BILL ANALYSIS Ó
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: AB 305 Hearing Date: June 24,
2015
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|Author: |Gonzalez |
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|Version: |June 15, 2015 |
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|Urgency: |No |Fiscal: |No |
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|Consultant:|Gideon Baum |
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Subject: Workers' compensation: permanent disability
apportionment.
KEY ISSUE
Should the Legislature prohibit apportionment if pregnancy,
menopause, or menopause-caused osteoporosis is contemporaneous
with the injured worker's claimed injury?
Should the Legislature require that breast cancer not be less
than the comparable impairment rating for prostate cancer,
despite the fact that breast cancer does not generally create a
comparable level of impairment?
ANALYSIS
Existing law establishes a workers' compensation system that
provides benefits to an employee who suffers from an injury or
illness that arises out of and in the course of employment,
irrespective of fault. This system requires all employers to
secure payment of benefits by either securing the consent of the
Department of Industrial Relations to self-insure or by securing
insurance against liability from an insurance company duly
authorized by the state.
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Existing law requires that, if an occupational injury results in
a permanent disability, the percentage of disability to total
disability shall be determined, and the disability payment
computed on the basis of the percentage of disability to total
disability. (Labor Code §4658)
Existing law requires that, when doctors are determining the
nature and severity of an occupational injury, the American
Medical Association (AMA) Guides to the Evaluation of Permanent
Impairment (5th Edition) must be used to measure physical
impairment and determine an injured worker's whole person
impairment (WPI). (Labor Code §4660.1)
Existing law creates the Permanent Disability Ratings Schedule
(PDRS), which increases the WPI by 40% and adjusts for
occupation and age to calculate a percentage of permanent
disability (PD), also known as a PD rating. (Labor Code §4660.1)
Existing law requires that any physician who prepares a report
addressing the issue of permanent disability include an
apportionment determination , where the physician determines what
approximate percentage of the permanent disability was caused by
other factors, including prior industrial injuries. (Labor Code
§4663)
This bill would require that WPI ratings for breast cancer and
its sequelae shall in no event be less than comparable WPI
ratings for prostate cancer and its sequelae.
This bill would prohibit apportionment in cases of physical
injury based on any of the following conditions if those
conditions are contemporaneous with the claimed physical injury:
1) Pregnancy;
2) Menopause; and
3) Osteoporosis casually related to menopause.
This bill would also prohibit apportionment in cases of
psychiatric injury caused by sexual harassment or any of the
conditions listed above if the conditions are contemporaneous
with the psychiatric injury.
COMMENTS
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1. A Brief Word on the AMA Guides:
The AMA Guides were first published in 1971 to provide "a
standardized, objective approach to evaluating medical
impairments". The Guides define "impairment" as a loss, loss
of use, or derangement of any body part, organ system, or
organ function. Excluding the introductory chapters, each
chapter of the AMA Guides deals with a specific area of the
body or a specific type of permanent impairment and discusses
how to measure impairment in a specific individual. This
impairment measurement is a percentage known as the whole
person impairment (WPI), with a higher WPI percentage
signifying a higher level of impairment.
WPI serves as the foundational calculation for the purposes of
calculating a Permanent Disability (PD) rating. In bringing
the AMA Guides into the workers' compensation system in 2004,
the goal was to make the measurement of impairment, and by
extension PD ratings, more objective and uniform throughout
the state and based on the best available medical evidence.
Further, as a part of the 2012 reform, the Legislature
codified case law that allows doctors to "rate by analogy" or
to use other chapters of the AMA Guides if those chapters
better explain the nature of the impairment (see Milpitas
Unified School District v. Workers' Comp. Appeals Bd. (Guzman)
(2010) 187 Cal.App.4th 808).
However, some proponents of the bill have argued that the AMA
Guides are not objective, specifically in the area of
gender-specific injuries. Specifically, proponents point to
the fact that the AMA Guides rate the removal of female
breasts at a WPI of 0%, while the removal of a prostate would
rate a 16%-20% WPI, arguing that such a rating shows bias
against women. This line of argument, however, has some
difficulties.
First, the male prostate is not a strong equivalent to female
breasts . The prostate is an exocrine gland that secretes
fluid, assisting the mobility of sperm after ejaculation. As
will be discussed in more detail below, removing the prostate
can lead to both incontinence and impotence. The closest
female equivalent, or homologue, to the prostate is the
skene's gland, which is located on the surface of the vulva.
