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Allied Waste Industries, Inc., et al. v. Workers' Compensation Appeals Board and Rogelio Rojas

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Sacramento)


December 6, 2010

ALLIED WASTE INDUSTRIES, INC., ET AL. PETITIONERS,
v.
WORKERS' COMPENSATION APPEALS BOARD AND ROGELIO ROJAS, RESPONDENTS.

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

Allied Waste Industries v. WCAB (Rojas)

CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

Labor Code section 4659, subdivision (c) provides a cost of living adjustment (COLA) for injured workers entitled to a life pension or total permanent disability indemnity. (Unspecified section references that follow are to the Labor Code.) This appeal involves an issue currently pending before the California Supreme Court, namely, the effective date of this adjustment. (Duncan v. Workers' Compensation Appeals Board (2009) 179 Cal.App.4th 1009, review granted Mar. 24, 2010, S179194 (Duncan).) We conclude that an injured worker is entitled to a COLA as of the January 1st following the date of injury. Because the Workers' Compensation Appeals Board (the Board) used a different starting date, we annul its decision and remand for further proceedings.

FACTS AND PROCEEDINGS

Rogelio Rojas (applicant) was seriously injured while working as a garbage truck driver for petitioner Allied Waste Industries, Inc. Applicant was deemed temporarily disabled from the date of his injury, February 18, 2005, through March 13, 2009, at which time he was deemed to have a permanent total disability. He received workers' compensation benefits throughout this period, and his attorney received an interim award of attorney fees.

At a workers' compensation hearing in October 2009, the parties stipulated to the underlying facts and also stipulated that applicant needed further medical treatment. Trial centered on three legal issues: (1) whether applicant, having been rated as permanently disabled, was entitled to a 15 percent increase in his disability award (see § 4658, subd. (d)), (2) when the COLA outlined in section 4659, subdivision (c) began, and (3) the total due for attorney fees, a calculation that depended on the amount of the underlying award, including any COLA adjustment.

On December 31, 2009, the administrative law judge (ALJ) awarded applicant the 15 percent increase and, pursuant to Duncan, a recent appellate decision described in greater detail below, determined that applicant was entitled to a COLA beginning January 1, 2004, even though his injury did not occur until February 2005. The ALJ ordered additional medical treatment for applicant and awarded counsel a total of $386,515.32 in attorney fees.

Petitioner sought reconsideration. The Board granted the petition and issued an order reversing the ALJ's decision in so far as it awarded applicant a 15 percent increase in permanent disability indemnity. However, the Board rejected respondent's challenge to the COLA calculation, concluding that it too was constrained by the Duncan decision.

Petitioner sought a writ of review, asserting that the Board erred in ruling that the COLA adjustment should be calculated as of January 1, 2004, and we granted the petition.

DISCUSSION

Before embarking on our analysis of petitioner's claim, we briefly review some fundamentals of the workers' compensation system.

A "temporary disability" is one that is expected to be cured or materially improved with medical care. (Western Growers Ins. Co. v. Workers' Comp. Appeals Bd. (1993) 16 Cal.App.4th 227, 235) Temporary disability indemnity is the basic benefit paid in this situation, and it is intended as wage replacement assistance during the time the employee is unable to work. (Ritchie v. Workers' Comp. Appeals Bd. (1994) 24 Cal.App.4th 1174, 1179.) "Depending on the severity of the injury, workers can be deemed partially or totally temporarily disabled and will receive temporary disability until they recover or become permanently disabled." (Gamble v. Workers' Comp. Appeals Bd. (2006) 143 Cal.App.4th 71, 79-80.)

If an employee does not fully recover but reaches maximum medical improvement or the employee's condition becomes stationary for a reasonable period of time, the disability is no longer "temporary" but is instead classified as "permanent." (Edgar v. Workers' Comp. Appeals Bd. (1998) 65 Cal.App.4th 1, 10.) A permanent disability that does not completely disable an employee is a "permanent partial disability," and compensation is paid for a certain number of weeks according to a permanent disability schedule. (See Gamble v. Workers' Comp. Appeals Bd., supra, 143 Cal.App.4th at p. 80; § 4658.) An employee with a permanent disability of at least 70 percent but less than 100 percent is entitled to life pension payments beginning when the permanent disability payments end. (§ 4659, subd. (a).) An employee with a 100 percent permanent disability, i.e., a total permanent disability, is entitled to permanent disability payments for life. (§ 4659, subd. (b).)

Benefits for permanent disabilities serve a different purpose than those for temporary disabilities. Permanent disability benefits are intended as "reimbursement for the employee's impaired future earning capacity or decreased ability to compete in the open labor market. [Citation.] Because an injured worker cannot be temporarily and permanently disabled at the same time, permanent disability payments do not begin until [temporary disability] payments cease." (Ritchie v Workers' Comp. Appeals Bd., supra, 24 Cal.App.4th at pp. 1179-1180.)

