What is apportionment and why does it matter?

When a worker experiences a workplace injury, an employer is not automatically liable for the full amount of an employee’s permanent disability. To understand this, it is important to distinguish between injury and impairment. If an incident results in any disability, or any need for medical care at all, it meets the definition of an injury. Impairment, on the other hand, is the residual permanent disability resulting from the injury when a doctor determines the injury is medically stabilized and therefore permanent and stationary.

In the workers’ compensation system, an employer generally is liable only for the permanent disability of an injured employee arising from the injury with that employer. The employer is not liable for disability that is reasonably attributable to previous injuries or to nonindustrial conditions that have contributed to the permanent impairment. This parsing out of employer liability for permanent impairment is what is called apportionment.

Apportionment is used to determine the liability of an employer for permanent disability caused by an industrial injury, in relationship to permanent disability caused by other factors. It is the process employed by the appeals board to segregate the residuals of an industrial injury from those attributable to other industrial injuries, or to nonindustrial factors, to fairly allocate the legal responsibility. It is applied to the final adjusted rating of permanent disability, not the standard rating. It is applied to each body part rating string as appropriate, not to an overall rating of disability after the disability of body parts is combined.[

In the past, apportionment of permanent disability was allowed only within specific parameters. It was often difficult for employers to obtain apportionment under any of the sections. This was because apportionment could only be made to disability, not to pathology or causation. So, for example, if an applicant had a bad back for many years before an industrial injury, an employer, in order to get apportionment for a specific back injury, would have to show that the applicant’s previously bad back resulted in a definable disability. The fact that there was something wrong, even seriously wrong, with the back before the injury would not necessarily be enough.

In 2004, the Legislature made a diametric change to the law on apportionment. In taking this action, the Legislature intended to significantly change the law relating to apportionment of permanent disability and expand the scope of legally permissible apportionment. Things got a lot better for employers after this change.

Substantive changes were made to the Labor Code, with the intent to reverse the features of the former sections regarding apportionment and to provide that permanent impairment now may be apportioned to causation, with the employer’s liability limited to the “percentage of permanent disability directly caused by the injury arising out of and in the course of employment. These sections were intended to eliminate the bar against apportionment based on pathology and asymptomatic causes.

This change now requires doctors to look at the current disability and parcel out its causative sources — nonindustrial, prior industrial, current industrial — and decide the amount directly caused by the current industrial source. This approach requires a thorough consideration of, not disregard for, past injuries. Therefore, under the current apportionment statutes, liability for permanent disability now may be changed or even eliminated when permanent disability is caused by a prior nondisabling condition or has been previously awarded.

Since the changes in 2004, apportionment has been one area of reform that has produced perhaps more case law than any other. No new regulations have been enacted to support the statutes. But the case law has been extensive and informative. In addition to providing instruction on what the statutes on apportionment actually mean, they have helped to define under what circumstances all of the provisions of SB 899 apply.

Nevertheless, although the apportionment sections have changed, these changes are not relevant to the issue of whether an employee’s injury arose out of and in the course of employment, which is governed by LC 3600 and LC 3208.3. They do not apply to temporary disability indemnity, medical treatment or death benefits. Because apportionment can have a profound effect on a claims ultimate value, understanding the complexities of apportionment and how to challenge unreasonable or improper findings on apportionment is a critical part in achieving maximum monetary compensation for a workers’ compensation claim.

The Workers’ Compensation attorneys at Mastagni Holstedt, APC are seasoned advocates for injured workers, and are here to protect your rights and help you navigate the complex workers’ compensation system.