Siegel, Moreno & Stettler AIP 2006 Workers' Compensation Case Law Update

I. Introduction • Recent key cases in Workers’ Compensation Law from January 2006 to present • Current cases clarifying: Apportionment between injuries at the same employer with different carriers with similar body parts (Nabors & Dykes and “formula C”), Permanent Disability – the “old” versus the “new” – which Schedule applies - some clarity MPN Physicians, and FEHA and Accommodation Siegel, Moreno & Stettler, APC (C) 2006

II. Apportionment • Labor Code Section 4663 Atascadero • Labor Code Section 4664 Dykes & Nabors • How prior awards count in present claims Percent or Dollars? • Multiple Injury dates involving the same body parts with the same employer, different carriers and with reopened claims? • The almighty dollar • The Permanent Total Disability Dilemma Siegel, Moreno & Stettler, APC (C) 2006

A. E&J Gallo Winery (Dykes) - Labor Code 4664 - The value of prior awards - Formula C E&J Gallo Winery v. WCAB (Dykes) 12/20/05, 70 CCC 1644 Application of apportionment pursuant to Labor Code §4664. Applicant sustained a back injury in 1996 in which he was awarded 20½% permanent disability via Stipulation with Request for Award. Applicant sustained a second back injury on 10/28/02 which resulted in an award of 73% permanent disability. The issue was how to deduct the prior award of 20½% permanent disability in accordance with Labor Code §4664. Labor Code §4664(b): “If applicant has received a prior award of permanent disability, it shall be conclusively presumed that the prior permanent disability exists at the time of any subsequent industrial injury.” The Court reviews application of the prior disability in formulas (a), (b) and (c). Siegel, Moreno & Stettler, APC (C) 2006

Dykes – Formulas A and B Formula A Subtract the percentage of the prior award from the overall disability. In the instant case, subtract 20½% permanent disability from overall 73%, leaving 52½% permanent disability ($48,662.50). Formula B Determine percent of disability caused by second injury and multiply overall number of weeks. Here, 20½% permanent disability divided by 73 equals 72%. Multiple 72% times the number of overall weeks caused by both injuries (453.50) which would total 326.25 weeks at $170.00 per week totaling $55,462.50. …continued Siegel, Moreno & Stettler, APC (C) 2006

Dykes – Formula C (aka the money counts) Formula C Deduct monetary value of prior award from present award. Subtract $11,680.00 (20½% permanent disability) from $104,305.00 (73% permanent disability) for a net award of $92,625.00. Formula C as Selected by the Court This case involved two separate injuries at the same self-insured employer. The Court left the door open whether the same formula should be applied in situations where they suffered injuries at different employers/insureds. Siegel, Moreno & Stettler, APC (C) 2006

B. Nabors - Labor Code 4664 and prior awards - Multiple Carriers but same body part Nabors v. WCAB, Piedmont Lumber Co. (2006) 140 Cal. App. 4th 217. Extends application of Dykes to multiple injuries at single employer with different insurance companies. Applicant sustained a May 2, 1996 low back injury which resulted in a Stipulated Award of 49% permanent disability ($42,476.00). The applicant sustained a second injury on August 19, 2002 (CT) which resulted in an award of 80% overall permanent disability. The WCJ and the WCAB Panel deducted the percentage of permanent disability resulting in a 31% award after deduction of the prior award. The First Appellate District overturned the En Banc Decision relying on Dykes, even though there were two separate injuries which were covered by two separate insurers. Problem with Dykes/Nabors/Formula C o Application of Formula C to 100% permanent Disability. o The same level of disability awarded years later. o Can Labor Code §4663 remedy the situation? Does AMA cure all? Siegel, Moreno & Stettler, APC (C) 2006

