BILL ANALYSIS Ó
AB 305
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Date of Hearing: May 6, 2015
ASSEMBLY COMMITTEE ON INSURANCE
Tom Daly, Chair
AB 305
Gonzalez - As Amended April 30, 2015
SUBJECT: Workers' compensation: permanent disability: gender
discrimination
SUMMARY: Prohibits the use of certain gender-related
characteristics in the calculation of permanent disability
benefits. Specifically, this bill:
1)Prohibits granting the disabling effects of breast cancer a
lower disability rating than granted to the disabling effects
of prostate cancer.
2)Prohibits the use of pregnancy, menopause, or osteoporosis, if
these conditions are contemporaneous with the industrial
injury causing the disability, to apportion permanent
disability with respect to a physical injury.
3)Prohibits the use of sexual harassment, pregnancy, menopause,
or osteoporosis, if these conditions are contemporaneous with
the industrial injury causing the disability, to apportion
permanent disability with respect to a psychiatric injury.
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EXISTING LAW:
1)Provides for a comprehensive system to provide workers'
compensation benefits to workers whose injuries arise out of
or in the course of employment, including medical treatment
and financial compensation if the injury or condition has a
permanently disabling effect.
2)Establishes a Permanent Disability Rating Schedule (PDRS), a
methodology for calculating impairment through the use of the
American Medical Association Guides to the Evaluation of
Permanent Impairment (AMA Guides), and other tools that are
used to determine the extent of an injured worker's permanent
disability (PD).
3)Allows for the "apportionment" of PD determinations to prior
industrial causes, or to prior non-industrial causes, and
reduces the amount of the injured worker's PD award to the
extent these prior causes have contributed to the extent of
the disability.
4)Requires the physician who is making a recommendation on the
extent of disability that has followed from an industrial
injury to identify, and quantify, causation of the disability
that is either prior to or subsequent to the industrial
injury.
FISCAL EFFECT: Undetermined
COMMENTS:
1)Purpose. According to the author, "[w]hile current law
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prohibits workers compensation claims from being denied based
on certain protected class characteristics, it does not
clearly prohibit gender or other characteristics from being
taken into account when apportioning an injury. Additionally,
current law requires physicians to identify "other factors"
when apportioning an injury. This leaves a loophole in which
an injury can be attributed to conditions predominantly or
only found among the workers' gender." Proponents assert that
lawyers who represent injured workers report that they have
cases where women have had the conditions cited in the bill
used as a reason to reduce permanent disability benefits.
2)Apportionment. Apportionment applies to PD determinations
when the disabling effect of an industrial injury has some
percentage of causation that either predates or occurs
subsequent to the industrial injury. Apportionment does not
apply to medical treatment. For example, no matter how much
the old football injury is making an industrial knee injury
more complicated or extensive, the workers' compensation
system provides medical treatment for the industrial knee
injury fully and comprehensively. The fact that there is
pre-industrial injury causation that affects the seriousness
of the injury does not limit the extent of medical treatment.
However, causation of the disability is treated differently
from causation of the injury.
There are at least three policy rationales underpinning the
apportionment rule. First, it has been deemed unfair to
require an employer to pay for disability that was not caused
by the employment. Second, if the prior causation was a
previous industrial injury that resulted in a PD award, the
injured worker would have already been compensated for that
portion of the disabling condition. Third, if an employer
knew that a job candidate suffered a previous injury that
might lead to more expense if he should re-injure himself, the
employer might opt to hire someone else who does not pose that
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financial risk.
Apportionment as a policy is not without its critics. On a "but
for" causation rationale, the injured worker would not be
suffering the current disability to any extent but for the
current industrial injury. And if the injury were being
compensated in the tort system, the person who acted
negligently to cause an injury would be responsible for the
full extent of the disability, because in tort the "victim's"
preconditions do not operate to diminish the consequences of
the acts that cause injury. However, apportionment is the
rule in workers' compensation, and this bill proposes
exceptions to the normal rules of apportionment.
