Earley v. Workers' Comp. Appeals Bd. ( 2023 )

Filed 8/1/23
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
MICHELE EARLEY et al., B318842
Petitioners, (W.C.A.B. Nos.
ADJ4430885,
v. ADJ11016330,
ADJ10047707,
WORKERS’ ADJ9372475,
COMPENSATION APPEALS ADJ11934915,
BOARD, ADJ11733861)
Respondent.
INSURANCE COMPANY OF
THE STATE OF
PENNSYLVANIA et al.,
Real Parties in Interest.
ORIGINAL PROCEEDING in mandate to the Workers’
Compensation Appeals Board. Petition granted.
Thomas F. Martin; The Rondeau Law Firm and Charles R.
Rondeau for Petitioners.
Mokri Vanis & Jones and Eric J. Danowitz for Amtrust
North America, Farmers Insurance Exchange, Insurance
Company of the West and Liberty Mutual Insurance Group as
Amici Curiae on behalf of Petitioners.
Brissman & Nemat, Best Best & Krieger, Mona Nemat;
Litigation and Consulting Associates and Timothy I. Mulcahey
for Mesa Pharmacy, Inc., as Amicus Curiae on behalf of
Petitioners.
Anne Schmitz and Allison J. Fairchild for Respondent.
No appearance for Real Parties in Interest.
_________________________________
We invalidate a longstanding practice of the Workers’
Compensation Appeals Board (Board) in ruling on petitions for
reconsideration.
A party to a workers’ compensation proceeding can petition
the Board for reconsideration if that party is unhappy with the
ruling of either a workers’ compensation judge or the Board itself.
By statute, the Board must act upon such petitions within 60
days. To satisfy this requirement, the Board often grants
petitions for purposes of further study without first deciding
whether reconsideration is actually warranted. Later—
sometimes many months after the petition for reconsideration
was filed—the Board issues a decision on the merits affirming,
reversing, or modifying the ruling at issue.
Five Petitioners correctly argue the Board’s grant-for-study
procedure is an unauthorized way to extend the 60-day deadline.
A statute requires the Board to make a reasoned decision when
granting reconsideration. The Board may not simply grant
reconsideration for the purpose of further study. We therefore
issue a writ of mandate requiring the Board to cease its grant-for-
2
study procedure and to comply with the statute when granting
reconsideration.
We also hold that the Board is not required to issue a final
ruling on the merits within 60 days. Statutory language negates
the Petitioners’ argument to the contrary.
Section citations are to the Labor Code.
I
We lay out some facts.
A
The Petitioners are Michele Earley, Ashraf Gorgi, Hyun
Sook Lee, Roman Hernandez Aguilar, and Jose Flores Campos.
Each is a claimant in a workers’ compensation proceeding. In
each case, the Board issued a grant-for-study order.
The Petitioners’ grant-for-study orders arose in different
situations with different timelines. In Earley’s case, the
employer sought reconsideration of an order by the workers’
compensation judge that granted reimbursement for some self-
procured medical treatment. The Board issued its grant-for-
study order on June 29, 2020. Gorgi sought reconsideration of an
order finding that only one injury was work related. The Board
issued its grant-for-study order on August 4, 2021. Lee’s
employer petitioned for reconsideration from an award of 100
percent permanent disability. The Board issued its grant-for-
study order on September 10, 2021. In Aguilar’s and Flores’s
cases, the employer sought reconsideration of an order that found
Aguilar and Flores to be employees. The Board issued its grant-
for-study order on September 24, 2021.
The cases are different but the Board’s orders were exactly
the same:
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“Taking into account the statutory time constraints for acting
on the petition, and based upon our initial review of the record, we
believe reconsideration must be granted to allow sufficient
opportunity to further study the factual and legal issues in this
case. We believe that this action is necessary to give us a complete
understanding of the record and to enable us to issue a just and
reasoned decision. Reconsideration will be granted for this purpose
and for such further proceedings as we may hereafter determine to
be appropriate.”
The uniform language of these orders reveals a standard
form and not particularized analyses.
When Petitioners filed their petition in this court, the
Board had not yet issued a decision in any of their cases.
