The court in a fairly recent case revisited the issue of calculation of average weekly wage for purposes of TTD under a somewhat different set of facts. In the case of Pham vs. WCAB (2000) Daily Journal D.A.R. 2063 the applicant had been working for two employers prior to the date of the injury. After the date of the injury the applicant was laid-off due to a reorganization of the company. The employers sought to reduce the level of TTD payments arguing that the applicant’s earning capacity had been reduced by the layoff.

The industrial injury was a very severe one. It left the applicant not only unable to take care of herself, but unable to communicate. From all indications she was not able to go back to any type of employment.

The WCJ and the Board concluded that the applicant’s average weekly earnings should have been calculated based upon her part-time employment only. The Board concluded that it would be speculative to conclude that the applicant would have found additional employment after the date that she was laid-off due to the corporate restructuring. However, the Court of Appeal granted a review of this case. They discussed Gonzales vs. WCAB. The court noted that the applicant’s willingness to work is a key factor. However, if it is the injury that has removed the applicant from the labor market, and not the subsequent layoff, then the Gonzales case does not apply.

The only other issue was with regards to the amount of the applicant’s average weekly wage. The court found that there was no speculation to believe that a lady who was thirty-five years old at the time of the injury and who had no prior health problems which interfered with her ability to work would not continue to find subsequent employment equivalent to what she was doing at the time of the injury. The court stated that they need to look no further than the applicant’s actual earnings at the time of the injury to determine her earning capacity.

In conclusion, it is important to find out what the applicant’s intentions regarding employment are independent of the injury. Before Gonzales vs. WCAB can be applied there must be a showing that the applicant’s “willingness to work” would have changed regardless of the injury. It must also be remembered that a person’s retirement must be from the entire labor market, and not just from one job.

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Judge has Power to Re-Allocate Proceeds of Third Party Settlement for Purposes of Credit

Mr. Bailey settled his automobile accident case. In the settlement, Mrs. Bailey who had filed a claim for loss of consortium received $200,000.00. Mr. Bailey received nothing. There was also the provision in the settlement that Mr. Bailey’s attorneys were to attempt to settle Reliance’s complaint-in-intervention for $50,000.00 or less, with any remainder going to the Baileys if the claim was settled for less than $50,000.00.

Upon hearing about the settlement, Reliance filed a “Motion Contesting Good Faith Settlement” pursuant to Code of Civil Procedure §877.6. Reliance argued that the $200,000.00 paid to Mr. Bailey’s wife for loss of consortium was a sham and was only for the purpose of circumventing the provisions of Labor Code sections 3858 and 3861.

Before its motion was heard, Reliance settled its entire complaint-in-intervention for $33,000.00. However, it continued with its motion because it wanted to have the right to claim credit against any future monies owed to Mr. Bailey on his workers’ compensation claim. However, the Court of Appeal held that C.C.P. §877.6 only applied to parties seeking to obtain a trial court determination that the settlement was in good faith in order to bar a joint tortfeasor’s or co-obligor’s contribution claims. The Court held that Reliance did not meet the statutes definition of a party who may properly bring a good faith motion. The Court dismissed the motion. However, they indicated that their decision did not leave Reliance remediless. The WCJ and the Workers’ Compensation Appeals Board, have the power to re-allocate the proceeds of a third party settlement in situations like this one where the injured employee and his or her spouse may have colluded with a third party to make a bad faith allocation of settlement proceeds in order to defeat the employers future credit rights. Reid vs. WCAB (1995) 60 C.C.C. 360) The WCJ and WCAB will be able to examine the entire circumstances surrounding the settlement, including the potential effect on workers’ compensation benefits, and render a meaningful decision on proper allocation. Bailey vs. Reliance Insurance Company (March 28) 2000 D.A.R. 3271.

The attorneys for the injured worker, Mr. Bailey, were obviously trying to defeat the employers future credit rights in this case. As far as the civil claim went, they were effective in eliminating any right of credit. However, the Court pointed out that the Appeals Board would be able to do a proper allocation. To do so, the WCJ would essentially have to make the same findings, as would either a jury, or a Superior Court judge setting as the trier of fact. Issues of negligence would have to be determined. This would include the value of the pain and suffering the injured worker had suffered in the automobile accident. After making all of these findings, the WCJ would then determine the extent, if any, of the credit for the workers’ compensation insurance carrier. It is interesting to note that Reliance settled their lien for $33,000.00. Bear in mind, they had paid out of over $100,000.00. Although Mr. Bailey had settled his claim, the complaint-in-intervention of Reliance was still viable. Had Reliance not settled their complaint, they still had the right to proceed to trial. They had an independent right to bring the cause of action. Mr. Bailey’s settlement could not prevent that. However, it is quite apparent that Reliance thought that the value of the case significantly dropped when the injured worker no longer wished to proceed with the case on his own. I am sure that the issue regarding attorney fees became a major concern. As soon as Mr. Bailey settled his case, Reliance had to take over the responsibility of litigating the entire case. It was obvious that they did not wish to do that.

