The Pebworth Lesson - Beyond Settlement of Rehab

Sunday, March 14, 2004 | 0

Pebworth vs. WCAB not only teaches us that settlement of vocational rehabilitation benefits is available to injuries earlier than 1/1/03, but the seven page decision also provides an important legal lesson on the interpretation of statutory law in determining whether it is procedural or substantive.

The Pebworth case is an excellent resource for this discussion because there were no factual disputes - the justices of the Second Appellate District had to deal purely with interpretation of law, which gives the case much greater authoritative application beyond workers' compensation issues.

Clarence Pebworth sustained a specific industrial injury in 1997 and a cumulative industrial injury from 1985 to August 20, 2003. In a Compromise and Release approved by the Workers' Compensation Appeals Board (WCAB) in November 2002, the parties settled all issues except vocational rehabilitation benefits.

As a result of AB 749, passed in 2002 and effective 1/1/03, vocational rehabilitation benefits could be settled for a lump sum payment of up to $10,000, regardless of whether there was a dispute as to entitlement of the benefit (which was the law under Thomas vs. Sports Chalet, later codified in LC 4646).

The Rehabilitation Unit rejected the settlement on the theory that the statute applies only to injuries occurring after the effective date of 4646, January 1, 2003. The WCAB upheld that ruling on reconsideration. In one the rare cases where the injured worker and the employer actually agree on a position in litigation, they joined in an appeal to the Appellate Court. What happened then was not so much a discussion on the application of 4646, but a detailed legal analysis of the difference between substantive and procedural law - and how a seemingly substantive change in the law (payment of money) is actually procedural.

The Court explained that the first part of the analysis is to see if the intent of the Legislature can be ascertained. Doing so, in this case, involved reviewing the history of 4646. Having reviewed the creation and amendment of 4646, the Court does not answer whether they were able to discern legislative intent, instead going into the question as to procedural versus substantive effect. If they are procedural, then there is no bar to the application of the statute to earlier dates of injury.

The test, says the court, "is whether the statute imposes a new or additional liability or affects existing vested or contractual rights on the one hand or merely changes the manner in which established rights or liabilities are invoked in the future."

The reasons that the employer must (read, mandatory) pay out vocational rehabilitation benefits if an injured worker is QIW. There is no new liability if the parties can resolve that obligation via the payment of a lump sum of money. The changes to 4646, said the court, merely shifted the timing of the payment of benefits and the resolution of the parties rights and liabilities. It did not actually change those rights and liabilities.

Referencing State Comp. Ins. Fund v. Workers' Comp. Appeals Bd. (Silva) (1977) 71 Cal.App.3d 133, the Court says, "The amendments to section 4646, like the statute in Silva, become operative only when and if the statute is invoked and, thus, operate in the future only. Like the statute in Silva, the amendments do not increase the cost of benefits due from the employer to the employee. In fact, the $10,000 settlement amount is $6,000 less than the amount of vocational rehabilitation benefits the employer would be liable for if Pebworth chose not to settle under the amendments.
"In addition, and perhaps most importantly, it is clearly the new legislative policy that an employee who is injured after January 1, 2003, have the opportunity to settle prospective vocational rehabilitation benefits. 'There is no reason why the same policy should be withheld and not apply to those who were injured previously.' (Citing Silva.) This is especially true where, as here, the employee and employer voluntarily elect to be bound by the terms of the amendments."

Pebworth vs. WCAB (2004) XX Cal App 3rd XXX.

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