Alternatively, one could also look at urthereal disease, which
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would lead to incontinence.
When we look at how the AMA Guides rate the female equivalent
injuries, we see comparable WPI ratings. For example, vulval
disease where sexual intercourse is not possible would be
26%-35% WPI. Additionally, urthereal disease which leads to
stress incontinence would be a 25% WPI at a minimum. In short,
when looking at comparable injuries, both men and women appear
to receive comparable ratings through the AMA Guides.
Second, as was noted above, a higher WPI indicates a higher
level of impairment, and the removal of a prostate is only
rated as a 16%-20% WPI if the prostate removal led to sexual
dysfunction or urinary incontinence. According to the American
Cancer Society, 25% to 75% of men who have their prostate
removed will be impotent, depending on the age and health of
the men.
The American Cancer Society does not note similar challenges
after recovering from a mastectomy, which is the surgical
removal of the mammary glands. If a mastectomy resulted in
comparable impairment, a doctor would be able to provide a WPI
rating comparable to the removal of the prostate through SB
863 and Guzman. The American Cancer Society does note that 20%
to 30% of women develop neuropathic pain near the site of the
surgery, though most women report that these symptoms are not
severe. If they were severe pain, it is likely that they would
be ratable through the AMA Guides chapter on Pain .
As was noted above, AB 305 makes breast cancer sequelae (or
consequences of injury or disease) equally ratable as prostate
cancer sequelae. The likely consequence of this is that it
would require that mastectomies are rated the same as prostate
removal. The Committee may wish to consider if a mastectomy
should be automatically rated as if it led to both sexual
dysfunction and incontinence, despite the fact it generally
does not.
2. A Brief Word on Apportionment:
Under existing law, every time a doctor prepares a report on
if a claimed workplace injury is permanently disabling, the
physician must determine causation AND what percentage of the
injury is due to non-occupational issues, including prior
workplace injuries. An injured worker's PD award is then
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adjusted down by this percentage. Only a physician can
determine if apportionment is appropriate and to what degree.
This makes apportionment a uniquely provocative policy. On one
hand, it would be difficult to defend requiring an employer to
provide PD awards for an injury that is unrelated to work or
occurred at another place of employment. This is why language
limiting PD awards to only cover the consequences of a
workplace injury has been in law since 1917. While the current
apportionment statute dates back to 2004, the idea behind it
is nearly a century old.
On the other hand, determining what percentage of an injury is
or is not occupational is highly dependent on the judgment of
the physician. WCAB case law provides that an apportionment
finding is only valid if the physician's medical opinion:
1) Framed in terms of reasonable medical probability;
2) Not speculative;
3) Based on pertinent facts and on an adequate examination;
4) Sets forth the reasoning in support of its conclusion;
and
5) Explains how and why the apportionable factor is
responsible for the disability.
(See Escobedo v. Marshalls, (2005) 70 Cal. Comp. Cases 604)
Despite this case law, sometimes physicians fail to meet these
requirements when making an apportionment determination.
For example, in Rice v. City of Jackson, ADJ8701916 (2015), an
injured worker's PD award was apportioned by 49% due to
"family history", or the injured worker's father's history of
hip and back issues. The physician cited several journal
articles, but did not evaluate the injured worker's family or
connect the "how and why" such family history led to the
injured worker's level of permanent disability. The WCAB ruled
that apportioning on the basis of genetic predisposition was
inappropriate, noted that apportioning on the basis of
immutable factors is impermissible , and returned the case to
the local board for a new unapportioned award of permanent
disability.
Proponents have brought forward several examples of
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apportionment that, like Rice, appear to fall into the arena
of physician failure. Each example is troubling. However, they
are a small sample; thousands of apportionment decisions are
issued each year and have been for over a decade. Staff notes
that it is currently unclear if such a small sample of
apportionment examples demonstrates systemic inequality
towards women or notable examples of physician error.
