California: Shipley Doctrine Lives, Continues to Safeguard Due Process Rights of Litigants Before the WCAB

By Hon. Susan V. Hamilton, Former Assistant Secretary and Deputy Commissioner, California Workers’ Compensation Appeals Board

Several months ago, an article in LexisNexis Workers’ Compensation Newsletter discussed Zurich American Ins. Co. v. Workers’ Comp. Appeals Bd. (2023) 97 Cal. App. 5th 1213, 89 Cal. Comp. Cases 1 (Zurich), in which the 2nd District Court of Appeal held that the 60-day time limit within which the Appeals Board must act on a petition for reconsideration (Lab. Code § 5909) is jurisdictional, and a decision issued beyond the 60-day period is void and in excess of the Appeals Board’s jurisdiction. The article, which is entitled “Is Shipley on Life Support? The Implications of Zurich” (https://www.lexisnexis.com/community/insights/legal/workers-compensation/b/recent-cases-news-trends-developments/posts/california-is-shipley-on-life-support-the-implications-of-zurich), examines a panel decision (Mayor v. Ross Valley Sanitary District, 2024 Cal. Wrk. Comp. P.D. LEXIS 26 (Mayor)) that issued shortly after Zurich and discusses the compelling rationale provided by that panel for continuing to apply Shipley v. Workers’ Comp. Appeals Bd. (1992) 7 Cal. App. 4th 1104, 57 Cal. Comp. Cases 493 (Shipley), when a timely-filed petition for reconsideration has not been acted upon by the Appeals Board within 60-days of filing due to a procedural irregularity outside of the control of the parties. Shipley held that in such circumstance, the 60-day time limit of Lab. Code § 5909 is tolled until the Appeals Board receives notice of the petition. The article than concedes that while it cannot be certain as to the outcome of future petitions for reconsideration that present the same issue, there is strong indication in the Mayor panel decision that Shipley remains alive and well. Three recent decisions issued by Appeals Board panels confirm that prognostication.

The first and most important of those decisions is Ja’Chim Scheuing v. Lawrence Livermore National Laboratory (2024) 89 Cal. Comp. Cases 325 (Ja’Chim Scheuing), which has been designated as an Appeals Board Significant Panel Decision. The other decisions are Richard Fisher v. Klingspor Abrasives, Inc. (2024 ADJ11434587) and Keri Noyce v. West Contra Costa Unified School District (2024 ADJ9898386).

Ja’Chim Scheuing

Facts

The facts in the case are straight forward. Applicant claimed her industrial injury caused permanent and total disability. The WCJ disagreed, and on December 1, 2023, issued a Findings and Award that the injury caused 28% permanent disability. Applicant filed a petition for reconsideration of that decision at the Oakland WCAB District Office consistent with applicable rules (Cal. Code Regs., tit. 8 § 10940). The petition was filed on December 18, 2023, just 17 days after the Findings and Award issued.

When applicant filed the paper petition for reconsideration at the Oakland WCAB District Office, it was scanned into EAMS, the electronic adjudication management system overseen and maintained by the Administrative Direct of the Division of Workers’ Compensation (Cal. Code Regs., tit. 8 §§ 10205, 10205.4, 10206, 10208.5, 10208.7).

Ordinarily when a petition for reconsideration is scanned into EAMS, an electronic message is sent to the WCJ assigned to the case that a petition for reconsideration has been filed. The notice serves to inform the WCJ that a petition for reconsideration has been filed so they can prepare the required Report and Recommendation on Petition for Reconsideration. (Cal. Code Regs., tit. 8 §§ 10206, 10962). The Appeals Board does not receive notification of the filing of a petition for reconsideration up to this point. Only after EAMS notifies the WCJ that a petition for reconsideration has been filed and the Report must be prepared, is the Appeals Board made aware of the filing by transmission of the electronic documents to it through EAMS. In this case, however, a glitch occurred when applicant’s petition was scanned into EAMS. The WCJ was not timely notified of the filing, nor sent notification that a Report and Recommendation on Petition for Reconsideration should be prepared. EAMS’ electronic docket confirmed that the Appeals Board was first notified of the timely-filed petition for reconsideration in the case on February 21, 2024, over two months after its filing. Thus, the 60-day period in Lab. Code, § 5909 for the Appeals Board to act on a petition for reconsideration had already expired when it received first notice of the filing.

