SEA–LAND SERVICE, INC. et al., Petitioners, v. WORKERS COMPENSATION APPEALS BOARD of the State of California and Chris A. Lopez, Respondents.
We hold that an employer who first pays benefits to an industrially injured worker under the federal Longshore and Harbor Workers' Compensation Act (33 U.S.C.A. § 901 et seq.) (LHWCA) and then pays benefits under the California workers' compensation system is entitled to category by category credit against the state award but not to dollar for dollar credit.
Chris Lopez (applicant), born December 5, 1962, worked for Sea–Land Service, Inc. (Sea–Land or employer) as a maritime warehouse worker (container loader). He suffered an industrial injury to his shoulder while loading boxes on July 15, 1985. The parties stipulated that the injury was the subject of concurrent jurisdiction with the California workers' compensation act and the LHWCA.
Employer, permissibly self-insured, provided all medical care and made temporary disability indemnity (TD) payments under the LHWCA. The TD payments under LHWCA totaled $25,457.14, which was $9,617.40 more than the TD payments of $15,840 which applicant would have received under the California system. Applicant also received, before the award was reversed on appeal, an unscheduled wage loss permanent disability payment under LHWCA of $7,040.88.
In the proceedings before the Workers' Compensation Appeals Board (Board) applicant conceded that employer was entitled to category by category credit, that is to credit before the Board for all payments made under the LHWCA for benefits of the same class or species. In other words because TD payments under LHWCA were higher than the state would have paid, applicant conceded he was not entitled to any additional TD under state law. Also, applicant agreed that employer was entitled to a credit against his state permanent disability indemnity (PD) for payments of $7,040.88 paid (before reversal) under the LHWCA. The issue before the Board, therefore, was whether employer was entitled to dollar for dollar credit so that it could receive credit against the state PD award for the TD payments under LHWCA in excess of what California TD payments would have been.
Workers' Compensation Judge Joel Gomberg (WCJ) denied employer's petition for dollar for dollar credit, holding that because TD and PD serve different purposes, denial of dollar for dollar credit to employer did not give applicant an impermissible double recovery or otherwise unjustly reward him. The Board denied reconsideration. We denied employer's petition for writ of review, but the Supreme Court granted the petition, transferred it to us, and ordered that we issue a writ of review. Upon further consideration we again conclude that the Board properly granted category by category credit and denied dollar for dollar credit.
I. The Prohibition Against Double Recovery
Relying on Sun Ship, Inc. v. Pennsylvania (1980) 447 U.S. 715, 100 S.Ct. 2432, 65 L.Ed.2d 458 (Sun Ship ), Sea–Land argues that refusal to give it dollar for dollar credit violates a prohibition against double recovery of workers' compensation benefits. We do not agree. The history of concurrent workers' compensation jurisdiction which underlies this assertion has been set out elsewhere and need not be repeated here in detail. (E.g., Larson, The Conflict of Laws Problem Between the Longshoremen's Act and State Workmen's Compensation Acts (1972) 45 So.Cal.L.Rev. 699 [hereafter Larson]; Larson, The Conflicts Problem Between the Longshoremen's Act and State Workmen's Compensation Acts Under the 1972 Amendments (1977) 14 Houston L.Rev. 287 [hereafter Larson 2], [referring to the history as a “convoluted and often tedious story”]; Note, Bouford v. Bath Iron Works: Defining Double Recovery Under State and Federal Compensation Laws for Maritime Workers (1987) 39 Me.L.Rev. 465.) A brief summary suffices for our purposes.
The Supreme Court held in 1917 that in order to preserve the uniformity of maritime law, a state workers' compensation act could not constitutionally be applied to anyone engaged in any kind of maritime work. (Southern Pacific Co. v. Jensen (1917) 244 U.S. 205, 37 S.Ct. 524, 61 L.Ed. 1086; Larson, supra, at p. 700.) Five years later the court eased the Jensen rule and permitted recovery of state workers' compensation if the work was local in character (e.g. construction work on an uncompleted vessel). (Grant Smith–Porter Ship Co. v. Rohde (1922) 257 U.S. 469, 42 S.Ct. 157, 66 L.Ed. 321; Larson, supra, at pp. 700–701.) In 1927, Congress enacted the LHWCA, bringing compensation coverage to workers injured on navigable waters who were not covered by state systems. (33 U.S.C.A. § 903; Larson, supra, at pp. 702–703.)
Under the “twilight zone” rule established by the court in 1942, when a worker came within an uncertain area between federal and state coverage, the tribunal before which the worker first appeared was presumed to have jurisdiction over the case. (Davis v. Department of Labor (1942) 317 U.S. 249, 63 S.Ct. 225, 87 L.Ed. 246; Larson, pp. 703–705.) An ensuing series of decisions established a broad area of concurrent state and federal compensation jurisdiction, thereby creating a theoretical risk of double recovery. (Calbeck v. Travelers Insurance Co. (1962) 370 U.S. 114, 82 S.Ct. 1196, 8 L.Ed.2d 368 (Calbeck ); Larson, supra, at pp. 705–709.)
