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Workers' Compensation

California: Todd En Banc Clarifies Method to Determine SIBTF Liability under Labor Code Section 4751

On June 23, 2020, the LEXIS-NEXIS e-Newsletter published the Appeals Board’s decision in Richard Todd v. Subsequent Injuries Benefit Trust Fund (6-23-2020, ADJ7475146) 2020 Cal. Wrk. Comp. LEXIS 35. The decision is a must read for the entire workers’ compensation community, not simply because it is an en banc decision, which means that it is binding on all Appeals Board panels and workers’ compensation administrative law judges. It is significant for two crucial reasons. Foremost, it resolves the long-debated question of the proper method to determine liability of the Subsequent Injuries Benefit Trust Fund (SIBTF) under Labor Code section 4751. Equally important, the decision presents an elegant review of the elements that give rise to SIBTF liability in the first place.

The decision begins with the acknowledgement that section 4751 (enacted 75 years ago) was intended to encourage the employment of persons who are permanently partially disabled. (Ferguson v. Industrial Acci. Com. (1958) 50 Cal. 2d 469, 475)

Next, it points out that there is no specific statute of limitations with regard to the filing of an application against SIBTF. So long as an application against SIBTF is filed within a reasonable time after the employee learns from an Appeals Board’s finding on permanent disability that there is a substantial likelihood of SIBTF liability, it will not be time-barred.

The decision then recaps the essential elements of SIBTF liability, all of which the employee must prove. Those elements are:

  1. A preexisting permanent partial disability that can be congenital, developmental, pathological, or due to an industrial or non-industrial accident;
  2. The preexisting disability must be independently capable of supporting an award of permanent disability;
  3. A subsequent industrial injury that results in additional permanent partial disability;
  4. If the preexisting permanent partial disability affected a hand, an arm, a foot a leg, or an eye, the subsequent permanent disability must affect the opposite and corresponding member and must equal 5% or more of the total disability when considered alone and without regard to or adjustment for age or occupation of the employee;
  5. If the preexisting permanent partial disability does not affect a hand, an arm, a foot, a leg or an eye, then the subsequent permanent disability must equal 35% or more of the total disability, when considered alone and without regard to or adjustment for age or occupation of the employee;
  6. The combined preexisting and subsequent permanent partial disability is greater than the subsequent permanent partial disability alone; and
  7. The combined preexisting and subsequent permanent partial disability is equal to 70% or more.

Once the employee establishes these essential, threshold elements of SIBTF liability, section 4751 provides that they are entitled to be paid in addition to the compensation due for the permanent partial disability caused by the subsequent injury, compensation for the remainder of the combined permanent disability existing after the subsequent injury.

Exactly how is the remainder of that combined permanent disability existing after the subsequent injury to be calculated? That is the paramount question answered by the Todd decision. Let’s examine that question with the underlying facts of the case. Todd, a police officer, sustained several industrial injuries that produced permanent partial disability and were resolved by Stipulated Awards. ADJ6807484 was an injury to the back that caused 23% permanent disability. MON 210685 was an injury to the right shoulder that caused 10% permanent disability. VNO 486348 was an injury to the gastrointestinal system that caused 8% permanent disability. Todd later sustained an industrial injury to his kidney, heart, psyche, and in the form of hypertension. That subsequent injury was later found to have caused permanent disability of 68% by way of a stipulated award.

Todd sought benefits from SIBTF and claimed permanent disability of 100% based on his preexisting permanent partial disability and the permanent disability from his subsequent industrial injury. Todd argued that his preexisting permanent disability attributable to his back injury (23%), right shoulder injury (10%), and gastrointestinal injury (8%) should be added to the permanent disability resulting from the subsequent industrial injury to his kidneys, heart (hypertension) and psyche (68%) to produce 100% permanent and total disability. Although SIBTF did not dispute these percentages of permanent partial disability or claim overlap between the successive disabilities, it argued that Todd’s combined permanent disability should be determined by use of the Combined Values Chart (CVC). The WCJ combined Todd’s prior and subsequent permanent disabilities under section 4751 by addition and issued an award of 100% permanent and total disability.

