The opinion
Filed 7/15/24
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
SUBSEQUENT INJURIES 2d Civ. No. B333633
BENEFITS TRUST FUND, (W.C.A.B. No. ADJ11362885)
(Santa Barbara District Office)
Petitioner,
v.
WORKERS’ COMPENSATION
APPEALS BOARD et al.,
Respondents.
Petitioner Subsequent Injuries Benefits Trust Fund (Fund)
pays additional compensation to workers who suffer an industrial
injury that, when combined with pre-existing disabilities, causes
permanent disability equal to 70 percent or more. (Labor Code,
§ 4751. 1) Section 4753 requires this additional compensation to
“be reduced to the extent of any monetary payments received by
the employee, from any source whatsoever, for or on account of
such preexisting disability or impairment.” This reduction or
“credit” preserves state resources by ensuring applicants receive
1 All statutory references are to the Labor Code unless
stated otherwise.
benefits commensurate with their combined disabilities—no
more, no less.
Respondent Nancy Vargas applied for subsequent injury
benefits when she injured her foot at work. The Fund
acknowledged Vargas qualified for benefits but claimed section
4753 credit for a significant portion of the Social Security
Disability Insurance (SSDI) payments she began receiving after
her latest injury. Respondent Workers’ Compensation Appeals
Board (Board) determined the Fund was not entitled to credit,
concluding the Fund had not proven Vargas’s SSDI payments
were awarded “for or on account of” her pre-existing disabilities.
This petition for review challenges the Board’s decision.
The Fund contends the Board erred by placing the burden of
proof on the Fund to show Vargas received SSDI benefits “for or
on account of” her pre-existing disabilities. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Respondent Nancy Vargas drove a bus for the Santa
Barbara Metropolitan Transit District (district) for 25 years. She
injured her foot in March of 2018 while stepping off the driver’s
pedestal. Vargas settled her claim against the district in
December of 2020. They stipulated the injury caused permanent
disability of 26 percent and agreed on the amount of her weekly
indemnity payments going forward.
Vargas applied for subsequent injury benefits from the
Fund while her workers’ compensation case was pending. She
listed pre-existing disabilities to her back, upper extremities, left
knee, and right ankle. She disclosed filing one prior workers’
compensation case. Vargas confirmed she had applied for SSDI
in January of 2018 and was currently receiving monthly SSDI
payments of $940. The Board granted Vargas’s motion to join the
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Fund as a defendant in her worker’s compensation case in July of
2021.
The Fund agreed Vargas was eligible for benefits. The
parties stipulated: (1) that Vargas had a “preexisting labor-
disabling disability”; (2) her subsequent injury, i.e., the March
2018 foot injury, caused permanent disability of 26 percent; and
(3) her combined disabilities meant she was now 100 percent
totally disabled. They also agreed Vargas met the “opposite
member” eligibility threshold for subsequent injury benefits
because she suffered injuries to both feet. The parties disputed,
however, the Fund’s right to section 4753 credit for Vargas’s
SSDI payments. 2 The issue went to trial in May of 2023. The
workers’ compensation judge (WCJ) admitted the parties’
stipulated facts and exhibits as evidence but heard no live
testimony.
Vargas introduced three medical reports as exhibits:
(1) one from an agreed medical examiner (AME) evaluating her
March 2018 foot injury; (2) one from a qualified medical examiner
(QME) “assess[ing] her nonindustrial internal medicine
disabilities,” both current and pre-existing; and (3) one from a
second QME evaluating her combined disabilities to determine
eligibility for subsequent injury benefits. The AME report rated
the March 2018 injury as causing whole person impairment
(WPI) of 15 percent. The first QME report rated internal
conditions such as liver disease, varicose veins, and COPD
(chronic obstructive pulmonary disease) as causing 51 percent
2 The parties’ pre-trial conference statement indicates the
Fund initially sought credit for both “SSDI and [disability
retirement] monies received by applicant.” The Fund’s petition
and supplemental briefs, however, refer only to credit for SSDI
payments.
