Workers’ Compensation Appeals Board State Of California



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Workers’ Compensation Appeals Board

State Of California








Case Nos. GRO 0028123

ERIC PASQUOTTO,

GRO 0028394







Applicant,







OPINION AND DECISION

vs.

AFTER RECONSIDERATION




(EN BANC)

HAYWARD LUMBER; CONNECTICUT INDEMNITY INSURANCE COMPANY; and ATHENS ADMINISTRATORS (Adjusting Agent),





Defendant(s).




We granted reconsideration to further study the issue of apportionment under Labor Code sections 4663 and 4664,1 as enacted by Senate Bill 899 (SB 899),2 in situations where an employee suffers an industrial injury causing permanent disability and where there has been a prior industrial injury that was settled by an approved compromise and release agreement. Because of the important legal issues presented, and in order to secure uniformity of decision in the future, the Chairman of the Appeals Board, upon a majority vote of its members, assigned this case to the Appeals Board as a whole for an en banc decision. (Lab. Code, § 115.)3

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Based on our review of the relevant statutes and case law, we hold:



  1. An order approving a compromise and release agreement, without more, is not a “prior award of permanent disability” within the meaning of section 4664(b);

  2. Where there is no “prior award of permanent disability” within the meaning of section 4664(b), the medical reports and other evidence relating to a prior industrial injury that was settled by a compromise and release still may be relevant in determining whether any of the permanent disability found after a subsequent industrial injury was caused by “other factors” under section 4663; and

  3. The concept of medical rehabilitation from a prior industrial disability remains viable under section 4663; however, even if an injured employee has medically rehabilitated from a prior industrial disability, this does not necessarily preclude a prior industrial injury from being an “other factor” causing the employee’s present disability.

I. BACKGROUND

This matter involves three industrial injuries sustained by Eric Pasquotto (applicant).4 Applicant’s first injury was settled by an approved compromise and release. His two subsequent injuries – involving a different employer – are now pending before us, with the parties disputing the issue of apportionment.



A. The First Injury

On May 9, 1998, applicant sustained an industrial injury to his low back while employed as a carpet layer by Joseph Rodney Pospisil (Pospisil), who was insured by State Compensation Insurance Fund (SCIF). Applicant received initial treatment for this injury from various physicians. An MRI of June 8, 1998 reflected that he had a disc herniation at L5-S1, as well as a disc protrusion at L4-5. In a July 1998 report, one physician suggested that applicant might benefit from an L5-S1 discectomy.

On July 27, 1998, applicant was admitted to the hospital with severe back pain. There, he was treated with pain medications and kept on bed rest. He was discharged on July 30, 1998.

On July 31, 1998 (the next day), he was again admitted to the hospital, this time with pulmonary emboli. He was treated with anti-coagulants and discharged on August 4, 1998.

On August 21, 1998, applicant started treatment for his back with Richard D. Kahmann, M.D., an orthopedic surgeon. In his initial report, Dr. Kahmann reviewed the June 1998 MRI scan, which he described as “suboptimal.” Nevertheless, based on the MRI scan, Dr. Kahmann diagnosed: moderate degenerative disc changes/disc desiccation at L4-5 and L5-S1; a moderate disc herniation at L5-S1, appearing to just touch the left S1 nerve root; a smaller herniation at L4-5; and a herniation at L3-4, which may contact the left L4 nerve root. Dr. Kahmann recommended a CT scan to better evaluate the disc protrusions at each level.

On October 21, 1998, applicant had a CT scan of the lumbar spine. It showed “[d]isc bulges at all scanned levels (L2-S1), most prominent at L3-4 on the left … , but also prominent and calcified in the midline at L5-S1.” A lumbar myelogram performed the same day indicated “[d]isc bulges at L3-4, L4-5, and L5-S1.”

On October 29, 1998, applicant was seen by Randolph H. Noble, M.D., as an agreed medical evaluator (AME) in internal medicine. In a December 1, 1998 report, Dr. Noble opined that applicant’s earlier pulmonary emboli were industrial, due to his July 1998 immobilization in the hospital because of his back injury. Dr. Noble opined that applicant had no residual respiratory problems, but he should be restricted from any work that would immobilize his lower extremities, preventing movement for greater than four hours. He said there was no basis for apportionment of this disability.

On December 17, 1998, Dr. Kahmann performed a left lateral microdiscectomy at L3-4.