3)Prior legislation. In 2008, SB 1115 (Migden), and in 2011, AB
1155 (Alejo), addressed the apportionment discrimination issue
in virtually the same language. Unlike AB 305, those bills
would have broadly prohibited the use of the protected classes
defined in the Unruh Civil Rights Act as a basis to apportion
permanent disability awards. Each was vetoed by the Governor.
The Veto Message to AB 1155 provided:
"This bill would state that workers' compensation
injury determinations shall not include consideration
of race, religious creed, color, national origin,
age, gender, marital status, sex, sexual orientation,
or genetic characteristics.
The courts already recognize that apportioning a
disability award to any of these classifications is
antithetical to our states' non-discrimination
policies. The courts also recognize that apportioning
to an actual non-industrial condition that
contributes to causing a disability is permissible
and required by the principle that apportionment is
based on causation.
This bill would not change existing law as
interpreted by the courts to date. This bill would,
however, generate new litigation over questions of
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whether it is intended to change existing
interpretations. At best, that additional litigation
would add to employers' costs for workers'
compensation. At worst, this bill could disturb the
appropriate interpretation of existing law that is
already taking shape in the courts."
AB 305 takes a different approach to the issue. Rather than
addressing the use of protected characteristics, the bill
proposes to prohibit precisely what the AB 1155 Veto Message
notes that courts currently recognize: that apportionment to
actual, factual prior industrial or non-industrial causation
is acceptable. AB 305 identifies specific factors that
proponents argue are inappropriate apportionment factors, and
prohibits their use regardless of whether there is factual
causation.
4)Case law. In an unpublished appellate decision, Vaira v.
WCAB , the Court of Appeal returned a case to the Workers'
Compensation Appeals Board (WCAB) because the record was
insufficient to determine whether the physician had based his
apportionment decision on medical facts that showed the older
female claimant suffered from osteoporosis, or on the basis
that the risk factor (older women face a high risk of
suffering from osteoporosis) alone was sufficient to assign a
percentage of the causation to osteoporosis. This decision
has been broadly applied in the workers' compensation courts
as establishing the following rule: a risk characteristic
such as older women having a high incidence of osteoporosis,
or older African American men having a high incidence of
hypertension, cannot be used as a basis to apportion a
permanent disability award. However, a woman diagnosed with
osteoporosis that contributes to her disability resulting from
the subsequent industrial injury, or an African American man
diagnosed with hypertension that contributes to his disability
resulting from the subsequent industrial injury, can have the
disability award apportioned based on the prior nonindustrial
causation. This is the rule Governor Brown alluded to in his
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AB 1155 Veto Message.
5)Gender discrimination. Proponents strongly argue that it is
inappropriate gender discrimination to use even factual
conditions that contribute to disability causation if those
factors are uniquely attributable to being a woman. Thus, the
policy argument is that the uniquely female gender factors
addressed by the bill should simply not be used to reduce
permanent disability awards. Opponents counter that the
workers' compensation system is designed to require employers
to pay to injured workers what the job itself caused, not what
non-job factors caused.
6)Scope of problem. There is substantial disagreement as
between supporters of the bill and opponents of the bill on
whether or not there is a serious problem of gender-based
unfairness in the workers' compensation system. Some
supporters have asserted that "we see it every day" while some
opponents assert that the wrongs complained of simply do not
occur in the workers' compensation courts.
This issue has been presented to, and debated in, the
Legislature in one form or another for at least 7 years, and
there is a paucity of concrete evidence, either academic or
anecdotal, to show that there is pervasive discrimination
based on gender, or other protected classes. The California
Applicants' Attorneys Association (CAAA), in its letter in
support of the bill, cites several examples of cases where
women are alleged to have suffered unfair treatment by the
system. Without getting into too much case-specific detail,
two things appear from the cited examples: first, the
characteristics used to reduce permanent disability awards
appear to be risk factors or broad characteristics like those
the Vaira case prohibited; second, in each example, it is
claimed that "the doctor determined" the offending
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apportionment factor. Opponents have argued that "dumb
doctors" making ill-advised, discriminatory apportionment
statements are not a basis to change the law - they are a
basis for the attorney representing the injured worker to
argue to a workers compensation judge that the doctor
recommended an illegal or inappropriate factor that does not
support apportionment. Opponents state that they are unaware
of any workers' compensation judge or Workers' Compensation
Appeals Board (WCAB) decision that has adopted or endorsed
apportionment on the basis of the considerations cited by
CAAA.
