Can a Social Security Disability Award Be Admissible in a Workers’ Compensation Case?

Can a Social Security Disability Award Be Admissible in a Workers’ Compensation Case?

  By Robert G. Rassp, Esq.
© Copyright 2013 LexisNexis. All rights reserved. Excerpts of this article will appear in a future edition of Rassp & Herlick, California Workers' Compensation Law.
 

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My friend and colleague George the Bartender and I were sitting at his bar recently—I was drinking ice tea and he was drinking—and we got to talking, I mean arguing, about whether or not a social security disability (SSD) award can be admissible in a workers’ compensation claim. Now George is a very knowledgeable bartender. He also practices workers’ compensation defense as a named partner in a large law firm during his spare time.
His best argument is that an SSD award cannot be given any res judicata effect since his client, the employer and its claims administrator, is not a party to an injured worker’s SSD claim. His client did not participate in the SSD administrative process and he cannot cross-examine a piece of paper (the award). In addition, he says, an SSD award cannot be given collateral estoppel effect because the criteria for a social security award do not match the basis of a workers’ compensation award that is based on the permanent disability rating schedule (PDRS) in effect on the date of injury, which PDRS applies WPI ratings, adjustment factors, occupational variants and the age of the worker on the date of injury. They are like comparing apples to oranges. This is especially true because an SSD award does not take into account any apportionment of permanent disability.
In fact, an SSD award can be and has been admitted into evidence in prior workers’ compensation cases. Did the WCJ in those cases commit reversible error in allowing the SSD award into evidence and in considering its content and conclusions? From recent actions by the WCAB, it appears that SSD awards can be admitted into evidence for a WCJ to consider in certain types of cases. How and why?
  • To show that the Applicant is unable to engage in any kind of substantial gainful activities, which is the same thing as inability to compete in the open labor market or a total loss of future earning capacity.
  • To prove the presumption of total dependency due to physical or mental impairment of an adult child of a deceased employee pursuant to Labor Code Section 3501(b) [LC 3501].
TOTAL DISABILITY CASES
Over the years, SSD awards have been admitted into evidence in workers’ compensation cases as part of a claim of permanent total disability under Labor Code section 4662 or under LeBouef [(1983) 34 Cal.3d 234, 48 Cal. Comp. Cases 587 [34 Cal.3d 234]]. Of the almost 250,000 licensed attorneys in California, there are about 4,600 certified specialists in various areas of the law. Of those, about 900 or so attorneys are certified specialists in workers’ compensation law and are mostly on the defense side. Probably fewer than 50 attorneys statewide regularly practice workers’ compensation applicant law and social security disability law at the same time. Needless to say, having an SSD award in hand at the time of an MSC to list it as an item of evidence, let alone to offer it into evidence at the time of trial, is rare.
In order to qualify for SSD benefits, a claimant must show that given his or her age at the time a disability onset occurs, his or her education, past relevant occupations (last 15 years prior to the onset date of disability), medically determinable physical and or mental impairments, and residual functional capacities, he or she is unable to engage in any kind of substantial gainful activities or the disability results in death. The actual language in the statute states [see 42 U.S.C.S. § 423(d)(2)(A) [42 USCS § 423]]:
“An individual shall be determined to be under a disability only if his physical or mental impairment or impairments are of such severity that he is not only unable to do his previous work but cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy,…”
42 U.S.C.S. § 423(d)(1)(A) states:
“The disability has to result in death or has lasted or can be expected to last for a continuous period of not less than 12 months.”
20 C.F.R. § 404.1571 [20 CFR § 404.1571] refers to “substantial gainful activities” (SGA) to include inability to perform part-time work, past relevant work and self-employment activities. The use of the term “unable to engage in any kind of substantial gainful activities” means the same as “unable to engage in any kind of substantial gainful work.”
The criteria for eligibility for SSD benefits from a medical standpoint are loosely based on the AMA Guides 2nd Edition, referred to as “meeting or equaling the Listings.” See 20 C.F.R. Part 404 Appendix 1 to Subpart P [20 CFR Pt. 404 App. 1 to Subpart P]. The criterion for eligibility also takes into account exertional and non-exertional factors, such as pain and psychiatric diagnoses.