C. Atascadero Hospital - Labor Code 4664 and prior awards - Reopened claims seeking increased PD Vargas v. Atascadero State Hospital, 04/11/06 (WCAB En Banc) New apportionment statutes applied to increased permanent disability. Applicant sustained injury on March 22, 1995. He received a 67% permanent disability award on January 21, 1998. A timely Petition to Reopen for New& Further Disability was filed. The Petition to Reopen was tried on March 2, 2004. An award of 91% was recommended, and defendant requested cross-examination. That was scheduled for May 20, 2004, and on April 19, 2004, Labor Code §46653 was enacted. Since the applicant’s Petition to Reopen was still pending on April 19, 2004, the new apportionment provisions apply. Citing Marsh v. WCAB (2005), 70 CCC 787, the WCJ was correct in authorizing the parties to develop the record further to address apportionment under the new law. Siegel, Moreno & Stettler, APC (C) 2006

III. Injury • Sudden And Extraordinary Events – Psychiatric claims Matea • Medical-Legal Costs for death claims for non-minors Doughty • Commercial Travelers Reynoso & Fleetwood (Moody) • Off Duty Recreational Activities – Police Officers City of Stockton (Jenneiahn) Siegel, Moreno & Stettler, APC (C) 2006

A. Matea - Psychiatric Claims - Sudden/Extraordinary Events exception Matea v. WCAB (Writ Granted) (Appellate Decision to follow) Sudden and Extraordinary Event/Psychiatric Claim. Applicant was an employee for Home Depot less than six months and injured when a stack of lumbar fell on him crushing his leg resulting in RSD and depression in addition to the orthopedic injury. The psychiatric claim was denied since the employee was employed less than six months at the time of the injury. The WCJ held that the lumber falling was an exception to the six-month rule, because it was a sudden and extraordinary event. The applicant was found to be 100% permanently disabled. The WCAB Panel granted reconsideration and reversed the psychiatric finding because the applicant did not satisfy the burden of showing that falling lumber is a sudden and extraordinary event. Working next to lumber at a Home Depot is not extraordinary. Siegel, Moreno & Stettler, APC (C) 2006

B. Doughty - Medical- Legal Costs Coverage - Death Claims with non-minors Doughty v. Sacramento County Sheriff’s Department (WCAB Panel Decision) Medical-legal costs for evaluation of applicant for death benefits is permitted. Applicant’s father sustained a fatal injury in the course and scope of employment. Applicant applied for death benefits, however, was not a minor. He contended he was physically and mentally incapacitated from earning, and therefore conclusively presumed to be wholly dependent on the deceased parent pursuant to Labor Code §3501(a). The Panel held applicant is entitled to a medical-legal evaluation to evaluate his incapacity. Siegel, Moreno & Stettler, APC (C) 2006

C. Reynoso - Commercial Travler Rule and expectations Reynoso v. Yasuda Fire & Marine Insurance Company (03/21/06) Order Denying Reconsideration Commercial Traveler Rule. Applicant was injured in an automobile accident on her way to a bible class while on a three-week out-of-town assignment. Pursuant to the Commercial Traveler Rule, a person on a business trip is considered in the course of his employment during the entire period of travel on the employer’s business. The Rule is not applied where there are distinct departures. The test is whether the activity is one “that an employer may reasonably expect the incident to its requirement that the employee spend time away from home.” Driving to a bible study was not a sufficient departure to take the applicant out of the course of his employment. Contrast that with the following opinion: Siegel, Moreno & Stettler, APC (C) 2006

D. Fleetwood Enterprises (Moody) - Commercial Traveler Rule - Business portions Fleetwood Enterprises, Inc. v. WCAB (Moody) (2006) 134 Cal. App. 4th 1316, 70 Cal. Comp. Cas. 1659 Commercial Traveler Rule Applicant was injured while driving from Rome to Dusseldorf to return a car rented by the company. The trip was arranged by the general manager to attend an RV show in Germany. The business portion of the trip was completed, but the applicant met with his wife and toured Italy in a car rented on applicant’s corporate credit card. The applicant claimed in addition to sightseeing, they were also observing RV designs as they traveled throughout Italy. The Court found the business portion of the trip had concluded, so it was not covered under the Commercial Traveler Rule. Additionally, the Court did not believe he was on a “special mission” at the time of the accident. There was no evidence that the company expected the applicant to keep photographing RV’s after the conclusion of the business portion of the trip. The Court noted a trip having both business and pleasure elements may give rise to a compensable injury, but the business element must be integral to it. Siegel, Moreno & Stettler, APC (C) 2006

