Zenith Ins. v. WCAB

Filed 8/16/07 Zenith Ins. v. WCAB CA1/5

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FIVE

The Workers Compensation Appeals Board (Board) awarded permanent disability benefits to applicant Catherine Watts using the 1997 permanent disability rating schedule that was in effect at the time of her work-related injury in 2004. Zenith Insurance Company (Zenith), the workers compensation carrier for Wattss employer, petitioned for a writ of review, arguing that the Board should have applied the new permanent disability rating schedule that went into effect on January 1, 2005. (Labor Code,  4660, subdivision (d).)^[1] We agree and annul that portion of the award.

Background

Watts was employed as a waitress at Rose Garden Deli for approximately three and one-half years until April 26, 2004, when she suffered a cumulative trauma to her foot during the course of her employment there. In August 2004, John D. Hollander, D.P.M., conducted a qualified medical examination and submitted a report in which he diagnosed Watts as suffering from plantar fasciitis with associated heel pain, and possible peroneal tenosynovitis and/or lateral column pain.^[2] Dr. Hollander did not believe that Wattss condition was permanent and stationary at that time, and he offered no opinion as to whether she would suffer permanent disability. Glenn B. Pfeffer, M.D., had rendered a similar diagnosis in a report prepared in July 2004 and also reached no conclusion regarding permanent disability. Watts remained temporarily disabled from April 27, 2004, until August 16, 2005, when her condition became permanent and stationary.

A trial was held before a workers compensation judge (WCJ) on March 2, 2006, who awarded permanent disability to Watts based on the 1997 rating schedule that was in effect at the time of her injury. Zenith filed a petition for reconsideration before the Board, arguing that permanent disability should have been rated under the new schedule that went into effect on January 1, 2005. The Board granted reconsideration to further examine the issue, but ultimately affirmed the WCJs decision in an order and decision issued on February 7, 2007. We granted Zeniths petition for writ of review.

Discussion

Section 4660 governs the calculation of the percentage of permanent disability. That statute was amended on April 19, 2004, as part of Senate Bill No. 899 (2003-2004 Reg. Sess. [Stats. 2004, ch. 34,  32]), a comprehensive workers compensation reform package, to require regular revisions of the permanent disability rating schedule. A new rating schedule incorporating the American Medical Association Guides to the Evaluation of Permanent Impairments (5th ed.) went into effect on January 1, 2005. ( 4660, subds. (b)(1) & (e).) This schedule superseded the 1997 rating schedule that was in effect when Watts was injured in 2004. (See State Comp. Ins. Fund v. Workers Comp. Appeals Bd. (2007) 146 Cal.App.4th 1311, 1313.)

Section 4660, subdivision (d), provides generally that [t]he schedule and any amendment thereto or revision thereof shall apply prospectively and shall apply to and govern only those permanent disabilities that result from compensable injuries received or occurring on and after the effective date of the adoption of the schedule . . . . The statute then lists three situations in which the date of injury does not govern the schedule to be applied, and extends the new schedule to pre-2005 claims when there has been either no comprehensive medical-legal report or no report by a treating physician indicating the existence of permanent disability, or when the employer is not required to provide the notice required by Section 4061 to the injured worker. ( 4660, subd. (d).) Phrased another way, when a qualifying medical report was prepared, or notice under section 4061 was required, before January 1, 2005, there is an exception to the rule that the new rating schedule applies to pre-2005 injuries, and the percentage of permanent disability will be calculated using the earlier schedule that was in effect on the date of the injury.^[3] (See State Comp. Ins. Fund v. Workers Comp. Appeals Bd., supra, 146 Cal.App.4th at p. 1313.)

The primary issue presented in this case is whether section 4660, subdivision (d)s use of the phrase indicating the existence of permanent disability was intended to refer to both comprehensive medical-legal reports and reports by treating physicians, or only to reports by treating physicians. The Board concluded the statutory language did not require that a comprehensive medical-legal report indicate permanent disability; consequently, the medical-legal reports prepared in 2004 removed Wattss injury from the ambit of the new rating schedule that went into effect on January 1, 2005, and required use of the 1997 schedule that was in effect on the date of the injury.