Punching Wall does not Constitute Intentional Injury to Self

At the time of the injury Officer Smith was being questioned by a co-worker who outranked him. There was a heated conversation during which time Officer Smith felt that he was being unfairly criticized. Although he had attempted to extract himself from the conversation on numerous times, the co-worker continued to follow Officer Smith and press him on the issue. Overwhelmed and extremely frustrated Officer Smith retreated approximately 10 steps away from his co-worker. He then turned and spontaneously hit the wall with his fist, injuring his hand. After striking the wall, Officer Smith continued walking to another room when he noticed a protruding bone from his hand as well as blood. Officer Smith had trained as a boxer for many years. Although the spur-of-the-moment punch was presumably not a proper boxing punch.

Officer Smith’s claim was denied by the City under Labor Code §3600(a)(5). This section bars compensation where an applicant intentionally injures himself. The City reasoned that the injury was foreseeable given Officer Smith’s expertise in the sport of boxing. As such, the applicant had intentionally injured himself.

The WCJ found that the applicant did not intentionally injure himself. However, the Board reversed the WCJ. They found that the claim was barred under Labor Code §3600. An Appeal was filed by the injured worker. The Appeal was granted. The Court of Appeal held that the only intentional misconduct of an employee, which excludes his right of recovery, is the deliberate infliction of injury upon himself. The court rejected the test of whether the act was wanton and reckless disregard of the possibility damaging consequences of his action. The court reasoned that if the legislature had wanted to include this definition they would have. Therefore, before there could be an exclusion under this Labor Code Section there must be a finding that the injured worker “intentionally self-inflicted” the injury. William Smith vs. WCAB and City of Hayward (2000) DAR 3283, March 29, 2000.

The Court of Appeal specifically rejected the rather broad application of criminal intent in defining what constitutes an intentional act. Under the criminal law intent could be found with a showing of wanton and reckless disregard of the possible consequence. Had that definition been used, most probably Officer Smith would have been barred from any workers’ compensation benefits for the hand injury. The Appellate Court gave a very literal interpretation of what constitutes an intentional injury. They did make the comment that had the legislator wanted to say something else, they could have. Since they didn’t, the court was unable to give the much broader interpretation. In reviewing the facts as set forth by the Court of Appeal, one could not help but be somewhat sympathic in how Officer Smith reacted. The facts as set forth in the opinion clearly indicate that Officer Smith felt that he was being unfairly belittled, embarrassed and harassed. Officer Smith had in fact received a commendation from Sergeant Row for the very same arrest that the co-worker was badgering him about. Additionally, the Court of Appeals’ interpretation of Labor Code §3600 is consistent with the directive to give liberal construction of the Labor Code with the purpose of extending their benefits for the protection of persons injured in the course of their employment. See Labor Code §3202.

Golf Caddy Considered Employee

Mr. Ware filed a workers’ compensation claim. The claim was denied by the Club. They contended that Mr. Ware was an independent contractor.

Mr. Ware had no separate business. Caddying was essential to the Club. No tools were needed although Mr. Ware had to wear Club clothes. Simplicity of the work did not require supervision. Mr. Ware took directions from the Club and caddy master and was never informed he was an independent contractor. Mr. Ware was paid solely by members who had direct control on the golf course. The Club did not set hours or require Mr. Ware to accept assignments. Mr. Ware was also not prohibited from working elsewhere.

The Workers’ Compensation Judge (WCJ) found that Mr. Ware was an independent contractor. A Petition for Reconsideration was filed. The Board agreed with the WCJ. A Petition for Writ of Review was then filed.

The Court of Appeal reversed the Board. They stated that the trend is to view indicia of employment in terms of what the workers’ compensation act was established for. The court noted that in the case of Yellow Cab Cooperative, Inc. vs. WCAB (1991) 226 Cal. App. 3d 1288, the court found that cab drivers were employees despite a cab leasing agreement. The court also noted that Labor Code §3203 requires the liberal construction of the code for purposes of finding employment. All things considered, the court found in favor of Mr. Ware.

Jerry Ware vs. WCAB 2000 Daily Journal DAR, 1957

I’m not surprised that the employment was found for the caddy. Although, one can easily understand why the WCJ and Board found that Mr. Ware was an independent contractor. This case does represent an expansion of the occupations covered by workers’ compensation laws.

Changes In Law

Changes are to Labor Code §96(k), §139(a)(b), §3212.1(a)(b)(c)(d)(e), §3700.5, §3702.5, §3762 (a)(b)(c)(1)(2), §4600.5, §4603.2(a)(b), §4850, §4850.5, and §5433. There are also a couple of changes to Administrative Rules 9785.2 & 9785.3 and 9700 through 9704.