One final note on apportionment: the apportioning of a PD
award has no impact on the ability of an injured worker to
receive medical care. Even in the event that a PD award is
apportioned to 0%, the worker has a right to medical care if
the injury arises or occurs in the course of employment (See
Employers Mutual Liability Ins. Co. of Wisconsin v. Industrial
Acc. Com. (Gideon) (1953) 41 Cal.2d 676 and Reyes v. Hart
Plastering (2005) 70 Cal.Comp.Cases 223).
3. Several Implementation Challenges Facing AB 305 and
Apportionment:
AB 305 poses several unique questions on its full impact on
the workers' compensation system.
"Contemporaneous" and the WCAB
As was noted above, apportionment of a PD rating cannot occur
if pregnancy, menopause, or osteoporosis casually related to
menopause is contemporaneous with the physical injury. The
Merriam-Webster dictionary defines contemporaneous as
"existing or happening during the same time period". For
specific injuries, such as a fall or a car accident, this
could be a straight forward analysis: a doctor would simply
exclude pregnancy, menopause, or osteoporosis from his or her
apportionment determination.
For injuries that are the product of cumulative trauma,
however, this may be a more complicated analysis. For
cumulative trauma injuries, existing law requires that the
injured worker must file a workers' compensation a year from
when the worker knew or should have known that the cumulative
trauma injury was caused by work. It is unclear how AB 305
would impact apportionment with cumulative trauma injuries.
Would, for example, menopause being considered contemporaneous
if it existed at the time of the filing? Or would the injured
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worker need to prove that she was going through menopause
during employment? What if the worker was going through
menopause but not osteoporosis during employment, but had
osteoporosis at the time of filing a claim? Likely, these are
fact-intensive analyses which may be clarified by future WCAB
decisions, which would necessitate significant litigation.
Therefore, it is likely that AB 305 would increase litigation
costs for employers, particularly in the area of cumulative
trauma claims.
Enshrining Gender Discrimination into the Workers'
Compensation System
Currently, California's workers' compensation system does not
treat different groups of injured workers differently than
others. As was noted above, the AMA Guides look solely at
impairment; PD is awarded on the severity of injury. While
adjustments may be made for occupation and age, there are no
adjustments for race, gender, or religion. AB 305 changes that
by excluding from apportionment conditions that are specific
to women, despite the fact that some male injured workers may
experience similar conditions.
For example, according to the National Osteoporosis Foundation
(NOF), up to 25% of all men over 50 may have osteoporosis -
and men over 50 are more likely to break a bone due to
osteoporosis than get prostate cancer. Currently, both men and
women could have their PD apportioned if osteoporosis was a
non-industrial cause of injury. Under AB 305, however, women
would be able to litigate that their menopause (which,
according to NOF is only a risk factor for osteoporosis, not
determinative) caused their osteoporosis, and therefore is
non-industrial. Under AB 305, a male injured worker would have
few to no legal avenues to contest the apportionment of his
osteoporosis.
By creating a gender disparity for male and female injured
workers, AB 305 may adversely impact some male injured workers
and undermine the equity of the workers' compensation system.
4. An Additional Note on Apportionment:
As was discussed above, AB 305 faces significant
implementation. However, that does not mean that apportionment
in and of itself is a policy that does not need additional
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legislative scrutiny. Rather, it may be time for a larger
stakeholder discussion on if apportionment works as intended.
Surprisingly, there has been little recent study on
apportionment. The last study on the impact of apportionment
was done by the WCIRB in 2008, and that study found that about
6% of all PD dollars were apportioned. However, there have
been significant increases in indemnity payments and
litigation frequency, as well as loss-adjusted expenses (LAE),
which tends to be a proxy for litigation costs.
Noting the strong evidence that apportionment is more likely
in litigated cases, the current impact of apportionment on PD
claims and dollars is an important policy question, and it is
a policy question about which we know very, very little. Does
apportionment still reduce PD dollars by 6%, or has it
increased? Does apportionment make litigation more likely? Or
does litigation make apportionment more likely? And would
apportionment change the way either an applicant or defendant
would litigate the case?
More fundamentally, however, there is an even more basic
question with apportionment: does it actually save money, or
is it a cost driver? If apportionment increases the likelihood
of litigation or makes litigation more severe, it is possible
that it actually serves as a cost driver in the system - one
that is automatic with the physician's completion of a PD
report. While this is very unlikely, the reality is that we
simply do not know the full impacts of apportionment.
