This year the California Legislature again introduced legislation poised to limit apportionment in several ways with SB 731. The proposed law adds a sentence to LC 4663 (c) “The approximate percentage of the permanent disability caused by other factors shall not include consideration of race, religious creed, color, national origin, age, gender, marital status, sex, sexual identity, sexual orientation, or genetic characteristics.”

The proposed law was likely a response to a few recent decisions that have enhanced the ability of employers to obtain apportionment of permanent disability. However the court successes may be short lived as a new proposed law is rapidly gaining momentum in the California Legislature to limit or water down apportionment law adopted in 2004 by S.B. 899.

In April 2017, the Court of Appeal published its decision in the City of Jackson v WCAB (Rice) which confirmed apportionment to genetic factors. Christopher Rice was a police officer who suffered a spine injury. A PQME found that genetic factors were significant factors in his permanent impairment. The Court of Appeal reversed the WCAB which refused to allow apportionment to genetics.

In December 2018, the Court of Appeal published its decision in City of Petaluma v WCAB and Aaron Lindh. In that case a PQME concluded that 85 percent of his disability was due to a previously asymptomatic, underlying condition. The ALJ, however, rejected apportionment and reconsideration was denied by the WCAB. The Court of Appeal reversed, and granted apportionment finding that the requirement that the asymptomatic preexisting condition will, in and of itself, naturally progress to disable the claimant. was “the law prior to 2004” and is no longer a requirement for apportionment to an underlying condition.

SB 731 has been passed by the California Senate on 5/19/2019, and sent to the State Assembly as of 5/22/2019.  On 5/30/2019 the bill was sent to the Insurance Committee, and as of the end of the legislative session this year, has not had a finding by that Committee.  Thus SB 731 will not be passed this year.

Similar bills were passed by the legislature and then vetoed by Governors Arnold Schwarzenegger and Jerry Brown for many years. It is likely that SB 731 will be passed by the legislature the next legislative session. It is not clear what response Governor Gavin Newsom will have if it is passed. However, the bill is not yet an urgency bill, so the effective date would be no earlier than January 1, 2021 if passed and signed next year.  Employers who have cases in litigation involving apportionment issues would have more than one year to bring those cases to a conclusion.

OxyContin maker Purdue Pharma LP has reached a tentative multibillion-dollar agreement with some plaintiffs aimed at settling thousands of lawsuits over its alleged role in the U.S. opioid crisis, Reuters reported on Wednesday, citing people familiar with the matter.

On Wednesday, lead lawyers representing more than 2,000 cities, counties and other plaintiffs suing Purdue, along with 23 states and three U.S. territories, were on board with an offer from the company and its controlling Sackler family to settle lawsuits in a deal valued at up to $12 billion, the people said.

More than a dozen other states remain opposed or uncommitted to the deal, setting the stage for a legal battle over Purdue’s efforts to contain the litigation in bankruptcy court. New York, Massachusetts and Connecticut, where privately-held Purdue is based, are among states opposed to the current offer and have pushed the family to guarantee $4.5 billion, the people said.

Last weekend, the Sacklers “refused to budge” after attorneys general in North Carolina and Tennessee presented them with counterproposals they said had widespread support from other states, according to correspondence reviewed by Reuters.

With negotiations over the family’s contribution to a settlement at loggerheads, Purdue is preparing to file for bankruptcy protection as soon as this weekend or next with the outlines of a settlement in hand.

Purdue would then ask a U.S. bankruptcy judge to halt litigation while settlement discussions continue, a move some states said they are likely to challenge. A bankruptcy judge could force holdouts to accept a settlement as part of Purdue’s reorganization plan if enough other plaintiffs agree.

In a related development, a federal judge on Wednesday approved the substance of a proposal by lawyers representing cities and counties suing drug companies over the U.S. opioid epidemic that would bring every state and municipality in the country into their settlement talks.

U.S. District Judge Dan Polster, in Cleveland, Ohio, federal court, said that the plan, which was opposed by 37 states and the District of Columbia, “does not interfere with the states settling their own cases any way they want.”

