BILL ANALYSIS �
AB 2378
Page 1
ASSEMBLY THIRD READING
AB 2378 (Perea)
As Amended May 23, 2014
Majority vote
INSURANCE 11-2 APPROPRIATIONS 13-0
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|Ayes:|Perea, Hagman, Bradford, |Ayes:|Gatto, Bocanegra, |
| |Ian Calderon, Cooley, | |Bradford, |
| |Dababneh, Frazier, | |Ian Calderon, Campos, |
| |Gonzalez, Olsen, | |Eggman, Gomez, Holden, |
| |V. Manuel P�rez, | |Linder, Pan, Quirk, |
| |Wieckowski | |Ridley-Thomas, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Allen, Beth Gaines | | |
| | | | |
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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 (Coto), Chapter 595, Statutes of 2007, 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
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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 Sections 4800,
et seq, and 4850, et seq, are payable in addition to the
maximum payments available under Section 4656, the temporary
disability statute.
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 two-thirds 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.
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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 : According to the Assembly Appropriations
Committee:
1)Assuming four officers per year receive an additional year of
TD benefits as a result of this bill, state costs of about
$220,000 (State Compensation Insurance Fund). Employee costs
for affected departments are funded through General
Fund/special funds. Given small numbers and the random nature
of disability claims, an exact projection of these costs is
not possible.
2)Applying similar assumptions to local public safety and
firefighters to which similar benefits apply, cities and
counties will incur increased costs of approximately $3
million (local funds) to provide an additional year of TD to
approximately 50 officers. These costs are not
state-reimbursable.
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. This
bill restores this critical disability eligibility for
firefighters and law enforcement officers. It doesn't create
any new benefits and doesn't impose any significant additional
cost on local governments that they haven't been paying for
many years. This bill 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
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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 two-thirds 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 in reaching its conclusions. Three points
need to be noted in this regard.
First, it is clear beyond debate that AB 338 was not intended to
alter, or in any way effect, Labor Code Sections 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
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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 Labor Code
Section 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 Labor Code Section 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
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
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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 Labor Code Section 4850
time 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
Labor Code Section 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.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086
FN: 0003639