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Payless Shoe Source v. Workers' Compensation Appeals Bd.

California Court of Appeals, Fifth District
Jul 8, 2008
No. F053612 (Cal. Ct. App. Jul. 8, 2008)

Opinion

NOT TO BE PUBLISHED

ORIGINAL PROCEEDINGS; petition for writ of review from a decision of the Workers’ Compensation Appeals Board. Frank M. Brass, Alfonso J. Moresi, and James C. Cuneo, Commissioners. Keigo Obata, Workers’ Compensation Administrative Law Judge., WCAB Nos. FRE 0226304.

Grancell, Lebovitz, Stander, Barnes and Reubens, and R. James Gillis, for Petitioner.

Vincent Bausano, for Respondent Workers’ Compensation Appeals Board.

Cole, Fisher, Bosquez-Flores, Cole & O’Keefe, and Leah R. Cole, for Respondent Rhonda Dalerio.


OPINION

THE COURT

Before Levy, Acting P.J., Gomes, J., and Hill, J.

Payless Shoe Source (Payless) petitioned this court for a writ of review from a decision of the Workers’ Compensation Appeals Board (WCAB). (Lab. Code, §§ 5950, 5952; Cal. Rules of Court, rule 8.494.) We granted the petition to inquire into Payless’s contention the WCAB should have rated the disability of an injured worker with pre-January 1, 2005, injuries under the revised 2005 permanent disability rating schedule (PDRS) instead of the more generous 1997 PDRS.

Further statutory references are to the Labor Code unless otherwise stated.

Section 4660, subdivision (d), as amended by Senate Bill No. 899 (Stats. 2004, ch. 34, § 32), establishes that the 2005 PDRS applies not only to claims arising after its effective date, but also to pending claims filed before January 1, 2005, “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.” (Emphasis added.) We agree with Payless that the WCAB may not look to evidence prepared after January 1, 2005, to establish that an employer, unaware of the employee’s medical condition, was required to send the employee a section 4061 temporary disability benefit termination notice “back in time” before that date so as to trigger the use of the 1997 PDRS. We therefore vacate the WCAB’s order denying reconsideration and remand the matter to the WCAB to consider whether another exception exists to apply the 1997 PDRS, and if not, to rate the injured employee’s permanent disability under the 2005 PDRS.

BACKGROUND

Rhonda Dalerio worked as a sales and stock clerk for a Payless shoe store in Oakhurst from October 25, 1999, through August 16, 2003. Her job required a great deal of bending, heavy lifting, stooping, squatting, and overhead work. On July 27, 2004, shortly within a year from her last day of employment, Dalerio filed a claim for workers’ compensation benefits alleging various cumulative trauma injuries sustained while working for Payless. The employer accepted responsibility for injuries to Dalerio’s neck, back, and left knee, but disputed liability as to her upper and lower legs and psyche.

In February 2007, the parties submitted the matter to a workers’ compensation administrative law judge (WCJ) to determine if Dalerio sustained the additional alleged injuries on an industrial basis, her right to receive and duration of temporary disability indemnity, her level of permanent disability, and whether the 1997 or 2005 PDRS applied. Based on the documentary evidence, the WCJ concluded only the injuries already accepted by Payless were industrially related and awarded her further related medical care. Pursuant to a December 19, 2005, medical report from agreed medical examiner (AME) in orthopedics James L. Strait, M.D., the WCJ also found Dalerio was temporarily totally disabled for the first six months after she resigned from Payless, from August 17, 2003, through February 15, 2004, and awarded her temporary disability for that period. The WCJ then concluded the 1997 PDRS applied, entitling Dalerio to a 28 percent permanent disability rating, because Payless should have provided Dalerio with a final temporary disability payment before January 1, 2005. In response to Payless’s claim on reconsideration that the 2005 PDRS instead applied, the WCJ explained he relied on the AME’s opinion that Dalerio became permanent and stationary six months after August 16, 2003, and therefore the “notice requirement under Labor Code section 4061 more likely than not would have arisen around 02/15/04.”

