Zenith Insurance Co. v. W.C.A.B.

• Decision Date: 29 January 2008
• Docket Number: No. B197186.,B197186.
• Citation: 71 Cal.Rptr.3d 724,159 Cal.App.4th 483
• Court: California Court of Appeals Court of Appeals
• Parties: ZENITH INSURANCE CO., Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD and Randolph CUGINI, Respondents.

71 Cal.Rptr.3d 724

159 Cal.App.4th 483

ZENITH INSURANCE CO., Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD and Randolph CUGINI, Respondents.

No. B197186.

Court of Appeal, Second District, Division 7.

January 29, 2008.

Wogee, Hagner & Hudges and Helen S. Thies, Orange; Law Offices of Saul Allweiss and Michael A. Marks, San Francisco, for Petitioner.

Janoff, Karpel & Cowan and Paul I. Cowan, Carson, for Respondent Randolph Cugini.

No appearance for Respondent Workers' Compensation Appeals Board.

WOODS, J.

Pursuant to the Legislature's 2004 comprehensive reform of workers' compensation under Senate Bill 899, a new Schedule For Rating Permanent Disabilities of injured workers was adopted and became effective on January 1, 2005. The Legislature also amended Labor Code section 4660, subdivision (d)¹ (section 4660(d)), which provides that the new schedule applies prospectively to compensable injuries on or after the effective date, as well as to compensable claims arising before January 1, 2005, "when there has been either no comprehensive medical-legal report or no report by a treating physician indicating the existence of permanent disability, or when the employer is not required to provide the notice required by Section 4061 to the injured worker."

Zenith Insurance Company petitions for writ of review and contends that the new schedule applies to respondent Randolph Cugini's 2004 industrial injury, because section 4061, subdivision (a) (section 4061(a)) expressly requires the notice with the last payment of temporary disability indemnity in 2005 and not the first payment in 2004 as determined by the Workers' Compensation Appeals Board (WCAB). Petitioner also contends that the new schedule applies because the treating physician's report in 2004 that indicated the existence of permanent disability was an unsupported conclusion and not substantial evidence. In addition, permanent disability did not exist because Cugini's condition was not permanent and stationary until 2005.

Based on the plain language of section 4061(a), which provides for notice of permanent disability indemnity "[t]ogether with the last payment of temporary disability indemnity," we agree with petitioner that the WCAB erred in ruling that the requirement to provide the notice arose with the first payment of temporary disability indemnity in 2004. However, we conclude that the WCAB should determine on remand whether there is a comprehensive medical-legal or treating physician report "indicating the existence of permanent disability" under section 4660(d), which is substantial evidence considering the entire record. We also conclude that the injured worker's permanent and stationary status is not required before a physician's report can indicate the existence of permanent disability under section 4660(d), for the reasons we stated in Genlyte Group, LLC, etc. v. Workers' Comp. Appeals Bd. (2008) 158 Cal.App.4th 705, 69 Cal.Rptr.3d 903 (Genlyte). Accordingly, the WCAB's decision is annulled and the matter is remanded for further proceedings consistent with this opinion.

FACTUAL AND PROCEDURAL BACKGROUND

1. Cugini's Industrial Injury and Treatment

Randolph Cugini, a swimming pool technician for Browning's Pool Service, insured for workers' compensation by Zenith Insurance Company (Zenith), injured his back at work on June 18, 2004, when he lifted two gallons of chlorine out of the bed of a pickup truck. Cugini was referred to Little Company of Mary Hospital for treatment, and an MRI was performed that revealed a 5 mm disc bulge at L3, a small disc protrusion with moderate narrowing at L3-4, and multilevel degenerative disc disease and diffuse disc bulging. Cugini treated with various physicians and medications were prescribed and back surgery discussed.

Cugini also was referred to Robert Fenton, M.D., for an orthopedic consultation and treatment. In a report dated October 12, 2004, Dr. Fenton indicated that the diagnosis was "L2-3 left-sided inter-foraminal disc herniation refractory to conservative care" based upon the history, medical record review, x-rays and physical examination. Dr. Fenton recommended that Cugini remain temporarily totally disabled and off work, and evaluation by a neurosurgeon.² In a three sentence report dated December 28, 2004, Dr. Fenton stated that, "I am a treating physician for the above-referenced applicant. There is a reasonable medical probability that permanent disability exists as a result of the injury or injuries for which I am treating this patient. I will describe that disability further in a subsequent report."

