County of Los Angeles v. State of California

• Decision Date: 02 January 1987
• Docket Number: No. 32106,32106
• Citation: 43 Cal.3d 46,729 P.2d 202,233 Cal.Rptr. 38
• Court: California Supreme Court
• Parties: , 729 P.2d 202 COUNTY OF LOS ANGELES et al., Plaintiffs and Appellants, v. The STATE of California et al., Defendants and Respondents. CITY OF SONOMA et al., Plaintiffs and Appellants, v. The STATE of California et al., Defendants and Respondents. L.A.

Page 38

233 Cal.Rptr. 38

43 Cal.3d 46, 729 P.2d 202

COUNTY OF LOS ANGELES et al., Plaintiffs and Appellants, v. The STATE of California et al., Defendants and Respondents.

CITY OF SONOMA et al., Plaintiffs and Appellants, v. The STATE of California et al., Defendants and Respondents.

L.A. No. 32106.

Supreme Court of California In Bank.

Jan. 2, 1987.

Rehearing Denied Feb. 26, 1987.

De Witt W. Clinton, Co. Counsel, Paula A. Snyder, Sr. Deputy Co. Counsel, Edward G. Pozorski, Deputy Co. Counsel, John W. Witt, City Atty., Kenneth K.Y. So, Deputy City Atty., William D. Ross, Diana P. Scott, Ross & Scott and Rogers & Wells, Los Angeles, for plaintiffs and appellants.

James K. Hahn, City Atty. (Los Angeles), Thomas C. Bonventura and Richard Dawson, Asst. City Attys., and Patricia V. Tubert, Deputy City Atty., as amici curiae on behalf of plaintiffs and appellants.

John K. Van de Kamp, Atty. Gen., N. Eugene Hill, Asst. Atty. Gen., Henry G. Ullerich and Martin H. Milas, Deputy Attys. Gen., for defendants and respondents.

Laurence Gold, Washington, D.C., Fred H. Altshuler, Marsha S. Berzon, Gay C. Danforth, Altshuler & Berzon, Charles P. Scully II, Donald C. Carroll, Peter Weiner, Heller, Ehrman, White & McAuliffe, San Francisco, Donald C. Green, Sacramento, Terrence S. Terauchi, Manatt, Phelps, Rothenberg & Tunney and Clare Bronowski, Los Angeles, as amici curiae on behalf of defendants and respondents.

GRODIN, Justice.

We are asked in this proceeding to determine whether legislation enacted in 1980 and 1982 increasing certain workers' compensation benefit payments is subject to the command of article XIIIB of the California Constitution that local government costs mandated by the state must be funded by the state. The County of Los Angeles and the City of Sonoma sought review by this court of a decision of the Court of Appeal which held that state-mandated increases in workers' compensation benefits that do not exceed the rise in the cost of living are not costs which must be borne by the state under article XIIIB, an initiative constitutional provision, and legislative implementing statutes.

Although we agree that the State Board of Control properly denied plaintiffs' claims, our conclusion rests on grounds other than those relied upon by the Court of Appeal, and requires that its judgment be reversed. We conclude that when the voters adopted article XIIIB, section 6, their intent was not to require the state to provide subvention whenever a newly enacted statute resulted incidentally in some cost to local agencies. Rather, the drafters and the electorate had in mind subvention for the expense or increased cost of programs administered locally and for expenses occasioned by laws that impose unique requirements on local governments and do not apply generally to all state residents or entities. In using the word "programs" they had in mind the commonly understood meaning of the term, programs which carry out the governmental function of providing services to the public. Reimbursement for the cost or increased cost of providing workers' compensation benefits to employees of local agencies is not, therefore, required by section 6.

We recognize also the potential conflict between article XIIIB and the grant of plenary power over workers' compensation bestowed upon the Legislature by section 4 of article XIV, but in accord with established rules of construction our construction of article XIIIB, section 6, harmonizes these constitutional provisions.

I

On November 6, 1979, the voters approved an initiative measure which added article XIIIB to the California Constitution. That article imposed spending limits on the state and local governments and provided in section 6 (hereafter section 6): "Whenever the Legislature or any state agency mandates a new program or higher level of service on any local government, the state shall provide a subvention of funds to reimburse such local government for the costs of such program or increased level of service, except that the Legislature may, but need not, provide such subvention of funds for the following mandates: [p] (a) Legislative mandates requested by the local agency affected; [p] (b) Legislation defining a new crime or changing an existing definition of a crime; or [p] (c) Legislative mandates enacted prior to January 1, 1975, or executive orders or regulations initially implementing legislation enacted prior to January 1, 1975." No definition of the phrase "higher level of service" was included in article XIIIB, and the ballot materials did not explain its meaning. ¹

The genesis of this action was the enactment in 1980 and 1982, after article XIIIB had been adopted, of laws increasing the amounts which employers, including local governments, must pay in workers' compensation benefits to injured employees and families of deceased employees.

