Existing workers compensation law generally requires employers to secure payment of workers compensation, including medical treatment, for injuries incurred by their employees that arise out of, or in the course of, employment. An employer is liable only for the percentage of the permanent disability directly caused by the injury arising out of, and occurring in the course of, employment.

Existing law requires apportionment of permanent disability to be based on causation, and a physician who prepares a report addressing the issue of permanent disability due to a claimed industrial injury is required to address the issue of causation of the permanent disability. The physician is required to make an apportionment determination by finding the approximate percentage of the permanent disability that was caused by the direct result of injury arising out of and occurring in the course of employment, and the approximate percentage of the permanent disability that was caused by other factors both before and subsequent to the industrial injury, including prior industrial injuries.

This bill would prohibit apportionment of permanent disability, in the case of a physical injury occurring on or after January 1, 2017, from being based on pregnancy, menopause, osteoporosis, or carpal tunnel syndrome. The bill would also prohibit apportionment of permanent disability, in the case of a psychiatric injury occurring on or after January 1, 2017, from being based on psychiatric disability or impairment caused by any of those conditions.

The bill would also provide, notwithstanding any other law, for injuries occurring on or after January 1, 2017, that the impairment ratings for breast cancer and the aftereffects of the disease, known as sequelae, shall in no event be less than comparable ratings for prostate cancer and its sequelae.

Existing law requires an employer to post specified wage and hour information in a location where it can be viewed by employees. Existing law further requires an employer to provide each employee, as defined, at the time of hiring, with a notice that specifies the rate and the basis of the employees wages and to notify each employee in writing of any changes to the information set forth in the notice, as specified.

This bill would make nonsubstantive changes to the latter provision.

GOVERNOR'S VETO

GV Bill Id:AB 1643

Author:(Gonzalez)

As Enrolled Ver:August 31, 2016

2/3 vote

SUMMARY: Prohibits the use of certain gender-related characteristics in the calculation of permanent disability benefits for injuries occurring on or after January 1, 2017. Specifically, this bill:

1. Prohibits granting the disabling effects of breast cancer a lower disability rating than granted to the disabling effects of prostate cancer.
2. Prohibits the use of pregnancy, osteoporosis, menopause, or carpal tunnel syndrome to apportion permanent disability with respect to a physical injury.
3. Prohibits the use of a prior psychiatric injury, if that prior injury was caused by pregnancy, osteoporosis, menopause, or carpal tunnel syndrome, to apportion permanent disability with respect to a psychiatric injury.

EXISTING LAW:

1. Provides for a comprehensive system to provide workers' compensation benefits to workers whose injuries or conditions arise out of or in the course of employment, including medical treatment and financial compensation if the injury or condition has a permanently disabling effect.
2. Establishes a Permanent Disability Rating Schedule (PDRS), a methodology for calculating impairment through the use of the American Medical Association Guides to the Evaluation of Permanent Impairment (AMA Guides), and other tools that are used to determine the extent of an injured worker's permanent disability (PD).
3. Allows for the "apportionment" of PD determinations to prior industrial causes, or to prior non-industrial causes, and reduces the amount of the injured worker's PD award to the extent these prior causes have contributed to the extent of the disability.
4. Requires the physician who is making a recommendation on the extent of disability that has followed from an industrial injury to identify, and quantify, causation of the disability that is either prior to or subsequent to the industrial injury.

FISCAL EFFECT: According to Assembly Appropriations Committee, approximately $6 million in new administrative costs associated with litigation over the bill's new rules; however, it is difficult to accurately quantify the scope of this issue. Unknown, but potentially significant costs to the state based on increased payouts to injured state employees.

COMMENTS:

1. Purpose. The purpose of the bill is to eliminate gender bias in the workers' compensation system. According to the author, California must eliminate the remnants of gender bias in the workplace, no matter how widespread, including within workers' compensation. The author maintains that the AMA Guides inappropriately assign little to no value to the loss of a woman's breasts, and that it is also inappropriate to apportion disability to non-industrial causation if that causation is a factor or condition that is uniquely or predominantly based on gender.
2. Case Law. In an unpublished appellate decision, Vaira v. WCAB, the Court of Appeal returned a case to the Workers' Compensation Appeals Board (WCAB) because the record was insufficient to determine whether the physician had based his apportionment decision on medical facts that showed the older female claimant suffered from osteoporosis, or on the basis that the risk factor (older women face a high risk of suffering from osteoporosis) alone was sufficient to assign a percentage of the causation to osteoporosis. This decision has been broadly applied in the workers' compensation courts as establishing the following rule: a risk characteristic such as older women having a high incidence of osteoporosis, or older African American men having a high incidence of hypertension, cannot be used as a basis to apportion a permanent disability award. However, a woman diagnosed with osteoporosis that contributes to her disability resulting from the subsequent industrial injury, or an African American man diagnosed with hypertension that contributes to his disability resulting from the subsequent industrial injury, can have the disability award apportioned based on the prior nonindustrial causation. This is the rule Governor Brown alluded to in his Veto Message on AB 1155 (Alejo) of 2011 (see below).
3. Scope of problem. There is substantial disagreement as between supporters of this bill and opponents of this bill on whether or not there is a serious problem of gender-based unfairness in the workers' compensation system. Some supporters have asserted that "we see it every day" while some opponents assert that the wrongs complained of simply do not occur in the workers' compensation courts.

This issue has been presented to, and debated in, the Legislature in one form or another for at least eight years, and there is a paucity of concrete evidence, either academic or anecdotal, to show that there is pervasive discrimination based on gender, or other protected classes. The California Applicants' Attorneys Association (CAAA), in its letter in support of this bill, and the author in the Background materials provided to the Committee, cite several examples of cases where women are alleged to have suffered unfair treatment by the system. Without getting into too much case-specific detail, two things appear from the cited examples: first, the characteristics used to reduce permanent disability awards appear to be risk factors or broad characteristics like those the Vaira case prohibits; second, in most examples, it is claimed that "the doctor" has pointed to the offending apportionment factor. Despite requests for any information indicating that workers' compensation judges have accepted these inappropriate apportionment factors, proponents have been unable to do so. Opponents, on the other hand, have argued that "dumb doctors" making ill-advised, discriminatory apportionment statements are not a basis to change the law – they are a basis for the attorney representing the injured worker to argue to a workers compensation judge that the doctor recommended an illegal or inappropriate factor that does not support apportionment.

1. Apportionment. Apportionment applies to PD determinations when the disabling effect of an industrial injury has some percentage of causation that either predates or occurs subsequent to the industrial injury. Apportionment does not apply to medical treatment. For example, no matter how much the old football injury is making an industrial knee injury more complicated or extensive, the workers' compensation system provides medical treatment for the industrial knee injury fully and comprehensively. The fact that there is pre-industrial injury causation that affects the seriousness of the injury does not limit the extent of medical treatment. But causation of the disability is treated differently from causation of the injury. There are at least three policy rationales underpinning the apportionment rule. First, it has been deemed unfair to require an employer to pay for disability that was not caused by the employment. Second, if the prior causation was a previous industrial injury that resulted in a PD award, the injured worker would have already been compensated for that portion of the disabling condition. Third, if an employer knew that a job candidate suffered a previous injury that might lead to more expense if he should re-injure himself, the employer might opt to hire someone else who does not pose that financial risk.

Apportionment as a policy is not without its critics. On a "but for" causation rationale, the injured worker would not be suffering the current disability to any extent but for the current industrial injury. And if the injury were being compensated in the tort system, the person who acted negligently to cause an injury would be responsible for the full extent of the disability, because in tort the "victim's" preconditions do not operate to diminish the consequences of the acts that cause injury. However, apportionment is the rule in workers' compensation, and this bill proposes exceptions to the normal rules of apportionment.

1. Does case law result in gender discrimination? Proponents strongly argue that it is inappropriate gender discrimination to use even factual conditions that contribute to disability causation if those factors are uniquely attributable to being a woman. In the proponents view, even the Vaira decision endorses gender discrimination, because Vaira merely rejected use of risk factors, but allowed use of factual pre-existing conditions, including some of the factors that the bill would prohibit. Thus, the policy argument is that the uniquely female gender factors addressed by the bill should simply not be used to reduce permanent disability awards. Opponents counter that the workers' compensation system is designed to require employers to pay to injured workers what the job itself caused, not what non-job factors caused.
2. Breast cancer vs prostate cancer. A key provision in this bill that proponents argue cures gender discrimination is the mandate that breast cancer and prostate cancer be treated the same in terms of disability ratings. Since 2004, the AMA Guides has been the basis in California law for making PD determinations.

The AMA Guides were first published in 1971 to provide "a standardized, objective approach to evaluating medical impairments". The Guides define "impairment" as a loss, loss of use, or derangement of any body part, organ system, or organ function. The Guides deal chapter by chapter with specific areas of the body or a specific type of permanent impairment and discuss how to measure impairment in a specific individual. This impairment measurement is a percentage known as the whole person impairment (WPI), with a higher WPI percentage signifying a higher level of impairment.

WPI serves as the foundational calculation for the purposes of calculating a PD rating. In bringing the AMA Guides into the workers' compensation system in 2004, the goal was to make the measurement of impairment, and by extension PD ratings, more objective and uniform throughout the state and based on the best available medical evidence. Further, as a part of the 2012 reform, the Legislature codified case law that allows doctors to "rate by analogy" or to use other chapters of the AMA Guides if those chapters better explain the nature of the impairment.

Proponents of this bill have argued that the AMA Guides are not objective in this context. Proponents have both specific and broad criticisms of the Guides. Specifically, they point to the fact that the AMA Guides rate the removal of female breasts at a WPI of 0%, while the removal of a prostate would rate a 16% to 20% WPI, arguing that such a rating shows bias against women. More generally, they argue that there has long been an outdated cultural gender bias that remains to this day, with an underappreciation of the psychological and physiological consequences to a woman of the loss of her breasts.

However, the male prostate may not be a strong equivalent to female breasts. The closest female equivalent, or homologue, to the prostate is the skene's gland, which is located on the surface of the vulva. Alternatively, one could also look at urthereal disease, which would lead to incontinence in women. A review of how the AMA Guides rate these female conditions shows that there is a comparable WPI rating to male prostate ratings. Opponents have argued that comparing ratings for breast and prostate cancer is simply the wrong comparison, and does not establish gender discrimination.

1. Menopause. Without question, menopause is a gender-based characteristic that ought not be used as a basis to apportion permanent disability. Opponents even state that "we don't do that." However, the effect of adding menopause to the apportionment statute causes great concern. They point out that courts have held that menopause is not a disability. They also point out that there are any number of symptoms that may be associated with menopause, and if any of those symptoms is associated with a factual pre-existing condition that contributes to permanent disability, there will be substantial, costly litigation because attorneys would be duty-bound to pursue the argument that menopause, and not the symptom, is the actual basis for the proposed apportionment.
2. Pregnancy. As with menopause, it is difficult to argue that permanent disabilities ought to be apportioned due to pregnancy. Indeed, many employers and insurers argue that this is not done, nor is it allowed in the workers' compensation system. However, they point out that adding this characteristic to the statute poses problems. First, they argue that it confuses the idea of causation to injury with causation to disability. They suggest that pregnancy can contribute to injury, but it is hard to understand how it is a condition that causes permanent disability. However, by adding pregnancy to the apportionment statue, uncertainties are created that will cause extended litigation to determine the precise meaning of the statutory change.
3. Osteoporosis. Osteoporosis presents a fundamental difference of perspective as between proponents and opponents. This is a predominantly (although not exclusively) female medical condition involving loss of bone mass, and the resulting risk of broken bones and other complications. Proponents argue that it is fundamentally wrong to reduce a woman's permanent disability award for a physical injury that occurs on the job due to this inherently gender-specific causation factor. Opponents, on the other hand, argue that it is fundamentally wrong to require employers to pay for disability that is factually unrelated to employment.
4. Carpal tunnel syndrome. The primary difference between this bill and last year's AB 305 (Gonzalez) of 2015 is the addition of carpal tunnel syndrome as one of the gender-based conditions for which apportionment would be prohibited. Proponents have suggested that this syndrome afflicts women more than men, citing a National Institutes of Health (NIH) report. California workers' compensation data is consistent with the NIH report. According to proponents, the study found the syndrome three times more likely to afflict women. The study suggested, but did not conclude, that the frequency in women might be due to a smaller carpal tunnel in women's hands. Opponents have cited a University of California (U.C.) Berkeley study that found some occupation based differences that result in some conditions being more likely causing men to have higher injury rates, and others more likely affecting women. However, that study found no across-the-board discrimination against either gender.
5. Psychiatric injuries. The approach to psychiatric injuries in the bill is narrower than AB 305. AB 305 used sexual harassment as a trigger for when apportionment would be prohibited with respect to a new psychiatric injury, but that provision is not included in this bill. Instead, this bill more clearly prohibits using a prior psychiatric injury to apportion permanent disability with respect to a new psychiatric injury if the prior psychiatric injury was caused by menopause, pregnancy, osteoporosis or carpal tunnel syndrome.
6. Prior legislation. In 2008, SB 1115 (Migden) of 2008, and in 2011, AB 1155 (Alejo) of 2011, addressed the apportionment discrimination issue in virtually the same language. Unlike this bill, those bills would have broadly prohibited the use of the protected classes defined in the Unruh Civil Rights Act as a basis to apportion permanent disability awards. Each was vetoed by the Governor. The Veto Message to AB 1155 provided:

"This bill would state that workers' compensation injury determinations shall not include consideration of race, religious creed, color, national origin, age, gender, marital status, sex, sexual orientation, or genetic characteristics.

