By Matthew J. Johns
By now we are all familiar with the basic requirements to avoid liability for a supplemental job displacement benefit voucher:
(1) An Offer of Regular, Alternative or Modified Work, (2) conforming to applicant’s work restrictions, (3) lasting at least 12 months, (4) for at least 85% of pre-injury wages (or 100% for regular work), (5) made on the Administrative Director’s required form, (6) within 60 days of the first report finding permanent impairment. (See Labor Code Sections 4658, et seq.)
However, the world of supplemental job displacement benefit voucher disputes was recently upended by the Workers’ Compensation Appeals Board’s En Banc decision in Anthony Dennis v. State of California – Department of Corrections and Rehabilitation Inmate Claims; State Compensation Insurance Fund, ADJ9346293.
In Dennis, the Workers’ Compensation Appeals Board, sitting En Banc, issued their holding stating:
“(1) AD Rule 10133.54 is invalid because it exceeds the statutory authority granted to the Administrative Director under sections 4658.5, subdivision (c), and 4658.7, subdivision (h), and restricts the exclusive adjudicatory power of the WCAB to adjudicate compensation claims, including disputes over supplemental job displacement benefits; and
(2) an employer must show it made a bona fide offer of regular, alternative, or modified work in order to avoid liability for a supplemental job displacement voucher.”
According to the Injured Worker Guidebook published by the Department of Industrial Relations: “a supplemental job displacement benefit is a voucher that promises to help pay for education retraining or skill enhancement, or both, at eligible schools.”
Next, let us examine the specific grants of authority to the Administrative Director in Labor Code Sections 4658.5(c) and 4658.7(h) referenced by the Workers’ Compensation Appeals Board in their holding in Dennis:
Therein the Legislature specifically granted authority to the Administrative Director to adopt regulations regarding (1) the form of payment and reimbursement under Labor Code Section 4658.5(c), and regarding (2) the time, manner, and content of notices as well as (3) the form of a mandatory attachment to a medical report to be forwarded to the employer under Labor Code Section 4658.7(h).
What these enactments do not say, is the Administrative Director may adjudicate disputes regarding supplemental job displacement benefits. Despite no grant of authority enabling such a rule, AD Rule 10133.54 subsection (b) states: “When there is a dispute regarding the Supplemental Job Displacement Benefit, the employee, or claims administrator may request the administrative director to resolve the dispute.”
This is the issue resolved by the En Banc decision in Dennis. The Workers’ Compensation Appeals Board noted their exclusive adjudicatory power includes determination of the validity of AD Regulations and here AD Rule 10133.54 exceeded the grants of authority in Labor Code Section 4658.5(c) and Labor Code Section 4658.7(h). After explaining their authority, the Workers’ Compensation Appeals Board turned to the question of whether a valid offer, such that the defendant would avoid liability for a supplemental job displacement benefit voucher, was made in the instant case.
The Workers’ Compensation Appeals Board found defendant failed to make a bona fide offer of work and therefore owed applicant the supplemental job displacement benefit voucher pursuant to the plain language of Labor Code Section 4658.7(b). That section states: “If the injury causes permanent partial disability, the injured employee shall be entitled to a supplemental job displacement benefit as provided in this section unless the employer makes an offer of regular, modified, or alternative work …”
The Workers’ Compensation Appeals Board seized upon the unless in Labor Code Section 4658.7(h) in reaching their conclusion, “that in order to qualify as an exception to the entitlement to a supplemental job displacement benefit voucher, the offer of regular, modified, or alternative work must be bona fide.”
The Workers’ Compensation Appeals Board did not discuss the meaning of bona fide at length, but noted that Merriam-Webster defines bona fide as: “made in good faith without fraud or deceit” and that Black’s Law Dictionary also defines the term as: “sincere; genuine.”
What It All Means:
The Dennis decision indicates two major changes to the current paradigm. First, disputes regarding supplemental job displacement benefit vouchers will be adjudicated by the Workers’ Compensation Appeals Board and not the Administrative Director moving forward. Second, employers, insurers, and defendants in general are required to make a Bona Fide offer of Regular, Modified, or Alternative Work, rather than an offer on the Administrative Director’s AD10133.35 Form, to avoid liability for a supplemental job displacement benefit voucher. At Yrulegui & Roberts we make every effort to ensure the injured worker receives every benefit he or she is legally entitled to, but not a penny more. Please feel free to contact our office regarding any issue relating to a workers’ compensation claim.