Court of Appeal Causes COLA Bubble-Over for the Holidays
December 2, 2009
Duncan v. WCAB (XYZZX SJO2) (11/25/09, No. H034040), published
The Sixth District Court of Appeals has been kind enough to construct a major bump in the road for defendants with regard to cost-of-living adjustment calculations in life pension and permanent total disability cases for injuries after 1/1/03. The court interprets Labor Code section 4659(c) to mean that the annual cost of living adjustment calculations which commenced as of 1/1/04 and every New Year's Day thereafter, according to a stated formula, were to run automatically, like a proverbial taxi meter, from 1/1/04 for workers who wind up with total permanent disability or a disability in the life pension range, regardless of when an applicant becomes permanent and stationary, at which point, one could argue that the right to a permanent total disability award accrues, or after the PD ends and the life pension begins, when the PD is 70% or more and less than 100%.
The Court of Appeal was very much won over by the policy argument that such payments of permanent total disability and life pensions need to be protected from the "ravages of inflation." The best way to avoid such erosion is to inflict the ravages on the defendant, according to the court's rationale. The justices were so overcome with their analytic goodwill that they gave applicants more than they asked for, namely start up of the COLA from 1/1/04 regardless of what the date of injury was (as long as it was on 1/1/03 or thereafter), while applicants' attorneys only wanted it from the January 1st after the date of injury.
The court construed the word "payment" in subdivision (c) to refer to that running taxi meter of automatic increases beginning on 1/1/04 (see page 14 of the printed opinion). However, query whether the word "payment" should refer to the actual payment or right to payment of the designated benefits when the taxi meter should start to run with appropriate COLA increases for all payments made after applicant stabilizes for a permanent total disability award or when the life pension kicks in after a permanent disability payout ends. That is the way "payment" seems to be interpreted in Labor Code section 4661.5. Why not here? The statutes are on facing pages in our blue Labor Code books....
Of course, that argument is not particularly appealing when it comes to a life pension which will take many more years to start up. The court chose a warmer and fuzzier section 3202 kind of approach.
A saving grace: Please keep in mind that these numbers do not go up infinitely. The Grim Reaper is one way for the benefit increases (not to mention the benefits themselves) to cease. However, there also is a ceiling for such increases based on the applicant's own average weekly wages which must support any COLA increase. Once that AWW ceiling at the time of injury is reached, no further COLAs should apply.
By: Barry Lesch, Oakland office
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