Supreme Court Denies Active Duty Peace Officers Labor Code 4458.2 Disability Benefits Provided to Volunteer Peace Officers

On October 26th, the California Supreme Court decided the case of Larkin v. Workers’ Compensation Appeals Board. The Supreme Court ruled that Labor Code section 4458.2 does not apply to sworn peace officers who are regular, salaried employees of a law enforcement agency.  The Court held that this enhancement of disability benefits was only applicable to so-called "Posse Comitatus" (i.e. volunteer or certain reserve officers) and declined to extend the benefit to regular active duty officers.

Brian Dixon and Gregory Gomez from the Law Offices of Mastagni Holstedt, A.P.C. represented Officer Larkin before the California Supreme Court.  Larkin filed a claim for TD benefits under Section 4458.2 arguing the express language of the Section did not exclude full time active duty officers. Larkin sought these enhanced benefits after having utilized all available 4850 time.  The Workers’ Compensation Appeals Board had denied his claim for these post-4850 benefits. The Court of Appeal upheld the WCAB.

Under Labor Code section 4458.2 an officer’s temporary disability (or “TD”) benefit is set at the maximum statutory rate instead of being based on what they were actually earning. This means that if an officer was serving as a volunteer or reserve officer when they were injured on duty, they would receive TD benefits as if they were full-time employees of the agency. And the officer would receive TD benefits at the highest possible rate even if they were actually paid less while they were working.

This makes a huge difference in the amount an officer is paid for an on-the-job injury. Normally, an employee’s TD benefit payment is only two-thirds (2/3) of their regular salary. But under Section 4458.2 an officer would receive the maximum statutory rate of TD, as if they were among the highest paid employees.

To put this in real terms, in 2008 Police Officer John Larkin was seriously injured in a vehicle accident while on duty. His average weekly salary at that time was around $1000. The City of Marysville said it would only pay Larkin TD at two-thirds of his salary, meaning around $670 per week. But if Section 4458.2 was applied and Larkin was paid TD at the maximum statutory rate, he would receive over $900 per week in TD benefits. That is a difference of more than $10,000 over a year.

 

The Supreme Court’s explained Section 4458.2 was originally written to provide disability coverage to volunteer peace officers. Officer Larkin’s attorneys pointed out that the word “volunteer” was removed from the law in 1989 and is not in the other law it references (Labor Code section 3362). Selectively relying upon the legislative history, the Court held these amendments were not intended to broaden the law to apply to all peace officers. 

The Court further opined that regular peace officer employees are covered under Labor Code sections 4850 and 4853. These laws allow an injured officer to take up to one year of full-paid leave and then up to one year of TD benefits at the normal two-thirds rate. The Court argued that it was “balancing” the interests of regular and volunteer peace officers by denying regular officers Section 4458.2 benefits.

The Court ignored the reality facing many peace officers in smaller cities and rural counties. Officers like Larkin choose to serve in dangerous positions for less pay than their colleagues in wealthier cities and counties. They should not be punished when they suffer an on-the-job injury. But now, not only will officers like Larkin get less in TD benefits than many regular peace officers. They cannot even get the same TD benefits that volunteer peace officers receive. This ruling affects the rights of more than 73,000 police and sheriff patrol officers across in the state. (Employment Development Department, Police and Sheriff Patrol Officers in California.)

On behalf of the thousands of peace officers hurt by this inequity, Mastagni Holstedt, A.P.C. hopes the Legislature immediately fixes the law and overturns the Supreme Court’s ruling.

California Supreme Court Grants Review of Mastagni Holstedt, APC Workers Compensation Case

The California Supreme Court agreed to hear oral arguments on one of Mastagni Holstedt, APC's workers compensation cases. At issue in the case is whether a permanent peace officer is entitled to the maximum temporary disability benefit as a result of an on the job injury.

Officer John Larkin was injured in a motor vehicle accident in November of 2008 while employed as an active police officer with the City of Marysville. He received benefits under Labor code section 4850 which expired. He then received temporary disability benefits. The temporary disability benefits are paid at two thirds the weekly earning rate. Officer Larkin's weekly earnings were $1008 resulting in a $671 weekly temporary disability benefits rate.

