In 1952 (over 73 years ago) the California Supreme Court upheld the constitutionality of the Subsequent Injuries Benefits Trust Fund in the Patterson case (17 CCC 142). But not only did the court uphold SIBTF constitutionally, they therein set forth the basis of how SIBTF benefits would be paid. 

Arthur L. Johnson

The court gives the example of the one-eyed man, stating:

1. “Workers’ Compensation laws of various states and the federal government contain provisions for additional compensation to be paid from a fund (rather than by the employer or his workers’ compensation insurance carrier) to the already handicapped worker who sustains an industrial injury which causes increased permanent disability. The purpose of such subsequent injuries legislation is manifestly sound and we think, as here and after developed in some detail, is encompassed within the purview of the 'complete system of workers’ compensation' contemplated by our constitution."
2. "For example the one-eyed worker who sustains an industrial injury which results in a loss of the sight of his remaining eye is in need of more compensation to enable him to rehabilitate himself than is the worker with two good eyes who sustains an industrial injury which results in the loss of the sight of one."
3. "Yet it seems unfair to place upon the employer who is willing to hire handicapped workmen the burden of furnishing such additional compensation indeed; in states which have held the employer of the one-eyed workman is liable for total disability when the workman loses his second eye as a result of an industrial injury, employers as a consequence of such decisions have refused to employ the handicapped.”
4. (The Subsequent Injuries Fund legislation) is the attempt of the California Legislature "to alleviate the plight of the handicapped workman who sustains an industrial injury resulting in seriously increased permanent disability."

So, there in the Patterson case, the seminal case finding SIBTF constitutionally sound, the Supreme Court places the burden of paying for the “increased permanent disability” on the Fund, while the employer pays for the loss of one eye, as if there was no prior missing eye at all. 

And so this methodology for payment has continued for 73 years. And we have had Escobedo (much quoted en banc decision) that analyzed how apportionment is to be medically addressed and what constitutes legitimate medical apportionment. Escobedo did not at all address how the apportionment benefits would be paid. Escobedo did not change the Patterson formula and the Subsequent Injuries Fund has continued to pay for the progression of the disability, the disability actually caused by the industrial injury. For example, with a claimant with a pre-existing lumbar fusion rated at 50%, and he has a new subsequent Injury from a fall, causing total disability, the employer pays as if he had a perfect back, 50% and the Subsequent Injuries Fund pays for the disability actually caused by the employer, the difference between the first 50% and the overall 100%. 

And so the cases continue to be processed with now a hue and cry that we have a “crisis.”

Well, we have a crisis because the Appeals Board has never addressed the plain meaning of the language of Labor Code §4663. Labor Code §4663 was part of the reform legislation that came about in 2005 with SB 899. Labor Code §4663 reads:

“Physician shall make an apportionment determination by finding what approximate percentage of the permanent disability was caused by the direct result of the injury arising out of and occurring in the course of employment and what approximate percentage of the permanent disability was caused by other factors.”

Comment

In the case of the one-eyed man who loses his remaining eye, the percentage of permanent disability directly caused by the industrial injury is the disability that took the claimant from the rating for loss of one eye to 100% disability. 

In the case of the claimant with a prior two-level fusion rated at 50%, the percentage of permanent disability caused by the “direct result of injury” was the percentage going from 50% to 100%.

And yet since 2005, no case has analyzed “how” apportioned benefits are to be paid.

Any plain meaning interpretation of Labor Code §4663 would be that the disability directly caused in the above two situations is the progression of the disability that takes the claimant to 100%. And yet there has been no judicial challenge to the interpretation of Patterson since the legislative change in 2005. 

The entire SIBTF “crisis” would dissipate if one of our legal brethren took up a case applying the plain meaning of Labor Code §4663, that the employer is liable for the disability from the injury that it has caused. In the SIF situation, it is the progression of the disability from the pre-existing to the overall. And any plain meaning reading of the statute (Labor Code §4663) would hold that the employer is liable for the increase in disability caused by the subsequent industrial injury and that the Subsequent Injuries Fund is liable for the pre-existing disability, the cost of that percentage. 

For the 20 years since 2005, despite the change in Labor Code §4663, the employers and carriers have continued to have an “escape valve” for payment of disability, with a de facto continuation of the Patterson methodology, despite the plain meaning language change in Labor Code §4663. 

Conclusion

So now we have a “crisis,” a crisis designed to greatly limit or eliminate the Subsequent Injuries Fund, and potentially seal in the judicial gift made by the California Supreme Court 73 years ago to employers, a gift made to encourage the hiring of the handicapped. 

Well, if that gift is now going to be rescinded, then the recipients of that gift, the employers, should bear the burden of the plain meaning of Labor Code §4663 and be required to pay for the disability directly caused by the subsequent industrial injury - the progression of the disability from the pre-existing to the overall. Because that is the medical reality. Because now that is the legal reality under a plain meaning interpretation of Labor Code §4663. And with the curtailment of SIBTF benefits, so that employers are no longer encouraged to hire the handicapped, then employers should be held to the original purpose of the workers’ compensation laws: “Industry should bear the costs of the disability it causes.”

Arthur L. Johnson is a founding attorney for Johnson Law Firm, a workers' compensation and Social Security disability law firm in San Jose. This opinion appears here with permission.