"The courts already recognize that apportioning a disability award to any of these classifications is antithetical to our states' non-discrimination policies. The courts also recognize that apportioning to an actual non-industrial condition that contributes to causing a disability is permissible and required by the principle that apportionment is based on causation.

"This bill would not change existing law as interpreted by the courts to date. This bill would, however, generate new litigation over questions of whether it is intended to change existing interpretations. At best, that additional litigation would add to employers' costs for workers' compensation. At worst, this bill could disturb the appropriate interpretation of existing law that is already taking shape in the courts."

This bill, and AB 305 (Gonzalez) of 2015, take a different approach to the issue. Rather than addressing the use of protected characteristics, the bill proposes to prohibit precisely what the AB 1155 Veto Message notes that courts currently recognize: that apportionment to actual, factual prior industrial or non-industrial causation is acceptable. This bill identifies specific factors that proponents argue are inappropriate apportionment factors, and prohibits their use regardless of whether there is factual causation. AB 305 was substantially similar to AB 1643. The Governor vetoed AB 305. The Veto Message provided:

"This bill prohibits the use of certain gender-related characteristics in the calculation of permanent disability benefits for injuries occurring on or after January 1, 2016.

"The workers compensation system must be free of gender-bias. No group should receive less in benefits because of an immutable characteristic. However, this bill is based on a misunderstanding of the American Medical Association's evidence-based standard, which is the foundation of the permanent disability ratings, and replaces it with an ill-defined and unscientific standard."

GOVERNOR'S VETO MESSAGE:

This bill prohibits apportionment in cases of physical injury based on pregnancy, menopause, osteoporosis, and carpal tunnel syndrome and requires that breast cancer not be less than the comparable impairment rating for prostate cancer.

I am vetoing this bill for many of the same reasons that I returned a similar measure, AB 305, last year. This bill is poorly drafted and reflects a seriously flawed understanding of both the workers' compensation system and the nature of physical disability that may result from a work-related injury. The bill would, among other provisions, mandate that impairment ratings for breast cancer be no less than the ratings for prostate cancer. It would also create broad gender-based exceptions to the core principle of apportionment: that employers are liable only for the permanent disability directly caused by their employee's work-related injury.

This measure seeks to draw a false comparison between disability ratings resulting from prostate and breast cancers, notwithstanding that these organs neither perform analogous physiological functions nor do their treatments result in similar physical limitations. There is a wide disparity in impairment levels that may result among individual women diagnosed with breast cancer and individual men diagnosed with prostate cancer, and individuals of all genders diagnosed with any form of cancer, depending on the stage at which the cancer was diagnosed, the nature of the treatment, and the degree and process of recovery. The suggestion that these two very different conditions should be rated equivalently in all cases has no basis in medical fact and upends the goals of ensuring consistency, uniformity and objectivity in ratings supported by substantial medical evidence.

On the issue of apportionment, this bill creates broad, gender-based exceptions to the rule that employers are liable only for the percentage of permanent disability directly caused by a work-related injury. As written, the bill would prohibit apportionment to, and thus require employers to pay for, a permanent disability that actually resulted from pregnancy or menopause, or from osteoporosis or carpal tunnel syndrome where these are preexisting conditions or unrelated to work.

As I said last year, there is no place for gender discrimination in the workers' compensation system. Current law, however, already prohibits apportionment to risk factors, including gender, age, and family history. There is ample opportunity within the workers' compensation adjudicatory process for workers, their counsel, and others to raise any concerns or allegations of improper and impermissible gender discrimination in the medical evaluation or apportionment process.

California's workers' compensation system strives to treat all injured workers fairly and to ensure that all workers, regardless of gender, are adequately compensated for any permanent disability directly caused by work-related injuries. Rather than promoting equality, the statutory changes proposed by this measure would create new gender-based classifications and spur additional and costly litigation, undermining the successful reforms enacted in 2012 and the sustainability of the system.

I urge proponents of this bill to support efforts to educate medical evaluators on current laws prohibiting bias and to collaborate with my administration.

Analysis Prepared by: Mark Rakich / INS. / (916) 319-2086 FN: 0005122

 THIRD READING  

Bill No: AB 1643

Author:

:

Vote:

SENATE LABOR & IND. REL. COMMITTEE: 4-1, 6/29/16

AYES: Mendoza, Jackson, Leno, Mitchell

NOES: Stone

SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/11/16

AYES: Lara, Beall, Hill, McGuire, Mendoza

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 60-20, 6/1/16 - See last page for vote

SUBJECT:

SOURCE: California Applicants’ Attorneys Association

DIGEST: This bill prohibits apportionment in cases of physical injury based on pregnancy, menopause, osteoporosis, and carpal tunnel syndrome and requires that breast cancer not be less than the comparable impairment rating for prostate cancer.

ANALYSIS:

Existing law:

1. Establishes a workers’ compensation system that provides benefits to an employee who suffers from an injury or illness that arises out of and in the course of employment, irrespective of fault. This system requires all employers to secure payment of benefits by either securing the consent of the Department of Industrial Relations to self-insure or by securing insurance against liability from an insurance company duly authorized by the state.
2. Requires that, if an occupational injury results in a permanent disability, the percentage of disability to total disability shall be determined, and the disability payment computed on the basis of the percentage of disability to total disability. (Labor Code §4658)
3. Requires that, when doctors are determining the nature and severity of an occupational injury, the American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment (5th Edition) must be used to measure physical impairment and determine an injured worker’s whole person impairment (WPI). (Labor Code §4660.1)
4. Creates the Permanent Disability Ratings Schedule (PDRS), which increases the WPI by 40% and adjusts for occupation and age to calculate a percentage of permanent disability (PD), also known as a PD rating. (Labor Code §4660.1)
5. Requires that any physician who prepares a report addressing the issue of permanent disability include an apportionment determination, where the physician determines what approximate percentage of the permanent disability was caused by other factors, including prior industrial injuries. (Labor Code §4663)

This bill:

1. Require that WPI ratings for breast cancer and its sequelae shall in no event be less than comparable WPI ratings for prostate cancer and its sequelae.
2. Prohibit apportionment in cases of physical injury occurring on or after January 1, 2017 based on the following conditions:
3. Pregnancy;
4. Menopause;
5. Osteoporosis; and
6. Carpal Tunnel Syndrome.
7. Prohibit apportionment in cases of psychiatric injury caused by any of the conditions listed above.

Comments

1) A Brief Word on the AMA Guides: The AMA Guides were first published in 1971 to provide “a standardized, objective approach to evaluating medical impairments”. The Guides define “impairment” as a loss, loss of use, or derangement of any body part, organ system, or organ function. Excluding the introductory chapters, each chapter of the AMA Guides deals with a specific area of the body or a specific type of permanent impairment and discusses how to measure impairment in a specific individual. This impairment measurement is a percentage known as the whole person impairment (WPI), with a higher WPI percentage signifying a higher level of impairment.

WPI serves as the foundational calculation for the purposes of calculating a Permanent Disability (PD) rating. In bringing the AMA Guides into the workers’ compensation system in 2004, the goal was to make the measurement of impairment, and by extension PD ratings, more objective and uniform throughout the state and based on the best available medical evidence. Further, as a part of the 2012 reform, the Legislature codified case law that allows doctors to “rate by analogy” or to use other chapters of the AMA Guides if those chapters better explain the nature of the impairment (see Milpitas Unified School District v. Workers’ Comp. Appeals Bd. (Guzman) (2010) 187 Cal.App.4th 808).

However, some proponents of the bill have argued that the AMA Guides are not objective, specifically in the area of gender-specific injuries. Specifically, proponents point to the fact that the AMA Guides rate the removal of female breasts at a WPI of 0%, while the removal of a prostate would rate a 16%-20% WPI, arguing that such a rating shows bias against women. This line of argument, however, has some difficulties.

First, a permanent disability rating must take into account all the complete nature of the injury. In the case of breast cancer, while the removal of the breast may be rated 0%, the sequelae of the surgery would be ratable. For example, if the injured worker suffered neuropathic pain, skin issues, spine issues or general pain, each one of those factors would ratable. Additionally, this would include consequences from the chemotherapy drugs used to treat the breast cancer would also be ratable. These ratable impairments are combined to create a single permanent disability rating. According to case law, statute, and the AMA Guides, a woman who suffers a comparable level of impairment due to breast cancer when compared to a man suffering from prostate cancer must be rated comparably.

Second, the evidence that the AMA Guides are not objective is fundamentally limited. Some proponents point to a 1990 Harvard Law Review article which argued that the 3^rd Edition of the AMA Guides showed consistent gender bias. The California workers’ compensation system uses the 5^th Edition of the AMA Guides, which does not suffer from the gender bias issues raised in that article. Moreover, since the 1990 gender bias Harvard Law Review article, no similar articles have been published arguing that the AMA Guides show gender bias.

2) A Brief Word on Apportionment: Under existing law, every time a doctor prepares a report on if a claimed workplace injury is permanently disabling, the physician must determine causation AND what percentage of the injury is due to non-occupational issues, including prior workplace injuries. An injured worker’s PD award is then adjusted down by this percentage. Only a physician can determine if apportionment is appropriate and to what degree.

This makes apportionment a uniquely provocative policy. On one hand, it would be difficult to defend requiring an employer to provide PD awards for an injury that is unrelated to work or occurred at another place of employment. This is why language limiting PD awards to only cover the consequences of a workplace injury has been in law since 1917. While the current apportionment statute dates back to 2004, the idea behind it is nearly a century old.

On the other hand, determining what percentage of an injury is or is not occupational is highly dependent on the judgment of the physician. Workers Compensation Appeals Board (WCAB) case law provides that an apportionment finding is only valid if the physician’s medical opinion:

1. Framed in terms of reasonable medical probability;
2. Not speculative;
3. Based on pertinent facts and on an adequate examination;
4. Sets forth the reasoning in support of its conclusion; and
5. Explains how and why the apportionable factor is responsible for the disability. (See Escobedo v. Marshalls, (2005) 70 Cal. Comp. Cases 604)

Despite this case law, sometimes physicians fail to meet these requirements when making an apportionment determination.

For example, in Rice v. City of Jackson, ADJ8701916 (2015), an injured worker’s PD award was apportioned by 49% due to “family history”, or the injured worker’s father’s history of hip and back issues. The physician cited several journal articles, but did not evaluate the injured worker’s family or connect the “how and why” such family history led to the injured worker’s level of permanent disability. The WCAB ruled that apportioning on the basis of genetic predisposition was inappropriate, noted that apportioning on the basis of immutable factors is impermissible, and returned the case to the local board for a new unapportioned award of permanent disability.

One final note on apportionment: the apportioning of a PD award has no impact on the ability of an injured worker to receive medical care. Even in the event that a PD award is apportioned to 0%, the worker has a right to medical care if the injury arises or occurs in the course of employment (See Employers Mutual Liability Ins. Co. of Wisconsin v. Industrial Acc. Com. (Gideon) (1953) 41 Cal.2d 676 and Reyes v. Hart Plastering (2005) 70 Cal.Comp.Cases 223).

Prior Legislation

AB 305 (Gonzalez) of 2015 was very similar to this bill. It was vetoed by Governor Brown. In his veto message, the Governor stated:

"This bill prohibits the use of certain gender-related characteristics in the calculation of permanent disability benefits for injuries occurring on or after January 1, 2016. The workers compensation system must be free of gender-bias. No group should receive less in benefits because of an immutable characteristic. However, this bill is based on a misunderstanding of the American Medical Association's evidence-based standard, which is the foundation of the permanent disability ratings, and replaces it with an ill-defined and unscientific standard."

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee analysis, the Department of Industrial Relations (DIR) indicates that it would incur costs (special funds) of $6.4 million in the first year, and $6 million annually thereafter to implement the provisions of the bill. The analysis also reports that DIR believes that the bill would also result in increased litigation costs to the State as a direct employer. The magnitude is unknown, but potentially significant.

SUPPORT: (Verified 8/12/16)

California Applicants’ Attorneys Association (source)

Alliance of Californians for Community Empowerment

American Association of University Women

California Asset Building Coalition

California Child Care Resource and Referral Network

California Conference Board of the Amalgamated Transit Union

California Conference of Machinists

California Domestic Workers Coalition

California Employment Lawyers Association

California Latinas for Reproductive Justice

California Partnership

California Teamsters Public Affairs Council

California Women’s Law Center

California Work and Family Coalition

Child Care Law Center

Courage Campaign

Engineers & Scientists of California

Equal Rights Advocates

International Longshore & Warehouse Union

Legal Aid Society Employment Law Center

Los Angeles County Professional Peace Officers Association

Mujeres Unidas y Activas

National Council of Jewish Women

Organization of SMUD Employees

Parent Voices

Professional & Technical Engineers

Raising California Together

San Diego County Court Employees Association

San Luis Obispo County Employees Association

The Center for Popular Democracy

The Opportunity Institute

The Organization of SMUD Employees

The Women’s Foundation of California

Tradeswomen, Inc.