However, Labor Code section 4458.2 states temporary disability benefits are paid at the maximum statutory rate for eligible peace officers. The maximum rate in 2008, the time of the case, was $916 per week. Labor Code section 4458.2 makes reference to Labor Code section 3362 which defines who is eligible for the maximum benefit. Labor Code section 3362 states that every person registered as an active police officer shall be considered an employee of the municipality he or she works for.

Labor Code section 3362 has evolved over time. Originally the language included only men and specified the peace officer had to be a volunteer to receive the maximum benefit. However, the California State Legislature in 1989 modernized the statute including both genders and removing the word "volunteer." This evidences the intent of the legislature to provide maximum benefits to all peace officers.

Officer Larkin challenged the lower compensation rate in front of the Workers' Compensation Appeals Board. He argued he was entitled to the full $916 per week rather than the $671 per week. The Workers' Compensation Appeals Board argued that since Labor Code section 3362 only applied to volunteer peace officers, Officer Larkin was not entitled to the maximum temporary disability benefit. On appeal, the California Court of Appeal for the Third District upheld the Workers' Compensation Appeals Board determination.

Mastagni Holstedt, APC appealed the decision to the California Supreme Court. In its briefs, the firm argues all officers, regardless of status, are entitled to maximum benefits. This is the clear language of the statute which must be followed by the court system. By reading extra terms into the statute, the Court of Appeal created an absurd result which harms peace officers across the state.

Oral argument for the case will be held on September 2, 2015 at 9 AM in San Francisco. The case will be argued by Mastagni Holstedt, APC attorney Brian A. Dixon. Mastagni Holstedt, APC attorney Gregory G. Gomez assisted in drafting the briefing materials for the case.

Court of Appeal Gives Retroactive Effect to Firefighter Injury Presumption

The California Court of Appeal ruled statutory changes to workers' compensation injury presumptions apply to cases pending prior to the change in the statute. In doing so, the Court of Appeal overruled the Workers' Compensation Appeals Board ("WCAB") who refused to apply the presumption to a pending case. This decision could affect the presumptions involved in many workers compensation cases.

 

The facts of Lozano v. W.C.A.B. are tragic. William Lozano worked as a firefighter for a Department of Defense installation. Lozano was diagnosed with stomach cancer and succumbed to the disease in September of 2007. In November of 2009, Lozano's wife and two young children filed a workers compensation claim alleging the stomach cancer was work related.

 

On January 1, 2009 the legislature amended the Labor Code so that firefighters like Lozano could take advantage of the cancer presumption. This means the family would not need to prove Lozano's employment caused stomach cancer. Rather, the court would assume the cancer was from his employment and the employer would have to prove the cancer was not job related.

 

The Agreed Medical Examiner ("AME") concluded Lozano was exposed to carcinogens as part of his work activities. However, he could not conclusively say the carcinogens caused Lozano's cancer. However, if the firefighter cancer presumption applied to Lozano's case, the AME concluded the cancer should be presumed as work related.

 

The WCAB determined the presumption did not apply to Lozano's case. The WCAB noted Lozano was not a qualifying firefighter under the statute at the time of his death. The WCAB refused to apply the statutory change retroactively because the Legislature did not provide for retroactive application in the statute.

 

The Second District Court of Appeal reversed the WCAB's decision and held the presumption did apply to Lozano's claim. In general new statutes operate prospectively unless the Legislature clearly indicates otherwise. However, this general rule does not apply to new statutes that simply alter procedural or evidentiary statutes to trials occurring after enactment. Thus, if a new statute alters substantive legal rights, like who is liable for an injury, that statute cannot be applied retroactively. But, if the statute only alters procedural rights, like who has the burden of proof, the statute can be applied retroactively.

 

Here, the presumption test does not change who is liable for the injury, but rather who has the burden of producing evidence. Making the cancer presumption available to firefighters like Lozano only addresses the procedure to follow, not the substantive legal rights. Thus, the Court of Appeal overruled the WCAB and allowed Lozano's heirs to retroactively apply the cancer presumption.