E. City of Stockton (Jenneiahn) - Police Officers/Safety - Off Duty Recreational Activities City of Stockton v. WCAB (Jenneiahn) (2006) 135 Cal. App. 4th 1513, 71 CCC 5 Police officer off duty recreational injury. Applicant was injured in an off-duty basketball game. The Court of Appeals reversed the WCAB Decision holding the injury compensable. The Court applied the two-prong test of Ezzy v. WCAB (1983) 48 CCC 611. This is considered the “reasonable expectancy” test. It considers the following: 1) The worker subjectively believes his or her capacity was expected by the employer. 2) The belief is objectionably reasonable. The Court did not believe the applicant subjectively felt that his participation was required. The basketball game occurred approximately once a month and was not part of an ongoing training regimen. The game was not connected to his employment. The employer, while having conditioning standards, did not follow through or counsel the officers regarding same. Siegel, Moreno & Stettler, APC (C) 2006

A. Andrade - Physicians outside the MPN - Administrator delays/timelines Andrade v. State Compensation Insurance Fund (04/03/06) Selection of physician outside MPN. The WCAB Panel has denied reconsideration of a WCJ Order that an employee covered by a medical provider network was entitled to be treated by a non-network physician. The administrator failed to respond in a timely manner to a request for treatment by another MPN physician at employee’s choosing. Applicant requested another treating physician within the MPN on May 3, 2005. Two weeks later, the applicant selected Daniel Capen, M.D. as the treating physician. On July 25, 2006, defendant offered applicant two alternate MPN physicians. Administrative Rule 9767.6 nor 9767.7 has an express time limit for compliance with a request for a change of MPN physician. The rules do not give a remedy for a late response. The WCJ and Panel found that 7 ½ weeks to respond was not reasonable. Further, the fact defendant only provided two names was incomplete. Siegel, Moreno & Stettler, APC (C) 2006

Practice Pointer Please ensure awareness of the notices required by statute and Administrative Rules regarding MPN’s. The employers posted notice concerning right to workers’ compensation and medical care in a conspicuous location after Labor Code §3550. Employer/administrator/insurer that offers an MPN must notify each covered employee or when an employee is transferred into an MPN (Administrative Rule 9767.12). Employee must set up initial medical evaluation, notify employee right of treatment by an MPN physician of his or her choice, and how to access the list of MPN physicians (Labor Code §4616.3). Siegel, Moreno & Stettler, APC (C) 2006

B. Metoyer - Physicians outside the MPN - Improper postings/notice Metoyer v. Zenith Insurance Company (2005) 34 CWCR 14. Employee allowed to select PTP outside MPN. The Panel denied reconsideration of a WCJ Award based on a report from the primary treating physician who was not a member of the MPN network which would otherwise cover the employee. The employer had neither posted the Labor Code §355 Notice in a conspicuous manner, or notified the applicant about the MPN pursuant to Administrative Rule 9767.12. This requires administrator to notify each covered employee in writing about the use of an MPN before implementation of a plan. Notification must also be sent at the time of the injury. Siegel, Moreno & Stettler, APC (C) 2006