However, the Board issued final rulings in each case after
Petitioners initiated this writ proceeding and before the Board
filed its initial response to Petitioners’ Petition. The time
between the filing of the grant-for-study orders and the Board’s
final decisions ranged from five to 21 months.
B
The Board explained its grant-for-study procedure. It
generally tries to identify significant cases or those requiring en
banc review, and cases involving complicated or novel issues. It
was able to trace the history of this practice to the 1950’s; an
earlier origin existed but is lost in time. The Board surmised the
grant-for-study procedure “evolved naturally” from 1913 statutes
that allowed the Industrial Accident Commission (a precursor to
the Board) either to grant or to deny rehearing and thereafter to
issue a decision after rehearing.
The Board decides most petitions for reconsideration within
60 days. However, the Board issued grant-for-study orders in
4
about 19 percent of cases from 2015 to 2019 and in about 38.5
percent of cases in the pandemic-affected years of 2020 and 2021.
According to the results of a public records request that
Petitioners served on the Board, as of November 2, 2021, there
were 543 workers’ compensation cases awaiting a final decision
in which the Board had issued a grant-for-study order between
October 1, 2018 and October 1, 2021.
II
The Board must comply with section 5908.5 when it orders
reconsideration. That is, the Board must state in detail the
reasons for its decision and the evidence supporting it. Those
reasons must be based on the grounds identified in section 5903.
The Board need not, however, issue a final order within 60 days.
The review necessary to support a decision to grant a petition for
reconsideration within 60 days does not involve the same burden
as the preparation of a final ruling. The Board must engage in
the analysis necessary to permit a reasoned decision as to
whether reconsideration is warranted based upon the factors
identified in section 5903 and the evidence in the particular case.
The Board then can decide whether to affirm, to modify, or to
vacate the order at issue after further consideration and a more
thorough review of the record.
At oral argument, the Board assured us it carefully reviews
the cases in which it decides to issue a grant-for-study order. A
careful review is not enough. Section 5908.5 requires the Board
to go a step further and to explain in its order granting
reconsideration why it made the decision to grant reconsideration
based upon the evidence in the particular case.
We proceed in three steps. First we discuss mootness.
Second, we show section 5908.5 requires the Board to explain its
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reasons for granting reconsideration and to identify the evidence
supporting its decision. Third, we reject the Petitioners’ claim
that the Board must reach a final decision within 60 days.
A
A writ of mandate to the Board is proper to compel it to
perform acts required by law. (Code Civ. Proc., § 1085, subd. (a);
§ 5955; Greener v. Workers’ Comp. Appeals Bd. (1993) 6 Cal.4th
1028, 1046.) A petitioner must show the Board has a clear duty
and the petitioner has a beneficial right to have the Board
perform that duty. (Santa Clara County Counsel Attys. Assn. v.
Woodside (1994) 7 Cal.4th 525, 539–540 (Santa Clara County).)
The petition now is moot because the Board has issued
final rulings in each case. Yet we may consider moot issues that
are of public interest, that are capable of repetition, and that may
evade review. (Smith v. Superior Court (2020) 52 Cal.App.5th 57,
68.) This issue is of public interest and is likely to recur. The
issue also can evade review if the Board repeats what it has done
here: issue a final ruling after a party seeks writ review. We
thus consider this petition.
B
Section 5908.5 requires the Board to explain its reasons for
granting reconsideration and to identify the evidence supporting
its decision. The statute is clear. The Board must obey it.
This section states:
“Any decision of the appeals board granting or denying a
petition for reconsideration or affirming, rescinding, altering, or
amending the original findings, order, decision, or award following
reconsideration shall be made by the appeals board and not by a
workers’ compensation judge and shall be in writing, signed by a
majority of the appeals board members assigned thereto, and shall
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state the evidence relied upon and specify in detail the reasons for
the decision.” (§ 5908.5, italics added.)
The Board’s reasons must be based on the grounds
identified in section 5903. (Hall v. Workers’ Comp. Appeals Bd.
(1986) 179 Cal.App.3d 850, 856 (Hall).) Section 5903 specifies
grounds for rehearing a case, including that the Board acted in
excess of its powers and so forth.
Cases applying section 5908.5 recognize that a decision of
the Board granting or denying a petition for reconsideration must
state the evidence relied upon and must specify in detail the
reasons for the decision. (See Le Vesque v. Workers’ Comp.