 

This case should help a great number of public safety employees in the future. The instant statute only dealt with firefighters working at Department of Defense facilities. But the court's logic could be applied to any new statute which changes the evidentiary burdens for workers compensation claims. Thus, when the legislature changes the statute to help more people, any pending claims can take advantage of that new rule.

Cashed Out Vacation and Sick Leave Earned During Labor Code § 4850 Leave Not Tax Exempt

The United States Tax Court recently decided that not all benefits earned during a leave of absence under Labor Code § 4850 are tax exempt.  In Clarence William Speer v. Commissioner of Internal Revenue, the Tax Court ruled that the government can tax accrued vacation and sick leave earned during a disability leave of absence.

After serving the citizens of Los Angeles for over 25 years, LAPD Detective Clarence Speer retired from public service in 2009.  On account of duty related injury, Speer took temporary disability twice during his decade’s long career.  Speer first took temporary disability leave in 1982. In 2007, Speer used temporary disability leave for the second time.

At retirement in 2009, Speer had accumulated 541 hours of unused vacation time. Speer also accrued 800 hours of unused sick leave. Combined, the unused benefits had a value of $53,513.  After cashing out the $53,513 at retirement, the City of Los Angeles reported that amount as income on Speer’s 2009 W-2. Since Speer earned some of the cashed out benefits while on temporary disability, Speer excluded the $53,313 from his 2009 income tax return.

Labor Code § 4850 allows police officers and firefighters a one year leave of absence in lieu of workers' compensation. When the disability ends, compensation for that disability also stops. The government cannot tax workers’ compensation income under 26 United States Code § 104(a)(1). As a statute that resembles a workers’ compensation statute, the income tax exemption applies to Labor Code § 4850.

Not only is disability pay exempt from income tax, but Labor Code § 4850(a) entitles police officers to temporary disability leave without any loss of salary. This means that vacation and sick leave continue to accrue during paid disability leave. Naturally, Speer claimed the benefits earned during his disability time as exempt from income tax.

The Tax Court disagreed with Speer. Citing Boyd v. City of Santa Ana, the Tax Court stated that compensation paid while on disability leave was not salary, but compensation for injuries. Since Speer could not take vacation or sick time during his temporary disability, he could not benefit from the accrued vacation or sick time while on disability. Speer’s only benefit from the accrued vacation and sick time came after his disability ended.  The Tax Court ruled that any payments received by Speer after his disability ended were not part of Speer’s Labor Code § 4850 compensation. Thus, the income tax exemptions did not apply to Speer’s cashed out leave.

All compensation received during a police officer or firefighter's leave of absence under Labor Code § 4850 is tax exempt. When cashed out after a leave of absence, the government can tax vacation and sick time earned during that Labor Code § 4850 leave.

Court of Appeal Denies Workers' Compensation Benefits for Officer's Injury During "Hold Over" Shift Commute

On May 19, 2014, the California Court of Appeal in Lanz v. Workers' Compensation Appeals Board ruled an officer's family was not entitled to workers' compensation benefits because an employee's commute after a "hold over" shift fell outside his ordinary course of employment.

In Lanz, a Pleasant Valley prison correctional officer was "held over" from his regular shift and worked 16 hours.  The officer was killed in a car accident during his commute home.  The officer's dependents filed claims for workers' compensation benefits.

Under the "coming and going" rule, an employee is not within the scope of employment when driving home or to work unless undertaking a "special mission."  A "special mission" is a specific instance when an employee is sent by their employer to do something unusual for the purpose of furthering business. 

The Court considered the location, timing, and nature of the officer's task during his hold over shift.  The hold over shift directly followed the officer's regular shift and was at his regular place of work.  The hold over shift affected the officer's commute only by changing the time of his drive home, but not the distance or location.  The Court held the officer's hold over shift was a common occurrence, and not a "special mission."  Therefore, his commute was not in the course of employment and his family was denied workers' compensation benefits.