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WPI. The second QME report rated her pre-existing
impairments at 160 percent WPI. It concluded “the overall
combined effects of the previous pre-existing
disability/impairment and the subsequent impairment/disability
. . . is greater than that which would have resulted from the
subsequent injury alone and, goes well beyond the 70 [percent]
disability threshold pursuant [to] Labor Code [section] 4751.”
The Fund introduced an award letter from the Social Security
Administration (SSA) as an exhibit along with 1099 forms
reflecting the SSDI paid to date. The letter stated SSA
considered Vargas disabled as of April 18, 2018 and eligible to
receive payments starting in October of 2018.
Vargas’s pre-trial brief argued the Fund bore the burden to
prove what amount or percentage of the SSDI award was
attributable to her pre-existing disabilities. The Fund rebutted
the argument in a post-trial brief. “[I]n the absence of contrary
evidence,” the Fund wrote, “the Board should simply deduct the
permanent disability percentage attributed to the subsequent
compensable injury from the 100 percent permanent disability
found [by SSA].” The Fund thus proposed a 74 percent reduction
of benefits: her stipulated 26 percent subsequent injury rating
subtracted from her 100 percent SSDI disability award.
The WCJ found the Fund “ha[d] not met their burden to
show an entitlement to credit for social security disability award
nor any other disability retirement benefit.” The Board denied
the Fund’s petition for reconsideration, finding “section [4753]
does not state that credit is absolute. [The Fund] would need to
show that the monetary payment received is for or on account of
such pre-existing disability or impairment. [It] did not show that
in this case.” The Board noted Vargas’s award letter and
subsequent SSDI statements “did not describe the basis of the
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benefit.” It concluded “[w]hat is before the court without
assumptions does not establish credit and therefore no credit was
awarded.”
We granted the Fund’s petition for a writ of review.
(§ 5950.)
DISCUSSION
The Fund contends the Board misinterpreted section 4753
by placing the burden on the Fund to prove its right to credit for
Vargas’s SSDI payments.
“‘In reviewing an award or decision made by the [Board],
we are governed by familiar principles. The [Board]’s factual
findings, when supported by substantial evidence, are binding on
us. [Citations.]’ [Citation.] ‘“‘“Questions of statutory
interpretation are, of course, for [a] court to decide.
[Citations.]”’”’ [Citation.] ‘However, although the [Board’s]
conclusions on questions of law are not binding on this court
[citation], and the interpretation of a labor statute is a legal
question subject to our independent review [citation], we
nevertheless “generally defer to the [Board’s] interpretation of
labor statutes unless clearly erroneous” [citation].’ [Citation.]”
(Meadowbrook Ins. Co. v. Workers’ Comp. Appeals Bd. (2019) 42
Cal.App.5th 432, 436.)
The provisions of the Worker’s Compensation Act “shall be
liberally construed by the courts with the purpose of extending
their benefits for the protection of persons injured in the course of
their employment.” (§ 3202.) “This command governs all aspects
of workers’ compensation; it applies to factual as well as
statutory construction.” (Arriaga v. County of Alameda (1995)
9 Cal.4th 1055, 1065.)
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Burden of Proof
The Fund “is funded and administered by the state for the
purpose of compensating workers with prior disabilities who
suffer subsequent industrial injuries.” (Baker v. Workers’ Comp.
Appeals Bd. (2011) 52 Cal.4th 434, 439.) Section 4751 states
such workers “shall be paid” additional compensation when their
combined disabilities meet certain criteria. Section 4753 provides
that Fund benefits “shall be reduced to the extent of any
monetary payments received by the employee, from any source
whatsoever, for or an account of such preexisting disability or
impairment.” (§ 4753.) 3 This includes SSDI payments based on a
prior injury. (Subsequent Injuries Fund v. Industrial Acc. Com.
