California: Workers Lose COLA Case

California: Workers Lose COLA Case

Today the California Supreme Court issued its opinion in the case dealing with the start of COLA calculations for life pension and permanent total disability cases.

The case, Baker v. WCAB (formerly known as the Duncan v. WCAB case and before that as the XYZZ case), is a big loss for severely disabled workers and a win for employers and carriers.

At issue was the proper interpretation of Labor Code 4659(c) which provides for a cost of living increase for injuries after January 1, 2003 for workers entitled to receive a life pension or total permanent disability.

The California Supreme Court rejected the COLA start date adopted by the WCAB, which was the January 1 date after the date of injury.

Also rejected was the start date used by the 6th District Court of Appeals, a COLA start date calculated back to January 1, 2004 regardless of the date of injury.

Although cases of 70% and up are not all that frequent in California's workers' comp system, the workers who qualify for 100% permanent total disability or 70% and above are workers with very substantial disabilities.

Today's decision means that such workers will see the COLA payments do little to protect them from the ravages of inflation.

Let's take an example of a "life pension case" (note that COLAs apply to permanent total cases as well).

Consider a 40 year old carpenter, a member of a construction trades union, who falls off a scaffold on 1/1/2006, causing a broken pelvis, traumatic brain injuries and the need for repeated surgeries.

The carpenter will be entitled to TTD for up to 104 weeks under the state's 104 week TTD limit, so TTD will end 1/1/2008.

After repeated surgeries he is declared at "maximal medical improvement" and rated at 90% (assume he is found able to maintain a minimal "future earning capacity").

That 90% will entitle him to payments of $230 per week over 753.25 weeks, which is about 14.5 years.

So by the time he is 56 years old (around the year 2022) he will be entitled to a "life pension" of $231.92 a week until he dies.

Under today's decision, that's when the COLA calculations start being applicable. So the 56 year old worker gets no protection from the ravages of inflation over the years til 2022. Going forward from 2022 he will qualify for COLA adjustments.

Whether this is a valid interpretation of the COLA statute might be argued by various legal scholars.

From a policy standpoint, however, the Supreme Court's interpretation offers little protection to the most disabled workers.

Some in the employer and insurance industry may be celebrating their victory today. The industry has been very concerned about the cost impact of COLAs even though they are relatively rare.

But to this observer, today's decision is a reminder that those studying the future direction of the comp system need to keep in focus the welfare of the most disabled workers and the adequacy of their benefits.

Here is a link to the opinion in Baker v. WCAB, currently available on the Supreme Court's website:

http://www.courtinfo.ca.gov/opinions/do ... 179194.PDF

Julius Young
www.boxerlaw.com
http://workerscompzone.com/

© Copyright 2011 Julius Young. All rights reserved. Reprinted with permission.