ATLANTIC RICHFIELD COMPANY et al., Petitioners, v. WORKERS' COMPENSATION APPEALS BOARD, Carman Arvizu et al., Respondents.
In this proceeding on writ of review, we are asked to examine (1) the propriety of the Workers' Compensation Appeals Board's (Board's) conclusion that the earnings of a deceased spouse are the measure of the actual support to the surviving spouse for purposes of calculating partial dependency awards pursuant to Labor Code section 4702 and (2) whether the Department of Industrial Relations is entitled to the difference between the final partial dependency award and the statutory maximum, if any, in a situation where the deceased employee leaves a spouse surviving.
Gilbert Arvizu, the husband of respondent Carman Arvizu (Carman), died on May 23, 1978, due to injuries suffered during the course of his employment as a truck driver with petitioner Atlantic Richfield Company (Atlantic Richfield).1 Carman filed an application for death benefits against Atlantic Richfield and its insurance carrier.2 It was admitted that Carman was the decedent's widow at a hearing before the workers' compensation judge. In addition, the parties stipulated that, on the date of Gilbert's death, the decedent earned $1,400 per month ($16,800/year) and that Carman earned $820 per month ($9,840/year).3 Following presentation of documentary evidence at the hearing and filing of points and authorities4 , the workers' compensation judge found Carman to be partially dependent and awarded her a death benefit of $33,600. In calculating this partial dependency award, the judge rejected a method proposed by Carman5 and Atlantic Richfield6 and adopted the following approach:
“The better rule to follow is to find the amount deceased contributed to applicant's needs and award accordingly.
“As deceased and applicant lived together with no other dependants, it can be assumed that one-half (1/2) of his income was used to support applicant.
“Therefore, under Labor Code Section 4702 applicant would be entitled to four times one-half (1/2) of deceased's annual income for $33,600.00.”
Carman filed a petition for reconsideration which was granted by the Board. Based upon its recent decision in Oropeza v. Newman Seed Co. (1980) W.C.A.B. No. 78 SD 52469 (reported in 45 Cal.Comp.Cases 1148-1156), the Board rescinded the judge's award and found the total actual earnings of decedent (rather than one-half that amount) to be the proper basis for the partial dependency calculation. Accordingly, the Board awarded the maximum death benefit of $50,000 allowable under law7 and rescinded the previous award of $33,600. Although awarding the full $50,000 statutory authorization to Carman, the Board also joined the State of California, Department of Industrial Relations, as a party in the event that this court awards a lesser monetary award to Carman or reinstates the award of the workers' compensation judge. Relying upon the case of Department of Industrial Relations v. Workers' Comp. Appeals Bd. (Tessler) (1979) 94 Cal.App.3d 72, 156 Cal.Rptr. 183, the Board noted that the State would be entitled to the difference between the final award (of less than $50,000) and the statutory maximum of $50,000. Petitioners then filed the present writ of petition before us.
Petitioners initially attack the method by which the Board computed the partial dependency award8 to Carman Arvizu. They contend it was erroneous to treat the total actual earnings of Carman's deceased husband as the measure of actual support for purposes of awarding death benefits. Petitioners pray for reinstatement of the award made by the workers' compensation judge, who assumed that one-half of husband's income was used to support Carman for purposes of calculating the final benefit figure. We disapprove both approaches.