On May 10, 1999, Dr. Kahmann issued a report finding applicant to be permanent and stationary. He said that applicant had slight sacroiliac pain that increases to moderate with heavy lifting and repetitive bending. He also said that applicant was precluded from heavy work and should not lift more than 30 pounds. He found no basis for apportionment.

On approximately June 14, 1999, applicant commenced vocational rehabilitation, apparently with the goal of becoming a truck driver.

On September 9, 1999, applicant executed a compromise and release agreement with SCIF, settling his May 9, 1998 injury “to his lumbar spine, low back, pulmonary system and all other medical conditions documented in the medical file.” The settlement was for $35,000, less permanent disability advances. Applicant also executed an addendum, which paragraph 10 of the agreement “incorporated” into the settlement. Among other things, the addendum stated:
“The following are in issue and are settled as part of this Compromise and Release: Injury AOE/COE, parts of body injured, nature and extent of permanent disability, duration of temporary disability, need for further medical treatment, self-procured medical treatment, apportionment, penalties of all types, reimbursement of all types, sanctions, costs and mileage.”5
The addendum also provided that the settlement included “all … disabilities as documented in the medical file,” all future medical treatment, and all accrued benefits. It further provided that applicant was settling “any potential compensation and/or medical benefits” that might arise out of an injury sustained in vocational rehabilitation, as well as any potential claims by his dependents for death benefits if his injury ever contributes to his death. Nowhere in the compromise and release or in the addendum was there any stipulation or representation by the parties as to the percentage of permanent disability – or the factors of disability – caused by the May 9, 1998 injury.

In early October 1999, applicant completed vocational rehabilitation and received a commercial driver’s license. During the job search portion of his vocational plan, he applied for a truck driver job with Hayward Lumber, the employer for the current injuries.

On October 7, 1999, SCIF signed the compromise and release agreement.

On October 15, 1999, a workers’ compensation administrative law judge (WCJ) issued an order approving compromise and release (OACR). The OACR made a $35,000 award to applicant – less permanent advances, attorney’s fees, and a lien.



B. The Current Injuries

On October 8, 1999, applicant was seen by Steven Dosch, M.D., for a pre-employment physical examination for the truck driving job with Hayward Lumber. In an October 15, 1999 report on that examination, Dr. Dosch related a history from applicant: that he had “low back surgery done in 1997;” that he had been released in 1998 “to do heavy work;” that “he has had no recent low back pain whatsoever;” and that “[h]e has been working out at the YMCA lifting weights five times a week with no pain or symptoms.” Dr. Dosch concluded that applicant was medically qualified to perform the job of truck driver “without restrictions.”

On or about October 19, 1999, applicant was hired as a driver by Hayward Lumber. There, he had to unload doors, windows, molding and specialty lumber by hand. At all times relevant here, Hayward Lumber was insured by Connecticut Indemnity Insurance Company.

In December 2001, applicant sustained an admitted industrial injury while delivering a prefabricated 10’x 4’ “strong wall,” which was “very, very, very heavy.” He and a co-worker were carrying it, but the co-worker tripped and the strong wall fell onto applicant, causing a back injury.

On August 2, 2002, applicant sustained another admitted injury when, while he was bending to move some lumber, he reaggravated his back.

Eventually, applicant saw Dr. Kahmann again. On July 10, 2003, Dr. Kahmann performed a left L5-S1 microdiscectomy.

Defendant had applicant evaluated by Daniel N. Ovadia, M.D., as its qualified medical evaluator (QME) in orthopedic surgery. In a September 15, 2003 report (i.e., about seven months before SB 899), Dr. Ovadia concluded that applicant was permanent and stationary, with

