Title: Baker v. Workers' Comp. App. Bd.
Citation: N/A
Docket Number: s179194
State: California
Issuer: California Supreme Court
Date: August 11, 2011

1 
 
Filed 8/11/11 
 
 
 
IN THE SUPREME COURT OF CALIFORNIA 
 
 
 
CHRISTINE BAKER, as Administrator,  
) 
etc., 
) 
 
 
) 
 
Petitioner, 
) 
 
 
) 
S179194 
 
v. 
) 
 
 
) 
Ct.App. 6  H034040 
WORKERS‟ COMPENSATION 
) 
APPEALS BOARD and X.S., 
) 
WCAB Case No. 
 
) 
ADJ1510738/SJO 0251902 
 
Respondents. 
) 
___________________________________ ) 
In this case we construe Labor Code1 section 4659, subdivision (c) 
(section 4659(c), or subdivision (c)), which provides for the annual indexing of 
two categories of workers‟ compensation benefits—total permanent disability and 
life pension payments—to yearly increases in the state‟s average weekly wage 
(SAWW), so that lifetime disability payments made to the most seriously injured 
workers will keep pace with inflation.  The indexing procedure is sometimes 
referred to as an “escalator,” or one providing for “cost of living adjustments” 
(COLA‟s). 
Permanent disability and life pension benefits are intended to compensate 
the injured worker for the long-term, residual effects of an industrial injury once 
the worker has attained maximum medical recovery.  (Department of 
                                              
1  
All further statutory references are to the Labor Code unless otherwise 
specified. 
2 
 
Rehabilitation v. Workers’ Compensation Appeals Board (2003) 30 Cal.4th 1281, 
1291 (Department of Rehabilitation).)  Total permanent disability benefits are 
weekly payments made for life to injured workers who are 100 percent disabled.  
(§ 4659, subd. (b).)  They commence on the date the injured worker reaches a 
medically stable condition (permanent and stationary) because, at that point, the 
full nature and extent of the worker‟s permanent disability, if any, can be 
determined.  (Department of Rehabilitation, supra, 30 Cal.4th at p. 1292.)  Life 
pensions are a form of supplemental partial permanent disability benefit, 
consisting of payments to a subclass of seriously injured workers, i.e., those whose 
“permanent disability is at least 70 percent, but less than 100 percent.”  (§ 4659, 
subd. (a).)  Life pension payments commence once the worker‟s partial permanent 
disability payments have been exhausted, and thereafter continue weekly for life.  
(Ibid.) 
Section 4659(c) provides, in full, “For injuries occurring on or after January 
1, 2003, an employee who becomes entitled to receive a life pension or total 
permanent disability indemnity as set forth in subdivisions (a) and (b) shall have 
that payment increased annually commencing on January 1, 2004, and each 
January 1 thereafter, by an amount equal to the percentage increase in the „state 
average weekly wage‟ as compared to the prior year.  For purposes of this 
subdivision, „state average weekly wage‟ means the average weekly wage paid by 
employers to employees covered by unemployment insurance as reported by the 
United States Department of Labor for California for the 12 months ending March 
31 of the calendar year preceding the year in which the injury occurred.”  
(§ 4659(c).) 
We must determine whether the operative language of subdivision (c) 
requires the annual COLA‟s for total permanent disability and life pension 
payments to be calculated (1) prospectively from the January 1 following the year 
3 
 
in which the worker first becomes “entitled to receive a life pension or total 
permanent disability indemnity” (§ 4659(c)), i.e., when the payments actually 
commence; (2) retroactively to January 1 following the year in which the worker 
sustains the industrial injury, the construction urged by real party in interest, or (3) 
retroactively to January 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, the interpretation given the statutory language by the Court of 
Appeal below. 
Applying the “fundamental rule of statutory construction . . . that a court 
should ascertain the intent of the Legislature so as to effectuate the purpose of the 
law [citations]” (DuBois v. Workers’ Comp. Appeals Bd. (1993) 5 Cal.4th 382, 
387 (DuBois)), we conclude that, through the operative language of 
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. 
FACTS AND PROCEDURAL BACKGROUND 
The injured worker in this matter, X.S.2 (applicant), sustained an industrial 
injury on January 20, 2004, while employed as an accountant/controller.  He 
received temporary disability payments of $728 per week from the date of injury 
through October 19, 2006.  On June 19, 2007, he and his employer settled his 
                                              
