Wednesday, June 6, 2007

CASE LAW UPDATE: Significant Decisions

The following are recent California case law decisions that may be of interest to our clients:

Utilization Review

SCIF v. WCAB (Sandhagen) - Utilization review decisions not made within the mandatory time frames are excluded from consideration. The AME/QME process is still available to the claims administrator. The case's ruling that utilization review is optional has been appealed by the applicant to the California Supreme Court, and the Court has agreed to make a ruling on the issue.
Smith & Amar v. WCAB; Attorneys are entitled to be paid attorney fees under Labor Code section 4607 for their efforts in enforcing a future medical award where a defendant has been denied a specific form of treatment but did not petition to terminate the award of medical care. The California Supreme Court recently granted the defendant's petition; therefore, this case is not citable authority.

Medical Provider Network

Bruce Knight v. Liberty Mutual - If an employer or insurer fails to provide the proper medical provider network notice to its employees, treatment can be obtained outside of the MPN.
Norman Pyle v. American Insurance and Fireman's Fund Insurance Company - Failure of an employer or insurer to have MPN providers available to treat employees is equivalent to terminating a future medical award, and attorney fees are owed under Labor Code section 4607.
Babbit v. Ow Jing & Golden Eagle – MPN statute applies to all injury dates. Thus, employers or insurers may transfer older cases into the MPN.

Permanent Disability

Pendergrass v. Duggan Plumbing & SCIF - The old permanent disability rating schedule is not triggered by the commencement of temporary total disability prior to January 1, 2005. Instead, the new schedule will apply. This replaces a previous finding by the same court that the payment of TTD prior to January 1, 2005 actually triggered a rating under the old system, generally producing a higher permanent disability rating.
Baglione v. Hertz Sales & AIG - A comprehensive medical legal report prior to January 1, 2005 does not trigger the old permanent disability rating schedule unless the report describes the existence of permanent disability.
Costco v. WCAB - Upholds the findings in Pendergrass II and Baglione II. The commencement of TTD prior to January 1, 2005 does not trigger the use of the old permanent disability schedule. Further, if the Comprehensive Medical Legal Report on a claim does not comment on the existence of permanent disability, the case cannot be rated under the old permanent disability schedule.
Costa v. SCIF - The new permanent disability rating schedule was validly adopted. Vocational rehabilitation evidence may be used for rebuttal of schedule, and fees may have to be adjusted. The WCAB has now granted the defendant’s petition for reconsideration. Therefore, this case is not citable authority.


The California Supreme Court has determined that the percentage (Welcher) method must be used for calculating apportionment in permanent disability cases. This resolves the issue as to which method should be used to calculate apportionment - the percentage or the dollar method.

Please see the illustration below of the two methods:

Assume '06 injury is 50% or $62,387.50 and prior award for '05 is 30% or $28,820

- Welcher - subtracting the percentage

- 50% - 30% = 20% or $17,365

- Nabors/Dykes - subtracting the money

- $62,387.50 - $28,820 = $35,567.50

- Variance of $18,202.50

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