Pearl v. WORKERS'COMP. APPEALS BD.

• Citation: 26 P.3d 1044,109 Cal.Rptr.2d 308,26 Cal.4th 189
• Decision Date: 19 July 2001
• Docket Number: No. S090553.,S090553.
• Court: United States State Supreme Court (California)
• Parties: Rodney Scott PEARL, Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD and Board of Trustees of the California State University, Respondents.

109 Cal.Rptr.2d 308

26 Cal.4th 189

26 P.3d 1044

Rodney Scott PEARL, Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD and Board of Trustees of the California State University, Respondents.

No. S090553.

Supreme Court of California.

July 19, 2001.

Lemaire, Faunce, Pingel & Singer, Edward L. Faunce, Cerritos, Steven R. Pingel, Seal Beach, and Larry J. Roberts, for Petitioner.

Joseph V. Capurro, San Jose, for California Applicants' Attorneys Association as Amicus Curiae on behalf of Petitioner.

Peter H. Mixon, Richard B. Maness, Kayla J. Gilland and Nathan D. Schmidt, Sacramento, for California Public Employees' Retirement System as Amicus Curiae on behalf of Petitioner.

Neil P. Sullivan, San Francisco, and Vincent Bausano, for Respondent Workers' Compensation Appeals Board.

Carlos Cordova, San Luis Obispo, for Respondent Board of Trustees of the California State University.

CHIN, J.

Petitioner Rodney Scott Pearl obtained disability retirement benefits from the Public Employees' Retirement System (PERS) for a job-related psychiatric injury. He subsequently petitioned the Workers' Compensation Appeals Board (WCAB) to determine whether the injury was industrial, entitling him to increased benefits. The WCAB, applying the substantive provisions of Labor Code section 3208.3, determined that the injury was nonindustrial. After considering the merits, the Court of Appeal denied Pearl's petition to review the WCAB's decision.

We conclude that Government Code section 20046, a provision of the Public Employees' Retirement Law, and not Labor Code section 3208.3, governs whether the disability of a PERS member is "industrial." Accordingly, we reverse the Court of Appeal's judgment.

FACTUAL AND PROCEDURAL BACKGROUND

Pearl worked as a police officer for California Polytechnic State University from April 1990 until July 1996. He applied for disability retirement, alleging cumulative workplace trauma for that period, including psychiatric injury caused by a series of incidents involving other officers and his supervisor.

The alleged incidents included a number of practical jokes played on Pearl, such as falsely informing him that he was the subject of an internal affairs investigation, and that he had been turned down for a coveted position in a critical response unit. On another occasion, while Pearl was in a toilet stall, his supervisor set off a packet of firecrackers in the stall. In addition, fellow officers tampered with his equipment and car. Pearl also believed that his supervisor had given him an unfair performance evaluation that had damaged his career. During this period, Pearl also suffered family pressures, including his brother's spousal murder and suicide, which occurred shortly before Pearl began work at the university, and Pearl's own divorce and custody dispute. In March 1997, PERS approved Pearl's retirement application. However, the determination was made without a finding whether the injury was industrial in character. Pursuant to Government Code section 21166, Pearl petitioned the WCAB for a finding of fact on the issue. The evidence presented at the hearing consisted of Pearl's deposition, performance evaluations, medical records, and the written opinions of two psychiatrists, Drs. Grattan and Wells. Dr. Grattan opined that the injury was not industrial: "Absent his employment with the Cal Poly campus police I believe Ms. Pearl [sic] would now present with seventy-five percent of a slight psychiatric disability." He ascribed "twenty-five percent [of the injury] to the actual events and perceived stresses in [Pearl's] work with the Cal Poly police department." Dr. Wells disagreed, opining that "cumulative trauma in the work place represented fifty-one percent or more of all causal factors."

Finding Dr. Grattan's report "well reasoned and indeed compelling," the workers' compensation judge made a factual finding that the disability was not industrial. He explained: "The sole question is whether or not applicant has sustained a disability which is or is not industrial. [¶] The undersigned equates this to whether or not there has been injury under Labor Code § 3208.3.... When one considers the magnitude of other outside problems that the applicant had, the undersigned is well convinced that applicant's work situation did not play a predominant role in his psychiatric condition."