2  
X.S. is a shortened version of a fictitious name assigned by the presiding 
workers compensation administrative law judge to protect applicant‟s medical 
privacy. 
4 
 
claim, stipulating that he had become permanent and stationary on October 20, 
2006, and that he suffered a 69.5 percent partial permanent disability, 
compensation for which was payable at the rate of $200 per week based on his 
earnings and date of injury (§ 4453, subd. (b)(6)(B)), for 422 weeks, commencing 
on the permanent and stationary date. 
Approximately one month after settling his claim with his employer, 
applicant, who had a preexisting disability caused by hepatitis B and his HIV-
positive status, filed an application for benefits from the Subsequent Injury Benefit 
Trust Fund (SIBTF) pursuant to section 4751.3  Petitioner in this matter, Christine 
Baker, is the Director of Industrial Relations serving as administrator of the 
SIBTF.  SIBTF is funded and administered by the state for the purpose of 
compensating workers with prior disabilities who suffer subsequent industrial 
injuries. 
On March 25, 2008, SIBTF and applicant stipulated that his January 20, 
2004 injury resulted in a 69.5 percent permanent disability; that he became 
permanent and stationary on October 20, 2006; that payments for permanent 
disability commenced on that date; and that his previous permanent disability 
combined with his industrial disability resulted in a combined total permanent 
                                              
3  
Section 4751 provides, in relevant part:  “If an employee who is 
permanently partially disabled receives a subsequent compensable injury resulting 
in additional permanent partial disability so that the degree of disability caused by 
the combination of both disabilities is greater than that which would have resulted 
from the subsequent injury alone, and the combined effect of the last injury and 
the previous disability or impairment is a permanent disability equal to 70 percent 
or more of total, he shall be paid in addition to the compensation due under this 
code for the permanent partial disability caused by the last injury compensation for 
the remainder of the combined permanent disability existing after the last injury 
. . . .”  (§ 4751.)  The payment for the combined disability is made by the SIBTF.  
(Subsequent Injuries Fund v. Workmen’s Comp. App. Bd. (1970) 2 Cal.3d 56, 59.) 
5 
 
disability of 100 percent.  The parties agreed that applicant would receive weekly 
payments of $528 from the SIBTF ($728 less $200 paid by the employer‟s 
workers‟ compensation insurance carrier), which payments would continue for 
422 weeks, and thereafter $728 weekly for life. 
Subsequently, a dispute arose when applicant claimed the initial $728 
weekly rate that started on October 20, 2006, had to be increased to reflect annual 
increases in the SAWW, through the calculation of retroactive COLA‟s for the 
period from January 1 following the date on which he had sustained his industrial 
injury (Jan. 20, 2004), to the date on which his total permanent disability payments 
commenced (the permanent and stationary date of Oct. 20, 2006).  Petitioner, on 
behalf of the SIBTF, maintained that the weekly payment of $728 to applicant, 
commencing on the permanent and stationary date, properly reflected the total 
permanent disability rate calculated under sections 4659, subdivision (b) and 4453 
(a related section under which total permanent disability rate payments are 
calculated, referenced in § 4659, subd. (b)), and that the annual indexing of that 
payment with COLA‟s should not commence, per the language of section 4659(c), 
until January 1, 2007, which was the January 1 following the date applicant 
became permanent and stationary and actually began receiving his payments.4 
On July 14, 2008, the worker‟s compensation administrative law judge 
(WCJ) issued a “Findings and Award” against the SIBTF, concluding that by 
failing to retroactively calculate and apply the annual COLA‟s for January 1, 2005 
(the first “January 1” following the date of injury) and January 1, 2006, COLA 
                                              
4  
There was no dispute among the parties that payments made on and 
subsequent to January 1, 2007, going forward, should be indexed annually, on that 
and each successive January 1, based on the percentage increase of the SAWW as 
compared to the “prior” year.  (§ 4659(c), 1st sentence.) 
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increases had been improperly withheld from applicant in the amount of 
$3,585.56. 
The SIBTF appealed to the Workers‟ Compensation Appeals Board 
(WCAB), which, on February 13, 2009, issued its “Opinion and Decision After 
Reconsideration,” construing section 4659(c) as “provid[ing] that for injuries on or 
after January 1, 2003, where an employee becomes entitled to total permanent 
disability indemnity or a life pension, that payment shall be increased annually 
commencing on January 1, 2004.  We construe this to mean that each payment of 
total permanent disability indemnity or life pension that is received on or after 
January 1 following the date of injury shall be increased, no matter when the first 
such payment is received.  This ensures that severely injured workers are protected 
from inflation, no matter when they receive their first payment.  In some cases 
there may be years of litigation before there is a determination that an employee is 
entitled to receive a life pension or total permanent disability indemnity award.  In 
the case of a life pension, the first payment will ordinarily be made years after the 
date of injury.  Nonetheless, the injured worker will have been protected against 
any inflation that may have ensued between the date of injury and the date of first 
payment of the life pension or total permanent disability indemnity.”  (Italics 
added.) 
On March 30, 2009, following the WCAB‟s final decision, the SIBTF 
petitioned the Court of Appeal for a writ of review (§ 5950), urging that the 
WCAB had misinterpreted section 4659(c) by finding that the statute‟s COLA 
increases begin accruing (and compounding) prior to the January 1 after the 
permanent and stationary date, the date on which the first benefit payment actually 
becomes due and payable, and asserting that “by holding that the payment increase 
is tied to the date of injury, the [WCAB] decided that the increase applies before 
an employee is entitled to receive a benefit payment, contrary to the plain 
7 
 