Appeals Bd. (1970) 1 Cal.3d 627, 634–635 & fn. 11 (Le Vesque);
Evans v. Workmen’s Comp. Appeals Bd. (1968) 68 Cal.2d 753,
754–755 (Evans); Hall, supra, 179 Cal.App.3d at pp. 858–859;
Zozaya v. Workmen’s Comp. Appeals Bd. (1972) 27 Cal.App.3d
464, 471, fn. 2, 472 (Zozaya); Solomon v. Workmen’s Comp.
Appeals Bd. (1972) 24 Cal.App.3d 282, 284–286 (Solomon).)
The Board’s grant-for-study orders in these cases fell short.
These orders gave no reason for granting reconsideration other
than a boilerplate statement that further study is necessary
“based upon our initial review of the record.” A rubber stamp
could have authored these statements.
In response to this court’s order to show cause, the Board
explicated, not the governing section 5908.5, but a different
section: section 5909, which states “[a] petition for
reconsideration is deemed to have been denied by the appeals
board unless it is acted upon within 60 days from the date of
filing.” This point carries no force. Section 5908.5 sets the
requirements for a decision. Section 5909 explains the
consequence of no decision. (Cf. Evans, supra, 68 Cal.2d at p. 755
7
[purpose of § 5908.5 is to help the Board avoid careless or
arbitrary action, to show reviewing courts the principles the
Board relied upon, and to make the right of review more
meaningful].) Section 5909 does not apply here because in each
of these cases the Board rendered some decision, not no decision.
The Board does not claim that its standard grant-for-study
order complies with section 5908.5. Rather, its defense of the
grant-for-study procedure focuses on the long tenure of the
procedure and the claimed impossibility of issuing a reasoned
order in all cases. But a long-standing and incorrect procedure
remains incorrect. And a claim that compliance is impossible is
in essence a plea for more funding. This claim is misdirected
because the Court of Appeal is not the entity setting the Board’s
budget.
At oral argument, the Board also suggested that section
5908.5 serves no useful function when the Board grants
reconsideration for further review without the expectation of any
additional evidence or argument from the parties. Section 5908.5
does not contain any exception for that situation, however, and
the Board does not have the authority to ignore the statute. The
Board’s argument also ignores the reasons our Supreme Court
identified in Evans for the existence of section 5908.5. Even if
the Board does not order additional evidence, identifying the
reasons for reconsideration assists the parties in deciding
whether to challenge the Board’s decision to grant
reconsideration through a petition for a writ of mandate, and
helps the reviewing court if such a petition is filed. And
requiring the Board to explain its reasons helps to ensure that
the Board grants a petition for reconsideration only in
circumstances permitted by section 5903.
8
In addition to the plain language of section 5908.5,
Petitioners suggest another reason why the Board’s grant-for-
study procedure is improper. Petitioners argue the grant-for-
study practice is an “underground” rulemaking procedure that
does not comply with the California Administrative Procedure
Act (Gov. Code, § 11340 et seq.). At oral argument, Petitioners
conceded a decision on this point would merely be an alternative
holding. It is unnecessary to reach this argument.
C
Contrary to the Petitioners’ further argument, the Board is
not required to issue a final ruling on the merits within 60 days.
The Petitioners maintain that reading sections 5909 and
5315 together means the Board must finally resolve a petition for
reconsideration within 60 days. Statutory text invalidates this
proposed interpretation. We turn to that text.
We repeat our quotation of section 5909:
“A petition for reconsideration is deemed to have been denied
by the appeals board unless it is acted upon within 60 days from
the date of filing.”
This section does not state the Board must issue a final
decision on the merits of a petition within 60 days.
Next we quote the other provision on which Petitioners
rely, section 5315:
“Within 60 days after the filing of the findings, decision,
order or award, the appeals board may confirm, adopt, modify or
set aside the findings, order, decision, or award of a workers’
compensation judge and may, with or without further proceedings,
and with or without notice, enter its order, findings, decision, or
award based upon the record in the case.” (Italics added.)
9
The fact that “further proceedings” are permissible before
the Board enters its own order means that the initial order
setting aside the workers’ compensation decision need not be
final. (§ 5315.)