On December 15, 2005, Dr. Fenton reported that an inter-foraminal left-sided discectomy at L2-3 was performed on March 29, 2005, and Cugini's condition had reached maximum medical improvement.³ Dr. Fenton also reported permanent disability under the former schedule, including no repetitive bending or hyper-extension at the waist or lifting, pushing, or pulling over 20 pounds, and that Cugini had lost 60 percent of his pre-injury capacity to perform such activities. Dr. Fenton further indicated that there was 13 percent whole person impairment under the new schedule, there was no apportionment to non-industrial causes, and Cugini required vocational rehabilitation.

Zenith obtained a medical-legal evaluation from Phillip Kanter, M.D. Dr. Kanter reported that Cugini's condition had reached maximum medical improvement on November 15, 2005, he was precluded from repetitive heavy lifting, bending, pushing, pulling, stooping and crawling under the former schedule, there was 13 percent whole person impairment under the new schedule, there was no apportionment and vocational rehabilitation was required.

2. Proceedings Before the WCAB

The parties proceeded to trial before the workers' compensation administrative law judge (WCJ), and submitted on the record and briefing which schedule applied. The WCJ determined that temporary disability indemnity was paid from June 19, 2004, through December 2, 2005, and permanent disability was 42 percent under the former schedule or $50,150 permanent disability indemnity. In the opinion on decision, the WCJ explained that the former schedule applies under section 4660(d) because a WCAB panel decision determined that the duty to provide the notice of permanent disability indemnity arises with the initial payment of temporary disability indemnity under section 4061(a).

Zenith petitioned the WCAB for reconsideration that the new schedule applies because the notice of permanent disability indemnity was required with the last payment of temporary disability indemnity in 2005 under the express language of section 4061(a). Cugini answered that the former schedule is applicable based on the WCAB's panel decision, and Dr. Fenton's report of December 28, 2004, indicated the existence of permanent disability.

In the report on reconsideration, the WCJ explained that, "Considering the treatment that Applicant has undergone including surgery and a long recuperative period, it is hard to argue that the assessment of Dr. Fenton in 2004 was not accurate and thoughtful. This consideration in addition to the fact that temporary disability was paid and there is no evidence of the notice [having] been provided as indicated in the Labor Code, Applicant's right to have this permanent disability assessed under the 1997 schedule appears thoroughly appropriate."

The WCAB adopted the WCJ's decision and report and denied Zenith reconsideration. However, Commissioner Brass disagreed that Zenith's duty to provide notice of permanent disability indemnity arose in 2004 under section 4061(a), but concluded that Dr. Fenton's December 28, 2004, report "is a report by a treating physician indicating the existence of permanent disability. Therefore, the prior rating schedule applies in this case."

Zenith petitions for writ of review and contends further that the new schedule applies because the notice of permanent disability indemnity under section 4660(d) was not required until the last payment of temporary disability indemnity in 2005 under the express language of section 4061(a). In addition, Dr. Fenton's report of December 28, 2004, is not substantial evidence permanent disability existed because it is a three sentence conclusion and Cugini was not permanent and stationary.

Cugini answers that the former schedule is applicable because the requirement to provide notice of permanent disability indemnity arose when Zenith paid temporary disability indemnity in 2004. In addition, Dr. Fenton's supplemental report of December 28, 2004, is substantial evidence of the existence of permanent disability under section 4660(d) when read with his initial report of October 12, 2004. Moreover, numerous medical reports in 2004 indicated permanent disability existed. While section 4660(d) expressly refers to permanent disability, permanent and stationary status is not mentioned.

DISCUSSION

1. Standard of Review and Rules of Statutory Construction

A decision by the WCAB that is based on factual findings which are supported by substantial evidence is affirmed by the reviewing court.⁴ Substantial evidence generally means evidence that is credible, reasonable, and of solid value, which a reasonable mind might accept as probative on the issues and adequate to support a conclusion.⁵ A factual finding, order, decision or award is not based on substantial evidence if unreasonable, illogical, arbitrary, improbable, or inequitable considering the entire record and statutory scheme.⁶ The reviewing court also may not isolate facts which support or disapprove of the WCAB's conclusions and ignore facts which rebut or explain the supporting evidence, but must examine the entire record.⁷ Similarly, the reviewing court may not reweigh evidence or decide disputed facts.⁸

Interpretation of governing statutes or application of the law to undisputed facts is decided de novo by the reviewing court, even though the...