PG&E Teaches HOW to Present a Psyche Case

Saturday, January 17, 2004 | 0

The First Appellate District of the California Court of Appeals certified for publication an opinion that further clarifies what constitutes "actual events of employment" under Labor Code section 3208.3 - but the opinion really provides a road map for the proper handling of psychiatric claims by applicant attorneys, and increases the burden on defense counsel in the discovery and trial process. In addition, the Court may have inadvertently created greater potential liability for small business.

The facts in Pacific Gas & Electric vs. WCAB (Bryan)(A101872, 1/09/04) are relatively simple. Bryan, the claimant, was a long-term employee of the company. Like many, he participated in the company's investment program and had most of his retirement savings in the company. PG&E went through rough times with energy deregulation, and as a result of downsizing Bryan took an alternative job with the company fielding customer complaints. It was at that position that Bryan experienced the most stress, ultimately leaving the job due to chest pains.

But at trial, Bryan made the tactical mistake of presenting testimony that most of his life savings were in the company's stock, a publicly traded stock, and that he experienced stress as a result of losses in his investment. Another trial mistake Bryan made was to testify that company downsizing and reorganization caused him stress. These factors apparently were taken to mean that 75% of Bryan's psychiatric injury was the product of stresses that the general public would experience.

The court discussed each of the four factors independently:

First - generalized anxiety over the downsizing of a company or department in which a claimant worked is not sufficient for making a psychiatric claim. And neither is fear of losing a job because "arguably, all employees who work for a troubled company experience stress. Allowing employees to recover benefits for psychiatric injuries caused by this type of stress would subject employers to virtually unlimited liability."

Second, stress as a result of being yelled at and harassed by irate customers, even if the claimant "love the job" may be a sufficient actual event of employment to support a psyche claim - in Bryan's case, such claim of stress was supported factually by the timing of physical symptoms supporting extreme stress: chest pains, seeking of medical care, eventual departing from the company as a result of the physical symptoms and accumulated stress.

Third, where there is no obligation that a worker invest in his own company, there is no claim of compensable stress when that investment tanks.

Fourth, a feared loss of job security is insufficient for a psyche claim. The court says that anxiety over losing a job is not unique and is contrary to the legislative goal of restricting stress claims "by inviting claims from any employee who suffers or fears a lay-off in economically uncertain times, or from any employee who has incurred a real or paper loss in an investment in employer-issued stock."

The Court in this discussion essentially is giving excellent instruction to counsel representing injured workers, and may have unwittingly expanded the opportunity to present compensable psychiatric claims by advising how to present the evidence at trial: don't throw in the kitchen sink but be sure testimony and evidence is tightly associated with factually supported events that are not generally experienced by the public.

Bryan may have been much better off by claiming only that he was yelled and harassed at in dealing with the public in his new position as a customer service representative when he saw a physician for his chest pain. And while he experienced some anxiety over his investment losses and the downsizing of his company, this certainly could have been explained away if Bryan had testified that he knew the investment was long term and he felt the stock would rebound, and that as a long-term employee he had seniority to be placed into alternative jobs with the company, thus preserving his employment.

Bryan demonstrated that he was able to handle ordinary job stress quite well as a collector - he testified in trial that he was chased and bitten by dogs, faced guns, had rocks thrown at him and called names, but he loved that job and performed it successfully for many years. It was the change in job circumstances that coincided with a deterioration in PG&E's service that caused him stress so great he experienced chest pain sufficient to make him see a doctor and eventually quit the job.

Had the evidence stopped there, it is likely that Bryan's case before the Court would have turned out differently: "The WCAB could reasonably conclude that Bryan's confrontations with angry, threatening or deceitful customers packed in large numbers in a confining small office caused him specific and identifiable work-related stress. Unlike corporate 'downsizing,' these stresses were a direct consequence of Bryan's new work assignment, an event of his particular employment, and a compensable cause of his psychic injury."

However, the court in the PG&E case strongly suggests that the Board find a different result because 3 of the four factual scenarios the Board relied on to find compensability were determined invalid by the Court - thus only 25% of the events relied upon were "actual events of employment" under 3208.3, thus not meeting the 50% requirement necessitated by predominant as to all causes combined of the psychiatric injury."

Thus, the Court is essentially stating that the presentation of a psychiatric claim must be tight, succinct, and leave no question as to other potential intervening events that lead to psychiatric decompensation.

By the same token, defending a psyche claim means throwing in the entire kitchen sink, to try and convince the trier of fact that there are numerous factors responsible for a claimant's psychiatric status. This may in fact be more difficult to prove at trial than it sounds, as the claimant must capitulate to suggestions that all of the "kitchen sink" events caused some stress or psychiatric injury.

Another aspect of the PG&E case that requires consideration is one that the Court, in its zeal to enforce the legislative attempt, may have unwittingly created an increase in liability for the vast majority of employers in California - small business.

Bryan testified that a portion of his psychiatric injury was the product of watching his investment in the company go down the tubes. The Court said that this could not be a factor because it was a risk experienced by the general public.

The question arises, however, whether the inverse would be true - that there would be a compensable claim if the worker was required to invest in his own failing company. This situation is not as unusual as it may sound as many small business shareholder agreements empower the Board of Directors of a company to make a capital call - and the worker faces financial ruin as he or she watches his own company go down the tubes, and there are many small business executives that have not been exempted from coverage. Dicta seems to indicate that in fact this could be a compensable event, as the court makes the distinction between an event that is experienced by the general public (not compensable) and one that is individual in experience (compensable):

"According to the record, Bryan voluntarily invested his retirement funds in PG&E stock, believing it was in his best interests to do so. There is no evidence that Bryan was obligated under the terms of his employment to invest his retirement funds that way; nor is there evidence of an employer incentive to invest in PG&E stock. His investment loss was no different from that experienced by the general investing public."

Would the situation be different if the employee received stock or stock options as a form of compensation? Dicta seems to suggest so.

The PG&E case is a mixed bag and creative counsel will be able to use this decision favorably if care is used in the development and presentation of the facts.

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