Case law aligns on this point.
An order granting reconsideration may “set aside” a
workers’ compensation judge’s decision without substituting the
Board’s own ruling. For example, in Zozaya, the Board initially
issued an order granting reconsideration of a referee’s findings
and award “and ordered that said findings and award be set
aside.” (Zozaya, supra, 27 Cal.App.3d at p. 466.) Then, after an
additional medical examination, the Board issued a “ ‘Decision
After Reconsideration’ ” vacating its earlier order and affirming
and adopting the referee’s original findings and award. (Id. at p.
469.)
Other sections within the statutory scheme, and the cases
interpreting them, also make clear that a separate ruling on the
merits may follow an initial order granting reconsideration.
Section 5906 states that, “[u]pon the filing of a petition for
reconsideration, or having granted reconsideration upon its own
motion, the appeals board may, with or without further
proceedings and with or without notice affirm, rescind, alter, or
amend” a workers’ compensation judge’s order “on the basis of
the evidence previously submitted in the case, or may grant
reconsideration and direct the taking of additional evidence.”
(Italics added.) Both the reference to further proceedings and the
taking of additional evidence show that the initial order granting
reconsideration need not be the final order. (See also Zozaya,
supra, 27 Cal.App.3d at pp. 468–469 [noting that, in appointing
10
an additional medical examiner after granting reconsideration,
the Board acted within the scope of § 5906].)
Section 5908 permits a final ruling affirming, rescinding,
altering, or amending the original order that is made “[a]fter the
taking of additional evidence and a consideration of all of the
facts.” And section 5908.5 imposes the requirement of a reasoned
ruling both on the initial decision “granting or denying a petition
for reconsideration” and a subsequent order “following
reconsideration.”
Section 5907 gives the Board the authority to issue a final
ruling when it grants reconsideration, but it does not require it to
do so. That section states that “[i]f, at the time of granting
reconsideration, it appears to the satisfaction of the appeals
board that no sufficient reason exists for taking further
testimony, the appeals board may affirm, rescind, alter, or
amend” the workers compensation judge’s decision, and “may”
without further proceedings or notice “enter its findings, order,
decision, or award based upon the record in the case.” Section
5907’s use of the volitional term “may” does not preclude the
Board from issuing a later, final decision on the merits after
reconsideration even without additional evidence. That reading
is consistent with section 5906, which, as mentioned, permits
“further proceedings” after granting reconsideration followed by a
final order “on the basis of the evidence previously submitted in
the case.”
Petitioners argue that the references in the governing
statutes to “further proceedings” concerns those situations where
additional evidence is necessary. Petitioners assert that, when
sections 5906 and 5907 are read together, they mean that the
Board may only act as an “appellate tribunal,” and in that
11
capacity must “either grant or deny reconsideration based upon
the existing evidentiary record or . . . order further development
of the record if deemed necessary at the trial level.” Petitioners
claim that another petition for reconsideration would then be
necessary following additional evidence and further proceedings
before the workers’ compensation judge.
That interpretation cannot be reconciled with the statutory
language for three reasons.
First, as noted above, section 5908.5 itself contemplates a
two-step procedure that involves first granting a petition for
reconsideration and then ruling on the merits. Otherwise, there
would be no need to distinguish a decision “granting or denying a
petition for reconsideration” and a decision “affirming,
rescinding, altering, or amending the original findings, order,
decision, or award following reconsideration.” (§ 5908.5, italics
added.) In Le Vesque, our Supreme Court recognized these two
steps in explaining that the requirements of section 5908.5 must
be met at each stage: “In granting a petition for
reconsideration, . . . the appeals board should comply with
section 5908.5 in order to apprise the parties and the referee as to
the basis for reconsideration. . . . [I]f the appeals board complies
with section 5908.5, the parties will understand what new
evidence or arguments they should present upon
reconsideration. [Citation.] If the appeals board grants
reconsideration, and without taking further evidence, affirms,
rescinds, or amends the original award [citations], Evans
requires full compliance with section 5908.5.” (Le Vesque, supra,
1 Cal.3d at p. 635, fn. 11.)
Second, section 5906 permits a two-step procedure even
when the Board issues a ruling on the existing evidence. That
12
section states that, “[u]pon the filing of a petition for
reconsideration,” the Board “may, with or without further
proceedings . . . affirm, rescind, alter, or amend the order,
decision, or award made and filed by the appeals board or the
workers’ compensation judge on the basis of the evidence
previously submitted in the case, or may grant reconsideration
and direct the taking of additional evidence.” (§ 5906, italics
added.) The reference to further proceedings even when the
Board makes a final ruling based upon the existing evidence
means the Board may grant reconsideration and later issue a
ruling on the merits even if it takes no additional evidence.