The first of these statutes, Assembly Bill No. 2750 (Stats.1980, ch. 1042, p. 3328), amended several sections of the Labor Code related to workers' compensation. The amendments of Labor Code sections 4453, 4453.1 and 4460 increased the maximum weekly wage upon which temporary and permanent disability indemnity is computed from $231 per week to $262.50 per week. The amendment of section 4702 of the Labor Code increased certain death benefits from $55,000 to $75,000. No appropriation for increased state-mandated costs was made in this legislation. ²

Test claims seeking reimbursement for the increased expenditure mandated by these changes were filed with the State Board of Control in 1981 by the County of San Bernardino and the City of Los Angeles. The board rejected the claims, after hearing, stating that the increased maximum workers' compensation benefit levels did not change the terms or conditions under which benefits were to be awarded, and therefore did not, by increasing the dollar amount of the benefits, create an increased level of service. The first of these consolidated actions was then filed by the County of Los Angeles, the County of San Bernardino, and the City of San Diego, seeking a writ of mandate to compel the board to approve the reimbursement claims for costs incurred in providing an increased level of service mandated by the state pursuant to Revenue and Taxation Code section 2207. ³ They also sought a declaration that because the State of California and the board were obliged by article XIIIB to reimburse them, they were not obligated to pay the increased benefits until the state provided reimbursement.

The superior court denied relief in that action. The court recognized that although increased benefits reflecting cost of living raises were not expressly excepted from the requirement of state reimbursement in section 6 the intent of article XIIIB to limit governmental expenditures to the prior year's level allowed local governments to make adjustment for changes in the cost of living, by increasing their own appropriations. Because the Assembly Bill No. 2750 changes did not exceed cost of living changes, they did not, in the view of the trial court, create an "increased level of service" in the existing workers' compensation program.

The second piece of legislation (Assem. Bill No. 684), enacted in 1982 (Stats. 1982, ch. 922, p. 3363), again changed the benefit levels for workers' compensation by increasing the maximum weekly wage upon which benefits were to be computed, and made other changes among which were: The bill increased minimum weekly earnings for temporary and permanent total disability from $73.50 to $168, and the maximum from $262.50 to $336. For permanent partial disability the weekly wage was raised from a minimum of $45 to $105, and from a maximum of $105 to $210, in each case for injuries occurring on or after January 1, 1984. (Lab.Code, § 4453.) A $10,000 limit on additional compensation for injuries resulting from serious and willful employer misconduct was removed (Lab.Code, § 4553), and the maximum death benefit was raised from $75,000 to $85,000 for deaths in 1983, and to $95,000 for deaths on or after January 1, 1984. (Lab.Code, § 4702.)

Again the statute included no appropriation and this time the statute expressly acknowledged that the omission was made "[n]otwithstanding section 6 of Article XIIIB of the California Constitution and section 2231 ... of the Revenue and Taxation Code." (Stats.1982, ch. 922, § 17, p. 3372.) ⁴

Once again test claims were presented to the State Board of Control, this time by the City of Sonoma, the County of Los Angeles, and the City of San Diego. Again the claims were denied on grounds that the statute made no change in the terms and conditions under which workers' compensation benefits were to be awarded, and the increased costs incurred as a result of higher benefit levels did not create an increased level of service as defined in Revenue and Taxation Code section 2207, subdivision (a).

The three claimants then filed the second action asking that the board be compelled by writ of mandate to approve the claims and the state to pay them, and that chapter 922 be declared unconstitutional because it was not adopted in conformity with requirements of the Revenue and Taxation Code or section 6. The trial court granted partial relief and ordered the board to set aside its ruling. The court held that the board's decision was not supported by substantial evidence and legally adequate findings on the presence of a state-mandated cost. The basis for this ruling was the failure of the board to make adequate findings on the possible impact of changes in the burden of proof in some workers' compensation proceedings (Lab.Code § 3202.5); a limitation on an injured worker's right to sue his employer under the "dual capacity" exception to the exclusive remedy doctrine (Lab.Code §§ 3601-3602); and changes in death and disability benefits and in liability in serious and wilful misconduct cases. (Lab.Code, § 4551.)

The court also held: "[T]he changes...