GAMBLE v. WORKERS’ COMPENSATION APPEALS BOARD, GALLAGHER BASSETT SERVICES

Filed 8/29/06; pub. order 9/21/06 (see end of opn.)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

Story continue from Part I ……..

However, the payment made to a temporarily partially disabled worker must take into account wages earned (or expected to be earned) by the worker in an alternative lower-paying job. Such benefits are “often called the ‘wage-loss’ benefit, because it pays a portion of the earnings that the injured worker loses” during the period of healing (or until their condition become permanent or stationary). (1 Cal. Workers’ Compensation Practice, supra, § 4.2, at p. 228.) Stated another way, employers of these workers are given a credit for any wages earned by the employee able to work less hours or at a lower-paying position.

Section 4657 delineates the formula to calculate the “loss in wages” for the temporarily partially disabled worker. The payment equates to the difference “between the [AWE] of the injured employee and the weekly amount which the injured employee will probably be able to earn during the disability, to be determined in view of the nature and extent of the injury. . . .”[1]

Not surprisingly, this same “loss in wages” credit formula applies when calculating the temporary disability indemnity component of a worker also receiving vocational rehabilitation services. In other words, workers receiving VRTD benefits can participate in vocational rehabilitation programs while continuing to collect temporary disability indemnity payments calculated on a “wage-loss basis.” (§ 4657.)

This category of benefits was discussed in the two California Compensation cases cited by United and the Board: County Sanitation District of Los Angeles v. Workers’ Comp. Appeals Bd. (1995) 60 Cal.Comp.Cases 618 (Reyes) and Douglas v. Workers’ Comp. Appeals Bd. (1982) 47 Cal.Comp.Cases 932 (Wiley).

In Reyes, the court recognized that to receive VRTD benefits an injured worker must meet the following requirements: (1) he or she is deemed a Qualified Injured Worker justifying rehabilitation services; and (2) the worker continues to show a current wage loss in order to receive temporary disability indemnity payments. (Reyes, supra, 60 Cal.Comp.Cases at pp. 619-620.)

Cesar Reyes, a sanitation worker, “suffered a work-related injury to his psyche[.]” (Reyes, supra, 60 Cal.Comp.Cases at p. 619.) He was denied retroactive VRTD benefits after the workers’ compensation judge determined he failed to satisfy the vocational feasibility criteria to be a Qualified Injured Worker. The judge relied on the fact Reyes started working as a self-employed salesman “in his own office sales enterprise[]” the same year he claimed to be injured at his job with the sanitation district. (Ibid.) The judge reasoned, “[H]e should not be entitled to rehabilitation benefits during the evaluation process since he had already returned to suitable gainful employment.” (Ibid.)

The Board granted Reyes’ petition for reconsideration and affirmed the prior decision Reyes did not meet the criteria to be deemed a Qualified Injured Worker status. However, the Board held Reyes was entitled to retroactive VRTD benefits during the evaluation period because “there was prima facie evidence of eligibility and good faith issues existed as to [his Qualified Injured Worker] status.” (Reyes, supra,

60 Cal.Comp.Cases at p. 619, relying on Industrial Indemnity Co. v. Workers’ Comp. Appeals Bd. (1985) 165 Cal.App.3d 633 [applicant ultimately determined not to be Qualified Injured Worker was found to be entitled to some VRTD benefits].) The Board explained, “[T]he amount to be awarded should be calculated on a wage-loss basis because [Reyes] did have some earnings during the relevant evaluation period.” (Reyes, supra, 60 Cal.Comp.Cases at pp. 619-620.) It recognized the temporary disability component of the VRTD benefits is measured on a wage-loss basis and the employer should be credited for wages earned, if any, by new supplemental employment.

Similarly, in Wiley, the Board applied a credit on VRTD benefits on a wage-loss basis for the commissions the injured worker earned from insurance policies “sold during Wiley’s temporary disability.” (Wiley, supra, 47 Cal.Comp.Cases at p. 933, italics added.) Unlike the worker in Reyes, William Wiley was working concurrently at two different jobs. He sustained a back injury while employed as a truck driver, but it did not prevent him from continuing his work as an independent agent selling insurance. (Ibid.) While receiving temporary disability, Wiley sought rehabilitation services because he was not interested in pursuing insurance work on a

full-time basis. It was undisputed Wiley was a Qualified Injured Worker, and “he had not been provided with suitable gainful employment.” (Ibid.) The Board reasoned, “Wiley was entitled to rehabilitation benefits because, regardless of his income from insurance work, it is undisputed his total income was lowered by virtue of his inability to drive a truck.” (Ibid.)

