Employers rejoice!  The California Supreme Court has properly interpreted the California Labor Code (§ 4659) to hold that cost of living adjustments are to begin on January 1st following the year in which an applicant becomes permanent and stationary in cases of permanent total disability, or when permanent disability benefits end and life pension payments begin.  (See  Baker v. Workers’ Compensation Appeals Board.)

The Skinny:  COLA is calculated and adjustments are to be made:

* At the time the applicant is P&S (when there is an award of 100% permanent disability);

* At the time the PD indemnity is exhausted and the life pension begins (if there is to be a life pension.)

Labor Code § 4659 is fairly clear: injuries after January 1, 2003 resulting in total permanent disability or a life pension will have the benefits increased based on the state average weekly wage (essentially to cover the cost of inflation).

Applicants’ attorneys have argued that COLA increases begin January 1, 2003, even for injuries occurring as late as 2011.  California Workers’ Compensation is racked with disappointments about the interpretation of the law, but this is not one of them.  The Supreme Court got this one completely right – COLA increases are determined by the PTD P&S date (or the start of the life pension), and not in 2003.

In rendering this decision, the Supreme Court overturned the California Court of Appeals, and put an end to years of waiting for the determination of this issue.

This morning, adjusters and defense attorneys around the state are walking with their heads held high, bearing a faint smile on their lips as many WCJs and applicants attorneys glare on and simmer in their defeat.