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City of Los Angeles v. Workers' Compensation Appeals Board

November 12, 2009

CITY OF LOS ANGELES, PETITIONER,
v.
WORKERS' COMPENSATION APPEALS BOARD AND STATE OF CALIFORNIA DEATH WITHOUT DEPENDENTS UNIT ET AL., RESPONDENTS.



PROCEEDINGS to review a decision of the Workers' Compensation Appeals Board. Annulled. (W.C.A.B. No. LA0852444).

The opinion of the court was delivered by: Perluss, P. J.

CERTIFIED FOR PUBLICATION

The City of Los Angeles petitioned for review of an order of the Workers' Compensation Appeals Board (WCAB) awarding a full, $125,000 death benefit to the California Department of Industrial Relations, Death Without Dependents Unit (DWD Unit), pursuant to Labor Code section 4706.5, subdivision (a),*fn1 notwithstanding the City's payment of $104,208 in death benefits to the Estate of Jaime Foster pursuant to section 4702, subdivision (a)(6)(B). Because the escheat of a death benefit to the state after partial payment to the estate of a deceased worker-in effect, the award of two death benefits for a single death-is inconsistent with the governing statutes and the legislative policy they implement, we annul the order.

FACTUAL AND PROCEDURAL BACKGROUND

Jaime Foster was employed as a firefighter by the City. While on duty on the afternoon of August 14, 2004, Foster was involved in a fatal accident.*fn2 At the time of her death Foster was 25 years old; she was not married and had no children or other dependents within the meaning of sections 3501 through 3503. Foster died intestate.

The City promptly began advancing workers' compensation death benefits to Foster's mother, Gloria Foster, pursuant to section 4702, subdivision (a)(6)(B), which provides, "Except as otherwise provided in this section . . . , the death benefit in cases of total dependency shall be as follows: [¶] . . . [¶] For injuries occurring on or after January 1, 2004, in the case of no total dependents and no partial dependents, two hundred fifty thousand dollars ($250,000) to the estate of the deceased employee." The City reported the payments to Gloria Foster on a notice-of-employee-death form filed with the Department of Industrial Relations on September 3, 2004.

On November 17, 2004 the DWD Unit filed an application for adjudication of claim with the local district office of the WCAB in Los Angeles, alleging Foster died without dependents and seeking payment of death benefits from the City pursuant to section 4706.5, subdivision (a), which provides, "Whenever any fatal injury is suffered by an employee under circumstances that would entitle the employee to compensation benefits, but for his or her death, and the employee does not leave surviving any person entitled to a dependency death benefit, the employer shall pay a sum to the Department of Industrial Relations equal to the total dependency death benefit that would be payable to a surviving spouse with no dependent minor children [$125,000 for injuries occurring on or after July 1, 1996 but before January 1, 2006]." The City filed an answer disputing the DWD Unit's claim because it was paying a death benefit to Foster's mother.

On August 15, 2005 Gloria Foster filed a formal application for death benefits. Also on August 15, 2005 Gloria Foster filed a petition, and then on October 11, 2005 an amended petition, to be appointed administrator of her daughter's estate under the Independent Administration of Estates Act. The amended petition listed Gloria Foster as Jaime Foster's sole heir and identified as property of the estate only an unliquidated amount of damages from a potential lawsuit concerning Foster's death. At the City's request, the claims of the DWD Unit and Gloria Foster on behalf of the Estate of Jaime Foster were consolidated.

On July 24, 2006 the Governor signed into law Assembly Bill No. 2292 (2005-2006 Reg. Sess.), which amended section 4706.5 by adding new subdivision (h): "This section does not apply where there is no surviving person entitled to a dependency death benefit or accrued and unpaid compensation if a death benefit is paid to any person under paragraph (6) of subdivision (a) of Section 4702." (See Stats. 2006, ch. 119, § 3.) Uncodified section 1 of Assembly Bill No. 2292 declares subdivision (h) is intended "to clarify existing statutory requirements." (Stats. 2006, ch. 119, § 1 ["[i]t is the intent of the Legislature to clarify existing statutory requirements governing the payment of death benefits to the survivors of deceased employees under the workers' compensation system when the employee suffered a fatal injury"].)