Section 4659, subdivision (c), the statute at the heart of this appeal, establishes a COLA for those receiving life pensions or total permanent disability benefits. It provides: "For injuries occurring on or after January 1, 2003, an employee who becomes entitled to receive a life pension or total permanent disability indemnity . . . shall have that payment increased annually commencing on January 1, 2004, and each January 1 thereafter, by an amount equal to the percentage increase in the 'state average weekly wage' as compared to the prior year. For purposes of this subdivision, 'state average weekly wage' means the average weekly wage paid by employers to employees covered by unemployment insurance as reported by the United States Department of Labor for California for the 12 months ending March 31 of the calendar year preceding the year in which the injury occurred."

The sole issue in this appeal is the effective date of the COLA. "While we accord '"significant respect"' to the Board's interpretation of statutes in the area of workers' compensation [citation], we subject the Board's conclusion of law to de novo review." (Department of Rehabilitation v. Workers' Comp. Appeals Bd. (2003) 30 Cal.4th 1281, 1290.)

"A fundamental rule of statutory construction is that a court should ascertain the intent of the Legislature so as to effectuate the purpose of the law. [Citations.] In construing a statute, our first task is to look to the language of the statute itself. [Citation.] When the language is clear and there is no uncertainty as to the legislative intent, we look no further and simply enforce the statute according to its terms. [Citations.]

"Additionally, however, we must consider [statutory language] in the context of the entire statute [citation] and the statutory scheme of which it is a part. 'We are required to give effect to statutes "according to the usual, ordinary import of the language employed in framing them." [Citations.]' [Citations.] '"If possible, significance should be given to every word, phrase, sentence and part of an act in pursuance of the legislative purpose." [Citation.] . . . "When used in a statute [words] must be construed in context, keeping in mind the nature and obvious purpose of the statute where they appear." [Citations.] Moreover, the various parts of a statutory enactment must be harmonized by considering the particular clause or section in the context of the statutory framework as a whole. [Citations.]' [Citations.]" (DuBois v. Workers' Comp. Appeals Bd. (1993) 5 Cal.4th 382, 387-388.)

Although applicant's injury did not occur until February 2005, the Board concluded that applicant was entitled to a COLA as of January 1, 2004, the date specified in section 4659, subdivision (c) as the start date for the adjustment. The Board found itself bound by an appellate decision, Duncan, that had determined this to be the COLA's effective date in all cases. The Board's decision was filed on March 22, 2010. Two days later, the California Supreme Court granted review in Duncan.

We conclude that, under the plain language of section 4659, subdivision (c), the COLA takes effect on the January 1st following the date of injury. Thus, in applicant's case, the COLA should be calculated as of January 1, 2006.

To reiterate, section 4659, subdivision (c) provides: "For injuries occurring on or after January 1, 2003, an employee who becomes entitled to receive a life pension or total permanent disability indemnity . . . shall have that payment increased annually commencing on January 1, 2004, and each January 1 thereafter, by an amount equal to the percentage increase in the 'state average weekly wage' as compared to the prior year. For purposes of this subdivision, 'state average weekly wage' means the average weekly wage paid by employers to employees covered by unemployment insurance as reported by the United States Department of Labor for California for the 12 months ending March 31 of the calendar year preceding the year in which the injury occurred."

As petitioner points out, the language of the statute offers three possible start dates for this COLA: (1) January 1, 2004; (2) the January 1st following a rating of permanent total disability; or (3) the January 1st following the date of injury.

The Duncan court opted for the first option, an effective date of January 1, 2004, in all cases. Because the California Supreme Court has granted review in this case, we do not discuss Duncan at length. In brief, Duncan noted that the statute provides that, once the life pension or total permanent disability payment is set, "that payment" has to be increased by COLAs starting from January 1, 2004. Therefore, the court concluded, the January 1, 2004, date was effective for any worker injured after January 1, 2003. (Duncan, supra, 179 Cal.App.4th at p. 1025.) The court found that this interpretation comported with the Legislature's intent that totally permanent disability payments and life pensions keep pace with inflation. (Id. at p. 1028.) The court rejected the suggestion that the COLA became effective on the January 1st following injury because the phrase "date of injury" was used only in the last sentence of section 4659, subdivision (c), defining "state average weekly wage." (See id. at pp. 1022-1023, 1028.) The court also rejected the notion that the COLA clause took effect on the date the worker became eligible for a life pension or total permanent disability indemnity, reasoning that because injuries may not become permanent and stable for a number of years, setting the COLA from the permanent and stationary date does nothing to protect the worker against inflation and in fact erodes the real value of these benefits. (Id. at p. 1027-1028.)