UNITE-HERE, AFL-CIO

Utility Workers Union of America, AFL-CIO

Voices for Progress

Western Center on Law and Poverty

9 to 5 California

OPPOSITION: (Verified 8/12/16)

Acclamation Insurance Management Services

Allied Managed Care

ALPHA Fund

American Insurance Association

Associated General Contractors

Association of California Healthcare Districts

Association of California Insurance Companies

California Association for Health Services at Home

California Association of Joint Powers Authorities

California Chamber of Commerce

California Coalition on Workers’ Compensation

California Delivery System

California Grocers Association

California Joint Powers Authority

California League of Food Processors

California Manufacturers and Technology Association

California Retailers Association

California School Boards Association

California Special Districts Association

California State Association of Counties

CAWA – Representing the Automotive Parts Industry

CSAC Excess Insurance Authority

Culver City Chamber of Commerce

League of California Cities

Los Angeles County Board of Supervisors

National Association of Mutual Insurance Companies

National Federation of Independent Business

Property Casualty Insurers Association of America

Rural County Representatives of California

Southwest California Legislative Council

ARGUMENTS IN SUPPORT: The sponsor of this bill, the California Applicants’ Attorneys Association (CAAA), argues that AB 1643 will eliminate gender bias from apportionment when determining permanent disability ratings. CAAA argues that factors such as pregnancy and menopause are used as factors to lower permanent disability. CAAA also cites several cases where apportionment is purported to have occurred due to risk factors and immutable characteristics, rather than proven conditions. CAAA also notes that AB 1643 will make breast cancer eligible for the same disability rating as prostate cancer. Finally, CAAA argues that the workers’ compensation system treats being a woman as a pre-existing condition, and that AB 1643 will ensure that women receive the level of permanent disability they deserve.

ARGUMENTS IN OPPOSITION: Opponents argue that AB 1643 is an attempt to undermine an employer’s use of apportionment when determining liability for permanent disability awards. Specifically, opponents note that apportionment is more than a decade old and ensures that employers do not need to pay for non-industrial injuries. Further, opponents point to case law and statute which protects injured workers from abusive apportionment, including apportionment on the basis of gender. Opponents further argue that AB 1643 will increase litigation, raise indemnity costs on employers, and increase systemic instability and subjectivity.

ASSEMBLY FLOOR: 60-20, 6/1/16

AYES: Achadjian, Alejo, Arambula, Atkins, Baker, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Hadley, Roger Hernández, Holden, Irwin, Jones-Sawyer, Levine, Linder, Lopez, Low, Maienschein, McCarty, Medina, Melendez, Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Weber, Williams, Wood, Rendon

NOES: Travis Allen, Bigelow, Brough, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Harper, Jones, Kim, Lackey, Mathis, Mayes, Obernolte, Olsen, Patterson, Wagner, Waldron, Wilk

Prepared by:

8/16/16 9:01:02

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 1643 (Gonzalez) - Workers’ compensation: permanent disability apportionment

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 1643 would (1) prohibit apportionment in cases of physical injury based on pregnancy, menopause, osteoporosis, and carpal tunnel syndrome, and (2) require that breast cancer not be less than the comparable impairment rating for prostate cancer.

Fiscal Impact:

• The Department of Industrial Relations (DIR) indicates that it would incur costs (special funds) of $6.4 million in the first year, and $6 million annually thereafter to implement the provisions of the bill.
• As a direct employer, the State would incur increased permanent disability costs due to breast cancer. Breast cancer permanent disability awards largely impact public sector employees such as policy and firefighters, due to presumptions of compensability, whereas in other employment sectors it is tougher to demonstrate breast cancer is job related. The magnitude of these costs is unknown, but likely significant.
• The bill also would result in increased litigation costs to the State as a direct employer. The magnitude is unknown, but potentially significant.

Background:

Current law establishes a workers’ compensation system that provides benefits to an employee who suffers from an injury or illness that occurs during the course of employment, irrespective of fault. This system requires all employers to secure payment of benefits by either (1) securing the consent of DIR to self-insure, or (2) securing insurance against liability from an insurance company authorized by the State.

Under current law, when doctors are determining the nature and severity of an occupational injury, the American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment (5th Edition) must be used to measure physical impairment and determine an injured worker’s whole person impairment (WPI).

When physicians prepare a report regarding whether a claimed workplace injury is permanently disabling, the physician must determine both (1) causation, and (2) what percentage of the injury is due to non-occupational issues, including prior workplace injuries. An injured worker’s permanent disability (PD) award is then adjusted down by this percentage. Only a physician can make the determination whether and to what extent if apportionment is appropriate.

Additionally, current law creates the Permanent Disability Ratings Schedule (PDRS), which increases the WPI by 40 percent and adjusts for occupation and age to calculate a percentage of permanent disability, also known as a PD rating. AMA Guides rate the removal of female breasts at a WPI of zero percent, while the removal of a prostrate generally rates at 16 to 20 percent WPI. Thus, prostrate removal currently translates into a higher PD rating than female breast removal.

Proposed Law:

This bill would (1) require that WPI ratings for breast cancer and its sequelae shall in no event be less than comparable WPI ratings for prostate cancer and its sequelae, (2) prohibit apportionment in cases of physical injury occurring on or after January 1, 2017 based on the following conditions: pregnancy, menopause, osteoporosis, and carpal tunnel syndrome, and (3) prohibit apportionment in cases of psychiatric injury caused by any of the conditions listed above.

Related Legislation:

AB 305 (Gonzalez) of 2015 was very similar to this bill. It was vetoed by the Governor.

Staff Comments:

The Office of the Legislative Counsel has keyed this bill “non-fiscal.” However, the purview of this Committee, pursuant to Joint Rule 10.5, is to review and analyze bills that would, among other things, result in a substantial expenditure of state money. Thus, even though AB 1643 was keyed “non-fiscal,” the Committee requested the bill to examine the extent to which it might potentially increase both workload and state costs. AB 1643 has the potential to create significant fiscal pressure on the state in the following ways: (1) increased litigation, leading to higher Workers Compensation Appeals Board (WCAB) utilization, (2) increased PD costs due to breast cancer for the State of California as a direct employer (particularly for peace officers), and (3) increased litigation costs for the State of California as an employer.

As noted previously, DIR estimates that the additional workload resulting from the bill would lead to increased costs of $6.4 million in the first year, and $6 million annually thereafter. However, to the extent that the number of women who receive an apportionment determination is reduced in light of the bill’s prohibition of apportionment to certain factors such as carpal tunnel syndrome and osteoporosis, the DIR estimate could be overstated.

-- END --

SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS

Senator Tony Mendoza, Chair

2015 - 2016 Regular

Bill No: AB 1643 Hearing Date: June 29, 2016

Subject: Workers’ compensation: permanent disability apportionment

KEY ISSUE

Should the Legislature prohibit apportionment in cases of physical injury based on pregnancy, menopause, osteoporosis, and carpal tunnel syndrome?

Should the Legislature require that breast cancer not be less than the comparable impairment rating for prostate cancer?

ANALYSIS

Existing law:

1. Establishes a workers’ compensation system that provides benefits to an employee who suffers from an injury or illness that arises out of and in the course of employment, irrespective of fault. This system requires all employers to secure payment of benefits by either securing the consent of the Department of Industrial Relations to self-insure or by securing insurance against liability from an insurance company duly authorized by the state.
2. Requires that, if an occupational injury results in a permanent disability, the percentage of disability to total disability shall be determined, and the disability payment computed on the basis of the percentage of disability to total disability. (Labor Code §4658)
3. Requires that, when doctors are determining the nature and severity of an occupational injury, the American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment (5th Edition) must be used to measure physical impairment and determine an injured worker’s whole person impairment (WPI). (Labor Code §4660.1)
4. Creates the Permanent Disability Ratings Schedule (PDRS), which increases the WPI by 40% and adjusts for occupation and age to calculate a percentage of permanent disability (PD), also known as a PD rating. (Labor Code §4660.1)
5. Requires that any physician who prepares a report addressing the issue of permanent disability include an apportionment determination, where the physician determines what approximate percentage of the permanent disability was caused by other factors, including prior industrial injuries. (Labor Code §4663)

This bill would:

1. Require that WPI ratings for breast cancer and its sequelae shall in no event be less than comparable WPI ratings for prostate cancer and its sequelae.
2. Prohibit apportionment in cases of physical injury occurring on or after January 1, 2017 based on the following conditions:
3. Pregnancy;
4. Menopause;
5. Osteoporosis; and
6. Carpal Tunnel Syndrome.
7. Prohibit apportionment in cases of psychiatric injury caused by any of the conditions listed above.

COMMENTS

1. A Brief Word on the AMA Guides:

The AMA Guides were first published in 1971 to provide “a standardized, objective approach to evaluating medical impairments”. The Guides define “impairment” as a loss, loss of use, or derangement of any body part, organ system, or organ function. Excluding the introductory chapters, each chapter of the AMA Guides deals with a specific area of the body or a specific type of permanent impairment and discusses how to measure impairment in a specific individual. This impairment measurement is a percentage known as the whole person impairment (WPI), with a higher WPI percentage signifying a higher level of impairment.

WPI serves as the foundational calculation for the purposes of calculating a Permanent Disability (PD) rating. In bringing the AMA Guides into the workers’ compensation system in 2004, the goal was to make the measurement of impairment, and by extension PD ratings, more objective and uniform throughout the state and based on the best available medical evidence. Further, as a part of the 2012 reform, the Legislature codified case law that allows doctors to “rate by analogy” or to use other chapters of the AMA Guides if those chapters better explain the nature of the impairment (see Milpitas Unified School District v. Workers’ Comp. Appeals Bd. (Guzman) (2010) 187 Cal.App.4th 808).

However, some proponents of the bill have argued that the AMA Guides are not objective, specifically in the area of gender-specific injuries. Specifically, proponents point to the fact that the AMA Guides rate the removal of female breasts at a WPI of 0%, while the removal of a prostate would rate a 16%-20% WPI, arguing that such a rating shows bias against women. This line of argument, however, has some difficulties.

First, a permanent disability rating must take into account all the complete nature of the injury. In the case of breast cancer, while the removal of the breast may be rated 0%, the sequelae of the surgery would be ratable. For example, if the injured worker suffered neuropathic pain, skin issues, spine issues or general pain, each one of those factors would ratable. Additionally, this would include consequences from the chemotherapy drugs used to treat the breast cancer would also be ratable. These ratable impairments are combined to create a single permanent disability rating. According to case law, statute, and the AMA Guides, a woman who suffers a comparable level of impairment due to breast cancer when compared to a man suffering from prostate cancer must be rated comparably.

Second, the evidence that the AMA Guides are not objective is fundamentally limited. Some proponents point to a 1990 Harvard Law Review article which argued that the 3^rd Edition of the AMA Guides showed consistent gender bias. The California workers’ compensation system uses the 5^th Edition of the AMA Guides, which does not suffer from the gender bias issues raised in that article. Moreover, since the 1990 gender bias Harvard Law Review article, no similar articles have been published arguing that the AMA Guides show gender bias.

2. A Brief Word on Apportionment:

Under existing law, every time a doctor prepares a report on if a claimed workplace injury is permanently disabling, the physician must determine causation AND what percentage of the injury is due to non-occupational issues, including prior workplace injuries. An injured worker’s PD award is then adjusted down by this percentage. Only a physician can determine if apportionment is appropriate and to what degree.

This makes apportionment a uniquely provocative policy. On one hand, it would be difficult to defend requiring an employer to provide PD awards for an injury that is unrelated to work or occurred at another place of employment. This is why language limiting PD awards to only cover the consequences of a workplace injury has been in law since 1917. While the current apportionment statute dates back to 2004, the idea behind it is nearly a century old.

On the other hand, determining what percentage of an injury is or is not occupational is highly dependent on the judgment of the physician. WCAB case law provides that an apportionment finding is only valid if the physician’s medical opinion:

1. Framed in terms of reasonable medical probability;
2. Not speculative;
3. Based on pertinent facts and on an adequate examination;
4. Sets forth the reasoning in support of its conclusion; and
5. Explains how and why the apportionable factor is responsible for the disability.

(See Escobedo v. Marshalls, (2005) 70 Cal. Comp. Cases 604)

Despite this case law, sometimes physicians fail to meet these requirements when making an apportionment determination.

For example, in Rice v. City of Jackson, ADJ8701916 (2015), an injured worker’s PD award was apportioned by 49% due to “family history”, or the injured worker’s father’s history of hip and back issues. The physician cited several journal articles, but did not evaluate the injured worker’s family or connect the “how and why” such family history led to the injured worker’s level of permanent disability. The WCAB ruled that apportioning on the basis of genetic predisposition was inappropriate, noted that apportioning on the basis of immutable factors is impermissible, and returned the case to the local board for a new unapportioned award of permanent disability.

Proponents have brought forward several examples of apportionment that, like Rice, appear to fall into the arena of physician failure. Each example is troubling. However, they are a small sample; thousands of apportionment decisions are issued each year and have been for over a decade. Staff notes that it is currently unclear if such a small sample of apportionment examples demonstrates systemic inequality towards women or notable examples of physician error.

One final note on apportionment: the apportioning of a PD award has no impact on the ability of an injured worker to receive medical care. Even in the event that a PD award is apportioned to 0%, the worker has a right to medical care if the injury arises or occurs in the course of employment (See Employers Mutual Liability Ins. Co. of Wisconsin v. Industrial Acc. Com. (Gideon) (1953) 41 Cal.2d 676 and Reyes v. Hart Plastering (2005) 70 Cal.Comp.Cases 223).

3. Apportionment and AB 1643:

As was noted above, AB 1643 prohibits apportionment in the presence of certain conditions. Unlike last year’s AB 305 (Gonzalez), however, this prohibition on apportionment is not time limited. AB 305 required that the prohibition on apportionment only applied if the conditions were present contemporaneously with the physical injury. AB 1643 does not have a similar limitation.

In some cases, the time limitation would not be a factor. For specific injuries, such as a fall or a car accident, this could be a straight forward analysis: a doctor would simply exclude pregnancy, menopause, or osteoporosis from his or her apportionment determination. For cumulativqe trauma (CT) cases, however, the analysis could become complicated. For example, if a woman was post-menopausal, could she argue that apportionment was not available to her employer because she went through menopause? Would it matter if she was menopausal during the period the CT injury was manifesting? Or would the fact she was menopausal at all prevent apportionment? What about pregnancy?