On November 27, 2006 Division Three of this court held section 4702, subdivision (a)(6)(B), unconstitutional because the California Constitution's enabling provision for the workers' compensation law (Cal. Const., art. XIV, § 4) does not identify workers' estates as a permissible class of beneficiaries. (Six Flags, Inc. v. Workers' Comp. Appeals Bd. (2006) 145 Cal.App.4th 91 (Six Flags).) Immediately thereafter, the City filed a petition to terminate liability for death benefits to the estate and to dismiss Gloria Foster's claim. On July 11, 2007 the workers' compensation administration law judge granted the City's petition. By this time the City had paid $104,208 in death benefits to the Estate of Jaime Foster.

The DWD Unit's claim proceeded to trial. On March 26, 2008 the workers' compensation administrative law judge ordered the City to pay the DWD Unit $125,000 less credit for $104,208 previously paid to the Estate of Jaime Foster. The judge explained, "The only issue in this matter is whether defendant [the City] is entitled to a credit for the money they paid pursuant to a conflicting but enacted law at the time the payments were made. [¶] This Court believes that equity requires that a credit be given in this matter. The defendant in this matter paid benefits pursuant to a valid and existing law passed by the State of California. . . . To now allow another State Agency to collect the death benefit without credit because the law was declared unconstitutional, appears to this Court to be [i]nequitable."

The DWD Unit petitioned the WCAB for reconsideration. In his report on reconsideration recommending the petition be denied, the workers' compensation administrative law judge defended his initial decision: "The history of death benefits in California workers' compensation law has always provided that the Death Without Dependents Unit would receive no death benefits, where family member dependents were entitled to benefits. While the new statute provided for payment of death benefits to the deceased worker's heir and not dependents[,] it is equally clear the legislative intent was to terminate DWD's right to death benefits where Labor Code 4702(a)(6) is applicable. This fact is evidenced by the passage of legislative bill AB 2292, which provided that no payment was due DWD where an estate was paid under Labor Code 4702(a)(6). While this bill was passed, it never went into effect because of the decision in the Six Flags case. The Bill, however, indicates that the Legislature acknowledged a conflict and would have resolved it in favor of the City in this matter."

The WCAB granted reconsideration and ordered the City to pay the full $125,000 death benefit to the DWD Unit under section 4706.5, subdivision (a), with no credit for sums paid in death benefits to the Estate of Jaime Foster pursuant to section 4702, subdivision (a)(6)(B). The WCAB explained section 4706.5, subdivision (a), requires an employer to pay a death benefit to the DWD Unit when an employee with no dependents dies as a result of an injury that arose out of or in connection with employment. Prior to its invalidation in Six Flags, section 4702, subdivision (a)(6)(B), required an employer to pay a death benefit to the estate of a deceased employee with no dependents who had died as a result of an injury that arose out of or in connection with employment. When the Legislature added subdivision (a)(6) to section 4702's provisions for the payment of death benefits in 2002, it did not amend section 4706.5, subdivision (a)'s requirement for payment to the DWD Unit. Accordingly, the WCAB concluded, "there is no actual "conflict' between the two statutes. At the time the applications were filed in this case, defendant was obligated to pay benefits to both DWD and the deceased's estate."

Unlike the workers' compensation administrative law judge, the WCAB did not find the Legislature's 2006 enactment of new subdivision (h) to section 4706.5 significant, noting the effective date for the new provision was January 1, 2007. However, because the Six Flags decision had invalidated section 4702, subdivision (a)(6)(B), prior to that date, "section 4706.5(h) likewise became inoperative, since it depended on the unconstitutional statute for its operation." Finally, whether or not the failure to credit the City for its payments to the Estate of Jamie Foster was "inequitable," the WCAB concluded it lacked "authority for allowing a credit against an amount due to DWD pursuant to an unambiguous and unchanged statute for an amount paid to another party pursuant to a statute that has been declared invalid."

The City petitioned the WCAB for reconsideration. The WCAB denied the petition, reiterating its view that the City was liable for death benefits under both section 4702, subdivision (a)(6)(B), and section 4706.5, subdivision (a), until the former provision was found unconstitutional in Six Flags and that section ...


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