7)Contemporaneous. Recent amendments to the bill provide that,
in order for the gender-related factor to be a prohibited
basis for apportionment, that factor must occur
"contemporaneous" with the industrial injury that is causing
permanent disability. The amendment is intended to ensure
that prior factual conditions that may have been associated
with a prohibited characteristic may still be used for
apportionment. For example, if a pregnant woman suffers a
back injury due, in some factually causative way, to
pregnancy, and she has an existing back injury, this prior
back injury is acceptable for purposes of apportionment when
she suffers an industrial back injury 5 years after her
pregnancy. Or, in the case of a psychiatric injury, a sexual
harassment at the hands of a college professor 5 years prior
to the industrial psychiatric injury that contributes to the
permanent disability would not be prohibited as a basis to
apportion the permanent disability.
While acknowledging that the purpose of this amendment serves to
narrow the bill, and eliminate one of the concerns that
remote, but factual, prior injuries would be used to argue
against legitimate apportionment, opponents fear that the
language fails to accomplish that goal, and that old, factual
injuries will still be used to argue against apportioning
job-related disability for non-job-related factors. This is a
consistent theme in opponents' objections to the bill - that
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much of the practical effect of the bill will be to establish
vague and uncertain factors that cannot be used to apportion
permanent disability, with a resulting substantial increase in
frictional litigation costs.
In this regard, it is important to note how courts treat
legislative enactments that add new language to statutes. One
of the most important rules of statutory construction is that
"significance should be given to every word, phrase, sentence
and part of an act" and that the Legislature does not engage
in idle acts or adopt words that are mere surplusage. Thus,
when the Legislature chooses to use certain words in a
statute, the courts will assume that something specific was
meant by those words, and seek to ascertain what that meaning
is. From the opponents perspective, the addition of the
"contemporaneous" amendment will enable a broad range of
litigation in an effort determine what the Legislature
intended.
In addition, this concern about how courts will interpret other
terms in the bill, and the frictional litigation costs
associated with those court proceedings, underpins many of the
opposition's arguments with the substantive factors the bill
proposes. Even those insurers and employers who profess that
"we don't apportion to those factors" fear frictional expenses
associated with litigants' efforts to obtain advantage by
broad use of vague terms.
8)Menopause. Without question, menopause is a gender-based
characteristic that ought not be used as a basis to apportion
permanent disability. Opponents even state that "we don't do
that." However, the effect of adding menopause to the
apportionment statute causes opponents great concern. They
point out that courts have held that menopause is not a
disability. They also point out that there are any number of
symptoms that may or may not be associated with menopause, and
if any of those symptoms is associated with a factual
pre-existing condition that contributes to permanent
disability, there will be costly litigation because attorneys
would be duty-bound to pursue the argument that menopause, and
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not the symptom, is the actual basis for the proposed
apportionment.
9)Pregnancy. As with menopause, it is difficult to argue that
permanent disabilities ought to be apportioned due to
pregnancy. Indeed, many employers and insurers argue that
this is not done, nor is it allowed in the workers'
compensation system. However, they point out that adding this
characteristic to the statute poses problems. First, they
argue that it confuses the idea of causation to injury with
causation to disability. They suggest that pregnancy can
contribute to injury, but it is hard to understand how it is a
condition that causes permanent disability. However, by
adding pregnancy to the apportionment statue, uncertainties
are created that will cause extended litigation to determine
the precise meaning of the statutory change.
10)Osteoporosis. Osteoporosis presents a fundamental difference
of perspective as between proponents and opponents. This is a
predominantly (although not exclusively) female medical
condition involving loss of bone mass, and the resulting risk
of broken bones and other complications. Proponents argue
that it is fundamentally wrong to reduce a woman's permanent
disability award for a physical injury that occurs on the job
due to this inherently gender-specific causation factor.
Opponents, on the other hand, argue that it is fundamentally
wrong to require employers to pay for disability that is
factually unrelated to employment.
