Applied Materials v. WCAB: 6th District Court of Appeal Holds That Physician Misconduct Is Compensable, But Upholds Fitzpatrick

On June 1, 2021, the 6th District Court of Appeal certified for publication its decision in Applied Materials et al. v. WCAB. The decision can be reviewed on the California courts' website.

In that case, the Court of Appeal issued a lengthy, 73-page decision addressing multiple issues raised by the parties. The decision is most significant for two issues:

1. Was a worker's post-traumatic stress disorder (PTSD) arising from a treating physician's sexual misconduct compensable under workers' compensation? It was.
2. Was the Fitzpatrick case wrongly decided? That case and its finding were affirmed. ('Fitzpatrick was important, as it had held that the WCJ may not use LC 4662 on its own to make a finding of total permanent disability.)

FACTS OF THE CASE

The case involved a worker who claimed three industrial injuries while working for an employer from 1996 until 2008: a specific injury in 2001; a specific injury in 2005; and a cumulative trauma injury through her last day of work in 2008. The 2001 injury was insured by Arrowood Indemnity Co. (Arrowood) and the two later injuries were insured by XL Specialty Insurance Co. (XL Specialty).

In late 2007, Dr. John Massey began serving as the primary treating physician. In January 2011, Arrowood entered into a stipulation in which it agreed to continue authorizing medical care with Dr. Massey. Arrowood implemented a medical provider network (MPN) in 2012, and Dr. Massey was part of the MPN, so the worker was permitted to continue seeing him.

Starting in 2012, Dr. Massey began hugging the worker in suggestive ways and engaged in sexual banter with her in the exam rooms. On five occasions between May 22 and June 25, 2013, Dr. Massey went to the worker's home where they had sexual intercourse. Dr. Massey went to the worker's home six more times between July 14 to Oct. 10, 2013, and asked for sex, but she refused him. She testified that Dr. Massey controlled her treatment and disability benefits, and had told her multiple times that if anyone found out about the affair, he would have to stop being her doctor and would no longer complete her disability forms. The worker continued treating with Dr. Massey until December 2013.

In May 2014, the worker contacted the Medical Board of California, and her claims were investigated. In September 2016, the medical board filed a formal accusation against Dr. Massey and charged him with multiple causes of action for discipline. Following a formal hearing, the board revoked his license.

In the meantime, the worker was evaluated by a psychiatric QME, Dr. Sidle, and in January 2016, after she disclosed additional details about her sexual contacts with Dr. Massey, Dr. Sidle diagnosed her with post-traumatic stress disorder (PTSD). Dr. Sidle reported that the worker had a Global Assessment of Function (GAF) score of 45 but also opined that she was 100 percent permanently disabled based on her psychiatric condition alone, and unable to work. Dr. Sidle later testified that the worker's disability was entirely due to her PTSD, which was due entirely to her sexual relationship with Dr. Massey.

Following a trial, the WCJ found that the worker was 100 percent permanent disabled for the injury to her psyche alone based on Dr. Sidle's report. The WCAB granted reconsideration and amended the amount of the weekly temporary disability and permanent disability rates but otherwise affirmed the award.

THE COURT'S DECISION

The 6th District Court of Appeal's decision addressed multiple issues, most of which related to the liability of Arrowood and XL Specialty. Ultimately, it rejected most of the arguments raised by both defendants and held that they were jointly and severally liable for the worker's injury.

On the primary issue for appeal, the court held that the worker's psychiatric disability arising from her sexual exploitation by Dr. Massey was compensable. It rejected the argument that the worker broke the chain of industrial causation when she entered into a personal relationship with Dr. Massey outside of the medical setting, and that her PTSD did not arise out of the employment because the sexual activity between her and Dr. Massey occurred in her home, did not involve medical treatment and was consensual. The court explained that a worker is entitled to compensation for a new or aggravated injury that results from medical treatment of an industrial injury.

The court concluded that the worker met her burden of demonstrating that her PTSD was a new injury that resulted from the treatment for her industrial injuries, and that her employment was one of the contributing causes without which the sexual exploitation by Dr. Massey and her PTSD would not have occurred. It found that Dr. Massey prescribed five or six drugs at the time of their sexual contact that affected the worker's ability to function. It found that Dr. Massey had treated the worker for six years by the time the sexual exploitation occurred, and Arrowood stipulated that he would continue to treat her industrial injuries. The court found that these facts supported the conclusion that the medications and treatment provided for the worker's industrial injuries were a contributing cause of her PTSD and disability.

