Part 3

The following article is the third in a series for attorneys and other professionals just getting started in workers' compensation. Authors Richard Owen and Harold Greene have graciously permitted the republication of their outline from their annual class on workers' compensation they give to the CA State Bar Section Education Institute, updated to reflect the changes in the law from the recent reforms. Though not in narrative format, workcompcentral editors felt the material to be of excellent educational quality in present form and are proud to publish it here.

Benefits, Continued

D. Permanent Disability [PD]:

1. The rating of permanent disability involves an analysis of disabilities described in the medical reports and is adjusted for age and occupation. (Labor Code section 4660). SB 899 modified the definition of permanent disability to be based on the "employee's diminished future earning capacity." Labor Code section 4600(a). "For purposes of this section [Labor Code section 4600], the nature of the physical injury or disfigurement' shall incorporate the descriptions and measurements of physical impairments and corresponding percentages of impairments published in the American Medical Associations (AMA) Guides to the Evaluation of Permanent Impairment (5th Edition)." Labor Code 4600(b)(1). SB 899 also requires the Administrative Director to adopt a new PD rating schedule incorporating the new definitions and to base such schedule on the RAND report and other empirical studies. The rating schedule shall be adopted by 1/1/05 and applies to all cases from 1/1/05 and for others "when there has been either no comprehensive medical-legal report or no report by a treating physician indicating the existence of permanent disability; or when the employer is not required to provide the notice required by Section 4061 to the injured worker." The Administrative Director has proposed a new PD rating schedule and regulation effective 1/1/05. See Rules 9725 - 9805; 10150 - 10165.5 For rating cases where SB 899 does not apply, see Schedule For Rating Permanent Disabilities, State of California, Department of Industrial Relations, Division of Workers' Compensation, April 1997, infra at p. 31. A working knowledge of the rating process is critical for counsel, on either side of the matter, to properly evaluate the level of the injured worker's disability and thus the value of the case. While the process is relatively simply and straight forward, it can involve complex calculations and appreciation of "unscheduled" factors of disability. It is well beyond the scope of this course to attempt to teach the rating process. If you are new at it, take a beginning rating class; after you've mastered the basic, go on to more advanced problems involving multiple body parts, overlapping disabilities, unscheduled rating factors, and subjective complaints. Please note: the rating schedule was modified effective April 1, 1997. Injuries occurring before that date will continue to use the "old" schedule; injuries occurring after that date will be rated using the new schedule. The rating process is essentially the same, but all of the numbers for parts of body injured and occupation variation have been modified. And the resulting rating are rounded to whole percentages.

2. Permanent Disability Indemnity (Labor Code sections 4658-4662): See schedule on pages 19-20, infra, for a summary of PD benefits. Additionally, most practitioners utilize a "money chart" which shows the dollar value for each percentage of disability to assist in valuing the case. Note: SB 899 modifies the PD schedule by decreasing number of weeks for low injuries and increasing the number of weeks for high PD injuries. Effective when the revise PD schedule is adopted by the administrative director pursuant to amended Labor Code section 4660, provides for a 15% reduction in PD if the employer offers modified or alternate work lasting at least 12 months regardless if the injured worker accepts or rejects to offer. If the employer terminates alternate or modified work before end of 12 month term, PD increases back to 15%. Does not apply to employers with less than 50 employees.

3. Apportionment of Permanent Disability: Completely rewritten by SB 899!

a) Labor Code sections 4663, 4750 and 4750.5 repealed.

b) New Labor Code section 4663 enacted: "Apportionment of permanent disability shall be based on causation." The injured worker shall disclose, upon request, all previous permanent disabilities or physical impairments. "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." Before a medical report can be considered complete on the issue of permanent disability, it must include an apportionment determination by the physician. The physician shall state the percentage of disability directly attributable to the industrial injury and what portion is caused by all other factors.

c) Labor Code section 4664 added: The employer is only liable for the percentage of PD directly caused by industrial injury; prior award conclusively presumed to exist at the time of the subsequent industrial injury; such presumption affects the burden of proof; lifetime accumulation of PD cannot exceed 100% for defined regions of the body: Hearing, vision, mental and behavioral, spine, upper extremities including shoulders, lower extremities including hip joints, and head, face, cardiovascular, respiratory, and all other parts not otherwise listed. Maximum PD for one industrial accident: 100%

E. Vocational Rehabilitation (Labor Code sections 139.5; Rules 10122-10133) (Only for injuries occurring before 1/1/2004):

1. Qualified Injured Worker (QIW): In order to be eligible for vocational rehabilitation benefits, the injured worker must be a QIW (Labor Code section 4635(a)):

a) Medical eligibility: The employee's expected permanent disability precludes, or is likely to preclude, the employee from engaging in his/her usual occupation or the position in which he/she was engaged at the time of injury; and

b) Vocational feasibility: The employee can reasonably be expected to suitable gainful employment through the provision of vocational rehabilitation services.

