Argonaut Ins. Co. v. Industrial Acc. Commission

• Decision Date: 08 May 1962
• Parties: , 371 P.2d 281 ARGONAUT INSURANCE COMPANY, Petitioner, v. INDUSTRIAL ACCIDENT COMMISSION and Fred Montana, Respondents. L. A. 26695.
• Court: California Supreme Court

Page 545

21 Cal.Rptr. 545

57 Cal.2d 589, 371 P.2d 281

ARGONAUT INSURANCE COMPANY, Petitioner, v. INDUSTRIAL ACCIDENT COMMISSION and Fred Montana, Respondents.

L. A. 26695.

Supreme Court of California, In Bank.

May 8, 1962.

Rehearing Denied June 4, 1962.

Herlihy & Herlihy, Robert R. Smith and Ray B. Cumming, Los Angeles, for petitioner.

Everett A. Corten, San Francisco, Edward A. Sarkisian, Richman, Garrett & Ansell and Lewis Garrett, Los Angeles, for respondents.

Charles P. Scully and Lowell A. Airola, San Francisco, as amici curiae on behalf of respondents.

TRAYNOR, Justice.

On June 20, 1960, Fred Montana injured his back lifting a heavy steel blade onto a truck. A co-worker holding one end of the blade dropped it without warning, and Montana, suddenly holding almost the entire load, 'felt something tight in * * * (his) back.' The injury, and acute lumbosacral strain, resulted in temporary total disability and partial permanent disability. Petitioner paid Montana temporary compensation of $928.57 at the rate of $65 a week before the Industrial Accident Commission made its award. The referee determined that 75 per cent of the disabilty should be apportioned to a pre-existing back condition, that Montana's earning capacity was less than minimum for compensation purposes, and that the award should therefore be based on average weekly earnings of $20 a week. Computed at this rate, Montana would be entitled to $285.72 as temporary compensation and $440 for permanent disability. Under this computation the insurance carrier had overpaid Montana $243.57. The Commission held, however, that the evidence did not require apportionment of the disability under Labor Code section 4663 and that Montana's 'earning capacity was maximum under Section 4453(d) of the Labor Code.' Accordingly, the Commission awarded him $4,620 as permanent indemnity and approved the temporary compensation paid.

Montana testified that he had never had back trouble before the injury. No evidence contradicted this testimony, and several doctors described his former condition as 'asymptomatic.' Nevetheless, the medical experts agreed that even before the injury he had an unstable lumbosacral spine with some arthritis and that he should not have been lifting heavy objects. When asked what advice he would have given Montana before the accident, the independent medical examiner testified: 'I don't know I couldn't tell him not to lift, because I know he would. We look at a number of things. I would not advise him to give up his work, if this is all he knows how to do, because some of these guys do get by indefinitely.' (Italics added.) Describing Montana's pre-accident condition, he stated: 'There was some increase in the lumbosacral angle with mild scoliosis. His pelvis was tipped forward. He had some degenerative changes which were not marked. I mean, there was nothing unusual about the x-rays for a man of this build * * * and age. They are not too far away from normal, about what you would expect with his build and age.' (Italics added.) Another doctor stated in his report: 'There is no evidence of pre-existing symptomatic bone or joint disease and no history of previous low back injury or disability. The osteoarthritic changes visualized are no more in evidence in the area of symptoms than they are in other areas of his spine. At most they delayed his functional recovery.'

Whether a disability results in whole or in part from 'the normal progress of a pre-existing disease' (Industrial Indem. Co. v. Industrial Acc. Comm., 95 Cal.App.2d 443, 450, 213 P.2d 11, 15) or represents a fully compensable lighting up or aggravation of a pre-existing condition is a question for the Commission to determine, and its award will not be annulled if there is substantial evidence to support it. (Colonial Ins. Co. v. Industrial Acc. Comm., 29 Cal.2d 79, 83-84, 172 P.2d 884; Tanenbaum v. Industrial Acc. Comm., 4 Cal.2d 615, 617, 52 P.2d 215.) In view of the foregoing testimony, the Commission could reasonably conclude that the pre-existing condition did not call for apportionment. (See Idaho Maryland Mines Corp. v. Industrial Acc. Comm., 104 Cal.App.2d 567, 232 P.2d 11.)

The more difficult question is whether the Commission correctly determined Montana's earning capacity under subdivision (d) of section 4453 of the Labor Code' ¹ in computing temporary and permanent disability compensation. Other subdivisions of that section (Lab.Code § 4453, subds. (a), (b), (c)) set forth formulae for computing average weekly earnings that in turn are made the basis for the two types of award. (Lab.Code §§ 4653-4655; 4658-4662.) When an employee is steadily employed at a full-time job his earning capacity is determined by an appropriate formula (see West v. Industrial Acc. Comm., 79 Cal.App.2d 711, 722, 180 P.2d 972). When the employment is for less than 30 hours a week or when a formula 'cannot reasonably and fairly be applied' the Commission must make its own estimate of weekly earning capacity at the time of the injury. (Lab.Code Code § 4453, subd. (d).) The purpose of this provision is to equalize for compensation purposes the position of the full-time, regularly employed worker whose earning capacity is merely a multiple of his daily wage and that of the worker whose wage at the time of injury may be aberrant or otherwise a distorted basis for estimating true earning power. It would hardly be consistent with that purpose to foreclose a worker from a maximum temporary or permanent award simply because a brief recession had forced him to work sporadically or at a low wage. Nor in making a permanent disability award would it be consistent with the purpose of the statute to base a finding of maximum earning capacity solely on a high wage, ignoring irregular employment and low income over a long period of time.

An estimate of earning capacity is a prediction of what an employee's earnings would have been had he not been injured. Earning capacity, for the purposes of a temporary award, however, may differ from earning capacity for the purposes of a permanent award. In the former case the prediction of earnings need only be made for the duration of the temporary disability. In the latter the predicition is more complex because the compensation is for loss of earning power over a long span of time. Thus an applicant's earning capacity could be maximum for a temporary award and minimum for a permanent award or the reverse. Evidence sufficient to sustain a maximum temporary award might not sustain a maximum permanent award. In making an award for temporary disability, the Commission will ordinarily be concerned with whether an applicant would have continued working at a given wage for the duration of the disability. In making a permanent award, long-term earning history is a reliable guide in predicting earning capacity, although in a variety of fact situations earning history alone may be misleading. With regard to both awards all facts relevant and helpful to making the estimate must be considered. (Colonial Mut. Compensation Ins. Co. v. Industrial Acc. Comm., 47 Cal.App.2d 487, 490-492, 118 P.2d 361; Aetna Life Ins. Co. v. Industrial Acc. Comm., 130 Cal.App. 488, 491-492, 20 P.2d 372; see Southern Bell Tel. & Tel. Co. v. Bell, 116 So.2d 617, 620-621 (Fla.); Vanney v. Alaska Packers Ass'n, 12 Alaska 284, 290-291; Larson, The Law of Workmen's Compensation § 57.21 at pp. 4-7.) The applicant's ability to work, his age and health, his willingness and opportunities to work, his skill and education, the general condition of the labor market, and employment opportunities for persons similarly situated are all relevant. (See West v. Industrial Acc. Comm., supra, 79 Cal.App.2d at p. 722, 180 P.2d 972; Aetna Life Ins. Co. v. Industrial Acc. Comm., supra, 130 Cal. App. at pp. 491-492, 20 P.2d 372.) In weighing such facts, the Commission...