The Board also noted that although the trucking employer was entitled to a credit for income earned on new policies sold during Wiley’s disability, the employer “was not entitled to a credit for renewal premiums because commissions on renewals could not be considered a current wage.” (Wiley, supra, 47 Cal.Comp.Cases at p. 933.)

Thus, to summarize, the Board held Wiley was entitled to VRTD benefits comprised of (1) vocational rehabilitation services because he met the requirements of a Qualified Injured Worker; and (2) continuation of temporary disability indemnity payments based on his weekly loss earnings (the difference between his AWE and the current weekly wage earned on new policies sold). (Wiley, supra, 47 Cal.Comp.Cases

at p. 933.)

D. No Wage Credit for VRMA Benefits

United argues the same rationale applied in Reyes and Wiley should apply to a worker falling under the VRMA benefit scheme. It maintains VRTD and VRMA benefits play essentially the same role in the scheme: Both are forms of temporary compensation. But United overlooks the fact the Legislature designed different formulas for calculating payments due to injured workers falling within these two benefit categories.

As discussed above, the Legislature determined the temporary disability indemnity component of VRTD must be based on a wage-loss formula found in section 4657. However, the Legislature specified the maintenance allowance given to a permanently disabled worker (VRMA) “shall be two-thirds of the employee’s [AWE] at the date of injury[.]” (§ 139.5, subd. (d).) The latter does not contemplate a wage credit for employers because it is not intended to replace lost earnings. Rather, it is one of many components of the array of vocational rehabilitation services available to qualifying, permanently disabled workers.

United apparently overlooks the fact the maintenance allowance is only available to workers deemed permanently disabled. Indeed, section 139.5,

subdivision (c), explicitly states that once a worker is permanent and stationary, the payment of temporary disability indemnity ceases and is replaced with the payment of a different benefit called “maintenance allowance.”

The maintenance allowance payment is measured in the same way as permanent disability indemnity payments. It is a pre-established fraction of the worker’s AWE at the date of injury. Section 139.5 also sets a maximum limit for the amount of maintenance allowance permitted using the AWE based formula.[2] If the Legislature had intended the maintenance allowance to also be reduced by wages earned, it could have used similar language found in section 4657 [containing the wage-loss formula for temporarily partially disabled workers]. We cannot rewrite section 139.5 to include it.

We note the Legislature recognized the maintenance allowance would likely be small in comparison to what the worker was awarded for permanent disability indemnity. The worker receiving VRMA benefits can supplement the maintenance allowance with “an additional amount from permanent disability indemnity due or payable, sufficient to provide the employee with a maintenance allowance equal to

two-thirds of the employee’s [AWE] at the date of injury subject to the limits specified in subdivision (a) of section 4453 . . . .” (§ 139.5, subd. (d)(2).) In other words, the worker has the option of combining the maintenance allowance with permanent disability benefits so long as the total combined payment does not exceed what a worker receives under VRTD benefits.[3] Very telling is the Legislature’s decision to set the maximum payment allowable for this combination of benefits by referring to section 4453 (used for measuring permanent disability limits), with no reference to the wage credit reduction formula found in section 4657. What would be the point of supplementing the maintenance allowance with permanent disability indemnity if an employer could reduce the total amount to zero?

We are required, as is the Board, under section 3202 to liberally construe the workers’ compensation provisions of the code “with the purpose of extending their benefits for the protection of persons injured in the course of their employment.” (Mathews v. Workmen’s Comp. Appeals Bd. (1972) 6 Cal.3d 719, 726.) We first look to the plain meaning of the statutory language, when clear and unambiguous. (DuBois v. Workers’ Comp. Appeals Bd. (1993) 5 Cal.4th 382, 387-388.) Effect also should be given to the statute’s every word and clause, thereby leaving no part or provision useless, deprived of meaning, or contradictory. (Id. at p. 388.) Finally, the statute should be interpreted consistently with its intended purpose, and harmonized within “’the statutory framework as a whole.’” (Ibid.)

In light of the above, we conclude that when the Legislature amended section 139.5 to create the maintenance allowance component for permanently disabled workers, it clearly and unambiguously determined the payment would be less than what a temporarily disabled worker would receive and, more importantly, would be based on a preset fraction of the worker’s AWE. It was foreseeable that permanently disabled workers could be collecting permanent disability indemnity as well as income from secondary employment. Yet, nowhere in section 139.5 is there any indication the Legislature contemplated a credit for wages to employers paying the maintenance allowance. Just as Gamble can supplement the maintenance allowance with permanent disability payments without fear of losing it, he can continue to earn wages from the School District while seeking under the VRMA benefit scheme a second job to replace his United air freight employment.