Labor Code section 47029 provides that partial dependency awards shall be a sum equal to four times “the amount annually devoted to the support of the dependents by the employee,” although such an award cannot exceed the statutory ceiling of $50,000. In the landmark case of Arp v. Workers' Comp. Appeals Bd., supra, 19 Cal.3d 395, 138 Cal.Rptr. 293, 563 P.2d 849, our Supreme Court held that the conclusive presumption of total dependency afforded to widows under former section 3501, subdivision (a), denied equal protection of the laws to both widowers and employed women. (Arp, supra, at pp. 398-399, 407, 138 Cal.Rptr. 293, 563 P.2d 849.) Rather than salvaging the former provision by extending the presumption to males and females alike, the court invalidated the section, requiring “all applicants, widows and widowers alike, to prove their dependency, and (to) be compensated in accordance with the facts and circumstances shown.” (Id. at pp. 409-410, 138 Cal.Rptr. 293, 563 P.2d 849.) The legislature has responded with amendments which eliminate the equal protection disparity. See Stats.1979, ch. 749, ss 1, 4; Messina v. Workers' Com. Appeals Bd. (1980) 105 Cal.App.3d 964, 968-969, 164 Cal.Rptr. 762.)10 Thus, pursuant to the present statutory provisions, we believe applicants for a partial dependency award must prove “the amount annually devoted to the support of the dependents by the (deceased) employee, ”
Noting that “the Supreme Court gave no guidance as to how to determine the partial dependency benefit for the surviving, partially dependent spouse,”11 the Board decided “to treat the earnings of the deceased spouse as the measure of actual support to the surviving spouse”12 in Oropeza v. Newman Seed Co., supra, 45 Cal.Comp.Cases 1148. The Board adopted the “total earnings” test because “ any other method would lead to grossly disparate results depending on whether the surviving spouse was totally dependent or partially dependent on the decedent.” It did so in the face of “the legislatively-created formula for establishing partial dependency benefits in Section 4702 (since it would) not presume that the Legislature intended the harsh results which would flow from applying this formula to the logical extremes urged by petitioner.” (Oropeza, supra, at p. 1152.) The Board rejected the petitioner's argument that one-half of the decedent's earnings should be regarded as the measure of partial dependency, since “(t)his suggestion ignores the surviving spouse's earnings which also contribute to the support of the other through the community.” (Id. at p. 1153.)13 Stating its “total earnings” rule would apply “in the ordinary case,” the Board acknowledged: “ there can be situations where this approach may not be appropriate. The existence of other partial dependents in addition to the surviving spouse, income from separate property or other circumstances may make it necessary to expand the inquiry. The Board's purpose here is not to enumerate the situations where this may occur, but to point out that there are situations where a different approach may be necessary.” (Id. at p. 1154, fn. omitted, emphasis added.)
Although the “total earnings” test does promote expedient administrative determinations, the Board's approach, we believe, contravenes the literal language of section 4702 and reinstates a presumption of dependency in partial dependency cases which flies in the face of Arp. The formula in section 4702 applies to “the amount annually devoted to the support of the dependents by the employee, ” Arp invalidated an outmoded presumption of dependency, leaving it to the applicant to prove his/her dependency according to the specific facts and circumstances of each case. (Arp v. Workers' Comp. Appeals Bd., supra, 19 Cal.3d at p. 410, 138 Cal.Rptr. 293, 563 P.2d 849.) In our opinion, this authority cogently reveals that the measure of support in partial dependency cases cannot be presumed to equal the total earnings of the decedent.
Moreover, we do not believe the Board should rely carte blanche on the “total earnings” test as the measure of decedent's support to the surviving, partially dependent spouse. Such an approach constitutes a windfall to a surviving spouse who works herself (like respondent here). In addition, it fails to recognize that a decedent may have used a portion of earnings to cover personal expenses (e. g., entertainment costs, payment of personal debts, alimony, etc.). Thus, we conclude the rationale of Arp demands that the applicant whether widow or widower prove the amount of dependency under section 4702.14
Likewise, the “community property” approach recommended by petitioners and utilized by the workers' compensation judge is too imprecise and may not fully compensate the surviving spouse for the loss of decedent's support. The hearing officer in this case merely “assumed that one-half (1/2) of (decedent's) income was used to support applicant” without evaluating any facts and circumstances which might have demonstrated a higher level of dependency. The Board in its Oropeza decision property rejected the “community property” test because “(t)he community, not merely the surviving spouse, loses the benefit of the deceased spouse's earnings.” (Oropeza v. Newman Seed Co., supra, 45 Cal.Comp. Cases at p. 1153.)