(Hanson) (1963) 217 Cal.App.2d 322, 328.) Section 4753 “was
enacted to avoid depletion of the funds in order to encourage the
employment of physically handicapped persons and to prevent
double recovery for the same disabilities.” (Ibid.)
We agree with the Board that the Fund must prove its
entitlement to a credit for SSDI and other “monetary payments”
received by applicants. The burden of proof in workers’
compensation proceedings “rests upon the party . . . holding the
affirmative of the issue.” (§ 5705.) Applicants must initially
show they are entitled to subsequent injury benefits under
section 4751 by proving: (1) they were “permanently partially
disabled” and (2) they “receive[d] a subsequent compensable
injury resulting in additional permanent partial disability.” 4 The
3 Section 4753 includes several exceptions to mandatory
reduction, including payments received for disabilities incurred
in the armed forces. These exceptions are not at issue.
4 Section 4751 states in relevant part: “If an employee who
is permanently partially disabled receives a subsequent
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Fund must then show it is entitled to reduce the applicant’s
subsequent injury benefit under section 4753, and, if so, the
“extent” it may reduce those payments. Both sides must meet
their burden by a preponderance of the evidence. (See § 3202.5
[“All parties and lien claimants shall meet the evidentiary burden
of proof on all issues by a preponderance of the evidence in order
that all parties are considered equal before the law”].) Section
4753’s mandate that compensation “shall be reduced” does not, as
the Fund contends, relieve the Fund of this burden. Nor does
section 4751’s similar language relieve applicants of their burden
to prove eligibility for benefits.
The Fund argues public policy justifies placing the burden
of proof on applicants. It first cites applicants’ greater access to
information about the basis of their disability payments. We are
not persuaded. The Fund may conduct discovery before trial into
compensable injury resulting in additional permanent partial
disability so that the degree of disability caused by the
combination of both disabilities is greater than that which would
have resulted from the subsequent injury alone, and the
combined effect of the last injury and the previous disability or
impairment is a permanent disability equal to 70 percent or more
of total, he shall be paid in addition to the compensation due
under this code for the permanent partial disability caused by the
last injury compensation for the remainder of the combined
permanent disability existing after the last injury as provided in
this article; . . .” The subsequent injury must meet one of two
disability rating thresholds: (1) 5 percent for “opposite member”
injuries, i.e., when an applicant has an existing injury to “a hand,
an arm, a foot, a leg, or an eye, and the permanent disability
resulting from the subsequent injury affects the opposite and
corresponding member”, or (2) 35 percent “when considered alone
and without regard to or adjustment for the occupation or the age
of the employee, . . .”
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the basis of any source of payments subject to credit. (See § 5502,
subd. (c) [“The case shall be set for trial when discovery is
complete, or when the . . . judge determines that the parties have
had sufficient time in which to complete reasonable discovery”].)
This includes SSDI benefits. (See Angell v. Subsequent Injuries
Benefits Trust Fund (2021) 86 Cal.Comp.Cases 419 (Angell) [WCJ
properly ordered applicant to disclose information about SSDI
payments when Fund sought credit under section 4753].)
The Fund next cites the Legislature’s aim of conserving
government resources as supporting its position. This aim is
balanced, if not outweighed, by section 3202’s mandate that
workers’ compensation “shall be liberally construed by the courts
with the purpose of extending their benefits for the protection of
persons injured in the course of their employment.” The Fund
should direct its concerns about the administration of section
4753 to the Legislature or the appropriate rulemaking body
instead of the judiciary.
The Fund cites Hanson to argue the Board must reduce
benefits unless an applicant can prove an SSDI award is based
solely on a subsequent injury. We read the case differently. In
Hanson, the hearing officer attributed 68 percent of an
applicant’s SSDI payments to “pre-existing disability or
impairment” after taking evidence on the issue. The Board
vacated the hearing officer’s decision. The appellate court in
Hanson reinstated that decision, holding the Fund was entitled
to reduce subsequent injury benefits by that portion of SSDI the
hearing officer found attributable to pre-existing disabilities.
