echeverria), SRO 131702 and the First Appellate District Case number is A114505, a currently unpublished decision out of the First Appellate District, Division One. The California Chamber of Commerce, however, is requesting that the case be published as they feel that it gives important guidance to the parties involved in the workers' compensation industry. I gave this matter some thought since Echeverria is a very "narrow" case. That is, it is based on the facts in that case, including the medical reports discussed, and it only deals with ONE of the exceptions in the Labor Code, albeit, an important one. Since I really hate writing, I decided that it would make more sense to discuss this case and some of the others in the broader context of the workers' compensation system, in general, including how judges look at cases to make their decisions, and Labor Code Section 4660 in particular. For the fortunate amongst you who do not know whereof I speak, Labor Code Section 4660 is the portion of the Labor Code that deals with how permanent disability is assessed for purposes of paying money to injured workers in California. That is, it quantifies the percentage of disability that would apply so that the statutory compensation can then be calculated. This entire arcane scheme is discussed later in the article. This article will not deal with a discussion on the merits of the system or the AMA Guides. Rather, this article focuses on the problems dealt with in Echeverria and other cases determining which schedule for determining permanent disability applies. This issue, is, in the long run, a very short lived problem, but for the workers that LC Section 4660(d) affects, the issues are critical and may the mean the difference between keeping a roof over their heads, or not. In writing this article, I am writing very generally except for areas where specific citations are being used. I intend this as an informational article, which will, hopefully, a lead the reader to a better understanding of the Workers' Compensation system, the nature of the problems, we currently face in interpreting Labor Code Section 4660(d), and the reasoning behind the Court's decisions in these cases. Unfortunately, this article is a mere snapshot of the state of the law at the time of this writing. Cases are being decided all the time and what is authority now may not be five minutes from now, but hopefully, this provides at least a foundation for understanding and investigating the issues. This is not intended as an article pertaining to any particular view, except that I am an applicant's attorney and to a large extent my views are colored by my own personal experiences handling cases at all levels through the courts. For anyone I offend, I apologize in advance and for the legal guru's amongst you, I apologize for any inaccuracies or things unsaid that should have been said.

THE WORKERS' COMPENSATION IN GENERAL

The Worker's Compensation system is created in the California State Constitution. Currently the authority is recited in Art. XIV, Section 4, adopted June 8, 1976. Prior to that there was Const. Art. X Section 7, adopted November 2, 1954 and prior to that Const. Art. XX Section 21, adopted October 10, 1911. Pursuant to the terms in the California State Constitution, the Legislature was expressly "vested with plenary power" "to create and enforce a complete system of worker's compensation by appropriate legislation and in that behalf to create and enforce a liability on the part of any or all persons to compensate any or all of their workers for injury or disability, their dependents for death incurred or sustained by the said workers, irrespective of the fault of any party." "A complete system of workers' compensation includes adequate provisions for the comfort, health and safety and general welfare of any and all workers and those dependent upon them for support to the extent of relieving them from the consequences of any injury or death incurred or sustained by workers in the course of their employment irrespective of fault of any party ; also full provision for such medical, surgical, hospital and other remedial treatment as is requisite to cure and relieve from the effects of such injury; ....full provision for adequate insurance coverage against liability to pay or furnish compensation; ....full provision for otherwise securing the payment of compensation; and full provision for vesting power, authority and jurisdiction in an administrative body with all the requisite governmental functions to determine any dispute or matter arising under such legislation, to the end that the administration of such legislation shall accomplish substantial justice in all cases expeditiously, inexpensively, and without incumbrance of any character; all of which matters are expressly declared to be the social public policy of this State, binding upon all departments of the State Government."

The Legislature was also granted plenary power to "provide for the settlement of any disputes arising under such legislation by..the courts.. And may fix and control the method and manner of trial of any such dispute, the rules of evidence and the manner of review of decisions rendered by the tribunal or tribunals designated by it; provided, that all decisions of any such tribunal shall be subject to review by the appellate courts of this State...."

