California: Shipley’s Ship Has Sailed, But on 7/2/2024, LC 5909 Came to the Rescue

By Hon. Colleen Casey, Former Commissioner, California Workers’ Compensation Appeals Board

Just when you thought the right of “due process” was on the brink of destruction, the legislature amended Labor Code section 5909 to ensure it survives, at least in the realm of a true and complete judicial review for ALL “Petitions for Reconsideration and Removal, (hereinafter “Petitions for Recon.”).

Effective July 2, 2024, the amended statute, Labor Code section 5909, requires an important adjustment for workers’ compensation practitioners. They will have to alter their “tickler system” to ensure that any Petition for Recon filed has been dealt with by the WCAB in a timely manner. (For instructions on how to do this see Section V below, “How Do Parties Know When the ‘Transmission to WCAB’ Occurs?”)

Any party aggrieved by a Workers’ Compensation Judge’s (WCJ’s) decision may appeal that decision to a higher court, the Workers’ Compensation Appeals Board (WCAB). The WCAB has 60 days to review that Petition for Recon and issue its determination. If it fails to timely do so, the petition is automatically denied by operation of law, pursuant to Labor Code section 5909.

The legislative intent of Labor Code section 5909 is to ensure a timely resolution of all Petitions for Recons. However, Petitions for Recons have been known to get lost in “cyberspace.” The 60-day deadline may then pass prior to any WCAB commissioner having laid eyes on it. What happens then? Labor Code section 5909 mandated an automatic denial by operation of law.

I. Shipley to the Rescue

Thirty plus years ago, the Fourth District Court of Appeal (DCA) crafted a brilliant solution to ensure preservation of the right of a parties’ right of “due process” in the form of Shipley v. WCAB (1992) 7 Cal. App. 4th 1104, 57 Cal Comp Cases 493.

The 4th DCA held,

“While the language of Lab. Code, § 5909, providing that a petition for reconsideration is deemed to have been denied by the board unless it is acted upon within 30 days from the date of filing, appears mandatory and jurisdictional, the time periods must be based on a presumption that a claimant’s file will be available to the board; any other result deprives a claimant of due process and the right to a review by the board.” (Emphasis added.)

NOTE: Initially, the Labor Code section 5909 timeframe was 30 days. In 1992, after Shipley was published, the statute was amended to extend the timeframe to 60 days. However, that particular amendment did not address nor solve the problem. Remember, back in the days of Shipley, WCAB cases were in the form of paper files, and EAMS did not exist until 2008. 

II. Zurich Court Enforces Automatic Denial

Things moved along swimmingly for thirty-one years, until the figurative shipwreck occurred in the form of Zurich v. WCAB (2023) 97 Cal. App. 5th 1213, 89 Cal Comp Cases 1. In that case, the 2nd DCA held that even though no party was at fault for the WCAB’s failure to act timely on the Petition for Recon, the WCAB lost any and all jurisdiction to do so after the 60-day period expired. Loss of jurisdiction is a hard-core “STOP” according to the 2nd DCA. I guess they thought it was like slipping off a tight rope. Once you fall, there is no going back. A party’s Petition for Recon was automatically denied, denying the WCAB of any ability whatsoever to rule on its merits.

Wait! What? Ensuring parties’ their right to “due process” is no longer a higher priority than mandating a decision issue within 60 days of filing? As stated above, the legislative intent of Labor Code section 5909 is to ensure a timely resolution of Petitions for Reconsideration. That’s a good thing. But what good does that noble purpose serve if it results in a denial of “due process” for those very same practitioners? Do “safety nets” not exist in the world of the 2nd DCA?

