By Charles R. Rondeau
Last fall, the Legislature enacted Senate Bill 863 (SB 863), yet another major reform of the California workers’ compensation system. Like SB 899, its predecessor in 2004, SB 863 was adopted as a reaction to, and an intended cure for, certain perceived “abuses” which were occurring in the workers’ compensation system. One of these was the prevalence of so-called “add on” allegations of sleep disorders, sexual disorders and psychological/psychiatric disorders to physical injury claims (most commonly orthopedic in nature). Ironically, the primary reason that these secondary consequence claims were being pursued was in response to the drastic decrease in permanent disability compensation for the underlying physical injury claims when SB 899 ushered in the AMA Guides to the California workers’ compensation system. And so the cycle of action and reaction perpetuates itself, as in the famous rabbit-wolf paradigm, with (unfortunately) no end in sight. This article will discuss the impact of SB 863 on psychological/psychiatric disorder claims for work-related specific injuries sustained on or after January 1, 2013 or for cumulative trauma injuries with an ending date on or after January 1, 2013.
Labor Code section 4660.1(c)
SB 863 effected several major changes to the system of permanent disability compensation by adopting a new statute, Labor Code section 4660.1, which is applicable for all injuries occurring on or after January 1, 2013. Among these changes is a severely limitation on the ability of injured workers to receive permanent disability compensation for sleep disorders, sexual disorders and psychological/psychiatric disorders which develop as a “compensable consequence” of physical injuries. Labor Code 4660.1(c)(1) states:
Except as provided in paragraph (2), there shall be no increases in impairment ratings for sleep dysfunction, sexual dysfunction, or psychiatric disorder, or any combination thereof, arising out of a compensable physical injury. Nothing in this section shall limit the ability of an injured employee to obtain treatment for sleep dysfunction, sexual dysfunction or psychiatric disorder, if any, that are a consequence of an industrial injury.
As is always the case when it comes to interpreting a statute, it is important to focus on its precise wording and to then consider the statute in the context of the greater body of law to which it belongs. So, let’s deconstruct Labor Code section 4660.1(c)(1) a bit and then examine its importance against the backdrop of California workers’ compensation jurisprudence.
The first phrase which must be emphasized is: “there shall be no increases in impairment ratings for sleep dysfunction, sexual dysfunction, or psychiatric disorder, or any combination thereof ….”. The potentially pivotal nature of the highlighted verbiage will be discussed later, but the primary point to be made here is that the Legislature did not state that there shall be no permanent disability compensation for compensable consequence sleep disorders, sexual disorders and psychological/psychiatric disorders. Furthermore, Labor Code section 4660.1(c)(1) does not preclude an injured worker from receiving temporary disability compensation when, for instance, compensable consequence psychological/psychiatric disorders renders an injured worker to be temporarily totally disabled.
The next phrase which needs to be emphasized is: “arising out of a compensable physical injury ….”. By its very terms, Labor Code section 4660.1(c)(1) does not preclude “increases in impairment ratings” for sleep disorders, sexual disorders and psychological/psychiatric disorders which occur as a direct result of the industrial injury itself. What this means in the specific context of psychological/psychiatric disorder claims is that an injured worker may still receive permanent disability compensation: (1) in cases where the primary injury is to the psyche (so called “mental-mental claims”); and (2) in cases of traumatic brain injury; and (3) in cases where the psychological/psychiatric disorder directly results from an underlying industrial event which is inherently psychologically traumatic (e.g., PTSD).
