Special Report: Appellate Court Invalidates WCAB's Practice of Granting Reconsideration for Further Study

On Aug. 1, 2023, the 2nd District Court of Appeal issued its decision in Earley v. WCAB invalidating the long-standing practice of the Workers' Compensation Appeals Board (WCAB) to grant petitions for reconsideration without first deciding whether reconsideration is warranted. It held that pursuant to Labor Code § 5908.5, the WCAB must state in detail the reasons for its decision to grant reconsideration and the evidence that supports it. But it also held that the WCAB is not required to issue a final ruling on the merits within 60 days.

BACKGROUND

Pursuant to LC 5903, a party may file a petition for reconsideration to challenge any final order, decision or award made and filed by the WCAB or a workers’ compensation judge (WCJ). Then the petition is reviewed by the commissioners of the WCAB, most often as a three-member panel. They must decide whether to grant or deny the petition. LC 5909 states that “[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.” So, for purpose of buying itself some time to decide the merits of a case, the WCAB had a practice of granting reconsideration within the 60-day period with this or similar language:

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.

As noted in Earley, the history of this practice can be traced to the 1950s. The WCAB issued such orders in about 19 percent of cases from 2015 to 2019, and in about 38.5 percent of cases in the pandemic-affected years of 2021 and 2022. After granting such reconsideration, it was not uncommon for parties to wait months or years for the WCAB to issue a final decision on the merits.

In 2022, several applicant attorneys filed a petition for writ of mandate to challenge the procedure. They also asserted that the WCAB must reach a final decision within 60 days.

COURT'S DECISION

In Earley, the 2nd District Court of Appeal held that the WCAB may not simply grant reconsideration for the purpose of further study. It explained that the WCAB's grant-for-study orders violated LC 5908.5, which states in pertinent part, "Any decision of the appeals board granting or denying a petition for reconsideration ... shall state the evidence relied upon and specify in detain the reasons for the decision." It concluded that the WCAB's grant-for-study orders did not comply with that requirement because the WCAB gave no reason for granting reconsideration other than a boilerplate statement that further study is necessary “based upon our initial review of the record.” Although the WCAB assured the court that it carefully reviewed the cases in which it decided to issue grant-for-study orders, the court found that it did not comply with LC 5908.5 because the WCAB did not explain in its order granting reconsideration why it made that decision based on the evidence in the particular case. It noted that LC 5909 carried no force because LC 5908.5 establishes the requirements for a decision, and LC 5909 explains the consequences of no decision.

The court noted that LC 5903 specifies the grounds for reconsideration. So, if the WCAB grants reconsideration, it must state in detail the reasons and evidence supporting its decision, and those reasons must be based on the grounds identified in LC 5903. The court was unmoved by the WCAB's plea that it would be impossible to issue a reasoned order in all cases, stating that it was a misdirected plea for more funding.

The court, however, rejected the petitioners' argument that the WCAB must issue a final ruling on the merits within 60 days. It found that LC 5909 does not state that the WCAB must issue a final decision within 60 days. It simply requires that the WCAB act on a petition for reconsideration within 60 days by granting or denying it, not by finally deciding the merits. It explained that LC 5908.5 contemplates a two-step procedure that involves first granting a petition for reconsideration, then ruling on the merits. It also found that LC 5906 permits a two-step procedure even when the WCAB issues a ruling on the existing evidence, and that cases recognize that a separate and final ruling on the merits may follow an order granting reconsideration. In addition, the court cited the California Supreme Court's decision in Gonzales v. IAC (1958) 50 Cal. 2d 360, and held that there was no time limit for the WCAB to make a decision after granting reconsideration.

The court also instructed that even if, after granting reconsideration, the WCAB does not order additional evidence, citing the reasons for reconsideration assists the parties in deciding whether to challenge the board's decision through a petition for a writ of mandate, and helps the reviewing court if such a petition is filed.

ANALYSIS OF THE DECISION

The Earley decision will have an immediate impact on the WCAB. No longer will the board be able to issue rubber-stamp decisions granting reconsideration for further study simply to extend the time to act. It may issue an order granting reconsideration only on one or more of the grounds in LC 5903. Specifically, reconsideration may be granted only if the WCAB finds that:

1. By the order, decision or award made and filed by the WCAB or the WCJ, the appeals board acted without or in excess of its powers.
2. The order, decision or award was procured by fraud.
3. The evidence does not justify the findings of fact.
4. The petitioner has discovered new evidence material to him or her that, with reasonable diligence, he or she could not have discovered and produced at the hearing.
5. The findings of fact do not support the order, decision or award.

The WCAB also must explain why it made the decision to grant reconsideration based on the evidence in the particular case. So, there is no question that commissioners of the WCAB must do more work in order to grant reconsideration. How the WCAB reacts remains to be seen.

This ruling possibly could result in more WCAB panels adopting the decisions of the WCJs, rather than granting reconsideration. Or it could result in the WCAB deciding cases more promptly. Parties also must be more conscious of LC 5909, and they might need to follow up with the WCAB or perhaps file a petition for writ of review if the board does not act on a petition within 60 days from the date of filing.

It is not clear what effect this could have on grant-for-study orders that were issued prior to Earley. But because it was a long-standing practice that wasn't determined to be improper until Aug. 1, 2023, it's likely that the WCAB still may decide those cases.

But because Earley held that the WCAB is not required to issue a final ruling on the merits within 60 days, the initial order granting reconsideration to buy the WCAB additional time could take a different form moving forward. For example, the WCAB might issue an order granting reconsideration by finding that a WCJ acted without or in excess of its powers by misapplying the law, or that a physician's opinion does not constitute substantial evidence to support an award, and then take additional time render a final decision on the factual and legal issues in the case. But those actions require the WCAB to do more work to issue an order granting reconsideration.

For further discussion on the WCAB's actions on a petition for reconsideration, see Sullivan on Comp Section 16.65 Petition for Reconsideration –– Workers' Compensation Appeals Board's Action.