Third, as noted above, by using the word “may,” section
5907 permits the Board to enter a final order at the time it grants
reconsideration, but it does not require the Board to do so.
Cases recognize that a separate and final ruling on the
merits may follow an order granting reconsideration. (See, e.g.,
Le Vesque, supra, 1 Cal.3d at pp. 633–634; see also Zozaya, supra,
27 Cal.App.3d at pp. 468–469 [ruling on the merits issued almost
six months after the order granting reconsideration]; Solomon,
supra, 24 Cal.App.3d at p. 287 [holding that noncompliance with
section 5908.5 in a decision granting reconsideration is not cured
by subsequent compliance in a decision following
reconsideration]; Urlwin v. Workers’ Comp. Appeals Bd. (1981)
126 Cal.App.3d 466, 469–470 [decision after reconsideration
violated § 5908.5 by purporting to incorporate the petition for
reconsideration].)
Our Supreme Court has also explained that “[t]here is no
provision in chapter 7, dealing with proceedings for
reconsideration and judicial review, limiting the time within
which the commission may make its decision on reconsideration,
13
and in the absence of a statutory limitation none will be implied.”
(Gonzales v. Industrial Acci. (1958) 50 Cal.2d 360, 364.)
Petitioners argue that this statement in Gonzales is dicta; we
disagree and read the statement as necessary to the ruling but
would count it as compellingly persuasive authority even were it
a dictum. (Hubbard v. Superior Court (1997) 66 Cal.App.4th
1163, 1169 [intermediate appellate court justices should follow
Supreme Court dicta].)
Our Supreme Court has also recognized the Board’s
authority to issue a final ruling that addresses issues not
included in its initial grant of reconsideration. In Argonaut Ins.
Exchange v. Industrial Acci. Comm. (1958) 49 Cal.2d 706, a
referee approved a compromise and release that awarded a death
benefit to a deceased worker’s survivors after increasing the
stipulated amount of attorney fees. The Board granted
reconsideration on its own motion to review the attorney fee
decision. In a later “decision after reconsideration,” the Board
substituted its own findings on the amount of the death benefit.
In affirming the Board’s decision, the court explained, though the
commission decided to reconsider the case because of the attorney
fees, its reconsideration was not limited to this issue. “The
commission was not required to take further evidence (Lab. Code,
§§ 5906, 5907) and it could redetermine the case upon the
existing record pursuant to its statutory powers. (Lab. Code,
§§ 5900, subd. (a), 5903.)” (Argonaut, at p. 711.)
This holding shows that the Board may initially grant
reconsideration and later issue a ruling on the merits
determining any issues that the Board has the statutory power to
decide, without additional proceedings and without ordering
additional evidence.
14
For these reasons, we also reject Petitioners’ request at oral
argument that we interpret the term “acted upon” in section 5909
to require some final action on a petition for reconsideration
within 60 days. Section 5909 simply requires that the Board
“act[ ] upon” a petition for reconsideration within 60 days by
granting or denying the petition, not by finally deciding the
merits.
III
Petitioners seek an award of attorney fees under Code of
Civil Procedure section 1021.5. Such an award requires
Petitioners to show that they were a “successful party,” and also
that (1) their petition conferred a “significant benefit” on the
general public or a large class of persons; (2) an attorney fee
award is appropriate in light of “the necessity and financial
burden of private enforcement;” and (3) in the interest of justice
their fees should not be paid out of Petitioners’ recovery, if any.
(Ibid.) Because this is an original proceeding, this court must
decide whether Petitioners are entitled to fees under this
standard and, if so, the amount. (See Cruz v. Superior Court
(2004) 120 Cal.App.4th 175, 191.)