Likely, these are fact-intensive analyses which may be clarified by future WCAB decisions, which would necessitate significant litigation. Therefore, it is likely that AB 1643 would increase litigation costs for employers, particularly in the area of cumulative trauma claims.

4. An Additional Note on Apportionment:

As was discussed above, AB 1643 raises specific questions about apportionment and gender. However, that does not mean that apportionment in and of itself is a policy that does not need additional legislative scrutiny.

Surprisingly, there has been little recent study on apportionment. The last study on the impact of apportionment was done by the WCIRB in 2008, and that study found that about 6% of all PD dollars were apportioned. However, there have been significant increases in indemnity payments and litigation frequency, as well as loss-adjusted expenses (LAE), which tends to be a proxy for litigation costs.

Noting the strong evidence that apportionment is more likely in litigated cases, the current impact of apportionment on PD claims and dollars is an important policy question, and it is a policy question about which we know very, very little. Does apportionment still reduce PD dollars by 6%, or has it increased? Does apportionment make litigation more likely? Or does litigation make apportionment more likely? And would apportionment change the way either an applicant or defendant would litigate the case?

More fundamentally, however, there is an even more basic question with apportionment: does it actually save money, or is it a cost driver? If apportionment increases the likelihood of litigation or makes litigation more severe, it is possible that it actually serves as a cost driver in the system – one that is automatic with the physician’s completion of a PD report. While this is very unlikely, the reality is that we simply do not know the full impacts of apportionment.

Noting the significance of apportionment for employers and injured workers, stakeholders may wish to consider requesting that the Commission on Health and Safety and Workers’ Compensation (CHSWC) authorize a study on the current impacts of apportionment on litigation and PD dollars.

5. Proponent Arguments:

The sponsor of this bill, the California Applicants’ Attorneys Association (CAAA), argues that AB 1643 will eliminate gender bias from apportionment when determining permanent disability ratings. CAAA argues that factors such as pregnancy and menopause are used as factors to lower permanent disability. CAAA also cites several cases where apportionment is purported to have occurred due to risk factors and immutable characteristics, rather than proven conditions. CAAA also notes that AB 1643 will make breast cancer eligible for the same disability rating as prostate cancer. Finally, CAAA argues that the workers’ compensation system treats being a woman as a pre-existing condition, and that AB 1643 will ensure that women receive the level of permanent disability they deserve.

6. Opponent Arguments:

Opponents argue that AB 1643 is an attempt to undermine an employer’s use of apportionment when determining liability for permanent disability awards. Specifically, opponents note that apportionment is more than a decade old and ensures that employers do not need to pay for non-industrial injuries. Further, opponents point to case law and statute which protects injured workers from abusive apportionment, including apportionment on the basis of gender. Opponents further argue that AB 1643 will increase litigation, raise indemnity costs on employers, and increase systemic instability and subjectivity.

7. Double Referral:

This bill has been double-referred and, if approved by this committee, it will be sent to the Senate Appropriations Committee for a hearing.

8. Prior Legislation:

AB 305 (Gonzalez) of 2015 was very similar to this bill. It was vetoed by Governor Brown. In his veto message, the Governor stated:

"This bill prohibits the use of certain gender-related characteristics in the calculation of permanent disability benefits for injuries occurring on or after January 1, 2016. The workers compensation system must be free of gender-bias. No group should receive less in benefits because of an immutable characteristic. However, this bill is based on a misunderstanding of the American Medical Association's evidence-based standard, which is the foundation of the permanent disability ratings, and replaces it with an ill-defined and unscientific standard."

SUPPORT

California Applicants’ Attorneys Association (Sponsor)

Alliance of Californians for Community Empowerment

American Association of University Women

California Asset Building Coalition

California Child Care Resource and Referral Network

California Conference Board of the Amalgamated Transit Union

California Conference of Machinists

California Domestic Workers Coalition

California Employment Lawyers Association

California Latinas for Reproductive Justice

California Partnership

California Teamsters Public Affairs Council

California Women’s Law Center

California Work and Family Coalition

Child Care Law Center

Courage Campaign

Engineers & Scientists of California

Equal Rights Advocates

Equal Rights Advocates

International Longshore & Warehouse Union

Legal Aid Society Employment Law Center

Los Angeles County Professional Peace Officers Association

Mujeres Unidas y Activas

National Council of Jewish Women

Parent Voices

Professional & Technical Engineers

Raising California Together

San Diego County Court Employees Association

San Luis Obispo County Employees Association

The Center for Popular Democracy

The Opportunity Institute

The Organization of SMUD Employees

The Women’s Foundation of California

Tradeswomen, Inc.

UNITE-HERE, AFL-CIO

Utility Workers Union of America, AFL-CIO

Voices for Progress

Western Center on Law and Poverty

9 to 5 California

OPPOSITION

Acclamation Insurance Management Services

Allied Managed Care

ALPHA Fund

American Insurance Association

Associated General Contractors

Association of California Healthcare Districts

Association of California Insurance Companies

California Association for Health Services at Home

California Association of Joint Powers Authorities

California Chamber of Commerce

California Coalition on Workers’ Compensation

California Grocers Association

California Joint Powers Authority

California League of Food Processors

California Manufacturers and Technology Association

California Retailers Association

California School Boards Association

California Special Districts Association

California State Association of Counties

CAWA – Representing the Automotive Parts Industry

CSAC Excess Insurance Authority

Culver City Chamber of Commerce

League of California Cities

Los Angeles County Board of Supervisors

National Association of Mutual Insurance Companies

National Federation of Independent Business

Property Casualty Insurers Association of America

Rural County Representatives of California

Southwest California Legislative Council

-- END --

SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS

Senator Tony Mendoza, Chair

2015 - 2016 Regular

Bill No: AB 1643 Hearing Date: June 29, 2016

Subject: Workers’ compensation: permanent disability apportionment

KEY ISSUE

Should the Legislature prohibit apportionment in cases of physical injury based on pregnancy, menopause, osteoporosis, and carpal tunnel syndrome?

Should the Legislature require that breast cancer not be less than the comparable impairment rating for prostate cancer?

ANALYSIS

Existing law:

1. Establishes a workers’ compensation system that provides benefits to an employee who suffers from an injury or illness that arises out of and in the course of employment, irrespective of fault. This system requires all employers to secure payment of benefits by either securing the consent of the Department of Industrial Relations to self-insure or by securing insurance against liability from an insurance company duly authorized by the state.
2. Requires that, if an occupational injury results in a permanent disability, the percentage of disability to total disability shall be determined, and the disability payment computed on the basis of the percentage of disability to total disability. (Labor Code §4658)
3. Requires that, when doctors are determining the nature and severity of an occupational injury, the American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment (5th Edition) must be used to measure physical impairment and determine an injured worker’s whole person impairment (WPI). (Labor Code §4660.1)
4. Creates the Permanent Disability Ratings Schedule (PDRS), which increases the WPI by 40% and adjusts for occupation and age to calculate a percentage of permanent disability (PD), also known as a PD rating. (Labor Code §4660.1)
5. Requires that any physician who prepares a report addressing the issue of permanent disability include an apportionment determination, where the physician determines what approximate percentage of the permanent disability was caused by other factors, including prior industrial injuries. (Labor Code §4663)

This bill would:

1. Require that WPI ratings for breast cancer and its sequelae shall in no event be less than comparable WPI ratings for prostate cancer and its sequelae.
2. Prohibit apportionment in cases of physical injury occurring on or after January 1, 2017 based on the following conditions:
3. Pregnancy;
4. Menopause;
5. Osteoporosis; and
6. Carpal Tunnel Syndrome.
7. Prohibit apportionment in cases of psychiatric injury caused by any of the conditions listed above.

COMMENTS

1. A Brief Word on the AMA Guides:

The AMA Guides were first published in 1971 to provide “a standardized, objective approach to evaluating medical impairments”. The Guides define “impairment” as a loss, loss of use, or derangement of any body part, organ system, or organ function. Excluding the introductory chapters, each chapter of the AMA Guides deals with a specific area of the body or a specific type of permanent impairment and discusses how to measure impairment in a specific individual. This impairment measurement is a percentage known as the whole person impairment (WPI), with a higher WPI percentage signifying a higher level of impairment.

WPI serves as the foundational calculation for the purposes of calculating a Permanent Disability (PD) rating. In bringing the AMA Guides into the workers’ compensation system in 2004, the goal was to make the measurement of impairment, and by extension PD ratings, more objective and uniform throughout the state and based on the best available medical evidence. Further, as a part of the 2012 reform, the Legislature codified case law that allows doctors to “rate by analogy” or to use other chapters of the AMA Guides if those chapters better explain the nature of the impairment (see Milpitas Unified School District v. Workers’ Comp. Appeals Bd. (Guzman) (2010) 187 Cal.App.4th 808).

However, some proponents of the bill have argued that the AMA Guides are not objective, specifically in the area of gender-specific injuries. Specifically, proponents point to the fact that the AMA Guides rate the removal of female breasts at a WPI of 0%, while the removal of a prostate would rate a 16%-20% WPI, arguing that such a rating shows bias against women. This line of argument, however, has some difficulties.

First, a permanent disability rating must take into account all the complete nature of the injury. In the case of breast cancer, while the removal of the breast may be rated 0%, the sequelae of the surgery would be ratable. For example, if the injured worker suffered neuropathic pain, skin issues, spine issues or general pain, each one of those factors would ratable. Additionally, this would include consequences from the chemotherapy drugs used to treat the breast cancer would also be ratable. These ratable impairments are combined to create a single permanent disability rating. According to case law, statute, and the AMA Guides, a woman who suffers a comparable level of impairment due to breast cancer when compared to a man suffering from prostate cancer must be rated comparably.

Second, the evidence that the AMA Guides are not objective is fundamentally limited. Some proponents point to a 1990 Harvard Law Review article which argued that the 3^rd Edition of the AMA Guides showed consistent gender bias. The California workers’ compensation system uses the 5^th Edition of the AMA Guides, which does not suffer from the gender bias issues raised in that article. Moreover, since the 1990 gender bias Harvard Law Review article, no similar articles have been published arguing that the AMA Guides show gender bias.

2. A Brief Word on Apportionment:

Under existing law, every time a doctor prepares a report on if a claimed workplace injury is permanently disabling, the physician must determine causation AND what percentage of the injury is due to non-occupational issues, including prior workplace injuries. An injured worker’s PD award is then adjusted down by this percentage. Only a physician can determine if apportionment is appropriate and to what degree.

This makes apportionment a uniquely provocative policy. On one hand, it would be difficult to defend requiring an employer to provide PD awards for an injury that is unrelated to work or occurred at another place of employment. This is why language limiting PD awards to only cover the consequences of a workplace injury has been in law since 1917. While the current apportionment statute dates back to 2004, the idea behind it is nearly a century old.

On the other hand, determining what percentage of an injury is or is not occupational is highly dependent on the judgment of the physician. WCAB case law provides that an apportionment finding is only valid if the physician’s medical opinion:

1. Framed in terms of reasonable medical probability;
2. Not speculative;
3. Based on pertinent facts and on an adequate examination;
4. Sets forth the reasoning in support of its conclusion; and
5. Explains how and why the apportionable factor is responsible for the disability.

(See Escobedo v. Marshalls, (2005) 70 Cal. Comp. Cases 604)

Despite this case law, sometimes physicians fail to meet these requirements when making an apportionment determination.

For example, in Rice v. City of Jackson, ADJ8701916 (2015), an injured worker’s PD award was apportioned by 49% due to “family history”, or the injured worker’s father’s history of hip and back issues. The physician cited several journal articles, but did not evaluate the injured worker’s family or connect the “how and why” such family history led to the injured worker’s level of permanent disability. The WCAB ruled that apportioning on the basis of genetic predisposition was inappropriate, noted that apportioning on the basis of immutable factors is impermissible, and returned the case to the local board for a new unapportioned award of permanent disability.

Proponents have brought forward several examples of apportionment that, like Rice, appear to fall into the arena of physician failure. Each example is troubling. However, they are a small sample; thousands of apportionment decisions are issued each year and have been for over a decade. Staff notes that it is currently unclear if such a small sample of apportionment examples demonstrates systemic inequality towards women or notable examples of physician error.

One final note on apportionment: the apportioning of a PD award has no impact on the ability of an injured worker to receive medical care. Even in the event that a PD award is apportioned to 0%, the worker has a right to medical care if the injury arises or occurs in the course of employment (See Employers Mutual Liability Ins. Co. of Wisconsin v. Industrial Acc. Com. (Gideon) (1953) 41 Cal.2d 676 and Reyes v. Hart Plastering (2005) 70 Cal.Comp.Cases 223).

3. Apportionment and AB 1643:

As was noted above, AB 1643 prohibits apportionment in the presence of certain conditions. Unlike last year’s AB 305 (Gonzalez), however, this prohibition on apportionment is not time limited. AB 305 required that the prohibition on apportionment only applied if the conditions were present contemporaneously with the physical injury. AB 1643 does not have a similar limitation.

In some cases, the time limitation would not be a factor. For specific injuries, such as a fall or a car accident, this could be a straight forward analysis: a doctor would simply exclude pregnancy, menopause, or osteoporosis from his or her apportionment determination. For cumulativqe trauma (CT) cases, however, the analysis could become complicated. For example, if a woman was post-menopausal, could she argue that apportionment was not available to her employer because she went through menopause? Would it matter if she was menopausal during the period the CT injury was manifesting? Or would the fact she was menopausal at all prevent apportionment? What about pregnancy?

Likely, these are fact-intensive analyses which may be clarified by future WCAB decisions, which would necessitate significant litigation. Therefore, it is likely that AB 1643 would increase litigation costs for employers, particularly in the area of cumulative trauma claims.