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intermittent slight lumbar spine pain and with a preclusion from heavy work. With respect to apportionment, Dr. Ovadia stated:
“[I]t is my feeling that there is a reasonable basis for apportionment given that Mr. Pasquotto has been diagnosed with an L5-S1 disc herniation following an injury that he sustained at Joe Pospisill [sic] in 1998. The Applicant also had disc herniation at L3-4 for which surgery was undertaken. Permanent work restrictions were imposed on the Applicant who received an award. Based on this information, I would apportionment fifty percent of Mr. Pasquotto’s lumbar spine residuals to factors predating his employment with Hayward Lumber and the specific injuries that he sustained in December of 2001 and August of 2002. Furthermore, I believe the combined effects of the Applicant’ previous injury in 1998 that resulted in disc herniations at L5-S1 and at L3-4 (the latter requiring surgery) combined with the injuries at Hayward Lumber led to the need for Mr. Pasquotto’s recent lumbar spine surgery. As such, I believe Mr. Pasquotto would have had fifty percent of his current level of lumbar spine disability even in the absence of his employment at Hayward Lumber. The remaining fifty percent of lumbar spine disability is directly related to the Applicant’s employment and injuries at Hayward Lumber.”
On May 17, 2004 (i.e., about a month after SB 899), Dr. Kahmann examined applicant and issued a report. The report declared him to be permanent and stationary, with subjective disability of frequent slight low back pain increasing to moderate with heavy lifting and repetitive bending. Dr. Kahmann also stated that applicant was precluded from heavy work, that he has a 30-pound lifting limitation, and that he should avoid repetitive bending. Under the heading “Apportionment,” Dr. Kahmann said:
“Not indicated. He did have previous surgery at the L3-4 level, recovered from that surgery and was back to work full-time in a very heavy work capacity without symptoms. On a 1998 CT scan/myelogram, it was noted that he had a disc herniation on the left at L5-S1. This herniated disc was completely asymptomatic and did not become symptomatic until his present injury. Therefore, in my opinion this is a pre-existing asymptomatic abnormality that did not cause any disability whatsoever until the industrial injury. Therefore, in my opinion, there are no grounds for apportionment to pre-existing industrial or non-industrial factors.”

On September 28, 2004, the matters proceeded to trial, with defendant having raised the issue of “apportionment.”

On October 6, 2004, the WCJ issued rating instructions for applicant’s December 2001 and August 2, 2002 back injuries with Hayward Lumber. The WCJ asked the disability evaluation specialist (rater) to consider that these two injuries resulted in a preclusion from heavy work, a thirty-pound lifting limitation, and a need to avoid repetitive bending. The WCJ further asked the rater to “consider apportionment where applicant had a prior low back disability [from the May 9, 1998 injury] precluding heavy work (Category E); should not lift greater than thirty pounds.” The rater found that applicant’s December 2001 and August 2, 2002 injuries caused 0% (zero percent) permanent disability, after apportionment – i.e., the rater concluded that both applicant’s current back disability and his prior back disability rated 30% standard (and 36% after adjustment for age and occupation), resulting in a net 0% rating.

On December 15, 2004, the WCJ issued a Joint Findings and Award. The WCJ determined that “[a]pplicant is not entitled to a permanent disability award” for his December 2001 and August 2, 2002 back injuries because “[t]here is a legal basis for apportionment under Labor Code § 4663 [sic].” In the accompanying Opinion on Decision, however, the WCJ stated that he “does not believe [section] 4663 is relevant.” The WCJ further said, “the crux of this case revolves around Labor Code § 4664 and more specifically subparagraph (b).” His Opinion then indicated, in essence, that he found a legal basis for apportionment because defendant had established the existence of a “prior award of permanent disability” within the meaning of section 4664(b) – i.e., the OACR for the May 9, 1998 injury – and that, under section 4664(b), this “prior award is conclusively presumed to [still] exist.”

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Applicant then filed a timely petition for reconsideration. In substance, he contends: (1) that section 4664(b) cannot be applied because his injuries occurred prior to the effective date of SB 899;6 (2) that he never received a “prior award of permanent disability,” within the meaning of section 4664(b), because the OACR for his May 9, 1998 back injury neither awarded permanent disability nor made any determination regarding the level of permanent disability; and (3) that section 4664(b) must be interpreted as merely creating a rebuttable presumption and, here, the evidence establishes that he had recovered from his May 9, 1998 injury and that he was performing his work without symptoms or limitations until his December 2001 and August 2, 2002 injuries.

Defendant filed an answer, essentially asserting that the OACR for the May 9, 1998 injury was a “prior award of permanent disability” under section 4664(b) because it was based solely on the May 10, 1999 report of Dr. Kahmann precluding applicant from heavy work and from lifting more than 30 pounds – which were the same restrictions imposed by Dr. Kahmann in his May 17, 2004 permanent and stationary report.

Because the parties on reconsideration had limited their briefing to the section 4664(b) apportionment issue, the Appeals Board gave the parties leave to file supplemental briefs on the issue of whether apportionment might be valid under section 4663, without regard to whether

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apportionment might be valid under section 4664(b).7 The supplemental briefing has been completed, and we now issue our Decision After Reconsideration.