Although Payless repeatedly refers to a December 31, 2005, AME evaluation, Dr. Strait signed the report on December 19, 2005, and listed a December 13, 2005, examination date. Perhaps Payless did not receive the report until December 31, 2005.

DISCUSSION

The Legislature adopted omnibus reforms to the state’s workers’ compensation system effective April 19, 2004, as part of Senate Bill No. 899. (Brodie v. Workers’ Comp. Appeals Bd. (2007) 40 Cal.4th 1313, 1323.) Among the changes, revised section 4660, required the Administrative Director of the Division of Workers’ Compensation to amend the PDRS effective January 1, 2005, and every five years thereafter. (§ 4660, subds. (c) & (e); Stats. 2004, ch. 34, § 32.) The Legislature specifically mandated the revisions “incorporate the descriptions and measurements of physical impairments and the corresponding percentages of impairments published in the American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment (5th Edition.).” (§ 4660, subd. (b)(1).) As directed, the Administrative Director subsequently adopted a new PDRS effective January 1, 2005. (Cal. Code Regs., tit. 8, § 9805.) In many cases, and evidently applicable here given the nature of the parties’ dispute, the use of the 2005 PDRS tends to result in significantly reduced awards to injured workers when compared to disabilities rated under the 1997 PDRS. (See Zenith Insurance Co. v. Workers’ Comp. Appeals Bd. (2008) 159 Cal.App.4th 483, 493 & fn. 24 (Zenith); Genlyte Group, LLC v. Workers Comp. Appeals Bd. (2008) 158 Cal.App.4th 705, 715-716 (Genlyte).)

Establishing the use of the 2005 PDRS, section 4660, subdivision (d), now provides:

“The schedule shall promote consistency, uniformity, and objectivity. The schedule and any amendment thereto or revision thereof shall apply prospectively and shall apply to and govern only those permanent disabilities that result from compensable injuries received or occurring on and after the effective date of the adoption of the schedule, amendment or revision, as the fact may be. For compensable claims arising before January 1, 2005, the schedule as revised pursuant to changes made in legislation enacted during the 2003-04 Regular and Extraordinary Sessions shall apply to the determination of permanent disabilities 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 interpretation of section 4660, subdivision (d) … is a legal issue subject to our de novo review.” (Costco Wholesale Corp. v. Workers’ Comp. Appeals Bd. (2007) 151 Cal.App.4th 148, 153.) “While the statute is not a model of linguistic clarity, its intent is clear. The intent is to apply the rating schedule in effect on the date of injury to injuries suffered prior to 2005 in only three circumstances: (1) when a comprehensive medical-legal report issued prior to 2005 indicates permanent disability, (2) when a report from a treating physician issued prior to 2005 indicates permanent disability, and (3) when an employer has been required to give notice under section 4061 prior to 2005 concerning its intentions regarding payment of permanent disability benefits. This interpretation supports the legislative goal of bringing as many cases as possible under the new workers’ compensation law.” (Costco Wholesale Corp., supra, at p.157.) “‘On the other hand, when none of the three circumstances has occurred before January 1, 2005, then the 2005 schedule applies.’” (Zenith, supra, 159 Cal.App.4th at p. 492, citing Energetic Painting and Drywall, Inc. v. Workers’ Comp. Appeals Bd. (2007) 153 Cal.App.4th 633 and Aldi v. Carr (2006) 71 Cal.Comp.Cases 783 [writ den.].) “Although the statute does not expressly set a January 1, 2005 cutoff date for the issuance of the treating physician’s report or the medical-legal report or for the existence of the requirement that the employer give the notice required by section 4061, a cutoff date of January 1, 2005, should logically be implied.” (Vera v. Workers’ Comp. Appeals Bd. (2007) 154 Cal.App.4th 996, 1004 (Vera).)