The panel found that applicant’s petition for reconsideration was timely and appropriately filed, that the Appeals Board’s failure to act on it within Lab. Code, § 5909’s timeframe was the result of an administrative error not attributable to either party, and that, accordingly, its time to act on the petition was tolled until 60 days after February 21, 2024, when it first received notice of the petition.

The panel’s analysis

Of note, the panel only mentions Zurich in footnote 6, acknowledging that the decision “appears to reflect a split of authority on the application of Shipley…”. Instead, Part I of the decision reviews and analyzes relevant constitutional provisions, procedural rules, statutes, and case law, and presents the rationale for application of Shipley, not only in the case before them, but in future matters that present similar underlying facts.

First, the panel lays out the statutory provisions governing the reconsideration process. Lab. Code, § 5900(a) allows any person aggrieved by a final order, decision or award made by the Appeals Board or a WCJ to file a petition for reconsideration of that decision within the time and the manner specified in related statutes.

Similarly, Lab. Code, § 5900(b) permits the Appeals Board, at any time within 60 days after the filing of a final order, decision, or award by a WCJ to grant reconsideration on its own motion.

Once the Appeals Board has acted on a timely filed petition for reconsideration by either granting it or denying it, or once the Appeals Board issues a final order, decision, or award after granting reconsideration on its own motion, a party may seek timely appellate review of that final decision by filing a petition for writ of review (Lab. Code, § 5950)

The panel then discusses the statutes and rules that govern timeliness of a petition for reconsideration. When a final order, decision or award is served by mail on an address in California, the aggrieved party has 25 days within which to file a timely petition for reconsideration. (Lab. Code, § 5903; Cal. Code Regs., tit. 8 § 10507(a)(1)). Cal. Code Regs., § 10508 extends the deadline to the following business day when the last date for filing falls on a weekend or holiday. Further, as discussed above, petitions for reconsideration are required to be filed at the district office and not at the Appeals Board. (Cal. Code Regs., tit. 8 §§ 10940, 10205).

This time limit for filing a petition for reconsideration is jurisdictional, meaning that the Appeals Board lacks jurisdiction to act upon or consider an untimely petition for reconsideration (Maranian v. Workers’ Comp. Appeals Bd. (2000) 81 Cal. App. 4th 1068, 65 Cal. Comp. Cases 650; Scott v. Workers’ Comp. Appeals Bd. (1981) 122 Cal. App. 3d 979, 46 Cal. Comp. Cases 1008).

In contrast, the panel notes that when a petition for reconsideration is timely filed, Lab. Code, § 5900(a) empowers the Appeals Board to act on the petition without issuing an order removing the case to itself under Lab. Code, § 5301, or issuing an order providing notice and opportunity to be heard pursuant to Lab. Code, § 5803. Further, the panel emphasizes that when the Appeals Board grants a petition for reconsideration under Labor Code § 5900, that action has the effect of causing the entire subject matter to be reopened for further consideration and determination (Great Western Power Co. v. Industrial Acc. Com. (1923) 191 Cal. 724, 10 I.A.C. 322). That is, the entire record is open for review (State Comp. Ins. Fund v. Industrial Acc. Com (1954) 125 Cal. App. 2d 201, 19 Cal. Comp. Cases 98).

Next, the panel points out that unlike the appellate courts which are authorized to summarily deny petitions for writ of review and mandate, the Appeals Board does not deny petitions for reconsideration by operation of law under Lab. Code, § 5909 based upon Supreme Court holdings that a summary denial of a petition for reconsideration is inconsistent with Lab. Code, § 5908.5, which requires that any decision of the Appeals Board following reconsideration specify in detail the reasons for the decision as well as the evidence relied on. In this regard, the panel cites, among others, Evans v. Workmen’s Comp. Appeals Bd. (1968) 68 Cal. 2d 753, 33 Cal. Comp. Cases 350, and Moyer v. Workmen’s Comp. Appeals Bd. (1972) 24 Cal. App. 3d 650, 37 Cal. Comp. Cases 219.

