When (and to whom) Does the RTW Incentive Apply?

Saturday, May 7, 2005 | 0

Often the WorkCompCentral Professional Forum will provide insight into some of the more timely, and difficult, issues confronting professionals in the system - and the following concerning the new "Return to Work Incentive" created so many different interpretations on a seemingly straight forward question that the editors felt presentation in an article format would help readers understand some of the more subtle complexities in dealing with work comp reform.

The actual forum has been heavily edited for readability. To read all of the posts, go to the Forum thread +15% and -15% .

Question: Are we all fairly confident that L.C. section 4658(d)(2) (the +15% or -15% on PPD) applies only to injuries on or after 1/1/2005?

A 1: My reading of 4658 on the 15% up and down is that it applies to all injuries after 1/1/05 and injuries that occurred between 4/30/04 and 12/31/04 so long as none of the "4660 exceptions" apply:
1. Indication from treater (prior to 1/1/05) that there is pd
2. A CMLE prior to 1/1/05
3. The need for the issuance of "pd" letter under the provisions of 4061(which means any claim in which TTD was stopped (even temporarily) before 1/1/05.

A 2: The provision for the +/-15% is in LC 4658. LC 4658(d)(1) states: "This subdivision shall apply only to injuries occurring on or after the effective date of the revised permanent disability schedule adopted by the administrative director pursuant to Section 4660."

It does not have the other exceptions set forth in 4660 which allows the AMA to be used in cases for DOI before 1/1/05.

A 3: As a defense attorney, my opinion is that the clear consensus is that the +/- 15% PD only applies to dates of injury on or after 1/1/5. 4658(d)(4) adds an element of confusion to the mix, but, in my opinion and that of many others, it does not affect the effective date for PD +/- 15%, namely, DOI on or after 1/1/5.

A 4: For what it is worth my opinion coincides with the two immediately above. The 15%+/- only applies to injuries on or after the effective date of the PDRM (1/1/05). The same applies to the new dollar values for the PD award values.

Even though we will apply the AMA guides and the new PDRM to some pre-1/1/05 injuries, the changes in the dollar values or the 15% adjustment only affects injuries on or after 1/1/05.

Q 2: So, now I'm confused. What does the 4/30/04 date in 4658(d)(4) mean?

A 5: With all due respect I think that the 15% adjustment applies to earlier cases as well. I would invite you to consider the following analysis:

Labor Code section 4658(d) is presented under SB 899. It needs to be considered as a whole to understand its two fundamental changes in the law, and when they apply. First, under subsection (d)(1), permanent disability is increased. For those injuries which result in permanent disability from 70% through 99.75%, the number of weeks for which permanent disability is paid is raised to sixteen. This subdivision gives plain language as to when it applies: "This subdivision shall apply to injuries occurring on or after the effective date of the revised permanent disability schedule adopted by the administrative director pursuant to Section 4660." That is of course those injuries occurring on or after January 1, 2005, so there is no big mystery here. The benefit increases under Labor Code section 4658 are effective for dates of injury on or after January 1, 2005 only.

The other big change in permanent disability law is outlined by section 4658(d)(2) and (d)(3). These sections provide that the applicant's permanent disability is either raised or lowered by 15% depending on whether the employer offers to the applicant a return to regular, modified or alternative work within sixty(60) days of permanent and stationary status. When does this 15% adjustment take effect? As per SB 899 section 47, all changes under that bill are in effect for all dates of injury as of April 19, 2004 . . . unless otherwise specified. We therefore turn back to the section in question. Unless that section specifies otherwise, the 15% adjustment should apply for all dates of injury as of April 19, 2004.

There are two possible parts of section 4658(d) that speak to this.

The first is Labor Code section 4658(d)(4) which reads as follows:

"For compensable claims arising before April 30, 2004, the schedule provided in this subdivision shall not apply to the determination of permanent disabilities when there has been either a comprehensive medical-legal report or a report by a treating physician, indicating the existence of permanent disability, or when the employer is required to provide the notice required by section 4601 to the injured worker."

