California: W.C.A.B. Rules on Gap Between TD Ending and PTD Commencing

The W.C.A.B. has issued an en banc decision addressing one of the consequential issues to the two-year limitation on payment of temporary total disability benefits contained in Labor Code § 4656(c). In Brower v. David Jones Construction, the W.C.A.B. has addressed the issue of when permanent total disability benefits commence subsequent to the termination of temporary disability benefits at an earlier date pursuant to Section 4656(c) and how to calculate the COLA (cost of living adjustment) pursuant to Labor Code § 4659 once those permanent total disability payments begin.

The W.C.A.B. in its decision found as follows:

1. When a defendant stops paying temporary disability indemnity pursuant to Section 4656(c) before an injured worker is determined to be permanent and stationary, the defendant shall commence paying permanent disability indemnity based on a reasonable estimate of the injured worker’s ultimate level of permanent disability.

2. When an injured worker who is receiving permanent partial disability payments pursuant to Section 4650(b)(1) becomes permanent and stationary and is deemed to be permanently totally disabled, the defendant shall pay permanent total disability indemnity retroactive to the date of its statutory obligation to pay temporary disability indemnity terminated.

3. COLAs begin on the first day in January after the injured worker becomes entitled to receive permanent disability indemnity pursuant to Labor Code § 4650(b)(1) or (b)(2).

In this case the Board also addressed questions as to whether the applicant was permanently totally disabled and whether the applicant was entitled to reimbursement for a rebuttal report, which was obtained from the treating physician, to the report of an Agreed Medical Examiner. The Board had little difficulty in upholding the WCJ’s finding of permanent total disability, particularly given the multiple medical reports of Dr. Newton, the Agreed Medical Examiner in neurology, who is reported to have indicated on multiple occasions that Mr. Bower was not really capable of any significant employment and was effectively totally precluded from working. While there was both vocational evidence and even the supplemental report from the applicant’s treating psychiatrist supporting total disability, it does appear that the opinion of Dr. Newton was very likely sufficient to carry the day in its own right and was relied upon predominantly by the W.C.A.B.

Having dispensed with issues involving permanent total disability, the W.C.A.B. got down to the business of statutory interpretation in how and when to pay the PTD benefits. This particular case had previously been to the W.C.A.B. on a request by the applicant attorney to award permanent disability benefits at the permanent total disability rate before the applicant was permanent and stationary. However, the WCJ had declined to issue such an Award and the W.C.A.B. had declined reconsideration. The WCJ interpreted that prior decision on reconsideration as precluding him from awarding payment of permanent total disability benefits prior to the date the applicant became permanent and stationary in October, 2011. The applicant’s temporary disability benefits had terminated on the two-year anniversary of his date of injury on December 20, 2007 (although TTD payments actually continued until January 31, 2008). Thereafter, permanent disability advances were commenced at $270.00 per week with defendant effectively conceding applicant was going to be entitled to a minimum 70% PD.

The trial judge awarded permanent total disability benefits with payments to begin on October 6, 2011, when the applicant was deemed permanent and stationary by the last of the three Agreed Medical Examiners who examined him. Based on this finding, the C.O.L.A. was to go into effect on the following January 1, 2012. On Reconsideration, counsel for applicant argued that permanent total disability benefits should commence on the day after the termination of temporary disability benefits and that his client was entitled to the COLA increases to benefits beginning on January 1 after the commencement of permanent total disability benefits in December of 2007. (This would entitle applicant to the first statutory increase on January 1, 2008.)

The W.C.A.B. granted Reconsideration for further study and assigned the matter to the W.C.A.B. en banc. The Board’s decision pointed to the language in Labor Code § 4650(b)(1) and (2) as providing substance that permanent disability benefits, regardless of whether they can be determined, are to be paid from the last date thattemporary disability indemnity has been paid regardless of whether the injured worker was P & S at that time or the termination was pursuant to Labor Code § 4656(c). Subsection (2) deals with the circumstance where an employer has returned the employee to work and is not required to make advances. In that circumstance, when the permanent disability is finally ascertained, the benefit was to be paid retroactively to the ending date of temporary disability or the date the applicant became permanent and stationary, whichever is earlier.

Read together, these sections certainly suggest the permanent disability indemnity benefits are to be paid without interruption upon termination of temporary total disability benefits, regardless of the reason or the nature of the PD being paid (partial or total). The W.C.A.B. elected to view payment of disability compensation, both temporary and permanent, in a continuum, which appears to be supported by Labor Code § 4650(b) and the appellate decision in Gangwich v. W.C.A.B., 66 CCC 458, which also supports the concept of the transition from one specie of benefit to the other as providing an “uninterrupted flow” of claim benefits during the transition from temporary disability indemnity to permanent disability indemnity.

The concept that permanent disability should flow immediately upon cessation of temporary disability indemnity appears to be firmly rooted in statutory and case law.

Perhaps the most significant issue that the W.C.A.B. had to address in this case was the question of when the applicant is entitled to adjustments pursuant to Labor Code § 4659(c). This section, which was enacted effective on January 1, 2003, has already been the subject of one California Supreme Court decision. In Baker v. W.C.A.B. the California Supreme Court had determined the COLA adjustments were to begin commencing on the

“January 1st following the date on which the injured worker first becomes entitled to receive, and actually begins receiving, such benefit payments. I.e., the permanent and stationary date in the case of total permanent disability benefits.”

Interestingly, in that case, the Supreme Court had suggested an answer but declined to pull the trigger on the issue:

“[i]t may be that an injured worker would become entitled to total permanent disability payments, and corresponding COLAs, before the worker’s medical condition is permanent and stationary. (See Sections 4650, Subdivision (b), 4656, Subdivision (c).) We express no view on that question, which was not presented under the facts of this case.”

While the Supreme Court declined to address the issue, certainly the language in their decision appears to open the door for the interpretation given by the W.C.A.B., and their holding is supported by the language in Baker that the cost of living increases are to be calculated from the commencement of the PTD.

CONCLUSIONS AND COMMENTS:

The holding by the Board in this case should not be particularly a surprise to most attorneys given the statutory language. The language in Labor Code § 4650(b) appears to compel the result that permanent total disability benefits should commence prior to the date of permanent and stationary status. The result in this matter is an additional four years of permanent total disability benefits. There is little question that during the interim four years the applicant was actually totally disabled, he was simply not eligible to receive temporary disability benefits. It would seem to be in keeping with the public policy of the State of California that when an employee is actually temporarily totally disabled and ultimately determined to be permanently and totally disabled, the benefits should flow in an unabated fashion. While it can be argued (and undoubtedly will be argued) that this effectively gives injured workers benefits beyond the two years of temporary disability and before their permanent and stationary date, given the conflicting statutory language and the purposes of providing compensation, it is not surprising that the Board fell on the side of extending benefits to the most severely disabled injured workers.

This result may also be attributed to gaps in the statutory language to address the issue. Labor Code § 4659(c) is not a model of drafting clarity, and the Supreme Court in its interpretation elected to utilize a rational interpretation approach supported by the legislative purpose behind the cost of living increases. The Board’s decision in this matter appears to be consistent with the Supreme Court’s interpretation of how this benefit is to be paid. 

© Copyright 2014 Shaw, Jacobsmeyer, Crain & Claffey PC. All rights reserved. Reprinted with permission.

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