WCAB Declares Intent to Invalidate Administrative Director’s Jurisdiction to Adjudicate SJDV

On January 13, 2020, the Workers’ Compensation Appeals Board (WCAB or Board) issued an en banc affirmation of its July 31, 2018 Opinion and Decision After Reconsideration and gave the California Administrative Director of the Division of Workers’ Compensation (AD) notice of the WCAB intention to invalidate Title 8 California Code of Regulations section 10133.54, because the regulation usurps the Board’s authority to adjudicate disputes over vouchers for supplemental job displacement benefits (SJDB or SJDV). In Anthony Dennis v. State of California – Department of Corrections and Rehabilitation, the WCAB also affirmed its decision that to avoid the obligation to provide a SJDB an employer must offer regular, modified or alternative work, regardless of a change in work availability or employee’s qualification for that work with the employer.

Mr. Dennis in 2013 sustained an injury to his wrist while working as an inmate laborer for the California Department of Corrections and Rehabilitation. The injury left Mr. Dennis with permanent disability, so he was sent a Notice of Offer of Regular, Modified or Alternative Work. Because he had been released from prison before being released to return to work, the notice included the statement that “subject to applicant verifying they are lawfully qualified to accept employment as an inmate laborer, you have voluntarily terminated your employment due to your release from prison and are no longer available for employment.”

Seeking to receive a Supplemental Job Displacement Voucher, Dennis filed with the AD a Request for Dispute Resolution in accordance with 8 California Code of Regulations section 10133.54. The AD failed to issue a determination, so the request was statutorily deemed denied. Pursuant to the regulation, Dennis appealed the denial to the WCAB by filing a Petition for Grant of Supplemental Job Displacement Benefit. At trial the Workers’ Compensation Administrative Law Judge determined that Dennis failed to timely file his Petition and was not entitled to the voucher. The WCAB disagreed, citing two bases for its decision.

Labor Code sections 4658.7(h) and 4658.5(c) direct the AD to “adopt regulations governing the form of payment, direct reimbursement to the injured employee upon presentation to the employer of appropriate documentation and receipts, and other matters necessary to the proper administration of the supplemental job displacement benefit.” Although there is no mention in either section of the duty of the AD to adjudicate SJDB disputes, the AD adopted 8 CCR 10133.54 which establishes a right to appeal disputes over the SBDV to the AD. In Dennis the WCAB concluded that by adopting section 10133.54, the AD exceeded the authority granted by statute. In doing so, the Director overstepped the exclusive jurisdiction of the WCAB to adjudicate all compensation disputes, including the SJDV benefit. As a result, the WCAB opined that section 10133.54 is invalid because it impairs the exclusive adjudication authority of the WCAB.

In addition to invalidating the regulation, the WCAB also determined that the California Department of Corrections and Rehabilitation failed to provide Dennis with a bona fide offer of work as required by Labor Code sections 4658.1 and 4658.7. In order for an offer of employment to be bona fide, it must be genuine and made in good faith when conveyed. This standard was set out in Robertson v. WCAB where the Applicant was fired for cause before he reached permanent and stationary status. Robertson was sent a Notice of Offer of Work indicating that a position as an invoicer would have been conveyed had he still been employed. The court determined that such an offer is not bona fide. Absent a bona fide offer, regardless of the employer’s ability to make such an offer, and regardless of an employee’s ability to accept, an employee is entitled to a supplemental job displacement voucher.

The Dennis decision of the WCAB sitting en banc sets up a power struggle between the AD and the WCAB. The Board acknowledges in its decision that there are several statutory grants of authority to the AD to adjudicate benefit disputes, with concomitant limitations on WCAB jurisdiction, including Labor Code sections 4610 (utilization review) and 4610.6 (independent medical review), sections 3715(c) (workers’ compensation insurance) and 4603.6(f) (medical bills). However, the WCAB identifies Dennis as an attempt by the AD to remove WCAB jurisdiction based on the AD’s own regulation, not legislative action. We will follow the Dennis litigation closely and provide our readers with updates as this matter is addressed in future decisions.

This document is intended to provide you with information about workers’ compensation related developments. The contents of this document are not intended to provide specific legal advice. If you have questions about the contents of this alert, please contact the authors. This communication may be considered advertising in some jurisdictions.

January 17, 2020