Sarah Arlene PECK, Petitioner, v. WORKERS COMPENSATION APPEALS BOARD, John Tapocik, et al,* Respondents.
Was an applicant denied fundamental due process when the Workers Compensation Appeals Board reversed a factual determination of a workers compensation judge involving her credibility without reviewing the transcript of her testimony? Yes.
Sarah Peck was knocked down by her employer's dog on May 2, 1983. She suffered back, neck, and psychological injuries from the accident. Peck had a preexisting back problem and underwent a lumbar laminectomy in 1975.
A hearing was conducted before a workers compensation judge in October 1986. Peck testified and various medical reports were submitted. Basing his decision on the applicant's “credible testimony” and the report of one physician, the workers compensation judge determined Peck was temporarily disabled for three years and five months and rated her orthopedic permanent disability at 64 percent. The judge found no permanent disability to Peck's psyche and, despite the earlier back injury, no basis for non-work-related apportionment.
The insurer for Peck's employer petitioned the Workers Compensation Appeals Board for reconsideration, arguing the judge's decision “[ran] contrary to the substantial weight of evidence which should be given the opinions of [ ] three [other] physicians,” whose reports the workers compensation judge dismissed as unpersuasive.1
The petition for reconsideration was granted by a divided panel. The majority determined Peck's condition was permanent and stationary within one year and a portion of her disability was attributable to the earlier back injury. Peck received a new rating of 21.2 percent for permanent disability on the board's order.
The board issued its decision over one member's strong dissent: “The [workers compensation judge] heard applicant's testimony, observed her demeanor, and was in the best position to evaluate her credibility. There is no evidence of considerable substantiality which would justify disturbing the [judge's] findings.”
Peck petitioned this court for relief, and we reviewed a copy of the record before the board. It included no declarations or reporters' transcripts. The record was comprised only of the following: various medical reports, the summary of Peck's testimony prepared by the workers compensation judge (also containing his opinion that her testimony was credible), and his report and recommendation to deny the petition for reconsideration. We issued a writ of review and specifically requested the parties to address the issue of the legality of a board decision reversing an award of compensation benefits resting in part on the credibility of a witness without a transcript of his or her testimony.
Workers compensation proceedings are not governed by the Evidence Code, but the parties must be accorded constitutional due process. (Hegglin v. Workmen's Comp. App. Bd. (1971) 4 Cal.3d 162, 174–175, 93 Cal.Rptr. 15, 480 P.2d 967; Gill v. Workers' Comp. Appeals Bd. (1985) 167 Cal.App.3d 306, 309–310, 213 Cal.Rptr. 140.) Frequently, the only witness at a hearing before a workers compensation judge is the injured employee; for “[t]he Workers' Compensation Appeals Board favors the production of medical evidence in the form of written report. Direct examination of a medical witness will not be received at a hearing except upon a showing of good cause and written notice to the parties․” (Cal.Admin.Code, tit. 8, § 10606; see also Cal. Workers' Compensation Practice (Cont.Ed.Bar 1985) § 8.7, p. 288.) The proceedings are required to be reported (Lab. Code, § 5708), but they are not transcribed as a matter of course. Transcripts may be obtained upon written request and payment of a fee. (Cal.Admin.Code, tit. 8, § 10740.) The Supreme Court long ago determined “[t]he transcript is as much a part of the record as is evidence received in written form.” (Allied Comp. Ins. Co. v. Ind. Acc. Com. (1961) 57 Cal.2d 115, 120, 17 Cal.Rptr. 817, 367 P.2d 409.)
Two indispensable parts of the record before the board are documents which are not prepared until after the hearing before the workers' compensation judge. The first is the judge's summary of the evidence. (Lab.Code, § 5313; Cal.Admin. Code, tit. 8, § 10566, subds. (d)-(f).) It must “include a fair and unbiased summary of the testimony given by each witness.” (Cal.Admin.Code, tit. 8, § 10566, subd. (d).) By definition, this document is not itself evidence; and neither is the second document, the workers' compensation judge's recommendation to the board, prepared in response to a petition for reconsideration.
The board must give “great weight” to the judge's findings as embodied in the report and recommendation. (Garza v. Workmen's Comp. App. Bd. (1970) 3 Cal.3d 312, 319, 90 Cal.Rptr. 355, 475 P.2d 451.) If the board denies a petition for reconsideration, for example, it may explain its decision simply by incorporating the judge's report into its own order. (U.S. Auto Stores v. Workmen's Comp. App. Bd. (1971) 4 Cal.3d 469, 474, 93 Cal.Rptr. 575, 482 P.2d 199.) The board is not bound by the findings of the workers compensation judge, however: It “is empowered to resolve conflicts in the evidence [citations], to make its own credibility determinations [citations], and upon reconsideration to reject the findings of the referee and enter its own findings on the basis of its review of the record [citations]․” (Garza v. Workmen's Comp. App. Bd., supra, 3 Cal.3d at p. 317, 90 Cal.Rptr. 355, 475 P.2d 451; see also Lamb v. Workmen's Comp. Appeals Bd. (1974) 11 Cal.3d 274, 280–281, 113 Cal.Rptr. 162, 520 P.2d 978.)
