A California Court of Appeal was recently called upon to decide how to apportion liability and calculate permanent disability benefits for an employee who injured the same body part in two separate work-related incidents. The Court held that the employee should be awarded benefits based on his total percentage of disability, less the dollar amount awarded for his earlier injury. (Nabors v. Workers’ Compensation Appeals Board, (— Cal.Rptr.3d —, 2006 WL 1550807, Cal.App. 1 Dist., June 8, 2006).)
Facts
Danny Nabors sustained an industrial injury to his low back and lower extremities in 1996 while employed by Piedmont Lumber. In 2001, he received a stipulated award of $42,476 based on 49 percent permanent disability. He later sustained cumulative injury to the same body parts while still employed by Piedmont. Nabors was determined to be 80 percent disabled after his second injury. Piedmont had a different insurance carrier for each of Nabors’s injuries. A Workers’ Compensation Judge awarded Nabors $22,610 based on a determination that the cumulative injury caused 31 percent of his permanent disability. The Workers’ Compensation Appeals Board affirmed the award.
Decision
On appeal, Nabors challenged the permanent disability apportionment formula used to determine his award. In Fuentes v. Workers’ Comp. Appeals Bd. (1976) 16 Cal3d 1, the California Supreme Court set out three different formulas for apportioning liability; formula A, formula B, and formula C.
Formula A apportions liability for disability by subtracting from the total percentage of disability the portion of disability that is nonindustrial. The Fuentes Court adopted formula A. At the time the Supreme Court decided Fuentes, Labor Code section 4750 provided that, when a previously disabled employee sustains an industrial injury, his or her employer is not liable for the combined disability, but only the portion of disability due to the later injury. Section 4750 has since been repealed and Labor Code section 4664 has been added. Section 4644 provides, in part, that an “employer shall only be liable . . . for the percentage of permanent disability caused by the injury arising out of and occurring in the course of employment.”
The Workers’ Compensation Judge stated that he followed the rational of Fuentes and the plain meaning of section 4664 in reaching a decision on how to calculate Nabors’s award. Although Nabors was 80 percent disabled after his second injury, he only received benefits based on the 31 percent disability attributable to the second injury.
Formula B apportions liability for disability by taking the number of weekly benefits authorized by Labor Code section 4658 for total permanent disability multiplied by the percentage of total permanent disability attributable to the current injury.
Formula C apportions liability for disability by taking the dollar value of the previous award subtracted from the dollar value of the total current disability. The application of formula C would result in a much higher award for Nabors; if the value of his previous award, $42,476, is subtracted from the value of his total current permanent disability, $118,795, the resulting award would be significantly higher than the $22,610 awarded using formula A.
The Court noted that the Fifth District Court of Appeal had recently applied the formula C method of computing benefits in E & J Gallo Winery v. Workers’ Comp. Appeals Board (2005) 134 Cal.App.4th 1536. The Gallo Court held that “where an employee sustains multiple disabling injuries while working for the same self-insured employer, the employee is entitled to compensation for the total disability above any percentage of permanent disability previously awarded.” The Gallo Court reasoned that the Fuentes Court adopted formula A solely because of section 4750. By repealing section 4750, the Legislature contemplated a variation in determining how to apportion disability; however, it did not specify any particular method to be used. The Gallo Court concluded that only formula C protects both the employee and the employer by ensuring that the employee is adequately compensated and that the employer is only held liable for the percentage of the employee’s disability caused by the current injury.
Although the Gallo Court specifically limited its holding to cases involving an injured employee who received a prior disability award while employed by the same self-insured employer, the Nabors Court concluded that it could see no reason why the Gallo decision should not apply simply because Piedmont was insured by two different insurance carriers instead of being self-insured.
The Court returned the matter to the Workers’ Compensation Appeals Board and directed it to utilize formula C to recalculate Nabors’s permanent disability benefits.
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