To anyone familiar with the Labor Code, you immediately see the language of Labor Code Section 4600, the authorization for the death benefits and permanent disability and temporary disability benefits, as well as why there is a requirement that all business with one or more employees carry workers' compensation insurance. The Constitution also specifically authorizes the creation of the State Compensation Insurance Fund, as well as providing that the State may allow self-insurance. You can also see how the courts were created and that the manner of presenting evidence and appealing the decisions of the courts was laid out, including that the Workers' Compensation Appeals Board decisions are reviewable by the courts of appeal of the State of California, including the State Supreme Court.

The Workers' Compensation system is a "no fault" system set up to provide "expeditious" provision of benefits, including compensation and medical treatment. This was to substitute for the old civil "tort" or negligence system. In return for workers' compensation being the exclusive remedy for injuries on the job, and "expeditious" provisions of benefit without regard to fault, the employees were no longer compensated for pain and suffering and loss of earning capacity, and employers were shielded from liability from these two items.

The general scope of the authority of the Workers' Compensation Appeals Board to take evidence and make decisions is contained in Chapter 5, starting at Labor Code Section 5700. Workers' Compensation Appeals Board at the trial level, are "finders of fact." This means that in any factual dispute which would provide the basis for payment of compensation or other provision of benefits, the appeals board takes evidence and makes a finding of fact then applies the law to come out with the final decision. For example, in a case where nature and extent of permanent disability is the issue, the appeals board takes the testimony of the applicant, and takes in the reports of the doctors. The judge then determines which report most comports with the level of disability and then issues a decision with the percentage of disability.

In order to come to a decision the appeals board has the authority to take testimony, inspect premises, timebooks and payroll of the employer, and direct the employee to be examined by a regular physician. Labor Code Section 5701. Under Labor Code Section 5703, the appeals may received at as evidence and use as proof of fact the following:

-Reports of attending or examining physicians

-Statement concerning any bill, if sworn that they are true and correct -Reports by physicians have to have a certification under LC Section 139.3 -Reports of special investigators appointed by the appeals board -Reports of employers containing copies of timesheets, book accounts, etc. -Hospital records -All Publications of the Division of Workers' Compensation -All official publications of the State of California and U.S. Governments

-Excerpts from expert testimony received by the Appeals Board upon similar issues of scientific fact in other cases and prior decisions of the Appeals Board upon similar issues

-Relevant portions of medical treatment protocols

-The medical treatment utilization schedule

Under Labor Code Section 5708, the appeals Board has the authority to conduct hearings by its own rules, specifically the provisions of the labor code and by the rules of practice and procedure adopted by the appeals board. In the conduct of the hearing they are "not bound by the common law or statutory rules of evidence or procedure, but may make inquiry in the manner, through oral testimony and records, which is best calculated to ascertain the substantial rights of the parties and carry out justly the spirit and provisions" of the Labor Code. All testimony, objections, and rulings shall be taken down in shorthand by a competent phonographic reporter."

Under Labor Code Section 5709, no "informality" in any proceeding or the manner of taking testimony shall invalidate the proceedings nor shall the order, decision award or rule be invalidated because of the admission into the record evidence which would not be admissible under the common law or statutory rules of evidence and procedure. They call this a "relaxed" standard.

In conjunction with the "relaxed" standard we also have Labor Code Section 3202 which provides that Divisions 4 and 5 of the labor code shall be "liberally construed" by the courts with the purpose of extending their benefits for the protection of persons injured in the course of their employment. Therefore, underlying all cases, there is a constitutional and judicial mandate to do whatever is necessary to ascertain the rights of the parties and to "carry out justly the spirit and provisions" of the Labor Code. This many times means interpreting the statutes liberally to provide benefits to the injured employees.

The decisions of the trial courts may be "reconsidered" by THE Appeals Board (Labor Code Section 5910); which then issues a decision to grant reconsideration or deny reconsideration. The decisions of the Appeals Board are then reviewable by the appellate courts for the district in which the case originally arose, and potentially by the State Supreme Court, (Labor Code Section 5950).

