BILL ANALYSIS �
AB 2378
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Date of Hearing: April 23, 2014
ASSEMBLY COMMITTEE ON INSURANCE
Henry T. Perea, Chair
AB 2378 (Perea) - As Introduced: February 21, 2014
SUBJECT : Workers' compensation: temporary disability benefits
SUMMARY : Provides that, with respect to certain fire and peace
officer employees, the right to a leave of absence for up to one
year with full pay as a result of on-the-job disability does not
offset any portion of those employees' right to up to 104 weeks
of temporary disability benefits. Specifically, this bill :
1)Contains Legislative findings and declarations to the effect
that:
a) Courts are supposed to liberally construe the workers'
compensation laws for the purpose of extending benefits to
workers whose injuries arise out of or in the course of
employment;
b) AB 338 of the 2007-2008 Session was intended to
ameliorate an unintended consequence of the temporary
disability law adopted in 2004 that limited the duration of
temporary disability to two years;
c) AB 338 was not intended to limit or reduce compensation
paid to certain fire and peace officer employees pursuant
to Labor Code Sections 4800 and 4850;
d) The Court of Appeal issued a decision in 2013 that
wrongly interprets existing law, and AB 338, with the
consequence of wrongfully denying these fire and peace
officer employees the full benefits that the statues
intended to provide to them; and
e) That it is imperative that the Legislature act to
abrogate the Court's holding and restore the Legislature's
intent to provide benefits to these employees.
2)Specifies that benefits provided by Labor Code Section 4800,
et seq, and 4850, et seq, are payable in addition to the
maximum payments available under Section 4656, the temporary
disability statute.
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3)Provides that it is the intent of the Legislature to abrogate
the holding in County of Alameda v. Workers' Compensation
Appeals Board (Knittel) (2013) 213 Cal.App.4th 278.
EXISTING LAW :
1)Provides for a comprehensive system of workers' compensation
benefits for workers whose injuries or conditions arise out of
or in the course of employment, including indemnity benefits
designed to compensate for lost wages in cases where a worker
is temporarily unable to work due to the injury or condition.
2)Provides that temporary disability benefits are available for
up to 104 weeks during a five-year period after the date of
injury, in an amount that is 2/3 of the worker's average
weekly wage, but subject to a cap that varies depending on
increases or decreases in a specified wage measurement.
3)Provides that most firefighter and peace officer employees
receive a one year leave of absence without loss of salary in
the event of a work-related disability that is either
temporary or permanent.
4)Provides, as a matter of state and federal tax law, tax
payments received as a result of disability are tax-free
benefits.
5)Provides, based on case law, that the one year leave of
absence constitutes the first 52 weeks of the 104 weeks of
temporary disability authorized by law.
FISCAL EFFECT : Undetermined
COMMENTS :
1)Purpose . According to the author, firefighters and police
officers face up to 10 times as great a risk of serious
on-the-job injury as non-safety private employees. Because of
a state appeals court decision that re-interprets decades of
case law and administrative rulings, firefighters are at risk
of losing up to half of their eligibility for temporary
disability if they suffer such a catastrophic injury. AB 2378
restores this critical disability eligibility for firefighters
and law enforcement officers. It doesn't create any new
AB 2378
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benefits and doesn't impose any significant additional cost on
local governments that they haven't been paying for many
years. AB 2378 simply allows firefighters and peace officers
to continue having the same option they've had for 75 years --
take up to a year's paid leave of absence before receiving
temporary disability.
2)4800 and 4850 time . These provisions of law were enacted
decades ago for the reasons noted by the author, above: fire
and police officers place life and limb on the line every day,
and suffer injury rates far higher than most classes of
employees. This was one of the first "special benefits"
granted to public safety officers, in recognition of the
special risks associated with the job. This benefit is
"special" because it provides this class of employee full
salary tax free during the up to one-year period. All other
employees receive 2/3 of their average weekly wages (subject
to a cap), which is designed to approximate their previous
take home pay during the period of temporary disability.
Historically, the issue presented by the bill, and by the
Knittel case, would have been irrelevant because temporary
disability benefits were not limited. As a result, the
firefighter or peace officer simply shifted to regular
temporary disability at the end of the one year leave of
absence, and received those benefits until the injury became
"permanent and stationary" (the trigger to shift from
temporary disability to permanent disability), or the employee
retired. (Prior to 1979, there was a 240 week limit on
temporary disability benefits, but there appear to have been
no cases that address the situation where the person was
"temporarily" disabled for almost 5 years before becoming
either permanently disabled or taking a disability
retirement.)
