CA Supreme Court Denies Retrospective Cost-of-Living Adjustments

August 11, 2011, the California Supreme Court ruled that injured workers collecting workers’ compensation benefits with total permanent disability awards and life pensions are only eligible for prospective cost-of-living adjustments (COLA) after they begin receiving the payments. The decision overturns a Court of Appeal holding that the cost-of-living adjustments increases should apply retroactively back to the January 1, 2004 enactment of this provision.

For California employers, the impact reduces costs associated with expensive permanent disability cases. For injured workers, this reduces any retroactive bulk payments for cost-of-living adjustment settlements.

“We conclude that, through the operative language of [Labor Code Section 4659] subdivision (c), the Legislature intended that COLA’s be calculated and applied prospectively commencing on the January 1 following the date on which the injured worker first becomes entitled to receive, and actually begins receiving, such benefit payments, i.e., the permanent and stationary date in the case of total permanent disability benefits, and the date on which partial permanent disability benefits become exhausted in the case of life pension payments,” the California Supreme Court ruling said in Baker v. WCAB.

If you would like more information about these changes or the benefits of incorporating Functional Capacity Evaluations (FCEs) into your practice, contact Medical Legal Experts Medical Inc.