The findings of the appeals board on questions of fact are conclusive and final and are not subject to review. Such questions of fact include "ultimate facts" and the findings and conclusions of the appeals court. Questions of law (statutory interpretation, construction, application of law) are able to be reviewed as are questions of the constitutionality of statutes. See Labor Code Section 5953.

"En Banc" decisions of the Workers' Compensation Appeals Board are binding precedent on all Appeals Board panels and Workers' Compensation Administrative Law Judges. Cal. Code Regs. Title 8, Section 1034; City of Long Beach v. WCAB (Garcia) (2005) 126 Cal. App.4th, 298, 313, fn. 5. See also Govt. Code Section 11425.60(b). That means that if the WCAB issues an en banc decision then that decision has to be followed by all the judges at the WCAB and the WCAB panels (less than en banc), unless that decision is overturned by the Court of Appeal or the Supreme Court.

Similarly, the decisions of the Courts of Appeal and the Supreme Court are binding precedent on the trial courts and the WCAB, acting en banc or in panel decisions. It is within this framework that the decisions in Echeverria and other cases interpreting Labor Code Section 4660 are being issued.

Explanation of Labor Code Section 4660

Prior to April 19, 2004, any permanent disability or disfigurement sustained by a worker as a result of his work was calculated based on a Permanent Disability Rating Schedule (PDRS) promulgated by the Administrative Director and updated periodically after public hearings were held. The Rating Schedule divided up the human body into separate body parts, and then arranged for each particular body parts "scheduled" disability or percentages for certain disabilities enumerated with particularity in the schedule. The doctors evaluating workers relied on the descriptions in the permanent disability rating schedule to describe the "nature of the disability or disfigurement" and used the published, scheduled disabilities to describe the disability they felt best described the one sustained by the worker. The categories of the disabilities were based on a study done on the effect of various disabilities on the ability of the worker to compete on an open labor market. Thus, the disabilities described in the manual and the corresponding percentages were actual calculations of disability from work. No further adjustment was required, except for age and occupation, as further required by LC Section 4660. For disabilities that did not exist in the Rating Schedule (PDRS), they were required to be rated by "analogy."

On April 19, 2004, Labor Code Section 4660 was changed pursuant to a Senate Bill infamously known as SB899. The purpose of the changes in Labor Code Section 4660 was to change the method of evaluating the "nature of the disability or disfigurement" so that now, there was to be a two step process. The first step in that process would be to require that the doctors determine the "nature of the disability and disfigurement" using the impairments or anatomical measurements such as range of motion of the joints, as described by the American Medical Association Guide to Determining Impairment, 5th Edition and then a translation to "disability" would be done using the information about "loss of earning capacity" as determined by the data developed by the Rand Corporation in a study to see how well the schedule that was in effect prior to 1/1/2005 correlated to the actual wage loss sustained by workers who had "permanent" disabilities or impairments. That study had shown two things: 1) that there was uncompensated wage loss for permanent disabilities at all levels; and 2) that there was disparity at all percentage levels regarding the uncompensated wage loss sustained by the injured workers as between different body part, i.e., that the uncompensated (difference between permanent disability paid and wage loss sustained) wage loss was higher for a shoulder than a knee.

Labor Code 4660(a), post 4/19/2004 (SB899) still requires that in "determining the percentages of permanent disability, account shall be taken of the nature of the disability or disfigurement, occupation of the injured employee, and his or her age at the time of the injury, consideration being given to an employee's diminished future earning capacity. However, the Courts and doctors are now required in subsection (b)(1) of Labor Code 4660, to describe the "nature of the physical injury or disfigurement" incorporating the "descriptions and measurements of physical impairments and the corresponding percentages of impairments published in the American Medical Association (AMA) Guidelines to the Evaluation of Permanent Impairment (5th Edition)."

Rather than loss of preinjury capacity to do work or loss of ability to compete on an open labor market, we now have loss of future earning capacity which is defined is Labor Code Section 4660 (b)(2) as "a numeric formula based on empirical data and findings that aggregate the average percentage of long-term loss of income from each type of injury for similarly situated employees. The administrative director shall formulate the adjusted rating schedule based on empirical data and findings from the Evaluation of California's Permanent Disability Rating Schedule, Interim Report (December 2003) prepared by the Rand Institute for Civil Justice, and upon data from other empirical studies." This has directive was translated by then Acting Administrative Director Andrea Hoch into an "FEC" factor to be used to as the first step in adjusting the "whole person impairment" found following the directives of Labor Code Section 4660(a) and 4660(b)(1).