language of the statute which stated that the increase applies to „an employee who 
becomes entitled to receive‟ a life pension or total permanent disability 
indemnity.”  (Italics in original.) 
The Court of Appeal granted the writ of review and received full briefing, 
as well as amicus curiae briefs from the California Applicants‟ Attorneys 
Association (CAAA) in support of applicant, and the County of Los Angeles on 
behalf of the SIBTF.  In its amicus brief, the CAAA noted that, under applicant‟s 
reading of the statute, the COLA‟s began accruing on January 1 following the date 
of injury, whereas under the SIBTF‟s interpretation, the COLA‟s began accruing 
only with the first payment of indemnity after the injured worker becomes 
permanent and stationary, “which could be many years after the date of injury.”  
The CAAA asserted that both were wrong, as the “plain language of the statute 
mandates that the COLA in fact begins to accrue January 1, 2004, without regard 
to date of injury.”  (Italics added.) 
Agreeing with the position taken by the CAAA, the Court of Appeal 
concluded that “the [COLA‟s] pursuant to [§ 4659(c)], for life pensions and total 
permanent disability indemnity, are added to those payments, per the words of the 
statute, starting January 1, 2004, and every January 1 thereafter,” and annulled the 
decision of the WCAB.  The court reasoned that “as to the worker whose injury 
leads to total permanent disability that does not become permanent and stable for a 
number of years, setting the COLA‟s from the permanent and stationary date 
causes that worker to see his or her payment exposed to the ravages of inflation 
over time, eroding the real value of the benefits.” 
We granted the SIBTF‟s petition for review.  We thereafter granted the 
requests of the State Compensation Insurance Fund and the California Chamber of 
Commerce to file amicus curiae briefs in support of petitioner, and the CAAA and 
8 
 
the California Correctional Peace Officers Association to file amicus curiae briefs 
in support of applicant. 
DISCUSSION 
“As in any case involving statutory interpretation, our fundamental task is 
to determine the Legislature‟s intent so as to effectuate the law‟s purpose.  (People 
v. Lewis (2008) 43 Cal.4th 415, 491.)  „We begin with the text of the statute as the 
best indicator of legislative intent‟ (Tonya M. v. Superior Court (2007) 42 Cal.4th 
836, 844), but we may reject a literal construction that is contrary to the legislative 
intent apparent in the statute or that would lead to absurd results (Ornelas v. 
Randolph (1993) 4 Cal.4th 1095, 1105).”  (Simpson Strong-Tie Co., Inc. v. Gore 
(2010) 49 Cal.4th 12, 27; DuBois, supra, 5 Cal.4th at p. 387.)  “[O]ur first task is 
to look to the language of the statute itself.  [Citation.]  When the language is clear 
and there is no uncertainty as to the legislative intent, we look no further and 
simply enforce the statute according to its terms.  [Citations.]”  (Dubois, at 
pp. 387-388.) 
Section 4659(c) comprises two sentences, the first of which contains the 
indexing scheme‟s operative language, and the second of which defines the 
SAWW for purposes of the subdivision.  The first sentence provides:  “For injuries 
occurring on or after January 1, 2003, an employee who becomes entitled to 
receive a life pension or total permanent disability indemnity as set forth in 
subdivisions (a) and (b) shall have that payment increased annually commencing 
on January 1, 2004, and each January 1 thereafter, by an amount equal to the 
percentage increase in the „state average weekly wage‟ as compared to the prior 
year.”  (§ 4659(c), italics added.) 
Petitioner SIBTF argued below that under a straightforward reading of the 
first sentence of subdivision (c), there is no retroactive calculation of COLA‟s or 
additional sums to be added into the first total permanent disability or life pension 
9 
 