Court of Appeal Publishes Cannon Decision

The Third District Court of Appeal published its decision in City of Sacramento v. Workers Compensation Appeals Board (Cannon) (December 26, 2013, Court of Appeal Case No. C072944). That means the case can now be cited as precedent throughout the state. The decision establishes the Almaraz/Guzman rule is not limited to “complex and extraordinary" workers’ compensation claims, increasing accuracy and fairness in rating workers’ compensation injuries. Mastagni attorney Eric Ledger argued the case for Sacramento police officer Arthur Cannon before the Court of Appeal.

Court of Appeal Protects Police Officers' Workers' Compensation Benefits

In City of Sacramento v. Workers Compensation Appeals Board (Cannon) (December 26, 2013, Court of Appeal Case No. C072944), the Court of Appeal ruled in favor of accuracy and fairness when rating workers’ compensation injuries.  The decision establishes the Almaraz/Guzman rule is not limited to “complex and extraordinary" workers’ compensation claims.

When a client suffers a permanent impairment, an evaluator rates the injury using the American Medical Association’s Guide to the Evaluation of Permanent Impairment (“AMA Guides”). Almaraz/Guzman, allows the evaluator to give a fair and accurate rating of the client’s disability using any page from the AMA Guides. This is particularly useful when a strict rating under AMA Guides rating is unfairly low. The use of Almaraz/Guzman often results in a higher disability rating for the client.

In this case, the City of Sacramento challenged the rating for a police officer injured on the job. The City's first argued an evaluator may not rate solely on the basis of subjective complaints of pain. The AMA Guides does not allow a strict rating solely based on pain. Thus, defendant argued no rating should be given. But the Court of Appeal quoted the Almaraz/Guzman decision, and reaffirmed the evaluator is not limited to either strict compliance or mechanical application of the AMA Guides. Where a condition is entirely subjective, the evaluator is entitled to use his/her best judgment in assigning a disability rating.

Next, the City of Sacramento dissected four words from the Almaraz/Guzman opinion and asserted it can only be used in “complex and extraordinary cases." The Court of Appeal flatly rejected the claim. The City of Sacramento misinterpreted Almaraz/Guzman. The words “complex and extraordinary cases” referred to syndromes not fully understood or those manifested solely by subjective complaints.  Officer Cannon’s injury, plantar fasciitis, is mentioned nowhere in the AMA guides. Thus, it was clearly within the realm of cases contemplated by Almaraz/Guzman.

This case was not the first time the defense bar has claimed Almaraz/Guzman was limited to “complex and extraordinary cases."  Hopefully, it will be the last. We hope this decision makes it clear accuracy and fairness is the key to rating workers’ compensation injuries.  In those cases where the strict interpretation of the AMA Guides does not accurately reflect a client’s impairment, the evaluator should cite Almaraz/Guzman and provide a more accurate rating.  Mastagni attorney Eric D. Ledger argued the case for Sacramento police officer Arthur Cannon before the Court of Appeal.

Court of Appeal: 1-year POBR Statute of Limitations Does Not Apply to Work Comp Fraud Cases

In California Department of Corrections and Rehabilitation v. State Personnel Board (April 26, 2013) 2013 WL 1777118, the Court of Appeal ruled workers' compensation fraud investigations are exempt from the one-year limitations period established in section 3304 of POBR.  The Court rejected the argument that the investigation has to be conducted by an outside agency for the exception to apply.

There are several exceptions to the 1-year statute of limitations for IAs under POBR.  The statute says the statute of limitations is tolled when the alleged "misconduct is also the subject of a criminal investigation or criminal prosecution," when the officer waives the statute of limitations, if the investigation is multi-jurisdictional and reasonable extension is required, if multiple officers are subjects and a reasonable extension is required, if the officer is incapacitated, and if the officer is a defendant in a lawsuit about the same issue.

There is also an exception If the investigation involves an allegation of workers' compensation fraud on the part of the public safety officer."  In this case, an officer was disciplined for alleged workers' comp fraud and dishonesty in the investigation of the alleged fraud.  He argued this exception only applied when the fraud investigation was done by an outside agency.  The Court disagreed, finding the plain language of the statue did not contain that limitation.