The Administrative Director is then given the requirement to amend the schedule for the determination of the percentage of permanent disability at least once every five years. The schedule is "prima facie evidence" of permanent disability. See Labor Code Section 4660 9 (c).

This leads us to Labor Code 4660(d) from which the current controversies such as the one in Echevarria, Pendergrass, Aldi, Costa, Torres and other spin. Labor Code Section 4660(d) states, in one part that the "schedule and any amendment thereto or revision thereof shall apply prospectively and shall apply to and govern only those permanent disabilities that result from compensable consequences or occurring on and after the effective date of the adoption of the schedule, amendment or revision, as the fact may be. For compensable claims arising before January 1, 2005, the schedule as revised pursuant to changes made in legislation enacted during the 2003-2004 Regular and Extraordinary Sessions shall apply to the determinations of permanent disabilities when there has been either no comprehensive medical-legal report or no report by a treating physician indicating the existence of permanent disability, or when the employer is not required to provide the notice required by Section 4061 to the injured worker." The emphasis is the writer's. Pursuant to 4660 (e), the Administrative Director of the Division of Workers' Compensation was to adopt regulations to implement the changes made to this section by the act that added this subdivision. In other words, the Administrative Director was to put out a new Permanent Disability Rating Schedule that translated the "impairment" determinations into disability ratings. The translation also needed to take into account the earnings/wage information of the Rand Corporation. Thereafter the current Permanent Disability Rating Schedule was born.

Basically Labor Code Section 4660(d) tells the courts and practitioners which schedule applies to which dates of injury. Historically, changes in the permanent disability rating schedule were prospective only. Compare the current 4660 to the former 4660. That is, that the changes only applied to injuries on or after the effective date of the schedule. This is actually stated in the first part of Labor Code Section 4660(d). However, in a model of clarity, the drafters then decided to also have the revised schedule apply to dates of injury before the date of the revised schedule unless one of the three exceptions enumerated in the third sentence of Labor Code Section 4660(d) which provides a legal conflict between the first and second sentences of the Labor Code Section. Immediately controversies erupted over what exactly the exceptions were.

First, the courts considered the effect of the conflict between the second and third sentences of Labor Code Section 4660(d), i.e., applying "prospectively" only (second sentence) and then applying the schedule unless one of the enumerated exceptions was made (third sentence). This was decided first by the Honorable David Hettick, Workers' Compensation Judge for the San Francisco WCAB office in a case by the name of Aldi v. Carr, McClellan, Ingersoll, Thomson & Horn SFO 0485703. Judge Hettick made a determination that the way to interpret the statute was to have it apply prospectively only, that is, the schedule for 1/1/2005 applied to dates of injury 1/1/2005 and forward only and did not apply to injuries before that date. This was overturned by the Appeals Board, acting en banc, (acting together) which decided that this was incorrect and decided that "The prior rating schedule may only be used to rate permanent disability arising from compensable injuries that occurred prior to 1/1/2005 where one of the exceptions described in the third sentence of 4660(d) has been established. If none of the specified exceptions were established (proven) then the 1/1/2005 PDRS applied to dates of injury prior to 1/1/2005. The Aldi case was decided on June 21, 2006 and can be found at 71 Cal. Comp. Cases 783.

Having established then that the 1/1/2005 rating schedule applied to dates of injury prior to 1/1/2005 unless one of the exceptions applied, the question then became "What are the exceptions?" These exceptions are:

"[W]here there has been either no comprehensive medical-legal report or no report by a treating physician indicating the existence of permanent disability"; and

"[W]hen the employer is not required to provide the notice required by Section 4061 to the injured worker."

