Several recent cases issued from the appellate courts and the California Supreme Court are of interest to employers providing their Workers Compensation coverage. Although the cases are unrelated in subject matter for the most part, they have one universal theme: In attempting to balance benefits in a reminder, the application of disability laws must be done with some reasonableness.
AVALON BAY FOODS V. WCAB
The 1998 California Supreme Court case of Avalon Bay Foods v. WCAB addressed two issues:
- whether the penalty for unreasonable delay in payment of medical treatment transportation expenses properly applies to the full amount of the award for medical treatment expenses
- whether the employer or its insurer has to reimburse the injured worker for medical treatment transportation costs within 60 days of receiving documentation, pursuant to Labor Code section 4603.2, subdivision (b)
This case is significant because the applicant's bar has recently been having a field day asserting penalties and collecting ridiculous amounts of money against insurers for what seem to be minor offenses. The court held that medical mileage reimbursement is an element of medical treatment under the definition of the Labor Code-and thus if the insurer fails to pay the medical mileage reimbursement request on time it's subject to a penalty on the entire value of medical treatment expenses.
However, the court also found that since the reimbursement request is the same as a medical treatment expense, the insurer has 60 days to pay or otherwise object to it. Thus, the result of this case is to liberalize the meaning of what a medical treatment expense is for purposes of applying penalties under Labor Code 5814 (which grants a 10% penalty for unreasonable failure or refusal to provide a benefit in a timely manner) -- but in light of the particular facts of this case, the insurer (ITT Hartford) got off because it made the payment within 60 days of the request.
SCIF V. WCAB
Also in 1998, the California Supreme Court issued its decision in the case of SCIF v. WCAB (Adrienne Stuart). This case also dealt with penalties under Labor Code section 5814. A clerical mistake attributing to the employee a change of address for her attorney led to a one-week delay in her benefit check for a temporary disability. (Because of computer system confusion, a temporary claims adjuster erroneously entered a change of address for the employee's attorney into the employee field.) This was subsequently caught and the employee was immediately issued a proper check.
The Workers Compensation judge (WCJ) found this delay to be unreasonable and assessed the statutory penalty of 10% of the entire award. The Workers Compensation Appeals Board ('the Board') and the Court of Appeal agreed. The Supreme Court disagreed that there was substantial evidence to support a finding for a penalty. It noted in particular that except for the one disability check that was delayed as a result of the error, no other checks were late or missing, and that all benefits were otherwise paid promptly.
In reviewing the purpose of Labor Code section 5814 ('The touchstone of a section 5814 penalty is a delay or refusal to pay benefits that is unreasonable'), the Supreme Court looked at the factual basis of the Board's decision that SCIF's delay was unreasonable, keeping an eye on whether the Board's decision represents a fair balance between the interests of the employee and employer. It considered the reality of human frailties: 'The mistake in entering the change of address admittedly was careless. Nevertheless, in any endeavor in which humans are involved, mistakes are made. A reasonably short delay attributable to human error cannot, standing alone, be considered unreasonable. In requiring a finding of unreasonableness as the trigger for a section 5814 penalty, our legislature intended something beyond the mere existence of any delay in the payment of benefits. A contrary interpretation of the statutory scheme would improperly conflate the penalty in section 4650, subdivision (d), which is an automatic, strict liability penalty, with the penalty in section 5814, defeating the Legislature's expressed intent to require a heightened showing of culpability to justify the greater penalty.
'Were there substantial evidence in the record showing that SCIF had a history of improperly processing benefits payments, or that SCIF failed to provide a sufficient number of adjusters to handle the caseload or otherwise configured its office or business practices in such a way that errors were likely or probable, we would have a different case. Here, however, all the record demonstrates is a solitary instance of human error, which was quickly corrected upon discovery.'
DILLON V. CITY OF MOORPARK
A recent case that has been making headlines as it has moved through the appellate process, Dillon v. City of Moorpark, was heard by the California Supreme Court on a procedural matter-so on review, the case is known as City of Moorpark v. Superior Court.
