CA Supreme Court Decides the Date for Commencement of COLA’s in Total P.D. and Life Pension Cases

Copyright@2011 Clifford J. Weinberg  All Rights Reserved

 August 15, 2011

Clifford J. Weinberg

On Friday, August 11, 2011, the CA Supreme Court issued a published opinion in Baker v. WCAB (X.S.) interpreting the application of Labor Code section 4659 (c) which provides for cost of living adjustments (COLA’s) to total permanent disability and life pension payments.

Total permanent disability benefits are of course weekly payments made for the life of the injured worker commencing on the P&S date, and paid at the T.D. rate.  Life pensions are a form of supplemental partial permanent disability benefits consisting of payments to a subclass of seriously injured workers, i.e., those whose permanent disability is at least 70%, but less than 100%.

There were multiple interpretations as to the COLA start date provided by the trial judge, the WCAB on a petition for reconsideration, and the Court of Appeal pursuant to a writ of review.  The Supreme Court then reviewed the case pursuant to a petition for review.  The Supreme Court determined whether the operative language of LC 4659(c) requires the annual COLA’s to be calculated:


a.         prospectively from the January 1st following the year in which the worker first becomes entitled to receive a life pension or total permanent disability indemnity, i.e., when the payments actually commence;

b.         retroactively to January 1 following the year in which the worker sustains the industrial injury (applicant’s contention, followed by the trial judge, and upheld by the WCAB); or

c.         retroactively to 1/1/2004, in every case involving a qualifying industrial injury, regardless of the date of injury or the date the first benefit payment becomes due (CAAA’s more expansive interpretation, which had been adopted by the Six District Court of Appeal).

In its ruling, The CA Supreme Court adopted the interpretation in a. above, and held that the express language of the operative first sentence of the statue was clear as to when the COLA’s must be applied: prospectively, from the January 1st following the date on which the worker first becomes eligible to receive the benefit payments and actually begins receiving them. 



This decision provides a relief to employers and their carriers who might have otherwise been obligated to provide COLA’s on benefits retroactive to 1/1/04, regardless of whether the injured worker has yet to enter the work force (the interpretation of the Court of Appeal in c. above)!  As a result, please note the following with respect to your pending claims:

  • Significant injury claims which are anticipated to be 100% total PD or a value of life pension permanent disability:  COLA’s must be calculated and applied prospectively commencing on the following:
  • As to the 100% total permanent disability benefits, the January 1st following the date the injured worker reaches MMI/P&S status;
  • As to 70% – 99% partial permanent disability cases, the January 1st following the date on which the partial permanent disability become exhausted and the life pension payments commences.  (this can be several years away)
  • Cases in which an Award has been already been received (via Stipulations or Findings) over which the WCAB retains continuing jurisdiction:   In these case, if COLA’s have been provided based upon either of the interpretations of the lower courts (i.e., retroactively utilizing the date of injury or 1/1/04 as the commencement date), then you need to assess each case and determine whether it is appropriate to file for relief.  This relief can come in several forms:  (1) A Petition to Set Aside and Vacate the Award should be considered to recalculate the proper COLA benefits, and to assert such amount as a credit against future benefits:  and/or (2) A petition to re-open the case and to amend the award, if you are within five years from the date of injury;  (3) A petition to reform the award (modify) and for credit under Lab C 5804 if you are beyond the five years from date of injury;  The WCAB has continuing jurisdiction over all of its awards. Also, we would take the position that this is a substantive right and therefore defendants would be permitted to ask for the appropriate relief for the payment of a prior award, for which the COLA’s calculations were governed under the two now rejected methods.


FINAL NOTE:  Be sure to remain aware that this decision could impact current exposure analysis and hence case settlement considerations, and therefore be careful, when assessing “present value” of a 100% award of a life pension, not to use a calculation method which has a built in “Duncan” COLA adjustment factor..


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