(See Hanson, supra, 217 Cal.App.2d at p. 329 [“if it can
reasonably be said that the social security disability payments
are in some part accountable to the preexisting liability . . . then
some credit should be allowed”].) While Hanson confirmed the
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Fund’s right to seek credit for SSDI payments received by
applicants, it did not hold the Fund was presumptively entitled to
credit unless the applicant could prove otherwise.
Finally, the Fund contends the 26 percent permanent
disability rating in the stipulated award creates an inference that
74 percent of her SSDI benefits are attributable to pre-existing
disabilities. This is not so. “[T]he Fund is not bound by the prior
adjudication of the employer’s liability relative to the
determination of its own obligation to make life pension benefit
payments when it has not been joined.” (Subsequent Injuries
Fund v. Workmen’s Comp. Appeals Bd. (Royster) (1974) 40
Cal.App.3d 403, 408, italics omitted.) “[W]hile the Fund may not
relitigate the issue of the employer’s liability in an attempt to
increase [the employer’s] obligation, it may litigate the question
of the employer’s liability so as to properly determine the extent
of its obligation to the applicant.” (Id. at p. 409.) The Fund was
joined as a defendant six months after Vargas and her employer
settled her worker’s compensation case. We decline to read
section 4753 as entitling the Fund to a presumptive SSDI credit
based on a rating negotiated in a different context with a
different party.
The Board’s Findings on Section 4753 Reductions
The Fund notes that Vargas had many pre-existing medical
conditions and applied for SSDI benefits several months before
injuring her foot in March of 2018. These facts do not establish
she received SSDI benefits primarily “for or on account of” her
pre-existing disabilities. The award letter Vargas received from
SSA in December of 2018 said she “became disabled under our
rules on April 18, 2018.” This date fell less than three weeks
after her March 2018 injury. The evidence at trial about Vargas’s
pre-existing disabilities came from medical reports prepared long
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after she received her SSDI award letter. Neither this letter nor
any other exhibit states the basis of the award.
The Fund joined this case almost two years before trial and
five months after the Board decided Angell. In Angell, the
applicant contended a discovery order directing her to obtain
additional information from the SSA shifted the burden of proof
to establish whether the Fund was entitled to a credit pursuant
to 4753. The Board disagreed. It stated: “[The Fund] is simply
seeking discovery of information and documentary evidence
related to applicant's admitted receipt of SSD benefits in order to
meet its burden of proof regarding the section 4753 credit.”
(Angell, supra, 86 Cal. Comp. Cases at p. 428.) There is no record
here of the Fund deposing Vargas or seeking her SSDI
application materials. The Fund declared ready for trial in
March of 2023, received Vargas’s pre-trial brief in April of 2023,
and agreed to proceed without live testimony in May of 2023. Its
post-trial brief did not request additional discovery in the event
the WCJ found the Fund bore the burden of proving section 4753
credit. Having assumed it need not carry the issue, it did not
shepherd the evidence required to prevail on the merits.
DISPOSITION
We affirm the Board’s order of October 20, 2023, denying
the Fund’s petition for reconsideration. Vargas is awarded costs.
CERTIFIED FOR PUBLICATION.
CODY, J.
We concur:
GILBERT, P. J. BALTODANO, J.
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Deborah Rothschuller
Santa Barbara District Office
______________________________
Department of Industrial Relations, Ken Lau, Chief
Counsel, Steven A. McGinty, Assistant Chief Counsel, and
Thomas G. Routson, Staff Counsel, for Petitioner.
Ghitterman, Ghitterman & Feld, Russell R. Ghitterman
and Benjamin P. Feld, for Respondent Nancy Vargas.
Allison J. Fairchild and Eric D. Ledger for Respondent
Workers’ Compensation Appeals Board.
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