The last phrase which deserves mention is: “[n]othing in this section shall limit the ability of an injured employee to obtain treatment ….”. Thus, whether or not an injured worker can receive permanent disability compensation for compensable consequence sleep disorders, sexual disorders and psychological/psychiatric disorders, that worker is still entitled to receive treatment for these conditions, provided, of course, that such treatment is deemed medically necessary. The fact that the right to such treatment has been preserved by SB 863 is crucial to both injured workers and the physicians who remain willing to treat them. As a matter of long-standing precedent in California workers’ compensation law, to the extent that a non-industrial injury or condition must be treated to “cure or relieve” an injured worker of the effects of an acknowledged work-related injury or condition can be effectively treated, the employer is required to provide treatment for both injuries and conditions . Assuming that the physical injury in a particular case is significant, one can easily understand why psychological/psychiatric treatment would be necessary to alleviate the effects of that injury. As will be discussed later in this article, medical treatment guidelines applicable in the California workers’ compensation system actually support the efficacy and necessity of psychological/psychiatric treatment in appropriate cases.
With respect to psychological/psychiatric injuries, there are two exceptions to the prohibition contained in Section 4660.1(c)(1). Labor Code section 4660.1(c)(2) states:
An increased impairment rating for psychiatric disorder shall not be subject to paragraph (1) if the compensable psychiatric injury resulted from either of the following:
- Being a victim of a violent act or direct exposure to a significant violent act within the meaning of Section 3208.3.
- A catastrophic injury, including, but not limited to, loss of a limb, paralysis, severe burn, or severe head injury.
As will be shown, these exceptions, particularly the “catastrophic injury” exception, will prove to be very difficult to apply in the short run and will cause tremendous controversy until the California appeals court provide specific guidance.
The “Violent Act Exception”
Labor Code section 4660.1(c)(2)(A) does not define the term “violent act”. Rather, it simply references Labor Code section 3208.3, which likewise fails to define this term. Accordingly, what constitutes a “violent act” is subject to debate until such time as a precise definition is derived through the appellate litigation process.
To begin to understand the term “violent act” in its proper context, one needs to first review Labor Code section 3208.3(b) in its entirety:
- In order to establish that a psychiatric injury is compensable, an employee shall demonstrate by a preponderance of the evidence that actual events of employment were predominant as to all causes combined of the psychiatric injury.
- Notwithstanding paragraph (1), in the case of employees whose injuries resulted from being a victim of a violent act or from direct exposure to a significant violent act, the employee shall be required to demonstrate by a preponderance of the evidence that actual events of employment were a substantial cause of the injury.
- For the purposes of this section, "substantial cause" means at least 35 to 40 percent of the causation from all sources combined.
There are several points which need to be made. First of all, in cases where the injured worker was either “the victim of a violent act” or was “direct[ly] expos[ed] to a significant violent act”, the causation threshold of compensability for any resulting psychological/psychiatric injury is different. Unlike all other claims of psyche injury which are subject to the “predominant cause” standard (>50%), where a psychological/psychiatric injury results from a “violent act” or exposure to a “significant violent act” the injured worker need only prove that the act was a “substantial cause” of their psyche injury (35% - 40%).
Secondly, although Labor Code section 3208.3(b) has been “on the books” since 1991, there are very few cases which address whether a particular work-related event constituted a “violent act”. Most of these cases involved rather obvious situations such where the injured worker was threatened by armed gunmen in the course of a robbery or witnessed a drunk driver hitting a pedestrian .
Furthermore, there are very few other statutes which define the term “violent act”. As one might expect, most of the statutes which define either “violent” or “violent act” appear in the Penal Code and do not involve sufficiently analogous situations such that those definitions are helpful in the context of a workers’ compensation case. On the other hand, Business and Professions Code section 7500.1(y) defines a “violent act” as “any act that results in bodily harm or injury to any party involved.” To the extent that a similar definition is adopted in the context of Labor Code section 4660.1(c)(2)(A), many workplace events could conceivably constitute a “violent act”. Only time will tell.
The “Catastrophic Injury” Exception
It is likely, however, the exception provided for in Labor Code section 4660.1 (c) (2) for psychological/psychiatric conditions which result from "catastrophic injury" will spark even more intense and heated debate. Just as in the case of the “violent act” exception, Section 4660.1(c)(2) does not define the term “catastrophic injury”. Instead, Section 4660.1(c)(2)(B) does no more than provide a non-exclusive list of examples of such injuries. Once again, what constitutes a “catastrophic injury” will be unclear until such time as the appellate courts intervene.