In adopting the WCJ’s recommendation, the WCAB applied the third exception to section 4660, subdivision (d) – the section 4061 notice requirement – in finding the 1997 PDRS applied to Dalerio’s current disability claim. An employer’s duty to send a section 4061 notice arises “[t]ogether with the last payment of temporary disability indemnity” and mandates the employer notify the employee of its position that (1) no permanent disability indemnity is warranted, (2) permanent disability benefits will be paid in a particular amount, but may be contested, or (3) permanent disability indemnity is or may be payable, but cannot be determined because the employee is not yet permanent and stationary. (§ 4061, subd. (a).) Unlike the first two grounds for applying the 1997 PDRS established under section 4660, subdivision (d), the section 4061 notice exception authorizes the use of the 1997 PDRS without a pre-January 1, 2005, medical report indicating the existence of permanent disability, so long as the employer terminates temporary disability payments and therefore was required to send the section 4061 notice before that date. (Zenith, supra, 159 Cal.App.4th at p. 494.) Necessarily, an employer’s duty to send a temporary disability indemnity termination notice under section 4061 along with the last payment of temporary disability cannot arise if such benefits never began.

Section 4061, subdivision (a) provides: “Together with the last payment of temporary disability indemnity, the employer shall, in a form prescribed by the administrative director pursuant to Section 138.4, provide the employee one of the following: [¶] (1) Notice either that no permanent disability indemnity will be paid because the employer alleges the employee has no permanent impairment or limitations resulting from the injury or notice of the amount of permanent disability indemnity determined by the employer to be payable. The notice shall include information concerning how the employee may obtain a formal medical evaluation pursuant to subdivision (c) or (d) if he or she disagrees with the position taken by the employer. The notice shall be accompanied by the form prescribed by the administrative director for requesting assignment of a panel of qualified medical evaluators, unless the employee is represented by an attorney. If the employer determines permanent disability indemnity is payable, the employer shall advise the employee of the amount determined payable and the basis on which the determination was made and whether there is need for continuing medical care. [¶] (2) Notice that permanent disability indemnity may be or is payable, but that the amount cannot be determined because the employee’s medical condition is not yet permanent and stationary. The notice shall advise the employee that his or her medical condition will be monitored until it is permanent and stationary, at which time the necessary evaluation will be performed to determine the existence and extent of permanent impairment and limitations for the purpose of rating permanent disability and to determine the need for continuing medical care, or at which time the employer will advise the employee of the amount of permanent disability indemnity the employer has determined to be payable. If an employee is provided notice pursuant to this paragraph and the employer later takes the position that the employee has no permanent impairment or limitations resulting from the injury, or later determines permanent disability indemnity is payable, the employer shall in either event, within 14 days of the determination to take either position, provide the employee with the notice specified in paragraph (1).”

By relying on Dr. Strait’s December 19, 2005, AME report declaring Dalerio permanent and stationary retroactively as of mid-February 2004 to demonstrate the last temporary disability payment should have been paid (and thus the section 4061 notice should have been sent) before 2005, the WCAB attempted to do what it could not under the second exception under section 4660, subdivision (d), i.e., point to a comprehensive medical-legal report issued before January 1, 2005, indicating the existence of permanent disability. Dr. Strait’s AME report was not prepared until after the 2005 PDRS went into effect, and the parties do not point to any evidence in existence before January 1, 2005, that would have placed Payless on notice that any temporary disability indemnity benefits were both payable and should have terminated before January 1, 2005.

As the WCJ advised the WCAB on reconsideration, Dalerio asserts the 1997 PDRS controls because the opinion of the AME, who was mutually chosen by the parties for his impartiality, should be followed absent good reason to find that opinion unpersuasive. (See Power v. Workers’ Comp. Appeals Bd. (1986) 179 Cal.App.3d 775, 782.) While we note parenthetically that the AME’s reasoning appears wanting, here it is the timing, not strength, of his report that is relevant as to whether the 1997 or 2005 PDRS applies. Dr. Strait’s report was not in existence until December 19, 2005, and there does not appear to be any medical evidence placing Payless on notice that it should have both begun and terminated temporary disability benefits before January 1, 2005.

Without further reference, the relevant portion of Dr. Strait’s AME report relied on by the WCAB explains in its entirety: “I would consider the applicant to be permanent and stationary six months from the time she stopped working in August of 2003. I feel that that would be a reasonable period of temporary disability.”

