Applied Materials v. WCAB – Physician Misconduct Compensable and Fitzpatrick Affirmed

June 9, 2021

The Sixth District Court of Appeal recently issued its decision in the matter of Applied Materials v. WCAB. The decision was initially issued as unpublished and the California Workers’ Compensation Institute obtained an order of publication. The decision was certified for publication on June 1, 2021 and may now be cited as binding precedent in future cases.

In its lengthy decision, the Court addressed multiple issues raised by the parties. The two issues most likely to have an immediate and substantial impact focused on a treating physician’s (mis)conduct and the proper method for rebutting a scheduled rating under the 2005 Permanent Disability Rating Schedule.

(Disclaimer: the author represented Arrowood from 2009 until early 2019, in connection with the 2001 specific injury.)

Treating Physician Misconduct

The injured worker and then treating physician Dr. John Massey engaged in a sexual relationship. Psychiatric QME Dr. Allan Sidle found that this relationship, referred to by the Court as sexual exploitation, caused applicant to suffer Post-Traumatic Stress Disorder. As Arrowood had authorized Dr. Massey to treat applicant for her orthopedic symptoms Dr. Sidle opined that these actions were industrial. He therefore concluded that the PTSD was industrial.

In Hikida v. Workers’ Comp. Appeals Bd. (2017) an injured worker was found entitled to compensation for a new or aggravated injury that resulted from the medical treatment of an industrial injury. In South Coast Framing, Inc. v. Workers’ Comp. Appeals Bd. (2015) employment was required to be one of the contributing causes without which the injury would not have occurred, in order to find a compensable injury. In Western Airlines v. Workers’ Comp. Appeals Bd. (1984) a psychiatric injury caused by rape of a flight attendant on a layover was nonindustrial because there was no evidence her employment contributed in any way to her selection as the victim.

The Court noted that Dr. Massey was treating the injured worker for the industrial injuries, he was a member of the employer’s MPN, and his treatment had been authorized by Arrowood, subject to utilization review by the employer. It found the injured worker met the burden of establishing that the PTSD was a new injury, resulting from the medical treatment for the orthopedic injuries. She also established that her employment was one of the contributing causes and, without it, the sexual exploitation and PTSD would not have occurred.

The Court concluded that Dr. Massey’s sexual exploitation was compensable, either as a consequence of the medical treatment provided by the employer or as an employment-related assault by a third party.

Rebutting a Scheduled Rating

Dr. Sidle had assigned a GAF score of 45 based on the PTSD diagnosis. He stated that the injured worker could not hold a job and would be considered totally disabled. He opined that she was 100% permanently disabled due to her psychiatric condition and was unable to work.

During his deposition, Dr. Siddle confirmed the injured worker was 100% totally disabled due to the PTSD alone. He further confirmed Dr. Massey’s actions caused the PTSD. He did not change the GAF score.

At trial, applicant’s counsel relied on Labor Code §4662(b) and the alternative path theory to find 100 percent Permanent Disability. He argued that multiple cases have held that a GAF of 45 means the injured worker cannot hold a job and that a finding of 100 percent PD is “mandated” when a QME psychiatrist finds the employee cannot work.

Labor Code §4660 prescribes the method for determining the percentages of permanent disability based on the applicable schedule. Section 4662(a) identifies four instances of permanent disabilities that shall be conclusively presumed to be total in character. Section 4662(b) provides that in all other cases, permanent disability shall be determined in accordance with the fact. There have been a number of cases addressing whether §4662(b) creates an alternative path to establishing 100 percent PD separate and apart from the scheduled rating under §4660 or attempting to rebut the scheduled rating under the case law. This alternative path approach is also referred to, at times, as an independent path theory or a different paths approach.

In the case of Coca-Cola Enterprises, Inc. v. Workers’ Comp Appeals Board (Jamarillo) (2012) the WCAB Panel applied an alternative path approach and held that §4662 applied to total PD (100%) while §4660 applied to partial PD (0% to 99.75%).

