As my dedicated and well-read readers will no doubt know, Labor Code section 4658(d) allows employers to take a 15% decrease in permanent disability payments if they make an offer of regular, modified, or alternative work to an injured employee within 60 days of that employee becoming permanent and stationary.  I’ve had the opportunity to blog about some interesting cases touching on this section.

What happens when there are two different P&S dates?  In the case of Velgrace Smith v. Workers’ Compensation Appeals Board, applicant sustained an injury and filed a workers’ compensation claim.  The parties eventually went to an AME, who evaluated applicant on November 29, 2006, finding her permanent and stationary as of September 2006.   Defendant made of offer of regular work, within the AME’s prescribed work restrictions, on December 29, 2006.  There was no response from applicant.

On April 30, 2008, applicant was re-evaluated by the same AME, who revised his opinions regarding her P&S status: she actually became P&S in March of 2007.  Defendant renewed its offer of regular work.

Here’s a timeline:

08/25/2005   –   Date of Injury (end of a cumulative trauma period)

09/??/2006   –   Retroactively found Permanent and Stationary Date (1)

11/29/2006   –   Evaluated by AME; AME issues report

12/29/2006   –   Defendant makes offer of regular work (1)

03/??/2007   –   Retroactively found Permanent and Stationary Date (2)

04/30/2008  –   Re-evaluated by AME; revised P&S opinions

05/??/2008    –   Defendant makes a second offer of regular work (2)

The matter proceeded to trial and the Workers’ Compensation Judge found that applicant was entitled to a 4658(d) increase of 15% because defendant did not make an offer of regular work within 60 days of March, 2007.  The WCJ acknowledged that this was physically impossible for the employer to do, but (for some reason) the literal application of the law was appropriate in this case.

Defendant petitioned for reconsideration and the WCAB granted said petition, holding that the 60 days during which a defendant has to make an offer of regular, modified, or alternative work begin to run upon defendant’s receipt of the report, not the actual date of the report or the date elected as the permanent and stationary date.  Furthermore, the WCAB held:

“a mere change in permanent and stationary date does not invalidate an offer of modified work for the purposes of Labor Code section 4658(d) unless there is also a change in the permanent work restrictions which renders the offer of modified work inconsistent with the work restrictions. To the extent that the December 29, 2006 offer of modified work was compatible with the applicant’s permanent work restrictions as of March 2007, the defendant should gain the benefit of the decrease outlined in section 4658(d)(3)(A) with regard to its entire permanent disability indemnity liability. However, if the applicant was given different or more restrictive work restrictions, a new 60-day period runs from the date of knowledge of the new work restrictions.”

The Court of Appeal denied applicant’s petition for a writ of review.

Assuming the second P&S dates comes with additional restrictions, does the defendant get the benefit of a 15% decrease on all permanent disability payments made after the offer of regular work was made, but before service of the new P&S date?  I would argue yes – the policy behind 4658, according to the WCAB, is to encourage retention of injured workers through the use of monetary incentives.  If you’re aware of a case with a contrary holding, I would be interested in reading it – gregory.grinberg@htklaw.com.

When does the 60 day time-period to make an offer of regular work begin?  This issue is a regular character in the California Workers’ Compensation Defense drama.

We all know that an employer has 60 days from when an applicant becomes permanent and stationary to make an offer of regular work.  In fact, the employer faces a 30% difference under Labor Code § 4658(d) – either a 15% increase in permanent disability indemnity, or a 15% decrease in the same.

Let’s say Dr. Cu’Emee finds that applicant became permanent and stationary January 1, 2011, based on his evaluation, which occurred March 1, 2011, but then doesn’t sign or send the report until May 1, 2011.

When does the 60-day time period start?  If it starts after the applicant becomes permanent and stationary, then by the time the report reaches the defendant, the 60 days have passed.  If it is based on the date of the report, then the employer isn’t afforded the full 60 days either.

In a recent case, Soto v. ACE Ins. Co. (2011) 39 CWCR 122, applicant became permanent and stationary, according to the QME, on August 14, 2007 (the same date as the P&S report).  But the report wasn’t mailed until September 18, 2007 and an offer of regular work wasn’t made until October 24, 2007, and the form sent was unsigned.

The Workers’ Compensation Judge awarded applicant the 15% increase under 4685(d).  On petition for reconsideration, the Workers’ Compensation Appeals Board granted reconsideration, holding that the 60 days do not begin to run until the defendant has been properly served with the Permanent and Stationary report.

Just before you begin to sigh with relief as you picture ACE Insurance Company riding off into the sunset, a 15% decrease in its pocket and a smile on its face, no such happy ending blessed our brave defendant.

