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Duncan v. Workers' Compensation Appeals Board

November 25, 2009


Trial Court: Workers' Compensation Appeals Board Trial Judge: Alfonso J. Moresi WRIT OF REVIEW (W.C.A.B. No.ADJ1510738).

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


John Duncan, administrator of the Subsequent Injuries Benefit Trust Fund of the State of California*fn1 (SIBTF) petitions this court for review of a decision of the Workers' Compensation Appeals Board, which construed Labor Code section 4659, subdivision (c) to mean that the cost of living adjustment to total permanent disability payments and life pensions are retroactive to the date of injury, no matter when the first payment is actually received. We granted two requests for leave to file briefs as amici curiae.*fn2

In this case of first impression, we hold that the cost of living adjustments pursuant to Labor Code section 4659, subdivision (c), for life pensions and total permanent disability indemnity, are added to those payments, per the words of the statute, starting January 1, 2004, and every January 1 thereafter. Accordingly, we annul the decision of the Workers' Compensation Appeals Board.


On or about June 19, 2007, an injured worker (the Worker) and his employer's insurance company settled the Worker's claim for an industrial injury that occurred on January 20, 2004. The parties stipulated that the Worker's injury became permanent and stationary on October 20, 2006; and that the industrial injuries caused permanent disability of 69.5 percent for which permanent disability indemnity was payable at the rate of $200 per week beginning October 20, 2006, for a period of 437 weeks. The Worker had received temporary disability benefits from 2004 to 2006.*fn3 However, because the Worker had a pre-existing disability caused by Hepatitis B and his HIV positive status, the Worker submitted a claim to the SIBTF about a month after he settled with his employer.

On or about March 25, 2008, SIBTF and the Worker stipulated that the Worker's January 20, 2004 injury resulted in a 69.5 percent industrial permanent disability, which became permanent and stationary on October 20, 2006; that October 20, 2006, was the date of his first payment for permanent disability; and that the Worker's previous permanent disability combined with his industrial disability resulted in a combined total permanent disability of 100 percent. Accordingly, the worker would receive $528 weekly payments for total permanent disability as of October 20, 2006 ($728 less $200 paid by the insurance company for Worker's employer), for 422 weeks, and thereafter $728 weekly for life.

Subsequently, it appears that a dispute arose after the Worker claimed the initial $728 weekly rate that started October 20, 2006, had to be increased by annual changes in the state average weekly wage starting from the date of his injury -- January 20, 2004 -- to the date payments became due -- October 20, 2006.

On July 15, 2008, the Workers' Compensation administrative law judge (WCJ) issued a FINDINGS and AWARD against the SIBTF. Specifically, the WCJ found that by failing to implement Labor Code section 4659, subdivision (c) in a timely fashion, the SIBTF delayed payments to the Worker in the sum of $3,585.56; and that increased payments to the Worker should have begun on January 1, 2005. The WCJ based these findings on an interpretation of Labor Code section 4659, the application of which to the facts of the case the WCJ found "somewhat puzzling."

After the SIBTF appealed to the Workers' Compensation Appeals Board (WCAB), the WCAB issued its OPINION AND DECISION. The WCAB held that Labor Code section 4659, subdivision (c) "provides that for injuries on or after January 1, 2003, where an employee becomes entitled to total permanent disability indemnity or a life pension, that payment shall be increased annually commencing on January 1, 2004. We construe this to mean that each payment of total permanent disability indemnity or life pension that is received on or after January 1 following the date of injury shall be increased, no matter when the first such payment is received. This ensures that severely injured workers are protected from inflation, no matter when they receive their first payment. In some cases there may be years of litigation before there is a determination that an employee is entitled to receive a life pension or total permanent disability indemnity award. In the case of a life pension, the first payment will ordinarily be made years after the date of injury. Nonetheless, the injured worker will have been protected against any inflation that may have ensued between the date of injury and the date of first payment of the life pension or total permanent disability indemnity."

Following the WCAB's decision, the SIBTF petitioned this court for a writ of review, which this court granted on June 30, 2009.*fn4

Appellate Review

All judicial powers under the workers' compensation system are vested in the WCAB, subject only to the review by the appellate courts of this state. (Lab. Code, §§ 111, 5301, 5950.)*fn5 WCJs hear and decide compensation claims as trial judges, and the WCAB functions as an appellate body. The WCAB has the power to reject the factual findings of a WCJ and to make its own findings of fact, and may affirm, rescind, alter or amend a WCJ's decision or award. (§§ 5906, 5908.5; Lamb v. Workmen's Comp. Appeals Bd. (1974) 11 Cal.3d 274, 280-281.)

Our review of a decision by the WCAB is limited. "As to findings of fact, we defer to the [WCAB]'s findings if supported by substantial evidence. (§ 5952 [fn. omitted]; [citation].)" (Department of Rehabilitation v. Workers' Comp. Appeals Bd. (2003) 30 Cal.4th 1281, 1290 (Department of Rehabilitation).) The WCAB has extensive expertise in interpreting and applying the workers' compensation scheme. Thus, in reviewing a workers' compensation provision, we give great weight to the WCAB's interpretation unless it contravenes legislative intent as evidenced by clear and unambiguous statutory language. (E & J Gallo Winery v. Workers' Comp. Appeals Bd. (2005) 134 Cal.App.4th 1536, 1543.) "While we accord ' "significant respect" ' to the [WCAB]'s interpretation of statutes in the area of workers' compensation [citation], we subject the [WCAB]'s conclusions of law to de novo review [citations]." (Department of Rehabilitation, supra, 30 Cal.4th at p. 1290.)

Background on Workers' Compensation

As our sister court in the Fourth Appellate District explained, "Workers' compensation is not an area of the law that routinely gives rise to California appellate court decisions." (Gamble v. Workers' Comp. Appeals Bd. (2006) 143 Cal.App.4th 71, 78 (Gamble).)

As did the Gamble court, we believe that a brief synopsis of this state's workers' compensation scheme and its development, an overview of the common terminology, and a discussion of the relevant legal provisions are necessary prerequisites to the resolution of this case.

" 'More than 90 years ago, our Legislature was directed to "create and enforce a liability on the part of all employers to compensate their employees for any injury incurred by the said employees in the course of their employment irrespective of the fault of either party." [Citation.] . . . The Legislature complied with this directive by enacting various provisions of the Labor Code.' [Citation.]" (Gamble, supra, 143 Cal.App.4th at p. 78.)

" ' "This system attempts to assure employees of an expeditious remedy both adequate and certain, independent of any fault on the part of employees and employers. At the same time, it provides the employer with a liability which is determinable within defined limits. It represents a philosophy that industry, as a cost of doing business, should provide for the care and rehabilitation of workers disabled by work injuries. In this way, society supports the program as a[n] integral element ...

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