E. Limited Applicability of Section 4909

As an alternative argument, United asserts it is entitled to a credit “for wages” pursuant to section 4909. It misunderstands the purpose and scope this provision.

“[S]ection 4909, as interpreted by the California courts, was intended to encourage employers to make voluntary payments to injured employees and obtain a subsequent reduction in the amount determined to be due the employee.” (Appleby, supra, 27 Cal.App.4th at p. 191, italics added.) Stated another way, if an employer makes payments that exceed what was actually owed, the Board has the discretion to consider such payments when later calculating the amount of compensation to be paid.

For example, an employer may receive a credit against an employee’s permanent disability award for voluntary payments made pursuant to the employer’s private benefit plan when “such payments were clearly intended by both the employer and the employee as an advance on future compensation.” (Appleby, supra,

27 Cal.App.4th at p. 192, citing Ott v. Workers’ Comp. Appeals Bd. (1981)

118 Cal.App.3d 912, 921-922.) In addition, section 4909 will be applied to avoid double recovery in concurrent jurisdiction situations, because awards under one compensation system are credited against a recovery under the second system. (See, e.g., Sea-Land Service, Inc. v. Workers’ Comp. Appeals Bd. (1996) 14 Cal.4th 76, 86-87 [employer entitled to a credit against workers’ compensation payments for federal maritime benefits paid]; California Comp. Ins. Co. v. Ind. Acc. Com. (1954) 128 Cal.App.2d 797, 807 [worker’s compensation should be reduced if injured worker also collecting unemployment insurance benefits].)

Relying on Hupp v. Workers’ Comp. Appeals Bd. (1995) 39 Cal.App.4th 84 (Hupp) and Kosowski v. Workers’ Comp. Appeals Bd. (1985) 170 Cal.App.3d 632 (Kosowski), United asserts it is entitled to a credit for wages earned before Gamble receives his VRMA benefits. It fails to mention Hupp and Kosowski concern unique workers’ compensation benefits given only to injured peace officers, firefighters, specified law enforcement, and other safety members described in sections 4850 and 4853. Under that special benefit scheme, the injured worker is entitled “to a leave of absence . . . without loss of salary in lieu of temporary disability payments or maintenance allowance payments under [s]ection 139.5, if any,” for one year or until retirement on a disability pension. (§ 4850, subd. (a).) The extra benefit is intended to compensate certain public employees in high-risk jobs. (See City of Martinez v. Workers’ Comp. Appeals Bd. (2000) 85 Cal.App.4th 601, 614 (City of Martinez).)

“If the disability continues beyond one year, the [eligible public employee] is entitled to a continued unpaid leave of absence until retirement and also is permitted to secure whatever regular workers’ compensation benefits may be available. [Citation.]

. . . [Citation.] Payments made under section 4850 are considered workers’ compensation benefits, not salary. [Citation.]” (City of Martinez, supra, 85 Cal.App.4th at p. 614.)

The Hupp and Kosowski courts held an employer paying full salary in lieu of temporary disability indemnity under section 4850 may be entitled to credit limited to net income from a disabled worker’s self-employment. In Hupp, an injured deputy sheriff “earned additional outside income by giving music lessons, playing his musical instrument, and servicing musical equipment prior to his disability. He continued this self-employment after becoming disabled.” (Hupp, supra, 39 Cal.App.4th at p. 86.) Similarly, in Kosowski an injured firefighter “started selling used cars as an investment and hobby prior to his injury and obtained a license to operate a used car dealership in partnership with his wife.” (Kosowski, supra, 170 Cal.App.3d at p. 635.)

These courts recognized the rule stating compensation may not be reduced “by an insurance, contribution or other benefit due to or received by the person entitled to such compensation. (§ 3752.) Credit will be allowed the employer, however, for amounts earned by the injured worker while the worker is being paid total temporary disability. [Citation.]” (Kosowski, supra, 170 Cal.App.3d at p. 636; italics added; see also § 4909.) The Kosowski court determined (and the Hupp court agreed), workers receiving special section 4850 benefits were comparable to temporarily totally disabled workers. Consequently, pursuant to section 4909, the Board had authority “to allow a credit against section 4850 benefits[.]” (See Kosowski, supra, 170 Cal.App.3d at p. 635.) We fail to see how these cases have any bearing on the question of Gamble’s entitlement to VRMA benefits.