Since nothing is ever simple, of course questions arose as to the meanings of the first and second sentences and whether there were two exceptions within the first exception or only one. That is, when looking at the sentence "either no comprehensive medical-legal report or no report by a treating physician indicating the existence of permanent disability" did that mean both the comprehensive medical report and the report of the treating physician had to "indicate the existence of permanent disability" or were there really two exceptions, 1) a comprehensive medical-legal report (for the moment one that was performed under Labor Code Section 4060; 4061 or 4062) which means that the report did not have to deal with permanent disability at all and 2) a report by a treating physician "indicating" the existence of PD.

The first issue, i.e., whether there are two exceptions or one in the first sentence above was first decided by a panel decision of the Appeals Board in Chilton v. Amulet Manufacturing Company (EUR 0037686) decided March 6, 2006. The Appeals Board decided there that the exception(s) enumerated first could be satisfied by either the existence of a comprehensive medical-legal report or a report by the treating physician indicating the existence of permanent disability. In coming to that conclusion the Appeals Board relied on a rule of statutory construction that was enunciated by the Court of Appeal in a case called Garcetti v. Superior Court of Los Angeles, (Blake), (2000) which can be found at 85 Cal. App. 4th, 1113. The court there discussed that "punctuation of a statute can be helpful in ascertaining its proper interpretation" and that a long standing rule of statutory construction (how you interpret a statute's language) was the "last antecedent rule." As explained by that Court, "qualifying words, phrases and clauses are to be applied to words or phrases immediately preceding and are not to be construed as extending to or including others more remote. That court was relying on a prior Supreme Court opinion in the case of White v. County of Sacramento (1982) found at 31 Cal. 3d 676, 680. When applying that rule, then, the court noted that the qualifying phrase "indicating the existence of permanent disability" is not separated from the antecedents "no comprehensive medical-legal report or no report by a treating physician" by a comma. Confusing? Yes, but a good illustration as to why the rules of grammar are important to learn.

The Appeals Board issued an en banc decision resolving the issue of whether the comprehensive medical-legal evaluation had to discuss permanent disability in the case of Joseph Baglione v. Hertz Car Sales (January 24, 2007) SJO 0251644, answering the question in the negative and agreeing with the panel decision in Chilton v. Amulet Manufacturing Company, above. This was a four to three decision. The dissent in Baglione felt that both the medical-legal report and the treating physician report needed to indicate the existence of permanent disability prior to 1/1/2005. However, at this time, the en banc decision is binding on the local Workers' Compensation Appeals Board offices so either a "comprehensive medical-legal report" prior to 1/1/2005 covering any issue or a treating physician report indicating the existence of PD prior to 1/1/2005 will put the case under the pre-1/1/2005 rating schedule. The words "comprehensive medical-legal evaluation" were discussed on a case where the Appeals Board denied Reconsideration of a Workers' Compensation Judge's decision. The case was Ruben Alcala v. Metroplex Corporation (September 2006) OAK 0287295. The trial judge there discussed that while the Labor Code and Board Rules do not define a "comprehensive medical-legal evaluation," Board rule 9793(c) does define a comprehensive medical-legal report as one attested to by Labor Code Section 4628 and is obtained by a party (or the Board or the Administrative Director) "for the purpose of proving or disproving a contested claim."

Moving, on, the next question becomes "What constitutes a report by the treating physician of the existence of permanent disability sufficient in which to allow the case to be decided or rated under the pre 1/1/2005 Permanent Disability Rating Schedule." This has been discussed in more than one court decision, including the Echeverria case which is the title of this article. The proper name of the Echeverria case is State Compensation Insurance Fund v. Workers' Compensation Appeals Board and Jose C. Echeverria (January 5, 2007). This was a case decided by the First District which was not to be published in the Official reports. This means that currently it cannot be cited or relied on by other courts, unless it become published.