4. An Additional Note on Apportionment:

As was discussed above, AB 1643 raises specific questions about apportionment and gender. However, that does not mean that apportionment in and of itself is a policy that does not need additional legislative scrutiny.

Surprisingly, there has been little recent study on apportionment. The last study on the impact of apportionment was done by the WCIRB in 2008, and that study found that about 6% of all PD dollars were apportioned. However, there have been significant increases in indemnity payments and litigation frequency, as well as loss-adjusted expenses (LAE), which tends to be a proxy for litigation costs.

Noting the strong evidence that apportionment is more likely in litigated cases, the current impact of apportionment on PD claims and dollars is an important policy question, and it is a policy question about which we know very, very little. Does apportionment still reduce PD dollars by 6%, or has it increased? Does apportionment make litigation more likely? Or does litigation make apportionment more likely? And would apportionment change the way either an applicant or defendant would litigate the case?

More fundamentally, however, there is an even more basic question with apportionment: does it actually save money, or is it a cost driver? If apportionment increases the likelihood of litigation or makes litigation more severe, it is possible that it actually serves as a cost driver in the system – one that is automatic with the physician’s completion of a PD report. While this is very unlikely, the reality is that we simply do not know the full impacts of apportionment.

Noting the significance of apportionment for employers and injured workers, stakeholders may wish to consider requesting that the Commission on Health and Safety and Workers’ Compensation (CHSWC) authorize a study on the current impacts of apportionment on litigation and PD dollars.

5. Proponent Arguments:

The sponsor of this bill, the California Applicants’ Attorneys Association (CAAA), argues that AB 1643 will eliminate gender bias from apportionment when determining permanent disability ratings. CAAA argues that factors such as pregnancy and menopause are used as factors to lower permanent disability. CAAA also cites several cases where apportionment is purported to have occurred due to risk factors and immutable characteristics, rather than proven conditions. CAAA also notes that AB 1643 will make breast cancer eligible for the same disability rating as prostate cancer. Finally, CAAA argues that the workers’ compensation system treats being a woman as a pre-existing condition, and that AB 1643 will ensure that women receive the level of permanent disability they deserve.

6. Opponent Arguments:

Opponents argue that AB 1643 is an attempt to undermine an employer’s use of apportionment when determining liability for permanent disability awards. Specifically, opponents note that apportionment is more than a decade old and ensures that employers do not need to pay for non-industrial injuries. Further, opponents point to case law and statute which protects injured workers from abusive apportionment, including apportionment on the basis of gender. Opponents further argue that AB 1643 will increase litigation, raise indemnity costs on employers, and increase systemic instability and subjectivity.

7. Double Referral:

This bill has been double-referred and, if approved by this committee, it will be sent to the Senate Appropriations Committee for a hearing.

8. Prior Legislation:

AB 305 (Gonzalez) of 2015 was very similar to this bill. It was vetoed by Governor Brown. In his veto message, the Governor stated:

"This bill prohibits the use of certain gender-related characteristics in the calculation of permanent disability benefits for injuries occurring on or after January 1, 2016. The workers compensation system must be free of gender-bias. No group should receive less in benefits because of an immutable characteristic. However, this bill is based on a misunderstanding of the American Medical Association's evidence-based standard, which is the foundation of the permanent disability ratings, and replaces it with an ill-defined and unscientific standard."

SUPPORT

9 to 5 California

Alliance of Californians for Community Empowerment

American Association of University Women

California Applicants’ Attorneys Association (Sponsor)

California Asset Building Coalition

California Child Care Resource and Referral Network

California Conference Board of the Amalgamated Transit Union

California Conference of Machinists

California Domestic Workers Coalition

California Employment Lawyers Association

California Latinas for Reproductive Justice

California Partnership

California Teamsters Public Affairs Council

California Women’s Law Center

California Work and Family Coalition

Child Care Law Center

Courage Campaign

Engineers & Scientists of California

Equal Rights Advocates

Equal Rights Advocates

International Longshore & Warehouse Union

Legal Aid Society Employment Law Center

Los Angeles County Professional Peace Officers Association

Mujeres Unidas y Activas

National Council of Jewish Women

Parent Voices

Professional & Technical Engineers

Raising California Together

San Diego County Court Employees Association

San Luis Obispo County Employees Association

The Center for Popular Democracy

The Opportunity Institute

The Organization of SMUD Employees

The Women’s Foundation of California

Tradeswomen, Inc.

UNITE-HERE, AFL-CIO

Utility Workers Union of America, AFL-CIO

Voices for Progress

Western Center on Law and Poverty

OPPOSITION

Acclamation Insurance Management Services

Allied Managed Care

ALPHA Fund

American Insurance Association

Associated General Contractors

Association of California Healthcare Districts

Association of California Insurance Companies

California Association for Health Services at Home

California Association of Joint Powers Authorities

California Chamber of Commerce

California Coalition on Workers’ Compensation

California Grocers Association

California Joint Powers Authority

California League of Food Processors

California Manufacturers and Technology Association

California Retailers Association

California School Boards Association

California Special Districts Association

California State Association of Counties

CAWA – Representing the Automotive Parts Industry

CSAC Excess Insurance Authority

Culver City Chamber of Commerce

League of California Cities

Los Angeles County Board of Supervisors

National Association of Mutual Insurance Companies

National Federation of Independent Business

Property Casualty Insurers Association of America

Rural County Representatives of California

Southwest California Legislative Council

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1643

Author:(Gonzalez)

As Amended Ver:March 16, 2016

Majority vote

SUMMARY: Prohibits the use of certain gender-related characteristics in the calculation of permanent disability benefits for injuries occurring on or after January 1, 2017. Specifically, this bill:

1. Prohibits granting the disabling effects of breast cancer a lower disability rating than granted to the disabling effects of prostate cancer.
2. Prohibits the use of pregnancy, osteoporosis, menopause, or carpal tunnel syndrome to apportion permanent disability with respect to a physical injury.
3. Prohibits the use of a prior psychiatric injury, if that prior injury was caused by pregnancy, osteoporosis, menopause, or carpal tunnel syndrome, to apportion permanent disability with respect to a psychiatric injury.

EXISTING LAW:

1. Provides for a comprehensive system to provide workers' compensation benefits to workers whose injuries or conditions arise out of or in the course of employment, including medical treatment and financial compensation if the injury or condition has a permanently disabling effect.
2. Establishes a Permanent Disability Rating Schedule (PDRS), a methodology for calculating impairment through the use of the American Medical Association Guides to the Evaluation of Permanent Impairment (AMA Guides), and other tools that are used to determine the extent of an injured worker's permanent disability (PD).
3. Allows for the "apportionment" of PD determinations to prior industrial causes, or to prior non-industrial causes, and reduces the amount of the injured worker's PD award to the extent these prior causes have contributed to the extent of the disability.
4. Requires the physician who is making a recommendation on the extent of disability that has followed from an industrial injury to identify, and quantify, causation of the disability that is either prior to or subsequent to the industrial injury.

FISCAL EFFECT: According to Assembly Appropriations Committee, approximately $6 million in new administrative costs associated with litigation over the bill's new rules; however, it is difficult to accurately quantify the scope of this issue. Unknown, but potentially significant costs to the state based on increased payouts to injured state employees.

COMMENTS:

1. Purpose. The purpose of the bill is to eliminate gender bias in the workers' compensation system. According to the author, California must eliminate the remnants of gender bias in the workplace, no matter how widespread, including within workers' compensation. The author maintains that the AMA Guides inappropriately assign little to no value to the loss of a woman's breasts, and that it is also inappropriate to apportion disability to non-industrial causation if that causation is a factor or condition that is uniquely or predominantly based on gender.
2. Case Law. In an unpublished appellate decision, Vaira v. WCAB, the Court of Appeal returned a case to the Workers' Compensation Appeals Board (WCAB) because the record was insufficient to determine whether the physician had based his apportionment decision on medical facts that showed the older female claimant suffered from osteoporosis, or on the basis that the risk factor (older women face a high risk of suffering from osteoporosis) alone was sufficient to assign a percentage of the causation to osteoporosis. This decision has been broadly applied in the workers' compensation courts as establishing the following rule: a risk characteristic such as older women having a high incidence of osteoporosis, or older African American men having a high incidence of hypertension, cannot be used as a basis to apportion a permanent disability award. However, a woman diagnosed with osteoporosis that contributes to her disability resulting from the subsequent industrial injury, or an African American man diagnosed with hypertension that contributes to his disability resulting from the subsequent industrial injury, can have the disability award apportioned based on the prior nonindustrial causation. This is the rule Governor Brown alluded to in his Veto Message on AB 1155 (Alejo) of 2011 (see below).
3. Scope of problem. There is substantial disagreement as between supporters of this bill and opponents of this bill on whether or not there is a serious problem of gender-based unfairness in the workers' compensation system. Some supporters have asserted that "we see it every day" while some opponents assert that the wrongs complained of simply do not occur in the workers' compensation courts.

This issue has been presented to, and debated in, the Legislature in one form or another for at least eight years, and there is a paucity of concrete evidence, either academic or anecdotal, to show that there is pervasive discrimination based on gender, or other protected classes. The California Applicants' Attorneys Association (CAAA), in its letter in support of this bill, and the author in the Background materials provided to the Committee, cite several examples of cases where women are alleged to have suffered unfair treatment by the system. Without getting into too much case-specific detail, two things appear from the cited examples: first, the characteristics used to reduce permanent disability awards appear to be risk factors or broad characteristics like those the Vaira case prohibits; second, in most examples, it is claimed that "the doctor" has pointed to the offending apportionment factor. Despite requests for any information indicating that workers' compensation judges have accepted these inappropriate apportionment factors, proponents have been unable to do so. Opponents, on the other hand, have argued that "dumb doctors" making ill-advised, discriminatory apportionment statements are not a basis to change the law – they are a basis for the attorney representing the injured worker to argue to a workers compensation judge that the doctor recommended an illegal or inappropriate factor that does not support apportionment.

1. Apportionment. Apportionment applies to PD determinations when the disabling effect of an industrial injury has some percentage of causation that either predates or occurs subsequent to the industrial injury. Apportionment does not apply to medical treatment. For example, no matter how much the old football injury is making an industrial knee injury more complicated or extensive, the workers' compensation system provides medical treatment for the industrial knee injury fully and comprehensively. The fact that there is pre-industrial injury causation that affects the seriousness of the injury does not limit the extent of medical treatment. But causation of the disability is treated differently from causation of the injury. There are at least three policy rationales underpinning the apportionment rule. First, it has been deemed unfair to require an employer to pay for disability that was not caused by the employment. Second, if the prior causation was a previous industrial injury that resulted in a PD award, the injured worker would have already been compensated for that portion of the disabling condition. Third, if an employer knew that a job candidate suffered a previous injury that might lead to more expense if he should re-injure himself, the employer might opt to hire someone else who does not pose that financial risk.

Apportionment as a policy is not without its critics. On a "but for" causation rationale, the injured worker would not be suffering the current disability to any extent but for the current industrial injury. And if the injury were being compensated in the tort system, the person who acted negligently to cause an injury would be responsible for the full extent of the disability, because in tort the "victim's" preconditions do not operate to diminish the consequences of the acts that cause injury. However, apportionment is the rule in workers' compensation, and this bill proposes exceptions to the normal rules of apportionment.

1. Does case law result in gender discrimination? Proponents strongly argue that it is inappropriate gender discrimination to use even factual conditions that contribute to disability causation if those factors are uniquely attributable to being a woman. In the proponents view, even the Vaira decision endorses gender discrimination, because Vaira merely rejected use of risk factors, but allowed use of factual pre-existing conditions, including some of the factors that the bill would prohibit. Thus, the policy argument is that the uniquely female gender factors addressed by the bill should simply not be used to reduce permanent disability awards. Opponents counter that the workers' compensation system is designed to require employers to pay to injured workers what the job itself caused, not what non-job factors caused.
2. Breast cancer vs prostate cancer. A key provision in this bill that proponents argue cures gender discrimination is the mandate that breast cancer and prostate cancer be treated the same in terms of disability ratings. Since 2004, the AMA Guides has been the basis in California law for making PD determinations.

The AMA Guides were first published in 1971 to provide "a standardized, objective approach to evaluating medical impairments". The Guides define "impairment" as a loss, loss of use, or derangement of any body part, organ system, or organ function. The AMA Guides deal chapter by chapter with specific areas of the body or a specific type of permanent impairment and discuss how to measure impairment in a specific individual. This impairment measurement is a percentage known as the whole person impairment (WPI), with a higher WPI percentage signifying a higher level of impairment.

WPI serves as the foundational calculation for the purposes of calculating a PD rating. In bringing the AMA Guides into the workers' compensation system in 2004, the goal was to make the measurement of impairment, and by extension PD ratings, more objective and uniform throughout the state and based on the best available medical evidence. Further, as a part of the 2012 reform, the Legislature codified case law that allows doctors to "rate by analogy" or to use other chapters of the AMA Guides if those chapters better explain the nature of the impairment.

Proponents of this bill have argued that the AMA Guides are not objective in this context. Proponents have both specific and broad criticisms of the AMA Guides. Specifically, they point to the fact that the AMA Guides rate the removal of female breasts at a WPI of 0%, while the removal of a prostate would rate a 16% to 20% WPI, arguing that such a rating shows bias against women. More generally, they argue that there has long been an outdated cultural gender bias that remains to this day, with an underappreciation of the psychological and physiological consequences to a woman of the loss of her breasts.

