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Apportionment and SIBTF: Acme Steel v. Bowman

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When California Labor Codes 4663 and 4664 were changed pursuant to Senate Bill 899 it was understood by the legal and medical stakeholders that major changes in applicable case law were in the making and that the issue of apportionment was about to become even more difficult than it already was. The upshot is that medical evidence that may be considered substantial and that was not rebutted may still be considered even in cases where permanent disability has been awarded at the 100% level.

In Acme Steel v. Workers' Compensation Appeals Board & Borman, Acme Steel appealed the verdict in favor of Borman wherein Borman was awarded 100% permanent disability without apportionment for hearing loss. It was Borman's contention that his hearing loss, associated with injury to other body parts, was attributable to his job with Acme. Three different agreed medical evaluators worked the case – orthopedics, neurology and otolaryngology for hearing loss.

The hearing loss was reported as apportioned to both industrial and nonindustrial factors, 40% to cochlear degeneration on a nonindustrial basis, 60% to "occupational factors," e,g., hearing loss caused by on-the-job noise. The applicant's hearing loss was diagnosed as secondary to cochlea degeneration, in turn to secondary congenital disease of the Organ of Corti. However, it was also understood that in 1994 the applicant sustained loss of consciousness secondary to an explosion that occurred on-the-job and that catapulted the applicant across the room. A workers' comp claim was filed at the time. Applicant Borman was awarded 22% disability; however, his hearing continued to deteriorate.

Applicant Borman's hearing loss was bilateral from the beginning. Hearing aids were advised. Ten years later, the AME found that there was "further hearing loss" and that this "further hearing loss ... was the result of both cochlear degeneration ... and persistent noise exposure."

In 2012, the workers' comp administrative law judge found that Borman's injury was ratable under the post-2004 Permanent Disability Rating Schedule and that Borman showed 100% loss of earning capacity so that he was entitled to permanent total disability. The judge also said that Labor Code Section 4664 was not pertinent because there was no earning loss before the prior award. In other words, Borman had continued to work while his hearing loss got worse. That's about when Acme appealed by stating that the judge failed to apportion injury pursuant to LC 4663. In other words, there was prior evidence showing 40% hearing loss on a nonindustrial basis.

The judge replied that she was not bound by the findings of the AME because there was "convincing vocational testimony regarding loss of earning capacity." In 2013, the WCAB denied Acme's petition for reconsideration. It was at about this time that matters got hot. The case came before the 1st District Court of Appeal, Division One, "Not to be published," 7/16/13.

The discussion led off with this remark: "When a workers' compensation decision rests on the board's erroneous interpretation of the law, the reviewing court will annul the decision." The appellate court then indicated that the judge's decision asserting that Borman could rebut the rating schedule's diminished future earning capacity by offering vocational expert testimony showing evidence of 100% loss of earning capacity was proper; however, it then also said that the judge erred "by failing to address the issue of apportionment."

This assertion was based on changes in LC Sections 4663 and 4664, enacted in 2004 as part of SB 899. These changes reflected changing concepts re the issues of apportionment and causation in favor of employer and insurance interests for any portion of a disability that would not have occurred but for the current industrial cause and where injured workers had "wide latitude to disprove apportionment based on prior permanent disability awards by demonstrating that they had substantially rehabilitated the injury."

The Supreme Court was quoted as saying that "the plain language of new sections 4663 and 4664 demonstrates they were intended to reverse these features." Apportionment was now to be based on causation such that "the new approach to apportionment is to look at the current disability and parcel out its causative sources – industrial, prior industrial, current industrial – and decide the amount directly caused by the current industrial source. This approach requires thorough consideration of past injuries, not disregard of them."

The court ruled that it was the "clear intent" of the Legislature in enacting SB 899 "to charge employers only with that percentage of permanent disability directly caused by the current industrial injury." It was then asserted that the WCAB had ignored substantial medical evidence from the otolaryngology AME that 100% of Borman's hearing loss could not be attributed to the current cumulative trauma.

The court said that the WCAB's failure to apportion the hearing loss portion of the cumulative trauma was contrary to law such that the award to Borman was annulled. ACME's petition for review was granted. The order denying consideration was annulled.

My Comment

It can now be expected that this determination on apportionment will have an effect on Substantial Injury Benefit Trust Fund cases. The crucial happenstance in the Acme v. Borman case is that the applicant's total disability award was actually vacated by being annulled and that apportionment was then determined to be applicable. The meaning of this determination is that what is lost in terms of apportionment may now be applicable and applied to SIBTF situations where prior injury resulted in work disability or "labor disablement." Labor disablement is currently a crucial concept in SIBTF cases and requires its own level of documentation and proof.

Dr. Robert Weinmann is a practicing neurologist in San Jose. This column was reprinted with his permission from his Politics of Healthcare blog.

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