Atlantic Richfield Co. v. Workers' Comp. Appeals Bd.

• Decision Date: 20 May 1982
• Docket Number: S.F. 24335
• Court: California Supreme Court
• Parties: Previously published at 31 Cal.3d 409 31 Cal.3d 409, 31 Cal.3d 715, 644 P.2d 1257 ATLANTIC RICHFIELD COMPANY et al., Petitioners, v. WORKERS' COMPENSATION APPEALS BOARD, Carman Arvizu, et al., Respondents.

Page 778

182 Cal.Rptr. 778

Previously published at 31 Cal.3d 409

31 Cal.3d 409, 31 Cal.3d 715, 644 P.2d 1257

ATLANTIC RICHFIELD COMPANY et al., Petitioners, v. WORKERS' COMPENSATION APPEALS BOARD, Carman Arvizu, et al., Respondents.

S.F. 24335.

Supreme Court of California.

May 20, 1982.

As Modified on Denial of Rehearing June 23, 1982.

Hanna, Brophy, MacLean, McAleer & Jensen and Daniel P. O'Brien, Fresno, for petitioners.

C. Gordon Taylor, San Francisco, as amicus curiae for petitioners.

George Deukmejian, Atty. Gen., and B. Franklin Walker, Deputy Atty. Gen., for respondents.

Donald G. Kendall, Bakersfield, for Arvizu.

RICHARDSON, Justice.

Atlantic Richfield Company and its workers' compensation insurer, Insurance Company of America (employer or ARCO), appeal from a decision of the Workers' Compensation Appeals Board (Board) awarding Carman Arvizu the sum of $50,000 as a death benefit following the death of her husband, Gilbert Arvizu, in an employment-related accident. Two issues are presented. First, in cases in which the surviving spouse is employed, how should partial dependency be determined and death benefits computed? Second, if the death benefits awarded are less than the statutory maximum which would be allowed to a surviving spouse with no other dependents of the deceased, should the difference between the award and the statutory maximum be paid to the Department of Industrial Relations (the DIR)? (Lab.Code, § 4706.5; all further statutory references will be to this code unless otherwise indicated.)

The facts are undisputed. On May 3, 1978, while employed by ARCO, Gilbert Arvizu was killed in an industrially related accident. The parties stipulated that his wife, Carman, was the only surviving dependent. She filed a timely claim for benefits, and a hearing was held before a workers' compensation judge on the only issues, the extent of Carman's dependency and the amount of attorney's fees. It was agreed that at the time of Gilbert's death, the annual earnings of Gilbert and Carman were $16,800 and $9,840, respectively.

On March 15, 1979, the compensation judge issued his findings and award, holding that Carman was a partial dependent entitled to a death benefit in the sum of $33,600. The judge further found that "As deceased and applicant lived together with no other dependants [sic ], it can be assumed that one-half ( 1/2) of his income was used to support applicant." One-half of his earnings being $8,400, pursuant to section 4702, subdivision (d), this sum was then multiplied by four to reach the figure of $33,600.

Carman thereupon filed a petition for reconsideration, contending that she was "solely dependent" upon Gilbert "to maintain the community home in the standard of living to which she was accustomed." She claimed that at the time of Gilbert's death the community was in debt beyond the normal expenditures for home or car, thereby demonstrating Carman's complete reliance on Gilbert's earnings.

Relying on Oropeza v. Newman Seed Company (1980) 45 Cal.Comp.Cases 1148, the Board, sitting en banc, granted reconsideration, and thereafter issued its "Order and Decision After Reconsideration," concluding that Carman was entitled to the statutory maximum of $50,000 (§ 4702, subd. (d)), reasoning that Gilbert's salary of $16,800 multiplied by four equalled $67,200. The Oropeza Board had concluded that when both spouses were employed the proper method of computing death benefits for surviving spouses was to treat the entire earnings of the deceased spouse as the measure of actual support for the survivor.

The Board also held, in reliance on Department of Industrial Relations v. Workers' Comp. Appeals Bd. [Tessler ] (1979) 94 Cal.App.3d 72, 156 Cal.Rptr. 183, that the DIR should be joined as a party in the event that ARCO later prevailed in its arguments that Carman was entitled to less than maximum benefits. The Board further noted that, in such event, ARCO would be required to pay to the DIR the difference between Carman's award and the statutory maximum.

Partial Dependency

In Arp v. Workers' Comp. Appeals Bd. (1977) 19 Cal.3d 395, 138 Cal.Rptr. 293, 563 P.2d 849, we held that the conclusive presumption of total dependency afforded to widows under section 3501, subdivision (a), was unconstitutional as a denial of equal protection. Rather than extending the presumption to widowers, we concluded that "all applicants, widows and widowers alike, will be required to prove their dependency, and will be compensated in accordance with the facts and circumstances shown. (§ 3502.)" (P. 410.)

