Escobedo v. Marshalls, 05 CAWC, GRO 0029816

• Case Date: January 01, 2005
• Court: California

MARLENE ESCOBEDO, Applicant, v. MARSHALLS; and CNA INSURANCE CO., Defendant(s). Nos. GRO 0029816, GRO 0029817 California Workers Compensation Decisions Workers’ Compensation Appeals Board State Of California 2005           OPINION AND DECISION AFTER RECONSIDERATION (EN BANC)           MERLE C. RABINE, CHAIRMAN.          The Appeals Board granted reconsideration of the June 29, 2004 Findings and Award issued by the workers' compensation administrative law judge ("WCJ"), to further study the record and the applicable law. This is our Decision After Reconsideration.          In the June 29, 2004 decision, the WCJ found that Marlene Escobedo ("applicant") sustained an October 28, 2002 industrial injury to her left knee, and to her right knee as a compensable consequence, while employed as a sale associate by Marshalls, the insured of CNA Insurance Company ("defendant"). In relevant part, the WCJ also found that applicant's bilateral knee injury entitled her to a 27% permanent disability award, after determining that 50% of her permanent disability was caused by the effects of preexisting degenerative arthritis in both knees. The WCJ applied the provisions of Labor Code section 4663,1 as enacted by Senate Bill 899 ("SB 899") and effective on April 19, 2004 (Stats. 2004, ch. 34, §34), in making this 50% apportionment determination.          In her petition for reconsideration, applicant contends in substance: (1) new section 4663 cannot be retroactively applied to cases where the date of injury was prior to the effective date of SB 899; (2) new section 4663 does not authorize the apportionment of disability to pathology in the absence of express legislative intent; and (3) the medical report relied upon by the WCJ to justify apportionment to applicant's preexisting arthritis does not constitute substantial medical evidence because it fails to explain in adequate detail how that condition caused permanent disability.2          Defendant filed an answer to applicant's petition, and the WCJ prepared a Report and Recommendation on Petition for Reconsideration ("Report") recommending that the petition be denied.          Because of the important legal issues presented as to the meaning and application of section 4663 with regard to the issue of apportionment of permanent disability based on causation, and in order to secure uniformity of decision in the future, the Chairman of the Appeals Board, upon a majority vote of its members, assigned this case to the Appeals Board as a whole for an en banc decision. (Lab. Code, §115.)3          Based on our review of the relevant statutory and case law, we hold that:

1) Section 4663(a)'s statement that the apportionment of permanent disability shall be based on "causation" refers to the causation of the permanent disability, not causation of the injury, and the analysis of the causal factors of permanent disability for purposes of apportionment may be different from the analysis of the causal factors of the injury itself.

2) Section 4663(c) not only prescribes what determinations a reporting physician must make with respect to apportionment, it also prescribes what standards the WCAB must use in deciding apportionment; that is, both a reporting physician and the WCAB must make determinations of what percentage of the permanent disability was directly caused by the industrial injury and what percentage was caused by other factors.

3) Under section 4663, the applicant has the burden of establishing the percentage of permanent disability directly caused by the industrial injury, and the defendant has the burden of establishing the percentage of disability caused by other factors.

4) Apportionment of permanent disability caused by "other factors both before and subsequent to the industrial injury, including prior industrial injuries," may include not only disability that could have been apportioned prior to SB 899, but it also may include disability that formerly could not have been apportioned (e.g., pathology, asymptomatic prior conditions, and retroactive prophylactic work preclusions), provided there is substantial medical evidence establishing that these other factors have caused permanent disability.

5) Even where a medical report "addresses" the issue of causation of the permanent disability and makes an "apportionment determination" by finding the approximate relative percentages of industrial and non-industrial causation under section 4663(a), the report may not be relied upon unless it also constitutes substantial evidence.

         BACKGROUND          Applicant sustained injury to her left knee on October 28, 2002, when she fell at her job as a sales associate with Marshalls, a retail clothing store. As a compensable consequence of that injury, she also developed right knee problems.          Applicant testified that, prior to her fall, she had never had any knee problems or limitations, and she had never consulted a doctor about her knees. Although her treating physician, Dr. Cronin, had diagnosed her as having arthritis about ten years earlier, he did not impose any work restrictions as a consequence of her arthritis.          Applicant was treated for her industrial injury by Daniel Woods, M.D., who performed arthroscopic surgery on February 12, 2003, to repair the medial meniscus in the left knee. On June 5, 2003, Dr. Woods prepared a report declaring applicant to be permanent and stationary with bilateral knee disability resulting in a limitation to semi-sedentary work. He noted that applicant's job duties at Marshalls had required her to be on her feet, standing or walking, six to eight hours per day, and to kneel or squat up to three hours per day. He had attempted to have her return to work four hours per day, but she was unable to tolerate it because of right knee pain. With regard to the issue of apportionment, Dr. Woods noted that applicant had no history of any previous problems with her left knee, and thus he concluded that all of her disability was attributable to her industrial injury.          Defendant's qualified medical evaluator ("QME"), Daniel Ovadia, M.D., evaluated applicant on March 15, 2004 and prepared a report on that date. He noted that a pre-surgical MRI of applicant's left knee revealed degenerative changes, in addition to the medial meniscus tear, and that post-surgical x-rays showed osteoarthritis in both knees. Dr. Ovadia concluded, based on applicant's bilateral knee condition: that she was limited to four hours of weight bearing in an eight-hour day; that she should avoid very heavy work; that she should avoid more than occasional kneeling, squatting, or walking on uneven ground; that she should avoid stair, incline and ladder climbing; and that she is totally precluded from running or jumping. With regard to apportionment, Dr. Ovadia stated:

"Ms. Escobedo's left knee residuals are directly related to the October 28, 2002 injury. The Applicant developed right knee problems as a derivative of the left knee and not as a result of any subsequent cumulative trauma. In my opinion, there is a medically reasonable basis for apportionment given the trivial nature of the injury that occurred on October 28, 2002 and the almost immediate onset of right knee symptoms that occurred shortly after the left knee injury. The Applicant has obvious, significant degenerative arthritis in both knees and essentially worked in a fairly congenial environment. Although denying any prior problems with her knees, it is medically probable that she would have had fifty percent of her current level of knee disability at the time of today's evaluation even in the absence of her employment at Marshalls. Dr. Woods did not take this into account when he discussed the issue of apportionment. Furthermore, when he saw the Applicant, he thought she had a lateral meniscus tear which was clearly not the case based on his operative findings (leading edge tears are of no clinical significance and would not have accounted for the Applicant's pathology and disability which relate to the medial and patellofemoral compartments)."

         Dr. Woods responded to Dr. Ovadia's conclusions on May 22, 2004, after he re-examined applicant. Dr. Woods found no basis for apportionment, stating:

"The patient prior to her industrial injury of October 28, 2003, was not suffering from any disability relative to her knees. She indicates that she was able to walk in unlimited fashion and had been able to work. She clearly has disability at this time which I have, in the absence of previously documented disability, attributed to her industrial injury."

         The WCJ determined that, overall, applicant's bilateral knee disability rated 53%, based on the...