C. Sierra Pacific (Chatman) - ACOEM Guidelines - Application pre 1/1/2004 Sierra Pacific Industries v. WCAB (Chatman), (2006) 33CWCR 299. ACOEM treatment guidelines apply to treatment pre 01/01/04. Applicant received chiropractic treatment following a September 22, 2003 injury. The applicant was seen by a Panel QME chiropractor on February 26, 2004 who indicated the applicant’s treatment was reasonable and necessary after the date of that evaluation. The chiropractor was deposed and stated that she did not feel ACOEM Guidelines applied since the injury was prior to the application of ACOEM. If ACOEM applied, her treatment recommendations would be different. The WCJ and the Panel found that ACOEM Guidelines were not applicable to treatment provided prior to January 1, 2004. The Appeals Board found that ACOEM Guidelines applies to all treatment/bills that are in dispute that have not been resolved prior to the passage of SB 899. Therefore, the chiropractor’s lien was subject to the reasonableness and necessity test under ACOEM Guidelines, even though the treatment was incurred prior to the passage of SB 899. Siegel, Moreno & Stettler, APC (C) 2006

A. Aldi - Old vs. New Schedules Aldi v. Carr, McClellan, et al./Republic Indemnity Company of America (2006) 8 WCAB Reporter 10, 199. Old versus new rating schedules. The applicant sustained injury on November 18, 2002. The sole issue for the Court was which permanent disability rating schedule applied. The WCJ found the permanent disability rating schedule adopted 1/1/05 (AMA Guidelines) pursuant to Labor Code §4660 is applicable only to injuries on or after 1/1/05. The old rating schedule applies to all injuries that occurred prior to 1/1/05. In an En Banc Decision, the Panel held Labor Code §4660(d) requires that the new permanent disability schedule be applied to injuries on or after 1/1/05 subject to specific exceptions for injuries occurring prior to 1/1/05. The case was remanded to determine if one of the exceptions applied. Siegel, Moreno & Stettler, APC (C) 2006

Practice Pointer Please be aware of the three exceptions that can trigger the application of the old schedule for pre 1/1/2005 injuries per Labor Code Section 4660: (d) 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 [1] when there has been either no comprehensive medical-legal report [? 2] or no report by a treating physician indicating the existence of permanent disability, [2 or 3] or when the employer is not required to provide the notice required by Section 4061 to the injured worker (emphasis added). Siegel, Moreno & Stettler, APC (C) 2006

B. Terrell - Old vs. New Schedules Terrell v. Ralph’s Grocery Old versus new rating schedule applies. Applicant sustained injury on January 3, 2004. On December 16, 2004, the treating physician Dr. Styner issued a report indicating the existence of permanent disability, however, the applicant remained temporarily totally disabled. Applicant contended the treating physician’s report was sufficient to bring the claim within the exception in Labor Code §4660(d), and the old schedule should be applied to his permanent disability. The case notes the tension in the Panel Decisions in Mancinas where a physician’s report that projects or predicts that there will be permanent disability was adequate to satisfy an exception under 4660(d), and that of Vera where concluding that there will be permanent disability on a preliminary basis is not sufficient to bring it within the exception of Labor Code §4660(d). Here, the WCJ agreed with the Vera holding that AMA guides that the new rating schedule applies and does not fit an exception pursuant to Labor Code §4660(d). Finding notably: o It is inconsistent for a medical report to talk about possible future permanent disability while the injured worker is still temporarily totally disabled. o Defendants are not obligated to advance permanent disability to an injured worker who is receiving temporary disability benefits. o There is no public policy reason for selecting one rating schedule over another on the sole basis of a doctor’s prediction or future outcome. Siegel, Moreno & Stettler, APC (C) 2006

A. Hernandez - Pre-insolvency Penalties - CIGA non-covered claims Angelica Alatorre Acevedo Hernandez v. WCAB (Aguilar-Farria & Sons Dairy (2006) 71 Cal. Comp. Case 369 CIGA not liable for penalties for pre-insolvency delays. Penalties were sought on acts by Legion Insurance Company in April, 2003 in administering death benefits. Penalties were awarded under Labor Code §5814 in October, 2003, however, CIGA sought reconsideration. A final decision was not in effect when the change in law occurred. Labor Code §5814 was repealed and reinstated on June 1, 2004. Prior cases had found CIGA liable for pre-insolvency penalties Siegel, Moreno & Stettler, APC (C) 2006