payment for periods prior to the date on which the worker first becomes eligible to 
receive, and actually begins receiving, such payment.  Instead, the first COLA 
would be computed and applied to the payment on the January 1 following the 
year in which the worker becomes permanent and stationary or, in the case of life 
pensions, on the January 1 following the year in which the worker‟s partial 
permanent disability benefits have become exhausted. 
The express language of the operative first sentence of subdivision (c) 
plainly supports this construction.  To receive the benefit of a COLA on any given 
January 1, a worker who has sustained an industrial injury must meet two 
conditions.  First, he or she must have been injured “on or after January 1, 2003 
. . .”  (§ 4659(c).)  Second, he or she must “become[] entitled to receive a life 
pension or total permanent disability indemnity . . . .”  (Ibid., italics added.)  This 
court‟s past decisions explain that the entitlement to total permanent disability 
indemnity payments arises when the injured worker‟s condition becomes 
permanent and stationary or, to put it in other terms, when the statutory obligation 
to pay temporary disability indemnity has ceased.  (LeBoeuf v. Workers’ Comp. 
Appeals Bd. (1983) 34 Cal.3d 234, 238, fn. 2; Department of Rehabilitation, 
supra, 30 Cal.4th at p. 1292.)  In the case of life pension benefits, the entitlement 
to receive such payments arises, by statute, when the worker‟s partial permanent 
disability benefits have been exhausted.  (§ 4659, subd. (a).)  Hence, under 
subdivision (c)‟s express language, it is not until the injured employee “becomes 
entitled to receive a life pension or total permanent disability indemnity” 
(§ 4659(c), italics added), and actually begins receiving such payments, that he or 
she “shall have that payment increased annually . . . by an amount equal to the 
percentage increase in the „state average weekly wage‟ as compared to the prior 
year.”  (Ibid., italics added.) 
10 
 
The reference to the fixed date of January 1, 2004, in the first sentence of 
section 4659(c) (“commencing on January 1, 2004, and each January 1 
thereafter”) is not inconsistent with this construction of its operative provisions.  
Since the subdivision applies only to injuries occurring “on or after January 1, 
2003” (§4659(c)), the date of January 1, 2004, is the first “January 1” on which a 
COLA may be calculated and applied under the subdivision‟s statutory scheme, 
i.e., for those workers who were injured on or after January 1, 2003, and who, 
during that calendar year, became permanent and stationary and thus became 
“entitled” (ibid.) to receive total permanent disability payments as of January 1, 
2004.5  The phrase “shall have that payment increased annually commencing on 
January 1, 2004, and each January 1 thereafter” (§ 4659(c), italics added) is thus 
most reasonably understood as a reference to the overall period to which the new 
statutory scheme will apply, or put another way, the indexing provision‟s effective 
date, with January 1, 2004, being the first “January 1” on which a COLA could be 
calculated and applied for qualifying injuries sustained after January 1, 2003. 
This straightforward and sensible reading of the operative language of 
subdivision (c) then applies uniformly to all successive years postdating the 
statute‟s effective date.  Each January 1, “commencing on January 1, 2004, and 
each January 1 thereafter” (§ 4659(c)), an employee who has sustained a 
qualifying industrial injury “on or after January 1, 2003” and who has “become 
entitled to receive a life pension or total permanent disability indemnity” “shall 
                                              
5  
It is not likely that a worker who sustains a partial permanent disability 
from an injury occurring on or after January 1, 2003, would have his or her partial 
permanent disability benefits awarded and exhausted within the ensuing year, thus 
entitling him or her to receive life pension benefits by January 1, 2004.  But a 
close reading of the syntax of the first sentence reflects that this circumstance does 
not undermine our construction of the provision. 
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have that payment increased annually . . . by an amount equal to the percentage 
increase in the „state average weekly wage‟ as compared to the prior year.”  (Ibid.) 
The Court of Appeal, in contrast, construed the phrase “shall have that 
payment increased annually commencing on January 1, 2004, and each January 1 
thereafter . . .” (§ 4659(c)), as meaning that every worker who sustains an 
industrial injury on or after January 1, 2003, regardless of the date he or she is 
injured, and who thereafter becomes eligible to receive total permanent disability 
or lifetime pension payments, even if that be decades into the future, must receive 
annual COLA‟s calculated and applied to any such future payments retroactive to 
January 1, 2004.  The court believed it was thereby giving effect to the literal 
language of the statute (“shall have that payment increased annually commencing 
on January 1, 2004 . . .” (§ 4659(c)).  The court reasoned that “as to the worker 
whose injury leads to total permanent disability that does not become permanent 
and stable for a number of years, setting the COLA‟s from the permanent and 
stationary date causes that worker to see his or her payment exposed to the ravages 
of inflation over time, eroding the real value of the benefits.”  It concluded the 
Legislature must have intended to remedy such inequity by authorizing COLA‟s 
retroactive to January 1, 2004, in every case qualifying for indexing treatment 
under the statutory scheme. 
“[W]e may reject a literal construction that is contrary to the legislative 
intent apparent in the statute or that would lead to absurd results (Ornelas v. 
Randolph [, supra,] 4 Cal.4th 1095, 1105).”  (Simpson Strong-Tie Co., Inc. v. 
Gore, supra, 49 Cal.4th at p. 27; Younger v. Superior Court (1978) 21 Cal.3d 102, 
113.)  We find that the Court of Appeal‟s purported literal construction of the 
reference to the date “January 1, 2004” in section 4659(c) is implausible for 
several reasons. 
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First and foremost, the Court of Appeal‟s construction is patently at odds 
with the operative language of section 4659(c), as described above.  Calculating 
and applying COLA‟s retroactively to the arbitrary fixed date of January 1, 2004 
in every case reads right out of the statute the requirement that the disabled worker 
must first “become[] entitled to receive a life pension or total permanent disability 
indemnity”  (§ 4659(c)) before COLA‟s may be applied to such payments.  
Similarly, before an injured worker becomes entitled to receive disability 
payments, there simply is no “payment” (“shall have that payment increased 
annually . . .”) (§ 4659(c), italics added) to be increased. 
Next, to ascribe such a literal meaning to the drafters‟ inclusion of the fixed 
date of January 1, 2004, in the statutory language would expand the scope of the 
statute‟s indexing provisions in a manner the Legislature could not within reason 
have intended.  Under the Court of Appeal‟s interpretation of section 4659(c), a 
worker who did not sustain his or her industrial injury until the year 2008, or 2011, 
and indeed workers who will not suffer such injuries qualifying them for total 
permanent disability or life pension benefits until well into the future, would still 
receive annual COLA‟s for every calendar year commencing on the arbitrary date 
of January 1, 2004, through to the date on which they become entitled to and 
actually begin receiving their benefit payments, which COLA‟s would further then 
be compounded from January 1, 2004, going forward.  Even persons who have not 
yet joined the work force, and for whom workers‟ compensation insurance 
premiums have yet to be paid, but who, in years to come, may become employed, 
sustain industrial injuries, and qualify for the two categories of disability benefits 
covered under subdivision (c), would likewise have their future benefit payments 
enhanced by compounded annual COLA‟s retroactive to the arbitrary fixed date of 
January 1, 2004, under the Court of Appeal‟s construction of the statute.  The 
13 
 