2. An injured worker must request vocational rehabilitation services. A medically eligible injured worker is entitled to continue to receive regular TD benefits until he/she is medically determined to be permanent and stationary; thereafter, the injured workers is only entitled to vocational maintenance allowance.

3. Vocational Rehabilitation Maintenance Allowance (VRMA): Same as total TD with a maximum of $246/week but can be supplemented by PD advances to equal TD rate. (Labor Code section 139.5) AB 749 made no express increases in VRMA but the supplementation from PD can bring the combined VRMA and supplementation to the new TD rates. SB 899 restored vocation rehabilitation to pre-2003 reforms levels but adds a sunset provision that VR expires on 1/1/2009.

4. Notice of medical eligibility and assignment of a qualified rehabilitation representative (Labor Code section 4637):

5. Development of vocational rehabilitation plan (Labor Code section 4638): A vocational rehabilitation plan is jointly developed by the injured worker and the defendants qualified rehabilitation representative; plans utilizing the employee's transferable skills are preferred to plans that propose training for an occupation in which the employee has no skills or experience. A formal plan is to be submitted to the Rehabilitation Unit within 90 days of determination of the employee's vocational feasibility.

6. Resolution of disputes (Labor Code sections 139.5, 4638(b)(2)): Disputes involving vocational rehabilitation issues must first be submitted to the Rehabilitation Unit of the DWC; Decisions and Orders (D&O) of the Rehabilitation Unit are appealable to the WCAB for a trial de novo.

7. Cap on rehabilitation benefits (Labor Code section 139.5): VRMA shall only be paid for a maximum of 52 weeks; total rehabilitation costs shall not exceed $16,000.00 including a maximum of $4,500.00 for counseling fees. (These caps were enacted effective July 16, 1993, but apparently only applied to injuries occurring on or after January 1, 1994; the vocational rehabilitation fee schedule is set out in Rule 10132.1)

8. No settlement of rehabilitation benefits unless there are "good faith issues which, if resolved against the employee, would defeat the employee's right to all compensation . . ." Thomas v. Sports Chalet, (1977) 42 CCC 625). The ruling in Estrada v. WCAB, (1997) 58 Cal.App.4th 1458, 62 CCC 1384, to extend this prohibition to include settlement of any retroactive rehabilitation benefits was overruled by amendment to Labor Code section 4646 in 1998. AB749 added Labor Code section 4646(b) which allows outright settlement of rehabilitation rights for $10,000, upon approval of the Rehabilitation Unit. (But read the fine print. This may not be an open door to liquidating Rehabilitation rights of the injured.) See also proposed Rule 10131.2; Form RU-122 Labor Code section 4646 was repealed by AB 227 in 2003; it was not restored by SB 899.

F. Supplemental Job Displacement Benefit - New for 1/1/2004 Injuries:

1. New Labor Code section 139.5 provides that if the injured worker does not return to work for the employer within 60 days of the ending of temporary disability, the injured worker shall receive a supplemental job displacement benefit (SJDB) consisting of a non-transferable voucher for education-related retraining or skill enhancement or both at accredited schools. The value of the voucher shall be from $4,000 to $10,000 depending on the level of partial permanent disability. No more than 10% may be used for vocational rehabilitation or return to work counseling. See also Labor Code section 4685.5

2. The employer shall not be liable for SJDB if within 30 days of the ending of temporary disability, the employer offers and the injured worker either rejects or fails to accept modified (accommodating the injured worker's work restrictions) or alternate (wages/compensation must be 85% of wages at time of injury and within a reasonable commuting distance from injured worker's home at the time of the injury) work lasting at least 12 months. Labor Code section 4658.6

3. The DIR proposed rules for SJDB in May 2004. See Rules 10133.50 - 10133.59. (proposed but apparently not adopted)

G. Death Benefits (Labor Code sections 4700-4727):

1. To be compensable, there must be an industrial injury which results in death within 240 weeks of that injury.

2. Who are "dependents" (Labor Code sections 3501-3503)?

3. Death benefits to dependents: See schedule on pages 19-20, infra, for a summary of death benefits.

4. Burial expenses: See schedule on pages 19-20, infra, for a summary of burial benefits.

5. Continuation of benefits until minors reach 18 years of age for deaths resulting from injuries occurring on or after January 1, 1990. (Labor Code section 4703.5)

6. For injuries occurring on or after 1/1/2004, if there are no dependants, a death benefit of $250,000 is payable to the estate of the deceased.

