Abandoning CA RTW Provision Should be Start of "Reform"

A California law with good intent demonstrates why legislators should not try to make social policy without fully understanding what they are doing.

I'm talking about Labor Code section 4658(d).

This is the statute that provides that an employer who offers an injured employee "regular work, modified work, or alternative work," within 60 days of his disability becoming permanent and stationary shall be entitled to decrease each remaining disability payment to the worker from the date of the offer by 15%. The statute also requires employers to increase the benefit by 15% if the worker is not returned to his job.

This law was one of the king pin Schwarzenegger "reform" moves. The former governor's administration wanted to provide employers an incentive for taking back injured workers as soon as possible and return them to productive status.

The idea is a good one - of course we all want injured workers to get back on the job as soon as possible. That's good for the business, good for the worker, good for California.

One of the problems with this law, though, is that it is one sided. There is reward for the employer to make an offer of work. There is no reward for the injured worker to return to work. There is only a penalty if an offer of work is made and the injured worker does not accept that offer.

Another problem with this statute is, for the most part, employers a) don't really understand or know of this provision, b) don't care, c) don't have the resources to avail themselves of this reward. This is a provision that really only works for large employers with diverse jobs and a human resources department for making all this happen (the statute specifically applies only to employers with 50 or more employees).

Third, this provision of the law is a huge headache to administer. Not only does it mess with the math of permanent disability benefit administration (think of calculating the present value of a lump sum distribution of this benefit in a life pension case - makes my spreadsheet hurt), but the law is undecided on when it actually applies.

For instance, a recent split decision from the Workers' Compensation Appeals Board (WCAB) panel wrestles with the question as to whether LC 4658(d) applies to an injured worker who misses no time from work.

In Braga v. City of Sebastopol, No. ADJ7702084, 01/23/2012, Braga (who represents himself) sustained hearing loss between 2009 and 2010 as a result of his employment with the city as a fire captain. He never missed any time from work and continues to work full time as a fire captain.

The parties stipulated that Braga was at an 18% permanent disability level, but Workers' Compensation Judge George R. Ferris suspended action on the settlement, based on a 2009 WCAB panel decision in Tsuchiya v. County of Los Angeles.

In that case, a panel comprised of Commissioners Deidra Lowe, Ronnie Caplane and Alfonso Moresi concluded the "bump down" benefit provided in Section 4658(d) was inapplicable when there was no time loss due to the industrial injury.

Ultimately the judge approved the settlement, with the exception of the permanent disability indemnity amount, which the judge refused to lower to 85% of the scheduled $15,065.

The city sought review by the WCAB, which denied reconsideration.

In the Braga opinion, Caplane, joined by Commissioner Frank M. Bass, opined that "(t)he provisions of Labor Code 4658(d) are intended to give employers an incentive to return their injured employees to work," and "(in) cases such as this one, where the employee has lost no time from work and is continuing to perform his or her regular work, the provisions have no purpose."

She further reasoned that "applying Labor Code Section 4658(d) in cases where the injured worker has lost no time from work creates the potential for injured workers to receive a 15% windfall if a defendant inadvertently fails to send the correct form" and such a "game of 'gotcha' with applicants who have not lost time from work does not further the purpose of this statute."

Moresi, however, said that "a close reading of this statute has convinced me that there is no exception for continuously employed applicants."

"We must consider the language of Labor Code Section 4658(d) in light of the entire statutory scheme of which it is a part," he wrote. "Pursuant to Labor Code Section 4660(a), permanent disability includes the employee's 'diminished future earning capacity,'" he noted, reasoning that an applicant who is able to "continue in his pre-injury employment and perform full duties" has "less diminished future earning capacity than an employee who cannot," so Section 4658(d) should function to adjust an injured worker's compensation "to better reflect his or her diminished future earning capacity."

I say that we must consider abolishing this illogical statute and that doing so should be the basis of the next wave of "reform".

Indeed, if the sentiments of those interviewed for the WorkCompCentral news story on this case are representative of the majority of people, there would be no love lost should this provision be abandoned.

Attorney Bob Sherwin of Marenstein, Wicke, Sherwin & Lee, a firm that represents a lot of public safety personnel in workers' compensation cases, said he thought "everyone" on both the claimant and defense bars "would like to see the section go away" since it is "more of a pain in the rear than beneficial to either side."

And the claims adjuster for the agency administering the Braga case called the section "very frustrating" to apply.

It is a complicating factor in what should be an easy to administer benefit. The incentive value is questionable and the administrative cost is significant.

That is the definition of a law that doesn't belong in the book.