However, the male prostate may not be a strong equivalent to female breasts. The closest female equivalent, or homologue, to the prostate is the skene's gland, which is located on the surface of the vulva. Alternatively, one could also look at urthereal disease, which would lead to incontinence in women. A review of how the AMA Guides rate these female conditions shows that there is a comparable WPI rating to male prostate ratings. Opponents have argued that comparing ratings for breast and prostate cancer is simply the wrong comparison, and does not establish gender discrimination.

1. Menopause. Without question, menopause is a gender-based characteristic that ought not be used as a basis to apportion permanent disability. Opponents even state that "we don't do that." However, the effect of adding menopause to the apportionment statute causes great concern. They point out that courts have held that menopause is not a disability. They also point out that there are any number of symptoms that may be associated with menopause, and if any of those symptoms is associated with a factual pre-existing condition that contributes to permanent disability, there will be substantial, costly litigation because attorneys would be duty-bound to pursue the argument that menopause, and not the symptom, is the actual basis for the proposed apportionment.
2. Pregnancy. As with menopause, it is difficult to argue that permanent disabilities ought to be apportioned due to pregnancy. Indeed, many employers and insurers argue that this is not done, nor is it allowed in the workers' compensation system. However, they point out that adding this characteristic to the statute poses problems. First, they argue that it confuses the idea of causation to injury with causation to disability. They suggest that pregnancy can contribute to injury, but it is hard to understand how it is a condition that causes permanent disability. However, by adding pregnancy to the apportionment statue, uncertainties are created that will cause extended litigation to determine the precise meaning of the statutory change.
3. Osteoporosis. Osteoporosis presents a fundamental difference of perspective as between proponents and opponents. This is a predominantly (although not exclusively) female medical condition involving loss of bone mass, and the resulting risk of broken bones and other complications. Proponents argue that it is fundamentally wrong to reduce a woman's permanent disability award for a physical injury that occurs on the job due to this inherently gender-specific causation factor. Opponents, on the other hand, argue that it is fundamentally wrong to require employers to pay for disability that is factually unrelated to employment.
4. Carpal tunnel syndrome. The primary difference between this bill and last year's AB 305 (Gonzalez) of 2015 is the addition of carpal tunnel syndrome as one of the gender-based conditions for which apportionment would be prohibited. Proponents have suggested that this syndrome afflicts women more than men, citing a National Institutes of Health (NIH) report. California workers' compensation data is consistent with the NIH report. According to proponents, the study found the syndrome three times more likely to afflict women. The study suggested, but did not conclude, that the frequency in women might be due to a smaller carpal tunnel in women's hands. Opponents have cited a University of California, Berkeley study that found some occupation based differences that result in some conditions being more likely causing men to have higher injury rates, and others more likely affecting women. However, that study found no across-the-board discrimination against either gender.
5. Psychiatric injuries. The approach to psychiatric injuries in the bill is narrower than AB 305. AB 305 used sexual harassment as a trigger for when apportionment would be prohibited with respect to a new psychiatric injury, but that provision is not included in this bill. Instead, this bill more clearly prohibits using a prior psychiatric injury to apportion permanent disability with respect to a new psychiatric injury if the prior psychiatric injury was caused by menopause, pregnancy, osteoporosis or carpal tunnel syndrome.
6. Prior legislation. In 2008, SB 1115 (Migden) of 2008, and in 2011, AB 1155 (Alejo) of 2011, addressed the apportionment discrimination issue in virtually the same language. Unlike this bill, those bills would have broadly prohibited the use of the protected classes defined in the Unruh Civil Rights Act as a basis to apportion permanent disability awards. Each was vetoed by the Governor. The Veto Message to AB 1155 provided:

"This bill would state that workers' compensation injury determinations shall not include consideration of race, religious creed, color, national origin, age, gender, marital status, sex, sexual orientation, or genetic characteristics.

The courts already recognize that apportioning a disability award to any of these classifications is antithetical to our states' non-discrimination policies. The courts also recognize that apportioning to an actual non-industrial condition that contributes to causing a disability is permissible and required by the principle that apportionment is based on causation.

This bill would not change existing law as interpreted by the courts to date. This bill would, however, generate new litigation over questions of whether it is intended to change existing interpretations. At best, that additional litigation would add to employers' costs for workers' compensation. At worst, this bill could disturb the appropriate interpretation of existing law that is already taking shape in the courts."

This bill, and AB 305 (Gonzalez) of 2015, take a different approach to the issue. Rather than addressing the use of protected characteristics, the bill proposes to prohibit precisely what the AB 1155 Veto Message notes that courts currently recognize: that apportionment to actual, factual prior industrial or non-industrial causation is acceptable. This bill identifies specific factors that proponents argue are inappropriate apportionment factors, and prohibits their use regardless of whether there is factual causation. AB 305 was substantially similar to this bill. The Governor vetoed AB 305. The Veto Message provided:

"This bill prohibits the use of certain gender-related characteristics in the calculation of permanent disability benefits for injuries occurring on or after January 1, 2016.

The workers compensation system must be free of gender-bias. No group should receive less in benefits because of an immutable characteristic. However, this bill is based on a misunderstanding of the American Medical Association's evidence-based standard, which is the foundation of the permanent disability ratings, and replaces it with an ill-defined and unscientific standard."

Analysis Prepared by: Mark Rakich / INS. / (916) 319-2086 FN: 0003205

ASSEMBLY THIRD READING

ATR Bill Id:AB 1643

Author:(Gonzalez)

As Amended Ver:March 16, 2016

Majority vote

SUMMARY: Prohibits the use of certain gender-related characteristics in the calculation of permanent disability benefits for injuries occurring on or after January 1, 2017. Specifically, this bill:

1. Prohibits granting the disabling effects of breast cancer a lower disability rating than granted to the disabling effects of prostate cancer.
2. Prohibits the use of pregnancy, osteoporosis, menopause, or carpal tunnel syndrome to apportion permanent disability with respect to a physical injury.
3. Prohibits the use of a prior psychiatric injury, if that prior injury was caused by pregnancy, osteoporosis, menopause, or carpal tunnel syndrome, to apportion permanent disability with respect to a psychiatric injury.

EXISTING LAW:

1. Provides for a comprehensive system to provide workers' compensation benefits to workers whose injuries or conditions arise out of or in the course of employment, including medical treatment and financial compensation if the injury or condition has a permanently disabling effect.
2. Establishes a Permanent Disability Rating Schedule (PDRS), a methodology for calculating impairment through the use of the American Medical Association Guides to the Evaluation of Permanent Impairment (AMA Guides), and other tools that are used to determine the extent of an injured worker's permanent disability (PD).
3. Allows for the "apportionment" of PD determinations to prior industrial causes, or to prior non-industrial causes, and reduces the amount of the injured worker's PD award to the extent these prior causes have contributed to the extent of the disability.
4. Requires the physician who is making a recommendation on the extent of disability that has followed from an industrial injury to identify, and quantify, causation of the disability that is either prior to or subsequent to the industrial injury.

FISCAL EFFECT: According to Assembly Appropriations Committee, approximately $6 million in new administrative costs associated with litigation over the bill's new rules; however, it is difficult to accurately quantify the scope of this issue. Unknown, but potentially significant costs to the state based on increased payouts to injured state employees.

COMMENTS:

1. Purpose. The purpose of the bill is to eliminate gender bias in the workers' compensation system. According to the author, California must eliminate the remnants of gender bias in the workplace, no matter how widespread, including within workers' compensation. The author maintains that the AMA Guides inappropriately assign little to no value to the loss of a woman's breasts, and that it is also inappropriate to apportion disability to non-industrial causation if that causation is a factor or condition that is uniquely or predominantly based on gender.
2. Case Law. In an unpublished appellate decision, Vaira v. WCAB, the Court of Appeal returned a case to the Workers' Compensation Appeals Board (WCAB) because the record was insufficient to determine whether the physician had based his apportionment decision on medical facts that showed the older female claimant suffered from osteoporosis, or on the basis that the risk factor (older women face a high risk of suffering from osteoporosis) alone was sufficient to assign a percentage of the causation to osteoporosis. This decision has been broadly applied in the workers' compensation courts as establishing the following rule: a risk characteristic such as older women having a high incidence of osteoporosis, or older African American men having a high incidence of hypertension, cannot be used as a basis to apportion a permanent disability award. However, a woman diagnosed with osteoporosis that contributes to her disability resulting from the subsequent industrial injury, or an African American man diagnosed with hypertension that contributes to his disability resulting from the subsequent industrial injury, can have the disability award apportioned based on the prior nonindustrial causation. This is the rule Governor Brown alluded to in his Veto Message on AB 1155 (Alejo) of 2011 (see below).
3. Scope of problem. There is substantial disagreement as between supporters of this bill and opponents of this bill on whether or not there is a serious problem of gender-based unfairness in the workers' compensation system. Some supporters have asserted that "we see it every day" while some opponents assert that the wrongs complained of simply do not occur in the workers' compensation courts.

This issue has been presented to, and debated in, the Legislature in one form or another for at least eight years, and there is a paucity of concrete evidence, either academic or anecdotal, to show that there is pervasive discrimination based on gender, or other protected classes. The California Applicants' Attorneys Association (CAAA), in its letter in support of this bill, and the author in the Background materials provided to the Committee, cite several examples of cases where women are alleged to have suffered unfair treatment by the system. Without getting into too much case-specific detail, two things appear from the cited examples: first, the characteristics used to reduce permanent disability awards appear to be risk factors or broad characteristics like those the Vaira case prohibits; second, in most examples, it is claimed that "the doctor" has pointed to the offending apportionment factor. Despite requests for any information indicating that workers' compensation judges have accepted these inappropriate apportionment factors, proponents have been unable to do so. Opponents, on the other hand, have argued that "dumb doctors" making ill-advised, discriminatory apportionment statements are not a basis to change the law – they are a basis for the attorney representing the injured worker to argue to a workers compensation judge that the doctor recommended an illegal or inappropriate factor that does not support apportionment.

1. Apportionment. Apportionment applies to PD determinations when the disabling effect of an industrial injury has some percentage of causation that either predates or occurs subsequent to the industrial injury. Apportionment does not apply to medical treatment. For example, no matter how much the old football injury is making an industrial knee injury more complicated or extensive, the workers' compensation system provides medical treatment for the industrial knee injury fully and comprehensively. The fact that there is pre-industrial injury causation that affects the seriousness of the injury does not limit the extent of medical treatment. But causation of the disability is treated differently from causation of the injury. There are at least three policy rationales underpinning the apportionment rule. First, it has been deemed unfair to require an employer to pay for disability that was not caused by the employment. Second, if the prior causation was a previous industrial injury that resulted in a PD award, the injured worker would have already been compensated for that portion of the disabling condition. Third, if an employer knew that a job candidate suffered a previous injury that might lead to more expense if he should re-injure himself, the employer might opt to hire someone else who does not pose that financial risk.

Apportionment as a policy is not without its critics. On a "but for" causation rationale, the injured worker would not be suffering the current disability to any extent but for the current industrial injury. And if the injury were being compensated in the tort system, the person who acted negligently to cause an injury would be responsible for the full extent of the disability, because in tort the "victim's" preconditions do not operate to diminish the consequences of the acts that cause injury. However, apportionment is the rule in workers' compensation, and this bill proposes exceptions to the normal rules of apportionment.

1. Does case law result in gender discrimination? Proponents strongly argue that it is inappropriate gender discrimination to use even factual conditions that contribute to disability causation if those factors are uniquely attributable to being a woman. In the proponents view, even the Vaira decision endorses gender discrimination, because Vaira merely rejected use of risk factors, but allowed use of factual pre-existing conditions, including some of the factors that the bill would prohibit. Thus, the policy argument is that the uniquely female gender factors addressed by the bill should simply not be used to reduce permanent disability awards. Opponents counter that the workers' compensation system is designed to require employers to pay to injured workers what the job itself caused, not what non-job factors caused.
2. Breast cancer vs prostate cancer. A key provision in this bill that proponents argue cures gender discrimination is the mandate that breast cancer and prostate cancer be treated the same in terms of disability ratings. Since 2004, the AMA Guides has been the basis in California law for making PD determinations.

The AMA Guides were first published in 1971 to provide "a standardized, objective approach to evaluating medical impairments". The Guides define "impairment" as a loss, loss of use, or derangement of any body part, organ system, or organ function. The AMA Guides deal chapter by chapter with specific areas of the body or a specific type of permanent impairment and discuss how to measure impairment in a specific individual. This impairment measurement is a percentage known as the whole person impairment (WPI), with a higher WPI percentage signifying a higher level of impairment.

WPI serves as the foundational calculation for the purposes of calculating a PD rating. In bringing the AMA Guides into the workers' compensation system in 2004, the goal was to make the measurement of impairment, and by extension PD ratings, more objective and uniform throughout the state and based on the best available medical evidence. Further, as a part of the 2012 reform, the Legislature codified case law that allows doctors to "rate by analogy" or to use other chapters of the AMA Guides if those chapters better explain the nature of the impairment.

Proponents of this bill have argued that the AMA Guides are not objective in this context. Proponents have both specific and broad criticisms of the AMA Guides. Specifically, they point to the fact that the AMA Guides rate the removal of female breasts at a WPI of 0%, while the removal of a prostate would rate a 16% to 20% WPI, arguing that such a rating shows bias against women. More generally, they argue that there has long been an outdated cultural gender bias that remains to this day, with an underappreciation of the psychological and physiological consequences to a woman of the loss of her breasts.

However, the male prostate may not be a strong equivalent to female breasts. The closest female equivalent, or homologue, to the prostate is the skene's gland, which is located on the surface of the vulva. Alternatively, one could also look at urthereal disease, which would lead to incontinence in women. A review of how the AMA Guides rate these female conditions shows that there is a comparable WPI rating to male prostate ratings. Opponents have argued that comparing ratings for breast and prostate cancer is simply the wrong comparison, and does not establish gender discrimination.