A few salient observations can, however, be made even at this time. The most important point is that what must be “catastrophic” is the outcome of a work-related injury and not necessarily the initial injury itself. Section 4660.1(c)(2)(B) speaks of a “catastrophic injury”, as opposed to a "catastrophic event," a "catastrophic incident" or even a "catastrophic accident." Furthermore, it is clear from the examples of “catastrophic injury” set forth in Section 4660.1(c)(2)(B)(i.e., loss of a limb, paralysis, severe burn, or severe head injury) that it is the outcome of a work-related injury, and not the nature of the underlying injury itself, which must be considered when determining whether that injury is, indeed, “catastrophic”. For example, a simple laceration to an arm or a leg which becomes infected may cause that limb to be amputated, or a slip and fall injury may result in paralysis. While neither the cut nor the slip and fall is “catastrophic”, the outcome in each instance certainly is.
Other California statutes, and indeed case law from other States, may ultimately help shape the ultimate definition of “catastrophic injury” in this context. As will be demonstrated, the cited authorities define a “catastrophic injury” in terms of its adverse financial consequences. For example, California Education Code sections 44043.5(a)(l) and 87045(a)(l) and California Government Code section 19991.13(b)(1) all define the terms "catastrophic illness" or "catastrophic injury" as “an illness or injury that is expected to incapacitate the employee for an extended period of time to care for that family member, and taking extended time off work creates a financial hardship for the employee because he or she has exhausted all of his or her sick leave and other paid time off.” Moreover, California Welfare and Institutions Code section 4785 (f) provides that the parents of a family receiving state welfare assistance are exempt from a particular annual assessment where they demonstrate: “the existence of a catastrophic loss that temporarily limits the ability of the parents to pay and creates a direct economic impact on the family.” Section 4785(f) goes on to provide examples of “catastrophic loss”, including: “natural disasters, accidents involving, or major injuries to, an immediate family member, and extraordinary medical expenses.”
In addition, an Illinois appellate court described the "ordinary and popularly understood meaning" of the term "catastrophic injury" as follows: "The term 'catastrophic' is ordinarily understood to mean, in terms of an illness, 'financially ruinous.' Thus, the plain meaning of the term 'catastrophic injury' ...refers to an injury that is financially ruinous."
What constitutes a "catastrophic injury" within the meaning of Labor Code 4660.1(c)(2)(B) will be a hotly-debated question until the inevitable appellate litigation is concluded. Once again, only time will tell.
Impairment vs. Disability
Impairment and disability are clearly separate and distinct concepts. The AMA Guides 5th Edition defines impairment as: “a loss, loss of use, or derangement of any body part, organ system, or organ function.” On the other hand, the Guides define disability as: “an alteration of an individual’s capacity to meet personal, social, or occupational demands or statutory or regulatory requirements because of an impairment.” In other words, an impairment represents a decrease in an injured worker’s pre-injury normal bodily function, whereas disability represents a decrease in their situational functionality as a result of an impairment.
The point was made earlier in this article that when interpreting a statute one must first focus attention on the precise wording of the statute. Recall that what Labor Code section 4660.1(c)(1) precludes is “increases in impairment ratings for sleep dysfunction, sexual dysfunction, or psychiatric disorder, or any combination thereof ….”. On the other hand, Section 4660.1(c)(1) does not by its terms preclude an increase in permanent disability due to any one of the aforementioned conditions or a combination thereof.
