Department of Rehabilitation v. Workers' Compensation Appeals Board

The workers’ compensation judge (WCJ) thereafter accepted the stipulation and denied Lauher’s additional claims for penalties under section 132a based on allegations that his supervisor had made harassing telephone calls to Lauher and his family, and that employer, before agreeing to the stipulation, had discriminated against Lauher by requiring that he use accrued sick and vacation time for absences to attend medical appointments. The WCJ denied a petition for reconsideration, as did the Workers’ Compensation Appeals Board (WCAB or the Board).

After agreeing to the stipulation, Lauher returned to work. He also continued to see Dr. Houts for treatment. Dr. Houts was available for appointments only during regular business hours. Lauher’s round-trip journey from his office to Dr. Houts’s office is 58 miles. Depending on the traffic, it took Lauher between two and one-half hours to four hours to drive to Dr. Houts’s office, have a session with him, and return to Lauher’s place of employment. Employer informed Lauher he would not be paid his full salary unless he took sick leave or vacation time for time spent away from his office seeing Dr. Houts. Lauher used close to 200 hours of either sick leave or vacation time to cover his medical appointments with Dr. Houts.

Lauher then filed the petition that forms the basis of this case, seeking reimbursement for the sick and vacation leave his employer docked him for time he spent seeing Dr. Houts for poststipulation treatment, as well as penalties for discrimination pursuant to section 132a. SCIF responded and explained that it had paid Lauher industrial disability leave and TDI for- his period of temporary disability, but that he was not entitled to receive either benefit in the future because his industrial injury had become permanent and stationary. Because, according to the stipulation, Lauher was entitled to

The WCJ ruled that Lauher “established a nexus between his industrial injury and [his employer’s] conduct of requiring him to take sick leave to attend doctor’s appointments.” Specifically, citing section 4600, the WCJ ruled that Lauher was “entitled to workers’ compensation benefits in the form of medical treatment” and that includes “ ‘all reasonable expenses of transportation, meals and lodging’ and ‘one day of temporary disability indemnity for each day of wages lost. . . .’ The worker’s permanent and stationary status has no bearing on his entitlement to receive treatment. Labor Code § 4600 does not say that the worker will be considered temporarily disabled on the day that he goes for treatment, but it says that the worker will be entitled to receive temporary disability indemnity for each day of lost wages. If a worker goes for treatment and must miss time from work, the worker should not be assessed sick leave but, rather, should be paid at the temporary disability rate for the time lost.” Further, the WCJ held employer had not established that a good faith business necessity justified docking Lauher’s sick leave under these circumstances and concluded employer had unlawfully discriminated against Lauher. Accordingly, the WCJ ordered employer to pay a penalty of 10 percent “of the cost of all past, present and future medical treatment in this case” and also ordered employer to pay Lauher $10,000 for violating section 132a. The WCJ thereafter denied a petition for reconsideration; the WCAB, over one dissent, affirmed.

The Court of Appeal disagreed with the WCAB, finding Lauher had not met his burden of presenting a prima facie case of discrimination under section 132a. Accordingly, the appellate court annulled the WCAB’s decision. We granted Lauher’s petition for review.

Discussion

A. Background

More than 90 years ago, our Legislature was directed to “create and enforce a liability on the part of all employers to compensate their employees for any injury incurred by the said employees in the course of their employment irrespective of the fault of either party.” (Cal. Const., former art. XX, §21, added Oct. 10, 1911.) This language was modified by an

With this standard of review in mind, we turn to the first issue posed in this case: Was Lauher entitled to TDI to reimburse him for wages lost while pursuing medical treatment for a permanent and stationary industrial injury?

B. Entitlement to TDI to Replace Wages Lost Attending Medical Appointments for Treatment of a Permanent and Stationary Injury

Lauher contends that “as a necessary means to the end of ensuring prompt medical treatment [pursuant to section 4600], [an] employee is entitled to temporary total disability indemnity for the time lost from work while attending necessary medical treatment.” As we explain, because his industrial injury had become permanent and stationary, he was no longer entitled to receive TDI.

