California Vocational Rehabilitation and the Sweet Hereafter – Struggling to Find Meaning Post-Weiner

California Vocational Rehabilitation and the Sweet Hereafter – Struggling to Find Meaning Post-Weiner

Does a workers' compensation system that loses its vocational rehabilitation program lose its meaning?

In 1965 the California legislature introduced the concept of "vocational rehabilitation" by adopting Labor Code § 139.5. In 1974, the legislature amended Labor Code § 139.5 to provide that vocational rehabilitation would be "at the expense of the employer or the insurance carrier".

"A rehabilitation concept has always been integral to the philosophic base for workers' compensation," wrote Stanford D. Herlick in his California Workers' Compensation Handbook (LexisNexis). "This purpose is most readily apparent in the provision for all medical treatment necessary to cure or relieve the effects of industrial injury. Also, when permanent disability is rated, consideration must be given to any diminished ability to compete in the open labor market."

According to Professor Arthur Larson, the industrial accident problem has three major phases: prevention, cure, and rehabilitation. "The compensation job is not done when the immediate wound has been dressed and healed," wrote Professor Larson in his nationally recognized treatise Larson's Workers' Compensation Law (LexisNexis). "There remains the task of restoring the person to the maximum usefulness that he or she can attain given the physical impairment. Rehabilitation is properly an inherent part of the workers' compensation system's function."

Yet, over the years, draconian changes have been made to California's vocational rehabilitation program, most notably in 1989, when extensive modifications were enacted to reduce the costs of vocational rehabilitation, in 1993, when caps were placed on vocational rehabilitation costs, in 2003, when Labor Code § 139.5 and Labor Code §§ 4635 through 4647 were repealed, and in 2004, when Labor Code § 139.5 was reenacted for injuries occurring before January 1, 2004, but remained in effect until January 1, 2009. In its place, the legislature created a "supplemental job displacement benefit" for specified workers who are permanently partially disabled, to be used for retraining. But the new system applies only to injuries occurring on or after January 1, 2004.

Then, on June 10, 2009, the California Workers' Compensation Appeals Board issued its opinion and decision after reconsideration (en banc) in Weiner v. Ralphs Company, holding that (1) the repeal of Labor Code 139.5 terminated any rights to vocational rehabilitation benefits or services pursuant to orders or awards that were not final before January 1, 2009, (2) no saving clause was adopted to protect vocational rehabilitation rights in cases still pending on or after January 1, 2009, (3) vocational rehabilitation statutes (Lab. Code §§ 4635-4647) that were repealed in 2003 do not continue to function as ''ghost statutes'' on or after January 1, 2009, (4) effective January 1, 2009, the WCAB lost jurisdiction over non-vested and inchoate vocational rehabilitation claims, but the WCAB continues to have jurisdiction under Labor Code 5502(b)(3) and Labor Code 5803 to enforce or terminate vested rights, and (5) subject matter jurisdiction over non-vested and inchoate vocational rehabilitation claims cannot be conferred by waiver, estoppel, stipulation, or consent.

Have Injured Workers With Injuries Before 1/1/2004 Lost Their Right to Collect Vocational Rehabilitation Benefits?

"Unless you had a vested entitlement to vocational rehabilitation benefits, based on a final decision or order, entitling you to some specific benefits, your entitlement to benefits ceased to exist as of 1/1/2009," explains Richard Jacobsmeyer a founding partner of Shaw, Jacobsmeyer, Crain, and Claffey.

Can the Legislature Abruptly End the Rights of Injured Workers Like This?

According to Jacobsmeyer, there is actually quite a bit of precedence for abruptly ending rights of injured workers. "Cases have held that because workers' compensation is a creature of statute, when the legislature changes a statute, they can change fundamental rights. They can basically change benefits that existed one day and make them so they don't exist any longer."

The Rule of Finality of Decisions

Jacobsmeyer explains that the rule of finality of decisions essentially says that "unless you have a final decision, . . .your rights expire". All of the body of case law goes back to a 1997 decision called Graczyk v. Workers' Comp. Appeals Bd., and then most recently in 2005 with Kleemann v. Workers' Comp. Appeals Bd.

"I think that a whole lot of cases beginning with Gracyzk and Kleeman sort of compelled this result from the Board whether one likes it or not", says Jacobsmeyer. "When you boil it down and look at the way the statute was written, the employees had five years to collect their vocational rehabilitation benefits."