The Third District Court of Appeal addressed this in Department of Corrections and Rehabilitations v. Workers’ Comp. Appeals Board (Fitzpatrick) (2018). It rejected the alternative path approach outlined in Jamarillo. It held that PD is determined first in accordance with the scheduled rating and the factors enumerated in §4660, and this is mandatory. Further, it is possible to obtain a scheduled rating of 100 percent PD under the 2005 Schedule. The scheduled rating is also rebuttable pursuant to rules developed in the case law. An injured worker may obtain 100 percent PD award by demonstrating that based on the facts, his or her disability is greater than that reflected in the scheduled rating.

This Court held that the injured worker was arguing that her rating was greater than the scheduled rating. She therefore had the burden of rebutting scheduled rating. The Court then provided an analysis of the case law addressing the various methods for rebutting a scheduled rating.

The Court discussed the manner in which the FEC component of a scheduled rating may be rebutted. First, the schedule may be rebutted by showing a factual error in the application of a formula or the preparation of the schedule. See Milpitas Unified School District v. Workers’ Comp. Appeals Bd. (Guzman) (2009), Ogilvie v. Workers’ Comp. Appeals Bd. (2011), Contra Costa County v. WCAB (Dahl) (2015). Second, a scheduled rating may be rebutted by showing that the injury impairs the injured worker’s rehabilitation, so that the diminished future earning capacity is greater than reflected in the rating. See LeBoeuf v. Workers’ Comp. Appeals Bd. (1983). Third, the scheduled rating may be rebutted when the injured worker can establish that the nature or severity of the injury was not captured within the sampling of disabled workers that was used to compute the adjustment factor. See Dahl.

In Blackledge v. Bank of America (2010) the WCAB held that the role of the medical evaluator is to assess work restrictions and resulting permanent impairment. In Merino v. Workers’ Comp. Appeals Bd. (2001) the WCAB held that it is proper for a doctor to give an opinion on whether an injured worker can perform his or her usual and customary duties but opinions about competing in the open labor market are beyond the doctor’s expertise and must be left to a vocational rehabilitation specialist. In Morris v. Workers’ Comp. Appeals Bd. (2014) (writ denied) the WCJ stated that an injured worker must present vocational expert evidence, in addition to medical evidence, proving that the diminished future earning capacity is greater than that reflected in the schedule. The WCJ found it improper for a doctor to deem an applicant 100% permanently disabled based on the doctor’s opinion that the applicant is unable to compete on the open labor market. The WCAB denied reconsideration and adopted this reasoning as its decision.

This Court noted the injured worker did not submit any vocational report or other evidence to rebut the scheduled rating. It concluded that the injured worker failed to meet her burden of rebutting the FEC component of the scheduled rating in accordance with LeBoeuf.

The Court also noted that the injured worker could have challenged the impairment standard used in the scheduled rating. See Guzman. In order to properly rebut a PD rating a physician must: 1) provide a strict rating per the AMA Guides; 2) explain why the strict rating does not accurately reflect the injured worker’s disability; 3) provide an alternative rating within the four corners of the AMA Guides; and 4) explain why the alternative rating most accurately reflects the employee’s level of disability.

The Court reviewed Dr. Sidle’s reports and deposition and noted that he did not provide any resources that supported deviating from the impairment standard.

Conclusion

The Sixth District Court of Appeal determined that a treating physician’s misconduct can result in a new, compensable injury, either as a consequence of the medical treatment provided by the employer or as an employment-related assault by a third party. This is an expansion of the compensable consequences doctrine and, although anticipated, it is nevertheless still disappointing. As a result of this decision it may be prudent to closely monitor the behavior of physicians in MPNs and to implement rigorous quality controls and ethical standards.

The Court of Appeal reaffirmed the Fitzpatrick decision and the methods by which a scheduled rating can be rebutted. The extensive discussion provides a welcome refresher course on the topic, particularly since the applicant’s bar (and some Workers’ Compensation Judges) have felt the Fitzpatrick decision was limited in its application to its facts. This Appellate decision suggests otherwise. Although it may serve as a wake-up call to the applicant’s bar it also lays out a blue print for the defense. Time will tell if this decision ultimately results in a better understanding of the process.