Thus, since neither approach is a realistic measure of the decedent's support, we hold that a sole and partially dependent applicant has the burden of proving the factual issue of the amount annually devoted to his/her support by the decedent spouse. We do not believe mere presentation of the total earnings of the decedent satisfies this burden; proof must be adduced which establishes the amount of community contributions by the deceased employee before benefits can be conferred pursuant to section 4702. The Board can then arrive at a reasonable contribution amount once applicant satisfactorily meets his/her burden of producing evidence of decedent's earnings, other family income, and family/community living expenses. (2 Hanna, op.cit.supra, s 15.03(1)(c), p. 15-26.2; cf. Graham-Loftus Oil Corp v. Industrial Acc. Com. (1939) 4 Cal.Comp.Cases 182, 182-183.)15
Anticipating that this court might not accept its “total earnings” position, the Board joined the State of California, Department of Industrial Relations, as a party. It did so upon the authority of Department of Industrial Relations, v. Workers' Comp. Appeals Bd. (Tessler), supra, 94 Cal.App.3d 72, 156 Cal.Rptr. 183 where the court interpreted section 4706.516 as entitling the State to the difference between the partial dependency benefit award and the $50,000 maximum benefit awarded under section 4702. Although there may be no differential found after remand, in view of our disposition herein on the first issue, we deem it proper to provide guidance to the Board in the event any differential appears. We hold that the State is not entitled to any differential in partial dependency cases such as the one before us.
In Tessler, the First District based its construction upon the following line of reasoning:
“Section 4706.5 was enacted in 1972. As amended in 1973 and 1974 and as relevant, it now provides that: ‘(a) Whenever any fatal injury is suffered by an employee under such circumstances as to entitle him to compensation benefits, but for his death, and such employee does not leave surviving him any person entitled to a dependency death benefit, the employer shall pay a sum to the Department of Industrial Relations equal to the total dependency death benefit that would be payable to a surviving spouse with no dependent minor children ’
“This statute makes no express disposition concerning the balance of the ‘sum equal to the total dependency death benefit that would be payable to a surviving spouse with no dependent minor children,’ where as here only a portion of the sum is disbursed to a partial dependent.
“But we nevertheless discern a patent legislative purpose that when a worker dies ‘under such circumstances as to entitle him to compensation benefits, but for his death,’ his employer will in any event be obligated at least in the amount of such a death benefit as ‘would be payable to a surviving spouse with no dependent minor children.’ In such cases the death benefits will be paid according to law to the workers' dependents, if any, and to the extent that such death benefits as would be payable to ‘a surviving spouse with no dependent minor children’ are not paid to the workers' dependents, they will be paid to the State pursuant to section 4706.5.” (Department of Industrial Relations v. Workers' Comp. Appeals Bd. (Tessler), supra, 94 Cal.App.3d at pp. 78-79, 156 Cal.Rptr. 183.)
Moreover, since the applicant under the facts before it had entered into a $10,000 settlement with decedent's employer, the Tessler court felt that employer's retention of the undisbursed balance “would encourage an employer or its insurance carrier to settle doubtful death benefit claims for small amounts and then, arguing reasonable doubt as to liability, obtain confirmation of the Board, thus to avoid the full liability of (section 4702).” (Tessler, supra, 94 Cal.App.3d at p. 79, 156 Cal.Rptr. 183.) Finally, the court believed that its interpretation harmonized sections 4702 and 4706.5, promoting the legislative objectives of having employers pay death benefits to dependents and then paying any residual amounts to the State. (Id. at p. 80, 156 Cal.Rptr. 183.) This result has been expressly followed by the Board (see Oropeza v. Newman Seed Co., supra, 45 Cal.Comp.Cases 1148, 1154-1155) and implicitly followed by another division of the First District (see State of California v. Workers' Comp. Appeals Bd. (Butterworth) (1980) 101 Cal.App.3d 673, 678 fn. 1, 161 Cal.Rptr. 821).
We believe Tessler unpersuasive for the following reasons.
First, we believe the court ignored the plain language of section 4706.5, subdivision (a). This provision operates as a type of escheat statute and is triggered only when the deceased employee “does not leave surviving him any person entitled to a dependency death benefit, ” (Emphasis added.) If the Legislature had meant to achieve the result discerned by the Tessler court, it could have used the phrase “a total dependency death benefit.” The fact that “any person entitled to a dependency death benefit” also refers to a partial dependent is manifested by the wording of section 4702, which involves both partial and total dependency awards. Although respondent here was only found to be a partial dependent, she nonetheless was a surviving dependent who impeded operation of section 4706.5. Accordingly, we believe the Tessler court misconstrued the legislative objective behind dispersal to the State when no dependents survive the deceased employee.17
Second, we believe Tessler enunciated an overly broad holding which has limited application to the facts presently before us. Tessler was narrowly concerned with dependency awards resulting from a compromise and release between the employer and the partial dependent. Contrasted with Tessler, the instant award occurred after an evidentiary hearing before a hearing officer. This makes the policy concern of the Tessler court the fear that employers/insurance carriers will enter into low settlements with dependents inapplicable to a vast array of contested cases, including the present situation.