II. DISCUSSION
A. An Order Approving A Compromise And Release Agreement, Without More, Is Not A “Prior Award of Permanent Disability” Within The Meaning Of Section 4664(b).

Section 4664(b) provides: “If the applicant has received a prior award of permanent disability, it shall be conclusively presumed that the prior permanent disability exists at the time of any subsequent industrial injury.” (Emphasis added.)

For the reasons that follow, we conclude that an approved compromise and release agreement, without more, does not constitute an “award of permanent disability” under section 4664(b).

A compromise and release agreement approved by the WCAB generally constitutes an “award.” The Labor Code permits the parties to a workers’ compensation case to reach a compromise regarding the amount of compensation payable to the injured employee and to release the defendant(s) from further potential liability for compensation. (Lab. Code, § 5000 et seq.) Such a compromise and release agreement, once approved by the WCAB (Lab. Code, § 5001), is an “award” that has the same force and effect as any other workers’ compensation award. (Lab. Code, § 5002; Smith v. Workers’ Comp. Appeals Bd. (1985) 168 Cal.App.3d 1160, 1169-1170 [50 Cal.Comp.Cases 311]; City of Anaheim v. Workers’ Comp. Appeals Bd. (Davis) (1982) 128 Cal.App.3d 200, 206 [47 Cal.Comp.Cases 52]; Raischell & Cottrell, Inc. v. Workmen’s Comp. Appeals Bd. (Adamson) (1967) 249 Cal.App.2d 991, 997 [32 Cal.Comp.Cases 135]; Jones v. Fremont Ins. Co. (1986) 14 Cal. Workers’ Comp. Rptr. 79 (Appeals Board panel); see also Kaiser Foundation Hospitals v. Workmen’s Comp. Appeals Bd. (Keifer) (1974) 13 Cal.3d 20, 25 [39 Cal.Comp.Cases 857]; Ogdon v. Workmen’s Comp. Appeals Bd. (1974) 11 Cal.3d 192, 196 [39 Cal.Comp.Cases 297]; Johnson v. Workmen’s Comp. Appeals Bd. (1970) 2 Cal.3d 964, 973 [35 Cal.Comp.Cases 362].)

Nevertheless, the fact that an approved compromise and release agreement generally constitutes an “award” does not mean that it is an “award of permanent disability” under section 4664(b), even if the compromise and release agreement resolved the issue of permanent disability.

This is illustrated by the facts of the case before us. The 1999 compromise and release agreement did not stipulate to or otherwise specify the percentage of permanent disability – or the factors of disability – attributable to applicant’s May 9, 1998 back injury. In paragraph 6 of the agreement, in which “[t]he parties represent that the following facts are true,” there is no representation regarding the percentage or factors of permanent disability. There also are no such representations in paragraph 10 of the agreement, which contained “additional information” regarding the compromise and release. To the contrary, paragraph 10 incorporated an addendum, which expressly stated that “the nature and extent of permanent disability” was “in issue.”

We are cognizant of defendant’s assertion that the 1999 compromise and release necessarily contemplated that applicant’s May 9, 1998 back injury had resulted in a preclusion from heavy work and in a preclusion from lifting more than 30 pounds, as found by Dr. Kahmann’s May 10, 1999 report – which was the only permanent and stationary report in evidence as to the back.

However, such a conclusion would be entirely speculative. The compromise and release agreement contained neither any stipulation regarding applicant’s percentage of permanent disability nor any language specifying the nature of his back disability. Moreover, while it might be fair to assume that some of the $35,000 in settlement money was for applicant’s back, there is no way to determine – at least on this record – how much of this consideration was for his back permanent disability – particularly given: (1) the compromise and release specified there was an “issue” regarding the “nature and extent of permanent disability,” which implies there was a dispute regarding applicant’s back permanent disability; (2) we do not know whether, absent the settlement, either party would have obtained supplemental medical reports on the issue of applicant’s back permanent disability; and (3) we cannot determine how much of the settlement money was in consideration for releasing issues other than applicant’s back permanent disability. This last point is of no small significance, given that applicant had a post-surgical back; yet, he settled his right to any further medical treatment. Moreover, in addition to applicant’s back, there apparently also were issues regarding pulmonary disability and/or treatment.