The principal holding in Calbeck was that federal coverage under LHWCA does not depend on whether a state compensation statute covers the same case. (370 U.S. at pp. 115–131, 82 S.Ct. at 1197–1205.) The court also addressed briefly an employer's contention that, an employee who first accepted benefits under the state system and then filed a claim under LHWCA had elected his remedy and was barred from LHWCA recovery. The Supreme Court disagreed, observing that the federal compensation order before it provided that “the full amount of all payments made by the employer was credited against the award, and no impermissible double recovery is possible.” (Id. at p. 131, 82 S.Ct. at 1206; italics added.) Accordingly the court held that “acceptance of the payments does not constitute an election of the remedy under state law precluding recovery under the [LHWCA].” (Ibid.) The discussion concluded: “Nothing in the statute requires a contrary result. And we agree that the circumstances do not support a finding of a binding election to look solely to the state law for recovery. [Citations.]” (Ibid.)
The Calbeck court expressly stated the issue before it to be whether there was an election of remedies. The question before the court was not whether double recovery was permissible, and therefore its reference to “impermissible double recovery” is dictum. Also, because Calbeck dealt with a state application preceding an LHWCA application, even if the statement about “impermissible double recovery” could be considered a holding, it would not be applicable to the case before us in which the first application is made in the federal system, followed by a state application.
By 1971, 11 maritime states had enacted workers' compensation statutes granting benefits higher than those under the LHWCA. Workers therefore consistently sought first to bring their cases in the state rather than the federal forum. In 1972, Congress more than doubled the LHWCA benefits and amended the LHWCA to extend federal coverage to qualified workers beyond the water's edge. (33 U.S.C.A. §§ 902(2)–(3), 903(a); Johnson v. Texas Employers Ins., Ass'n (1977) 558 S.W.2d 47.) The trend in application preference then reversed and workers (except those in Alaska, which still had higher rates) generally sought federal compensation first. (Larson 2, supra, at p. 290; see Johnson v. Texas Employers Ins., Ass'n, supra, 558 S.W.2d at p. 51.)
In Sun Ship, supra, 447 U.S. 715, 100 S.Ct. 2432, the court stated the issue before it as “[W]hether a State may apply its workers' compensation scheme to land-based injuries that fall within the coverage of the [LHWCA], as amended in 1972. (33 U.S.C.A. §§ 901–950.)” The court held that a state could do so. (447 U.S. at p. 716, 100 S.Ct. at 2434.)
Pennsylvania employees of Sun Ship had filed claims for state compensation first, although LHWCA applied. The state compensation board held that LHWCA did not preempt state compensation laws, and the state courts denied review (447 U.S. at pp. 716–717, 100 S.Ct. at 2434.) The Supreme Court reviewed the evolution of the law of compensation for maritime workers, noting that the 1972 amendments supplement rather than supplant state laws. (447 U.S. at pp. 719–720, 100 S.Ct. at 2436.)
The court found that the “disparities which Congress had in view in amending the LHWCA lay primarily in the paucity of relief under state compensation laws. The thrust of the amendments therefore was to ‘upgrade the benefits.’ [Citation.] Concurrent jurisdiction for state and federal compensation laws is in no way inconsistent with this policy of raising awards to a federal minimum. When laborers file claims under the LHWCA, they are compensated under federal standards. And workers who commence their actions under state law will generally be able to make up the difference between state and federal benefit levels by seeking relief under the [LHWCA] if the latter applies.” (447 U.S. pp. 723–724, 100 S.Ct. at 2438, italics added, fn. omitted.) Thus where concurrent jurisdiction exists the court contemplated and sanctioned workers using both systems to maximize their benefits.
Turning to the language from Calbeck which we italicized above (“no impermissible double recovery is possible”), the Sun Ship court stated in its often-quoted footnote 8, “Of course, there is no danger of double recovery under concurrent jurisdiction since employers' awards under one compensation scheme would be credited against any recovery under the second scheme. See, e.g., Calbeck․” (447 U.S. 715, 725, fn. 8, 100 S.Ct. 2432, 2439, fn. 8, italics added.) Again, as in Calbeck, the italicized language does not control the case before us for two reasons: (1) it is dictum because the issue of double recovery was not before the Sun Ship court (E.P. Paup Co. v. Director, OWCP (9th Cir.1993) 999 F.2d 1341, 1350 (E.P. Paup Co.)), and (2) the workers had applied for state compensation first, distinguishing that case from ours.
A similar holding and dictum had appeared 18 years earlier in Holland v. Harrison Bros. Dry Dock and Repair Yard, Inc. (5th Cir.1962) 306 F.2d 369 (Holland ). In this “twilight zone” case the employer made voluntary payments first under the state act. Then the worker sought and received LHWCA compensation, with the federal commissioner crediting the employer for voluntary state payments. The employer challenged the award because the injury was on land. The district court agreed, but the court of appeals reversed and reinstated the LHWCA award. (Id. at p. 369.)
The Holland court traced the “tortured history of the division between state and admiralty jurisdiction with regard to workmen's compensation․” (306 F.2d at p. 370.) “Although the Act chartered a course for thousands of workers, many weary and frustrated litigants were unable to navigate the legal complexities of state and maritime jurisdiction, misjudged their course, and pursued the wrong remedy until after prescription had barred appropriate relief.” Then, noted the Holland court, came the Davis decision and the twilight zone. (Id. at pp. 371–372.)
The Holland court explained that workers do not have the option of applying for compensation from both systems in every case, but only in the twilight zone. In other words, if admiralty jurisdiction is clearly present, LHWCA applies; where it is totally absent, state law applies. (306 F.2d at p. 372.) The Holland case was in the twilight zone where the worker did not have to elect his remedies. The court explained that allowing LHWCA recovery does not harm employer for the following reason. “Until the claim is litigated once or settled by a binding compromise agreement, the employee has not received a complete compensation and the employer could make no objection to a suit by the injured worker under [state] law. The claimant's action in bringing suit instead under the federal law does not subject the employer to any additional burden. An award under either compensation law would of course credit the employer with any voluntary payments he had already made. Mere acceptance by the worker of the voluntary payments will not suffice to commit him to one remedy or the other in limitation of the choice he is entitled to make in a twilight zone case.” (Id. at p. 373.)