Third, even if the policy concern of Tessler is applicable in the case before us, we believe it to be generally unsound. Settlements have a favored position in the law; it does not necessarily follow that a dependency claim is settled below the $50,000 ceiling because the employer/insurance carrier wants to avoid maximum payout. The dependent may indeed feel that there is a reasonable doubt as to liability which may not even produce an award amounting to the settlement figure. By requiring a disbursement equivalent to the maximum benefit (since any differential goes to the State), the Tessler analysis thwarts settlement attempts between the parties. The employer/insurance carrier has no incentive to settle with the dependent, since the State will get any residual amount. Although attempting to prevent settlements “for small amounts,” we believe Tessler discourages settlements between any partial dependents and the employer/insurance carrier.
In conclusion, we hold the plain meaning of section 4706.5 shows that the State is entitled to no balance when any dependents survive the employee.18 Thus, it was erroneous for the Board to join the State in the case before us.
The award is annulled and the cause remanded for such further proceedings as are consistent with the views expressed herein. The order joining the State of California, Department of Industrial Relations/Division of Industrial Accidents, is vacated.
1. The other petitioner is the Insurance Company of North America, Atlantic Richfield's insurance carrier for liability arising under the state workers' compensation laws.
2. Atlantic Richfield was dismissed as a party defendant in the action because its interests were represented by its insurance carrier.
3. Carman had been employed at a Thrifty Drug store since July 1, 1959.
4. The points and authorities submitted by the parties concede that Carman was the only surviving dependent of decedent. Although a 20-year-old child of the marriage was living in the couple's house at the time of decedent's injury and death (both occurring on May 23, 1978), this child never filed an application for benefits or attempted to establish the fact of his dependency upon decedent. (Lab.Code, ss 3501, 3502; 2 Hanna, Cal.Law of Employee Injuries and Workmen's Comp. (2d ed. 1980) s 15.02(7)(a), p. 15-20.) Because no dependency was claimed by others, the parties correctly characterize Carman as the “only surviving” dependent.
5. Carman contended she was entitled to the full benefit provided by law in order to preserve the standard of living to which she was accustomed and to prevent discrimination against the working spouse, whether male or female.
6. The workers' compensation judge rejected Atlantic Richfield's suggested method by indicating, “It could be argued, as mentioned by defendants, that deceased provided 63% of the total income and therefore applicant would be entitled to 63% of the death award of $50,000.00 or $31,500.00. However, this method seems incorrect as it is using total dependency amounts ($50,000.00) and applying them to partial dependents.”
7. At the time of decedent's injury and death, Labor Code section 4702 read: “In cases of partial dependency the death benefit shall be a sum equal to four times the amount annually devoted to the support of the dependents by the employee, not to exceed the sum of fifty thousand dollars ($50,000).” (Stats.1976, ch. 1017, s 6, p. 4596.) This same price ceiling can also be found in the current statute. (Lab.Code, s 4702, subd. (d); see Stats.1980, ch. 1042, s 4.)Given this statutory limitation, the Board correctly noted: “Although decedent's earnings multiplied by four yields $67,200, the widow is of course limited to the maximum specified in Section 4702, or $50,000.”