Two of the types of benefits available to the worker injured on the job are temporary disability indemnity, or TDI, and permanent disability indemnity, or PDI. Although both take the form of financial benefits, “[i]t must be remembered that temporary disability indemnity and permanent disability indemnity were intended by the Legislature to serve entirely different functions. Temporary disability indemnity serves as wage replacement during the injured worker’s healing period for the industrial injury. [Citation.] In contrast, permanent disability indemnity compensates for the residual handicap and/or impairment of function after maximum recovery from the effects of the industrial injury have been attained. [Citation.] Permanent disability serves to assist the injured worker in his adjustment in returning to the labor market. [Citation.]” (Maples v. Workers’ Comp. Appeals Bd. (1980) 111 Cal.App.3d 827 , 836 [ 168 Cal.Rptr. 884 ]; see also Nickelsberg v. Workers’ Comp. Appeals Bd. (1991) 54 Cal.3d 288 , 294 [ 285 Cal.Rptr. 86 , 814 P.2d 1328 ].)

That TDI is intended as wage replacement is inferable from section 4653, which requires temporary total disability be calculated as “two-thirds of the average weekly earnings during the period of such disability, consideration being given to the ability of the injured employee to compete in an open labor market.” Because “[t]emporary disability indemnity is intended primarily to substitute for the worker’s lost wages, in order to maintain a steady stream of income” (J. T. Thorp, Inc. v. Workers’ Comp. Appeals Bd. (1984) 153 Cal.App.3d 327 , 333 [ 200 Cal.Rptr. 219 ]; Braewood Convalescent Hospital v. Workers’ Comp. Appeals Bd., supra, 34 Cal.3d at p. 168), an employer’s obligation to pay TDI to an injured worker ceases when such

By contrast, section 4650 provides that the first permanent disability payment must be made by the employer within “14 days after the date of the last payment of temporary disability indemnity.” From this, we may infer the Legislature anticipates an employer has.no legal obligation to pay PDI until the obligation to pay TDI has ceased. Accordingly, we held in LeBoeuf v. Workers’ Comp. Appeals Bd. (1983) 34 Cal.3d 234 [ 193 Cal.Rptr. 547 , 666 P.2d 989 ] that “[t]he right to permanent disability compensation does not arise until the injured worker’s condition becomes ‘permanent and stationary.’ ” (Id. at p. 238, fn. 2.) “A disability is considered permanent after the employee has reached maximum medical improvement or his or her condition has been stationary for a reasonable period of time.” (Cal. Code Regs., tit. 8, § 10152; see Gee v. Workers’ Comp. Appeals Bd. (2002) 96 Cal.App.4th 1418 , 1422, fn. 3 [ 118 Cal.Rptr.2d 105 ]; 1 Hanna, supra, § 8.03, pp. 8-16 to 8-17.)

That Lauher’s industrial injury was permanent and stationary is undisputed. Lauher’s physician, Dr. Houts, so reported, and Lauher entered into a stipulation with SCIF to that effect. That Lauher had returned to work is also undisputed. Under these circumstances, we conclude he was not entitled to any further TDI payments to compensate him for wages lost due to his attending medical appointments during the workday. “An injured employee cannot be temporarily and permanently disabled at the same time; thus, permanent disability payments do not begin until temporary disability payments cease.” (City of Martinez v. Workers’ Comp. Appeals Bd. (2000) 85 Cal.App.4th 601 , 609 [ 102 Cal.Rptr.2d 588 ]; see also Ritchie v. Workers’ Comp. Appeals Bd., supra, 24 Cal.App.4th at p. 1180 [same]; New Amsterdam Cas. Co. v. Ind. Acc. Com. (1951) 108 Cal.App.2d 502 , 507 [ 238 P.2d 1046 ] [same]; 1 Hanna, supra, § 7.02[1], p. 7-8 [same].) Here, Lauher had passed out of the healing period (for which TDI serves as a wage replacement) and had agreed to a stipulation compensating him for his diminished

Lauher’s counterarguments are not persuasive. As did the WCJ, he first relies on section 4600, which relates generally to medical and hospital treatment for an injured worker. That section provides in pertinent part that “Medical, surgical, chiropractic, acupuncture, and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches, and apparatus, including orthotic and prosthetic devices and services, that is reasonably required to cure or relieve from the effects of the injury shall be provided by the employer.” He contends that section 4600 should be liberally construed to include replacement of lost wages occasioned by an employee’s medical treatment. Although he is correct that “[t]he Legislature intended that section 4600 shall be liberally interpreted in favor of the employee’s right to obtain reimbursement” (McCoy v. Industrial Acc. Com. (1966) 64 Cal.2d 82 , 86 [ 48 Cal.Rptr. 858 , 410 P.2d 362 ]; Rodriguez v. Workers’ Comp. Appeals Bd. (1994) 21 Cal.App.4th 1747 , 1758 [ 27 Cal.Rptr.2d 93 ]), he is incorrect that even a liberal interpretation of section 4600 will extend so far as to authorize the payment of temporary disability indemnity to replace lost wages when an injury has become permanent and stationary.

