The More Things Change...

Thursday, January 19, 2012 | 0

In this edition of the Bulletin we focus on some of the legislative and rule changes that went into effect on January 1, as well as some recent cases that we expect to have an impact on how we do business in this new year. While there are some new rules and rates, and some new interpretations of the law, for the most part they can be viewed as minor adjustments in the way we have been doing business all along.  

New (And Old) Rates. Two types of payments routinely issued in workers’ compensation cases are subject to adjustment every year.  The temporary disability rate is subject to adjustment based on an increase in the State Average Weekly Wage. The medical mileage rate is subject to adjustment based on mileage reimbursement rates established by the IRS. This year, the temporary disability rate changed, but the medical mileage rate did not.

Effective Jan. 1, the minimum temporary total disability rate was increased to $151.57 per week. The maximum rate was increased to $1,010.50 per week. The new maximum rate applies only to those cases where the injured worker’s average weekly wage is high enough to justify maximum benefits. Injured workers are still only entitled to temporary disability benefits at a rate which equals two-thirds of their average weekly wage.

The medical mileage rate for medical and medical-legal travel in 2012 remains at the previous rate of 55.5 cents per mile. As always, medical mileage is to be paid at the rate in effect on the date of travel, regardless of when you get the bill.

New and Revised Statutes.  The legislature appears to have devoted a significant amount of time in 2011 to workers compensation related legislation. We are very pleased that some of the more employer unfriendly bills did not survive to become law. Of the new laws that did go into effect on January 1, most either resulted in positive changes or should have little impact so long as we all do our jobs correctly. We summarize those we deem most pertinent here.

AB 335 amends various Labor Code provisions, including Sections 138.4, 3350, 4060, 4061, 4658.5 and 5401. Generally stated, this new law requires that the Administrative Director create and issue, and that employers and insurers provide, claim notices and posters which describe a workers’ rights “in plain language” and provide them with more information about how to pursue their rights, including the DIR web address. Because of this law, we should be seeing some new forms in the near future.

AB 378 amends Labor Code Sections 139.1, 139.31 and 5307.1 to require that compound drugs be reimbursed consistent with the Medi-Cal rates for the included ingredients, and adds compound drugs, medical foods, and over the counter medications to the goods for which physician self-referral is prohibited. We expect to see a lot fewer medical reports announcing that the doctor has dispensed medications as a result of this law.

AB 397 adds Section 7125.5 to the Business and Professions Code, requiring contractors to submit proof of workers’ compensation coverage or entitlement to an exemption when renewing a contractor’s license. A companion bill, AB 878, amends Business and Professions Code section 7125 to require a workers’ compensation insurer to report to the Contractor’s State License Board when insurance coverage is cancelled due to audit or investigation. This should reduce the number of uninsured employers in those industries for which a contractor’s license is required.

AB 1168 adds a new statute, Labor Code section 5307.7, which requires the Division of Workers' Compensation administrative director to establish a fee schedule for vocational experts by Jan. 1, 2013. We expect to hear more about this issue later in the year.

We also want to alert you to SB 826, which amends Labor Code sections 138.6 and 138.7. This law requires the Administrative Director to assess a penalty of up to $5,000 per year against a claims administrator for data reporting violations, requires the Administrative Director to disclose compliance rates of claims administrators, and authorizes the Administrative Director to publish the identities of claims administrators for this purpose. Previously, publishing names was not permitted. This last provision was apparently added to provide extra incentive to comply with the rules.

Clarifying an Undocumented Worker’s Benefit Entitlement.  We have all known at least since the Del Taco decision 12 years ago that an undocumented worker is entitled to temporary disability benefits when he or she is  unable to work because of the injury. Del Taco held that undocumented workers are entitled to temporary disability benefits, but are not entitled to vocational rehabilitation benefits. But what happens when the worker is released to modified work, and the employer has modified work available, but the employer is precluded by federal law from allowing the undocumented worker to return to work? The WCAB recently answered that question in the panel decision Cubedo v. Leemar Enterprises.

