All You Need to Know About Apportionment

Saturday, August 13, 2005 | 0

The Three Great Hits: Kleeman, Escobedo, and Nabors
"The Employer Pays for What It Directly Causes" By Phil Walker, Esq.
Principal,Brigham Walker

On April 19, 2004, Governor Arnold Schwarzenegger signed into law California's new workers' compensation law, known as "S.B. 899."

Apportionment-the allocation of responsibility for causation of disability-was one of the 3 areas of California law most radically changed by S.B. 899. Over 40 years of California law on apportionment in workers' compensation is being eliminated through the changes in S.B. 899 and the 3 subsequent decisions from the Workers' Compensation Appeals Board--Kleeman, Escobedo, and Nabors. These changes are radical and represent a dramatic reversal of direction on apportionment in California.

To make such changes, the California Legislature enacted 2 new Labor Code provisions-Labor Code sections 4663 and 4664. Their essence is: The employer only pays for what it directly causes.

Labor Code sections 4663 and 4664 provide:

4663. Apportionment of permanent disability; causation as basis; physician's report; apportionment determination; disclosure by employee.

(a) Apportionment of permanent disability shall be based on causation.

(b) Any physician who prepares a report addressing the issue of permanent disability due to a claimed industrial injury shall in that report address the issue of causation of the permanent disability.

(c) In order for a physician's report to be considered complete on the issue of permanent disability, it must include an apportionment determination. A physician shall make an apportionment determination by finding what approximate percentage of the permanent disability was caused by the direct result of injury arising out of and occurring in the course of employment and what approximate percentage of the permanent disability was caused by other factors both before and subsequent to the industrial injury, including prior industrial injuries.

If the physician is unable to include an apportionment determination in his or her report, the physician shall state the specific reasons why the physician could not make a determination of the effect of that prior condition on the permanent disability arising from the injury. The physician shall then consult with other physicians or refer the employee to another physician from whom the employee is authorized to seek treatment or evaluation in accordance with this division in order to make the final determination.

(d) An employee who claims an industrial injury shall, upon request, disclose all previous permanent disabilities or physical impairments.

4664. Liability of employer for percentage of permanent disability directly caused by injury; conclusive presumption from prior award of permanent disability; accumulation of permanent disability awards.

(a) The employer shall only be liable for the percentage of permanent disability directly caused by the injury arising out of and occurring in the course of employment.

(b) If the applicant has received a prior award of permanent disability, it shall be conclusively presumed that the prior permanent disability exists at the time of any subsequent industrial injury. This presumption is a presumption affecting the burden of proof.

(c) (1) The accumulation of all permanent disability awards issued with respect to any one region of the body in favor of one individual employee shall not exceed 100 percent over the employee's lifetime unless the employee's injury or illness is conclusively presumed to be total in character pursuant to Section 4662.

As used in this section, the regions of the body are the following:
(A) Hearing.
(B) Vision.
(C) Mental and behavioral disorders.
(D) The spine.
(E) The upper extremities, including the shoulders.
(F) The lower extremities, including the hip joints.
(G) The head, face, cardiovascular system, respiratory system, and all other systems or regions of the body not listed in subparagraphs (A) to (F), inclusive.

(2) Nothing in this section shall be construed to permit the permanent disability rating for each individual injury sustained by an employee arising from the same industrial accident, when added together, from exceeding 100 percent.

Court Interpretation of Labor Code Sections 4663 and 4664

The WCAB has issued, essentially, 3 new rules on apportionment. Each rule is known by the name of the case in which it was articulated.

Rule 1: The Kleeman rule: The new rules on apportionment apply to all cases which were pending as of April 19, 2004. Kleeman v. WCAB, 127 Cal.App.4th 274 (2005).

Rule 2: The Escobedo rule: The employer is only liable for the percentage of permanent disability directly caused by the industrial injury. (Escobedo v. Marshalls and CNA Insurance Co., Case No. GRO 0029816).)

Apportionable conditions, burdens of proof, and "substantial medical evidence" are:

a. Defendant has the burden to establish a basis for apportionment.

b. Applicant then has the burden of establishing the percentage of permanent disability directly caused by the industrial injury.

c. Defendant then has the burden of establishing the percentage of the permanent disability caused by factors other than the industrial injury.

d. Defendants can apportion to:

1) natural progression of a non-industrial condition or disease;
2) pathology;
3) asymptomatic prior conditions; and
4) retroactive prophylactic work restrictions; and
5) prior Awards, Findings, Stipulations, Claims, Compromise and Release Agreements, Awards in non-California disability systems, and Civil awards and actions.

e. To prevail on apportionment, Defendant must use "substantial medical evidence" to establish that the conditions being apportioned to caused disability.

"Substantial medical evidence" means that the report establishing apportionment must:

1) Base its conclusions on reasonable medical probability;
2) Be based on pertinent facts;
3) Be based on an adequate examination and history of the Applicant; and
4) Set forth the reasoning for its conclusions.

Rule 3: The Nabors rule: To determine the dollars paid to an Applicant after apportionment is awarded, do the following:

a. Calculate the overall percentage of permanent disability;
b. Subtract the percentage of PD caused by other factors or previous awards; and
c. The balance is Applicant's final percentage of PD.
d. Pay based on the balance. (Nabors v. Piedmont Lumber and SCIF, en banc, 6/9/05).

What To Do

Based on these 3 decisions, Defendants will need to do the following to prevail on apportionment:

1. Identify the following through contact with the Applicant, deposition, investigation, and discovery:

a. All medical conditions or diseases throughout Applicant's life;

b. All records of medical treatment, hospitalization, diagnostic tests, medical examinations, physical therapy, physical rehabilitation, nurse case management, and physical examinations (military service, insurance, sports, and employment) throughout the Applicant's life;

c. Any evidence of pathology;

d. Any evidence of prior conditions, either symptomatic or asymptomatic;

e. Any work restrictions, either prophylactic or actual; and

f. Any and all prior Awards, Findings, Stipulations, Compromise and Releases, workers' comp claims, claims under non-California disability systems, and/or civil claims.

2. Ensure that the physician doing the evaluation does the following:

a. Gets a complete history from the Applicant;

b. Does a complete examination of the applicant;

c. Reviews all medical records and reports provided;

d. Orders all necessary diagnostic tests;

e. Identifies all potential factors which could cause the subject disease or injury [is trained on the "science" and "medicine" of apportionment];

f. Uses the AMA Guides to the Evaluation of Permanent Impairment [5th Edition] correctly in producing an impairment rating for the Applicant (if the AMA Guides apply to the case) [and is trained on the correct use of the AMA Guides];

g. Bases his/her opinion on reasonable medical probability; and

h. Sets forth the reasoning for his conclusions, including the specific sections of the AMA Guides which he has utilized in calculating the impairment.

We hope that these guidelines will assist you in addressing all issues presented by California's new law on apportionment.

Brigham Walker provides training for Claims Professionals, Attorneys, and Medical Professionals on apportionment, use of the AMA Guides, California's new PD Rating System, and all of the areas noted above.

Please contact Mindy Brigham for further information on training and resources. Call 619-299-7377 or mbrigham@brighamassociates.com .

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