The California Chamber of Commerce has written a letter to the Court of Appeal, Fifth District requesting that the case be published as, in their words, this is "the first narrative appellate opinion to address the pressing issue of how to determine whether the evidence supports use of the permanent disability schedule adopted as part of SB 899's changes to Labor Code Section 4660(d), or the prior permanent disability schedule." It is the Chamber's position that the "Court's opinion reaffirms the requirement that the evidentiary record must contain substantial evidence' demonstrating the existence of a permanent disability prior to January , 2005 (the date of adoption of the new PD schedule) in order to find that the statutory exception to the requirement of applying the new schedule to all pending matters exists in a case." The Chamber's letter continues stating that "this decision gives important guidance regarding th role of substantial evidence' in light of the lack of any medical reasoning, and cautions against the practice of isolating fragmentary portions of the record and disregarding other portions, which contradict or nullify it." The Chamber feels that analysis in Echeverria will prevent inappropriate rejection of the new permanent disability schedule and that publication of the decision would substantially assist the entire employer community.

I think that the importance of Echeverria has been a bit overstated, however, the court does provide an analysis of the rules governing medical evidence in general and how the specific medical evidence in Echeverria does not comply. The facts in Echeverria are very narrow, however, and since the Echeverria case is based very much on its facts, litigants on both sides will have to distinguish or liken their case from the facts in Echeverria or the facts in the other cases, discussed below, that so far, have made determinations in favor of the injured worker.

In order to better determine the importance of this case and relevance to other cases we first need to understand the facts of Echeverria which are as follows: Mr. Echeverria was injured on July 21, 2004. He hurt his right ankle and low back working as a Logger. His injuries became "permanent and stationary" on June 16, 2005. On November 15, 2004, Mr. Echeverria's attorney faxed a letter to Mr. Echeverria's treating physician Dr. Morales stated that "Changes have occurred in the California Workers' Compensation system. Elements of those changes may affect your patient's rights to permanent disability benefits. Please advise by merely signing and dating this letter if you believe permanent disability, as that term is now defined, is a reasonable medical probability as a result of your patient's industrial injury. ...'I believe permanent disability is within reasonable medical probability emanating from this injury' below this last sentence, spaces for date and signature appeared and contained the date of "12-15-2004" written in and what appeared to be the signature of Dr. Morales. The trial court and the Appeals Board felt that the last sentence of the letter read in conjunction with the doctor's other reports constituted a "report by a treating physician indicating the existence of permanent disability within the meaning of Labor Code Section 4660(d). The Workers' Compensation Judge (WCJ) also found that the statute did not require a medical determination of the amount of permanent disability, only an "indication of the existence of permanent disability."

The court disregarded State Fund's arguments that the "letter" was not a "report" under Code of Regulation Section 9785 (LC Section 4603.2(a)), and did not discuss the other argument that an "indication of permanent disability" is contradicted by a simultaneous finding that the worker is then currently temporarily totally disabled as not permanent and stationary when the report issued. The Appellate Court instead turned to the issue of whether or not the Boards' decisions were supported "substantial evidence" in light of the entire record.

The importance of "substantial evidence" is make sure that the applicant's burden of proof, by a preponderance of the evidence is met when obtaining benefits. Even if the law and facts are "liberally construed" under Labor Code Section 3202, the applicant still bears the burden of proof on the issues. The requirement for "substantial evidence" is not a new requirement. It is a requirement that has run through every case dealing with medical reports. In fact, it was the applicant's attorneys' allegation in the Escobedo case dealing with apportionment, that the doctor's apportionment should be disregarded as it was not "substantial evidence." In this case the issue was whether or not the letter from the applicant attorney, signed by Dr. Morales with the bald statement "I believe permanent disability is within reasonable medical probability emanating from this injury" was evidence upon which a court could base a determination that there was a "report" with an "indication of permanent disability" sufficient to satisfy the requirements of Labor Code Section 4660(d), even if taken into consideration with other reports. The court cited Granado v. Workmen's Comp. App. Bd. (1968) 69 Cal.2d 399, 407, a Supreme court case, for the proposition that be "substantial evidence" the medical report must indicate the reasoning behind the doctor's opinion. The appellate court felt that the letter did not indicate the reasoning behind the opinion and that the other reports did not explain how the findings on other examinations related back to the statement on that letter. Therefore, the court felt that this bald conclusory statement with no reasons to support the conclusion did not meet the standard for substantial evidence.