Accordingly, the board may grant the petition for reconsideration and arrive at a different result so long as it “state[s] the evidence relied upon and specif[ies] in detail the reasons for the decision.” (Lab.Code, § 5908.5; Painter v. Workers' Compensation Appeals Bd. (1985) 166 Cal.App.3d 264, 212 Cal.Rptr. 354.) There is a significant caveat to this rule, however: “[W]hen as in this case the referee has relied upon the subject evidence to make a wholly supported finding of compensability, the Board may not avoid its obligation to give that finding great weight by ignoring the evidence on which it was based. In so doing, the Board ․ render[s] a decision which is not supported by substantial evidence in the light of the entire record.” (Lamb v. Workmen's Comp. App. Bd., supra, 11 Cal.3d at p. 283, 113 Cal.Rptr. 162, 520 P.2d 978.)
Does the board necessarily “ignore” the evidence supporting a finding of compensability when it fails to review a transcript of the applicant's testimony? Or is the workers compensation judge's summary of the evidence an adequate substitute? In our view, whenever the board rejects the findings and award of the workers compensation judge which were based in whole or in part on a determination of witness credibility, due process demands it at least review a transcript of the relevant testimony.
This requirement appears fundamental to us, and decisional law supports our conclusion. For example, in Pacific Indem. Co. v. Industrial Acc. Com. (1946) 28 Cal.2d 329, 170 P.2d 18, the court noted, “if the commissioners (precursers of today's board members) follow the recommendations of the referee who heard the evidence or read the record, they need not themselves review the evidence: however, if they make a contrary determination they are required to make an independent examination of the record. (Bethlehem Steel. Co. v. Ind. Acc. Com. (1940) 42 Cal.App.2d 192, 194 [108 P.2d 698]; Taylor v. Industrial Acc. Com. (1940) 38 Cal.App.2d 75, 82 [100 P.2d 511].)” (Id., at p. 339, 170 P.2d 18, emphasis added.) “Record” must be read to mean “evidence” in this context. In both Bethlehem and Taylor, the Court of Appeal clearly stated the commission must review the evidence presented to the referee before rejecting the findings made. In Taylor, for example, the court wrote, “When the commission adopts the facts found and the decision recommended by the one who is authorized to and does hear the evidence, [i.e., the workers compensation judge] then the commission is not required to review the record. An entirely different situation would be presented if the commission, disregarding and setting aside the findings and recommendation of the referee, undertook, without a review of the evidence, to appraise the same and make determinations based thereon.” (Taylor, supra, 38 Cal.App.2d at p. 82, 100 P.2d 511, emphasis added.)
In Bethlehem, a different appellate panel was even more emphatic: “[I]f the commission disregards the findings and recommendations of its referee and makes different findings and award, the commission must itself review the evidence [citing Taylor ]. This rule is obviously applicable to the act of a subsequent referee in modifying findings and award of a prior referee. [A new award made] ․ without examining a transcript of the record containing the evidence considered by [the first referee] in making his findings and award [cannot stand].” (Bethlehem, supra, 42 Cal.App.2d 192, 194, 108 P.2d 698, emphasis added.)
The Supreme Court reiterated the theme several years later: “Implicit in the rule that it is not a denial of due process for the commission to base its award on a report of a referee although it does not review the record, is the corollary that if it reviews the evidence in the record it may validly make an award contrary to the referee's recommendation.” (Nat. & Cas. Co. v. Ind. Acc. Com. (1949) 34 Cal.2d 20, 30, 206 P.2d 841.) The rule articulated in National Auto is unequivocal in our view and binding on this court and the board. (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 20 Cal.Rptr. 321, 369 P.2d 937.)
The insurer relies on Allied Comp. Ins. Co. v. Ind. Acc. Com., supra, 57 Cal.2d 115, 17 Cal.Rptr. 817, 367 P.2d 409 for the notion the board may reverse or reduce an award of compensation without reviewing the evidence. Indeed, the Allied court did observe that because the summary of the applicant's “testimony was ample to provide a complete and full understanding of the record,” the commission was not obligated to procure the transcript. (Id., at p. 120, 17 Cal.Rptr. 817, 367 P.2d 409.) When analyzed in context, however, that language in no manner lessens the scope or impact of the National Auto rule.
In Allied a celery trimmer injured her back in the course of her employment. She testified at a hearing and medical records were received in evidence. The referee assigned her a permanent disability rating of 321/212 percent. She petitioned for reconsideration, claiming the rating should have been higher.