Quite simply, the Supreme Court held that the Workers Compensation statutory scheme for dealing with discrimination was not an exclusive bar to an employee's right to pursue a claim under the Fair Employment and Housing Act (FEHA).
Dillon, the employee, sustained an injury on the job as a secretary for the city of Moorpark. The doctor released her and she returned to work, but she was terminated because the City Manager decided that her disabilities precluded her from performing the essential functions of her job.
After a long discussion of the history of the law and the protection against discrimination that has been followed by the courts, the Supreme Court found that Dillon had the right to pursue a civil action for discrimination under the FEHA. It also found that Dillon had the right to pursue common-law grounds for wrongful termination, stating that discrimination against injured employees is a protected public policy matter that is not precluded by the exclusive-remedy provisions of the Labor Code.
The Court noted that 'section 132a [the anti-discrimination statute regarding Workers Compensation claims] is in division 1 of the Labor Code, not division 4. Thus, the plain language of the exclusive remedy provisions of the Workers Compensation law apparently limits those provisions to division 4 remedies. Remedies that the legislature placed in other divisions of the Labor Code are simply not subject to the Workers Compensation exclusive remedy provisions'.
To further support its conclusion, the Court noted that the FEHA is the supreme law regarding discrimination in the workplace unless there's a law that provides greater protection and benefits. Labor Code section 132a is much more limited in remedies than the FEHA, so the Court found that the FEHA governed.
In making a general statement, the Court recommended that each matter must be dealt with case by case: 'In conclusion, we hold that section 132a does not provide an exclusive remedy and does not preclude an employee from pursuing FEHA and common law wrongful discharge remedies. We disapprove any cases that suggest otherwise. Nevertheless, we emphasize that not every instance of disability discrimination in violation of section 132a gives rise to a valid FEHA claim. The term 'disability' has a specific meaning in the context of the Workers Compensation law that it has in no other context. On the other hand, the FEHA includes detailed definitions of 'Physical disability' and 'Mental disability' that make no reference to the Workers Compensation law. (Gov. Code, § 12926, subds. (i), (k).) Because the standards for establishing disability discrimination may well be different under the FEHA than under section 132a, a decision in an employee's favor on a section 132a petition would not establish a FEHA violation. Moreover, to the extent section 132a and the FEHA overlap, equitable principles preclude double recovery for employees. For example, employees who settle their claims for lost wages and work benefits as part of a section 132a proceeding could not recover these damages as part of a subsequent FEHA proceeding.'
The reader should note that while the Court held this opinion in respect to Dillon's specific rights, it found that the allegation of a common law wrongful discharge due to her disability status duplicated her right to file an FEHA claim. Thus it dismissed Dillon's cause of action for wrongful discharge.
JOHNSON V. STATE OF OREGON
Finally, be aware of a recent Federal Appeals Court case, Johnson vs. State of Oregon. This case has broad implications, and when read in conjunction with the City of Moorpark ruling described at the beginning of this article, it's importance for Workers Compensation becomes immediately apparent.
In short, Johnson held that even though an employee may be totally disabled under Workers Compensation laws, the employee may still be able to assert a claim under the Americans with Disabilities Act (ADA) if the employer fails to make a 'reasonable accommodation' for that employee to return to work.
Johnson had five surgeries for bilateral carpal tunnel syndrome. Her doctor made recommendations regarding accommodations for her to return to work. The employer felt it could not accommodate Johnson, so she filed an ADA lawsuit. In the meantime, she filed for Social Security disability benefits, stating that she was totally disabled from work, and also represented to the IRS that her total disability resulted in the late filing of income tax returns.
The Federal Appeals court stated that each law concerning disability has a different definition of the term, and that a conclusion of total disability cannot be asserted from one law to the next. In finding for Johnson, the court stated that each case is different, that conclusions regarding disability status are not transferable between laws, but that factual statements regarding the fact of disability may be binding in other proceedings.