H. Penalties for unlawful discrimination (Labor Code section 132a):

1. "Any employer who discharges, or threatens to discharge, or in any manner discriminates against any employee because he or she has filed or made known his or her intention to file a claim for compensation . . is guilty of a misdemeanor and the employee's compensation shall be increased by one-half . . . [not to exceed $10,000]. Any such employee shall also be entitled to reinstatement and reimbursement for lost wages and work benefits caused by the acts of the employer."

2. Similar penalties for similar acts of discrimination against potential witnesses except for the 50% increase in compensation benefits.

3. Similar penalties for "any insurer that advises, directs or threatens an insured under penalty of cancellation or raise in premium or for any other reason" to discriminate against an injured worker or potential witness.

4. There must be a separate petition filed with the WCAB within 1 year of the discriminatory act or date of termination or the action is barred.

I. Penalties for Serious and Willful Misconduct:

1. By Employee (Labor Code section 4551):

a) 50% reduction of benefits where the "injury is caused by the serious and willful misconduct of the injured employee" except in cases of death, disability over 70%, employer Cal-OSHA violations, or where the injured is 15 years of age and under.

2. By Employer (Labor Code section 4553-4553.1):

a) 50% increase in benefits where the "injury is caused by reason of the serious and willful misconduct of the employer or his managing representative. The penalty is to be calculated on the entire compensation award, not just indemnity benefits, subject to a general limitations that such penalty cannot exceed the employee potential civil tort recovery; such limitation is necessary to prevent sanctioning constitutionally excessive damages. Ferguson v. WCAB (Raley's Supermarkets) 33 Cal.App.4th 1613, 60 CCC 275 (1995).

b) A Cal-OSHA violation/citation of a safety order which proximately caused the injury is tantamount to a prima facia showing of S&W.

c) There is no cap on the amount of increased benefits due as a result of a S&W finding.

d) Illegal hiring of a person under the age of 16 is also a basis for a 50% increase of benefits. (Labor Code section 4557)

e) S&W is a penalty and is not covered by workers' compensation insurance; it is liability owed directly by the employer. (Insurance Code sections 11661, 11661.5)

f) There must be a separate petition filed with the WCAB within 1 year of the date of injury or the benefit is barred by the statute of limitations. This statute is strictly construed. (Labor Code section 5407)

J. Liens (Labor Code sections 4900-4905, Rules 10770-10772):

1. "No claim for compensation nor compensation awarded, adjudged, or paid is subject to be taken for the debts of the party entitled to such compensation except as hereinafter provided." Labor Code section 4901.

2. Determination of liens against compensation payable: Only those liens specified in the Labor Code are chargeable against the injured workers' benefits.

a) Reasonable attorney's fee for legal services pertaining to any claim for compensation, and reasonable disbursements in connection therewith. No fee for legal services shall be awarded to any representative who is not an attorney, except for cases filed on or before December 31, 1991 (Labor Code section 4903(a)); only reasonable legal and medical services claims valid (Labor Code section 4906). For further discussion of attorney fees, see Part II, section XX, infra.

b) Reasonable medical treatment and reasonable medical-legal expenses (Labor Code section 4903(b)). Labor Code section 4903.5 proscribes a statute of limitations for the filing of liens for medical expenses under 4903(b) from the latest to occur: 6 months after the final resolution of the claim by the WCAB, 5 years from date of injury or 1 year from the date the services were provided. See also Labor Code section 4903.2 for the process of payment of medical providers.

c) Reasonable value of living expenses of an injured employee or of his/her dependents, subsequent to the injury (Labor Code section 4903(c)).

d) Reasonable burial expenses not to exceed amount specified in Labor Code section 4701 (Labor Code section 4903(d)).

e) Reasonable living expenses of the spouse or minor children of the injured worker, or both, subsequent to the date of injury, where the injured worker has deserted or is neglecting his/her family (Labor Code section 4903(e)).

f) Unemployment compensation disability benefits (Labor Code sections 4903(f), 4904).

g) State Disability Insurance benefits (Labor Code sections 4903(g), 4904).