In Bouford v. Bath Iron Works Corp. (Me.1986) 514 A.2d 470 (Bouford ) (Note, supra, 39 Me.L.Rev. 465) the Maine Supreme Court confronted the issue alluded to in the above cases. The worker first received voluntary benefits under LHWCA for TD and permanent partial disability. Then he filed for and was awarded state compensation for TD and permanent impairment. The state commissioner allowed the employer to credit the federal compensation paid during specific periods against state compensation, but did not allow an offset to the permanent impairment award because the LHWCA did not contain a similar provision compensating employee for the loss of use of his back. (514 A.2d at p. 472.) In other words, the state commissioner allowed category by category credit, but not dollar for dollar credit.
The Maine Supreme Court, with which we agree, upheld the commissioner's decision. “An examination of the LHWCA and Maine's Act makes clear that the permanent impairment benefits awarded to Bouford in this case are separate and distinct from the benefits he received under the LHWCA.” (Bouford, supra, 514 A.2d at p. 472.) After reviewing state and federal provisions, the court concluded, “Unlike the permanent partial disability benefits Bouford received under the LHWCA intended to compensate him for his loss of earning capacity, permanent impairment benefits awarded pursuant [to the state statute] are based exclusively on loss of function of a bodily part․ Since the permanent impairment award in this case provides compensation for the physical consequences of a work-related injury, it is not duplicative of a permanent partial disability awarded to Bouford under LHWCA. Instead it is a superior benefit that is distinct from those available under LHWCA. Accordingly, we find no basis to conclude that Bouford received a double recovery in this case. Absent an award under the LHWCA compensating Bouford for the permanent loss of function of his back, [employer] is not entitled to an offset against the permanent impairment award.” (Id. at pp. 473–474.)
The court rejected employer's argument that the holding contravened public policy. Noting that the LHWCA requires dollar for dollar credit (33 U.S.C.A. § 903(e) 1 ), the court said, “That Congress requires that an employer be given credit for any payments made under a state act does not require that any payments made under LHWCA be necessarily offset when benefits are paid under Maine's Act.” (514 A.2d at p. 474.) 2 The court noted that states are free to provide benefits more favorable than the LHWCA. If these benefits provide compensation “that is separate and distinct” from federal, no public policy supports offset. The three-justice majority believed that since the state permanent impairment benefit compensates solely for physical loss of bodily function, it would defeat its purpose and not promote any public policy to offset it against LHWCA benefits paid for loss of earning capacity. (Ibid.)
Two justices dissented. (514 A.2d at p. 474.) They agreed that permanent impairment benefits received by the worker under the federal act were separate and distinct from those he received under the LHWCA, and that there was no basis in state law to require setoff. But they would have held that this is a question of federal law and that footnote 8 was critical to Sun Ship. “Although it is true that the Supreme Court observed in Sun Ship that Congress was unconcerned about states providing superior benefits, the federal scheme plainly requires all payments under LHWCA to be credited toward those superior state benefits.” Reviewing the Calbeck holding the court said, “It is inconceivable that the application of the setoff principle is dependent upon the fortuity of whether the state or federal proceeding occurred first.” (Id. at p. 475.) 3
The Connecticut appellate court agreed with the Bouford dissent in McGowan v. General Dynamics Corp. (1988) 15 Conn.App. 615, 546 A.2d 893. The court believed that Congress did not object to a claimant getting a greater state award or a greater federal award, but did object to a worker getting both. (546 A.2d at p. 897.) The McGowan court found a category by category system inconsistent with 1984 amendments to LHWCA, namely 33 U.S.C.A. section 903(e) (see fn. 1, ante ), and with Connecticut's exclusive remedy provisions. The court opined that receiving the maximum from either of two systems is consistent with an exclusive remedy rule, because the higher award constitutes the worker's exclusive remedy. But obtaining category by category credit takes some from each and is not consistent.4 (546 A.2d at p. 897.) The court declined to follow Bouford. (Id. 546 A.2d at p. 898.)
It has been suggested that two California appellate decisions followed the dollar for dollar policy approach of McGowan, Calbeck and Sun Ship 's footnote 8. We do not agree with that reading of the cases. The holding in Duong v. Workers' Comp. Appeals Bd. (1985) 169 Cal.App.3d 980, 215 Cal.Rptr. 609, was that “injuries occurred while the worker was engaged in activities covered by both the federal and state acts, entitling him to receive state workers' compensation benefits.” (169 Cal.App.3d at p. 981, 215 Cal.Rptr. 609.) The court stated, “When dual federal and state coverage is available, simultaneous application under each act is permitted because the delay in determining whether both or only one of the acts covers injuries incurred in employment arguably overlapping both the state and federal jurisdictions, may allow a statute of limitations to run for claims where the applicant files only with an agency lacking jurisdiction. Where concurrent jurisdiction allows coverage under both the state and federal acts, there is no danger of double recovery because an employer's contributions under one will be credited against the other. (Calbeck v. Travelers Insurance Co. [supra ] 370 U.S. 114, 131 [82 S.Ct. 1196, 1205–06, 8 L.Ed.2d 368.] )” (169 Cal.App.3d at p. 982, 215 Cal.Rptr. 609, italics added.)
