State: Calif.
A Supreme View: [2011-09-08]
Clarifying The Cost of Living Adjustment (COLA) Rules. In the July edition of the Bulletin, we reported on the oral argument before the Supreme Court in Baker v. WCAB. In that case, the court was asked to resolve a dispute over when Labor Code Section 4659(c) requires the parties to first apply a cost of living adjustment (COLA) to life pension or total permanent disability benefits. It was our observer’s perception that the Court was leaning toward the defense position in the case. We are pleased to report his perception was correct.
The court was presented with three possible starting dates for applying a COLA to the benefit payment rate. One option, advocated by the Court of Appeal, was to apply the COLA starting on January 1, 2004, regardless of the date of injury. The second option, advocated by the applicant and the WCAB, was to apply the COLA starting on January 1 of the year following the date of injury, even if the applicant did not become entitled to permanent disability or life pension benefits until years later. The third option, advocated by the defense, was to apply the COLA on January 1 of the year after the applicant first became entitled to the benefit being adjusted.
The court reviewed the language of the statute. The statute says that the COLA applies to injury dates on or after January 1, 2003, and provides that an employee “who becomes entitled to receive a life pension or total permanent disability indemnity” is entitled to the annual COLA “commencing on January 1, 2004”. The court concluded that because the statute says that the COLA is to be applied only to someone who “becomes entitled” to receive a life pension or total permanent disability benefits, it cannot be applied until after the person is entitled to receive those benefits. As a result, a person who is permanently totally disabled is entitled to an annual COLA beginning on January 1 of the year after the person becomes permanently totally disabled. A person who is entitled to a life pension is entitled to an annual COLA beginning on January 1 of the year after the life pension benefits start. It is important to note that, in a life pension case, the COLA is not applied to permanent disability benefits, but only to the life pension benefits after permanent disability benefits end and the life pension begins.
We like this decision because it is both clear and sensible.
Clearing The Way. Sometimes, the Supreme Court’s decision to not say anything is just as significant as if the court had issued an opinion. On August 24, 2011, the Supreme Court declined to review the Almaraz case, clearing the way for parties to rely on the Court of Appeal decision in its companion case, Guzman v. WCAB.
The WCAB combined the Almaraz and Guzman cases for decision at the Board level to provide a unified opinion on the rules for rebutting an AMA Guides impairment rating. However, since the two cases arose in different parts of the state, two separate appeals were filed, in two different districts of the Court of Appeal. Because of this procedural circumstance, until now it was possible that there could have been two different opinions issued. The Court of Appeal previously declined to hear the Almaraz case. The Supreme Court’s decision to also not hear the case leaves the Guzman decision as the controlling opinion.
While we might have liked for the Supreme Court to take up the case and clarify some of the ambiguities in Guzman, or perhaps issue a decision which is a little more favorable to the defense, the Supreme Court’s refusal to hear the case at least ended any controversy over whether the Guzman decision should be followed.
On The Horizon. It is not only the Supreme Court which has been busy working on workers’ compensation issues. There are currently a number of bills pending before the state legislature which may have a significant impact if passed.
Some of the pending legislation includes a proposal to cap reimbursement to doctors for compound drugs, a proposal that would impose penalties on claims administrators who do not timely report claim information, a proposal to require the DWC to adopt a fee schedule for reimbursement of vocational experts, a proposal to extend the 104 week limit on temporary disability benefits to 240 weeks when the course of treatment lasts more than two years, a proposal that creates a presumption that blood-borne disease is a compensable injury for hospital workers providing direct patient care, and a proposal to require a contractor to show proof of workers’ compensation insurance or exempt status when renewing a contractor’s license.
The current legislative session ends on Sept. 9, 2011.
Mullen & Filippi is a workers' compensation defense firm with 12 offices in Southern California. This column was reprinted with the firm's permission from its client newsletter.