In contrast to Echeverria case, consider the following:

A case now pending before the Fifth District, Trader Joe's Co. V. WCAB and Rick Evet Fifth District No. A115638; WCAB Case No.: SRO 132436. In the Trader Joe's case the applicant underwent surgery in January 2004 and the surgeon noted that was a fracture of a portion of the interphalangeal joint of the small finger that would result in fusion of that joint. The injured worker had another surgery in June 2004, was re-evaluated in July 2004 and the doctor stated the fusion of the small finger was necessary. In October 2004, the injured worker had a fusion surgery of the joint in his small finger. The fusion meant that he lost all range of motion of the small finger through the fused joint. This is a rateable "impairment" under the AMA Guides. The Board held that this was sufficient to use the pre-1/1/2005 guidelines to rate the case. The employer appealed and the case is now pending.

Samuel Johnson WCAB a panel decision by the Appeals Board (SDO 313168) where the Board relied on the treating physician report dated July 7, 2004. That report addressed the need for multiple surgeries, including decompressive laminectomy with diskectomy and ultimately three level fusion in order to provide "some" relief of the applicant's symptom complex. The injured worker did undergo the laminectomy and discectomy at L3-4 on August 2004. The fact of those surgeries supported a permanent disability rating under the AMA Guides, so there was rateable impairment at the time of the surgeries. The court found that the treating doctor's report on 7/7/2004 with the recognition of the need for the surgeries was an indication of permanent disability.

In Caryn Compton v. The Terraces RDG 0110828, the Appeals Board found two reports of the treating physician to be sufficient to make a finding of "an indication of permanent disability." The doctor wrote a report 2/2/2004 that the applicant had recently undergone lumbar surgery and that the applicant would not be able to return to an occupation requiring lifting of 75 pounds. In November of 2004, the doctor wrote that the applicant remained unable to work and unable to compete in the open labor market, and that he considered her to be 100 percent disabled in her current condition. He further stated that she was not permanent and stationary but that when did become permanent and stationary she would have permanent disability. The court found that these reports were substantial evidence and that the applicant had established one of the exceptions under Labor Code Section 4660(d).

In Ruben Alcala v. Metroplex Corporation OAK 0287295, the Appeals Board denied Reconsideration of a trial court's finding that the treating physician report had an "indication of the existence of disability" where a report dated 8/25/2003 indicated that Mr. Alcala had undergone an interior cervical arthrodesis and diskectomy in connection with cervical injury. The court found that this report, by itself, evidences an "impairment" under the AMA guidelines, and an "impairment" "ineluctably leads to a finding of permanent disability. Therefore, the court found that the doctor's report "indicates" the existence of permanent disability within the meaning of the statute and that the 1997 Guidelines apply.

Finally, in Frederic Washington v. American Home Assurance OAK 0303351, the Appeals Board denied Reconsideration in a case where the Workers' Compensation Judge found that a doctor's report dated July 15, 2004, indicating that the injured worker had undergone a foraminotomy in connection with a herniated disc. Again, the decision was based on the fact that report evidenced "impairment" under the AMA Guidelines and that therefore, there was a finding of permanent disability and the physician's report "indicates" the existence of permanent disability.

The conclusion that one can draw from these cases, which are by no means an exhaustive list, nor are they intended to be, is that where the report indicates some condition or treatment that leads to an "impairment" under the AMA Guidelines prior to 1/1/2005, those reports will be considered a report "indicating the existence" of disability prior to 1/1/2005, whether or not the applicant is permanent and stationary at the time of those reports. However, a report that is basically a physician's signature on an attorney's pre-printed letter with a bare conclusion of the existence of permanent disability with nothing more is not going to be sufficient to satisfy the courts as being a "report" "indicating the existence of permanent disability." Nor does it appear that a physician's statement of the anticipation of permanent disability without something more to support it would satisfy the courts. It appears equally likely that a report that describes disability in other terms, but at least has some reasoning to support the conclusion of the "indication of permanent disability" should satisfy the court's requirements for "substantial evidence."