Petitioners were partially successful but did not obtain all
the relief they sought. Petitioners successfully challenged the
lawfulness of the Board’s current grant-for-study practice,
resulting in an order that will require the Board to comply with
section 5908.5 when it grants reconsideration. They did not
achieve their aim of requiring the Board to issue final rulings on
petitions for reconsideration within 60 days.
The relief that Petitioners obtained will confer a significant
benefit on people who obtain a favorable workers’ compensation
ruling that is then challenged through a petition for
15
reconsideration. The requirement that the Board state the
reasons for granting reconsideration and the evidence on which it
relies will permit the parties in such cases to determine whether
to challenge the Board’s reasons in a petition for a writ of
mandate. And it will ensure that the Board has granted
reconsideration only after itself determining that its order is
based on the grounds identified in section 5903 and justified by
specific evidence in the case.
Private enforcement here was both valuable and
burdensome. Moreover, prosecution of this writ proceeding
provides a public benefit beyond the compensation that
Petitioners’ counsel will receive from Petitioners’ workers’
compensation cases.
We reject the Board’s argument that Petitioners are not
entitled to fees because a petition for a writ of mandate was not a
procedurally proper way to require the Board to comply with
section 5908.5. Contrary to the Board’s claim, Petitioners and
other parties affected by noncompliant orders do not have an
adequate legal remedy. Such parties may file a petition for
review only after the Board has issued a final order. A reviewing
court’s finding at that point that the Board failed to comply with
section 5908.5 in granting reconsideration could do no more than
nullify the proceedings following the grant of reconsideration.
(See Zozaya, supra, 27 Cal.App.3d at pp. 471-472.) Such a
finding would simply add delay. It would not require a timely
justification of the need for reconsideration, and it would not
direct compliance in future cases.
Petitioners meet the statutory requirements for an award
of attorney fees under Code of Civil Procedure section 1021.5.
16
We reduce the requested $221,554.50 in fees by one half
because Petitioners’ success was only partial. (See Chavez v. City
of Los Angeles (2010) 47 Cal.4th 970, 989-990.)
The time and effort that Petitioners devoted to
investigation and briefing of their petition can be divided into the
time before this court’s order to show cause—when Petitioners
sought only unsuccessful relief—and the time after the order to
show cause, when they were ultimately successful on the issue we
identified for briefing.
Substantively and procedurally, these two segments of the
proceeding roughly comprise two halves. Before the order to
show cause, Petitioners researched and prepared their petition
and a reply to the Board’s letter response. After the order,
Petitioners filed a reply to the Board’s formal response, presented
oral argument, and, at this court’s request, briefed their request
for attorney fees. Petitioners’ counsel who argued the case
declared he devoted the bulk of his time on arguments in this
court to filings before the order (about 118 hours), compared to
37.5 hours on post-order arguments. However, some portion of
the time spent in preparation of the petition (such as legal
research and preparation of the public records request to obtain
grant-for-study data from the Board) was relevant to the overall
effort to challenge the Board’s grant-for-study practice. This
general background work is fairly compensable even though the
specific argument that Petitioners originally presented to this
court (i.e., that the Board must issue final rulings on petitions for
reconsideration within 60 days) was unsuccessful.
Thus, a 50 percent reduction in the fees that Petitioners
have requested approximately but reasonably reflects the split in
17
effort Petitioners devoted to successful and unsuccessful
arguments.
We also award Petitioners their out-of-pocket appellate
costs, which they identify as $7,891.63.
DISPOSITION
We grant the requests by Petitioners, the Board, and
Amicus Curiae for judicial notice of items relating to the
legislative and statutory history of the Board’s reconsideration
procedure and to the Board’s records. We issue a peremptory
writ of mandate commanding the Workers’ Compensation
Appeals Board to end its practice of granting petitions for
reconsideration solely for purposes of further study, and to
comply with section 5908.5 when granting petitions for
reconsideration, including the requirement that the Board “state
the evidence relied upon and specify in detail the reasons for its
decision.” We award petitioners $110,777.25 in attorney fees and
$7,891.63 in costs.
WILEY, J.
We concur:
STRATTON, P. J.
GRIMES, J.
18