Further, in this case – and in other cases – there is no reliable way to determine how much of the settlement monies paid under an approved compromise and release agreement represent compensation for permanent disability, at least where the compromise and release agreement does not contain any specific stipulation or representation regarding the applicant’s percentage of or factors of permanent disability. There are many factors that may motivate parties to settle by way of a compromise and release agreement, some of which might not be disclosed in the compromise and release agreement and might have no relation to the percentage of or the nature of the applicant’s permanent disability. These factors can include, but certainly are not limited to: undisclosed issues regarding injury, employment, the statute of limitations, insurance coverage, or fraud; an applicant’s desire to extricate him or herself from the workers’ compensation system; an applicant’s wish to avoid the delays inherent in obtaining a decision or the risks inherent in litigation; an applicant’s non-industrial health factors; an applicant’s immediate financial needs or desire for a lump sum; an undisclosed agreement that the applicant will resign his or her employment in conjunction with the compromise and release; a defendant’s wish to avoid the risks and costs of litigation; a defendant’s desire to close its file – thereby eliminating its need to maintain reserves for possible future benefits (if the case were to be reopened), eliminating its costs of maintaining the file for the lifetime of the employee (in the event of an award of further medical treatment), and reducing its risks of penalties; a defendant’s desire to keep its costs down in multiple party cases or cases likely to entail multiple or extended proceedings; a defendant’s desire to settle around liens; and third-party recovery issues.

We are aware that, in any given case, evidence outside the four corners of an approved compromise and release agreement conceivably might be presented in an attempt to show that some discrete portion of the settlement was for permanent disability. We conclude that such extrinsic evidence should not be allowed.

In this regard, an analogous situation was presented in Claxton v. Waters (2004) 34 Cal.4th 367.

In Claxton, an employee had sued her employer and other defendants for civil damages, alleging workplace sexual harassment. Previously, however, the employee had filed workers’ compensation claims, including one for injury to the “psyche due to sexual harassment.” The employee then settled her workers’ compensation claims through a standard pre-printed compromise and release agreement, approved by the WCAB, which made no reference to the pending civil lawsuit. Thereafter, the civil defendants moved for summary judgment on the ground that the compromise and release agreement had settled the employee’s civil sexual harassment claim. In opposition, the employee filed a declaration stating her belief that the compromise and release agreement “did not include” her civil damages claim and stating she had not authorized her workers’ compensation attorney to settle her civil action. Her workers’ compensation attorney filed a similar declaration.

The Supreme Court concluded that, to show that the standard pre-printed workers’ compensation compromise and release agreement released the employee’s civil claims, the civil defendants would have to produce a separate agreement expressly so stating. That is, the civil defendants cannot rely on extrinsic evidence to show that the compromise and release intended to settle claims outside the workers’ compensation scheme. Among other things, the Court said:
“We are … convinced that extrinsic evidence should not be admissible to show that the standard preprinted workers’ compensation release form also applies to claims outside the workers’ compensation system. To allow such evidence would unduly burden our courts. Illustrative of this point are [various] Court of Appeal decisions [citations omitted]. In those cases, as here, the employer relied on standard language in the preprinted workers’ compensation release form as an affirmative defense in the worker’s civil lawsuit and later as the basis for a motion for summary judgment in that action. In each case, the appellate court determined that there were triable issues of fact as to whether the parties intended the workers’ compensation settlement to also apply to claims outside the workers’ compensation system, thus requiring further proceedings. This necessitated the presentation of evidence on that issue, and ultimately required resolution of disputed issues of fact as to what occurred in negotiations at the workers’ compensation proceedings. Thus, allowing such extrinsic evidence would require our trial courts, which currently are under severe budgetary restraints, to expend their already scarce resources to divine and reconcile the parties’ intentions in signing a standard preprinted workers’ compensation release form. And parties too would have to spend time and money in presenting this evidence.” (Claxton v. Waters, supra, 34 Cal.4th at p. 377.)