h) Indemnification granted by the California Victims of Crime Program under Government Code sections 13959 et seq. (Labor Code section 4903(h)). i) Compensation and related benefits provided by the Asbestos Workers' Account pursuant to Labor Code section 4401 (Labor Code section 4903(I)). j) A filing fee of $100 shall be charged for each initial lien filed by providers, or on behalf of providers, pursuant to Labor Code section 4903(b). See Labor Code section 4903.05 (amended by SB 899). The Administrative Director has filed regulations relating to the collecting of the lien fees effective 6/30/04. See Rule 10250. K. 10% penalty for unreasonable delay or refusal of payment of compensation (Labor Code section 5814): Suspended by SB 899 effective 6/1/2004; repealed 12/31/2004. 1. The 10 percent penalty is applied to the class of benefits where payment was unreasonably delayed. And the penalty applies to the entire class of benefits, not just the benefits delayed. See Gallamore v. WCAB, 23 Cal.3rd 815, 44 CCC 321 (1979). By analogy to Labor Code section 4603.2(b), the Supreme Court has held that Labor Code section 5814 penalties for the delay in the payment of medical mileage claims attach to the entire species of medical treatment when such claims are not paid within sixty days. Avalon Bay Foods v. WCAB (Moore) (1998) 18 Cal. 4th 1165, 63 CCC 902. But see State Compensation Insurance Fund v. WCAB (Stuart) (1998) 18 Cal.4th 1165, 63 CCC 902, in which the Supreme Court requires the WCAB should consider the totality of the circumstances in determining whether a delay is unreasonable. "When penalties are assessed in the workers' compensation setting, we have cautioned that the board should proceed with a view towards achieving a fair balance between the right of the employee to prompt payment of compensation benefits, and the avoidance of imposition upon the employer or [insurance] carrier of harsh and unreasonable penalties' (Gallamore [v. WCAB (1979)] 23 Cal 3rd 815, 828, [44 CCC 321].) We have reiterated this position . (Christian v. WCAB (1997) 15 Cal. 4th 505, 517 [62 CCC 576]...; Rhiner v. WCAB [(1993) 4 Cal.4th 1213, 1230, [58 CCC 172].)" Stuart, supra, 18 Cal.4th at pp 1216-1217. County of San Luis Obispo v. WCAB (Barnes) (2001) 92 C.A.4th 869, 66 CCC 1261. [emphasis added] 2. Multiple penalties may be awarded if there have been separate and distinct incidents where benefits have been unreasonably delayed. See Gallamore, supra. But where multiple installments of a single benefit are delayed as a result of a single decision and a single course of conduct, only one penalty for delay is payable. See Christian v. WCAB, 15 Cal.4th 505, 62 CCC 576 (1997). In 2002, AB 749 codified this rule: "Multiple increases shall not be awarded for repeated delays in making a series of payments due for the same type or specie of benefit unless there has been a legally significant event between the delay and the subsequent delay in payments of the same type or specie of benefit" 4. Now in most situations, reasonable attorneys' fee shall be awarded in addition to any penalty imposed (Labor Code section 5814.5). This section had been limited to those employers under Labor Code section 3700(c), which generally were cities, counties and other political subdivisions of the State. Labor Code section 3700 relates to all employers, other than the State of California, required to secured workers compensation coverage. This change was made by AB 749, effective 1/1/2003. 5. No 5814 penalties during the time necessary to complete the utilization review process. Labor Code section 4610.1. L. New 5814 penalty for unreasonable delay: Operative 6/1/04, new penalty: Up to 25% of delayed or refused payment only, up to $10,000. If employer discovers violation before issue raised by the injured worker and pays within 90 days a self-imposed 10% penalty plus the amount due, no 25% penalty. Any C&R, F&A, or STIP and Order of the Board shall conclusively presume that all penalty issues have been resolved unless issue specifically reserved. No penalty over billing disputes of medical treatment timely authorized. A new two year statute of limitations from when payment was due applies to penalty petitions. This new 5814 section applies to all injuries, regardless of date of injury. See Abbey v. Aera Energy (en banc) (2004) 69 CCC ___.

A summary table of the various benefits and applicable rates is available in Word format here .

The next article in this series will begin a review of procedures, what are available and how they are calculated.

Richard D. Owen is a Sr. Staff Counsel, Supervisor, with State Compensation Insurance Fund; he is the Attorney-in-Charge for Glendale Legal's Unit A, comprised of 16 litigation attorneys and 14 clerical support, and participates in training/educating attorneys and claims adjusters for SCIF in throughout California. He has been a certified workers' compensation law specialist since 1992 He can be reached at rdowen@scif.com. Harold L. Greene is an Attorney at Law with the offices of Greene and Weinberger in Simi Valley, CA, and has been a certified specialist in workers' compensation law since 1974. He can be reached at haroldlgreene@hotmail.com.

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