In 2017, the 2nd District Court of Appeal stated in Hikida v. WCAB (2017) 12 Cal. App. 5th 1249 that an employer had the “responsibility to compensate for medical treatment and the consequences of medical treatment without apportionment.” That is, when medical care causes a worsening of an industrial condition, apportionment does not apply. This was a big win for applicants. Since then, the scope of Hikida has been a source of contention between workers and employers.

Injured workers argued that if they underwent surgery because of an industrial injury, they were entitled to permanent disability without apportionment. The Workers’ Compensation Appeals Board (the board) also generally interpreted Hikida to mean that an employee would be entitled to unapportioned compensation when permanent disability was caused by reasonable medical treatment of the industrial injury. (See, for example, Sutter Solano Medical Center v. WCAB (Go) (2018) 83 CCC 381 (writ denied).)

On May 27, 2020, the 6th District Court of Appeal issued its decision in County of Santa Clara v. WCAB (Justice), which clarified and limited the scope of Hikida. It held that disability could be apportioned to other factors pursuant to Labor Code 4663, even if the workplace injury directly caused the need for surgery.

FACTS OF THE CASE

In Justice, an employee fell at work and injured her left knee. She later developed problems in her right knee as a compensable consequence. She underwent total knee replacement surgery on both knees.

The agreed medical evaluator (AME) testified at deposition that the employee had significant pre-injury degeneration in both knees. He agreed that the total knee replacement surgery was not required because of the meniscal tear resulting from the fall at work, but because of the underlying arthritis. The AME explained that the fall hastened the need for total knee replacement surgery by lighting up the underlying pathology. He added that absent the pre-existing arthritis, the employee would not have had the total knee replacement. So, the AME apportioned 50 percent of the bilateral knee disability to nonindustrial, pre-existing degeneration in the knees.

The workers’ compensation judge (WCJ) issued an award of 48 percent permanent disability without apportionment. The judge stated that prior to Hikida, he would have issued a decision awarding permanent disability with apportionment based on the AME’s opinion. But he understood Hikida to preclude apportionment in the case, stating, “Hikida holds that where medical treatment (here, the bilateral knee replacement surgery) results in an increase in [permanent disability], [permanent disability] should be awarded without apportionment.”

The board granted reconsideration, but only to amend the award to correct a clerical error. It rejected the employer’s assertion that the WCJ erroneously applied Hikida.

THE COURT’S DECISION

The 6th District Court of Appeal annulled the board’s decision. It noted that in Hikida, the injured worker underwent surgery for carpal tunnel syndrome and sustained a new, more disabling condition of complex regional pain syndrome (CRPS). The Hikida court reasoned that the employer was responsible for the new consequential injury based on the long-standing principle requiring employers to pay for industrial medical treatment without apportionment.

The Justice court stated, “However, it does not follow that an employer is responsible for the consequences of medical treatment without apportionment, when that consequence is permanent disability.” It added, “There is no case or statute that stands for the principle that permanent disability that follows medical treatment is not subject to the requirement of determining causation and thus apportionment, and in fact such a principle is flatly contradicted by sections 4663 and 4664.”

The Justice court noted that unlike Hikida, the permanent disability in that case was not caused entirely by the industrial medical treatment. Moreover, it found that the evidence established that the surgery was “quite successful.” The court concluded that the WCJ and the board erred when they ignored unrebutted substantial medical evidence that nonindustrial factors, in part, caused the employee’s permanent disability.

The court then rejected the employee’s argument that because the total knee replacement provided the sole basis for the disability rating, there should be no apportionment. The court explained, “Although she is correct that an employer is responsible for the portion of the permanent disability ‘directly caused’ by industrial factors, implicit in this inquiry is a determination of whether other nonindustrial factors also indirectly caused the permanent disability.” It added, “Whether or not the workplace injury ‘directly caused’ the need for surgery, the apportionment statutes nevertheless demand that the disability be sorted among direct and indirect causal factors.”

The court remanded for the board to issue an award that apportioned the employee’s disability 50 percent to nonindustrial factors and 50 percent to her industrial injury.

ANALYSIS OF THE DECISION

Hikida left several unanswered questions. Most practitioners understood that an employer would be liable for permanent disability without apportionment if unsuccessful medical treatment resulted in a new and distinct condition. But the case was misunderstood and misapplied, because the Hikida court made statements that could be interpreted as creating a broader rule precluding apportionment even following reasonable and successful medical treatment.

The Justice court clarifies and limits the holding in Hikida. It recognizes that permanent disability and medical treatment are treated differently in the workers’ compensation system. Although medical treatment may not be apportioned, permanent disability may be. It holds that permanent disability may be apportioned, even if it is based on medical treatment or surgery necessitated by an industrial injury.

The Justice court rejects any dicta in Hikida suggesting otherwise, stating, “Although parts of the Hikida opinion can be read to announce a broader rule that there should be no apportionment when medical treatment increases or precedes permanent disability, it is clear that the rule is actually much narrower.” The Justice court held that, “Hikida precludes apportionment only where the industrial medical treatment is the sole cause of the permanent disability.”

Because employers have the burden of proving apportionment, the case also highlights evidence that would be helpful in meeting that burden. Specifically, if an employee requires surgery, employers should solicit an opinion from the physician that the surgery was not required because of the industrial injury alone. The physician also should explain how and why nonindustrial factors or other nonindustrial injuries are the cause of the applicant’s postsurgical disability.

Justice may be obtained from the California courts’ website at: https://www.courts.ca.gov/opinions/documents/H046562.PDF.