by 'Jake' Jacobsmeyer

The Workers' Compensation Appeals Board has issued its newest en banc decision in the case of Pasquotto v. Hayward Lumber. In this case the Appeals Board considered the issue of whether a defendant was entitled to assert apportionment pursuant to Labor Code Section 4664 for a prior Compromise and Release.

Applicant Eric Pasquotto initially sustained injury in 1998. His injury was diagnosed as a herniated disc at L5/S1 with a bulge also at L3-4 & L4-5. Surgery was ultimately performed at L3-4. His disability was ultimately described as a preclusion from heavy work and lifting limitation of 30 lbs. Applicant then C&Red his case with typical language indicating that all issues were resolved including PD. There was no language identifying a specific level of PD in the settlement.

Subsequently Mr. Pasquotto became employed as a driver at Hayward Lumber. He underwent a pre-employment physical with reports of no low back pain at all. The applicant advised the examining physician of his prior history but advised that he had been working out at the local gym and had essentially rehabilitated his back with no current pain or discomfort. The physician cleared applicant to work at Hayward without restrictions. The work at Hayward was described as heavy and some of it was very heavy.

Applicant worked without difficulty at Hayward for over 2 years. He then sustained a specific injury when he and a co-worker were lifting a "very, very, very heavy" prefabricated wall that fell onto applicant causing another back injury. There was also another injury some months later while lifting. Applicant eventually underwent another surgery at L5/S1.

Upon becoming P&S the reports described PD with a preclusion from heavy work and lifting of over 30 lbs. After trial the WCJ issued Rating Instructions for the described level of PD with a pre-existing level of PD using essentially the same language. The recommended rating was 0%. In his decision the WCJ opined that apportionment was based on Labor Code Section 4664(b) and concluded that the level of PD described was "conclusively presumed to exist based on the Order of Approval of the C & R from the prior claim.

Applicant appealed arguing that the Order approving a C&R was not an "award of PD". The WCAB granted and reviewed the case en banc. The WCAB held as follows:

1. An Order approving a compromise and release agreement, without more, is not a "prior award of permanent disability" within the meaning of section 4664(b).

2. Where there is no "prior award of permanent disability" within the meaning of section 4664(b), the medical reports and other evidence relating to a prior industrial injury that was settled by a compromise and release still may be relevant in determining whether any of the permanent disability found after a subsequent industrial injury was caused by "other factors" under section 4663; and

3. The concept of medical rehabilitation from a prior industrial disability remains viable under section 4663; however, even after the injured employee has medically rehabilitated from a prior industrial disability; this does not necessarily preclude a prior industrial injury from being an "other factor" causing the employee's present disability.

The WCAB's decision in this case is certainly not surprising. As the WCAB pointed out the C & R agreement contained neither a stipulation regarding the applicant's percentage of PD nor an language specifying the nature of the PD associated with the injury. The Board concluded that there is no reliable way of assessing how much of the value of the C & R was paid for the level of PD. Given that there can be other factors affecting the value of the settlment, the dollar value of the C&R itself is not a true indicator or the level of PD to associate with the claim.

The WCAB also rejected the concept of using evidence extrinsic to the C&R itself to prove the level of PD considered in the settlement. However in a footnote the WCAB declined to decide once and for all whether there might be some occasions where a C&R might constitute such an award of PD. This presumably refers to the practice that has been commonly adopted by many defendants of putting a figure in the C&R represents a level of PD. Commissioner Brass, in a strongly worded concurring opinion urged the Board to not leave this loophole for further litigation in the future.

This case has all kinds of significant implications. The principle that a C&R without any specific language should not be considered an "award of PD" certainly seems to make sense. The decision points to many of the myriad of problems that would arise in trying to assign a value to such an award for apportionment purposes.

Footnote 8 at page 14 leaves the issue of 4664 apportionment where the C&R has such a figure to another day and while we know how Commissioner Brass will rule, the other members of the Board are a mystery on the issue (any of them could have joined in the Concurring Opinion, but it probably means little at this point that they did not.)

One of the issues that this case affects is the currently pending cases of Nabors and Dykes. Nabors is pending at the Court of Appeal and Dykes is awaiting word of whether the Supreme Court will grant a hearing. [Ed. Note: Dykes was denied review by the Supreme Court on 3/02/06]. If the holding in Dykes is upheld and defendants are denied the substantial benefits of apportionment under Labor Code Section 4664(b), this case may end up being a positive result for them. Labor Code Section 4663 apportionment, at least as currently outlined by the Court, results in a reduction in PD based on the percentage of disability caused by "other factors" and may, while reducing the amount of apportionment on a percentage basis, allow for a much greater level of apportionment on a dollar basis. This case therefore may provide a "hedge for defendants on the issue of apportionment depending on the ultimate appellate result. However if the principle in Nabors holds true, the defendants are certainly as well off with this case as with out it.

If the Dykes rationale prevails, and the remainder of the WCAB decides that footnote 8 represents a valid exception to the rule in this case, the existence of such language in settlement documents might end up costing employers significantly in total dollars by allowing greater apportionment on a percentage basis but significantly reducing the dollar impact of such apportionment.

By attorney Richard "Jake" Jacobsmeyer, managing partner of the Concorde office of Adelson, Testan, Brundo & Popolardo. Jake can be reached at richardjacobsmeyer@atblaw.net.

-------------------

The views and opinions expressed by the author are not necessarily those of workcompcentral.com, its editors or management.