The panel goes on to emphasize that timely petitions for reconsideration are acted upon by the Appeals Board within 60 days of their receipt, consistent with Lab. Code, § 5909. The panel may grant, deny, or dismiss the petition, and once a decision on the merits of the petition issues, the parties can determine whether to seek appellate review under Lab. Code, § 5950. But it notes, there is one important exception. The exception occurs when a timely filed petition for reconsideration is not received by the Appeals Board within 60 days due to some administrative or procedural irregularity outside the control of the parties. In such instance, the “Shipley Doctrine” has been consistently applied to toll the statutory period in Lab. Code, § 5909 until 60 days from the Appeals Board’s first notice of the petition for reconsideration.

The panel then discusses the rationale underlying Shipley—that all parties to a workers’ compensation proceeding have a fundamental right to due process and a fair hearing under the California and United States Constitutions, which requires notice and a meaningful opportunity to be heard and present evidence on the issues in dispute. The Shipley court observed that summary denial of a timely petition for reconsideration because it had not been acted on within the required time frame due to an administrative irregularity and through no fault of the petitioner was offensive to due process as well as ordinary common sense.

Of equal significance the panel states is the right of the petitioning party to a decision on the merits of the petition (see Lab. Code, § 5908.5; Evans, supra, 68 Cal. 2d at pp. 754-755), the absence of which compromises their ability to seek meaningful appellate review (see Lab. Code, §§ 5901, 5950, 5951; Evans, supra; Rea v. Workers’ Comp. Appeals Bd. (2005) 127 Cal. App. 4th 625, 70 Cal. Comp. Cases 312). The panel then observes that Rea, supra, and numerous appellate court cases issued in every appellate district have consistently applied Shipley when weighing the statutory mandate of 60 days against the parties’ constitutional due process right to a true and complete judicial review by the Appeals Board.

Finally, the panel addresses the Constitutional mandate that the Appeals Board accomplish substantial justice in all cases expeditiously, inexpensively, and without incumbrance of any character (Cal. Const., art. XIV, § 4) by simultaneously observing the Supreme Court’s declaration that “[p]rocedural rules should engender smooth and functional adjudication” and “…must be able to withstand the charge that it is inequitable, burdensome or dysfunctional.” (Elkins v. Derby (1974) 12 Cal. 3d 410, 420, 39 Cal. Comp. Cases 624).

The panel then explains that the Appeals Board has consistently applied and relied on the Shipley precedent for over 30 years by continuing to consider all timely-filed petitions for reconsideration on their merits, as required by due process. This practice promotes judicial stability and safeguards due process considerations for all litigants. Equally important, this practice protects every litigant’s right to seek meaningful appellate review after receiving a final decision on the merits from the Appeals Board. It concludes its analysis with the statement, “In keeping with the WCAB’s constitutional and statutory mandate, all litigants before the WCAB must be able to rely on precedential authority, and all litigants must have the expectation that they will be treated equitably on issues of procedure and be accorded same or similar access to the WCAB.”

The panel then applied Shipley and issued a decision on Ja’Chim Scheuing’s timely-filed petition for reconsideration.

Richard Fisher and Keri Noyce

The panel decisions in both the Richard Fisher and Keri Noyce cases pre-date the Appeals Board’s significant panel decision in Ja’Chim Scheuing by a couple of weeks, and the make-up of each panel was different. Nonetheless, all three decisions present the same underlying facts vis-à-vis the filing of the petition for reconsideration. In each case, the petition for reconsideration was timely filed with a WCAB district office. In each case, an administrative error occurred whereby EAMS failed to notify the WCJ of the filing of the petition, task the WCJ with the obligation to prepare a Report and Recommendation on the petition, and then timely transmit the electronic file to the Appeals Board. And in each case, as in the earlier Mayor panel decision, the panel consistently applied Shipley and went on to issue a decision on the merits of the respective petitions.

What Can Litigants Expect

Notwithstanding our best efforts and intentions, neither humans nor electronic systems are infallible. There will continue to be administrative irregularities that cause a timely-filed petition for reconsideration to fall through the cracks of EAMS, depriving the Appeals Board of the ability to address the petition within the statutory 60-day period. The Ja’Chim Scheuing, Fisher, Noyce, and Mayor panel decisions tell us that going forward, Shipley will continue to be applied to toll the statutory time until 60 days after the Appeals Board’s receipt of the petition, consistent with the persuasive rationale set out in Ja’Chim Scheuing.

Reminder: Board panel decisions are not binding precedent.

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