BILL ANALYSIS Ó
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: AB 1643 Hearing Date: June 29,
2016
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|Author: |Gonzalez |
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|Version: |March 16, 2016 |
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|Urgency: |No |Fiscal: |No |
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|Consultant:|Gideon L. Baum |
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Subject: Workers' compensation: permanent disability
apportionment
KEY ISSUE
Should the Legislature prohibit apportionment in cases of
physical injury based on pregnancy, menopause, osteoporosis, and
carpal tunnel syndrome?
Should the Legislature require that breast cancer not be less
than the comparable impairment rating for prostate cancer?
ANALYSIS
Existing law:
1) 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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2) 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)
3) 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)
4) 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)
5) 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:
1) 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.
2) Prohibit apportionment in cases of physical injury
occurring on or after January 1, 2017 based on the
following conditions:
a) Pregnancy;
b) Menopause;
c) Osteoporosis; and
d) Carpal Tunnel Syndrome.
1) Prohibit apportionment in cases of psychiatric injury
caused by any of the conditions listed above.
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COMMENTS
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, a permanent disability rating must take into account
all the complete nature of the injury. In the case of breast
cancer, while the removal of the breast may be rated 0%, the
sequelae of the surgery would be ratable. For example, if the
injured worker suffered neuropathic pain, skin issues, spine
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issues or general pain, each one of those factors would
ratable. Additionally, this would include consequences from
the chemotherapy drugs used to treat the breast cancer would
also be ratable. These ratable impairments are combined to
create a single permanent disability rating. According to case
law, statute, and the AMA Guides, a woman who suffers a
comparable level of impairment due to breast cancer when
compared to a man suffering from prostate cancer must be rated
comparably.
Second, the evidence that the AMA Guides are not objective is
fundamentally limited. Some proponents point to a 1990 Harvard
Law Review article which argued that the 3rd Edition of the
AMA Guides showed consistent gender bias. The California
workers' compensation system uses the 5th Edition of the AMA
Guides, which does not suffer from the gender bias issues
raised in that article. Moreover, since the 1990 gender bias
Harvard Law Review article, no similar articles have been
published arguing that the AMA Guides show gender bias.
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
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;
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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
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. Apportionment and AB 1643 :
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As was noted above, AB 1643 prohibits apportionment in the
presence of certain conditions. Unlike last year's AB 305
(Gonzalez), however, this prohibition on apportionment is not
time limited. AB 305 required that the prohibition on
apportionment only applied if the conditions were present
contemporaneously with the physical injury. AB 1643 does not
have a similar limitation.
In some cases, the time limitation would not be a factor. 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 cumulativqe trauma (CT)
cases, however, the analysis could become complicated. For
example, if a woman was post-menopausal, could she argue that
apportionment was not available to her employer because she
went through menopause? Would it matter if she was menopausal
during the period the CT injury was manifesting? Or would the
fact she was menopausal at all prevent apportionment? What
about pregnancy?
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 1643
would increase litigation costs for employers, particularly in
the area of cumulative trauma claims.
4. An Additional Note on Apportionment:
As was discussed above, AB 1643 raises specific questions
about apportionment and gender. However, that does not mean
that apportionment in and of itself is a policy that does not
need additional legislative scrutiny.
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
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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. Proponent Arguments :
The sponsor of this bill, the California Applicants' Attorneys
Association (CAAA), argues that AB 1643 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 1643 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 1643 will
ensure that women receive the level of permanent disability
they deserve.
6. Opponent Arguments :
Opponents argue that AB 1643 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
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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
that AB 1643 will increase litigation, raise indemnity costs
on employers, and increase systemic instability and
subjectivity.
7. Double Referral:
This bill has been double-referred and, if approved by this
committee, it will be sent to the Senate Appropriations
Committee for a hearing.
8. Prior Legislation :
AB 305 (Gonzalez) of 2015 was very similar to this bill. It
was vetoed by Governor Brown. In his veto message, the
Governor stated:
"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."
SUPPORT
9 to 5 California
Alliance of Californians for Community Empowerment
American Association of University Women
California Applicants' Attorneys Association (Sponsor)
California Asset Building Coalition
California Child Care Resource and Referral Network
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Domestic Workers Coalition
California Employment Lawyers Association
California Latinas for Reproductive Justice
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California Partnership
California Teamsters Public Affairs Council
California Women's Law Center
California Work and Family Coalition
Child Care Law Center
Courage Campaign
Engineers & Scientists of California
Equal Rights Advocates
Equal Rights Advocates
International Longshore & Warehouse Union
Legal Aid Society Employment Law Center
Los Angeles County Professional Peace Officers Association
Mujeres Unidas y Activas
National Council of Jewish Women
Parent Voices
Professional & Technical Engineers
Raising California Together
San Diego County Court Employees Association
San Luis Obispo County Employees Association
The Center for Popular Democracy
The Opportunity Institute
The Organization of SMUD Employees
The Women's Foundation of California
Tradeswomen, Inc.
UNITE-HERE, AFL-CIO
Utility Workers Union of America, AFL-CIO
Voices for Progress
Western Center on Law and Poverty
OPPOSITION
Acclamation Insurance Management Services
Allied Managed Care
ALPHA Fund
American Insurance Association
Associated General Contractors
Association of California Healthcare Districts
Association of California Insurance Companies
California Association for Health Services at Home
California Association of Joint Powers Authorities
California Chamber of Commerce
California Coalition on Workers' Compensation
California Grocers Association
California Joint Powers Authority
California League of Food Processors
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California Manufacturers and Technology Association
California Retailers Association
California School Boards Association
California Special Districts Association
California State Association of Counties
CAWA - Representing the Automotive Parts Industry
CSAC Excess Insurance Authority
Culver City Chamber of Commerce
League of California Cities
Los Angeles County Board of Supervisors
National Association of Mutual Insurance Companies
National Federation of Independent Business
Property Casualty Insurers Association of America
Rural County Representatives of California
Southwest California Legislative Council
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