In Ogilvie vs. Workers’ Compensation Appeals Board [(2011) 197 Cal. App. 4th 1262, 129 Cal. Rptr. 3d 704, 76 Cal. Comp. Cases 624] [197 Cal.App.4th 1262], the District Court of Appeal discussed the difference, if any, between an injured worker’s total loss of ability to compete in the open labor market, which falls under cases that are subject to the 1997 PDRS, and an injured worker’s total loss of future earning capacity which falls under cases subject to the 2005 PDRS. The DCA, quoting the California Supreme Court in Brodie vs. WCAB [(2007) 40 Cal.4th 1313 at 1320] [40 Cal.4th 1313], stated the definition of permanent disability “…is the irreversible residual of a work-related injury that causes impairment in earning capacity, impairment in the normal use of a member or a handicap in the open labor market” [Ogilvie at 1270]
The Court in Ogilvie held the total loss of ability to compete in the open labor market and a total loss of future earning capacity are interchangeable: “Indeed, the terms ‘diminished future earning capacity’ and ‘ability to compete in the open labor market’ suggest to us no meaningful difference, and nothing in SB 899 suggests the Legislature intended to alter the purpose of an award of permanent disability through this change of phrase” [Ogilvie at 1272].
A very strong argument can be made that “inability to engage in any kind of substantial gainful activities” also is essentially the same concept as inability to compete in the open labor market or a total loss of future earning capacity.
In cases that involve dates of injury on or after 1/1/13, the matter gets even murkier since Labor Code Section 4660.1 [LC 4660.1] no longer defines “permanent disability” in terms of loss of future earning capacity. It does not define the term at all—other than to instruct us to use the 2005 PDRS to calculate a PD rating—except to mandate the use of one adjustment factor of 40% for each part of body injured. So it is safe to assume that the use of SGA can and will occur to limited cases where the Applicant is claiming permanent and total disability under the “based on the fact” concept of Labor Code section 4662(c) [LC 4662] or under a pure LeBouef theory.
An SSD award may be admissible in these cases not only to tip the balance of the case towards a permanent and total disability WCJ finding but also to bolster any weak vocational expert opinion evidence in a case where the presumption of total disability in Section 4662 does not apply. WCJs have admitted Notice of Favorable Decisions from the federal Office of Disability Adjudication And Review (ODAR) in these cases as well as testimony from injured workers that they are receiving SSD benefits. These are very limited occasions and may only apply when the underlying cause of the SSD award was originally from a serious work related injury.
A very strong word of caution in these cases is: Do not use an SSD award in a workers’ compensation case if there are many non-industrial factors that may have led to the SSD award in the first place. The Applicant attorney community does not want a bad case to bring forth a WCAB en banc or published DCA decision that allows apportionment to occur in a Labor Code section 4662 presumption case. The selection criteria for using an SSD award in the workers’ compensation case should be limited to cases where the onset of disability is due to a serious work related injury, such as failed lumbar spine cases or other routine injuries that result in serious and permanent medical complications.
TOTAL DEPENDENCY CASES
As a part of SB 899 from the 2004 reforms, Labor Code section 3501 was amended to allow an adult dependent of a deceased injured worker to receive death benefits for life if he or she was mentally or physically impaired from working at the time of the deceased parent’s date of injury. Labor Code section 3501(a) specifically states:
“A child under the age of 18 years, or a child of any age found by any trier of fact, whether contractual, administrative, regulatory, or judicial, to be physically or mentally incapacitated from earning, shall be conclusively presumed to be wholly dependent for support upon a deceased employee-parent with whom that child is living at the time of injury resulting in death of the parent…”
How does one prove a finding “by any trier of fact?” Is an SSD award for the adult dependent child of a deceased worker admissible to prove the existence of the child’s permanent total impairment? What if the SSD determination was made by the Social Security Administration (SSA) without a formal hearing by an administrative law judge (ALJ)?
When a person applies for Title II Social Security Disability Insurance (SSDI) or Title XVI Supplemental Security Income Disability (SSI)) benefits, the initial claim is worked up under the umbrella of the SSA (see http://www.ssa.gov). The initial decision granting or denying benefits is a decision of the Social Security Commissioner who is part of the U.S. Department of Health and Human Services. See 42 U.S.C.S. § 421 [42 USCS § 421]. If benefits are denied on an initial claim, then the claimant for disability benefits can appeal the administrative decision within 60 days by way of filing a written Request for Reconsideration, which is a second level administrative process. See 20 C.F.R. §§ 404.907-404.913 [20 CFR 404.907-404.913].
If the Reconsideration is denied (and most of them are), then that decision, too, isa decision of the Commissioner of Social Security and the claimant has 60 days to request an administrative hearing before an ALJ at the ODAR office closest to his or her residence. See 20 C.F.R. §§ 404.914-404.917 [20 CFR 404.914-404.917]. If a claimant receives a favorable decision from the ALJ, then the SSA usually pays benefits, but it can appeal to the Appeals Council on its own motion (which has occurred only twice in 34 years of this author’s law practice). If the claimant loses at the ALJ hearing at ODAR, then he or she can appeal the denial of benefits to the Appeals Council, and if he or she loses there, a lawsuit can be filed at Federal District Court naming the Commissioner of Social Security and DHHS as the Defendants, essentially as a writ of mandate.