Lauher apparently would have us analogize the right to reimbursement for sick and vacation leave used for seeking continuing treatment for a permanent and stationary industrial injury to the right to reimbursement for transportation costs. Citing Avalon, supra, 18 Cal.4th 1165 , Hutchinson v. Workers’ Comp. Appeals Bd. (1989) 209 Cal.App.3d 372 [ 257 Cal.Rptr. 240 ], and Bundock v. Herndon and Finnigan (1923) 10 I.A.C. 32, Lauher contends that because section 4600 has been construed liberally to compensate an injured worker for transportation costs associated with obtaining medical treatment, we similarly should conclude he is entitled to TDI to compensate him for wages lost while seeking treatment with Dr. Houts. We disagree because the two situations are not comparable. In Avalon, we observed that although section 4600 “does not expressly refer to medical treatment transportation expenses as an aspect of medical treatment benefits, they have consistently been so regarded under the workers’ compensation laws. [Citations.]” (Avalon, supra, at p. 1173.) “The board’s practice . . . of awarding medical treatment transportation expenses,” we observed, “is of long standing,” noting that such benefits have been paid “[a]s early as 1923.” (Id. at p. 1174.) No comparable precedent exists for compensating an injured employee for his wage loss once his injury becomes permanent and stationary.

Nor is Lauher’s claim for TDI to offset the associated wage loss he would incur should he fail to use his sick and vacation leave during his appointments with Dr. Houts supportable as a conceptual matter. Lauher argues that

Finally, Lauher argues the Schedule of Administrative Penalties, Administrative Director Rule 10111.1 (a)(4), which is codified in California Code of Regulations, title 8, section 10111.1, subdivision (a)(4) (hereafter rule 10111.1), indicates the Legislature’s intent that section 4600 be interpreted broadly enough to authorize payment of TDI to reimburse an employee for time away from work seeking medical treatment even though the employee’s injury has become permanent and stationary. The Board accepted this argument as further support for awarding TDI to reimburse Lauher for time spent out of the office seeking treatment with Dr. Houts, but, with due respect to the Board, we do not.

Section 129, subdivision (a) provides in part: “To make certain that injured workers, and their dependents in the event of their death, receive promptly and accurately the full measure of compensation to which they are entitled, the administrative director shall audit insurers, self-insured employers, and third-party administrators to determine if they have met their obligations under this code.” In connection with this auditing procedure, section 129.5, subdivision (a) provides in pertinent part: “The administrative director may assess an administrative penalty against an insurer, self-insured employer, or third-party administrator for [enumerated failings].” Finally, section 129.5, subdivision (b) requires the administrative director to “promulgate regulations establishing a schedule of violations and the amount of the administrative penalty to be imposed for each type of violation.”

Pursuant to this legislative delegation, the Labor Department’s administrative director promulgated rule 10111.1(a)(4). That provision sets forth a schedule of graduated financial penalties for failures to pay enumerated benefits. In particular, rule 10111.1(a)(4) provides: “The penalty for each failure to pay mileage fees and bridge tolls when notifying the employee of a medical evaluation scheduled by the claims administrator, in accordance with Labor Code Sections 4600 through 4621; or to pay mileage fees and bridge tolls within 14 days of receiving notice of a medical evaluation

Lauher contends this administrative rule, with its specific mention of “temporary disability,” supports his view that the Legislature intended section 4600 be interpreted to authorize the payment of TDI as a replacement for wages an employee loses while pursuing medical treatment for an industrial injury that has become permanent and stationary. No basis for such a conclusion exists. Read as a whole, rule 10111.1(a) addresses several distinct situations. For example, rule 10111.1(a)(1) addresses the failure to pay the self-imposed penalty for a late indemnity payment pursuant to section 4650, subdivision (d). Rule 10111.1(a)(2) addresses the failure to begin paying permanent disability indemnity in a timely fashion. Rule 10111.1(a)(3) addresses the failure timely to reimburse a worker for self-procured medical treatment.