Legislature could not possibly have envisioned or intended such an expansive 
application of the statute‟s anti-inflationary protections. 
Furthermore, as petitioner observed below, under the Court of Appeal‟s 
construction of the statute, many workers with industrial injuries qualifying them 
for total permanent disability benefits could actually receive a windfall “double 
escalator” as a result of applying retroactive COLA‟s for the period from January 
1, 2004, until the date they sustain their injury.  This is so because of the 
provisions of section 4453, subdivision (a)(10), which operate in conjunction with 
section 4659, subdivision (b), to set the total permanent disability payment rates 
based on the worker‟s earnings on the date of injury.  Briefly, section 4453, 
subdivision (a)(10), sets forth brackets (floors and ceilings) for determining 
temporary disability payments based on the injured worker‟s earnings on such 
date.  For injuries occurring after January 1, 2007, the upper brackets are 
themselves indexed to the SAWW (i.e., increased) to account for the effects of 
inflation over time.6  Section 4659, subdivision (b), in turn, extends those 
increases in the ceiling brackets for temporary disability payments to the 
calculation of total permanent disability payment rates.  As a result of the interplay 
of these two statutes, under the Court of Appeal‟s interpretation of section 
4659(c)‟s indexing provision, a maximum earnings worker sustaining an industrial 
injury in 2011 that leads to total permanent disability would receive the benefit of 
both section 4453, subdivision (a)(10)‟s increase in the ceiling brackets used to 
calculate temporary disability payment rates (i.e., adjusted for inflation), which are 
then utilized to calculate the total permanent disability payment rate by virtue of 
                                              
6  
Applicant here sustained his industrial injury on January 20, 2004.  
Accordingly, the SAWW indexing provision found in section 4453, 
subdivision (10), has no direct application to his case. 
14 
 
section 4659, subdivision (b), and the benefit of the annual (and compounded) 
COLA‟s calculated and applied retroactive to January 1, 2004, for the period from 
that date until the date of injury in 2011 — the “double escalator” complained of 
by petitioner below. 
“The words of the statute must be construed in context, keeping in mind the 
statutory purpose, and statutes or statutory sections relating to the same subject 
must be harmonized, both internally and with each other, to the extent possible.  
[Citations.]”  (Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987) 43 
Cal.3d 1379, 1387.)  It is unreasonable to infer that the Legislature intended two 
distinct anti-inflation measures to overlap and apply to the calculation of the same 
total permanent disability payment rate.  Moreover, workers who sustain industrial 
injuries qualifying them for total permanent disability payments receive temporary 
disability payments for the period between the date of injury and the date they 
become permanent and stationary and begin receiving their permanent payments.  
Depending on the date of injury, the Legislature has provided that those temporary 
disability payments may themselves be indexed to the SAWW, thereby protecting 
the payments received by the worker during that waiting period from the effects of 
inflation.  (See §§ 4453, subd. (a)(10), 4653, 4661.5.) 
Next, to the extent the phrase “shall have that payment increased annually 
commencing on January 1, 2004, and each January 1 thereafter . . .” (§ 4659(c), 
italics added) can be viewed as creating some ambiguity in the operative language, 
we may “look to a variety of extrinsic aids, including the ostensible objects to be 
achieved, the evils to be remedied, the legislative history, public policy, 
contemporaneous administrative construction, and the statutory scheme of which 
the statute is a part.  [Citations.]”  (People v. Woodhead (1987) 43 Cal.3d 1002, 
1008.)  We find an examination of the legislative history of section 4659(c), 
enacted by Assembly Bill No. 749 (2001-2002 Reg. Sess.) (Stats. 2002, ch. 6, 
15 
 