Furthermore, Section 4660.1(c)(1) must be interpreted in reference to Section 4660.1 as a whole, as well as in the context of the workers' compensation system generally. To begin, Labor Code section 4660.1(d) provides that the Permanent Disability Rating Schedule (“PDRS”) adopted by the Administrative Director “shall be prima facie evidence of the percentage of permanent disability to be attributed to each injury covered by the schedule.” This very language which appears verbatim in Labor Code section 4660 has been interpreted to mean that the permanent disability rating derived by strict application of the PDRS in a particular case is subject to rebuttal . Since impairment and disability are separate concepts, an injured worker should be permitted to present evidence of all disability factors, including psychological/psychiatric factors, to rebut the disability rating which is derived as a function of their legally ratable impairments and application of the PDRS.
Primary Psyche Injury Claims (“Mental-Mental”)
Up to this point, this article has been devoted to discussing what SB 863 has changed with respect to psychological/psychiatric conditions. It is equally important, of course, to consider what has not changed. The obvious first place to begin is with psychological/psychiatric conditions which flow from work-related events that do not involve a physical injury. An injured worker’s right to receive the full panoply of workers’ compensation benefits, including permanent disability compensation, remains unaffected by SB 863. Therefore, applicant attorneys and the physicians who treat them must be mindful of this fact and carefully screen their cases to identify potential “mental-mental” claims which are independent of any physical injury claims, such as psychological/psychiatric conditions which result from “overwork”, harassment, discrimination and otherwise hostile work environments.
“Mixed Factor” Cases
In many cases, a psychological/psychiatric condition is caused by multiple concurrent factors. For example, an injured worker may feel “stressed” both due to a work-related physical injury and the hostile nature of the employment environment. This situation is more common than one would hope when an injured worker returns to (or attempts to return to work) after suffering a work-related physical injury. In addition, non-industrial factors (e.g., family and personal life issues, general health issues, etc.) may also be contributory factors causing the psychological/psychiatric condition. In such cases, determining the relative contributions of the various factors in causing the psychological/psychiatric condition will be challenging indeed.
Physical Sequelae of Psychological/Psychiatric Injuries
While SB 863 bars permanent disability compensation for psychological/psychiatric conditions which arise from work-related physical injuries in many cases, the converse is not true. That is to say, where a primary psychological/psychiatric condition which is determined to be work-related and compensable causes physical injuries, the injured worker is entitled to receive permanent disability compensation for the mental and physical injuries. One can easily conceive of a whole range of physical injuries and conditions which might arise as a result of primary psychological/psychiatric condition and cause the injured worker to sustain permanent disability, including hypertension, diabetes, sleep dysfunction and sexual dysfunction. In this regard, it is important to note that even if these conditions were pre-existing on a non-industrial basis, the injured worker may still be entitled to permanent disability compensation if the work-related psychological/psychiatric condition aggravated or accelerated the development of the physical conditions. Furthermore, since the need for medical treatment (unlike permanent disability compensation) is not subject to apportionment as between industrial and non-industrial causes , the injured worker would be entitled to full medical treatment for any physical conditions which are caused by the work-related psychological/psychiatric condition.
Labor Code section 4662
Labor Code section 4662 specifies certain injuries which are conclusively presumed to cause permanent total disability (100% PD). These injuries include:
- Loss of both eyes or the sight thereof.
- Loss of both hands or the use thereof.
- An injury resulting in a practically total paralysis.
- An injury to the brain resulting in incurable mental incapacity or insanity.
The language of this statute was unchanged by SB 863. Indeed, Labor Code section 4660.1(g) provides: “Nothing in this section shall be preclude a finding of permanent total disability in accordance with Section 4662.” Therefore, where a work-related injury directly causes “incurable mental incapacity or insanity” (e.g., a head injury which produces an organic brain injury and/or an affective mental disorder), the injured worker is entitled to an award of permanent total disability. On the other hand, where a psychological/psychiatric disorder arises from a work-related physical injury and results in “incurable mental incapacity or insanity”, there appears to be a serious conflict between Labor Code section 4660.1(c) and Labor Code section 4662. A valid argument can be made that in such an instance the injured worker is not seeking an increase in the impairment rating otherwise applicable to the underlying physical injury (which would be prohibited by Section 4660.1(c)) but rather is seeking an award of presumed permanent total disability pursuant to Section 4662. The fact of the matter is that, in such instances, the injury would most likely be deemed “catastrophic” and therefore subject to the exceptions to Section 4660.1(c).
