Apportionment Decisions

Saturday, December 2, 2006 | 1

By Jake Jacobsmeyer

Two decisions were announced on the application of Labor Code sections 4663 and 4664.

The 6th Appellate District has now weighed in on yet another couple of cases involving the application of Labor Code Sections 4663 and 4664 and the calculation of apportionment under those sections in the post-SB 899 world. This issue is currently pending before the California Supreme Court in a series of consolidated cases commonly known as the Welcher cases, as well as Brodie v. WCAB.

The Mary Davis v. WCAB and Moises Torres v. WCAB cases were consolidated for hearing in the 6th Appellate District. In the Mary Davis case, the applicant was deemed to be permanently and totally disabled. She had previously suffered a work-related injury with an Award of permanent disability of 35%. As a result of the provisions of Labor Code Section 4664 she was awarded partial permanent disability of 65%. In the second case, Torres, the injured worker had an overall disability of 52% with a prior Award of 24 %. Again, the WCAB awarded benefits based on the prior decision in Nabors v. Piedmont Lumber (en banc) and subtracted the prior percentage of PD. The Court of Appeal extensively reviewed the prior history of this issue going back to the Fuentes v. WCAB (1976) 16 Cal 3d 1, which set the standard for how to calculate apportionment for pre-existing disability. As noted by this Court, the foundation for the decision in Fuentes was Labor Code Section 4750, which was repealed as part of SB 899. However, the court also noted:

"Although the Legislature repealed former Section 4750 in 2004, it also repealed two related sections pertaining to apportionment and 'recast' the substance of all three provisions in new Sections 4663 and 4664."

The court then went on to review the current law as reflected in SB 899. The court noted that the changes in apportionment were intended to "repeal and recast" existing law with respect to apportionment of permanent disability. They noted:

We have set out the former law and the new code sections side by side in the appendix. As shown by that table, the Legislature has completely rewritten the law. Where former law allowed apportionment in only three circumstances (former Sections 4463, 4750, 4750.5) new Section 4663, subdivision (a) now simply states: "Apportionment of permanent disability shall be based on causation."

The court then notes that the WCAB has interpreted the changes in the apportionment statutes to indicate that the intent of the Legislature was to expand the range of potentially apportionable factors but not to change the method of calculation.

The Court also noted that neither Labor Code Section 4663 nor 4664 provides specific language on how to calculate apportionment but found in Labor Code Section 4664 an implied instruction based on the statutory language:

The employer shall only be liable for the "percentage of permanent disability" directly caused by the work injury. "Percentage of permanent disability" is the phrase used in Section 4658 to describe the level of permanent disability for which a specified number of benefit weeks may be paid

"Where the same word [or phrase] is used in more than one place in a legislative enactment, we presume the same meaning was intended in each instance." (Citation omitted) Thus we presume that when the Legislature stated that an employer's liability is limited to a "percentage of permanent disability"the Legislature was referring to the measure used to calculate the weekly benefit under Section 4658. Formula A is the only calculation that yields a result in terms of "percentage of permanent disability."

The court noted that the decision in Dykes was largely based upon the Legislature's repeal of Labor Code Section 4750 and the enactment in Section 4664(b) indicating that if the injured worker has a prior disability award, the disability must be conclusively presumed to exist at the time of the injury. Dykes concluded that the combined effect of these two was to require compensation calculation taking into account the current level of disability and subtracting the dollar value.

The Court pointed out again that the Legislature did not simply repeal these sections, but it completely redrafted them to reflect a completely different way of looking at apportionment:

The new law is plainly intended to protect the employer from paying for that portion of the disability that is not the direct result of the industrial injury. Fuentes was concerned with the same issue. But in light of the change to causation-based apportionment, the new law could not import the language of Section 4750 verbatim. It would be ambiguous and possibly inaccurate to instruct the WCAB to compensate the employee for the injury "considered by itself."

The court also reviewed the legislative history of SB 899 noting the skyrocketing costs of workers' compensation and the need to reduce the overall cost of the system as a fundamental goal of the legislation. The court notes that it was beyond question that SB 899 was intended, overall, to reduce workers' compensation costs for employers. Either formula B or formula B would result in much larger awards than those calculated under formula A as outlined in the Fuentes case. The court therefore concludes:

"That being so, it is inconceivable that the Legislature intended to abandon formula A in favor of either alternate formula because to do so would be inconsistent with the goal of SB 899."

This analysis is actually quite consistent with the concurring opinion in the Welcher cases from the 3rd Appellate District. In the concurring opinion it was noted that the legislative intent was to reduce the costs of workers' compensation and that application of the principles in the Dykes case would have the exact opposite effect.