§ 67), lends no support to the argument that the Legislature intended to expand the 
inflation protection of subdivision (c), through the language utilized in its 
operative sentence, by authorizing COLA‟s to be calculated retroactive to either 
the fixed date of January 1, 2004, in every case, or to the January 1 following the 
date on which the worker sustains his or her qualifying industrial injury. 
First, the Workers‟ Compensation Insurance Rating Bureau of California 
(WCIRB) prepared a cost analysis report for the Legislature, which is part of the 
official legislative history of Assembly Bill No. 749 (2001-2002 Reg. Sess.), in 
which the indexing of disability benefits proposed in the new legislation was 
summarized and analyzed.  (WCIRB, Preliminary Evaluation of Assembly Bill 
No. 749 as Amended January 31, 2002 (Feb. 1, 2001) pp. 1-2.)  In that report, the 
WCIRB stated, “AB 749 provides that weekly permanent total benefits [sic] paid 
during each calendar year be increased annually by the change in the state average 
weekly wage.  We have assumed these annual increases would commence the year 
following the year in which permanent total benefit payments began.”  (Id., 
appen., Summary of Benefits Proposed, § 2, fn. 1, italics added.)  At the very least, 
this legislative history reflects that when enacting section 4659(c), the Legislature 
had before it for consideration the solicited opinion of a workers‟ compensation 
insurance rating service, which analyzed the legislation‟s provisions and fiscal 
impact, and concluded the annual COLA‟s authorized thereunder would, per the 
bill‟s language, be applied prospectively once the injured worker‟s total permanent 
disability payments commenced. 
Second, in the Assembly debates over the proposed workers‟ compensation 
reform measures in the 2001-2002 legislative session, the question arose whether 
COLA‟s for total permanent disability and life pension payments should be 
retroactively extended to workers who had sustained their industrial injuries prior 
to January 1, 2003, and who were receiving lifetime disability payments without 
16 
 
any adjustments for inflation.  Then Governor Davis vetoed two earlier attempts at 
reform (Sen. Bill No. 71 (2001-2002 Reg. Sess.) and Assem. Bill No. 1176 (2001-
2002 Reg. Sess.)) because, inter alia, he viewed the total costs of those packages, 
which included COLA‟s for pre-2003 injured workers, as exorbitant.  (See Assem. 
Com. on Insurance, Analysis of Assem. Bill No. 749 (2001-2002 Reg. Sess.) as 
amended Jan. 31, 2002, pp. 17-18; Sen. Rules Com., Off. of Sen. Floor Analyses, 
3d reading analysis of Assem. Bill No. 749 (2001-2002 Reg. Sess.) as amended 
Jan. 31, 2002, p. 2.)  It would be unreasonable to conclude that the Legislature, 
having agreed in the final enacted version of subdivision (c) to forego retroactive 
COLA‟s for workers with pre-2003 injuries as a cost-saving compromise, would 
then extend COLA‟s to all current workers who will sustain qualifying industrial 
injuries in future years, and to those persons who will sustain such future injuries 
but have yet to even enter the workforce, retroactive to the fixed arbitrary date of 
January 1, 2004, as a component of the compromise legislation. 
The COLA‟s provided for in subdivision (c) apply to only two categories of 
disability benefits: total permanent disability and life pension payments, and only 
then for injuries sustained after January 1, 2003.  It can further be observed that 
partial permanent disability payments for industrial injuries rated at less than 70 
per cent, and temporary disability payments for workers in all such categories 
whose injuries predate 2007, are not indexed to the SAWW to protect such 
payments against inflation.  Indeed, adjustment for inflation seems to be more the 
exception than the rule.  (See § 4453, subd. (d) [“Except as provided in section 
4661.5 [for the calculation of temporary disability payments more than two years 
after the date of injury], disability indemnity benefits shall be calculated according 
to the limits in this section in effect on the date of injury and shall remain in effect 
for the duration of any disability resulting from the injury.”].)  In short, we find no 
compelling reason to conclude the Legislature intended the COLA‟s authorized 
17 
 