The same or similar problems would occur if extrinsic evidence were allowed to establish what permanent disability, if any, was “awarded” under an approved compromise and release. As discussed above, the reasons are many and varied why parties agree to settle a workers’ compensation claim by compromise and release, and the amount of the settlement may have no clear relation to the nature and extent of the employee’s permanent disability. To permit extrinsic evidence to be developed through discovery and then introduced at trial – so that the WCAB could attempt to “divine and reconcile” the parties’ intention on the issue of permanent disability, if they had a common intention or, indeed, any intention at all – would result in delays and expenses that would be inconsistent with the constitutional mandate that the California workers’ compensation system “shall accomplish substantial justice in all cases expeditiously, inexpensively, and without incumbrance [sic] of any character.” (Cal. Const., art. XIV, § 4.) Moreover, if a party to a subsequent case attempted to develop and present evidence from outside the four corners of an earlier compromise and release, regarding what was discussed or agreed to during settlement negotiations leading to that compromise and release, there could be significant potential legal problems. For example, attorney-client privilege issues could arise, even with respect to information that counsel for one party to the compromise and release disclosed to counsel for the other party – at least if those disclosures were reasonably necessary to further the interests of both parties in finalizing negotiations. (Oxy Resources Calif. LLC v. Superior Court (2004) 115 Cal.App.4th 874, 898; STI Outdoor LLC v. Superior Court (2001) 91 Cal.App.4th 334, 339-341.)

Accordingly, for all of the reasons above, an approved compromise and release agreement, without more, does not constitute “an award of permanent disability,” within the meaning of section 4664(b).8
B. Where There Is No “Prior Award Of Permanent Disability” Within The Meaning Of Section 4664(b), The Medical Reports And Other Evidence Relating To A Prior Industrial Injury Settled By A Compromise And Release May Be Relevant In Determining Whether Any Of The Permanent Disability Found After A Subsequent Industrial Injury Was Caused By “Other Factors” Under Section 4663.

At trial, defendant raised the issue of “apportionment.” Under SB 899, there are two statutory avenues for apportionment: section 4663 and section 4664. Thus, although we have concluded there is no basis for apportionment under section 4664(b) because the October 15, 1999 OACR was not a “prior award of permanent disability,” there may still be a basis for apportionment under section 4663.9

Under section 4663, apportionment is based on the causation of the permanent disability and the WCAB must determine what approximate percentage of the permanent disability was caused by the direct result of the injury and what approximate percentage of the permanent disability was caused by “other factors … , including prior industrial injuries.” (Lab. Code, § 4663(a), (b), & (c); Escobedo v. Marshalls (2005) 70 Cal.Comp.Cases 604 [2005 Cal. Wrk. Comp. LEXIS 71, 2005 WL 910490] (Appeals Board en banc), writ den. sub nom. Escobedo v. Workers’ Comp. Appeals Bd. (2005) 70 Cal.Comp.Cases 1506 [2005 Cal. Wrk. Comp. LEXIS 272], review den. 2005 Cal. LEXIS 13096 [Nov. 16, 2005, S137275].) Accordingly, if a prior injury was settled by an approved compromise and release agreement, then the medical reports and other evidence relating to that prior injury may be relevant in determining whether any of the current overall permanent disability was caused by “other factors” under section 4663.

In this case, however, the WCJ has not yet addressed the issue of apportionment under section 4663. Moreover, Dr. Ovadia’s report issued on September 15, 2003 – before the enactment of SB 899 – and Dr. Kahmann’s May 17, 2004 report do not discuss apportionment under section 4663 in accordance with the standards set out in Escobedo. Therefore, we will remand the matter to the WCJ to address section 4663 apportionment in the first instance. On remand, the WCJ shall redetermine the issues of permanent disability and apportionment under section 4663, without applying section 4664(b).



C. The Concept Of Medical Rehabilitation From A Prior Industrial Disability Remains Viable Under Section 4663; However, Even If An Injured Employee Has Medically Rehabilitated From A Prior Industrial Disability, This Does Not Necessarily Preclude A Prior Industrial Injury From Being An “Other Factor” Causing The Employee’s Present Disability.

The facts of this matter may raise questions of whether applicant had medically rehabilitated from the effects of his May 9, 1998 injury before he sustained his December 2001 and August 2, 2002 injuries and, if so, whether any such medical rehabilitation would affect the determination of apportionment under section 4663 in this case.