Similarly, the court in Bobbitt v. Workers' Comp. Appeals Bd. (1983) 143 Cal.App.3d 845, 192 Cal.Rptr. 267, held that the Board had jurisdiction over an oil rig worker's compensation claim filed after an LHWCA claim. The court stated, “The fact that petitioner also has a pending claim for benefits under LHWCA does not preclude prosecution of his claim before the WCAB, since any benefits he might receive in the federal proceeding may be credited against benefits he might receive in the instant proceeding. (Travelers Ins. Co. v. Industrial Acc. Com.  240 Cal.App.2d 804, 810 [50 Cal.Rptr. 114;] see Holland v. Harrison Bros. Dry Dock and Repair Yard, Inc. [supra] 306 F.2d 369, 373.) As noted in Sun Ship, supra, 447 U.S. at page 724, [100 S.Ct. at 2438] where ‘state remedial schemes are more generous than federal law, concurrent jurisdiction could result in more favorable awards for workers' injuries than under an exclusively federal compensation system.’ ” (143 Cal.App.3d at p. 849, 192 Cal.Rptr. 267, italics added.)
Travelers Ins. Co. v. Industrial Acc. Com., supra, relied on in Bobbitt, did not involve the LHWCA but was an interstate case in which the court held that the California insurer was entitled to dollar for dollar credit for payments it had made to the worker in Alaska. The Alaska payments made by Travelers were not pursuant to a formal award, and there was no award or acceptance of benefits under Alaska law. “Under these circumstances it was proper for the commission, in order to prevent a double recovery for the same injury, to allow a credit against the award made under the work[er]'s compensation law of California in a sum equal to the payments made on behalf of the insured under the work[er]'s compensation law of Alaska. (Industrial etc. Exchange v. Industrial Acc. Com.  80 Cal.App.2d 480, 482–483 [182 P.2d 309.] )” (240 Cal.App.2d at p. 810, 50 Cal.Rptr. 114.)
The cited case, Industrial etc. Exchange v. Industrial Acc. Com., supra, involved a California contract of a worker injured in Utah. The Utah insurer accepted liability without a formal award and paid $16 per week, plus medical expenses. Then employee returned to California and applied for benefits. The California commission awarded $30 per week with no credit for the Utah payments. These facts raised an issue of first impression in California. (80 Cal.App.2d at p. 481, 182 P.2d 309.)
The court cited numerous treatises and cases regarding the fact that double recovery is not allowed, because of the need to maintain incentive to return to work. (80 Cal.App.2d pp. 481, 182 P.2d 309, et seq.) The court quoted and relied upon the Restatement of Conflict of Laws section 403: “ ‘Award already had under the Workmen's Compensation Act of another state will not bar a proceeding under an applicable Act, but the amount paid on a prior award in another state will be credited on the second award.’ ” (80 Cal.App.2d at pp. 481–482, 182 P.2d 309).5
The above decisions seem to agree that “double recovery” is impermissible, but they do not explain what that term means. The California decisions expressed a view that dollar for dollar credit was proper, but none of the courts had the issue before them, and so their statements are of no precedential value. (E.g., Canales v. City of Alviso (1970) 3 Cal.3d 118, 127–128, fn. 2, 89 Cal.Rptr. 601, 474 P.2d 417.)
In the case at bench applicant first received an award under the LHWCA and then applied for California compensation. We agree with Bouford that the federal statute, 33 U.S.C.A. section 903(e), does not control here. The clear language of that statute applies only where state recovery precedesan LHWCA award. The question before us is one of state, rather than federal, law.
II. California Double Recovery
The California Constitution grants to the Legislature plenary power over workers' compensation. (Cal. Const., art. XIV, § 4.) Our courts have consistently interpreted the statutes enacted pursuant to that power to permit but one recovery for a single injury. For example, in the leading case of Herrera v. Workmen's Comp. App. Bd. (1969) 71 Cal.2d 254, 78 Cal.Rptr. 497, 455 P.2d 425, a worker was temporarily disabled, and his employer paid him full wages. The court held the worker could not recovery statutory workers' compensation TD benefits for that period, because that would result in double recovery for a single injury. (Id. at p. 259, 78 Cal.Rptr. 497, 455 P.2d 425.)
However, nothing in the law of compensation which the Legislature has enacted pursuant to its plenary power, nor anything in the decisions interpreting that law, suggests that this state has adopted or should adopt the dollar for dollar rather than category by category credit system. As will appear, category by category credit does not result in prohibited double recovery and is appropriate in this case.
A. Section 4909
Employer contends that as a matter of state law, Labor Code section 4909 6 requires that employer receive dollar for dollar credit, that is, credit against the California PD payment for the amount by which the TD payment under LHWCA exceeded what a California TD award would have paid. Employer also contends that section 4909 is inconsistent with and is preempted by U.S.C.A. section 903(e). We reject both claims.