III. WCAB Clings to the Reasoning of Shipley

On 3/27/2024, the WCAB issued their decision in the case of Ja’Chim Scheuing v. Livermore National Laboratory, 89 Cal. Comp. Cases 325, designating it as a “Significant Panel Decision.” They explained that under Labor Code section 5908.5, the WCAB is barred from summarily denying a timely filed Petition for Reconsideration, as the 2nd DCA Zurich court seemed to mandate.  Instead, the WCAB relied on the 4th DCA’s Shipley decision and held,

“Like the Court in Shipley, ‘we are not convinced that the burden of the system's inadequacies should fall on [a party].’ (Ibid.) Pursuant to the holding in Shipley allowing tolling of the 60-day time period in section 5909, the Appeals Board acts to grant, dismiss, or deny such petitions for reconsideration within 60 days of receipt of the petition, and thereafter issues a decision on the merits.

“All parties to a workers’ compensation proceeding retain the fundamental right to due process and a fair hearing under both the California and United States Constitutions.” (Emphasis added.)

The Ja’Chim Scheuing case was a “Significant Panel Decision” (SPD) only. It does not carry the weight of precedence that a WCAB en banc decision would have.

Nevertheless, on 6/11/2024, the WCAB continued to follow the 4th DCA’s holding in Shipley and released the “Noteworthy Panel Decision” (NPD) of Lowe v. CSU East Bay, PSI, 2024 Cal. Wrk. Comp. P.D. LEXIS 222, finding its holding to be most consistent with the general tenets of jurisprudence and with the holdings of other California appellate courts. The WCAB tolled the Labor Code section 5909 mandatory 60-day deadline until the WCAB had actually received the Petition for Recon, regardless of the date the Petition had been filed.

IV. The Legislature Comes to the Rescue

Then, less than a month later, the legislature amended Labor Code section 5909. Essentially, they moved back the triggering event for the 60-day timeframe. Prior law started the clock running when a party filed the Petition for Reconsideration. That same 60-day time period now begins when “a trial judge transmits a case to the appeals board.”

With this amendment to Labor Code section 5909, the deadline is now tolled until the WCAB has the Petition for Reconsideration available for meaningfully review. As before, if the WCAB fails to act before the 60-day deadline of Labor Code section 5909 expires, the Petition is automatically denied. See the amended statute below:

§ 5909. Denial of petition by inaction; Extension of time [Effective until July 1, 2026; Repealed effective July 1, 2026]

(a) A petition for reconsideration is deemed to have been denied by the appeals board unless it is acted upon within 60 days from the date a trial judge transmits a case to the appeals board.

(b)

(1) When a trial judge transmits a case to the appeals board, the trial judge shall provide notice to the parties of the case and the appeals board.

(2) For purposes of paragraph (1), service of the accompanying report, pursuant to subdivision (b) of Section 5900, shall constitute providing notice.

(c) This section shall remain in effect only until July 1, 2026, and as of that date is repealed.

(Emphasis added.)

Since the amendment was deemed urgency legislation it became effective immediately on July 2, 2024. Phew! So now if a petition gets “lost in space” between the time it is filed and the time it reaches the eyes of the WCAB commissioners, due process will not be denied.

PRACTICE TIP: Do not forget to calendar 7/1/2026. Why? See Section VII, below.

V. How Do Parties Know When the “Transmission to WCAB” Occurs?

Under Labor Code section 5903, anyone aggrieved by a WCJ’s decision may file a Petition for Recon within 20 days (+5 days for mailing if in California,) of the issuance of that decision. Under the old Labor Code section 5909, parties would file their petitions on a date certain, and prudent practitioners would then set a tickler reminder for 50 or so days thereafter, to ensure that the petition had not fallen through the cracks before the 60-day deadline ran, which would result in a denial of the petition by operation of law.

Post 7/2/2024, with the implementation of amended Labor Code section 5909 well underway, how do the parties know when their case file has been sent to the WCAB, so that they can begin their 50-60 day countdown?

According to the amended Labor Code section 5909, “the trial judge shall provide notice to the parties” when the case has been transmitted to the WCAB, which is the new trigger for the countdown. The amended statute further provides that said Notice to the parties is accomplished by “service of the accompanying report.”

“The accompanying report” referred to in the amended statute is the WCJ’s response to the Petition, a Report and Recommendation (R&R) as described in Rule 10962. That regulation provides that a WCJ submit the R&R to the WCAB within 15 days after the Petition for Recon is filed (unless an extension is granted).