Cubedo involved a cashier who had an admitted industrial injury to her spine. After a period of temporary total disability, she was released to return to work at modified duty. She then admitted at a deposition that she was undocumented. The claims administrator informed the employer. A letter was then sent to the applicant offering her modified work contingent on her completing, and her employer verifying, an I-9 form. She did not return to work.

The case went to trial on the issue of entitlement to temporary disability benefits. Applicant testified that she wanted to return to work, but her employer would not offer her work because she was undocumented. The employer provided evidence that appropriate modified work was available, and would have been provided if not for her undocumented status.

Although the Board found that the medical evidence presented was not sufficiently clear to determine exactly what benefits she was owed, the panel held that, consistent with Del Taco, she is entitled to temporary disability benefits only for those periods during which she was temporarily totally disabled. For periods for which she had been released to modified duty, and the employer’s evidence establishes that modified duty was available, but was not offered solely because she was undocumented, Del Taco requires a finding that no temporary disability benefits are owed.

In our opinion, this decision is absolutely consistent with the long established Del Taco rule. Where the sole reason for not providing work is the federal prohibition against hiring undocumented workers, the employer should not be penalized for following the law by having to provide temporary disability benefits. We encourage you to contact your favorite Mullen & Filippi attorney if you have questions about practical application of this decision.

Explaining The Rules for Apportionment of Spine Disability.  Finally, we would like to congratulate Dana Miller of Mullen & Filippi’s Santa Rosa office on a job well done in a complicated spine disability case. Dana was able to convince the judge and the Workers' Compensation Appeals Board that it is appropriate to deduct an award of lumbar spine disability which had been initially rated under the 1997 schedule from permanent disability for the cervical spine resulting from a 2005 injury rated under the American Medical Association Guides.

In Dana’s case, the applicant suffered a lumbar spine injury in 2001 resulting in an award of 21% permanent disability under the 1997 schedule. In 2005, applicant suffered an injury to the cervical spine. The AME found that the cervical spine disability was caused 80% by the injury and 20% by a non-industrial degenerative condition. The parties stipulated that disability was rated at 34% after apportionment to the non-industrial condition. Dana argued that, in addition to the apportionment to non-industrial cause under Labor Code section 4663, defendant was also entitled to apportionment for the prior 21% award under Labor Code section 4664 because, as defined in that statute, the cervical spine and lumbar spine were part of the same body region, and the prior disability award represented overlapping disability.

Significantly, the agreed medical evaluator in the case was able to provide AMA Guides ratings for the previous lumbar spine disability under both the diagnosis related estimate (DRE) and range of motion (ROM) methods, which could be compared to the cervical spine disability under those methods. Upon review of the AME reports, the judge found that the prior award was the equivalent of a 22% disability rating under the 2005 schedule.  The judge then found that Labor Code Section 4664 required apportionment of 22% against the cervical disability award for the prior lumbar spine award.  The applicant was awarded 12% permanent disability for the cervical spine after apportionment.

On reconsideration, the applicant raised two arguments. First, he argued that since the lumbar spine and cervical spine are different spinal regions under the AMA Guides, and are rated separately, disability to one region cannot be apportioned against disability to another region.  Dana successfully argued that because Labor Code section 4664 treats the entire spine as one body region, apportionment is appropriate.  Applicant also argued that it was not appropriate to give apportionment under both Section 4663 and Section 4664. Dana pointed out that there was no duplication in doing so, because the 4663 apportionment was for a degenerative condition of the cervical spine, and the 4664 apportionment was for the prior award of disability to the lumbar spine. The Board agreed with Dana on both points, and upheld the award.  Applicant sought review from both the Court of Appeal and the Supreme Court.  Review was denied at both levels.

Mullen & Filippi is a workers' compensation defense firm with 12 offices throughout California. This column was reprinted with the law firm's permission from it's client newsletter, The Bulletin.