2nd DCA Asked to Rule on Apportionment for PTD, LC 139.48

Published on February 25, 2013 by WorkCompCentral, authored by Sherri Okamoto 

The California 2nd District Court of Appeal is considering whether an employer can apportion liability for a permanent and total disability caused by a worker's loss of earning capacity if the worker also has limitations caused by non-industrial medical conditions.

The defense in Pacific Compensation Insurance Co. v. WCAB, No. B245572, contends that it is an issue of first impression for the court. The California Workers' Compensation Institute, a defense amici, also argues that the state legislature's passage of Senate Bill 863 last year affects similar cases where the permanent disability award is based solely on earnings loss.

Section 139.48, part of the reforms created by SB 863, shifts liability from an employer to a $120 million special fund created for the purpose of making supplemental payments to workers whose permanent disability benefits are disproportionately low in comparison to their earnings losses. 

CWCI is urging the 2nd DCA to remand the case to allow Administrative Law Judge William Carero to determine what portion of benefits due to Gregory Nilsen should be payable by Nilsen's employer, and what portion should be paid by the special fund. 

The Workers' Compensation Appeals Board took the unusual step of filing an informal response to the CWCI's brief, advising the 2nd DCA not to take Section 139.48 into account since the parties had not raised it as an issue and since the Department of Industrial Relations has yet to enact regulations establishing who is eligible for payments from the special fund and the amount of such payments.

Sherman Oaks attorney Robert G. Rassp, author of the "Lawyer's Guide to the AMA Guides and California Workers' Compensation," said Friday that the WCAB's "position that an amicus has no dog in the fight is a good argument."

If neither party raised the potential of the special fund's liability, he queried, "why should an amicus be allowed to?" Rassp posited that "this is the best and strongest argument for the court to not even address the (special fund) issue."

CWCI also took the position that Section 139.48 applies to "all pending matters, regardless of date of injury," but the statute does state explicitly whether it applies to pending cases. Rassp pointed out that other Labor Code provisions enacted by SB 863 – such as Section 4660.1 – explicitly limit their application to injuries that occur on or after Jan. 1, 2013. Since Section 139.48 contains no similar limitation, he said it arguably could apply to older injuries like Nilesen's, unless the DIR promulgates regulations that say otherwise.

Rassp said he thought the department was hinting that it does not think Section 139.48 should apply to injuries before Jan. 1, 2013, and he anticipated that "we will see the same memo from DIR legal" when workers with a dates of injury prior to Jan. 1, 2013 begin making demands for payment from the special fund created by the statute. 

Nilsen's attorney, Alan Zane Gurvey of Rowen, Gurvey & Win, said he was "surprised" to see CWCI raise Section 139.48 in the case. He said he agreed with Rassp that an amicus should not be able to raise new lines of argument, and that even if it were procedurally appropriate, the argument is "a non sequitur."

The WCAB, he opined, essentially said "the amicus brief did not have a valid position" since Section 139.48 "is not relevant." Without implementing regulations, Gurvey said, "no one knows how this fund is going to work," so "why ask the court to rule on something that for all intents and purposes is an unknown?" 

Gurvey also said he saw no need for the 2nd DCA to hear the substantive issue in the case since there was no dispute that Nilsen was permanently and totally disabled, and "it is so clear that...but for this injury, he would not have been out of the labor market." 

Nilsen's injury took place in February 2007. He had worked as an automotive repair service manager for Vista Ford in Woodland Hills, earning $100,000 to $120,000 annually. 

A co-worker drove a car over a wooden plank on while Nilsen was standing, which propelled the plank into the wall of the shop and threw Nilsen backwards into a steel post. 

Nilsen later filed a claim for workers' compensation benefits based on injuries to his back, knees, psyche, gastrointestinal system, neck, shoulders, and hand. He also claimed to have chronic pain, headaches, sleep problems and sexual dysfunction. 

Vocational expert Enrique Vega testified that Nilsen had no future earning capacity as a result of his disabilities after the February 2007 accident. 

Carero concluded that Nilsen was 100% permanent and total disabled. 

He noted that Nilsen had some impairments that were caused by factors unrelated to the February 2007 accident, but Carero reasoned that none of these impairments contributed to Nilsen's total loss of earning capacity. In light of this, Carero said liability for Nilsen's permanent and total disability fell entirely upon Nilsen's employer and its carrier, the Pacific Compensation Insurance Co.


A WCAB panel upheld Carero's ruling in October. Pacific then petitioned for judicial review.