In our en banc decisions in Sanchez v. County of Los Angeles (2005) 70 Cal.Comp.Cases 1440 and Strong v. City and County of San Francisco (2005) 70 Cal.Comp.Cases 1460, we construed the language of section 4664(b), which states, in relevant part: “If the applicant has received a prior award of permanent disability, it shall be conclusively presumed that the prior permanent disability exists at the time of any subsequent industrial injury.” We held that if there has been a “prior award of permanent disability” within the meaning of section 4664(b), then the permanent disability underlying that award is “conclusively presumed” to still exist; therefore, the applicant is not permitted to show medical rehabilitation from the disabling effects of the earlier industrial injury or injuries. (Sanchez v. County of Los Angeles, supra, 70 Cal.Comp.Cases at p. 1452; Strong v. City and County of San Francisco, supra, 70 Cal.Comp.Cases at p. 1472.) Thus, we concluded that where there has been a prior permanent disability award, section 4664(b) abrogates the line of cases that had allowed an injured employee to show he or she had medically rehabilitated from the effects of an earlier injury at the time of a subsequent injury. (See Mercier v. Workers’ Comp. Appeals Bd. (1976) 16 Cal.3d 711, 716, fn. 2 [41 Cal.Comp.Cases 205]; State Comp. Ins. Fund v. Industrial Acc. Com. (Hutchinson) (1963) 59 Cal.2d 45, 56 [28 Cal.Comp.Cases 20]; Robinson v. Workers’ Comp. Appeals Bd. (1981) 114 Cal.App.3d 593, 602-603 [46 Cal.Comp.Cases 78]; Bookout v. Workers’ Comp. Appeals Bd. (1976) 62 Cal.App.3d 214, 223-224 [41 Cal.Comp.Cases 595]; Amico v. Workmen’s Comp. Appeals Bd. (1974) 43 Cal.App.3d 592, 607-608 [39 Cal.Comp.Cases 845].)

Nevertheless, in both Sanchez and Strong, we expressly did not address the issue of whether an injured employee may still show medical rehabilitation from a prior industrial or non-industrial condition to avoid apportionment under section 4663. (Sanchez v. County of Los Angeles, supra, 70 Cal.Comp.Cases at p. 1452, fn. 14; Strong v. City and County of San Francisco, supra, 70 Cal.Comp.Cases at p. 1472, fn. 15.)

We now conclude that section 4663 does not preclude a showing that, prior to the injury or injuries for which the employee is now claiming permanent disability, he or she had medically rehabilitated from the disabling effects of an earlier industrial or non-industrial condition.

When construing a statute, the Appeals Board’s fundamental purpose is to determine and effectuate the Legislature’s intent. (DuBois v. Workers’ Comp. Appeals Bd. (1993) 5 Cal.4th 382, 387 [58 Cal.Comp.Cases 286, 289]; Nickelsberg v. Workers’ Comp. Appeals Bd. (1991) 54 Cal.3d 288, 294 [56 Cal.Comp.Cases 476, 480]; Moyer v. Workmen’s Comp. Appeals Bd. (1973) 10 Cal.3d 222, 230 [38 Cal.Comp.Cases 652, 657].) Because the statutory language generally provides the most reliable indicator of that intent, the Appeals Board’s first task is to look to at the language of the statute itself. (Ibid.; e.g., also, People v. Smith (2004) 32 Cal.4th 792, 797.)

If the statutory language is clear and unambiguous, the Appeals Board must enforce the statute according to its plain terms. (DuBois v. Workers’ Comp. Appeals Bd., supra, 5 Cal.4th at pp. 387-388 [58 Cal.Comp.Cases at p. 289]; Atlantic Richfield Co. v. Workers’ Comp. Appeals Bd. (Arvizu) (1982) 31 Cal.3d 715, 726 [47 Cal.Comp.Cases 500, 508].)

If, however, the statutory language is ambiguous and susceptible of more than one reasonable interpretation, then the Appeals Board may look beyond the statutory language to other evidence of the Legislature’s intent. (In re Reeves (2005) 35 Cal.4th 765, 771; Estate of Griswold (2001) 25 Cal.4th 904, 911.) For example, where a statute relating to a particular subject contains a critical word or phrase, then the omission of that word or phrase from another statute on the same subject generally shows a different legislative intent. (People v. Valentine (1946) 28 Cal.2d 121, 142; Reeves v. Workers’ Comp. Appeals Bd. (2000) 80 Cal.App.4th 22, 28 [65 Cal.Comp.Cases 359]; see also Ferguson v. Workers’ Comp. Appeals Bd. (1995) 33 Cal.App.4th 1613, 1621 [60 Cal.Comp.Cases 275]; Clark v. Workers’ Comp. Appeals Bd. (1991) 230 Cal.App.3d 684, 696 [56 Cal.Comp.Cases 331].) This principle applies with particular force when the two statutes relating to the same subject matter were enacted by the same bill and chaptered at the same time. (See International Business Machines v. State Bd. of Equalization (1980) 26 Cal.3d 923, 932; Krumme v. Mercury Ins. Co. (2004) 123 Cal.App.4th 924, 943, fn. 6; People v. Hitchings (1997) 59 Cal.App.4th 915, 922; Conservatorship of Bryant (1996) 45 Cal.App.4th 117, 122.)

