It was only a matter of time. At some point, the Workers’ Compensation Appeals Board (WCAB) was going to issue an opinion that was going to touch off a controversy. To experienced WCAB watchers, it wasn’t a question of if but when. With all the changes created in AB 227, SB 228, and SB 899, it was inevitable that the Appeals Board was going to step into the confusing morass of often contradictory changes to benefits, procedures and rights that have occurred over the past three years as the Legislature scrambled to get out of the political oven and proclaim the workers’ compensation crisis “fixed.”

Well, you didn’t have to wait long. The recent en banc decision in Scheftner v. Rio Linda School District not only touched off a controversy within the community but also generated some pretty harsh words between Appeals Board commissioners. The basic issue in this case is, to paraphrase Gertrude Stein, when is an order an order? What raises this issue to a high level of importance is that the Legislature stated in SB 899 that these new laws are to apply prospectively regardless of date of injury, but, according to Section 47 of SB 899: “…shall not constitute good cause to reopen or rescind, alter, or amend any existing order, decision, or award of the Workers’ Compensation Appeals Board.”

One of the biggest changes in SB 899 is the change in the law of apportionment. Apportionment says that an employer is responsible only for permanent disability caused by the injury that occurred during the injured worker’s employment with that employer, and not for conditions that resulted from prior injuries.

Prior to SB 899, apportionment was a confusing morass of shifting legal thought largely influenced by Court of Appeal decisions over the years. The net result was that apportionment was difficult to prove and seldom applied. For employers, this manifested in recurring permanent disability awards for workers that resulted in some injured workers having combined awards well in excess of 100%. Changing that dynamic was one cornerstone of SB 899 reforms.

To bring about as much savings as possible, the drafters of SB 899 wrote Section 47 of the bill, known as an “uncodified” section of legislation designed to let regulators and judicial tribunals have a better understanding of the intent behind the changes in the substantive law. These uncodified sections appear frequently in major legislation, and there are more than a few of these in SB 899 itself. The problem arises, however, when the clarification needs clarification. Thus, the conundrum in Scheftner.

Judges issue orders. Lots of them. They accomplish different things throughout the course of a claim, even after a claim has been subject to seemingly final adjudication. Thus, an “existing order, decision, or award,” while easily rolling off the pen of the drafters of SB 899 – albeit lifted from various sections of the Labor Code – doesn’t necessarily, automatically mean that it is understood which of this litany of orders would be effected if the new apportionment reforms are to be applied to claims filed prior to the effective date of SB 899. The majority of the WCAB has an answer to this question.

According to the majority decision of the Board, the apportionment reforms of SB 899 apply regardless of date of injury. On that there is universal agreement among the commissioners. The majority of the Board, however, gave an expansive definition to the term “order.” They decided that an “order” included an order of submission and an order closing discovery. Under Board rules, “submission” means the closing of the record to the receipt of further evidence or argument. That seems pretty final, doesn’t it? At least that’s what the majority of the Board thinks. Furthermore, in what appears to be a somewhat gratuitous offering, the Board also decided that an order closing discovery was a final order – even though that was not an issue raised by the Scheftner facts.

Given that the Board has rulemaking authority, one would think that clarification of what constitutes an “order” for purposes of apportionment would be more the subject of rulemaking rather than judicial activism. Perhaps the logic of the Board is that individual judges tend to view en banc decisions of the Board as black-letter law while regulations are bureaucratic annoyances that shouldn’t get in the way of decision making.

The effect of the majority’s decision in Scheftner is to limit the application of the new apportionment laws when applied to claims filed prior to the effective date of SB 899 (April 19, 2004 for those who have not circled it as a state holiday). It limits the application because it expands the number of cases that contain an existing order, decision or award; and thus, by application of the oft-recited Section 47, the new laws are not applicable.

In a scathing dissent, Commissioner James Cuneo considered this decision a totally unjustified assault on the intent of SB 899. He argues passionately and somewhat persuasively that the universe of orders, decisions and awards that are not final and thus outside the limitations of Section 47 is far greater than what the majority of the Appeals Board sees in its opinion. The business and insurance communities share this opinion and his outrage. Commissioner Cuneo also appears to be enamored of the word “sophistry” when describing the thought processes of the majority. It can be reasonably expected, absent the purchase of a thesaurus, that this term will be used repeatedly by the commissioner as more groundbreaking cases come before the Board.

Is Scheftner the SB 899 version of Minnear? Hardly. First and perhaps most important, there is every reason to believe that Scheftner will be submitted to the Court of Appeal for review, something mysteriously never done with the Minnear decision. Second, even if decided correctly, Scheftner applies to a limited number of cases.

Ultimately, the apportionment changes will have their desired effect. This will happen regardless of whether the Board’s majority decision is upheld. Thus, this case will in no way create the changes in behavior attributed to Minnear.

This is not to say, however, that Scheftner is not a significant case. The majority’s same rationale, if applied to the repeal of the treating-physician presumption (Section 46 of SB 899), would also limit the applicability of that reform when applied to cases filed prior to its effective date. But there is a more serious reason why Scheftner should be examined carefully.

The majority analysis is premised on a balancing between what it perceives to be a Constitutional mandate to “accomplish substantial justice in all cases expeditiously, inexpensively, and without encumbrance of any character” with the Legislature’s desire, as stated in Section 49 of SB 899, to provide relief to the state from the workers’ compensation crisis at the earliest possible time.

How will this balancing test be applied to transfer of medical treatment to medical provider networks or to the interpretation of the new permanent disability rating schedule? Where does the Legislature’s “plenary authority” enter into this process? These questions will be asked soon and the answers may further push back the savings reform that supporters are so desperate to achieve.

It also means that, sooner or later, Minnear will be in the building.