About 30% of initial claims or claims that are under a Request for Reconsideration are approved by the SSA without any kind of administrative hearing before an ALJ. Those favorable decisions become those of the Commissioner of Social Security.
If a claimant for SSDI or SSI wins his or her claim, the SSA sends the claimant what is called a notice of “Retirement, Disability, or Survivor Benefit,” which indicates the fact that the claim was accepted by the Commissioner of Social Security and the amounts of any retroactive and prospective monthly payments and how the amounts were calculated. Some practitioners still call these documents “Award Certificates.”
So is a decision of the Social Security Commissioner a final finding by a “trier of fact, whether contractual, administrative, regulatory, or judicial” that satisfies Labor Code section 3501(a)? Can an applicant’s attorney introduce into evidence the Notice of Retirement, Disability, or Survivor Benefits in a workers’ compensation case to prove that the adult dependent child of a deceased employee is physically or mentally impaired and unable to earn a living?
A WCAB trial judge (WCJ) held that a non-judicial award of SSD was not a finding by a trier of fact under Labor Code Section 3501(a) sufficient to trigger the presumption of total dependency of an adult child of a deceased employee. The WCJ’s decision was reversed by a WCAB panel in Jamie Xelowski (Deceased), Jennifer Campbell (daughter-Applicant) vs. City and County of San Francisco – Community Health Network, 2013 Cal. Wrk. Comp. P.D. LEXIS 91 [2013 Cal. Wrk. Comp. P.D. LEXIS 91] (February 27, 2013). [Note: The discussion of the Xelowski case in this article is based on two separately written opinions by the WCAB panel. The first decision, dated February 27, 2013, involved the WCAB panel granting the Applicant's Petition for Reconsideration and reversing the WCJ. The second decision, dated May 13, 2013, is the same WCAB panel denying Defendant's Petition for Reconsideration of the panel's previous order granting Applicant's Petition for Reconsideration. Caution: The May 13, 2013 WCAB panel decision is not a final decision since the time to file a Petition for Writ of Review with the Court of Appeal does not run until 45 days from the date of this WCAB decision.]
In Xelowski, a deceased employee’s adult daughter filed for SSD benefits in November 2009, claiming that she was unable to engage in any kind of substantial gainful activities as of July 2004. On October 5, 2010, the Commissioner of Social Security issued a Notice of Award, indicating a finding that the daughter was disabled under the Social Security Act as of July 1, 2004, and that she was entitled to disability benefits from November 2008 and continuing.[fn1] Applicant’s mother was killed while on the job in a motor vehicle collision on July 31, 2009, which was during the time the Applicant was eventually deemed to be incapacitated from engaging in any kind of substantial gainful activities.
The WCJ denied application of the incapacitated adult child presumption of section 3501(a) for two reasons—first, that the October 5, 2010 Notice of Award from SSA did not issue as a result of a trial before a “trier of fact” as that phrase is used in section 3501(a). The second is that the SSA decision is not a finding that Applicant is “physically or mentally incapacitated from earning” as that phrase is used in section 3501(a).
Applicant filed a Petition for Reconsideration. A WCAB panel reversed the WCJ and held that an administrative finding by the Commissioner of Social Security that an adult dependent child of a deceased employee is permanently incapacitated from earning a living is admissible in a workers’ compensation case to satisfy the requirements of Labor Code section 3501(b). The WCAB panel held that the administrative process of filing for SSD satisfies the requirement of section 3501(a) that a trier of fact can be from an administrative agency such as SSA without having to obtain a judicial order from an ALJ at the Office of Disability Adjudication and Review (ODAR) after a hearing on the merits.
The WCAB panel specifically states:
“As the WCJ acknowledges in this Report, the Social Security Commissioner makes findings of fact and decisions as to the rights of individuals applying for SSA disability benefits. The October 5, 2010 SSA Notice of Award in this case confirms that the Commissioner entered such a finding on the ultimate fact that applicant became disabled under the rules of the SSA on July 1, 2004, five years before her mother’s death. That is an ‘administrative’ finding by a ‘trier of fact’ within the meaning of section 3501(a). That finding establishes that applicant met her burden of producing evidence that she is disabled under the rules of the SSA.” (Citations omitted)
The WCAB panel also rejected the WCJ’s second conclusion that entitlement to SSD benefits is not the same as being “physically or mentally incapacitated from earning” as described in section 3501(a). After defining the definition of “inability to engage in any kind of substantial gainful activities,” the WCAB panel states:
“We are unable to discern any meaningful distinction between the SSA finding of disability based upon a determination that applicant’s impairment is of such severity as to preclude her from engaging in any kind of ‘substantial gainful work exists in the national economy,’ and the section 3501(a) requirement that there be an administrative finding that applicant is ‘physically or mentally incapacitated from earning.’ In our view, the SSA finding that applicant is disabled because her ‘physical or mental impairment or impairments are of such severity that [s]he is not only unable to do h[er] previous work but cannot, considering h[er] age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy’ pursuant to 42 U.S.C. § 423(d)(2)(A) meets the section 3501(a) requirement of an administrative finding by a trier of fact that applicant is ‘physically or mentally incapacitated from earning.’
