Cnty. of Santa Clara v. Workers' Comp. Appeals Bd.

Decision Date27 May 2020
Docket NumberH046562
Citation262 Cal.Rptr.3d 876,49 Cal.App.5th 605
Parties COUNTY OF SANTA CLARA, Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD and Barbara Justice, Respondents.
CourtCalifornia Court of Appeals Court of Appeals

Attorney for Petitioner: Mark A. Cartier, Thomas, Lyding, Artier, Arnone, & Daily, LLP, Walnut Creek.

Attorneys for Respondents: Allison Jane Fairchild, Workers' Compensation Appeals Board, Todd A. Johnson, Butts & Johnson, San Jose.

Attorney for Amicus Curiae California Workers' Compensation Institute and California Chamber of Commerce: Ellen Sims Langille, California Workers' Compensation Institute, San Francisco.

Attorneys for Amicus Curiae California Applicant's Attorneys Association: Justin Carl Sonnicksen, Gearheart & Sonnicksen, William Herreras, San Luis Obispo.

Mihara, J. Petitioner County of Santa Clara petitioned this court for review of the decision of respondent Workers' Compensation Appeals Board (WCAB or the Board) affirming an unapportioned permanent disability award in favor of respondent Barbara Justice. Petitioner contends that the Board erred in determining no apportionment was warranted as a matter of law.

We issued a writ of review and now conclude that the permanent disability in this case should have been apportioned between industrial and nonindustrial causes. We therefore annul the Board's decision to the contrary and remand for further proceedings.

I. Facts and Procedural Background

Barbara Justice was employed as a workers' compensation claims adjuster for petitioner from November 1991 until she retired in December 2016. On November 22, 2011, Justice fell at work and suffered an injury to her left knee. After Justice injured her left knee, she developed pain and problems in her right knee, which was found to be a compensable consequence of the injury to her left knee. In June 2012, Justice had total knee replacement surgery on the right knee. In September 2013, she had total knee replacement surgery on her left knee.

The parties arranged for Justice to be examined by Dr. Mark Anderson, an orthopedic surgeon, who served as an agreed medical examiner. Dr. Anderson prepared his initial report in March 2016. He prepared five supplemental reports and was deposed twice.

Dr. Anderson testified that an X-ray of Justice's knees, taken on November 28, 2011, showed "marked osteoarthritis" of the knees. An MRI conducted on January 18, 2012, showed that Justice had suffered a medial and lateral meniscal tear as a result of the fall at work. The MRI also revealed significant preexisting degeneration, all of which predated the fall at work: an "old" tear of the anterior cruciate ligament, "marked loss of articular cartilage in the medial compartment," "moderate loss of articular cartilage in the lateral compartment," and "moderate loss in the patellofemoral joint." There was also scar tissue on both knees indicating that Justice had undergone a "significant open procedure" at some point in the past.

Based on Justice's medical history, Dr. Anderson testified that there was significant preinjury degeneration in both knees. In response to questions on what precipitated the need for total knee replacement surgery, Dr. Anderson agreed that "[t]otal knee replacement [was] not required because of the meniscus tear ... but rather as a result of the underlying arthritis," because "[a] meniscal tear does not require a knee replacement." Rather, Dr. Anderson determined that the fall at work "hasten[ed]" the need for total knee replacement surgery by "lighting up the underlying pathology." Dr. Anderson opined that "[a]bsent the underlying pre-existing arthritis, is it medically probable that [Justice] would not have had total knee replacement as she did when she did ...." As a result, Dr. Anderson apportioned 50 percent of the bilateral knee disability to the nonindustrial, preexisting degeneration in the knees.

The workers' compensation judge determined that Justice had sustained permanent partial disability of 48 percent, which was worth $59,110.00. In pertinent part, the workers' compensation judge found that Justice "suffered from knee trouble due to degenerative arthritis for many years prior to her [2011] industrial injury. The available medical evidence makes plain that this condition played a large role in making the effects of the industrial injury significantly worse than they would ... otherwise have been, both in the need for treatment ... and in the ultimate [permanent disability] .... The injury precipitated the need for bilateral knee replacement surgery. These surgeries had been in contemplation at varying levels of urgency for some years prior to the injury, but as a result of the injury became practically mandatory. There is no doubt on this evidence that the need for these surgeries was at least partially non-industrial. There also seems to be little doubt that had the injuries and attendant surgeries never occurred, [Justice] would still now suffer from a non-trivial level of impairment from her arthritic knees."