Noting the significance of apportionment for employers and
injured workers, stakeholders may wish to consider requesting
that the Commission on Health and Safety and Workers'
Compensation (CHSWC) authorize a study on the current impacts
of apportionment on litigation and PD dollars.
5. AB 305 and Retroactivity:
When AB 305 was heard in the Assembly Insurance Committee on
May 5, 2015, both members and stakeholders raised concerns
about AB 305 and the possibility of retroactive application of
its provisions. At that time, Assemblymember Gonzalez said
that was not her intent and committed to future amendments. AB
305 was amended on June 15, 2015, removing the retroactive
provisions. The author's office stated that the purpose of the
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amendments was to eliminate the possibility of retroactive
application of AB 305's provisions, and the sponsor's letter
also states the same.
Therefore, noting the strong legislative intent, it is
unlikely that a court would find that the provisions of AB 305
are retroactive. The Committee may wish to further clarify
this point by considering the following amendment, which would
make AB 305's apportionment provisions apply to injuries on or
after January 1, 2016.
On page 6, page 1, strike "Apportionment" and insert: "For
injuries occurring on or after January 1, 2016,
apportionment".
6. Proponent Arguments :
The sponsor of this bill, the California Applicants' Attorneys
Association (CAAA), argues that AB 305 will eliminate gender
bias from apportionment when determining permanent disability
ratings. CAAA argues that factors such as pregnancy and
menopause are used as factors to lower permanent disability.
CAAA also cites several cases where apportionment is purported
to have occurred due to risk factors and immutable
characteristics, rather than proven conditions. CAAA also
notes that AB 305 will make breast cancer eligible for the
same disability rating as prostate cancer. Finally, CAAA
argues that the workers' compensation system treats being a
woman as a pre-existing condition, and that AB 305 will ensure
that women receive the level of permanent disability they
deserve.
7. Opponent Arguments :
Opponents argue that AB 305 is an attempt to undermine an
employer's use of apportionment when determining liability for
permanent disability awards. Specifically, opponents note that
apportionment is more than a decade old and ensures that
employers do not need to pay for non-industrial injuries.
Further, opponents point to case law and statute which
protects injured workers from abusive apportionment, including
apportionment on the basis of gender. Opponents further argue
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that AB 305 will increase litigation, raise indemnity costs on
employers, and increase systemic instability and subjectivity.
8. Prior Legislation :
AB 1155 (Alejo) of 2011 addressed apportionment by broadly
prohibiting the use of the protected classes defined in the
Unruh Civil Rights Act as a basis to apportion permanent
disability awards. AB 1155 was vetoed by Governor Brown, who
said the following is his veto message:
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 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.
SUPPORT
California Applicant's Attorneys (co-sponsor)
California Teamsters Public Affairs Council (co-sponsor)
American Association of University Women - AAUW of CA
American Federation of State, County and Municipal Employees,
AFL-CIO
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Nurses Association
California Professional Firefighters
California School Employees Association, AFL-CIO
California State Lodge, Fraternal Order of Police
Engineers & Scientists of California
International Longshore & Warehouse Union
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LA County Professional Peace Officers Association
Long Beach Police Officers Association
Los Angeles County Professional Peace Officers Association
Organization of SMUD Employees
Peace Officers Research Association of California
Professional & Technical Engineers
Sacramento County Deputy Sheriffs' Association
San Bernardino Public Employees Association
San Diego County Court Employees Association
San Luis Obispo County Employees Association
Santa Ana Police Officers Association
The United Nurses Association of California
Union of Health Care Professionals
United Food & Commercial Workers
UNITE-HERE, AFL-CIO
Utility Workers Union of America
9to5 of California
OPPOSITION
Acclamation Insurance Management Services
Allied Managed Care
American Insurance Association
Association of California Insurance Companies
Association of California Water Agencies
California Association of Joint Powers Authorities
California Chamber of Commerce
California Coalition on Workers' Compensation
California Grocers Association
California League of Food Processors
California Manufacturers and Technology Association
California Retailers Association
California State Association of Counties
County of Los Angeles
CSAC Excess Insurance Authority
Independent Insurance Agents and Brokers of California
League of California Cities
Marin County Board of Supervisors
Torrance Area Chamber of Commerce
Western Occupational & Environmental Medical Association
-- END --
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