Dalerio offers various hypotheticals to suggest an employer could delay “picking up” a pre-2005 disability claim so as to unfairly hinder an employee’s ability to obtain a medical-legal evaluation before 2005. We are unconvinced that the exceptions to applying the 2005 PDRS under section 4660, subdivision (d), were completely within the employer’s control. For example, Dalerio forgets that she delayed nearly a year from her last date of employment before filing her workers’ compensation claim, which she filed three months after the effective date of Senate Bill No. 899 mandating the changes to the PDRS. Moreover, if medically warranted, nothing prevented an employee with an uncooperative employer or insurance carrier from seeking, before January 1, 2005, a “report by a treating physician indicating the existence of permanent disability” that would have triggered the use of the 1997 PDRS. (§ 4660, subd. (d).)

AME Dr. Strait relied on numerous medical reports of Dalerio’s history in declaring her permanent and stationary as of mid-February 2004. Although prior caselaw suggested pre-2005 medical evidence was required to demonstrate an injured worker was permanent and stationary with a ratable disability to invoke the application of the 1997 PDRS (Vera, supra, 154 Cal.App.4th at pp. 1006-1007), more recent decisions have since concluded that under the plain reading of section 4660, subdivision (d), the medical reporting only need indicate the existence of permanent disability. (Genlyte, supra, 158 Cal.App.4th at pp. 719-722.) We agree with this more recent interpretation. As summarized in Zenith, supra, 159 Cal.App.4th at pp. 497-498:

“[S]ection 4660(d) is worded broadly to include any comprehensive medical-legal or treating physician report ‘indicating the existence of permanent disability.’ The language is not limited to what the Vera court describes as the typical final or permanent stationary report, in which the extent of ratable permanent disability is reported. In an appropriate case, a physician is not precluded from reporting that permanent disability exists prior to permanent and stationary status or the extent of ratable disability is known.” (fns. omitted.)

The medical evidence indicating the existence of permanent disability must nevertheless be based on substantial evidence considering the entire record. (Zenith, supra, 159 Cal.App.4th at p 495.) Such a finding is a question of fact properly before the WCAB and not the appellate courts. (Ibid.)

Adopting the WCJ’s report and recommendation, the WCAB found the 1997 PDRS applicable because “it was the judgment of the AME after examination of applicant and review of the medical records that applicant’s orthopedic injury had become permanent and stationary six months after injury.” There is no indication the WCAB independently considered any evidence from her treating physicians in existence before January 1, 2005, that might have indicated “an existence of temporary disability.” In light of the recent caselaw clarifying the application of section 4660, subdivision (d), and given that workers’ compensation proceedings are not final until the appellate process has been exhausted (Marsh v. Workers’ Comp. Appeals Bd. (2005) 130 Cal.App.4th 906, 916), we will remand the matter to the WCAB to determine whether a report of a treating physician indicated the existence of permanent disability, thereby warranting the use of the 1997 PDRS. If the record is void of such evidence prepared before January 1, 2005, then Dalerio’s permanent disability must be rated under the 2005 PDRS pursuant to section 4660, subdivision (d).

DISPOSITION

The WCAB’s order denying reconsideration is annulled. The matter is remanded to the WCAB to conduct further proceedings as it deems appropriate to determine whether a legal basis exists to rate Dalerio’s permanent disability under the 1997 PDRS.


Summaries of

Payless Shoe Source v. Workers' Compensation Appeals Bd.

California Court of Appeals, Fifth District
Jul 8, 2008
No. F053612 (Cal. Ct. App. Jul. 8, 2008)
Case details for

Payless Shoe Source v. Workers' Compensation Appeals Bd.

Case Details

Full title:PAYLESS SHOE SOURCE, Petitioner, v. WORKERS’ COMPENSATION APPEALS BOARD…

Court:California Court of Appeals, Fifth District

Date published: Jul 8, 2008

Citations

No. F053612 (Cal. Ct. App. Jul. 8, 2008)