No Saving Grace to COLA Bubble-Over Case from 6th District
December 14, 2009
We were swallowed up by an unhealthy overdose of denial in the concluding remarks to our e-blast on the first case interpreting the COLA statute, section 4659(c), Duncan v. WCAB (XYZZX SJO2), out of the 6th Appellate District in San Jose (No. H034040). Cold, wintry reality has set in and tells us that there appears to be no grace, saving or otherwise, in the statute to allow for caps on COLAs.
If there were a connection between COLAs and the average weekly wage (AWW) of an injured worker, those with minimum statutory wages would receive no COLA and actually, all but the very highest paid would drop out of the COLA add-on sweepstakes eventually. (There are some questions we still have about what we do with workers who have an AWW between minimum and maximum which raises questions about the court's ruling and we will get to them a bit later.)
However, the court's "ravages of inflation" concept has prevailed for all injured workers at all times (injured after January 1, 2003) in this decision.
Still, although a defense-oriented Santa is nowhere to be found in section 4659, there are a few potentially challengeable points to the decision. First, should the COLA taxi meter start only after the date of injury rather than as of January 1, 2004 for all injuries regardless of when they occur? That was apparently what applicants' attorneys wanted, though they got more. (See our discussion below.)
Secondly, and admittedly a very long shot indeed, perhaps another court of appeal will define "payment" differently from the way the 6th District did and find that COLA adjustments only commence when the actual payment is due--when the injured worker deemed permanent and total becomes P&S or MMI or when the applicant with a permanent disability of 70% or higher begins receiving the life pension after PD payments cease.
Thirdly, given the inexorable increase in exposure because of these COLA payments and the current disagreement between the Insurance Commissioner and insurers about rate hikes, the Legislature could act to clarify its intentions if the court acted contrary to them or override the court's decision for future injuries with a spanking-new subdivision to section 4659. However, given the Legislature's incredibly short attention span about the comp system since the 2003 and 2004 reforms, this is perhaps the longest shot of all.
Getting back to the point raised in the second paragraph above, we have difficulty in understanding how the statute is going to be applied for instance to a worker with an AWW of $750 per week injured in 2017, and deemed permanently totally disabled the following year. What is that worker's permanent disability weekly benefit rate going to be? Does it start out at $500 per week with every COLA increase thereafter incrementally adding onto that figure or is that $500 subject to all incremental add-ons from January 1, 2004 on? Clearly the "ravages of inflation" concept doesn't apply to someone with less than maximum earnings in 2017. What should the answer be?
Certainly, for workers who have already suffered injuries of such severity that they are entitled to a life pension or permanent total disability, the anti-inflation purpose of the statute is applicable. However, not for that hypothetical but very real worker who is going to be seriously injured in 2017. Perhaps at the least, an appellate court needs to revisit the question of the reasonableness of the COLA kicking in after the date of injury rather than as of January 1, 2004 for all injuries in perpetuity.
By: Barry Lesch, Oakland office
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