Legislative intent topples accountant's argument over retroactive benefits

In California, cost-of-living increases for total permanent disability benefits are calculated prospectively commencing on the Jan. 1 following the date on which the injured worker first receives total permanent disability benefits.

Case name: Baker v. Workers' Compensation Appeals Board, No. S179194 (Cal. 08/11/11).

Ruling: The California Supreme Court held that an accountant was not entitled to retroactive cost-of-living increases for his total permanent disability benefits.

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What it means: In California, cost-of-living increases for total permanent disability benefits are calculated prospectively commencing on the Jan. 1 following the date on which the injured worker first receives total permanent disability benefits.

Summary: An accountant sustained a work-related injury. He received temporary disability payments from his employer. Later, the employer agreed that he suffered a 69.5 percent partial permanent disability. The accountant claimed that his initial weekly benefits had to be increased through the calculation of retroactive cost-of-living increases from the Jan. 1 after he sustained his injury to the date on which permanent total disability benefits commenced. The California Supreme Court held that he was not entitled to retroactive cost-of-living increases for his total permanent disability benefits.

The court explained that a "straightforward and sensible" reading of the law applied the increases uniformly to all successive years after the laws' effective date. The court said that allowing retroactive cost-of-living increases would allow workers not injured until the future to receive increases for every calendar year beginning on the effective date of the statute. The court said the legislature could not have envisioned or intended such an application.

The court also explained that injured workers could receive a "windfall 'double escalator'" as a result of retroactive cost-of-living increases. It was unreasonable to assume the legislature intended two distinct anti-inflation measures to overlap and apply to total permanent disability payments. The court suggested that the legislature revisit the language of the statute.

Read more at the WorkersComp Forum homepage.

October 6, 2011

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