under section 4659(c) to broadly redress all the potentially erosive effects of 
inflation—past, present and future—for every case falling within the two 
categories of disability benefits covered under subdivision (c). 
Last, applicant‟s argument that section 4659(c) calls for the calculation of 
COLA‟s retroactive to the January 1 following the date of injury must be rejected 
for the same reasons we have found the Court of Appeal‟s construction of the 
statutory language untenable.  Applicant‟s construction would likewise conflict 
with the straightforward operative language of the subdivision‟s first sentence, 
because workers who suffer total permanent disability, or partial permanent 
disability sufficiently serious to give rise to the right to life pensions, do not 
“become[] eligible” (§ 4659(c)) to receive such benefit payments as of the date of 
injury or the January 1 immediately following that date.  (Indeed, life pension 
payments usually commence many years if not decades after the date of injury.)  
Hence there is no “payment” (§ 4659(c)) to which COLA‟s can be applied as of 
the date of injury under the statute‟s operative language.  Moreover, for the same 
policy and legislative history reasons given for rejecting the Court of Appeal‟s 
expansive reading of the statute, we find no basis to conclude that the Legislature, 
through the language utilized in subdivision (c), actually intended to extend the 
COLA‟s authorized thereunder retroactive to the January 1 following the date of 
injury. 
The WCAB below agreed with the interpretation of the statutory language 
urged by applicant, suggesting that, “[t]his holding is also consistent with the 
second sentence of section 4659(c).  The state average weekly wage which is the 
basis of the increased payments is determined initially by data in the „calendar 
year preceding the year in which the injury occurred,‟ not the year in which the 
first payment is made.  This is further evidence of legislative intent that the 
18 
 
increased payments be calculated from the January 1 following the date of injury, 
not from the date of first payment.” 
The second sentence of section 4659(c) reads, “For purposes of this 
subdivision, „state average weekly wage‟ means the average weekly wage paid by 
employers to employees covered by unemployment insurance as reported by the 
United States Department of Labor for California for the 12 months ending March 
31 of the calendar year preceding the year in which the injury occurred.”  
(§4659(c).) 
The WCAB‟s Opinion and Decision After Reconsideration offered no 
further guidance as to how the language in the second sentence, which specifically 
references SAWW data for “the calendar year preceding the year in which the 
injury occurred” (§ 4659(c)), might be read consistently with the operative 
language of the first sentence to support applicant‟s position that the COLA‟s must 
be calculated and applied from the January 1 following the date of injury.  We 
make the following brief observations regarding the matter. 
First, the question directly before us in this case is when the COLA‟s 
authorized under subdivision (c) must be applied under the operative language, 
i.e., prospectively, from the January 1 following the date on which the worker first 
becomes eligible to receive the benefit payments and actually begins receiving 
them, as was argued by petitioner below, or retroactively, i.e., from either the 
fixed date of January 1, 2004 (the Court of Appeal‟s construction of the 
subdivision), or from the January 1 following the date of injury (applicant‟s 
position).  Consideration of the language of the second sentence of subdivision (c) 
sheds little light on that inquiry, and, as noted, the WCAB‟s decision neither 
analyzed the relevant statutory language nor explained how the special definition 
of the SAWW found in the second sentence could be squared with the operative 
19 
 
language of the first sentence and thereby support its conclusory determination 
that the date of injury controls. 
Second, the parties below agreed, as apparently did the WCAB and the 
Court of Appeal, that, looking forward from the January 1 following the date on 
which the worker‟s benefit payments in question first become due and payable, the 
COLA‟s must then be calculated and applied “each January 1 thereafter” 
(§ 4659(c)), to reflect each successive year‟s percentage change in the SAWW “as 
compared to the prior year” (id., italics added) for the duration of the worker‟s 
lifetime payments.  As petitioner states in the opening brief, “No one disputes that 
once payments begin, the raise in payments each year is based on the increase in 
the state average weekly wage from the prior calendar year.”  (Italics added.) 
Neither the parties nor the Court of Appeal focused on the special definition 
of the SAWW contained in the second sentence of section 4659(c).  Nor did they 
seek to explain how the phrase “average weekly wage paid by employers to 
employees covered by unemployment insurance as reported by the United States 
Department of Labor for California for the 12 months ending March 31 of the 
calendar year preceding the year in which the injury occurred,” utilized in that 
definition, could be given effect together with the operative language of the first 
sentence, “shall have that payment increased annually . . . by an amount equal to 
the percentage increase in the „state average weekly wage‟ as compared to the 
prior year.”  (§ 4659(c), italics added.)  Accordingly, we have no clear occasion in 
this case to construe the language or import of the special definition of the SAWW 
contained in section 4659(c).  That having been said, we briefly observe that the 
special definition, which purports to tie any year-to-year change in the SAWW to 
the figures for the year preceding the date of injury, appears in conflict with the 
otherwise clear language of the first sentence, which defines the COLA‟s in the 
20 
 