Section 4909 provides in relevant part: “Any payment, allowance, or benefit received by the injured employee during the period of his incapacity, ․ which by the terms of this division was not then due and payable or when there is any dispute or question concerning the right to compensation, shall not, in the absence of any agreement, be an admission of liability for compensation on the part of the employer, but any such payment, allowance, or benefit may be taken into account by the appeals board in fixing the amount of the compensation to be paid․”
Section 4909 does not mandate dollar for dollar credit in LHWCA cases. The purpose of section 4909 is to encourage prompt payment of benefits and to protect employers who mistakenly make payments for a nonindustrial condition. (Appleby v. Workers' Comp. Appeals Bd. (1994) 27 Cal.App.4th 184, 191, 32 Cal.Rptr.2d 375 (Appleby ); 1 Herlick, Cal. Workers' Compensation Law Practice (5th ed. 1994) § 6.16, p. 6–21.) An employer is entitled to section 4909 credit in two situations. First, credit will be given “for any wages or irregular payments in excess of compensation liability which are clearly intended by both employer and employee as an advance on compensation to become due.” (Ott v. Workers' Comp. Appeals Bd. (1981) 118 Cal.App.3d 912, 920, 173 Cal.Rptr. 648 (Ott ), citing 2 Hanna, Cal. Law of Employee Injuries and Workmen's Compensation (2d ed. 1980) § 13.03, pp. 13–20.) There is no indication or allegation of such intent here or in LHWCA cases generally.
Second, in the absence of agreement, the Board has discretion to allow credit if the employer voluntarily made payments described in section 4909. (Ott, supra, 118 Cal.App.3d at p. 921, 173 Cal.Rptr. 648.) Federal TD payments are compelled by law 7 and cannot be characterized as voluntary. (Appleby, supra, 27 Cal.App.4th at p. 193, 32 Cal.Rptr.2d 375.) Section 4909 is inapplicable to the case at bench or to similar LHWCA cases.
Employer's reliance on Appleby for the contrary proposition is misplaced. The Appleby court upheld an order of the Board permitting “integration” of workers' compensation benefits and a private benefit plan adopted pursuant to a contract between Pacific Bell and its employees. The effect of dollar for dollar credit was the result of express contractual provisions broadly equating all payments under the benefits plan with all payments under workers' compensation. (Appleby, supra, 27 Cal.App.4th at pp. 188–189, 32 Cal.Rptr.2d 375.) No such provisions exist in the case before us.
Nor is section 4909 preempted by the federal statute. Our review of the history of the double recovery issue above shows that at least since Sun Ship it has been clear that concurrent jurisdiction exists and that preemption of state compensation plans by the federal act was not intended and did not occur. In fact, Congress expressly rejected a preemptive statutory amendment to the LHWCA as recently as 1984. (E.P. Paup Co., supra, 999 F.2d 1341, 1349.) In 1993, the California Legislature codified the rule of Sun Ship in section 3701, subdivision (g), which provides in part, “The employee shall be entitled to pursue recovery under either or both the state and federal [LHWCA] programs.” As we have seen, the subject matter and intent of section 4909 and 33 U.S.C.A. section 903(e) are distinct. The latter provides dollar for dollar credit in the federal system, but the former does not contain a similar provision for the state. Employer's claim of preemption is unfounded. (E.P. Paup Co., supra, 999 F.2d at p. 1350.)
B. Section 4661
Category by category credit is in keeping with the underlying philosophy of our system generally and of section 4661 in particular.
California law provides unequivocally that workers are entitled to both TD and PD in appropriate cases. Prior to 1945, section 4661 provided that an injured worker could receive temporary disability or permanent disability, but not both. The Legislature amended the statute to more fairly compensate the injured worker. (See Aetna Cas. & Surety Co. v. Ind. Acc. Com. (1947) 30 Cal.2d 388, 391–392, 182 P.2d 159.) Section 4661 now provides in part, “Where an injury causes both temporary and permanent disability, the injured employee is entitled to compensation for any permanent disability sustained by him in addition to any payment received by such injured employee for temporary disability.” We hold that one effect of section 4661 is to mandate a category by category credit system.8
Our workers' compensation act provides separate and distinct indemnity for temporary disability and permanent disability. (§§ 4650–4662.) Temporary and permanent disabilities have different characteristics, and the indemnity for each of them meets different needs.
A temporary disability is an incapacity to work that is reasonably expected to improve with proper medical care. (Chavira v. Workers' Comp. Appeals Bd. (1991) 235 Cal.App.3d 463, 473, 286 Cal.Rptr. 600.) To qualify for TD, the impairment must affect the wage earning ability of the injured worker. (Herrera v. Workmen's Comp.App. Bd., supra, 71 Cal.2d at p. 257, 78 Cal.Rptr. 497, 455 P.2d 425.) A temporary disability involves two basic elements: (1) an inability to perform the tasks of one's employment; and (2) physical impairment. (1 Hanna, Cal. Law of Employee Injuries and Workers' Compensation (2d rev. ed. 1994) § 7.01, p. 7–4.) TD is intended primarily to replace lost wages, in order to maintain a steady stream of income. (Western Growers Ins. Co. v. Workers' Comp. Appeals Bd. (1993) 16 Cal.App.4th 227, 235, 20 Cal.Rptr.2d 26; J.T. Thorp, Inc. v. Workers' Comp. Appeals Bd. (1984) 153 Cal.App.3d 327, 333, 200 Cal.Rptr. 219, quoted with approval in Nickelsberg v. Workers' Comp. Appeals Bd. (1991) 54 Cal.3d 288, 294, 285 Cal.Rptr. 86, 814 P.2d 1328; §§ 4653–4655.)
TD is payable at the rate of two-thirds of the injured employee's average weekly earnings at the date of injury (§§ 4653–4655), subject to statutory maximum and minimum limits (§ 4453). TD payments cease when: (1) the employee returns to work; (2) the employee is deemed medically able to return to work; or (3) the employee's medical condition becomes permanent and stationary.9 (1 Hanna, op. cit. supra, § 7.02, p. 7–7).)