Finally, the court notes that the purposes of encouraging hiring of the disabled would be more properly served through use of formula A and also that the continued existent of the Subsequent Injuries Fund is an expression of the Legislature's ongoing interest in promoting the employment of disabled persons. The use of the formula C would in effect make Subsequent Injuries Fund benefits almost irrelevant, as virtually everything that could go wrong from a medical perspective could be substantially compensated through the overall level of permanent disability. The court further rejected the arguments presented by counsel for applicant and the California Applicants' Attorneys Association that Labor Code Section 3202 required application of the most liberal interpretation of the statute in order to extend benefits to injured workers. The court viewed the language of the Legislature and its intent as paramount to Section 3202:

"The policy underlying Section 3202 cannot supplant the intent of the Legislature as expressed in a particular statute." (Fuentes v. WCAB at 16 Cal 3d p. 8)

The court finally concludes that there is no legislative intent to abandon formula A as adopted by Fuentes and therefore the decisions of the WCAB denying applicants' petitions for reconsideration in both of these cases were upheld.

These cases throw yet another opinion into the mix of cases currently pending at the California Supreme Court. It is interesting that the court, knowing that the Supreme Court has this issue under review, as decided to go ahead and issue its own decision. Clearly they intend to have some influence (or at least have their say) on this particularly thorny issue. There is little doubt that the applicant attorneys in these cases will take the matters up to the California Supreme Court and there is certainly a fairly strong likelihood that the Supreme Court will grant the petitions for hearing and consolidate these matters with the other five cases currently pending. The other possibility is that the Supreme Court could simply de-publish these opinions and wait for the other cases to become final. That seems less likely than a grant in consolidation.

The one thing we have to hope is that there are not too many more of these cases in the pipeline to be granted and consolidated, which might serve to further delay the Supreme Court issuing a final opinion in this matter. The WCAB policy expressed in the Memorandum by Commissioner Miller to defer decisions on calculation of apportionment until the issue resolves looks like a necessary step to provide the Appellate Courts some relief from having to continue grant and consolidate additional appeals.

The WCAB has indicated that it intends to request the Supreme Court to accelerate the process for review of this issue because of its importance and encouraged interested parties to express their support for the concept. However, one must always recognize that virtually everything that shows up before the California Supreme Court is considered to be important and it is difficult to determine whether the court will decide that this issue is more important than the other issues that are presented for it. However, the court may give some deference to the request by a fellow state agency, indicating that this is an area of importance involving certainly thousands of cases over the next several years.

The 4th Appellate District has issued the first appellate decision on the legal standards involved in applying Labor Code Section 4663. Inexplicably, after providing significant commentary and guidance on the evidentiary burden under that section, the court orders the opinion to not be published. Given that this decision is the only current appellate authority on this important topic, we can only hope that the court recognizes the significance of its decision and changes the status of the case and orders it published.

In Yeager Const. Co v. WCAB (Gatten) the court was presented with a WCAB decision which had declined to apportion disability under Labor Code Section 4663 to a previous mildly symptomatic but essentially non-disabling level of degenerative disc disease (DDD). The reporting physician had felt that apportionment of 20% was appropriate based on the applicant's significant level of pre-existing multiple level DDD and the prior history of mild symptoms. The trial judge and the WCAB had rejected the physician's conclusion arguing that the doctor's opinion was not substantial evidence.

The Appellate Court looked at each of the WCJ's & WCAB's arguments and was unimpressed. The Court seemed to feel that the WCAB's arguments were disingenuous and that the Board attempted to apply pre-SB 899 rules at the same time claiming that it recognized the applicability of the new standards.

The primary criticism leveled by the WCJ and WCAB was the lack of history of prior disabling symptoms. The court noted:

" ... In contrast, the Board's rejection of his opinion on apportionment is based on an analysis of the facts that would have been appropriate under the prior law, rather than the current one. While paying lip service to the new standard that apportionment can be warranted if there is a preinjury asymptomatic condition, the doctor's report is criticized in large part because of the absence of significant preinjury medical treatment or disability. It points out, for instance, that applicant suffered from minor episodic back pain prior to his injury, but notes that such pain is not a ratable disability. This is, of course, true, but this fact is not significant under the new law. An asymptomatic prior condition would not involve a ratable disability, so that the fact that applicant here did not have a history of medical treatment or lost time due to his degenerative back condition is not significant under the new apportionment standards and does not serve as a basis to disregard Dr. Akmakjian's opinion. If the Board's analysis were the norm, apportionment under the new standard could rarely, if ever, be found.". (emphasis added by author)

It is clear that the Appellate Court felt that the WCAB was not following its own guidelines and rational from Escobedo. The WCAB had quoted extensively from that opinion in its arguments and then promptly refused to follow their own ruling instead attempting to utilize the pre-AB 899 criterion for apportionment.