Are There Other Ways to Vest a Right to Vocational Rehabilitation?

Julius Young, a partner of Boxer & Gerson and a blogger at WorkersComp Zone, points out that footnote 3 in the Board's decision in Weiner reads: "It is conceivable there may be other ways to vest a right to vocational rehabilitation other than through an order that had become final before January 1, 2009. However, we have no occasion to address that question now."

"I think if there is a plan that has been agreed to by the parties, that that may very well be one way to vest the benefits," suggested Jacobsmeyer. "If you agreed to provide benefits after 1/1/09 and there is an effective plan in place – that might be one of the ways."

Jacobsmeyer also opines that "a decision made at the Rehabilitation Unit probably provides vested rights", but acknowledges that "there may be other people who disagree with that".

Is Weiner the Final Word?

"The caveat is even though this is an en banc decision of the WCAB, undoubtedly it will be appealed further," warns Jacobsmeyer. "The fact is that litigation is always uncertain."

According to Young, we need to watch how the Court of Appeal, Second Appellate District, rules in Beverly Hills Hilton Hotel v. Workers' Comp. Appeals Bd. (Boganim). Oral argument is scheduled for August 4, and the court specifically asked for the parties to address these issues about the survivability of vocational rehabilitation.

"So the Weiner decision – if it is upheld – and if the applicant's bar ends up losing in the Beverly Hills Hilton Hotel case, then the Weiner decision basically cuts out the legs under a lot of cases where there was huge case value because of retroactive VRMA," says Young.

Still, Young believes that, even if Weiner is not overturned, we might see "other permeations coming up – like the footnote referred to – that there may be other ways in which there could be a showing of a vested right before 1/1/09".

The Impact of Weiner on Injured Workers

Young says that the Weiner decision – whether the decision itself or the change in the law – has done a "great injustice to injured workers".

Young points out that, while the old vocational rehabilitation system had its own set of problems, "a lot of injured workers need the component of the old vocational rehabilitation system that helped them think through their options and gave them testing to find out what their abilities and areas they can succeed in and help them design a program."

"We have a system that was designed to help injured worker, and, now, after the reforms, workers get the short end of the stick," says Young.

Young also points out the shortcomings of the supplemental job displacement benefit program. "Efforts in the legislature in 2008 and 2009 to clarify and to streamline the provision of supplemental job displacement benefit vouchers have failed," says Young. "For those who don't understand how the voucher system works, it is a voucher that is worth between $4,000 to $10,000, depending upon the percentage of disability that is awarded. But as a practical matter the voucher really is not payable until the determination of the percentage of permanent disability. So, a lot of injured workers are getting a voucher later on or getting a voucher and not using it."

"It appears to be used by a relatively small number of employees," says Jacobsmeyer. "The experience I have and most of my clients have is that most employees are not using the voucher."

"I would argue that what we are seeing is a shifting of responsibility for injured workers onto other resources, whether they be private resources of some kind or public resources," says Young. "Of course, there is the California Department of Vocational Rehabilitation, but they have limited resources, and, in light of the state budget crisis, they may have much more limited resources. Historically they were not interested in doing retraining for people injured on the job."

Are Attorney's Fees Vested When It Comes to VRMA?

Young points out that another issue that will come up, and which has already come up with one case he's handling, is where an applicant's attorney is petitioning for release of attorney's fees withheld from vocational rehabilitation maintenance allowance (VRMA), but where there has never been a petition to get those fees released to the attorney before 1/1/09.

"The defendant indicated they were going to contest any order from the WCAB releasing those fees to us," said Young. "My position is that the fees were already withheld, and I'm taking the position they are vested."

Jacobsmeyer argues that attorney's fees are something that is withheld from the applicant's benefits and that the money for attorney's fees is really the applicant's money.

"I've actually recommended to my clients to write the applicant's attorney and tell them if they don't file a petition within 30 or 45 days for attorney's fees, you will pay the money to the applicant," says Jacobsmeyer. "If you don't get a petition, send [the money] to the applicant. In effect, they are holding the money for the injured worker. It is still their money. It is not the employer's money."

 Parts of this blog were excerpted from the podcast of Richard Jacobsmeyer and Julius Young on the Weiner decision. To listen to the entire podcast for free, click here.

© Copyright 2009 LexisNexis. All rights reserved.