This construction of the statute was recently rejected by another division of this court in Costco Wholesale Corp. v. Workers Comp. Appeals Bd. (2007) 151 Cal.App.4th 148, modified 151 Cal.App.4th 1101f (Costco). Costco concluded that section 4660, subdivision (d), was grammatically susceptible to the interpretation given to it by the Board in this case, but that such an interpretation was contrary to the legislative intent. We are persuaded by and follow the reasoning of Costco. (Costco, at pp. 153-154.)

Section 4660, subdivision (d) provides that the new rating schedule will apply to pre-2005 injuries unless one of three circumstances have occurred before 2005. One such circumstance is the preparation of a physicians report indicating the existence of permanent disability. Another . . . is the obligation of the employer to serve notice under section 4061, which advises the employee of the employers position regarding the entitlement to permanent disability at the time the last payment of temporary disability is made. These two circumstances are clearly tied to a determination of permanent disability before January 1, 2005. [There would be] no rational basis for the Legislature to include a third circumstancethe comprehensive medical-legal report at issue hereunless it was tethered to a similar requirement. A pre-2005 medical-legal report written about issues other than permanent disability, or a report that considered that issue but found no permanent disability, would supply no logical basis for applying the earlier rating schedule. It makes little sense to . . . hold that any medical-legal report could suffice, when the syntax of the statute is amenable to a construction that requires those reports to contain an indication of permanent disability. [Citation.] (Costco, supra, 151 Cal.App.4th at p. 154.) We agree with the reasoning of Costco and similarly conclude that a medical-legal report can only trigger the exception under section 4660, subdivision (d), if it indicates the existence of permanent disability.^[4]

Watts has not filed an answer to Zeniths petition, but there was no claim below that the 2004 medical-legal reports indicated the existence of permanent disability. Accordingly, the 2005 permanent disability rating schedule must be utilized unless one of the other two exceptions under section 4660, subdivision (d), applies. As there is no pre‑2005 treating physicians report in the record, we consider whether the employer was required to provide the notice required by Section 4061 to the injured worker.^[5]

Section 4061 provides in relevant part, (a) Together with the last payment of temporary disability indemnity, the employer shall, in a form prescribed by the administrative director pursuant to Section 138.4, provide the employee one of the following: [] (1) Notice either that no permanent disability indemnity will be paid because the employer alleges the employee has no permanent impairment or limitations resulting from the injury or notice of the amount of permanent disability indemnity determined by the employer to be payable. . . . [] (2) Notice that permanent disability indemnity may be or is payable, but that the amount cannot be determined because the employees medical condition is not yet permanent and stationary. . . .

Temporary disability benefits were paid to Watts for periods between April 27, 2004, and August 16, 2005. Her employer was required to provide notice under section 4061, [t]ogether with the last payment of temporary disability indemnity, on August 16, 2005. Because that notice was not required until after January 1, 2005, the 2005 permanent disability rating schedule applies to Wattss case. This conclusion is consistent with Costco, which considered the section 4061 notice exception as well as the medical-legal report exception, and held that the duty to give notice under section 4061 arises with the last payment of temporary disability. (Costco, supra, 151 Cal.App.4th at pp. 156-157.) The Board has, since then, reached the same conclusion. (Pendergrass v. Duggan Plumbing (2007) 72 Cal.Comp.Cases 456, 462.)^[6]

The California Applicants Attorneys Association (CAAA) has filed a brief as amicus curiae arguing that notwithstanding the last sentence of section 4660, subdivision (d), which extends the new rating schedule to certain claims arising before January 1, 2005, there are no circumstances under which the 2005 schedule can apply to such claims. CAAA posits that the third sentence of the subdivision, which extends the new schedule to pre-2005 claims, conflicts irreconcilably with the second sentence of the subdivision, which states the more general rule that the schedule shall apply prospectively and shall apply to and govern only those permanent disabilities that result from compensable injuries received or occurring on and after the effective date of the adoption of the schedule, amendment or revision, as the fact may be. ( 4660, subd. (d).) CAAA then attempts to resolve this purported conflict by interpreting the statute to mean that the third sentence extending the new schedule to pre-2005 claims was intended to apply only if the new schedule was adopted after April 19, 2004, when Senate Bill No. 899 (2003-2004 Reg. Sess.) was signed into law, but before January 1, 2005, the due date for the implementing the new schedule.^[7]