8. The facts developed before the workers' compensation judge are susceptible of a finding that Carman was a total dependent, thereby entitling her to the full $50,000 award. However, both the workers' compensation judge and the Board (by reliance upon its Oropeza decision) held that Carman was a partial dependent. Resolution of the status of an applicant as either a total or partial dependent is a factual determination and cannot be overturned by us unless “no evidence of substance” appears in support of the finding (Coborn v. Industrial Acc. Com. (1948) 31 Cal.2d 713, 716-717, 192 P.2d 959; cf. London Guar. etc. Co. v. Ind. Acc. Com. (1943) 57 Cal.App.2d 616, 618-620, 135 P.2d 7). Given the salary earned by Carman and the lack of explanation as to where that salary went, we cannot hold as a matter of law that the record conclusively demonstrates total dependency. Nevertheless, the existing circumstances can just as reasonably be construed as demonstrative of total dependency. Carman's decision to work may have been an attempt to help keep the wolf from the door and to erect a barrier against the onslaught of rampant inflation. As is true of most couples in these times of skyrocketing costs, Carman and her husband were practically treading water to merely maintain the same level of living. They had to run to stand still and avoid falling below their accustomed mode of living. In our opinion, the workers' compensation judge and the Board would do well to prudently and realistically consider that the present economic situation has transformed many working spouses (who would appear at first blush to be partially dependent only) into total dependents from a practical standpoint.However, given Carman's failure to adequately develop this theory and gain its acceptance below, we, as an appellate court, must view this case as involving a partial dependent. As shall be seen, Arp (Arp v. Workers' Comp. Appeals Bd. (1977) 19 Cal.3d 395, 138 Cal.Rptr. 293, 563 P.2d 849) has determined that widows and widowers alike must prove the extent of their dependency. Perhaps the Legislature should consider appropriate methods to remedy possible penalties which may result in the case of working spouses such as Carman.
9. Unless otherwise indicated, all code references are to the Labor Code.
10. As noted in Messina, the Legislature deleted the offending conclusive presumption and substituted “spouse” for “widow” with respect to section 4702. (Messina v. Workers' Comp. Appeals Bd., supra, 105 Cal.App.3d at pp. 968-969, 164 Cal.Rptr. 762.)
11. Oropeza v. Newman Seed Co., supra, 45 Cal.Comp.Cases 1148, 1149.
12. Oropeza, supra, 45 Cal.Comp.Cases at page 1152 (emphasis added).
13. The Board found the community property model inappropriate, noting that:“The marital community is something more than the sum of the economic interests of individuals who make it up. It is this community which is shattered by a fatal industrial injury. The community, not merely the surviving spouse, loses the benefit of the deceased spouse's earnings. The statement that ‘two can live as cheaply as one’ is perhaps more romantic than real, but there are definite economic advantages to be derived when two people establish a single household.“In the absence of express legislative direction to the contrary, it would be unrealistic and simplistic to utilize the method urged by defendant, i. e., taking one-half the decedent's earnings as the measure of partial dependency. This suggestion ignores the surviving spouse's earnings which also contribute to the support of the other through the community.” (Oropeza, supra, at p. 1153.)
14. In this regard, the Board was correct to note that the facts and circumstances must be evaluated in setting a partial dependency award for many situations. We believe, “the ordinary case,” rather than just an unusual situation, mandates that the applicant prove the value of support devoted by the deceased spouse.
15. For an illustrative list of items which should not be included in the contribution amount see 2 Hanna, op.cit.supra, s 15.03(1)(c), pp. 15-26.1 to 15-26.2.
16. At the pertinent time, section 4706.5, subdivision (a), provided:“Whenever any fatal injury is suffered by an employee under such circumstances as to entitle him to compensation benefits, but for his death, and such employee does not leave surviving him any person entitled to a dependency death benefit, the employer shall pay a sum to the Department of Industrial Relations equal to the total dependency death benefit that would be payable to a surviving spouse with no dependent minor children.” (Stats.1973, ch. 21, s 1, p. 37.)
17. That section 4706.5 was designed as an escheat provision is clear when recognition is given to the fact that, prior to this legislation, an employer was relieved from further liability if there was no other dependent entitled to dependency death benefits. (See Review of Selected 1972 California Legislation (1973) 4 Pacific L.J. 211, 672-673.)
18. The Third District so held in Subgrade Construction Corp. v. Workers' Comp. Appeals Bd. (1981) 118 Cal.App.3d 493, 495-498, 173 Cal.Rptr. 514. We agree with the analysis set forth by the Subgrade court.
ZENOVICH, Associate Justice.
HOPPER, Acting P. J. and C. P. EVANS,* J., concur.