A disability cannot be both temporary and permanent at the same time. (Western Growers Ins. Co., supra, 16 Cal.App.4th 227, 235, 20 Cal.Rptr.2d 26.) A disability ceases to be temporary, and becomes permanent, when treatment has restored the injured employee to the full extent that the permanent character of the injury will permit. (1 Hanna, op. cit. supra, § 7.02, p. 7–9.)
Permanent disability is the result of a permanent injury that impairs an employee's earning capacity or a bodily function, or that creates a competitive handicap in the open labor market. (§ 4660; Franklin v. Workers' Comp. Appeals Bd. (1978) 79 Cal.App.3d 224, 237, 145 Cal.Rptr. 22.) Statutory guidance for rating PD is limited. (See § 4660, subd. (a).) The Schedule for Rating Permanent Disabilities, adopted by the Administrative Director of the Division of Workers' Compensation, is mechanically applied in determining PD ratings. (See, Cal.Code Regs., tit. 8, § 9805.) A PD rating is based primarily on the employee's actual incapacity to perform tasks usually encountered in his or her employment and on other permanent physical impairment of the body. (Granado v. Workmen's Comp.App.Bd. (1968) 69 Cal.2d 399, 403–404, 71 Cal.Rptr. 678, 445 P.2d 294.) Once a rating if warranted is obtained, PD indemnity, like TD, is set by statute and subject to statutory minimum and maximum rates. (§ 4658.)
Thus, it is unquestioned under California law that an injured employee is entitled to receive both TD and PD indemnity. Each is designated by the Legislature as a separate and distinct class of benefit, designed to compensate for a different kind of loss. The primary element in TD is loss of wages, whereas loss of earning power is not a prerequisite to the right to PD; permanent body impairment or a competitive handicap in the open labor market is the prime consideration in determining right to PD. (Russell v. Bankers Life Co. (1975) 46 Cal.App.3d 405, 415–416, 120 Cal.Rptr. 627; Manning v. Workmen's Comp.App. Bd. (1970) 10 Cal.App.3d 655, 658, 89 Cal.Rptr. 76; § 4660, subd. (a).)
“It must be remembered that [TD] indemnity and [PD] indemnity were intended by the Legislature to serve entirely different functions.” (Maples v. Workers' Comp. Appeals Bd. (1980) 111 Cal.App.3d 827, 836, 168 Cal.Rptr. 884.) The Maples court stated further: “[TD] indemnity serves as wage replacement during the injured worker's healing period for the industrial injury. [Citation.] In contrast [PD] indemnity compensates for the residual handicap and/or impairment of function after maximum recovery from the effects of the industrial injury have been attained. [Citation.] [PD] serves to assist the injured worker in his adjustment in returning to the labor market. [Citation.] Thus in many instances the allowance of credit for a [TD] overpayment against [PD] indemnity can be disruptive and in some instances totally destructive of the purpose of [PD] indemnity. [Citations.]” (Maples, supra, 111 Cal.App.3d at p. 836, 168 Cal.Rptr. 884, italics added.)
Inasmuch as TD payments are not credited against PD awards for employees in general (§ 4661), and there is no statute calling for an offset of TD paid under the LHWCA against a state PD award, we hold that dollar for dollar credit as urged by employer is not allowed. (See Pennington v. Workmen's Comp. Appeals Bd. (1971) 20 Cal.App.3d 55, 58, 97 Cal.Rptr. 380.)
Double recovery as defined by our state law and under our statutory system does not result if category by category credit is permitted. Absent a legislative directive, neither the Board nor the courts have the power to offset TD paid under the LHWCA against a subsequent state PD award.10
Employer complained at oral argument that the result we reach today would be inequitable. We suggest that this argument should be addressed to the Legislature which has chosen not to enact a dollar for dollar credit system, and which also had mandated that any doubts in interpreting our statute be resolved liberally in favor of the injured worker.
Sea Land is not entitled to dollar for dollar credit, but is entitled to category by category credit against applicant's award under California law for the higher rate paid under LHWCA. Accordingly the Board's order denying reconsideration is affirmed.
I respectfully dissent. In doing so, however, let me be clear that I agree with much of the majority's analysis. But I disagree with other parts of it and, most profoundly, with its conclusion as to where that analysis takes us.
To start with, I agree generally—although with an exception I shall shortly come to—with the majority's treatment of the legal history of the handling of workers' compensation claims in the “twilight zone.” I likewise agree with its conclusion that, contrary to petitioner's contention, Labor Code section 4909 is not controlling here in any way or manner. Next, I agree that section 903 of the federal law (33 U.S.C. § 903) neither preempts state law given the present fact circumstances nor controls on the issue of what constitutes “double recovery.” Put another way, on the issue that is critical here, I agree with the majority that California law controls.1
So much for my points of agreement. As for my areas of disagreement, I will start with the majority's reliance on two provisions of the Labor Code sections 4661 and 3752.