traditional sense, as “an amount equal to the percentage increase in the „state 
average weekly wage‟ as compared to the prior year.”  (Ibid., italics added.) 
Although the parties have not briefed or argued the point, our research 
reveals that the Legislature‟s two earlier attempts at drafting the inflation-
offsetting measures of subdivision (c), Senate Bill No. 71 (2001-2002 Reg. Sess.) 
and Assembly Bill No. 1176 (2001-2002 Reg. Sess.), both of which were vetoed 
by then Governor Davis, contained the following language as the proposed 
subdivision‟s second sentence:  “For the purpose of this subdivision, „state average 
weekly wage‟ means the average weekly wage paid by employers to employees 
covered by unemployment insurance, as reported to the Employment Development 
Department for the four calendar quarters ending June 30 of the calendar year 
preceding the year in which the adjustment is made.”  (Italics added.) 
The current text of section 4659(c)‟s second sentence is no model of clarity.  
Perhaps the Legislature may wish to revisit the suitability of the current language 
of the second sentence of subdivision (c) in light of the operative language of the 
first sentence.
21 
 
 
CONCLUSION 
The judgment of the Court of Appeal is reversed and the matter remanded 
to that court for further proceedings consistent with the views expressed herein. 
 
 
 
 
 
 
BAXTER, J. 
WE CONCUR: 
CANTIL-SAKAUYE, C. J. 
KENNARD, J. 
WERDEGAR, J. 
CHIN, J. 
CORRIGAN, J. 
LAMBDEN, J.P.T.* 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
_______________________ 
*  Associate Justice, Court of Appeal, First Appellate District, Division Two, 
assigned by the Chief Justice pursuant to article VI, section 6 of the California 
Constitution.
22 
 
See next page for addresses and telephone numbers for counsel who argued in Supreme Court. 
 
Name of Opinion Baker v. Workers‟ Compensation Appeals Board and X.S. 
__________________________________________________________________________________ 
 
Unpublished Opinion 
Original Appeal 
Original Proceeding 
Review Granted XXX 179 Cal.App.4th 1009 
Rehearing Granted 
 
__________________________________________________________________________________ 
 
Opinion No. S179194 
Date Filed: August 11, 2011 
__________________________________________________________________________________ 
 
Court: 
County: 
Judge: 
 
__________________________________________________________________________________ 
 
Counsel: 
 
Vanessa L. Holton, Steven A. McGinty, Carol Belcher, Anthony Mischel and Jesse N. Rosen for Petitioner. 
 
Robert E. Kalunian, Acting County Counsel (Los Angeles), Leah D. Davis, Assistant County Counsel, 
Jeffrey L. Scott and Jason E. Waller, Deputy County Counsel, for County of Los Angeles as Amicus Curiae 
on behalf of Petitioner. 
 
Suzanne Ah-Tye, Patricia A. Brown and David M. Goi for State Compensation Insurance Fund as Amicus 
Curiae on behalf of Petitioner. 
 
Law Offices of Saul Allweiss and Michael A. Marks for California Workers‟ Compensation Institute as 
Amicus Curiae on behalf of Petitioner. 
 
Finnegan, Marks, Theofel & Desmond and Ellen Sims Langille for the California Chamber of Commerce 
as Amicus Curiae on behalf of Petitioner. 
 
No appearance for Respondent Workers Compensation Appeals Board. 
 
Butts & Johnson, Arthur L. Johnson and Heather A. Harper for Respondent X.S. 
 
Marcus & Regalado, Marc G. Marcus and Jason M. Marcus for California Applicants‟ Attorneys 
Association as Amicus Curiae on behalf of Respondent X.S. 
 
Frank Rankin for California Correctional Peace Officers Association as Amicus Curiae on behalf of 
Respondent X.S. 
 
23 
 
 
 
 
 
Counsel who argued in Supreme Court (not intended for publication with opinion): 
 
Anthony Mischel 
Department of Industrial Relations 
Office of the Director-Legal Unit 
320 W. 4th Street, Suite 600 
Los Angeles, CA  90013 
(213) 576-7725 
 
Ellen Sims Langille 
Finnegan, Marks, Theofel & Desmond 
1990 Lombard Street, Suite 300 
San Francisco, Ca  94123 
(415) 931-9284 
 
Arthur L. Johnson 
Butts & Johnson 
481 N. First St. 
San Jose, CA  95112 
(408) 293-4818 
 
Marc G. Marcus 
Marcus & Regalado 
3031 F Street, Suite 100 
Sacramento, CA  95816 
(916) 441-1611