Employers Win in CA Workers’ Comp COLA Case

August 12, 2011 (PLANSPONSOR.com) - California’s Supreme Court handed employers and insurers a victory in a closely watched dispute over annual cost-of-living adjustments for certain workers compensation claimants, Business Insurance reports.

In Christine Baker as Administrator vs. Workers’ Compensation Appeals Board and X.S., the court had to determine whether a law adopted in 2002 required COLAs to be calculated in one of three ways: prospectively from the January 1 after the year in which the worker first becomes entitled to receive benefits; retroactively to January 1 after the year in which the worker is injured; or retroactively to January 1, 2004, for every case regardless of the date of injury or the date the first benefit payment becomes due.  

Business Insurance said the Supreme Court sided with the California Chamber of Commerce and the State Compensation Insurance Fund to overturn an appeals court’s finding. The high court concluded that the Legislature intended that COLAs be “calculated and applied prospectively commencing on the Jan. 1 following the date on which the injured worker first becomes entitled to receive, and actually begins receiving, such benefit payments.”   

It remanded the case to the appeals court for proceedings consistent with its view.  

The appeals court had agreed with the California Applicants’ Attorney Association, which filed amicus briefs in the case, and concluded that the law calls for COLAs to be added starting on January 1, 2004, regardless of the date of injury. The appeals court reasoned that otherwise for a worker “that does not become permanent and stable for a number of years, setting the COLAs from the permanent and stationary date causes that worker to see his or her payment exposed to the ravages of inflation.”   

According to Business Insurance, the case involved an unnamed accountant/controller injured in 2004 who was eligible to receive $728 weekly for life. The applicant claimed weekly payments that started on October 20, 2006, should be increased to reflect COLAs from the Janurary 1 after the date on which he was injured.   

However, the Subsequent Injury Benefit Trust Fund, which is responsible for payments to the claimant, maintained that the annual adjustments to the $728 weekly payment should not commence until January 1, 2007 – the January 1 after the date the applicant became permanent and stationary and actually began receiving his payments.