Despite petitioner's argument to the contrary, we agree that using the permanent and stationary date as the COLA effective date is ineffective to meet the aims of the statute. Section 4659, subdivision (c) is designed to protect an injured employee from inflation. A finding of permanent and stationary disability may not happen for years after an injury occurs. Here, for example, applicant was injured in February 2005 but was not found to have a permanent and stationary disability until March 2009. Under petitioner's theory, applicant would not be entitled to a COLA until January 1, 2010, the January 1st following this determination. This interpretation does little to protect an employee against inflation and does not further the Legislature's aims as expressed in section 4659, subdivision (c).

We do not agree, however, that January 1, 2004, is the effective date for a COLA in all cases. Rather, we hold that the clear statutory language establishes that the COLA begins on the January 1st following the date of injury.

Section 4659, subdivision (c) first provides that eligible workers injured after January 1, 2003, are entitled to an annual COLA "commencing on January 1, 2004, and each January 1 thereafter" in "an amount equal to the percentage increase in the 'state average weekly wage' as compared to the prior year." "State average weekly wage" is defined in the statute's second sentence as the reported average weekly wage "for the 12 months ending March 31 of the calendar year preceding the year in which the injury occurred." (Italics added.)

When these two sentences are read together, as they must be (DuBois v. Workers' Comp. Appeals Bd., supra, 5 Cal.4th at p. 388), it becomes clear that the critical period for determining the amount of the COLA (the subject of the first sentence) is the year in which the injury occurred (the subject of the second sentence). The COLA calculation begins by ascertaining the state average weekly wage for the year preceding the injury and comparing it to the average for the prior year, and then starting the COLA on the January 1st following the injury. (§ 4659, subd. (c).) Because this statute was enacted to apply to those whose injuries occurred on or after January 1, 2003, the first date on which a COLA could possibly be effective is January 1, 2004, which explains why the statute specifies that date. The statutory language is understandable in this context. If, for example, a worker were injured in April 2003, the COLA would be based on the percentage increase between the average weekly wage from March 31, 2001 to March 31, 2002 (the year preceding the injury), and the average weekly wage of the prior year, with the COLA taking effect on the next January 1st, or January 1, 2004.

It makes no sense, however, to use the January 1, 2004 date for those who were injured in years after 2003 and, in fact, it is impossible to calculate a COLA using that date. The statute computes the initial COLA by comparing the weekly wage rates for the year preceding the injury and the year before that. A COLA for an employee injured in November 2010 would be based on the increase in the average weekly rate from March 31, 2008 to March 2009 (the year before the injury) and the prior year. The critical data, and the sole relevant figure for computing the state average weekly wage, is the 12-month period ending March 31 of the calendar year preceding the year of injury.

The COLA cannot take effect as of January 1, 2004, by this amount and then increase annually thereafter because there is no measure for the following years. To explain, take our hypothetical worker injured in November 2010. If the state average weekly wage increased 1 percent in the period March 31, 2008 to March 31, 2009 over the preceding year, the worker would be entitled to a 1 percent increase. If that increase were to begin on January 1, 2004, however, how would the increase for the following years be computed? There is nothing in section 4659 that explains how to calculate an increase for January 1, 2005. Having based the initial calculation on increases surrounding the date of injury in 2009, it is nonsensical to suddenly examine the relative wages in 2004 and 2005 and base COLAs on that information. COLAs cannot be calculated by looking at one year and then suddenly jumping back several other years. An increase in average wages between 2004 and 2005 is irrelevant to the initial benchmark set by comparing the rates around the time of injury in 2009.

By defining "state average weekly wage" as it does, the statute explicitly calls for the initial calculation to be based on the increase in the year preceding the injury over the prior year, and subsequent increases are to be based on subsequent changes in the state average weekly wage.

The formula outlined in section 4659, subdivision (c) makes sense if the COLA begins on the January 1st following an injury. The hypothetical worker injured in November 2010 would be entitled to a COLA in January 2011 based on the percentage increase in the state average weekly wage between the year preceding the accident (March 31, 2008 to March 31, 2009) and the prior year. The following January 2012, the worker would be entitled to a COLA based on the percentage increase from 2008-2009 to 2009-2010, and so on.

By using a COLA start date of the January 1st following the year of injury, the purposes behind the workers' compensation system are served: an injured employee receives inflation protection based on actual inflation rates from the time he or she is injured. The alternatives proposed--a standard effective date of January 1, 2004, or an effective date based on when an injury is determined to be permanent and stationary--do nothing to protect against inflation.

In the instant case, applicant was injured on February 18, 2005, and he is therefore entitled to a COLA effective January 1, 2006. Because the Board utilized a different effective date, we annul the Board's decision and remand for further proceedings to recalculate both the COLA amount and the award of attorney fees.

DISPOSITION

The decision of the Board is annulled in so far as it calculated its award of benefits and attorney fees to include a COLA as of January 1, 2006. The matter is remanded to the Board for further proceedings in accordance with this decision.

We concur: BLEASE , Acting P. J. RAYE , J.

20101206

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