Court of Appeal Vindicates Injured Workers' Right to Temporary Disability

In Meeks Building Center et al. v. WCAB and Salem Najjar (June 26, 2012, C065944; WCAB No. ADJ4255212), the Third District Court of Appeal vindicated an injured worker's rights after his employer tried to use a legal technicality to cut off his temporary disability prematurely. After Salem Najjar was injured on the job, his employer sent him to a qualified medical evaluation to learn more about his injuries.  He saw the doctor on September 11, 2007 and received $64.71 for the wages he lost that day.

Najjar continued working.  Then, on March 17, 2009, the doctor determined he was temporarily disabled and needed to be off work.  As a result, he started getting temporary disability payments so he could recover.  Under the Labor Code, injured workers can receive up to two years of temporary disability payments if necessary.  However, on September 8, 2009, the employer cut off his temporary disability payments.  They claimed the two years started running when they sent him to the doctor in 2007, even though he only got one's days wages. 

Mastagni Law partner John Holstedt fought for Najjar in the Workers' Compensation Appeals Board and the Third District Court of Appeal.  Both bodies found for Najjar, deciding the one day's payment in 2007 did not start the clock on temporary disability.  Instead, the Court of Appeal noted the one day payment was "not a payment of temporary disability benefits, but a reimbursement of a medical-legal expense."  Accordingly, the Court of Appeal affirmed the ruling at WCAB and upheld Najjar's right to receive full temporary disability payments while he was off work recovering from his injury.

Small California Town Lapses on Workers' Comp Insurance, Briefly Shuts Down Police Department

The town of Isleton, California shut down its police department for about a week in late January after it lost its workers' compensation insurance for lack of payment.  During the shutdown, the Sacramento County Sheriff's Department assumed responsibility for high priority calls in the area.  The department was back up and running after negotiating a policy with a new carrier.

Court of Appeal Vindicates Firefighter's Workers' Comp Rights

Where does the personal end and the legally compensable begin? In Richard Warner v. W.C.A.B. et al., California’s Second Appellate District recently had a chance to weigh in on this crucial workers’ comp question as it relates to a work-from-home firefighter.

Richard Warner is a Los Angeles County firefighter who works and lives on small, picturesque Santa Catalina Island. To ensure that the approximately 4,000 residents of the island have fire protection, LA County required Warner, along with one other firefighter, to live on the island. Warner’s house is both residence and partial workplace. Island denizens visit him there when they need his services, and he often responds to incident calls directly from home, without traveling to the island’s modest fire station.

In February of 2010, Warner’s wife asked him to help her trim the wisteria that grows wildly around their house. Warner, after falling off a ladder, injured his neck and his back, as well as his wrist, elbow, and shoulder on his left side.

The County tried, with initial success, to avoid paying disability or medical costs to Warner, under the claim that this injury was due to a personal act—a favor Mr. Warner did for his wife—rather than part of his employment obligations. The Workers’ Comp Appeals Board sided with the County, concluding that although Warner suffered his injury in the course of employment, it did not arise out of employment, because trimming the wisteria was something he did for private purposes.

The Second Appellate District overturned the Board and upheld Warner’s rights. The Court invoked the time-honored Dual Purpose Doctrine: if an action serves both personal and employment-related ends, it is an act which “arises out of work” for compensation purposes. There was no question that Warner worked from his home. It was equally incontestable that the County benefited from having this fire station-cum-residence be both easily accessible and aesthetically pleasing.

In other words, trimming the wisteria served both Warner’s ends and those of his boss—the fact that Warner acted at his wife’s request did not negate this fact. His employer must pay him workers’ comp.

The court’s decision is unpublished, but it nevertheless represents a significant vindication of the rights of workers in a time when they are under increasing attack. Workers’ comp exists to help those who are hurt serving their bosses’ interests. Employers who compel their subordinates to mingle duty and leisure should not be able to cry “Personal purposes!” when the same mingled deeds lead to mangled results.