1. Menopause. Without question, menopause is a gender-based characteristic that ought not be used as a basis to apportion permanent disability. Opponents even state that "we don't do that." However, the effect of adding menopause to the apportionment statute causes great concern. They point out that courts have held that menopause is not a disability. They also point out that there are any number of symptoms that may be associated with menopause, and if any of those symptoms is associated with a factual pre-existing condition that contributes to permanent disability, there will be substantial, costly litigation because attorneys would be duty-bound to pursue the argument that menopause, and not the symptom, is the actual basis for the proposed apportionment.
2. Pregnancy. As with menopause, it is difficult to argue that permanent disabilities ought to be apportioned due to pregnancy. Indeed, many employers and insurers argue that this is not done, nor is it allowed in the workers' compensation system. However, they point out that adding this characteristic to the statute poses problems. First, they argue that it confuses the idea of causation to injury with causation to disability. They suggest that pregnancy can contribute to injury, but it is hard to understand how it is a condition that causes permanent disability. However, by adding pregnancy to the apportionment statue, uncertainties are created that will cause extended litigation to determine the precise meaning of the statutory change.
3. Osteoporosis. Osteoporosis presents a fundamental difference of perspective as between proponents and opponents. This is a predominantly (although not exclusively) female medical condition involving loss of bone mass, and the resulting risk of broken bones and other complications. Proponents argue that it is fundamentally wrong to reduce a woman's permanent disability award for a physical injury that occurs on the job due to this inherently gender-specific causation factor. Opponents, on the other hand, argue that it is fundamentally wrong to require employers to pay for disability that is factually unrelated to employment.
4. Carpal tunnel syndrome. The primary difference between this bill and last year's AB 305 (Gonzalez) of 2015 is the addition of carpal tunnel syndrome as one of the gender-based conditions for which apportionment would be prohibited. Proponents have suggested that this syndrome afflicts women more than men, citing a National Institutes of Health (NIH) report. California workers' compensation data is consistent with the NIH report. According to proponents, the study found the syndrome three times more likely to afflict women. The study suggested, but did not conclude, that the frequency in women might be due to a smaller carpal tunnel in women's hands. Opponents have cited a University of California, Berkeley study that found some occupation based differences that result in some conditions being more likely causing men to have higher injury rates, and others more likely affecting women. However, that study found no across-the-board discrimination against either gender.
5. Psychiatric injuries. The approach to psychiatric injuries in the bill is narrower than AB 305. AB 305 used sexual harassment as a trigger for when apportionment would be prohibited with respect to a new psychiatric injury, but that provision is not included in this bill. Instead, this bill more clearly prohibits using a prior psychiatric injury to apportion permanent disability with respect to a new psychiatric injury if the prior psychiatric injury was caused by menopause, pregnancy, osteoporosis or carpal tunnel syndrome.
6. Prior legislation. In 2008, SB 1115 (Migden) of 2008, and in 2011, AB 1155 (Alejo) of 2011, addressed the apportionment discrimination issue in virtually the same language. Unlike this bill, those bills would have broadly prohibited the use of the protected classes defined in the Unruh Civil Rights Act as a basis to apportion permanent disability awards. Each was vetoed by the Governor. The Veto Message to AB 1155 provided:

"This bill would state that workers' compensation injury determinations shall not include consideration of race, religious creed, color, national origin, age, gender, marital status, sex, sexual orientation, or genetic characteristics.

The courts already recognize that apportioning a disability award to any of these classifications is antithetical to our states' non-discrimination policies. The courts also recognize that apportioning to an actual non-industrial condition that contributes to causing a disability is permissible and required by the principle that apportionment is based on causation.

This bill would not change existing law as interpreted by the courts to date. This bill would, however, generate new litigation over questions of whether it is intended to change existing interpretations. At best, that additional litigation would add to employers' costs for workers' compensation. At worst, this bill could disturb the appropriate interpretation of existing law that is already taking shape in the courts."

This bill, and AB 305 (Gonzalez) of 2015, take a different approach to the issue. Rather than addressing the use of protected characteristics, the bill proposes to prohibit precisely what the AB 1155 Veto Message notes that courts currently recognize: that apportionment to actual, factual prior industrial or non-industrial causation is acceptable. This bill identifies specific factors that proponents argue are inappropriate apportionment factors, and prohibits their use regardless of whether there is factual causation. AB 305 was substantially similar to this bill. The Governor vetoed AB 305. The Veto Message provided:

"This bill prohibits the use of certain gender-related characteristics in the calculation of permanent disability benefits for injuries occurring on or after January 1, 2016.

The workers compensation system must be free of gender-bias. No group should receive less in benefits because of an immutable characteristic. However, this bill is based on a misunderstanding of the American Medical Association's evidence-based standard, which is the foundation of the permanent disability ratings, and replaces it with an ill-defined and unscientific standard."

Analysis Prepared by: Mark Rakich / INS. / (916) 319-2086 FN: 0003205

Date of Hearing: May 18, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 1643

Author:(Gonzalez) – As Amended Ver:March 16, 2016

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill prohibits the use of certain gender-related characteristics in the calculation of permanent disability (PD) benefits for injuries occurring on or after January 1, 2017. Specifically, this bill:

1. Prohibits granting the disabling effects of breast cancer a lower impairment rating than granted to the disabling effects of prostate cancer.
2. Prohibits apportionment based on pregnancy, osteoporosis, menopause, or carpal tunnel syndrome, when apportioning permanent disability with respect to a physical injury.
3. Prohibits apportionment based on prior psychiatric disability or impairment caused by pregnancy, osteoporosis, menopause, or carpal tunnel syndrome, when apportioning permanent disability with respect to a psychiatric injury.

FISCAL EFFECT:

1. On balance, it appears this bill has the potential to increase administrative costs in the workers' compensation system. Specifically, the Department of Industrial Relations (DIR) expects the language prohibiting apportionment to certain preexisting conditions to result in an increase in judicial workload and commensurate costs to the Workers' Compensation Appeals Board (WCAB). DIR estimates, based on a number of assumptions, including 33,000 additional judicial hearings (an average of three per each of 11,000 cases), increased cost pressure to WCAB in the range of $6 million. (Workers Compensation Administration Revolving Fund). DIR indicates out of 90,000 permanent disability cases, 11,000 cases are women and include apportionment.

However, staff notes it is difficult or impossible to project such costs with certainty, and indeed there are countervailing factors at play as well. For instance, the number of women who receive an apportionment determination could be reduced somewhat, as the bill prohibits apportionment to certain factors, such as carpal tunnel syndrome and osteoporosis. Conversely, the bill is likely to result in increased litigation as attorneys seek to demonstrate apportionment determinations are related to one of the factors no longer allowable, such as a condition attributable to pregnancy or menopause. Some cases among males may also be subject to similar impacts, although they would be far fewer, as all of the conditions listed are more common in, or exclusively among, females. Thus, though there does appear to be potential for significant net cost increase, the magnitude is unknown.

1. Unknown, likely significant increased workers' compensation costs to the state as an employer for higher permanent partial disability compensation as a result of fewer allowable apportionments and increased compensation for job-related breast cancers (various funds). Breast cancer PD awards largely affect public-sector employees, like police and firefighters, due to presumptions of compensability, whereas in other employment sectors it is difficult to prove breast cancer is job-related. These costs would also impact local governments whose workers have similar presumptions.

COMMENTS:

1. Purpose. According to the author, this bill is needed to eliminate bias in the workers' compensation system, by barring consideration of certain conditions more likely to affect women when considering permanent disability awards. The California Applicants’ Attorney Association (CAAA), the sponsor of this bill, indicates these are narrowly crafted changes that will ensure women receive the permanent disability they deserve after being injured on the job.
2. Background. Current law establishes a workers’ compensation system that provides benefits to an employee who suffers from an injury or illness that occurs during the course of employment, irrespective of fault. Workers' compensation benefits include medical treatment and indemnity benefits, including temporary and permanent disability benefits. Gender bias in workers' compensation was the subject of an informational hearing by the Assembly Select Committee on Women in the Workplace on February 23, 2016, where this bill and related issues were discussed. Speakers noted the lack of adequate compensation for a woman with breast cancer who has a mastectomy, as compared to other compensation for other conditions.
3. Determining PD Awards. Once an individual's condition is permanent and stationary, they can be evaluated for PD benefits.
   1. Impairment. Impairment refers to how the injury affects one's ability to do normal life activities. Most people receiving PD benefits are not 100% disabled, but instead receive permanent partial disability based on a partial loss of function. Under current law, when doctors are determining the nature and severity of an occupational injury, the American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment, 5^th Edition must be used to measure physical impairment and determine an injured worker’s whole person impairment (WPI), which is expressed as a percentage of impairment. A treating physician issues a report that provides a WPI value and an apportionment determination.
   2. Apportionment. Physician's reports must include an apportionment determination, which is a determination that some percentage of a disability is not work-related. Apportioning a percentage of the injury to a preexisting condition, if applicable, attempts to ensure employers are only responsible to provide permanent disability compensation for a disability that is work-related. This bill bars apportionment based on the factors listed, including pregnancy, menopause, carpal tunnel, and osteoporosis, regardless of whether the condition is work-related.
   3. Disability evaluation. Disability means how impairment affects one's ability to work. A disability rating is issued, which is expressed as a percentage. The rating is based on the WPI value, applicable apportionment, and other relevant factors such as age and occupation. After the amount of PD in a claim is determined, there is usually a settlement or award for benefits, which the claims administrator or the injured party's attorney can assist to obtain.
   4. Appeals and litigation. There are a number of avenues for appeals if the injured party disagrees with a medical report on impairment or an apportionment determination, or a disability rating. The process depends on whether he or she is represented by an attorney. He or she can appeal to a DWC to have the rating reconsidered, and/or present the case to a workers' compensation administrative law judge at the WCAB. If there is a dispute about impairment and apportionment determinations, an injured worker can request a qualified medical examiner (QME), who is selected from a panel, or an agreed medical examiner (AME) to provide a new report.
4. Breast Cancer in AMA Guides. The AMA Guide, 5^th Edition rates the removal of female breasts at a WPI of zero percent, while the removal of a prostrate generally rates at 16-20% WPI. Thus, prostrate removal currently translates into a higher PD rating than female breast removal. Physicians have some flexibility to use other parts of the 5^th Edition to accurately describe the impairment, if needed. The more recent AMA Guide, 6^th Edition, includes a higher rating for mammary disorders, which range from 0 -15% WPI, where a 15% WPI rating would apply to mastectomy not amenable to cosmetic or reconstructive surgery.
5. Support. The California Applicants Attorneys and employment lawyers, advocates for women's issues, public safety, and some labor groups support this bill. Supporters indicate the AMA Guides inappropriately assign little to no value to the loss of a woman's breasts, and that it is also inappropriate to apportion disability to non-industrial causation if that causation is a factor or condition that is uniquely or predominantly based on gender.
6. Opposition. Groups representing numerous private employers; cities, counties and other public employers; insurance companies; and the California Coalition for Workers' Compensation are opposed to this bill. Opponents contend this bill will undermine objectivity in workers' compensation permanent disability ratings, and require employers to pay monetary awards to injured workers for disease or disability that did not result from a workplace injury. They indicate lack of evidence that discrimination is occurring under current law, and argue current law already clearly prohibits apportionment based on age, gender, or other characteristics.
7. Prior Legislation. AB 305 (Gonzalez) of 2015 was substantially similar to this bill, and was vetoed. The veto message stated,

"This bill prohibits the use of certain gender-related characteristics in the calculation of permanent disability benefits for injuries occurring on or after January 1, 2016. The workers compensation system must be free of gender-bias. No group should receive less in benefits because of an immutable characteristic. However, this bill is based on a misunderstanding of the American Medical Association's evidence-based standard, which is the foundation of the permanent disability ratings, and replaces it with an ill-defined and unscientific standard."

As it is similar to AB 305, this bill does not appear to address the veto message.

Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081

Date of Hearing: April 20, 2016

ASSEMBLY COMMITTEE ON INSURANCE

Tom Daly, Chair

ABPCA Bill Id:AB 1643 (

Author:Gonzalez) – As Amended Ver:March 16, 2016

SUBJECT: Workers’ compensation: permanent disability apportionment

SUMMARY: Prohibits the use of certain gender-related characteristics in the calculation of permanent disability benefits for injuries occurring on or after January 1, 2017. Specifically, this bill:

1. Prohibits granting the disabling effects of breast cancer a lower disability rating than granted to the disabling effects of prostate cancer.
2. Prohibits the use of pregnancy, osteoporosis, menopause, or carpal tunnel syndrome to apportion permanent disability with respect to a physical injury.
3. Prohibits the use of a prior psychiatric injury, if that prior injury was caused by pregnancy, osteoporosis, menopause, or carpal tunnel syndrome, to apportion permanent disability with respect to a psychiatric injury.

EXISTING LAW:

1. Provides for a comprehensive system to provide workers' compensation benefits to workers whose injuries arise out of or in the course of employment, including medical treatment and financial compensation if the injury or condition has a permanently disabling effect.
2. Establishes a Permanent Disability Rating Schedule (PDRS), a methodology for calculating impairment through the use of the American Medical Association Guides to the Evaluation of Permanent Impairment (AMA Guides), and other tools that are used to determine the extent of an injured worker's permanent disability (PD).
3. Allows for the "apportionment" of PD determinations to prior industrial causes, or to prior non-industrial causes, and reduces the amount of the injured worker's PD award to the extent these prior causes have contributed to the extent of the disability.
4. Requires the physician who is making a recommendation on the extent of disability that has followed from an industrial injury to identify, and quantify, causation of the disability that is either prior to or subsequent to the industrial injury.