The Defendant also argued at trial and on Reconsideration that federal law allows a recipient of SSD benefits to return to work on a trial basis and section 3501(a) requires permanent and total disability. The WCAB panel rejected that argument by pointing out that the Labor Code section 4662 [LC 4662] presumption of permanent and total disability (PTD) does not preclude someone awarded PTD from returning to the work force since medical technology is changing and some people with severe disabilities may eventually be able to work in the future. The WCAB panel in Xelowski v. City and County of San Francisco, 2013 Cal. Wrk. Comp. P.D. LEXIS 188 [2013 Cal. Wrk. Comp. P.D. LEXIS 188] (May 20, 2013) said:
“We recognize that the SSA tests of inability ‘to engage in any substantial gainful activity’ and inability to engage in ‘substantial gainful work’ do not require proof of total inability to ever earn anything over an entire lifetime. However, section 3501(a) does not require such a finding. Instead, section 3501(a) provides for a presumption of dependency when there has been a contractual, administrative, regulatory, or judicial finding that the individual was incapacitated from earning ‘at the time of injury resulting in death of the parent,’ as was issued by the SSA in this case.” (Footnote omitted)
The WCAB panel in footnote #3 pointed out that even cases that fall under a Labor Code section 4662 permanent and total disability presumption that results in a 100% award does not require proof of total inability to ever earn anything over an entire lifetime. In addition, federal law allows a recipient to Title II SSDI benefits to have an unsuccessful trial return to work period of up to 9 months post-award without prejudice to his or her disability benefits or to earn up to $1,000.00 per month for 9 months without losing Title II SSDI benefits. See 20 C.F.R. § 404.1592 [20 CFR 404.1592].
The Defendant filed a Petition for Reconsideration of the WCAB’s decision that had reversed the WCJ’s trial decision and contended the same arguments discussed above and also raised a third issue—that the Defendant should be not be subject to collateral estoppel effect since the Social Security Commissioner decision that the Applicant is disabled occurred after the employee had died and applied retroactively.
The WCAB panel rejected the Defendant’s argument and found that in this case the WCAB panel’s finding of the section 3501(a) presumption of dependency by the adult child of the deceased employee is not an improper application of the doctrine of collateral estoppel. The WCAB panel said:
“…Instead, the presumption created by the Legislature simplifies the administration of the workers’ compensation dependent death benefit by eliminating the need for a separate WCAB hearing to determine if the adult child was incapacitated from earning at the time of injury resulting in death of the parent when such a finding has already been made by another trier of fact. It also avoids the potential inequities that could result from inconsistent determinations.
“The SSA has been regularly and routinely issuing disability findings for many years. It cannot be assumed that the Legislature intended to exclude a SSA finding of inability to engage in any ‘substantial gainful work’ from the broad provisions of section 3501(a), which allows for any finding that an individual is ‘incapacitated from earning’ that is made by ‘any trier of fact,’ whether contractual, administrative, regulatory, or judicial.”
The WCAB panel applied the presumption of total dependency of the adult child of the deceased employee even though the administrative decision by the SSA was retroactive to include the date on which the employee-parent died on the job. So you do not have to have an advanced contractual, administrative, regulatory, or judicial decision of incapacity from earning prior to the death of an employee-parent.
So, George The Bartender has to wait another day to make his arguments that an SSD award is not admissible at a WCAB trial in specific types of workers’ compensation cases. You can catch stories by George the Bartender, written by Joseph Truce, Esq., in the California Workers’ Compensation Quarterly, which is published almost quarterly by the State Bar Workers’ Compensation Law Section. To join the section, go to http://www.calbar.ca.gov > “Sections and CYLA” > “Workers’ Compensation” > “Join.” Cheers!
Footnote:

1. A filing for SSD benefits creates a “protective filing date” wherein if the claimant for SSD benefits files for SSD within 5 years of the last year of paying payroll deductions to SSA, benefits are retroactive to one year prior to the protective filing date or six months after the onset of disability, whichever is later.

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