Dykes Becomes Final - What it Means

Saturday, March 11, 2006 | 0

by 'Jake' Jacobsmeyer

In a move that is sure to bring joy to the hearts applicant attorneys throughout the state and gloom to the employer and insurance communities, particularly the self insured employer and public entity community (who tend to have more stable long term work forces), the California Supreme Court has denied the defendant's petition for hearing in E & J Gallo Winery v. WCAB (Dykes) without comment.

This decision leaves in place as a published decision the holding of the Court of Appeals that allow the calculation of apportionment pursuant to Labor Code Section 4664(b) (the conclusive presumption of existence of prior permanent disability awards) by subtraction of the dollar value of the awards and not the percentage of disability.

It is important to note that this case by its own terms only applies to cases where there are multiple injuries with prior awards that involve the same self insured employer. The court specifically only applied their holding to cases involving those claims as this was the specific issue brought before it. However, the court's discussion and the language in commenting on the issue of apportionment certainly carries the potential that the rule could be extended to other cases if this court were given the opportunity to do so. However the current authority that applies to all other cases would be the WCAB en banc decision in Nabors v Piedmont Mill & Lumber.

This Court of course may not need to arrive at that decision or may not have a chance to as the exact issue is currently pending at the First Appellate District in the aforementioned Nabors v. Piedmont Mill and Lumber. That case is an appeal from the WCAB decision holding that apportionment under the same Code section identified above is accomplished by subtraction of percentages of permanent disability rather than dollars. If the court in Nabors rules against the injured worker then we will be left in a rather anomalous situation where employees whose injuries occur with the same employer; if self-insured; are treated differently than employees who are working for multiple employers or insured employers. It is debatable whether this distinction will be legally supportable, but there does appear to be some basis in drawing the distinction based upon the language in Labor Code Section 4664 which provides that the "employer" is to compensate for the disability it caused. This was a distinction made by the WCAB in its correspondence to the court of appeal in Dykes and explaining why the decision in Nabors and the decision to uphold the original trial decision in Dykes were different.

Clearly the ruling in Nabors, which is still months away as briefing is just being completed, is going to be considered a key issue in whether employers get some of the cost relief that was sought in re aligning of the apportionment statutes.

This case also highlights the potential impact of the en banc decision which issued yesterday in Pasquotto v.Hayward Lumber. In that case the WCAB determined a Compromise and Release is not an Award of permanent disability with a conclusive presumption for purposes of Labor Code Section 4664(b) and is not subtracted out on a percentage basis. The Board then directed the parties to evaluate apportionment pursuant to Labor Code Section 4663 as one of the "other factors" to be considered in the causation of disability. The court left open the issue of whether Compromise and Release Agreements which attempt to fix the value of permanent disability will provide for apportionment under 4664 with a conclusive presumption or simply require the parties to prove apportionment under Labor Code Section 4663.

Based on the holding in Pasquotto v Hayward Lumber there may end up being advantages to employers and carriers in not inserting percentages of disability in Compromise and Release Agreements as this may provide for apportionment under 4664 which would then only allow for subtraction of the dollar value of permanent disability. Apportionment under 4663 as outlined in Escobedo v. Marshall is subtracted on a percentage basis. The differential in subtracting on the basis of dollars versus percentages in some cases is very dramatic with the employer being favored much more in subtraction of the percentage of disability.

This author believes that employers, carriers and defense attorneys should be very careful in making the decision to insert a percentage value for permanent disability in a Compromise and Release agreement anticipating that this will result in subtraction on a percentage basis. The benefits of doing so may end up being illusory. There is also an argument to be made that in resolving a current claim, the employer is not necessarily operating in their own best interests in inserting such language but doing so for someone down the line. Since most Compromise and Release Agreements are only entered into if the employee is no longer working for the employer the benefit of inserting this language is not providing any real protection to the employer who is party to the claim and is of questionable value to subsequent employers.

By attorney Richard "Jake" Jacobsmeyer, managing partner of the Concorde office of Adelson, Testan, Brundo & Popolardo. Jake can be reached at richardjacobsmeyer@atblaw.net.

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