As was discussed above, nothing in SB 863 precludes an award of temporary disability benefits on the basis of a psychological/psychiatric condition provided that the condition meets the relevant causation threshold set forth in Labor Code section 3208.3(b) and does, in fact, render the injured worker temporarily totally disabled.
Psychological and Psychiatric Treatment
As was also discussed above, SB 863 explicitly preserves an injured worker’s right to receive treatment for psychological/psychiatric conditions even if they may not be entitled to receive permanent disability compensation for them. For purposes of the California workers’ compensation system, the scope of medically necessary treatment is defined by The Medical Treatment Utilization Schedule (“MTUS”) . In the case of psychological/psychiatric conditions, the MTUS has adopted and incorporated the Stress Related Conditions Chapter of the ACOEM Practice Guidelines, 2nd Edition (2004) . Moreover, the Chronic Pain Medical Treatment Guidelines in the MTUS mandate that in chronic pain cases treatment should be provided according to the “biopsychosocial model” which: “recognizes that pain is ultimately the result of pathophysiology plus the psychological state, cultural background/belief system, and relationship/interactions with the environment” . The Chronic Pain Treatment Guidelines specifically state that psychological treatment is “recommended” in chronic pain cases and that cognitive behavioral therapy and self-regulatory treatments “have been found to be particularly effective.”
Accordingly, both SB 863 and the MTUS recognize the important role of proper treatment of psychological/psychiatric conditions whether those conditions are the primary injury or a secondarily-occurring one.
Upon careful review, it is clear that a claim of psychological/psychiatric injury remain a viable and important aspect of an injured worker’s benefit claim in appropriate cases notwithstanding the significant changes wrought by SB 863. There are many questions pertaining to these changes will remain unanswered and subject to debate while cases are litigated through the Workers’ Compensation Appeals Board and the appellate courts. In the meantime, Applicant attorneys and treating physicians must familiarize themselves with the relevant legal principles and should, within the bounds of ethical practice, continue to address claims of psychological/psychiatric injury for the benefit of the injured workers they represent or treat.
iMr. Rondeau is a practicing applicant attorney and also advises providers of both medical treatment and medical-legal services in the California workers’ compensation system. He is a certified specialist in Workers’ Compensation Law and a recently appointed Commissioner of the Workers’ Compensation Law Advisory Committee of the State Bar of California.
iiGranado v. Workmen’s Comp. Appeals Bd., 69 Cal. 2d 399 (1968).
iiiCrandler v. The Customer Company/Cigarettes Cheaper, 2007 Cal. Wrk. Comp. P.D. LEXIS 47 (2007); Abushi v. Burger King (Case No. SFO 492440)(2007)(WorkCompCentral Panel Decision).
ivWoodland Joint USD v. WCAB (Royles) 65 Cal. Comp. Cas. 131 (1999) (writ denied).
vVillareal v. Village of Schaumburg, 325 Ill. App. 3d 1157, 1162-1163, 759 N.E. 2d 76 (2001).
viGuides to the Evaluation of Permanent Impairment, 5th Ed., p. 2.
viiGuides to the Evaluation of Permanent Impairment, 5th Ed., p. 8.
ixSee, e.g., Almaraz v. Environmental Recovery Services, et al., 74 Cal. Comp. Cas. 1084 (2009).
xiLabor Code section 4600(b).
xiiTitle 8, California Code of Regulations, section 9792.23.8.
xiiiChronic Pain Medical Treatment Guidelines, p. 2. Chronic Pain Medical Treatment Guidelines, p. 101.