3)Knittel and AB 338 . The findings and declarations in the bill
essentially provide that the bill is needed to overrule an
erroneous Court of Appeal decision that has the effect of
denying public safety employees benefits the Legislature
intended to provide them. Further, the findings and
declarations point to the Court's apparent reliance on its
reading of AB 338 (Coto), Statutes 2007, Chapter 595, in
reaching its conclusions. Three points need to be noted in
this regard.
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First, it is clear beyond debate that AB 338 was not intended to
alter, or in any way effect, Section 4800 and 4850 benefits
for public safety employees. The bill was intended to cure an
unintended consequence of the 2004 workers' compensation
reform. That reform adopted the 104 week limitation, but
allowed payments for only 104 weeks from the first date
temporary disability was paid. This created a disincentive
for the employees who were trying the hardest to return to
work, or pursue conservative treatment as recommended by
treatment guidelines, because they would run out of the 104
weeks from first payment, even if they had not been off work
and collecting benefits all of those 104 weeks. AB 338 was
aimed only at curing this unintended consequence by allowing
104 weeks of temporary disability benefits within five years
of the injury.
Second, it is less than clear that AB 338 formed the basis of
the Court of Appeal's conclusion that 4850 time counts as the
first 52 weeks of the 104 week temporary disability cap. In
announcing its decision, the Court pointed to language in
Labor Code Section 4656 that long pre-dated AB 338, and to a
long line of pre-AB 338 case law that held that 4850 time is a
workers' compensation benefit. However, in the body of the
opinion, the Court engaged in a discussion of AB 338 that
could lead one to conclude that the Court relied on some of
the change in language from that bill in guiding its decision,
or at least guiding its rejection of the applicant's various
arguments. To add confusion, the Court's concluding statement
returned to the two prongs of pre-AB 338 statute and case law.
Thus, it is clear that the Court misconstrued the Legislative
intent of AB 338; but it is less than clear that this mistake
formed the basis of its decision.
Third, the policy question presented by the bill is the same,
regardless of what motivated the Court: was the 104 week
limitation ever intended to limit 4850 time, and should it?
4)Why a 104 week limitation ? Prior to 2004, temporary
disability was not capped. The vast majority of cases, well
in excess of 90%, did not exceed two years. Nonetheless, a
few outliers went beyond two years, and some extended
temporary disability as many as five years or more. It was
believed that most of these outliers did not involve injured
workers who were truly "temporarily" disabled, but rather were
gaming the system for as long as possible with no intention of
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returning to work. But this does not establish that there are
never cases where legitimate temporary disability can extend
for more than two years, and AB 338 itself recognized that
some injuries can involve extended periods of temporary
disability for workers who intend to return to work.
Not surprisingly, public employers argue that it is rare that
injured workers who are out for more than one year, let alone
3 years, are likely to return to work. They argue that public
safety employees injured this severely will in all likelihood
take a disability retirement, which frees up the public agency
to replace that employee with a new hire. These public
employers argue that the bill will merely extend the date that
this occurs, with added public sector costs in the meantime.
They also argue that keeping the total 4850 plus 52 weeks of
temporary disability benefits is an appropriate balance when
considering public sector costs. In this regard, they point
out that under the Court of Appeal's decision, all employees
are treated the same with respect to the duration of benefits,
but that public safety officers still receive better benefits
than other employees because 4850 benefits, which are paid out
for the first year after an injury, are superior to regular
temporary disability benefits.
Proponents counter that it takes a significant time for many
injuries to heal sufficient for the public safety employee to
return to work, and that every opportunity should be afforded
these employees who are trying to do so. They also note that
temporary disability ends when the injured worker is
"permanent and stationary" - when the effects of the injury
are unlikely to improve medically - and this is a
determination made by a doctor, not by the injured worker, and
this limitation ensures that the injured worker is not
improperly attempting to extend the benefit period.
REGISTERED SUPPORT / OPPOSITION :
Support
California Professional Firefighters (CPF) (sponsor)
California Labor Federation (co-sponsor)
American Federation of State, County and Municipal Employees
(AFSCME)
Association for Los Angeles Deputy Sheriffs
Glendale City Employees Association
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Los Angeles Probation Officers' Union AFSCME, Local 685
Organization of SMUD Employees
Riverside Sheriffs' Association
San Bernardino Public Employees Association
San Luis Obispo County Employees Association
Opposition
California Association of Joint Powers Authorities (CAJPA)
California Coalition on Workers' Compensation
California Joint Powers Insurance Authority
CSAC Excess Insurance Authority
League of California Cities
Los Angeles County Board of Supervisors
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086