Spending Money

Wednesday, November 4, 2009 | 0

By Mullen & Filippi

This is Halloween week, when many of us spend money on fun things like costumes and candy. Next week, the stores start putting out Christmas displays to encourage us to spend money on gifts for the holidays. Here, we discuss recent legal developments, most of which are likely to result in the need to spend more money on claims.   

New Higher Temporary Disability Rate. On Oct. 7, the Division of Workers’ Compensation Newsline reported that the minimum and maximum temporary disability rates are going up as of Jan. 1.

The Newsline reports that the new minimum rate will be $148 per week, and the new maximum rate will be $986.69. This does not affect the rule that temporary disability benefits are paid at two-thirds of the injured worker’s average weekly wage, up to the maximum rate. As a result, by our calculation, the new maximum rate only applies to claims where the worker’s actual average weekly wage is at least $1,480.03. The new rate applies to new claims as of Jan. 1, 2010, as well as claims for which benefits are being paid more than two years from the date of injury.

As explained in the Newsline article, changes in these rates are tied to changes in the state average weekly wage, which is measured by the average weekly wage paid to employees covered by unemployment insurance. This is the fourth year in a row that the rate has increased.

Almaraz/Guzman and Ogilvie Expected To Increase Benefits and Litigation Costs. WorkCompCentral reported on Oct. 20 that the State Legislative Analyst’s Office (LAO)  has released a report concluding that the Workers' Compensation Appeals Board's Almaraz/Guzman and Ogilvie decisions will likely lead to changes in permanent disability ratings, increased benefits for injured workers, incentives for more litigation, and higher costs for businesses and governments. For those of us who have been dealing with these decisions for the last several months, this should come as no surprise.

According to the WorkCompCentral article, the LAO concluded that an earlier report by the Workers' Compensation Insurance Rating Bureau estimating that Almaraz/Guzman and Ogilvie would add more than $800 million to the system is still viable despite the revised decisions issued in September. The LAO report finds that these decisions provide incentive for injured workers to challenge disability ratings, and result in workers with similar injuries potentially receiving different permanent disability benefits depending on how they rebut the standard ratings, which may be counter to SB 899’s goals of consistent, uniform and objective ratings. We wholeheartedly agree with the LAO’s conclusions.

The LAO has proposed various options for addressing what it appears to conclude are flaws in these decisions. One is legislative action to clarify whether the legislature really intended for the standard ratings to be rebuttable. Another is to let the disputes over these decisions be resolved through the judicial process.

Efforts are already underway to pursue the latter option. A petition for writ of review was filed in the 1st District Court of Appeal in the Ogilvie case on Oct. 15. A petition for writ of review was filed in the 6th District Court of Appeal in the Guzman case on Oct. 16. A petition for writ of review was filed in the 5th District Court of Appeal in the Almaraz case on Oct. 19.

We look forward to seeing what the Courts decide to do. With three different courts looking at these issues, we also hope that, whatever they do, their decisions are consistent. Inconsistent decisions will almost certainly result in further appeals to the Supreme Court.

Setting a Limit On Compensable Consequences Claims.  On Oct. 13, the 4th  District Court of Appeal issued its decision in Esquivel v. WCAB, holding that an employer is not liable for injuries incurred while driving to a medical appointment beyond a reasonable geographic distance. Unfortunately, while this case has the potential to save money by limiting what is a compensable claim, the court also found that determining what is a reasonable geographic distance is to be decided on a case by case basis, potentially leading to increased litigation costs.

The case involved a correctional officer living in San Diego who was being treated for an industrial injury by medical providers located within eight miles of her home. She drove to Hesperia, about 130 miles away, to visit her mother, and at the end of the visit planned to drive from her mother’s house to a scheduled medical appointment in San Diego. Shortly after leaving her mother’s house, while still in Hesperia, she was involved in an automobile accident and suffered injuries. She claimed these injuries were a compensable consequence of her industrial injury because they were incurred while driving to a medical appointment.

The trial judge found that the new injuries were compensable, concluding that the dispositive fact was that she was driving to a doctor’s appointment, not where she started her trip. The WCAB disagreed, holding that since the location where the accident occurred was an excessive and unreasonable distance from both her home and her doctor’s office, the employer should not bear the risk of injury.

The Court agreed with the WCAB. The Court concluded that although there is no express geographical limitation on an employer’s risk of liability for injuries incurred while traveling to a medical appointment, a limitation is implied in Labor Code provisions limiting the medical treatment for which an employer must pay to that which is reasonably necessary, requiring an employer to pay for a treating physician selected by the injured worker who is within a reasonable geographic distance, and requiring the employer to pay reasonable expenses of transportation for medical appointments. Concluding that these statutes demonstrated a legislative intent that liability be limited to what is reasonable, the Court held that an employer is only liable for injuries incurred during travel to a medical appointment where the employee is traveling a reasonable distance within a reasonable geographic area.

The one question the Court did not answer is how far is a reasonable distance. The Court held that to be an issue of fact to be decided on a case by case basis. In this case, they held that an injury incurred 130 miles away from her doctor’s office and home, while visiting her mother for reasons unrelated to her injury, was not compensable because it occurred outside the reasonable geographic limit of her employer’s risk for incurring liability.

Mullen & Filippi is a workers' compensation defense law firm with 11 offices located throughout California. This column was reprinted with permission from the firm's newsletter.