Nabors Reversed, Dykes Endorsed for All 4664 Cases

Saturday, June 17, 2006 | 0

In a move which surprised very few, the First Appellate District Court of Appeals has reversed and remanded the WCAB en banc decision in Nabors v. WCAB holding that when calculating payment of permanent disability where there is apportionment allowed under to Labor Code Section 4664, the injured worker is entitled to have the dollar value of prior awards subtracted rather than the percentages of disability subtracted. The WCAB, in its en banc decision, had determined that the legislature did not intend to alter the scheme for calculation of apportionment in subtracting prior awards of permanent disability from subsequent awards, relying in part upon their interpretation of the legislative intent and the California Supreme Court decision in Fuentes v. WCAB.

The effect of this decision, which is almost certainly to be appealed, is to impose the method for calculation of permanent disability adopted by the Fifth Appellate District in Gallo Glass Co. v. WCAB (Dykes) several months ago. In that case the court had appeared to limit its holding to only multiple injuries with a single self-insured employer. The Court in Nabors termed the limitation to such employers a "Distinction without a Difference, and also opined that the court in Dykes did not really limit its holding but only addressed the issue before it. The holding in Nabors therefore is that the Dykes holding applies to all cases thereby expanding that method of calculation to all claims where there are pre-existing awards of partial permanent disability that are subject to apportionment under Labor Code Section 4664.

The Courts decision also spent a good deal of ink addressing the arguments put forth by the California Workers' Compensation Institute (CWCI) that the intent of the legislation was not to overturn Fuentes but the decision in Wilkinson v WCAB and its progeny, which allowed for the combining of disabilities where all injuries became P & S at the same time. However the Court was unimpressed with the arguments and issued this decision holding that there was no showing that the 1st District should not follow the lead of its sister court in Dykes(5th District) and that it therefore ruled in the same fashion as the initial court addressing this issue.

This decision renders even more significant the court determination in Pasquatto v. Hayward Lumber, a WCAB en banc decision wherein the Board determined that an Order Approving a Compromise and Release was not an award of permanent disability for purposes of Labor Code Section 4664. The Board appeared to leave open the possibility that some Compromise and Release agreements might under some circumstances be considered such an award. Extensive speculation has pointed to Compromise and Release agreements where the parties have inserted a specific finding of a level of permanent disability as potentially involving a different application of Labor Code Section 4664 and allowing such Compromise and Releases to be considered an award of permanent disability. If this turns out to be the case, those awards will involve subtracting the dollar value of the permanent disability award rather than apportioning disability on the basis of medical causation pursuant to Labor Code Section 4663 which of course was still a viable issue even where a Compromise and Release was involved.

Given the two tracts on apportionment that we now have, i.e. Labor Code Section 4663 (apportionment to medical causation) vis a vis Labor Code Section 4664 (apportionment to a prior award), we now appear to have two distinct methodologies for handling calculations of Permanent Disability and Apportionment. Given the decisions in Nabors and Pasquatto, in most cases (but not necessarily all cases), the value of apportionment under Labor Code Section 4663 is potentially of greater "value" to defendants than apportionment under Labor Code Section 4664 because of the progressive nature of the permanent disability rating schedule. The circumstance where this would not be true would include cases where the prior award was of a relatively modest nature and the new award for an injury was after 1/1/05 and the level of disability was under 15 or 16 percent. In those circumstances, the dollar values would result in a slightly greater reduction in the applicant's overall benefits than apportionment on the basis of percentages because of the reduction of the number of weeks of payments in SB899. However, for the majority of cases, the application of apportionment of Labor Code Section 4664 and subtraction of the dollar value of the prior awards should result in a significant increment in total benefits for the applicant, particularly in larger cases and certainly in cases involving life pension and permanent total disability with their dramatic increase in total value.

While the decision brings mixed results for the employer community, the reality is that such apportionment is still, generally speaking, going to be more valuable than the apportionment that the defendants had before SB899 when even with a pre-existing award, defendants would frequently receive no credit at all for a prior award or if an old case was capable of being reopened and combined with the new disability award, apportionment was on a dollar basis anyway using the rational in the Wilkinson v WCAB. In effect, this decision makes every case, whether it is a prior award of permanent disability, subject to the rule in Wilkinson where all of the injuries are combined and a single award paid. Wilkinson required the Appeals Board to have jurisdiction to reopen the award or for the cases to still be a live litigated file. The holding in Nabors eliminates that particular requirement as it eliminates the requirement that cases be permanent and stationary at the same time.

A copy of the Court of Appeals decision can be located by clicking on the case title in the side bar at right.

Interestingly there are approximately half a dozen other cases pending at the Courts of Appeals on the same issue. It is conceivable that a different district will come to a different conclusion from the First Appellate District on this issue as several of those courts denied petitions for writ of review by applicants before having the cases transferred back to them by the California Supreme Court. Should such a situation occur the obvious result would be to require the California Supreme Court to make a decision in this area.

That possibility alone should not necessarily raise any great hopes given the fact that the Supreme Court denied defendant's petition for hearing in Gallo Glass Company v. WCAB (Dykes) case and also that the Supreme Court has granted and retransferred to the Court of Appeals several other cases where decisions relying upon Nabors had already issued (Shevchuk v WCAB & Welcher v WCAB). One has to certainly suspect that given a chance to review this issue, the Supreme Court might very well fall on the side of the Court of Appeals in Nabors rather than the WCAB. However, clearly this is an issue which the Supreme Court will be asked to comment upon on several future occasions and all we can do is wait and see how the court responds.

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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