The majority contends that Labor Code section 4661 supports its conclusion that “double recovery” somehow means only double recovery of either TD or PD considered separately (category by category credit) but not both considered together (dollar for dollar credit). I suggest this analysis is faulty. The purpose and effect of the present form of Labor Code section 4661 was made clear by our Supreme Court in Aetna Cas. & Surety Co. v. Ind. Acc. Com. (1947) 30 Cal.2d 388, 391, 182 P.2d 159. There the court explained that, prior to 1945, the section provided that an injured worker could not receive both TD and PD, but only one or the other. The 1945 amendment changed that; the current language of that section is set out by the majority, ante at p. 874. The majority suggests that the straightforward and rather simple language of the statute has, as “one effect,” to “mandate a category by category approach.” Precisely how this language does that we are not told and, I suggest, with good reason: no such mandate—or even implication—can conceivably be read into the straightforward words of the statute.
Later, the majority cites—via a tepid “see also” citation—section 3752 of the Labor Code. (See maj. opn. at p. 876, fn. 10.) If possible, this statute provides even less support than Labor Code section 4661 for the majority's ultimate conclusion. It simply prohibits an employer from crediting other types of insurance or benefit payments an injured worker receives from workers' compensation payments otherwise due him or her, and has never been understood or interpreted otherwise.2 Indeed, if the section had any pertinence at all to the “twilight zone” issue before us, it would necessarily preclude even the category by category credit of which the majority approves.
After mentioning Labor Code section 4661, the majority goes on to what seems to be the main thrust of its holding: that TD and PD serve different functions and that, therefore, it is inappropriate to credit an overpayment in one category against payments due in the other. But the majority's argument seems very unconvincing to me. Its theme seems to be that “never the twain shall meet,” i.e, that there is such a basic, fundamental difference between the two types of payments that a dollar for dollar credit system is unfair. I simply disagree with the majority's premise. In the first place, both TD and PD serve (with exceptions, of course) as “wage replacement.” Secondly, as any lawyer or judge who has ever been involved with personal injury actions can attest, practically all complaints in those cases include prayers for relief for both (a) loss of wages, medical expenses and the like and (b) permanent injury, if any (and often even if not any). But no one would suggest that the generally separate statement of, and usual lack of overlap between, these two items of damage mean much of anything very profound; they are still—as are TD and PD—integral parts of the same injury claim.
Thirdly, PD and TD are not only integral, they are interrelated. As the opinion in Maples v. Workers' Comp. Appeals Bd. (1980) 111 Cal.App.3d 827, 834, 168 Cal.Rptr. 884, makes clear, overpayments of TD can and are regularly credited against PD, a practice hardly indicative of the strict compartmentalization which the majority imagines.3
The majority suggests, at least twice (see maj. opn. at pp. 17 and 18), that our Legislature has not decreed that there be “dollar for dollar” credit and that, therefore, any credit should be only on a “category by category” basis. I confess I don't understand this point. The Legislature has not, to put the shoe on the other foot, said anything favoring “category by category” credit, either. Indeed, if one were to carry the majority's point to its logical conclusion, even an overpayment of federal TD could not be credited against later-owing state TD because one can find no message by the Legislature approving even this degree of credit. In short, in my view the Legislature has not said anything which provides this court any guidance on this novel issue.
My conclusion from this state of affairs is that this court must deduce what the law is from applicable court precedent. This, inevitably, brings me back to the many examples (seven, by my count) of court precedent which the majority effectively dismisses as “dictum.”
Included in these seven cases are two United States Supreme Court decisions directly involving the “twilight zone” area, one federal court of appeals case pertaining to the same area, and four decisions of our sister Courts of Appeal, two of them also involving the federal-California “twilight zone” and two dealing with duplicative and overlapping state workers' compensation laws. (Sun Ship, Inc. v. Pennsylvania (1980) 447 U.S. 715, 725, fn. 8, 100 S.Ct. 2432, 2439, fn. 8, 65 L.Ed.2d 458; Calbeck v. Travelers Insurance Co. (1962) 370 U.S. 114, 131, 82 S.Ct. 1196, 1205–06, 8 L.Ed.2d 368; Holland v. Harrison Bros. Dry Dock and Repair Yard, Inc. (5th Cir.1962) 306 F.2d 369, 373; Duong v. Workers' Comp. Appeals Bd. (1985) 169 Cal.App.3d 980, 982, 215 Cal.Rptr. 609; Bobbitt v. Workers' Comp. Appeals Bd. (1983) 143 Cal.App.3d 845, 849, 192 Cal.Rptr. 267; Travelers Ins. Co. v. Industrial Acc. Com. (1966) 240 Cal.App.2d 804, 810, 50 Cal.Rptr. 114; Industrial Etc. Exchange v. Ind. Acc. Com. (1947) 80 Cal.App.2d 480, 482–483, 182 P.2d 309.) 4
The first three of these are decreed to be “dictum” by the majority (maj. opn. at pp. 869–870) and the last four are dismissed as follows: “The California decisions expressed a view that dollar for dollar credit was proper, but none of the courts had the issue before them, and so their statements are of no precedential value.” (Maj. opn. at p. 872.) All of which prompts the admittedly somewhat flippant observation that perhaps somewhere in this large pile of dictum a useful legal principle might be found. Indeed, it seems clear to me, as it has to others before me, that we ought to pay careful attention to the accumulation of “dicta.” As one federal court of appeals put it: “[W]hile, strictly speaking, the rule announced by the Supreme Court in a number of these cases may be regarded as dictum, nevertheless the reannouncement of the doctrine repeatedly over a period of more than 100 years serves to establish it, not only as the consistent view of the court, but also as a rule ․ upon which practical transactions have been, and are being, based.” (United States v. Guaranty Trust Company (8th Cir.1929) 33 F.2d 533, 537.)