This argument proceeds from a faulty premise, because there is no inconsistency between the provisions of section 4660, subdivision (d). The statute states the general rule that the applicable schedule is the one in effect on the date of the injury, and then provides an exception to that rule, namely, that the new schedule will apply to pre-2005 injuries unless one of three specified circumstances existed prior to 2005. There is nothing illogical or absurd about this interpretation of the statute, which adheres to its plain and commonsense meaning. [CAAAs] interpretation is strained by comparison. If, as [it] suggests, the Legislature had meant to target only those injuries arising during the period between the enactment of Senate Bill No. 899 (2003-2004 Reg. Sess.) on April 19, 2004, and the implementation of the new permanent disability rating schedule, it presumably would have done so explicitly rather than by making a blanket reference to claims arising before January 1, 2005. (Zenith Ins. Co. v. Workers Comp. Appeals Bd. (2007) ___ Cal.App.4th ___ [2007 Cal.App. Lexis 1193, pp. *8-*9]; Chang v. Workers Comp. Appeals Bd. (2007) ___ Cal.App.4th ___ [2007 Cal.App. Lexis 1218, pp. *2-*12].)

Disposition

The portion of the award applying the 1997 permanent disability rating schedule is annulled, and the case is remanded for recalculation of Wattss permanent disability

rating under the schedule that went into effect on January 1, 2005. In all other respects, the award is affirmed. The parties shall bear their own costs herein.

SIMONS, Acting P. J.

We concur.

GEMELLO, J.

NEEDHAM, J.

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^[1] Further statutory references are to the Labor Code.

^[2] Plantar fasciitis is an inflammation of the fascia (fibrous tissue) found in the sole of the foot. (Dorlands Illustrated Medical Dict. (30th ed. 2003) pp. 674, col. 2, 678, col. 1, 1445, col. 1.) Peroneal tenosynovitis is an inflammation of the fibular tendon sheath. (Id. at pp. 1408, col. 2, 1865, col. 2.)

^[3] The full text of section 4660, subdivision (d), states: The schedule shall promote consistency, uniformity, and objectivity. The schedule and any amendment thereto or revision thereof shall apply prospectively and shall apply to and govern only those permanent disabilities that result from compensable injuries received or occurring on and after the effective date of the adoption of the schedule, amendment or revision, as the fact may be. For compensable claims arising before January 1, 2005, the schedule as revised pursuant to changes made in legislation enacted during the 2003-04 Regular and Extraordinary Sessions shall apply to the determination of permanent disabilities when there has been either no comprehensive medical-legal report or no report by a treating physician indicating the existence of permanent disability, or when the employer is not required to provide the notice required by Section 4061 to the injured worker.

^[4] When the Board issued its ruling in Wattss case, it was bound by the en banc decision in Baglione v. Hertz Car Sales (2007) 72 Cal.Comp.Cases 86, 88-89, which applied the last antecedent rule of statutory construction and concluded that no indication of permanent disability was required for a medical-legal report to trigger the exception. The Board later granted reconsideration in Baglione and reversed its position, adopting reasoning similar to that in Costco. (Baglione v. Hertz Car Sales (2007) 72 Cal.Comp.Cases 444, 448-452.)

^[5] The Board did not address this issue due to its conclusion that the medical-legal report exception applied, but Zenith discusses the section 4061 notice exception in its petition for writ of review. We consider the applicability of this exception notwithstanding its absence from the Boards opinion in order to determine whether the result was correct on different grounds. (See Board of Administration v. Superior Court (1975) 50 Cal.App.3d 314, 319.)

^[6]Pendergrass is not binding on this court, but we consider it for the limited purpose of pointing out the contemporaneous interpretation and application of the workers compensation law by the Board. (Smith v. Workers Comp. Appeals Bd. (2000) 79 Cal.App.4th 530, 537, fn. 2.)

^[7] In the proceedings before the WCJ and the Board, the parties recognized that this argument was rejected by the Boards en banc decision in Aldi v. Carr, McClellan, Ingersoll, Thompson & Horn (2006) 71 Cal.Comp.Cases 783.