Ct.App. 6 H034040 WCAB Case No. ADJ1510738/SJO 0251902
The opinion of the court was delivered by: Baxter, J.
In this case we construe Labor Code*fn1 section 4659, subdivision (c) (section 4659(c), or subdivision (c)), which provides for the annual indexing of two categories of workers' compensation benefits--total permanent disability and life pension payments--to yearly increases in the state's average weekly wage (SAWW), so that lifetime disability payments made to the most seriously injured workers will keep pace with inflation. The indexing procedure is sometimes referred to as an "escalator," or one providing for "cost of living adjustments" (COLA's).
Permanent disability and life pension benefits are intended to compensate the injured worker for the long-term, residual effects of an industrial injury once the worker has attained maximum medical recovery. (Department of Rehabilitation v. Workers' Compensation Appeals Board (2003) 30 Cal.4th 1281, 1291 (Department of Rehabilitation).) Total permanent disability benefits are weekly payments made for life to injured workers who are 100 percent disabled. (§ 4659, subd. (b).) They commence on the date the injured worker reaches a medically stable condition (permanent and stationary) because, at that point, the full nature and extent of the worker's permanent disability, if any, can be determined. (Department of Rehabilitation, supra, 30 Cal.4th at p. 1292.) Life pensions are a form of supplemental partial permanent disability benefit, consisting of payments to a subclass of seriously injured workers, i.e., those whose "permanent disability is at least 70 percent, but less than 100 percent." (§ 4659, subd. (a).) Life pension payments commence once the worker's partial permanent disability payments have been exhausted, and thereafter continue weekly for life. (Ibid.)
Section 4659(c) provides, in full, "For injuries occurring on or after January 1, 2003, an employee who becomes entitled to receive a life pension or total permanent disability indemnity as set forth in subdivisions (a) and (b) 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." (§ 4659(c).)
We must determine whether the operative language of subdivision (c) requires the annual COLA's for total permanent disability and life pension payments to be calculated (1) prospectively from the January 1 following the year in which the worker first becomes "entitled to receive a life pension or total permanent disability indemnity" (§ 4659(c)), i.e., when the payments actually commence; (2) retroactively to January 1 following the year in which the worker sustains the industrial injury, the construction urged by real party in interest, or (3) retroactively to January 1, 2004, in every case involving a qualifying industrial injury, regardless of the date of injury or the date the first benefit payment becomes due, the interpretation given the statutory language by the Court of Appeal below.
Applying the "fundamental rule of statutory construction . . . that a court should ascertain the intent of the Legislature so as to effectuate the purpose of the law [citations]" (DuBois v. Workers' Comp. Appeals Bd. (1993) 5 Cal.4th 382, 387 (DuBois)), we conclude that, through the operative language of subdivision (c), the Legislature intended that COLA's be calculated and applied prospectively commencing on the January 1 following the date on which the injured worker first becomes entitled to receive, and actually begins receiving, such benefit payments, i.e., the permanent and stationary date in the case of total permanent disability benefits, and the date on which partial permanent disability benefits become exhausted in the case of life pension payments.
FACTS AND PROCEDURAL BACKGROUND
The injured worker in this matter, X.S.*fn2 (applicant), sustained an industrial injury on January 20, 2004, while employed as an accountant/controller. He received temporary disability payments of $728 per week from the date of injury through October 19, 2006. On June 19, 2007, he and his employer settled his claim, stipulating that he had become permanent and stationary on October 20, 2006, and that he suffered a 69.5 percent partial permanent disability, compensation for which was payable at the rate of $200 per week based on his earnings and date of injury (§ 4453, subd. (b)(6)(B)), for 422 weeks, commencing on the permanent and stationary date.
Approximately one month after settling his claim with his employer, applicant, who had a pre-existing disability caused by hepatitis B and his HIV-positive status, filed an application for benefits from the Subsequent Injury Benefit Trust Fund (SIBTF) pursuant to section 4751.*fn3 Petitioner in this matter, Christine Baker, is the Director of Industrial Relations serving as administrator of the SIBTF. SIBTF is funded and administered by the state for the purpose of compensating workers with prior disabilities who suffer subsequent industrial injuries.
On March 25, 2008, SIBTF and applicant stipulated that his January 20, 2004 injury resulted in a 69.5 percent permanent disability; that he became permanent and stationary on October 20, 2006; that payments for permanent disability commenced on that date; and that his previous permanent disability combined with his industrial disability resulted in a combined total permanent disability of 100 percent. The parties agreed that applicant would receive weekly payments of $528 from the SIBTF ($728 less $200 paid by the employer's workers' compensation insurance carrier), which payments would continue for 422 weeks, and thereafter $728 weekly for life.
Subsequently, a dispute arose when applicant claimed the initial $728 weekly rate that started on October 20, 2006, had to be increased to reflect annual increases in the SAWW, through the calculation of retroactive COLA's for the period from January 1 following the date on which he had sustained his industrial injury (Jan. 20, 2004), to the date on which his total permanent disability payments commenced (the permanent and stationary date of Oct. 20, 2006). Petitioner, on behalf of the SIBTF, maintained that the weekly payment of $728 to applicant, commencing on the permanent and stationary date, properly reflected the total permanent disability rate calculated under sections 4659, subdivision (b) and 4453 (a related section under which total permanent disability rate payments are calculated, referenced in § 4659, subd. (b)), and that the annual indexing of that payment with COLA's should not commence, per the language of section 4659(c), until January 1, 2007, which was the January 1 following the date applicant became permanent and stationary and actually began receiving his payments.*fn4
On July 14, 2008, the worker's compensation administrative law judge (WCJ) issued a "Findings and Award" against the SIBTF, concluding that by failing to retroactively calculate and apply the annual COLA's for January 1, 2005 (the first "January 1" following the date of injury) and January 1, 2006, COLA increases had been improperly withheld from applicant in the amount of $3,585.56.
The SIBTF appealed to the Workers' Compensation Appeals Board (WCAB), which, on February 13, 2009, issued its "Opinion and Decision After Reconsideration," construing section 4659(c) as "provid[ing] 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." (Italics added.)
On March 30, 2009, following the WCAB's final decision, the SIBTF petitioned the Court of Appeal for a writ of review (§ 5950), urging that the WCAB had misinterpreted section 4659(c) by finding that the statute's COLA increases begin accruing (and compounding) prior to the January 1 after the permanent and stationary date, the date on which the first benefit payment actually becomes due and payable, and asserting that "by holding that the payment increase is tied to the date of injury, the [WCAB] decided that the increase applies before an employee is entitled to receive a benefit payment, contrary to the plain language of the statute ...