Pebworth, Voc Rehab and Pre-'03 Injuries

Saturday, August 16, 2003 | 0

AB 749 was the first time in California workers' compensation history that settlement of prospective vocational rehabilitation entitlement was permitted. Labor Code section 4646 was amended into three sub-sections, providing the framework for a scheme that permitted settlement of "the employee's right to prospective vocational rehabilitation services with a one-time payment to the employee not to exceed ten thousand dollars ($10,000) for the employee's use in self-directed vocational rehabilitation."

While vocational rehabilitation groups derided the provision, announcing that it was bad policy, an attempt was being coordinated by the applicant's bar to make the section applicable to injuries that occurred prior to the effective date of the legislation. Typically, unless a statute specifically provides that it is retrospective, a new law will be applicable only to incidents that occur on or after the effective date of the law. Evangelatos v. Superior Court (1988) 44 Cal.3d 1188.

It came as no surprise, though, when a September 1, 2002 letter authored by Assembly Insurance Committee Chairman Tom Calderon, D-Montebello (who was responsible for the bulk of AB 749, including the amendment to LC 4646), was submitted by California Applicants Attorneys Association President Gil Stein to Richard Gannon, the Administrative Director of the Division of Workers' Compensation, as the Division was in the process of drafting regulations to put into effect the amendments. That letter declared that it was legislative intent to make the amendments to 4646 apply retrospectively to injuries occurring prior to the effective date of AB 749:

"It appears as though the Department of Industrial Relations (DIR) has taken the position that the legislative intent of AB 749 is to limit such settlements to injuries occurring on or after Jan[uary] 1, 2003, and are proposing regulations to bar settlement of vocational rehabilitation for injuries prior to that date.

"Such an interpretation flies in the face of our intent. If the legislature wishes to specify the effective date of a provision relating to benefits, it does so specifically (i.e., the cap on vocational rehabilitation benefits).

"If a question as to legislative intent remains, it is clarified in a trailer bill. It is important to note that neither AB 749 (Calderon) nor AB 486 (Calderon) contain language specifying that settlement of prospective vocational rehabilitation applies only to injuries occurring post January 1, 2003. Therefore, no such limitation is intended by the legislature. The ability to settle such claims beginning January 1, 2003 applies to all injuries, regardless of date of injury.

"I would also note that the changes in California Labor Code Section 4646 are procedural, not substantive. They neither expand nor diminish the rights of either party. Thus, any settlement must be less than the maximum allowable under the cap."

The Division took the opposite tact, drafting regulation section 10131.2 specifically to apply only to injuries that occur 1/01/03 or later. The line was drawn in the sand, and a test case was pursued.

That test case, Clarence A. Pebworth vs. Allan Hancock College, Permissibly Self-Insured; and Workers' Compensation Administrators (Third Party Administrators) (WCAB No. GRO 023699) was decided by the Workers' Compensation Appeals Board En Banc on 8/08/03, and the Board made it clear that so far as the Commissioners were concerned, not only was the statute clear on its face as to its applicability, but that since vocational rehabilitation exists solely by legislative manifesto, only a clear statute specifically providing an implementation different than the general rule of statutory construction is sufficient to override generally accepted principles.

In Pebworth applicant sustained industrial injuries to both knees while employed by defendant on November 6, 1997 and from 1985 to August 20, 2002. The parties settled the main issues by Compromise and Release that was approved by the Workers' Compensation Judge (WCJ) on 11/19/02. The C&R provided that applicant "does not wish to pursue vocational rehabilitation services and benefits at this time," that applicant waives any and all claims for retroactive vocational rehabilitation benefits or services to date, and that applicant was settling "all injuries...that might occur in the future during participation in vocational rehabilitation."

However, on 1/29/03, the parties to the case submitted to the Rehabilitation Unit a "Settlement of Prospective Vocational Rehabilitation Services [Lab. Code, section 4646(b)]" (DWC Form RU-122). This proposed settlement, which was signed by applicant and his attorney, stated: "The parties hereby agree to settle the employee's right to prospective Vocational Rehabilitation services with a one-time payment to the employee for the sum of $10,000... ." The Rehabilitation Unit denied the settlement and the parties appealed to the WCAB. The WCJ upheld the position of the Rehabilitation Unit, stating that if the legislature intended to make the application of the 4646 amendment retroactive it would have stated so in the law itself.

The Board, En Banc, agreed because the law change was substantive, not procedural, wholly rejecting Senator Calderon's letter after a thorough review of the history of vocational rehabilitation in the California workers' compensation scheme:

"Similarly, here, given the long-standing reluctance of the state and national workers' compensation study commissions, of the Appeals Board (Thomas v. Sports Chalet, Inc., [Citation]), and even of the Legislature itself to allow the settlement of vocational rehabilitation except in limited circumstances (see, Lab. Code, section 5100.6; former Lab. Code, section 4646), we conclude that the amendments to the statutory preclusions against settling vocational rehabilitation are not procedural because they effect substantial changes to a substantive right. Accordingly, unless there is a clear contrary expression of legislative intent, the amendments cannot be retrospectively applied to injuries occurring before their effective date."

At the time that this article was written, the decision of the Board had just been released, and I was unable to confirm prior to deadline whether the matter would be taken up to the Court of Appeals, though it certainly would seem to be an issue upon which a Petition for Writ of Review would be filed by the parties. For the time being, however, Regulation section 10341 (effective 1/1/03) applies: "En banc decisions of the Appeals Board are binding on panels of the Appeals Board and workers' compensation judges as legal precedent under the principle of stare decisis."