“This process simply provides an option – and in the court’s opinion, it is a powerful, creative and helpful one,” the judge wrote.

The proposal, part of litigation consolidating about 2,000 lawsuits against opioid manufacturers, retailers and others seeking damages for the epidemic, calls for creating a class of up to 3,000 counties and 30,000 cities, towns and villages that could vote on whether to accept any settlement the plaintiffs reach with the defendants.

Luis Enrique Perez, 49, owned and operated several temporary employee staffing companies. He lost his workers compensation insurance in July 2013, but continued to operate his businesses. Soon, Orange County prosecutors charged Perez and two other defendants with defrauding a workers’ compensation insurance company by misrepresenting uninsured injured workers as employees of a different company.

The defendants were accused of conspiring to fraudulently report 47 injured employees to American International Group, Inc. (AIG) to avoid liability for its employees who were injured at work, to hide failure to obtain workers’ compensation insurance as mandated by law. As a result, AIG became liable for approximately $393,000 worth of expenses for claims of individuals not covered by their insurance policy.

Perez has now been named at the end of August in a federal grand jury indictment that charges him with tax evasion for failing to pay to the Internal Revenue Service nearly $30 million in payroll taxes, penalties and interest related to money that had been withheld from the salaries of employees of his various temporary worker companies.

Perez – who has maintained residences in Anaheim Hills, Yorba Linda and Dove Canyon – is charged with one felony count of tax evasion in an indictment returned by a grand jury on August 28, 2019.

Perez’s companies – which include Checkmates Staffing Inc.; Staffaide Inc.; BaronHR, LLC; and Fortress Holding Group, LLC – were required to withhold taxes from employee wages and to pay the withheld amounts to the IRS on a periodic basis. These withheld taxes, sometimes known as “trust fund taxes,” include income taxes and Federal Insurance Contributions Act (FICA) taxes that fund Social Security and Medicare.

The indictment alleges that for the tax years 2001, 2002, 2003, 2006, 2007, 2008 and 2010, Perez’s companies failed to pay the IRS the payroll taxes, including trust fund taxes that Perez’s companies withheld from employees’ paychecks. Beginning in June 2007, the IRS attempted to collect Perez’s outstanding tax liability, including penalties and interest. By February 2017, the outstanding balance had grown to $29,593,378, which included the unpaid taxes, interest and the “Trust Fund Recovery Penalty.”

The indictment alleges that Perez attempted to thwart the IRS’s collection efforts by purchasing luxury items – including numerous cars and a boat – and concealing his ownership by placing the titles of these items in the names of his businesses and other individuals. Those luxury items included a 2005 Ferrari 360 Spider F, a 2007 Rolls Royce Phantom, a Duffy D 22 Bay Island boat, a 2011 Mercedes-Benz SLS, a 2015 Mercedes-Benz G-Class, and a 2014 Lamborghini Aventador.

The Court of Appeal published decision in Department of Corrections and Rehabilitation v. Workers’ Compensation Appeals Board (Fitzpatrick (2018) 27 Cal. App. 5th 607 [238 Cal. Rptr.3d 224, 83 Cal. Comp. Cases 1680] pertained to an injury before SB 863 in 2013.

The case rejected a 100 percent disability award that did not first rate a case using the AMA Guides, and then follow the steps outlined in the 2005 Rating Schedule, and then a rational why some other scheme should be used instead.

The Court of Appeal concluded that Section 4660 addresses how the determination on the facts shall be made in each case for injuries occurring before January 1, 2013. Indeed, section 4660 expressly applies to the determination of the percentages of permanent disability. A final permanent disability rating is obtained by going through the steps outlined in the 2005 Schedule.

The logic of the Fitzpatrick case would seem to equally apply to injuries after 2013, on the theory that the scheme for rating permanent disabilities is prima facie evidence to be rebutted only by more compelling evidence that it is inappropriate in a given case.

However, recent panel decisions show a willingness of the WCAB to award total disability based solely on a vocational rehabilitation report without any discussion of why the AMA Guides rating would be inappropriate. Here is a recent example.