This section appears then to distinguish between those claims with dates of injury before April 30, 2004, and those with dates of injury on or after April 30, 2004. For those earlier cases the 15% adjustment would seem only to apply under certain conditions. For those cases with a later date of injury the section would seem to apply now, and to have been in effect since the April 30 date. So, it seems, we should be already making that adjustment. It can be a confusing analysis though.

It should be noted at the outset that section 4658(d) is at best awkwardly put together. The timing of the implementation is spoken to not only in (d)(4), but also as noted above in (d)(1). The latter states directly that "This subdivision shall apply to injuries occurring on or after the effective date of the revised permanent disability schedule adopted by the administrative director pursuant to Section 4660." What exactly is meant by "subdivision" in this context? If this term is meant to encompass only 4658(d)(1), then this limitation would apply only to the benefit increase specified in (d)(1). If however the term "subdivision" means the entirety of 4658(d), then there is a much more dramatic result. In that case, the 15% adjustment would be made only for those dates of injury on or after January 1, 2005, and not April 30, 2004.

A careful review of the construction of section 4658(d)(4), however, should lead to the conclusion that, however awkwardly the statute is written, the time considerations in (d)(1) are meant only for (d)(1). Therefore it seems clear that the 15% adjustment is in effect as of the April 30 date.

My reasoning is as follows. There are four distinct sections in 4658(d). The first does confine its application to dates of injury on or after January 1, 2005. It is ambiguous when it applies itself to "this subdivision". However, in addition to setting out time limitations, this (d)(1) also describes the increase in benefits. The increase in benefits is not dealt with in any other part of 4658(d). Therefore this subdivision seems to be self-contained.

In fact it is isolated from (d)(2), (d)(3), and (d)(4). Parts three and four describe the conditions under which the 15% increase or decrease is to be made. Part four has only one function: to limit the application of "the schedule as provided in this subdivision" for certain dates of injury. Unlike (d)(1) it does perform any other function aside from ascribing time limits. Again, the unfortunate use of the word "subdivision" is ambiguous. Even more unfortunate is the use of the term "schedule", especially in light of the newly published PD schedule and the extensive discussion of the same in Labor Code section 4660. However sections 4658 and 4660 are isolated, and 4658(d)(4) is clearly done in the context of 4658(d) only. Therefore, given the overall statutory construction, it seems that the best understanding of the term "schedule" is the scheme set out in (d)(3) and (d)(4) regarding the 15% increase/decrease.

This point of view is further reinforced by one reality. In accordance with section 47 of SB 899, the new 15% adjustment would apply across the board for all dates of injury as of April 19, 2004. If (d)(1) were meant to apply to the entirety of 4658(d), then (d)(4) would be superfluous. That is because (d)(1) would only allow for the 15% adjustment to apply to dates of injury as of 2005. Placing conditions on the applicability of the section for dates of injury before April 30, then, would not make any sense.

We can therefore draw the conclusion that, in accordance with section 47 of SB 899, the 15% increase or decrease in permanent disability applies in every case with a date of injury on or after April 30, 2004. There are also of course three exceptions to the application for cases with dates of injury before April 30.

1. There has been a comprehensive medical-legal report;
2. There has been a report by a treating physician indicating the existence of permanent disability;
3. The employer is obligated to provide the required notice under Labor Code section 4601.

There are, of course, a serious set of complications as to what exactly these standards mean. Obviously this language is nearly identical to that used is Labor Code section 4660, and it accordingly carries with it all of the ambiguities of that section. As Jake pointed out in his recent article on that section, there are a variety of factual scenarios that will need dealing with. A doctor may state that permanent disability is likely to exist at some point in the future. He or she may state that the permanent disability exists before the permanent and stationary status, and this assertion may or may not be reasonable under the facts of the case. Permanent disability may be described for one part of the injury but not others. Jake sets out many more possibilities, and it seems clear that interpreting these standards will be the subject of quite a bit of disagreement.

What seems clear though is that if one of these conditions is in place by the April 29 date, the 15% adjustment will apply even to those dates of injury before April 30, 2004.

In my experience many claims adjusters are missing this when it should be applied now to many cases.