Sections 4663 and 4664 are both apportionment statutes that were enacted and chaptered at the same time. (Stats. 2004, ch. 34, §§ 34 & 35.) Section 4664(b) specifically states that, in “prior award” situations, “it shall be conclusively presumed that the prior permanent disability exists at the time of any subsequent industrial injury.” (Emphasis added.) Section 4663, however, contains no such language – notwithstanding the fact that it also applies in cases of “prior industrial injuries.” (Lab. Code, § 4663(c).) Because the Legislature omitted the conclusive presumption terminology from a concurrently adopted statute concerning the same subject, we conclude the Legislature did not intend, under section 4663, to bar an applicant from demonstrating that he or she had medically rehabilitated from the disabling effects of earlier industrial injuries. Accordingly, the line of medical rehabilitation cases – referred to above – remain valid, to that extent.10

Nevertheless, section 4663 ultimately is concerned with the causation of permanent disability. (Lab. Code, § 4663(a), (b), & (c); Escobedo v. Marshalls, supra, 70 Cal.Comp.Cases at p. 611.) The WCAB must determine what percentage of the permanent disability was directly caused by the industrial injury and what percentage was caused by other factors, including prior industrial injuries. (Lab. Code, § 4663(c); Escobedo v. Marshalls, supra, 70 Cal.Comp.Cases at pp. 607, 611-612.)

Even if an injured employee establishes medical rehabilitation from his or her prior industrial injury, this does not necessarily mean that the prior industrial injury cannot be an “other factor” that is “causing” some of the employee’s present disability under section 4663. This, however, is an issue of proof requiring substantial medical evidence. (Escobedo v. Marshalls, supra, 70 Cal.Comp.Cases 604.)

Here, as discussed above (see Section II-B, supra), neither Dr. Ovadia’s September 15, 2003 report nor Dr. Kahmann’s May 17, 2004 report discuss apportionment under section 4663 – including any potential medical rehabilitation issue – in accordance with the principles set out in Escobedo. Moreover, the WCJ has had the opportunity to observe the demeanor of applicant and to weigh his statements in connection with his manner on the stand. (Garza v. Workmen’s Comp. Appeals Bd. (1970) 3 Cal.3d 312, 318-319 [35 Cal.Comp.Cases 500]; see also, Gay v. Workers’ Comp. Appeals Bd. (1979) 96 Cal.App.3d 555, 564-565 [44 Cal.Comp.Cases 817].) Therefore, in addition to remanding the general issue of section 4663 apportionment to the WCJ to address (see Section II-B, above), we will also remand this matter to the WCJ so that he may determine, in the first instance, whether applicant’s claims of medical rehabilitation from his May 9, 1998 injury are credible and, even if so, whether his May 9, 1998 injury nevertheless may be an “other factor” that is “causing” his current disability pursuant to section 4663.

For the foregoing reasons,

IT IS ORDERED, as the Decision After Reconsideration of the Appeals Board (En Banc), that the Joint Findings and Award issued by the workers’ compensation administrative law judge on December 15, 2005, be, and it is hereby, RESCINDED and that the matter is RETURNED to

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the workers’ compensation administrative law judge for further proceedings and decision, consistent with this opinion.
WORKERS’ COMPENSATION APPEALS BOARD (EN BANC)

/s/ Joseph M. Miller_______________________

JOSEPH M. MILLER, Chairman

/s/ Merle C. Rabine________________________

MERLE C. RABINE, Commissioner

/s/ William K. O’Brien_____________________

WILLIAM K. O’BRIEN, Commissioner

/s/ James C. Cuneo________________________

JAMES C. CUNEO, Commissioner

/s/ Janice J. Murray_______________________

JANICE J. MURRAY, Commissioner

/s/ Ronnie G. Caplane_____________________

RONNIE G. CAPLANE, Commissioner
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