11)Psychiatric injuries. Psychiatric injuries, and the addition
of sexual harassment as a prohibited apportionment factor for
psychiatric injuries, poses some unique issues in addition to
the issues associated with physical injuries.
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First, due to the "contemporaneous" element of the current
version of the bill, it appears that sexual harassment cannot
be used to apportion a permanent disability caused by a
psychiatric injury, but this sexual harassment must be
contemporaneous. Most logically, the psychiatric injury would
have to be caused by a sexual harassment. If that is the
case, then it is difficult to understand how the sexual
harassment could operate to reduce any permanent disability.
On the other hand, if the psychiatric injury is not caused by
the sexual harassment, but by some other stressor that causes
psychiatric injury, it is difficult to understand how a
contemporaneous sexual harassment would be involved.
Second, but partially related to the first point, psychiatric
injuries are treated differently than physical injuries in at
least two significant ways: 1) in order to qualify for
compensation, the psychiatric injury must be predominantly
work caused, and 2) psychiatric injuries that are not the
primary injury, but rather are consequences of the primary
injury, are no longer included in the total PD calculation.
Opponents argue that all of these uncertainties, coupled with
the unique way the law treats psychiatric injuries, will
inevitably lead to costly litigation. In making this
argument, the opposition asserts that they are in no way
seeking to justify an employer that commits or allows sexual
harassment in the workplace. Nonetheless, they find it
difficult to understand exactly how the bill changes the law,
and thus have the concerns noted above.
12)Breast cancer. Breast cancer is the one aspect of the bill
that has nothing to do with apportionment. Rather, the bill
prohibits giving a lower PD rating to a woman based on the
"sequelae" associated with breast cancer as compared with the
sequelae associated with prostate cancer. ("Sequelae" means
pathological conditions resulting from a disease.) This would
be a public policy judgment that the permanent disability
"value" associated with breast cancer (women) should be the
same as the permanent disability "value" associated with
prostate cancer (men). In essence, it would be a public
policy judgment that these two cancers have comparable effects
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on their respective victims.
The 2004 workers' compensation reform (SB 899 (Poochigian),
Statutes 2004, Chapter 34) sought to reduce the subjectivity
of the permanent disability system, and replace it with a more
objective method of determining PD. One of the ways SB 899
sought to accomplish this goal was to adopt the AMA Guides as
the basis for calculating the level of impairment caused by
industrial injuries. The underlying premise was that
objective, scientific evaluations and determinations of the
consequences of various disabling conditions ought to displace
the prior system which relied upon subjective evaluations and
litigation, with judges making the final determinations. The
AMA Guides are used in a number of states as the best source
of objective, medically expert-based classifications of
impairment.
AB 305 proposes, with respect to breast cancer, to replace the
judgment that went into the AMA Guides with a public policy
judgment that equates two different conditions that proponents
argue are similar as a matter of public policy. Opponents
object that this entry into subjective policy judgments is a
slippery slope that will, eventually, undermine the AMA guides
as arbiter of objective evidence-based medical impairment
evaluations.
REGISTERED SUPPORT / OPPOSITION:
Support
9to5 California, National Association of Working Women
American Federation of State, County and Municipal Employees
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(AFSCME), AFL-CIO
CA Conference Board of the Amalgamated Transit Union
CA Conference of Machinists
California Applicants' Attorney Association (CAAA)
California Nurses Association (CNA)
Engineers & Scientists of California
International Longshore & Warehouse Union
Professional & Technical Engineers
The Teamsters
UNITE-HERE, AFL-CIO
Utility Workers Union of America
Opposition
Acclamation Insurance Management Services (AIMS)
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Allied Managed Care (AMC)
ALPHA Fund
American Insurance Association
Association of California Insurance Companies
California Chamber of Commerce
California Coalition on Workers' Compensation
California Grocers Association
California League of Food Processors
California Manufacturers and Technology Association
California Newspaper Publishers Association
California Retailers Association
California State Association of Counties
CSAC Excess Insurance Authority
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Independent Insurance Agents and Brokers of California
Workers' Compensation Action Network
Analysis Prepared by:Mark Rakich / INS. / (916) 319-2086