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Calif. Supreme Court rules on comp apportionment


SAN FRANCISCO--The California Supreme Court handed employers a victory Thursday, ruling that workers compensation reforms adopted in 2004 did not alter apportionment of employer responsibility for permanent disability injuries.

The decision settles a two-year battle between applicants and their attorneys on one side and employers on the other over the apportionment issue.

Numerous employer associations weighed in with amicus briefs on the consolidated case of Stan Brodie vs. Workers' Compensation Appeals Board and Kenneth Dee Welcher vs. Workers Compensation Appeals Board.

Apportionment addresses employer and insurer responsibility for a current permanent disability claim when an applicant also suffered a previous injury, either while working for a former employer or while away from work.

The court unanimously found that employers should not be liable for the combined disability, but only for the portion due for the later injury as if a prior disabling injury did not exist.

"Thus, a worker with a 60% industrial disability, 30% current and 30% pre-existing, and a worker with a 60% current disability, 30% industrial and 30% nonindustrial, should each be treated the same as a worker with a 30% industrial disability," the court's opinion states.

The ruling maintains a formula for determining apportionment that the Supreme Court previously upheld in 1976 in Fuentes vs. Workers' Comp Appeals Board.

However, Senate Bill 899, the workers comp reform bill signed into law in 2004 by Gov. Arnold Schwarzenegger, created doubt over whether the apportionment formula adopted in Fuentes had been superseded, the court noted in its decision.

Three separate appeals courts came to differing conclusions on the issue, with two of them agreeing that the passage of S.B. 899 had changed the formula.

The Supreme Court justices reasoned, however, that Fuentes stands as law and that the reforms had not superseded it.

Adoption of a different formula favored by applicants would have significantly increased the amount of disability awards charged to employers and insurers, the court noted.

Thursday's ruling will result in hundreds of millions of dollars in savings for employers across the state, added a spokesman for the Workers' Compensation Action Network, a Sacramento, Calif.-based employer and insurer coalition.

"It's a major decision," said Steve Suchil, assistant vp in Sacramento, Calif. for the American Insurance Assn. "Had the court ruled the other way it would have vastly increased the dollars paid by employers."

Gov. Schwarzenegger in a prepared statement called the ruling a huge victory in protecting the workers comp reforms. "Thanks to these reforms, we have eliminated a poison to our economy and cut premiums by almost 65%--resulting in more than $15 billion in savings," the governor said in the statement.

Following the conflicting appeals court decisions over apportionment, the California's Workers' Compensation Appeals Board in October 2006 placed a moratorium on hearing all apportionment-related cases pending direction from the Supreme Court.

The decision handed down on Thursday stems from the consolidation of five different cases. Each had differing facts, but in all of them the injured worker's permanent disability level was attributed to one or more previous injuries.

California Supreme Court, S146979