At issue here is rule 10111.1(a)(4). That subsection addresses the failure to pay transportation and associated costs in certain enumerated situations. Thus, it first prescribes an administrative penalty for failing to pay mileage and tolls “when notifying the employee of a medical evaluation scheduled by the claims administrator.” (Italics added.) Such an evaluation would typically occur during the healing period when a worker would claim entitlement to TDI, but it could also occur at other times, for example, when the employee’s ability to return to work is undisputed but disagreement exists over the degree of the permanent injury, in which case further medical evaluations may be necessary. Nevertheless, although Labor Code section 4600 specifically provides for payment of transportation expenses and temporary disability when the evaluation is performed at the request of, for example, the employer or the employer’s insurer, neither this clause of rule 10111.1(a)(4) nor Labor Code section 4600 authorizes TDI or wage replacement where, as here, an employee seeks medical treatment for a permanent injury.

The second clause of rule 10111.1(a)(4), which sets forth the administrative penalty for failure to pay mileage and tolls “within 14 days of receiving notice of a medical evaluation scheduled by the administrative director,” similarly fails to mention wage replacement. Here, too, the medical evaluation referred to would typically occur during the healing period to determine

Finally, rule 10111.1(a)(4) prescribes a penalty for the “failure ... to object or pay the injured worker for any other transportation, temporary disability, meal or lodging expense incurred to obtain medical treatment or evaluation, within 60 days of receiving a request.” (Italics added.) This clause of rule 10111.1(a)(4) differs from the first two clauses in two respects. First, unlike the two previous clauses, this clause refers to both “treatment” and “evaluation.” Second, it specifically mentions “temporary disability.” Although the mention of “treatment” could refer to medical care after a worker’s industrial injury becomes permanent and stationary, it seems unlikely the administrative director, exercising delegated legislative powers, intended to authorize payment of TDI to replace wages an employee loses while pursuing medical treatment for a permanent and stationary injury, absent any statutory authorization for such a benefit. Moreover, the mere mention of “temporary disability” in rule 10111.1(a)(4) is insufficient to create a benefit untethered to any statutory authorization. In short, rule 10111.1(a)(4) does not speak at all to the question whether an injured worker is entitled to TDI to compensate him for wages lost while seeking medical treatment once his injury has become permanent and stationary.

In sum, we find no authority for the proposition that an injured worker is entitled to payment of TDI to reimburse him for wages lost while pursuing medical treatment for an industrial injury once that injury has become permanent and stationary. On the contrary, once the employee’s injury is permanent and stationary and, as here, the employee returns to work, he is no longer entitled to TDI. Exercising independent review on this legal question (Barnes v. Workers’ Comp. Appeals Bd., supra, 23 Cal.4th at p. 685), we find the Board erred in ruling otherwise.

C. Discrimination Pursuant to Section 132a

Lauher next claims that his employer discriminated against him within the meaning of section 132a because he had suffered an industrial

Noting this last passage, the court in Smith, supra, 152 Cal.App.3d 1104 , held that “save for the two exceptions just described [i.e., reemploying employees who are unqualified or for whom no position is available], action which works to the detriment of the employee because of an injury is unlawful under section 132a.” (Id. at p. 1109, italics added.) This test of “detriment” to the employee was accepted as the applicable standard in Barns v. Workers ’ Comp. Appeals Bd., supra, 216 Cal.App.3d at page 531 (“a worker proves a violation of section 132a by showing that as the result of an industrial injury, the employer engaged in conduct detrimental to the worker”) as well as by at least one commentator (1 Hanna, supra, § 10.11 [1], p. 10-20 [“[t]he critical question is whether the employer’s action caused detriment to an industrially-injured employee”]).

The Court of Appeal in this case, however, found the Smith formulation “analytically incomplete.” The court explained that, although Lauher had clearly suffered a detriment by having to use his accumulated sick leave and vacation time for his visits to see Dr. Houts, he never established he “had a legal right to receive TDI and retain his accrued sick leave and vacation time, and that [his employer] had a corresponding legal duty to pay TDI and