Pearl petitioned for reconsideration, arguing in part that Government Code section 20046, not Labor Code section 3208.3, applies to a determination of industrial injury under the Public Employees' Retirement Law, and that the former provision required him to establish only that his injury arose out of and in the course of his employment. (Gov.Code, § 20046.) He further contended that his right to retirement benefits must be determined by the law in effect on the day he began his employment, which preceded subsequent amendments of Labor Code section 3208.3.

The workers' compensation judge recommended denial, on the ground that "[t]he Workers' Compensation Appeals Board must make findings in accordance with the Labor Code." He also disagreed that Pearl's right to disability benefits vested at the time he began employment, concluding that "the rights to a certain cause of action are determined when that cause of action accrues." The WCAB issued an order denying reconsideration.

Pearl petitioned for review in the Court of Appeal, which summarily denied review. We then granted Pearl's petition for review and transferred the cause to the Court of Appeal.

The Court of Appeal denied the petition. It observed that under both psychiatric reports, Pearl's injury met the threshold of industrial causation stated under Government Code section 20046. However, it concluded that the Public Employees' Retirement Law did not state the applicable standard, but that Labor Code section 3208.3 determines whether Pearl's injury was industrial. The Court of Appeal reasoned that by amending Labor Code section 3208.3 to raise the threshold for industrial causation for psychiatric injuries, the Legislature presumably intended the new standard to apply to disability retirement claims of public employees.

The Court of Appeal also held that applying the amended version of Labor Code section 3208.3 did not impermissibly interfere with Pearl's vested pension rights. Instead, the law in force at the time of injury determines his recovery. Although Pearl's pension rights vested when he was hired, his right to increased benefits was contingent on his psychiatric injury, which occurred later. Thus, applying amended Labor Code section 3208.3 did not interfere with his vested rights, but modified a contingency or condition.

We granted review. We now reverse.

DISCUSSION

The Legislature enacted the Public Employees' Retirement Law (Gov.Code § 20000 et seq.), "to effect economy and efficiency in the public service by providing a means whereby employees who become superannuated or otherwise incapacitated may, without hardship or prejudice, be replaced by more capable employees, and to that end provide a retirement system consisting of retirement compensation and death benefits." (Id. § 20001.) Under its provisions, certain persons, including police officers, are eligible for special disability retirement benefits if they are "incapacitated for the performance of duty as the result of an industrial disability." (Id. § 21151, italics added.) Thus, upon retirement for such a disability, a peace officer "shall receive a disability allowance of 50 percent of his or her final compensation plus an annuity purchased with his or her accumulated additional contributions, if any, or, if qualified for service retirement, the member shall receive his or her service retirement allowance if the allowance, after deducting the annuity, is greater." (Id. § 21407.) These benefits are free from federal income taxes. (26 U.S.C. § 104(a)(1).)

Those employees retiring due to a nonindustrial disability receive a substantially smaller benefit: "Upon retirement for a nonindustrial disability, a local safety member [(Gov.Code, § 20420)] who has attained the minimum age at which he or she may retire for service without an actuarial discount because of age, shall receive his or her service retirement allowance." (Gov.Code, § 21405.) For purposes of the Public Employees' Retirement Law, industrial is defined as follows: "`Industrial,' in reference to the ... disability of any member of [the public employees' retirement] system who is in a membership category under which special benefits are provided by this part because the ... disability is industrial, means disability ... as a result of injury or disease arising out of and in the course of his or her employment as such a member." (Gov.Code, § 20046.) Under this standard, injury is compensable if the industrial component was "`real and measurable.'" (Bowen v. Board of Retirement (1986) 42 Cal.3d 572, 578, 229 Cal.Rptr. 814, 724 P.2d 500.)

If the PERS Board of Administration (Board) disputes a claim that a disability is industrial, "the Workers' Compensation Appeals Board, using the same procedure as in workers' compensation hearings, shall determine whether the disability is industrial." (Gov.Code, § 21166.) In this context, the jurisdiction of the WCAB "shall be limited solely to the issue of industrial causation." (Ibid.)¹

The requirement that the WCAB, in making its determination of industrial causation, must use the same procedure as in workers' compensation hearings "implies pleadings, hearings, and notices of hearings, with opportunity to all parties to be heard, to be represented by counsel, and to submit pertinent oral and written evidence." (2 Hanna, Cal. Law of Employee Injuries and Workers' Compensation (rev.2d ed. 2001) Arbitration and Fact-Finding, § 33.02[4][d][i], p. 33-20.) The question in this case is whether Government Code section 21166 also implies the use of substantive workers' compensation law,...