The Legislature elected not to reinstate the presumption of total dependency, and in 1979 it amended section 3501, removing subdivision (a). It retained the presumption of total dependency only for minor children or children 18 or older, who, because of incapacitation, were dependent upon the deceased parent. It also retained section 3502, which provides that "questions of entire or partial dependency and questions as to ... the extent of ... dependency shall be determined in accordance with the facts as they exist at the time of the injury of the employee."

Our conclusion in Arp that applicants for benefits "will be required to prove their dependency" (19 Cal.3d at p. 410, 138 Cal.Rptr. 293, 563 P.2d 849), is consistent with the view which we have long held that partial dependents must establish proof of their dependency. (Spreckels S. Co. v. Industrial Acc. Com. (1921) 186 Cal. 256, 258, 199 P. 8; 1 Herlick, Cal. Workers' Compensation Law Handbook (2d ed. 1978) § 9.10, p. 316.) Our belief that this comports with legislative intent is further confirmed by the Legislature's action, consistent with Arp, in repealing the conclusive presumption of total dependency formerly contained in section 3501, subdivision (a), without attempting to provide any other applicable conclusive presumptions.

Several different approaches have been suggested for determining the appropriate amount of the award to a partial dependent.

ARCO, before the Board, urged that the community earnings be totalled and the percentage of the aggregate earnings which the decedent contributed be applied against the statutory maximum in determining the appropriate death benefit. Here, the total community earnings were $26,640, of which decedent contributed $16,800, or approximately 63 percent. Using this method, the dependent spouse would be entitled to 63 percent of the maximum of $50,000, or $31,500. The problem with this formula is that it does not carefully accommodate the statutory mandate that the amount of partial dependency be determined by multiplying by four "the amount annually devoted to the support of the partial dependent." (§ 4702, subd. (d).) Rather, it adopts an arbitrary percentage method unrelated to the actual sums used for support.

A second method, suggested by ARCO as an alternative, was adopted by the compensation judge. Under this formula, where the parties live together without other dependents, one-half of the earnings of the deceased spouse is considered the amount contributed to the support of the survivor. As applied to the present case, one-half of Gilbert's earnings ($8,400) were multiplied by four producing a death benefit of $33,600. This is a variation of a "family pot" approach which has been used by the Board in previous cases involving partial dependents. (Mendoza v. Workers' Comp. Appeals Bd. (1976) 54 Cal.App.3d 820, 127 Cal.Rptr. 173 [contribution of deceased children divided by number of members of family and then multiplied by number of partial dependents]; Shirek v. The Ronoh Preschool for Disturbed Children (1966) 31 Cal.Comp.Cases 431 [50 percent of deceased wife's contribution to community used as base figure for determining widower's death benefit]; Desherow v. Hindin etc. (1966) 31 Cal.Comp.Cases 431 [same]; see also cases cited in 1 Herlick, supra, § 9.10, pp. 316-317 for other examples of methods used by the Board.)

The major difficulty with this technique is that it considers neither the standard of living of the surviving spouse nor the amount actually contributed to his or her support. Nor does it respect the mutual obligation of support owed by each spouse (Civ.Code, § 5125) and the power vested in each spouse to manage and control the community property (id., § 5100). As one commentator has noted, "In order to establish partial dependency it need not be shown that the dependent could not live without the employee's contributions. It is sufficient that such contributions were looked to in the maintenance of the dependent's accustomed mode of living and that after the employee's death the dependent could no longer maintain the same living standard." (2 Hanna, Cal.Law of Employee Injuries & Workmen's Compensation (2d ed. rev. 1981) § 1502(c), p. 15-8, fns. omitted.) A deceased spouse may have paid certain fixed expenses of the community which constitute far more than the one-half of his or her earnings which are measured by this method. Moreover, such spouse may have paid from earnings sums which did not accrue to the benefit of the surviving spouse or the community, e.g., premarital debts, alimony, or support to children of a previous marriage.

Finally, the method used by the Board here was originally adopted in Oropeza v. Newman Seed Company, supra, 45 Cal.Comp.Cases 1148. In directing an award of $21,554.32, reached by multiplying the decedent's total earnings of $5,388.58 in the year preceding his death by four, the Board discerned a legislative intent "to treat the earnings of the deceased spouse as the measure of actual support to the surviving spouse ...." (Id., at p. 1152.) It concluded that "any other method would lead to grossly disparate results depending on whether the surviving spouse was totally dependent or partially dependent ..." because totally dependent spouses are entitled to the full benefit of $50,000 no matter what the earnings of the deceased spouse...