The commission on its own solicited a new disability rating, and the expert it retained submitted an informal recommendation of 77 percent disability. The commission then permitted the employer to cross-examine the new rating expert and to present rebuttal evidence. After the hearing, the commission adopted the higher disability rating, although it was “inconsistent both with the other medical opinions in the record and with the referee's observations of [the applicant] described in his report․” (Id., at p. 122, 17 Cal.Rptr. 817, 367 P.2d 409.)
The employer petitioned the Supreme Court for review, arguing “it was denied a fair hearing because the second disability statement was formulated without reference to the entire record.” (Id., at p. 119, 17 Cal.Rptr. 817, 367 P.2d 409.) The court disagreed, first observing, “it is clear that the commission is required to make an independent examination of the record when, as here, it rejects the findings and recommendations of its referee. [Citing National Auto and Pacific Indemnity.] The extent of that independent examination has not, however, been clearly defined․ [T]he United States Supreme Court [has] held generally that, ‘The one who decides must hear.’ [Citation.] The requirement of a hearing may be satisfied, however, even though the members of the commission do not actually hear [citations] or even read, all of the evidence. [Citations.]” (Ibid.) The opinion continued, “[The employer] takes an equally unrealistic position. It contends that the panel members were obligated to read the entire record, including the transcript. So rigid a requirement cannot be extracted from the decided cases.” (Id., at p. 120, 17 Cal.Rptr. 817, 367 P.2d 409.) Because the summary of the applicant's “testimony was ample to provide a complete and full understanding of the record,” the commission was not required to procure the transcript. (Ibid.)
Allied is distinguishable. The question there did not involve the applicant's credibility; rather, the dispute concerned the opinion of the commission's own rating expert who did not testify before the referee but was a witness in the subsequent hearing before the commission. Here, the applicant's credibility was in issue; and the board was in no position to reject the workers compensation judge's evaluation of that aspect of her testimony without reviewing a transcript.
Western Electric Co. v. Workers' Comp. Appeals Bd. (1979) 99 Cal.App.3d 629, 160 Cal.Rptr. 436, upon which the insurer also relies, is similarly distinguishable. There, the trial judge denied the applicant's petition for increased benefits under Labor Code section 132a (which prohibits discrimination against employees who file workers' compensation claims). The board granted reconsideration, found a violation of the statute, and increased the employee's earlier award by 50 percent. Although the court granted the employer's writ petition and annulled the board's decision on other grounds, it cited Allied and concluded the board “did not commit error per se by failing to review an actual transcript of the testimony [because] ‘the WCJ's summary of evidence [was not] in any way inadequate or incorrect.’ ” (Id., at p. 641, 160 Cal.Rptr. 436.) Again, however, in Western Electric the board's rejection of the workers compensation judge's findings benefited the applicant, presumably the only witness who testified. Requiring a transcript under those circumstances would have served no practical purpose. Moreover, in contrast to the present case, the Supreme Court had a transcript of the relevant testimony and could make its own harmless error analysis.
In a case such as this, where the board chooses to reject the findings of the workers compensation judge and to reduce or eliminate benefits, due process compels it to review a transcript of any testimony critical to that determination. To hold otherwise would permit the board, in the great majority of cases, to consider all the evidence presented by the employer but only a third-person summary of that presented by the testifying applicant. This it may not do; the Supreme Court has held the board may not ignore the evidence supporting a compensation award. (Lamb v. Workmen's Comp. Appeals Bd., supra, 11 Cal.3d at p. 281, 113 Cal.Rptr. 162, 520 P.2d 978.)
The present facts illustrate the reason for the rule. Unlike the situation in Allied, where the applicant's credibility was not at issue, Peck's credibility was important to her defense of the employer's petition for reconsideration. The board should not have rejected the workers compensation judge's credibility determination without benefit of a transcript. We hold his summary of her testimony was inadequate to that purpose as a matter of law. (Cf. Western Electric Co. v. Workers' Comp. Appeals Bd., supra, 99 Cal.App.3d at p. 641, 160 Cal.Rptr. 436.) Because the insurer failed to provide such a transcript with its petition for reconsideration and the award below depended in substantial part on the applicant's credibility, the board had no alternative but to deny the petition.
The order is annulled and the cause is remanded for further proceedings consistent with this opinion.
1. This allegation was insufficient to entitle the petitioner to reconsideration in our view. The bases for reconsideration are statutory. Labor Code section 5903 provides for reconsideration in only five circumstances: fraud, actions by the judge or board in excess of their respective powers, the discovery of new evidence, insufficiency of the evidence, and findings which do not support the award. In its petition, the employer argued the award of permanent disability and the failure to apportion were not supported by substantial evidence. (Lab.Code, § 5903, subds. (d) & (e).) In light of her testimony and doctor's report, its contention that “the award of temporary disability [was] not supported by the substantial weight of the evidence” fell considerably short of the statutory requirement.
CROSBY, Associate Justice.
SONENSHINE, Acting P.J., and WALLIN, J., concur.