Given the fact sensitive nature of these cases, it is unclear what effect the publication of Echeverria would have since the report in question was arguably not a report at all. Time will have to tell.

This brings us to the final exception: "[W]hen the employer is not required to give a notice under Labor Code Section 4061."

The notice under Labor Code Section 4061 is one that is required to be sent "together with the last payment of temporary disability indemnity." The purpose of the notice is to inform the worker that there is NO permanent disability or that permanent disability cannot be determined because the employee's condition is not permanent and stationary. Under the first scenario, the injured worker is permanent and stationary and the doctor indicated no permanent disability. The second scenario occurs temporary disability ceases prior to a determination of being permanent and stationary, usually when the employee returns to modified work.

The issue here is whether the exception applies in only those cases where the notice was sent or should have been sent prior to 1/1/2005 or does the exception apply in all cases in which temporary disability has been paid. The most recent decision to date is an En Banc decision of the Appeals board dated January 24, 2007, in Josh Pendergrass v. Duggan Plumbing SAL 0110868. The Appeals Board issued the en banc decision to "secure uniformity of decision in the future" with regard to this issue. The Board decided that the notice under Labor Code Section 4061 is required at the first payment of temporary disability because once temporary disability is paid, the employer has an absolute duty to provide the notice required by Labor Code Section 4061 upon the termination of the payments. This is an absolute duty and there is no circumstance under which the employer may avoid that duty. The court distinguished when the duty arises and when the duty is required to be executed. The court's reasoning turned upon the phrasing of the exception, i.e., "when the employer is not required." The employer is required upon the first payment of temporary disability. The duty is executed upon the last payment of temporary disability and the sending of the notice. This decision followed similar decisions in Shaga Shayeteh v. Abbot Laboratories (writ denied); Deborah Ann Torres v. George's Wonderful World of Cakes, SDO 0236797; 0341114; Isais Hernandez v. Vander-Bend Manufacturing SJO 248403, and others. There is a dissent in this case which disagrees with the reasoning. This, also was a four to three split of the Appeals Board.

WHEN DO THE EXCEPTIONS UNDER LABOR CODE 4660(d) COME INTO PLAY

Echeverria and the other cases interpreting the issue of "indication of permanent disability" only become important when you have a pre January 1, 2005, date of injury for which no permanent and stationary report outlining permanent disability was in existence before January 1, 2005 and for which no notice under Labor Code Section 4061 was required and for arguably, no comprehensive medical-legal report.

Where there has been a Comprehensive Medical-Legal evaluation prior to 1/1/2005, then the question becomes whether or not it also requires an "indication of permanent disability," in which case the analysis under Echeverria becomes important. Under current case law, (En Banc decision in Joseph Baglione), the comprehensive medical legal report does not have to discuss permanent disability.

The temporary disability notice exception (4061 notice) only becomes important when (under current law) temporary was paid prior to 1/1/2005 or when temporary ceased prior to 1/1/2005, regardless of whether or not the applicant was permanent and stationary at the time.

Clearly, any date of injury 1/1/2005 and forward comes under the January 1, 2005 schedule. Soon, the entire issue of which schedule applies will vanish as the pre January 1, 2005 injuries resolve.

WHY ARE THE EXCEPTIONS IMPORTANT

The exceptions are important because there are cases which have no rateable "impairment" under the AMA Guides which were formally rateable and, in fact had significant ratings. Also, there are cases that had far higher disability under the form disability rating schedule which included pain as a basis for disability, than they do under the AMA Guides. This results in potential loss of thousands to tens of thousand of dollars to the individual injured workers and their families, many of whom have not been able to return to their old employment and may not have any transferable skills to another industry. On the other hand, the self-insured employers and insurers are saving tens of thousands of dollars. The ultimate result of the changes in the Labor Code remain to be seen. In the meantime, litigation is a certainty until some of these issues are resolved in the courts to provide some certainty to all the people involved in obtaining, determining and paying benefits to the injured worker. One can only hope that the guidance comes sooner rather than later.

Linda F. Atcherley is the president of CAAA. -------------------------------

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