(May 7, 2007) A unanimous ruling last week by the California Supreme Court settles the issue of how to apportion an employer’s liability for a permanent disability.
In a long-awaited decision, the court ruled that the appropriate method for calculating a permanent disability award after apportionment is through the percentage method. As a result, employers are only responsible for the percentage of the employee's disability attributable to the current industrial injury for which the permanent disability award applies.
The Supreme Court decision was the final stop in the case of Welcher v. Workers' Compensation Appeals Board et al., along with the cases of Strong v. Workers' Compensation Appeals Board et al., Lopez v. Workers' Compensation Appeals Board et al., Williams v. Workers' Compensation Appeals Board et al. and Brodie v. Workers' Comp. Appeals Board et al. The Welcher decision is the leading case on whether workers' compensation cases should apportion an employer's liability for a permanent disability by subtracting percentages of an employee's disability as a result of a work-related injury - the approach supported by the California Chamber of Commerce - or by subtracting the dollar value of the injury.
Read the opinion.
In the opinion the court explained that SB 899 (Poochigian; R-Fresno) of 2004 and the “history behind them reflect a clear intent to charge employers only with that percentage of permanent disability directly caused by the current industrial injury."
"It was only a few years ago that California's workers compensation system was a huge drag on our economy, with escalating costs spiraling out of control,” said CalChamber President Allan Zaremberg. “Governor Schwarzenegger made fixing this problem a priority and reached a balanced, bipartisan compromise with the Legislature to reform our broken system. The workers’ compensation reforms of SB 899 have been successful for both employers and employees: costs and premiums to employers have been reduced dramatically, while workers have seen improved medical treatment guidelines and a promising increase in return-to-work rates.”
"The billions of dollars saved due to workers’ compensation reform have allowed California businesses to expand and create more jobs and tax revenue, while local governments and school districts have had more money to spend on public services, such as schools, roads and public safety. That is why the CalChamber led the effort for reform and why we joined in defending against this lawsuit by filing an amicus brief. "
CalChamber-Supported Ruling
The 3rd District Court of Appeal agreed with the CalChamber approach in a September 2006 ruling in the Lopez case. In agreement with a friend-of-the-court brief filed by the CalChamber, the 3rd District found that the 2004 workers' compensation reform legislation did not change the formula for calculating apportionment from a percentage-based formula to a dollar-based formula. The court also agreed that the reform legislation did not intend to change the formula.
The apportionment method was adopted by the California Supreme Court 30 years ago in Fuentes v. Workers’ Comp Appeals Bd. (1976) 16 Cal.3d 1 (Fuentes).
"This important Supreme Court ruling upholds the intent of our policymakers when they sought to reform workers compensation and reduce its costs,” Zaremberg said. “This decision protects those successful reforms and prevents a return to the days of double-digit premium increases and job loss. The CalChamber will remain vigilant in defending the reforms against attacks in all arenas - the courts, the Legislature, and on the ballot."
Read the opinion.
Staff Contact: Erika Frank