The Court also addressed the WCAB's argument that the doctor's opinion was "speculative", an argument that is frequently advocated by Applicant Attorneys and accepted by WCJs. Even physicians, who can provide opinions on the most obtuse medical issues, are all too often willing participants is this argument. The same kind of medical judgment that doctors are willing to provide on issues involving judgement such as PD, contribution and other medically based issues, suddenly becomes "speculative" when apportionment is the issue.

However the Appellate Court did not think so:

".A medical expert may well view a person's history of minor back problems as being more significant in light of the evidence of substantial degeneration of the back shown by an MRI. Dr. Akmakjian did so here. His conclusion cannot be disregarded as being speculative when it was based on his expertise in evaluating the significance of these facts. This was a matter of scientific medical knowledge and the Board impermissibly substituted its judgment for that of the medical expert."

The Appellate Court also found the physician's opinion of the percentage of apportionment to be legally supportable even though it was expressed in approximate terms:

".Finally, the 20 percent figure that Dr. Akmakjian used is based on his subjective evaluation, but we cannot conclude that it is merely a random number that he settled upon. He himself noted that apportionment would have been greater if applicant had had more extensive treatment for his back. On the other hand, the doctor may have given applicant a higher disability rating because he appeared to be in more pain than other patients with similar injuries because of the preexisting pathology. In Dr. Akmakjian's words, applicant just did not have a normal back. The doctor made a determination based on his medical expertise of the approximate percentage of permanent disability caused by degenerative condition of applicant's back. Section 4663, subdivision (c), requires no more." (emphasis added by author)

Each of the arguments presented to the Appellate Court are advocated on a daily basis at the WCAB by Applicant Attorneys and acquiesced in by WCJs, in part because there is such a lack of legal definition of the issues. I have yet to hear a single WCJ advise an applicant attorney that their report fails to meet the affirmative burden imposed by Escobedo for presentation of substantial evidence as to the percentage of causation for the industrial injury. But in every case the issue of whether the defendant has met their burden on apportionment is raised. Under the guidelines set out in EscobedoHYPERLINK l "BM__ftn1"[1], the initial burden is on applicant to present substantial evidence on how much of the permanent disability is attributable to the industrial injury, and then the burden shifts to defendant to present evidence of apportionment.

What typically happens at the WCAB is a report for applicant is presented stating that it is "speculative" to apportion to non-industrial causes and then a legal conclusion is made by the physician that all of the PD is industrial (in effect applying the pre-SB 899 rule that the PD was by default industrial in the absence of substantial evidence for apportionment). In reality there ends up being no substantial medical opinion on the issue of causation and yet the defendant is still expected to meet its burden on presenting substantial evidence to justify apportionment (and as demonstrated by the trial and WCAB decisions in the instant case - the burden is frequently misstated to defendant's detriment). The holding in this case goes a long way toward dispelling the myth that defendant's are unable to meet their burden with carefully outlined medical opinions and further that the opinion on apportionment does not require exactness but merely what the statute requires, an approximation of the values for causation.

In one respect defendants are failing to meet their burden. As pointed out by the WCAB in its arguments; for an opinion on causation (either industrial or non-industrial) to be "substantial evidence", a physician must give more than an number. The percentage of causation opinion must be supported by a discussion as to the basis for the physician's opinion. As expressed in Escobedo the physician must describe the " how" and the "why" of causation. "How" the contributing factor played a role in causing the PD and "why" the physician believes the contributing factor is playing a role in the current level of PD.

".if a physician opines that 50% of an employee's back disability is caused by degenerative disc disease, the physician must explain the nature of the degenerative disc disease, how and why it is causing permanent disability at the time of the evaluation, and how and why it is responsible for approximately 50% of the disability." (Escobedo v. Marshalls (2005) 70 Cal.Comp.Cases 604, 621, fn. omitted.)"

Failing to provide this critical information is one of the most frequent mistakes that defendants make in presenting their case for apportionment before the WCAB. Good case preparation can go a long way toward making it more difficult for WCJ's to dismiss defendant's valid arguments on apportionment. This kind of preparation must be evaluated and completed long before the case gets to the MSC in order to make certain that the record is complete. With many WCAB venues becoming able to set cases for MSC within 60 days of getting a Declaration of Readiness to Proceed, waiting till the MSC to make certain the record is adequate is a prescription for failure.

A copy of this case can be located by clicking on the citation above.

Attorney Richard "Jake" Jacobsmeyer is a partner in the firm Shaw, Jacobsmeyer, Crain & Claffey and can be reached at jakejacobsmeyer@shawlaw.org.

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