In its order, the WCAB instructed the WCJ to evaluate if, because the offer of regular work was unsigned, the employer failed to comply with the requirements of § 4658(d).

So, the two lessons to take away from this:

(1)   The 60 days don’t begin to run until after there has been proper service of the permanent and stationary report; and

(2)   Make sure to sign page 3 of the offer of regular work form.

Armed as you are with today’s post, I wish you all good hunting!

While we’re on the subject of Labor Code § 4658(d), let’s take a hypothetical.  Andy the applicant slips and falls at work.  He twists his ankle and it’s hard for him to work.  He goes to see a doctor on the same day, and the following morning returns to work.  He tells his supervisor that he needs to stay off his leg, but other than that he’s fine.

Naturally, Andy’s supervisor puts him to work at the same job – sitting at a desk and working the call center.

Eventually, Andy files a claim and the matter proceeds to trial.  As the defense attorney is filling out the Stipulations with Request for Award form, he gets to page 6 and is stumped – is there a 15% increase because the employer never sent out an offer of regular work?  Is there a 15% decrease because Andy never missed work?  Does this section even apply?

For the moment, the authority seems limited and split.  Fortunately, both splits are relatively good for the defense!

In the panel decision of Hisato Tsuchiya v. County of L.A. (ADJ2508984) [scroll down to page 50], the panel found that the 15% increases and decreases do not apply when no time was lost due to the injury.   In other words, the defendant was not penalized 15%, but didn’t get the benefit of a 15$ reduction either, because the proper paperwork was not done.

In another decision, Wendy Audiss v. City of Rohnert Park (2007 Cal. Wrk. Comp. P.D. Lexis 9), the Board went further to favor the defense.

There, the Board held “[d]efendant’s compliance with the purposes of this provision is evidenced by the fact that as of the date applicant became permanent and stationary March 31, 2006, she was employed by defendant performing her regular work … The subsequent timing of defendant’s offer is not dispositive for the purposes of this provision, where applicant has been employed full time in her regular work.”

Of note here is the fact that there was a formal offer of work made, but, because of late service of the treating physician’s P&S report, this offer was made more than 60 days after applicant was permanent and stationary.

Subsequent authority might later hold that, unless the Notice of Offer of Modified or Alternative Work is actually sent, the applicant will receive a 15% in permanent disability payments.  I’ve known some adjusters to safeguard against this by always sending the offer of alternative work, even when the applicant’s employment has been terminated for cause.

In the meantime, it is important to press for that 15% decrease if the employee is back to work at any time before the 60-day-mark of the Permanent and Stationary report.

Under Labor Code § 4658(d) an applicant’s permanent disability payments can be increased, or decreased, by 15% if he or she returns, or doesn’t return, to work.

Essentially, the employer has sixty days from the date the applicant becomes permanent and stationary to offer an employee regular work, or the rate of permanent disability payments goes up by 15%.

In the alternative, if, at any time before the sixty days elapse, the employer makes an offer of regular work, then the permanent disability payments are decreased by 15% (immediately, not after the 60 days).

What happens if, up until trial, the issue goes unaddressed?  Like that sandwich in the back of the office refrigerator, always there and never eaten, what if everyone assumes that addressing this is someone else’s responsibility?

For example, let’s say Jill gets hurt at work and files a claim.  The litigation back-and-forth begins, and ultimately there is a trial before a workers’ compensation judge.  At no point is the 15% increase claimed or raised as an issue, nor is the right to a 15% decrease claimed or raised, until the WCJ, in making an award, decides do add it on.

At this point, the WCJ has heard no evidence one way or another – there is nothing in the record regarding whether or not Jill returned to work and, if she did, whether it was within 60 days of becoming permanent and stationary.

Is the WCJ right in raising the issue him or herself after the record has closed?  Is the WCJ to assume that Jill gets the 15% increase?

In the Reconsideration Granted opinion of Maria Parra v. E. & J. Gallo Winery (2011 – ADJ6536976) [Handled masterfully, again, by Thomas J. Harbinson (my boss) and Laura K. Lachman of Harbinson Tune Kasselik], those questions were answered.

By raising the issue of permanent disability, the issue of § 4658(d) is implied (the Board cited Bontempo v. Workers’ Compensation Appeals Board (2009) 173 Cal.App.4^th 689).

However, a WCJ is bound by Labor Code § 5903(c), specifically that evidence must justify the findings of fact.  This was not the case here – the WCJ did not make any findings of fact as to § 4658(d).

In other words, the WCJ can’t simply assume the insurer or self-insured employer owes money without finding the facts on which to base this assumption.

It’s easy to get cynical being a defendant in California’s Workers’ Compensation system.  Don’t!  You shouldn’t have to give up an inch of territory that’s yours.