Witkin expresses the same view: “To say that dicta are not controlling ․ does not mean that they are to be ignored; on the contrary, dicta are often followed. A statement which does not possess the force of a square holding may nevertheless be considered highly persuasive, particularly when made by an able court after careful consideration, or in the course of an elaborate review of the authorities, or when it has been long followed.” (9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, § 785, p. 756.)
Contrary to the majority, I find an important legal principle in these cases, both federal and California: an applicant should not be allowed to “take advantage” of the concurrent jurisdiction of workers' compensation laws allowed in the “twilight zone” by getting a recovery which is duplicative or redundant.5
At oral argument, counsel for the applicant candidly acknowledged that what is really involved in this case is whether an applicant working in the “twilight zone” of concurrent jurisdiction can have “the best of both worlds” when it comes to TD and PD, i.e, as here, apply for and get the more generous federal TD and then apply for and get the more generous California PD, but without having any credit taken for the amount by which the federal TD exceeds the allowable California TD. Applicant's counsel argued that there was absolutely nothing wrong with this “best of both worlds” ploy. I think there is; I think it is a blatant example of taking advantage of the zone of concurrent jurisdiction and is, thus, exactly what the United States Supreme Court had in mind when it twice cautioned that “double recovery” should not be permitted.6
As I noted above, the majority rationalize the circumvention of this principle by simply decreeing that TD and PD are so different that the two cannot be combined and considered together to see if the total is duplicative. Because I find this ipse dixit declaration unpersuasive, I respectfully dissent.
1. 33 U.S.C.A. § 903(e) provides, “Notwithstanding any other provision of law, any amounts paid to an employee for the same injury, disability, or death for which benefits are claimed under this chapter pursuant to any other workers' compensation law ․ shall be credited against any liability imposed by this chapter.”
2. Accord, ITO Corp. v. Director, OWCP, U.S. Dept. of Labor (5th Cir.1989) 883 F.2d 422. “Section 903(e) ․ only applies when the prior compensation was paid under a state workers' compensation provision․” (Id. at p. 425.)
3. The note writer agrees with the majority that the question of credit for a prior LHWCA award is one of state, not federal, law. (Note, supra, 39 Me.L.Rev. 465.)
4. The court cited 2A Larson, The Law of Workmen's Compensation (1988) §§ 65–67.30 for the proposition that all states have such exclusive remedy provisions.
5. Restatement 2d of the Conflict of Law, section 182 provides, “Relief may be awarded under the workmen's compensation statute of a State of the United States, although the statute of a sister State also is applicable.” Paragraph 2 of comment b states, “In any event, the amount paid on the prior award in the first State will be credited against a second award.”
6. Unless otherwise indicated, all statutory references are to the Labor Code.
7. 33 U.S.C.A. § 908(b) provides, “In case of disability total in character but temporary in quality 66–2/3 per centum of the average weekly wages shall be paid to the employee during the continuance thereof.”
8. We neither cite nor rely on unpublished opinions. (Cal. Rules of Court, rule 977(a).) However, it is common for workers' compensation practitioners to cite and rely on unpublished opinions and reports of writ denials which do not appear in the official reports. Having that fact in mind we note that the rationale of an opinion by Division One of this court, which the Supreme Court ordered not to be published, has been repeatedly cited by workers compensation practitioners advocating category by category credit, and has been followed for five years by this and other courts of appeal. (Galvin v. Workers Compensation App. Bd. (1990) 55 Cal. Comp. Cases 423.)
9. For injuries occurring on or after January 1, 1991, a “disability is considered permanent after the employee has reached maximum medical improvement or his or her condition has been stationary for a reasonable period of time.” (Cal.Code Regs., tit. 8, § 10152.)
10. See also section 3752 which provides: “Liability for compensation shall not be reduced or affected by any insurance, contribution or other benefit whatsoever due to or received by the person entitled to such compensation, except as otherwise provided by this division.”
1. Although, as I shall shortly discuss, California law does not exist in a juridical vacuum and when, as is the case here, our courts cite, quote and expressly rely upon United States Supreme Court authority for a basic point of policy, that reliance and the bases of it should be regarded with more favor than the majority does here.
2. Which, undoubtedly, is the reason the section was never cited to us by able and experienced counsel for the applicant in this case.
3. The majority's quotation from Maples (see maj. opn. at p. 875) is from that portion of the opinion after the court noted that “[e]quity favors the allowance of such credit against permanent disability indemnity” (Maples v. Workers' Comp. Appeals Bd., supra, 111 Cal.App.3d at p. 834, 168 Cal.Rptr. 884). It embodies the court's holding that an employer who violated the Labor Code and the WCAB's rules by continuing TD payments long after it should was estopped from claiming a credit for its overpayments against PD.
4. Of necessity, similarly dismissed by the majority are such secondary sources as Restatement Second of Conflicts section 182, and 4 Larson, The Law of Workmen's Compensation (1995) §§ 89.73 and 89.74, and the two law review articles by Professor Larson cited by the majority (maj. opn. at p. 868).
5. Obviously (and I believe the majority would agree with me on this) the proscription on “double recovery” cannot be taken literally; clearly, what the term means is not a recovery twice what it ought to be, but simply a recovery which is duplicative in any degree.
6. Thus, in general I agree with the Connecticut appellate court in McGowan v. General Dynamics Corp. (1988) 15 Conn.App. 615, 546 A.2d 893, although I would prefer to base my opinion less on federal law and more on state law grounds, at least as contrasted with McGowan.
SMITH, Associate Justice.
KLINE, P.J., concurs.