FISCAL EFFECT: According to the Senate Appropriations Committee's analysis of AB 305 (Gonzalez) last year, a measure similar to this bill, the Department of Industrial Relations (DIR) would incur costs (special funds) of $4.25 million in the first year, and $4 million annually thereafter to implement the provisions of this bill. In addition, as a direct employer, the state would incur unknown, but potentially significant increased permanent disability costs due to breast cancer. This bill also would result in unknown, but potentially significant increased litigation costs to the state as a direct employer.

COMMENTS:

1. Purpose. The purpose of the bill is to eliminate gender bias in the workers' compensation system. According to the author, California must eliminate the remnants of gender bias in the workplace, no matter how widespread, including within workers' compensation. The author maintains that the AMA Guides inappropriately assign little to no value to the loss of a woman's breasts, and that it if also inappropriate to apportion disability to non-industrial causation if that causation is a factor or condition that is uniquely or predominantly based on gender.
2. Case Law. In an unpublished appellate decision, Vaira v. WCAB, the Court of Appeal returned a case to the Workers' Compensation Appeals Board (WCAB) because the record was insufficient to determine whether the physician had based his apportionment decision on medical facts that showed the older female claimant suffered from osteoporosis, or on the basis that the risk factor (older women face a high risk of suffering from osteoporosis) alone was sufficient to assign a percentage of the causation to osteoporosis. This decision has been broadly applied in the workers' compensation courts as establishing the following rule: a risk characteristic such as older women having a high incidence of osteoporosis, or older African American men having a high incidence of hypertension, cannot be used as a basis to apportion a permanent disability award. However, a woman diagnosed with osteoporosis that contributes to her disability resulting from the subsequent industrial injury, or an African American man diagnosed with hypertension that contributes to his disability resulting from the subsequent industrial injury, can have the disability award apportioned based on the prior nonindustrial causation. This is the rule Governor Brown alluded to in his AB 1155 (Alejo) of 2011, Veto Message (see below).
3. Scope of problem. There is substantial disagreement as between supporters of this bill and opponents of this bill on whether or not there is a serious problem of gender-based unfairness in the workers' compensation system. Some supporters have asserted that "we see it every day" while some opponents assert that the wrongs complained of simply do not occur in the workers' compensation courts.

This issue has been presented to, and debated in, the Legislature in one form or another for at least eight years, and there is a paucity of concrete evidence, either academic or anecdotal, to show that there is pervasive discrimination based on gender, or other protected classes. The California Applicants' Attorneys Association (CAAA), in its letter in support of this bill, and the author in the Background materials provided to the Committee, cite several examples of cases where women are alleged to have suffered unfair treatment by the system. Without getting into too much case-specific detail, two things appear from the cited examples: first, the characteristics used to reduce permanent disability awards appear to be risk factors or broad characteristics like those the Vaira case prohibits; second, in most examples, it is claimed that "the doctor" has pointed to the offending apportionment factor. Despite requests for any information indicating that workers' compensation judges have accepted these inappropriate apportionment factors, proponents have been unable to do so. Opponents, on the other hand, have argued that "dumb doctors" making ill-advised, discriminatory apportionment statements are not a basis to change the law – they are a basis for the attorney representing the injured worker to argue to a workers compensation judge that the doctor recommended an illegal or inappropriate factor that does not support apportionment.

1. Apportionment. Apportionment applies to PD determinations when the disabling effect of an industrial injury has some percentage of causation that either predates or occurs subsequent to the industrial injury. Apportionment does not apply to medical treatment. For example, no matter how much the old football injury is making an industrial knee injury more complicated or extensive, the workers' compensation system provides medical treatment for the industrial knee injury fully and comprehensively. The fact that there is pre-industrial injury causation that affects the seriousness of the injury does not limit the extent of medical treatment. But causation of the disability is treated differently from causation of the injury.
   
   There are at least three policy rationales underpinning the apportionment rule. First, it has been deemed unfair to require an employer to pay for disability that was not caused by the employment. Second, if the prior causation was a previous industrial injury that resulted in a PD award, the injured worker would have already been compensated for that portion of the disabling condition. Third, if an employer knew that a job candidate suffered a previous injury that might lead to more expense if he should re-injure himself, the employer might opt to hire someone else who does not pose that financial risk.
   
   Apportionment as a policy is not without its critics. On a "but for" causation rationale, the injured worker would not be suffering the current disability to any extent but for the current industrial injury. And if the injury were being compensated in the tort system, the person who acted negligently to cause an injury would be responsible for the full extent of the disability, because in tort the "victim's" preconditions do not operate to diminish the consequences of the acts that cause injury. However, apportionment is the rule in workers' compensation, and this bill proposes exceptions to the normal rules of apportionment.
2. Does case law result in gender discrimination? Proponents strongly argue that it is inappropriate gender discrimination to use even factual conditions that contribute to disability causation if those factors are uniquely attributable to being a woman. In the proponents view, even the Vaira decision endorses gender discrimination, because Vaira merely rejected use of risk factors, but allowed use of factual pre-existing conditions, including some of the factors that the bill would prohibit. Thus, the policy argument is that the uniquely female gender factors addressed by the bill should simply not be used to reduce permanent disability awards. Opponents counter that the workers' compensation system is designed to require employers to pay to injured workers what the job itself caused, not what non-job factors caused.
3. Breast cancer vs prostate cancer. A key provision in this bill that proponents argue cures gender discrimination is the mandate that breast cancer and prostate cancer be treated the same in terms of disability ratings. Since 2004, the AMA guides has been the basis in California law for making PD determinations.

The AMA Guides were first published in 1971 to provide "a standardized, objective approach to evaluating medical impairments". The Guides define "impairment" as a loss, loss of use, or derangement of any body part, organ system, or organ function. The Guides deal chapter by chapter with specific areas of the body or a specific type of permanent impairment and discuss how to measure impairment in a specific individual. This impairment measurement is a percentage known as the whole person impairment (WPI), with a higher WPI percentage signifying a higher level of impairment.

WPI serves as the foundational calculation for the purposes of calculating a PD rating. In bringing the AMA Guides into the workers’ compensation system in 2004, the goal was to make the measurement of impairment, and by extension PD ratings, more objective and uniform throughout the state and based on the best available medical evidence. Further, as a part of the 2012 reform, the Legislature codified case law that allows doctors to "rate by analogy" or to use other chapters of the AMA Guides if those chapters better explain the nature of the impairment.

Proponents of this bill have argued that the AMA Guides are not objective in this context. Proponents have both specific and broad criticisms of the Guides. Specifically, they point to the fact that the AMA Guides rate the removal of female breasts at a WPI of 0%, while the removal of a prostate would rate a 16% to 20% WPI, arguing that such a rating shows bias against women. More generally, they argue that there has long been an outdated cultural gender bias that remains to this day, with an underappreciation of the psychological and physiological consequences to a woman of the loss of her breasts.

However, the male prostate may not be a strong equivalent to female breasts. The closest female equivalent, or homologue, to the prostate is the skene's gland, which is located on the surface of the vulva. Alternatively, one could also look at urthereal disease, which would lead to incontinence in women. A review of how the AMA Guides rate these injuries shows that there is a comparable WPI rating. Opponents have argued that comparing rating for breast and prostate cancer is simply the wrong comparison, and does not establish gender discrimination.

1. Menopause. Without question, menopause is a gender-based characteristic that ought not be used as a basis to apportion permanent disability. Opponents even state that "we don't do that." However, the effect of adding menopause to the apportionment statute causes great concern. They point out that courts have held that menopause is not a disability. They also point out that there are any number of symptoms that may be associated with menopause, and if any of those symptoms is associated with a factual pre-existing condition that contributes to permanent disability, there will be substantial, costly litigation because attorneys would be duty-bound to pursue the argument that menopause, and not the symptom, is the actual basis for the proposed apportionment.
   
2. Pregnancy. As with menopause, it is difficult to argue that permanent disabilities ought to be apportioned due to pregnancy. Indeed, many employers and insurers argue that this is not done, nor is it allowed in the workers' compensation system. However, they point out that adding this characteristic to the statute poses problems. First, they argue that it confuses the idea of causation to injury with causation to disability. They suggest that pregnancy can contribute to injury, but it is hard to understand how it is a condition that causes permanent disability. However, by adding pregnancy to the apportionment statue, uncertainties are created that will cause extended litigation to determine the precise meaning of the statutory change.
   
3. Osteoporosis. Osteoporosis presents a fundamental difference of perspective as between proponents and opponents. This is a predominantly (although not exclusively) female medical condition involving loss of bone mass, and the resulting risk of broken bones and other complications. Proponents argue that it is fundamentally wrong to reduce a woman's permanent disability award for a physical injury that occurs on the job due to this inherently gender-specific causation factor. Opponents, on the other hand, argue that it is fundamentally wrong to require employers to pay for disability that is factually unrelated to employment.
   
4. Carpal tunnel syndrome. The primary difference between AB 1643 and last year's AB 305 is the addition of carpal tunnel syndrome as one of the gender-based conditions for which apportionment would be prohibited. Proponents have suggested that this syndrome afflicts women more than men, citing a National Institutes of Health report. According to proponents, the study found the syndrome 3 times more likely to afflict women. The study suggested, but did not conclude, that the frequency in women might be due to a smaller carpal tunnel in women's hands. It is not clear whether any statistical differences that might exist are actually gender-based, or might instead be occupation based, nor if general population data matches workplace injury data. Opponents have cited a U.C. Berkeley study that found some occupation based differences that result in some conditions being more likely causing men to have higher injury rates, and others more likely affecting women. However, that study found no across-the-board discrimination against either gender.
5. Psychiatric injuries. The approach to psychiatric injuries in the bill is narrower than AB 305. AB 305 used sexual harassment as a trigger for when apportionment would be prohibited with respect to a new psychiatric injury, but that provision is not included in this bill. Instead, the bill more clearly prohibits using a prior psychiatric injury to apportion permanent disability with respect to a new psychiatric injury if the prior psychiatric injury was caused by menopause, pregnancy, osteoporosis or carpal tunnel syndrome.
6. Prior legislation. In 2008, SB 1115 (Migden), and in 2011, AB 1155, addressed the apportionment discrimination issue in virtually the same language. Unlike this bill, those bills would have broadly prohibited the use of the protected classes defined in the Unruh Civil Rights Act as a basis to apportion permanent disability awards. Each was vetoed by the Governor. The Veto Message to AB 1155 provided:

This bill would state that workers' compensation injury determinations shall not include consideration of race, religious creed, color, national origin, age, gender, marital status, sex, sexual orientation, or genetic characteristics.

The courts already recognize that apportioning a disability award to any of these classifications is antithetical to our states' non-discrimination policies. The courts also recognize that apportioning to an actual non-industrial condition that contributes to causing a disability is permissible and required by the principle that apportionment is based on causation.

This bill would not change existing law as interpreted by the courts to date. This bill would, however, generate new litigation over questions of whether it is intended to change existing interpretations. At best, that additional litigation would add to employers' costs for workers' compensation. At worst, this bill could disturb the appropriate interpretation of existing law that is already taking shape in the courts.

AB 1643, and AB 305 (Gonzalez) of 2015, take a different approach to the issue. Rather than addressing the use of protected characteristics, the bill proposes to prohibit precisely what the AB 1155 Veto Message notes that courts currently recognize: that apportionment to actual, factual prior industrial or non-industrial causation is acceptable. This bill identifies specific factors that proponents argue are inappropriate apportionment factors, and prohibits their use regardless of whether there is factual causation. AB 305 was substantially similar to AB 1643. The Governor vetoed AB 305. The Veto Message provided:

"This bill prohibits the use of certain gender-related characteristics in the calculation of permanent disability benefits for injuries occurring on or after January 1, 2016.

The workers compensation system must be free of gender-bias. No group should receive less in benefits because of an immutable characteristic. However, this bill is based on a misunderstanding of the American Medical Association's evidence-based standard, which is the foundation of the permanent disability ratings, and replaces it with an ill-defined and unscientific standard."

REGISTERED SUPPORT / OPPOSITION:

9 to 5 California

Alliance of Californians for Community Empowerment

American Association of University Women

California Applicants' Attorney Association (CAAA)

California Asset Building Coalition

California Child Care Resource and Referral Network

California Domestic Workers Coalition

California Employment Lawyers Association

California Latinas for Reproductive Justice

California Partnership

California Professional Firefighters (CPF)

California Women's Law Center

Child Care Law Center

Courage Campaign

Equal Rights Advocates

Legal Aid Society Employment Law Center

Los Angeles County Professional Peace Officers Association

Mujeres Unidas y Activas

National Council of Jewish Women

Parent Voices

Raising California Together

The Center for Popular Democracy

The Opportunity Institute

The Women's Foundation of California

Tradeswomen, Inc.

UFCW Western States Council

Voice for Progress

Western Center on Law and Poverty

Opposition

Acclamation Insurance Management Services

Allied Managed Care

ALPHA Fund

American Insurance Association

Associated General Contractors

Association of California Insurance Companies

California Association of Joint Powers Authorities

California Chamber of Commerce

California Coalition on Workers' Compensation

California Grocers Association

California League of Food Processors

California Manufacturers and Technology Association

California Relators Association

California School Boards Association

California Special Districts Association

California State Association of Counties

CAWA - Representing the Automotive Parts Industry

CSAC Excess Insurance Authority

League of California Cities

National Association of Mutual Insurance Companies

National Federation of Independent Business

Property Casualty Insurers Association America

Rural County Representatives of California

Analysis Prepared by: Mark Rakich / INS. / (916) 319-2086