On January 23, 2015 Rafael Sandoval suffered an admitted industrial injury to his cervical and lumbar spine while employed as an iron worker by The Conco Companies.

Dr. Mandell, the AME in orthopedics, described applicant’s injury as severe spinal stenosis and disc herniation in the cervical spine and lumbar disc disease with radiculopathy, requiring four level laminoplasty from C3-C7, with hardware implantation, as well as a subsequent cervical discectomy.

Mr. Van de Bittner, applicant’s vocational expert, evaluated applicant on December 15, 2016, and issued a report on applicant’s vocational feasibility, employability and earning capacity. Mr. Van de Bittner concluded that applicant was not capable of returning to the labor market due to his physical limitations, noting that he lacked transferrable skills without consideration of non-industrial factors, per the requirements of Ogilvie.

The WCJ found applicant sustained 100% permanent disability. The WCAB Decision.After Reconsideration, affirmed the WCJ’s Findings, Award and Order in the case of Sandoval v The Conco Companies. Neither the Report and Recomendation on Petition for Reconsideration by the WCJ, or the Opinion and Order Granting Reconsideration report what the rating using the AMA Guides and 2005 Rating Schedule would have been, nor why it would be rejected in favor of the Vocational Rehabilitation Expert. The decision went directly to the simple metrics of a vocational evaluation seemingly unfettered by the logic of the Fitzpatrick decision by the Court of Appeal.

There is no way of knowing what steps are required, if any, to ignore the AMA Guides, the Rating Schedule, and case law in favor of another scheme of awarding total disability.

Renee Skelton sustained an injury to her ankle in July 2012, and an injury to her shoulder in July 2014, while working for the Department of Motor Vehicles. She filed separate applications for workers’ compensation benefits for her injuries.

The parties disputed whether Skelton was entitled to TDI for wage loss for time missed at work to attend medical appointments.

Skelton sought to be reimbursed for her wage loss for time missed at work for medical treatment and for medical evaluations. Skelton continued working after each injury. She missed work to attend appointments with her treating physicians and to attend two visits with the panel qualified medical evaluator (QME). Skelton’s work hours were not flexible, and she could not visit her doctors on weekends. She initially used her sick and vacation leave, but eventually her paycheck was reduced for missed time at work. Her ankle injury was not yet permanent and stationary at the time of the hearing.

SCIF contended that under Department of Rehabilitation v. Workers’ Comp. Appeals Bd. (2003) 30 Cal.4th 1281 (Department of Rehabilitation), Skelton was not entitled to TDI to compensate her for taking time off from work for medical treatment, but it acknowledged that Skelton was entitled to compensation for wage loss for attending medical-legal evaluations.

Skelton contended that under Department of Rehabilitation, an employee is entitled to TDI unless the employee has returned to work and the employee’s injury is permanent and stationary. Because her injury was not permanent and stationary, Skelton argued that she was entitled to compensation, including “full reimbursement of sick and vacation time used,” for time spent attending medical treatment with her treating physicians and medical evaluations with the QME.

The WCJ issued a joint findings and order, concluding that Skelton was not entitled to TDI to attend medical treatment based on Department of Rehabilitation. After reconsideration, a WCAB majority in a split panel decision stated that Skelton was entitled to TDI for wage loss to attend medical-legal evaluations, but that based on Department of Rehabilitation and Ward v. Workers’ Compensation Appeals Bd. (2004) 69 Cal.Comp.Cases 1179 (Ward) [writ denied], she was not entitled to TDI for wage loss to attend medical treatment following her return to work.

The Court of Appeal concluded that Skelton was not entitled to TDI after she returned to work full time in the published case of Skelton v Department of Motor Vehicles.

“Neither Skelton’s time off from work nor her wage loss was due to an incapacity to work. Rather, these circumstances were due to scheduling issues and her employer’s leave policy. Because Skelton’s injuries did not render her incapable of working during the time she took off from work and suffered wage loss, Skelton was not entitled to TDI for that time off or wage loss.”