It is likely that Rule 10962 will soon be amended to include, as a mandatory component of the R&R, a “notice section” providing the precise date upon which the case file was transmitted to the WCAB.

In the meantime, WCJs now must indicate the “Date of Transmission,” preferably on the title page and signature page, of each of their R&Rs.  That very same day, the WCJ’s staff will then serve and upload the R&R into Division of Workers’ Compensation’s (DWC) computer-based case management system known as EAMS (Electronic Adjudication Management System).

Hopefully, this will ensure that no future Petition for Recon or Removal will fall through the cracks and that due process rights will continue to be preserved for all, as one of the cornerstones of our judicial system.

VI. WCAB Issues NPD post the Amendment of Labor Code section 5909

How is this going to work in practice? The WCAB recently implemented the amended Labor Code section in the NPD of Hale v. Super Stores Industries, 2024 Cal. Wrk. P.D. LEXIS –. The WCAB explained the “nuts and bolts” as to how this new “transmission” process will work its way through the Division of Workers’ Compensation (DWC) computer-based case management system known as EAMS (Electronic Adjudication Management System) as follows:

(1) The WCJ drafts a response to the Petition for Recon, called a “Report and Recommendation.” (R&R).

(2) The WCJ shall indicate on the R&R, the date the R&R, along with the case file, is being sent to the WCAB Reconsideration Unit (Recon Unit).

(3) Once the R&R is served on all parties and uploaded into EAMS, it is now deemed “complete” and is ready for transmission to the WCAB Recon Unit.

(4) The WCJ (or their staff) logs onto EAMS and enters into “Case Events” for that particular case. After finding the section called “Event Description,” they will click on the option “Send to Recon.” In addition, they will likely add a notation under “Additional Information” such as “The case is sent to the Recon Unit.”

(5) Lastly, once the appropriate “Transfer to Recon Unit” keys in EAMS are activated, the R&R and entire case file will be considered “transmitted” to the WCAB, and the 60-day period for WCAB begins.

The WCAB explained how they complied with this mandate in the NPD of Hale, as follows:

“Under Labor Code section 5909(a), the Appeals Board must act on a petition for reconsideration within 60 days of transmission of the case to the Appeals Board. Transmission is reflected in Events in the Electronic Adjudication Management System (EAMS).

“Specifically, in Case Events, under Event Description is the phrase ‘Sent to Recon’ and under Additional Information is the phrase ‘The case is sent to the Recon board.’

“Here, according to Events, the case was transmitted to the Appeals Board on July 12, 2024, and the next business day that is 60 days from the date of transmission is September 10, 2024… This decision is issued by or on September 10, 2024, so that we have timely acted on the petition as required by Labor Code section 5909(a).”

VII. BUT WAIT, there’s more…

As noted above, in about 20 months, on 7/1/2026, the amended statute of Labor Code section 5909 will be automatically repealed. What happens then? Will there no longer be a statute with a mandatory deadline for the WCAB to issue its decision? Will due process rights once again be in danger? The legislators who brought the amendment to fruition as part of AB 171, had very little to say on the topic as follows:

“AB171 Section (8): Existing law authorizes a person aggrieved by an order, decision, or award made and filed by the appeals board or a workers’ compensation judge under certain workers’ compensation provisions to petition the appeals board for reconsideration. Existing law deems a petition for reconsideration to have been denied by the appeals board unless that petition is acted upon within 60 days from the date of filing.

"This bill, until July 1, 2026, would instead deem a petition for reconsideration to have been denied by the appeals board unless it is acted upon by the appeals board within 60 days from the date a trial judge transmits a case to the appeals board. The bill would require a trial judge, when it transmits a case to the appeals board, to provide notice to the parties of the case and the appeals board, as specified.”

And that’s all they wrote…

At least for now, we have a certain amount of certainty… at least until 7/1/2026. That is a date that should be entered and earmarked on all our calendars now, to avoid any uninvestigated surprises in the future. Stay tuned.

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