The workers' compensation judge further found that "[t]he available medical evidence also indicates that, in terms of function, the surgeries were quite successful. While by no means curative, the surgeries appear to have significantly increased [Justice's] ability to walk and engage in weight-bearing activities. Under the pre-2005 [Permanent Disability Rating Schedule (PDRS) ] one suspects that the surgeries would have significantly decreased [her] work limitations and increased her ability to engage in gainful activity, resulting in a lower [permanent disability] rating. Since the current PDRS is based not upon functional capacity but upon diagnosis, the surgery has resulted in an impairment rating substantially higher than it was pre-surgery. The only real cause of this change in impairment rating was the surgery, in turn brought about by a combination of industrial and non-industrial factors. The [agreed medical examiner] ..., thought the [permanent disability] should be apportioned 50/50. I believe his basis for that conclusion was sound and in accordance" with the law.

The workers' compensation judge then stated that prior to the decision in Hikida v. Workers' Comp. Appeals Bd. (2017) 12 Cal.App.5th 1249, 219 Cal.Rptr.3d 654 ( Hikida ), he would "have issued a decision awarding [permanent disability] with 50% apportionment based upon Dr. Anderson's opinion." However, the workers' compensation judge understood Hikida to preclude apportionment in this case: " Hikida holds that where medical treatment (here, the bilateral knee replacement surgery) results in an increase in [permanent disability], [permanent disability] should be awarded without apportionment." The workers' compensation judge emphasized that he was bound by the Hikida decision: "While the reasons why the Hikida court made a significant change in the law are obscure to me, they are as beyond the scope of a trial judge as is the argument that the case was wrongfully decided. While I cannot tell why the Court concluded as it did, what they did is readily apparent, and I have no option but to follow this binding precedent." Accordingly, the workers' compensation judge awarded permanent disability with no apportionment.

Petitioner sought reconsideration with the Board, arguing that the workers' compensation judge erroneously applied Hikida to the facts of this case. The workers' compensation judge issued a report and recommendation on the petition for reconsideration, recommending that the Board deny reconsideration. The workers' compensation judge reiterated that "but for the rule first announced in Hikida ," "the parties agree that ... Dr. Anderson's apportionment would have been sufficient" to sustain a finding of 50 percent apportionment of Justice's permanent disability. The workers' compensation judge determined, however, that " Hikida is not distinguishable from this case," and stated that "it is far beyond the scope of a WCAB trial judge to decide whether a published Court of Appeal decision was based upon sound policy or otherwise." The Board ultimately granted reconsideration, but only to amend the award to correct a clerical error. The Board rejected the merits of the petition for reconsideration on the apportionment issue for the reasons stated in the workers' compensation judge's report, which it adopted and incorporated as its decision.

II. Discussion
A. Standard of Review

" We review the Board's factual findings for substantial evidence, but we review its legal decisions de novo.’ [Citation.] If "a workers' compensation decision rests on the Board's erroneous interpretation of the law, the reviewing court will annul the decision." [Citation.]" ( City of Petaluma v. Workers' Comp. Appeals Bd. (2018) 29 Cal.App.5th 1175, 1181-1182, 241 Cal.Rptr.3d 97 ( Petaluma ).)

B. Apportionment of Permanent Disability

In 2004, the Legislature enacted Senate Bill No. 899 (2003-2004 Reg. Sess.) (Senate Bill No. 899), which made substantial changes to workers' compensation law, including the law of apportionment of permanent disability. Senate Bill No. 899 was an "urgency measure designed to alleviate a perceived crisis in skyrocketing workers' compensation costs." ( Brodie v. Workers' Comp. Appeals Bd. (2007) 40 Cal.4th 1313, 1329, 57 Cal.Rptr.3d 644, 156 P.3d 1100 ( Brodie ).) Before the 2004 amendments, apportionment "based on causation was prohibited." ( Id. at p. 1326, 57 Cal.Rptr.3d 644, 156 P.3d 1100.) This meant that in some cases "to the extent that a subsequent industrial injury exacerbated, accelerated, aggravated, or ‘lit up’ an applicant's preexisting condition, the employer was liable for the resulting disability, without apportionment." ( Escobedo v. Marshalls (2005) 70 Cal.Comp.Cases 604, 617, fn. 9, 2005 WL 910490 ( Escobedo ); Marsh v. Workers' Comp. Appeals Bd. (2005) 130 Cal.App.4th 906, 912, 30 Cal.Rptr.3d 598.) Thus, before Senate Bill No. 899, apportionment based on causation was "limited...

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