A 6: Interesting analysis Mike, but I am not buying it. The main reason being that the term "subdivision" is used consistently in LC 4658 for several sections commenced by a small letter [ie: (b), (c) & (d)]. This is also consistent with the use of the term subdivision in other sections such as 4453, 4650, 4659 & 4703. Also (d) (4) references the same term ("this subdivision") and has nothing to refer to if it does not apply to the entire subsection (b).

(d)(4) is certainly a puzzler. But if you are correct it does not apply to any subdivision at all. If I am correct it is moot as it covers cases which are already excluded under (d) (1). Either way (d)(4) makes no sense, unless it applies to the entire section (d) in which case it excludes itself.

I went to the original 899 bill and reviewed the summary at the beginning of the bill. It is equally confusing. The summary states that the new schedule including the 15%+/- will apply after the effective date of the PDRS but that the schedule will also apply to some injuries before 4/30/04, leaving out the period from 5/1/04 to 12/31/04 altogether! Not much help there.

Given the consistent usage of the term "subdivision to apply to a paragraph beginning with a lower case letter, I think the correct interpretation is to apply the limiting language to the entire "subsection (b)"

A 7: I spent a lot of time this past fall reading, studying and trying to reconcile L.C. Sec. 4658(d)(4) and 4660(d) when working on Table 17 in the Labor Code Book (properly the Workers' Compensation Laws of California), for the 2005 edition. I sent e-mails to many people and came up with many possible interpretations.

I saw a possibility of applying the new PD rates for 2005 to those cases where the 2005 PD Schedule applies in pre-2005 cases. (This explains the "hole" in Table 17A where readers are directed to "See Table 17B." For more explanation, see Table 8 and Table 10.)

During the course of my many conversations with many different persons discussing these sections, one told me that 4658(d)(4) was "probably" left in SB 899 accidentally! It is a virtual mirror image or reverse image of 4660(d), except as to dates, and the designers of this legislation decided to "go" with 1/1/05 as an effective date and just "forgot" and left 4658(d)(4) in place as an oversight with its earlier 4/30/04 date!

That blew my mind! I've often thought "legislative intent" was a misnomer...an oxymoron at best. Most of the problems which develop after a piece of legislation is passed were simply never considered by the people who drafted it, much less those who voted to approve it...so they could go home in the early morning hours.

I am familiar with the rules of statutory interpretation and agree they are needed to help us make sense of and apply legislation to specific facts, but reconciling these two statutes is more than a little difficult, and I am not sure it is possible.

I finally decided that by interpreting these statutes as different sides of the same coin, 4658(d)(4) is redundant because 4/30/04 is included in 4658(d)(4)'s "before January 1, 2005." This allows the new PD Table and new PD Schedule to begin on 1/1/05, which makes sense.

As to the +/- 15%, the thread being discussed, I understand both the Bronshvag tables and Warren Schneider's Med-Legal Copy Service's tables are being revised. The +/- 15% does not apply to employers of 49 or less employees.

Earlier versions of these tables allowed for a 15% reduction across the board, however, my understanding is at the 2005 DWC conference it was announced, per the paragraph/sub-paragraph argument on this thread, that +/- 15% for mod/alt work offers only applies for employers of 50 or more employees.

I have spoken to several persons on this topic in the last week, attorneys, WCJs, claims people, and others. The bottom line is that after seriously reconsidering the matter, everyone I have talked to agrees: The +/- 15% for mod/alt work offers only applies for employers of 50 or more employees, and only for injuries o/a 1/1/05.

There will be cases coming up for litigation on this very point in the near future. Meanwhile, we will all have to wait and let the issues filter through our courts for a final interpretation....assuming the legislature does not help us, which no one now expects.

A 8: I believe that employees of small employers are not subject to either the increase or decrease for return-to-work status. The discrepancy arises from the last sentence of Section 4658(d)(3)(B). Where that sentence says "this paragraph" does not apply to small employers, I believe "paragraph" means paragraph (3) of subdivision (d) of section 4658. In the sentence immediately preceding that one, the legislature referred to "this subparagraph," meaning subparagraph (B) of paragraph (3) of subdivision (d) of section 4658. The distinction between "paragraph" and "subparagraph" is crucial. I believe that the distinction has been overlooked....

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