VII. Liens • Outpatient Surgery Center must be licensed and accredited to recover on lien claims • Zenith (Capi) • Lien Filing Fees – reimbursable by Defendant - Cardosa Siegel, Moreno & Stettler, APC (C) 2006

A. Zenith Insurance (Capi) - Ambulatory Surgery Center Liens - Current licensure/accreditation Zenith Insurance Co. v. WCAB (Capi) (2006) 71 CCC 374 ASC must show licensure and accreditation to recover on lien. Applicant sustained injury to low back in January, 2002 and obtained epidural steroid injections and manipulations under anaesthesia performed at Beach Cities Ambulatory Surgery Center. There were outstanding liens for the facility fees for injections and manipulations. The WCJ did not permit a continuance to defendant to determine whether the outpatient surgery center was licensed. The WCJ awarded $46,000.00 in facility fees. The Court of Appeals reversed the Decision of the WCJ. The Court found that it is the lien claimant’s burden to establish entitlement to recovery including the services were properly provided in compliance with licensure. The Court also noted it is illegal to operate an outpatient clinic including an ambulatory surgery center in California without proper license and accreditation. The case was remanded to the WCJ for further proceedings and development of the record, if necessary. Siegel, Moreno & Stettler, APC (C) 2006

B. Cardosa - Lien Filing Fee - Reimbursement on Contested Claims with court-ordered recovery Cardosa v. SCIF (2006) Reimbursement of lien filing fee. Lien claimant filed a lien including the $100.00 filing fee on a contested medical-legal charge. The physician charged $2,200.00. The administrator allowed $550.00. After review of the evidence, the WCJ allowed an additional $275.00. Since the $275.00 was recovery of a contested amount by a lien claimant, the defendant was obligated to reimburse the filing fee. Siegel, Moreno & Stettler, APC (C) 2006

Gelfo - Interactive Accommodation Process - Awards result in “regarded as” disabled triggering FEHA process rights - Employment subsequent to injury Gelfo v. Lockheed Martin Corp.(2006) 71 CCC 726 Employer must engage in interactive process and accommodate following a work injury where employee is perceived as disabled. Applicant sustained injury in September, 2000. In June, 2001, applicant underwent Qualified Medical Evaluation and was precluded from heavy work. The treating physician found restrictions of no heavy lifting, repetitive bending, prolonged sitting or standing. He was found to be a qualified injured worker. He participated in vocational rehabilitation. By late 2001, applicant determined he was not disabled even though he ended up settling his case in January, 2002 with a permanent disability rating of 42½% disability. Applicant then begins a training program with employer and is offered a job. The employer rescinded the job offer based on the restrictions in the medical reports, even though the applicant no longer considered himself disabled. The Court of Appeals found that even though the applicant was in fact not disabled, he was “regarded as” disabled, and therefore, entitled to protection under FEHA. Since the applicant was “regarded as” disabled, the employer must explore reasonable accommodations and engage in an interactive dialog. Siegel, Moreno & Stettler, APC (C) 2006

Siegel, Moreno & Stettler, APCProudly serving San Diego, Los Angeles, Orange County and Riverside areas for over twenty-five years primarily in the areas of subrogation and litigation, fraud, and worker's compensation/employment law. For further information please contact: Steven Siegel, Esq. ssiegel@siegelmoreno.com Ralph Moreno, Esq. rmoreno@siegelmoreno.com or Scott Stettler, Esq. sstettler@siegelmoreno.com 707 Broadway, Suite 1400 San Diego, CA 92101 619-525-7626 (Tel.) 619-525-7685 (Fax) www.siegelmoreno.com Siegel, Moreno & Stettler, APC (C) 2006

Siegel, Moreno & Stettler AIP 2006 Workers' Compensation Case Law Update