The crux of the Todd decision is the proper method to be used to determine the employee’s combined permanent disability as specified in section 4751: i.e., whether to use the CVC or simple addition. That analysis begins with a discussion of Bookout v. Workers’ Comp. Appeals Bd. (1976) 62 Cal. App. 3d 214 [41 Cal. Comp. Cases 595], which addressed that very question. In Bookout an oil worker (Bookout) sustained an industrial injury to his back that caused a limitation to semi sedentary work (60% standard). He had a prior non-industrial heart disability that caused a preclusion from heavy work (30% standard) as well as a preclusion from excessive emotional stress (12% standard). The WCJ awarded Bookout 30.5% permanent disability for the subsequent back injury, based on a rating of 65%, less apportionment of 34.5%, attributable to the preexisting heart disability. The WCJ denied Bookout SIBTF benefits by attributing to the subsequent back injury 30.5%, which is less than the minimum requirement of 35% for a subsequent injury under section 4751. Bookout sought reconsideration and the Appeals Board affirmed the WCJ’s award.

On review, the Court of Appeal affirmed the finding of 30.5% permanent disability attributable to the subsequent back injury, which is the liability of the employer, but determined that Bookout was erroneously denied SIBTF benefits under section 4751 because the rater apportioned the 34.5% nonindustrial heart disability from the subsequent industrial back disability of 65%, instead of using the total disability for the subsequent injury, standing alone and without regard to or adjustment for the age and occupation of the employee, as required by section 4751. Thus, for purposes of SIBTF liability, the permanent disability attributable to the subsequent industrial back injury was 60%, which is greater than the minimum requirement of 35% in section 4751.

The Court of Appeal then observed that the WCJ had instructed the rater to treat the preexisting and subsequent disabilities as arising from a single injury for purposes of calculating overall disability. The rating specialist combined the disabilities by use of the MDT, the predecessor to the CVC. The preclusion from heavy work attributable to the preexisting nonindustrial heart disability was found to be subsumed by and overlapped the permanent disability attributable to the subsequent industrial back disability that was based on a limitation to semi-sedentary work. The preclusion from excess emotional stress caused by the preexisting heart disability was found to have caused 12% permanent disability. Based on the WCJ’s instructions, the rater combined the 12% non-overlapping heart disability with the 65% permanent disability attributable to the subsequent back injury by use of the MDT, resulting in 70.5% permanent disability. The Court of Appeal rejected use of the MDT and held that the 12% non-overlapping heart disability should have been added to the 65% instead, resulting in 77% overall disability. From that total, the Court of Appeal then subtracted the permanent disability for the subsequent back injury after apportionment (30.5%) and concluded that SIBTF was liable for the difference of 46.5% permanent disability.

Next, the Todd decision examines the basis for use of the MDT or the CVC under the 1997 and 2005 Permanent Disability Rating Schedules (PDRS). It acknowledges that a single injury can cause multiple impairments or disabilities and recognizes that the MDT/CVC are used to avoid overlap between disabilities or impairments or pyramiding when rating a single injury. It quotes numerous sections in the PDRS that premise use of the MDT/CVC on the rating of disabilities or impairments from a single injury. The decision recognizes a distinction between combining impairments or disabilities from a single injury and combining successive disabilities under section 4751. Based on these factors and the holding in Bookout, supra, the decision concludes that when combining successive and non-overlapping disabilities related to prior and subsequent injuries under section 4751, addition is the proper method to use.

Finally, the Todd decision addresses exactly how the award against SIBTF should be made. The decision examines the precise wording of section 4751; i.e., that the eligible injured employee “shall be paid in addition to the compensation due under this code for the permanent partial disability caused by the last injury compensation for the remainder of the combined permanent disability existing after the last injury as provided in this article… .” It then concludes that the quoted language means that SIBTF is liable under section 4751 for the total amount of the combined permanent disability, from which is subtracted the amount due to the injured employee from the subsequent injury, and from which is subtracted any credits that might be allowable under section 4753.

Practitioners should be heartened by the fact that the Todd en banc decision eliminates the complexities associated with the handling of cases involving potential SIBTF liability. The decision addresses the statute of limitations applicable to SIBTF applications and provides an easy checklist of the elements that must be met to establish SIBTF liability. And once those elements are demonstrated, the decision sets forth the formula to be used to calculate the amount of SIBTF liability under section 4751, as follows:

  1. Prior and subsequent permanent disabilities shall be added to the extent they do not overlap in order to determine the combined permanent disabilities specified in section 4751; and
  2. SIBTF is liable under section 4751 for the total amount of the combined permanent disability less the amount due to the injured employee from the subsequent injury and less credits allowable under section 4753.

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