Although it is not discussed in Hupp or Kosowski, we recognize a permanently injured worker who qualifies under section 4850 can collect up to one year of full wages in lieu of “maintenance allowance payments under [s]ection 139.5[.]” (§ 4850, subd. (a).) For example, a police officer deemed permanently disabled can “continue[] to receive section 4850 benefits through the covered period while other employees will receive the reduced maintenance allowance payments under section 139.5, [subdivision] (c)[,] during vocational rehabilitation.” (City of Martinez, supra,

85 Cal.App.4th at pp. 617-618.) Applying the rational of Hupp and Kosowski, an employer’s overpayment of salary made in lieu of a maintenance allowance, due to the employee’s gainful self-employment, may be credited back to the employer.

However, United has not made an overpayment of the special section 4850 benefits. Gamble falls in the category of the permanent employees who are only

eligible to receive the reduced maintenance allowance payments under section 139.5, subdivision (c). The discussion in Hupp and Kosowski of a credit for wages is limited to the context of an employee receiving their full salary under section 4850. There is no logical reason to extend the holdings of these cases to other benefit schemes. We note United failed to offer any rationale for comparison, or any meaningful analysis on the issue. It was United’s burden of proof to establish entitlement to credit. (Evid. Code, § 500; see also Ott v. Workers’ Comp. Appeals Bd., supra, 118 Cal.App.3d

at pp. 921-922.)

IV. Disposition

We have concluded a credit for wages is not contemplated by section 139.5. The maintenance allowance prescribed by that section is not intended to replace lost wages, and affording United a credit for wages Gamble currently earns at the School District would unjustly enrich United. There is no double recovery issue with respect to those wages, payments, and services owed during vocational rehabilitation, or his permanent disability indemnity payments.

Simply stated, Gamble is entitled to all components of VRMA benefits because he a Qualified Injured Worker. VRMA benefits can terminate if he secures alternative work offered by United or another employer. (See § 4644, subd. (a) [listing reasons VRMA may be terminated].)[4] Wages earned at a job that preexisted and coexisted with his employment at United is not grounds for refusing VRMA benefits.

Accordingly, we find the Board improperly construed the applicable statutory provisions and incorrectly determined, pursuant to inapt case authority relating to other benefit provisions, that United was entitled to a credit “for wages” against the maintenance allowance component of Gamble’s vocational rehabilitation benefits. The Order and Decision after Reconsideration of the Board to “allow credit for wages paid on a wage-loss basis” is annulled. The matter is remanded to the Board for further proceedings consistent with the views expressed in this opinion. Costs are awarded to petitioner.

O’LEARY, J.

WE CONCUR:

RYLAARSDAM, ACTING P. J.

IKOLA, J.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

Attorney Lon E. Peek II has requested that our opinion, filed August 29, 2006, be certified for publication. It appears that our opinion meets the standards set forth in California Rules of Court, rule 976(b). The request is GRANTED.

The opinion is ordered published in the Official Reports.

O’LEARY, J.

WE CONCUR:

RYLAARSDAM, ACTING P. J.

IKOLA, J.

Publication courtesy of San Diego pro bono legal advice.

Analysis and review provided by Poway Property line attorney.

[1] If a totally disabled employee collecting temporary disability indemnity obtains new employment, he or she must immediately notify the employer who is making the payment. (See § 3820.) If the work is for fewer hours or at a lower-paying job, the indemnity payment will be recalculated using the “weekly loss in wages” formula described above: The payment is two-thirds of his or her “weekly loss in wages,” which consists of the difference between the worker’s AWE and the weekly amount the employee can earn during the disability. (See § 4657.)

[2] The maintenance allowance is defined as, “The amount the employee would have received as continuing temporary disability indemnity,” but with a maximum of $246 per week. (§ 139.5, subd. (d)(1).)

[3] For the sake of comparison, a temporarily totally disabled worker receiving VRTD is capped at $735 per week. If this same hypothetical worker was temporarily partially disabled and receiving VRTD, the maximum he or she receives would be the difference between the AWE maximum limit ($735) minus the wages currently being earned under the “loss in wages” formula. (See § 4657.) Whereas, a permanently disabled worker receiving VRMA is capped at $246 unless the worker chooses to supplement with a payable PD indemnity award (with a maximum limit of $735).

[4] United’s liability can terminate if Gamble: (1) completes a rehabilitation plan (§ 4644, subd. (a)(2)); (2) unreasonably fails to participate in the plan (§ 4644,

subd. (a)(1)); (3) accepts or rejects alternative work by United that meets the requirements of section 4644, subdivision (a)(5); (4) accepts work lasting 12 months (§ 4644, subd. (a)(6)(b)); or (5) settles his claims with United and agrees on a

self-directed vocational rehabilitation program (§ 4644, subd. (a)(8)).