BILL ANALYSIS Ó
AB 1643
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Date of Hearing: April 20, 2016
ASSEMBLY COMMITTEE ON INSURANCE
Tom Daly, Chair
AB 1643
(Gonzalez) - As Amended March 16, 2016
SUBJECT: Workers' compensation: permanent disability
apportionment
SUMMARY: Prohibits the use of certain gender-related
characteristics in the calculation of permanent disability
benefits for injuries occurring on or after January 1, 2017.
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, osteoporosis, menopause, or
carpal tunnel syndrome to apportion permanent disability with
respect to a physical injury.
3)Prohibits the use of a prior psychiatric injury, if that prior
injury was caused by pregnancy, osteoporosis, menopause, or
carpal tunnel syndrome, 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: According to the Senate Appropriations
Committee's analysis of AB 305 (Gonzalez) last year, a measure
similar to this bill, the Department of Industrial Relations
(DIR) would incur costs (special funds) of $4.25 million in the
first year, and $4 million annually thereafter to implement the
provisions of this bill. In addition, as a direct employer, the
state would incur unknown, but potentially significant increased
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permanent disability costs due to breast cancer. This bill also
would result in unknown, but potentially significant increased
litigation costs to the state as a direct employer.
COMMENTS:
1)Purpose . The purpose of the bill is to eliminate gender bias
in the workers' compensation system. According to the author,
California must eliminate the remnants of gender bias in the
workplace, no matter how widespread, including within workers'
compensation. The author maintains that the AMA Guides
inappropriately assign little to no value to the loss of a
woman's breasts, and that it if also inappropriate to
apportion disability to non-industrial causation if that
causation is a factor or condition that is uniquely or
predominantly based on gender.
2)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
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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
AB 1155 (Alejo) of 2011, Veto Message (see below).
3)Scope of problem . There is substantial disagreement as
between supporters of this bill and opponents of this 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 eight 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 this bill, and the author in the Background
materials provided to the Committee, cite 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 prohibits; second,
in most examples, it is claimed that "the doctor" has pointed
to the offending apportionment factor. Despite requests for
any information indicating that workers' compensation judges
have accepted these inappropriate apportionment factors,
proponents have been unable to do so. Opponents, on the other
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hand, 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.
4)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.
But 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
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
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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.
5)Does case law result in 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. In the proponents view, even the Vaira decision
endorses gender discrimination, because Vaira merely rejected
use of risk factors, but allowed use of factual pre-existing
conditions, including some of the factors that the bill would
prohibit. 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)Breast cancer vs prostate cancer . A key provision in this bill
that proponents argue cures gender discrimination is the
mandate that breast cancer and prostate cancer be treated the
same in terms of disability ratings. Since 2004, the AMA
guides has been the basis in California law for making PD
determinations.
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. The Guides deal chapter by chapter with
specific areas of the body or a specific type of permanent
impairment and discuss how to measure impairment in a specific
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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 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.
Proponents of this bill have argued that the AMA Guides are
not objective in this context. Proponents have both specific
and broad criticisms of the Guides. Specifically, they 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% to 20% WPI, arguing that such a rating shows bias
against women. More generally, they argue that there has long
been an outdated cultural gender bias that remains to this
day, with an underappreciation of the psychological and
physiological consequences to a woman of the loss of her
breasts.
However, the male prostate may not be a strong equivalent to
female breasts. 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 would lead to incontinence in women.
A review of how the AMA Guides rate these injuries shows that
there is a comparable WPI rating. Opponents have argued that
comparing rating for breast and prostate cancer is simply the
wrong comparison, and does not establish gender
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discrimination.
7)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 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 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
substantial, costly litigation because attorneys would be
duty-bound to pursue the argument that menopause, and not the
symptom, is the actual basis for the proposed apportionment.
8)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.
9)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.
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Opponents, on the other hand, argue that it is fundamentally
wrong to require employers to pay for disability that is
factually unrelated to employment.
10)Carpal tunnel syndrome . The primary difference between AB
1643 and last year's AB 305 is the addition of carpal tunnel
syndrome as one of the gender-based conditions for which
apportionment would be prohibited. Proponents have suggested
that this syndrome afflicts women more than men, citing a
National Institutes of Health report. According to
proponents, the study found the syndrome 3 times more likely
to afflict women. The study suggested, but did not conclude,
that the frequency in women might be due to a smaller carpal
tunnel in women's hands. It is not clear whether any
statistical differences that might exist are actually
gender-based, or might instead be occupation based, nor if
general population data matches workplace injury data.
Opponents have cited a U.C. Berkeley study that found some
occupation based differences that result in some conditions
being more likely causing men to have higher injury rates, and
others more likely affecting women. However, that study found
no across-the-board discrimination against either gender.
11)Psychiatric injuries . The approach to psychiatric injuries
in the bill is narrower than AB 305. AB 305 used sexual
harassment as a trigger for when apportionment would be
prohibited with respect to a new psychiatric injury, but that
provision is not included in this bill. Instead, the bill
more clearly prohibits using a prior psychiatric injury to
apportion permanent disability with respect to a new
psychiatric injury if the prior psychiatric injury was caused
by menopause, pregnancy, osteoporosis or carpal tunnel
syndrome.
12)Prior legislation . In 2008, SB 1115 (Migden), and in 2011, AB
1155, addressed the apportionment discrimination issue in
virtually the same language. Unlike this bill, those bills
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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
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 1643, and AB 305 (Gonzalez) of 2015, take 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
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industrial or non-industrial causation is acceptable. This bill
identifies specific factors that proponents argue are
inappropriate apportionment factors, and prohibits their use
regardless of whether there is factual causation. AB 305 was
substantially similar to AB 1643. The Governor vetoed AB 305.
The Veto Message provided:
"This bill prohibits the use of certain gender-related
characteristics in the calculation of permanent disability
benefits for injuries occurring on or after January 1, 2016.
The workers compensation system must be free of gender-bias. No
group should receive less in benefits because of an immutable
characteristic. However, this bill is based on a
misunderstanding of the American Medical Association's
evidence-based standard, which is the foundation of the
permanent disability ratings, and replaces it with an
ill-defined and unscientific standard."
REGISTERED SUPPORT / OPPOSITION:
9 to 5 California
Alliance of Californians for Community Empowerment
American Association of University Women
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California Applicants' Attorney Association (CAAA)
California Asset Building Coalition
California Child Care Resource and Referral Network
California Domestic Workers Coalition
California Employment Lawyers Association
California Latinas for Reproductive Justice
California Partnership
California Professional Firefighters (CPF)
California Women's Law Center
Child Care Law Center
Courage Campaign
Equal Rights Advocates
Legal Aid Society Employment Law Center
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Los Angeles County Professional Peace Officers Association
Mujeres Unidas y Activas
National Council of Jewish Women
Parent Voices
Raising California Together
The Center for Popular Democracy
The Opportunity Institute
The Women's Foundation of California
Tradeswomen, Inc.
UFCW Western States Council
Voice for Progress
Western Center on Law and Poverty
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Opposition
Acclamation Insurance Management Services
Allied Managed Care
ALPHA Fund
American Insurance Association
Associated General Contractors
Association of California Insurance Companies
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
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California Relators Association
California School Boards Association
California Special Districts Association
California State Association of Counties
CAWA - Representing the Automotive Parts Industry
CSAC Excess Insurance Authority
League of California Cities
National Association of Mutual Insurance Companies
National Federation of Independent Business
Property Casualty Insurers Association America
Rural County Representatives of California
Analysis Prepared by:Mark Rakich / INS. / (916) 319-2086
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