The court also found that the worker was assaulted by a physician who was treating her industrial injuries; who was a member of the employer's MPN; and whose treatment was authorized and paid for by Arrowood, and should have been authorized by XL Specialty. Based on this, it concluded that the disability due to Dr. Massey's sexual exploitation was a compensable consequence of the medical treatment provided by the employer.

The court, however, also concluded that the WCAB erred in awarding 100 percent PD. It noted that in Fitzpatrick, the Court of Appeal declined to endorse the WCAB's interpretation that Labor Code sections 4660 and 4662(b) provided alternative paths to establishing 100 percent PD.

It found that the facts in Fitzpatrick'' were very similar to the facts in ''Applied Materials.'' In ''Fitzpatrick,'' an employee claimed injuries to his heart and psyche. The psychiatrist reported that the injured worker's GAF score was 45, but also opined that he was "on strict psychiatric grounds totally and permanently disabled." The court noted that ''Fitzpatrick'' harmonized sections 4660 and 4662(b) by explaining that although § 4662(b) allows the WCAB to make a determination of permanent total disability on the facts of the case, § 4660 addresses ''how the determination on the facts shall be made in each case for injuries before Jan. 1, 2013.

The court rejected the worker's assertion that Fitzpatrick'' was wrongly decided and agreed with its statutory analysis. It found that the record supported the conclusion that the worker in ''Applied Materials relied on the alternative path theory to support her claim of permanent total disability. Specifically, in the pretrial conference statement, the worker claimed total PD under § 4662(b). She also cited § 4662(b) and a case that supported the alternative path theory in her answer to the petition for reconsideration.

It found that although the WCJ did not cite LC 4662(b) or the worker's cases, the judge clearly agreed with her view of the case. So, it appeared that the WCJ relied on the alternative path theory that was later rejected in Fitzpatrick'' to award 100 percent PD. It added that although the WCAB's decision was issued after ''Fitzpatrick,'' there was nothing in its decision indicating that it considered the scheduled rating, ''Fitzpatrick or whether the worker presented substantial evidence to rebut the scheduled rating.

The court then held that the worker did not meet her burden of rebutting the scheduled rating in accordance with LeBoeuf v. WCAB ^{(1983) 34 Cal. 3d 234}. It found that Dr. Sidle did not opine on the worker's ability to participate in vocational rehabilitation, take advantage of training opportunities or find work. It added that although Dr. Sidle was able to opine on these matters from a medical or psychiatric standpoint, he was not a vocational expert. So he was not qualified to opine on these points from a vocational perspective or opine that she was 100 percent "disabled from working in the open labor market."

The court also held that the worker did not meet her burden of rebutting the scheduled rating under Milpitas Unified School District v. WCAB (Guzman) ^{(2010) 187 Cal. App. 4th 808}. It found that although Dr. Sidle provided a strike rating by assigning a GAF score, which converts to a 40 percent WPI, he erroneously assumed that a GAF of 45 meant she was 100 percent disabled. It found that he did not explain why the 40 percent WPI did not accurately reflect her disability, provide an alternative rating within the GAF scale or explain why the rating more accurately reflected the level of her disability.

The court concluded that because Dr. Sidle, the WCJ and the WCAB all relied on an incorrect legal theory (that is, the alternative path theory) to find 100 percent PD, the award of 100 percent PD was not supported by substantial evidence. The court remanded for further proceedings on the PD issue with instructions to consider apportionment.

ANALYSIS OF THE DECISION

Applied Materials is a very complicated decision. Neither the defendants nor the worker was satisfied with the decision. So the request for publication came from outside organizations, rather than the parties. Nevertheless, the case settles some important legal issues.

There is no question that Applied Materials expands what qualifies as a compensable consequence injury. The court doesn't focus on whether the treating physician's sexual exploitation constituted an actual event of employment under LC 3208.3. This statute isn't even considered during the court's discussion of the issue.

Instead, it relies on the general rule that an injury is compensable if the employment is a contributing cause. It also relies on the rule that an employee is entitled to compensation for a new or aggravated injury that results from the medical treatment of an industrial injury. Because the treating doctor was part of the employer's MPN and his care was authorized, the court found that the worker's PTSD was a compensable consequence of the medical treatment provided by her employer.

The case involves a very special set of facts, and hence was an issue of first impression. So there will be questions as to its general application beyond these facts. There is no doubt, however, that the case expands what will be considered a compensable consequence of treatment.

The court's decision to uphold Fitzpatrick'' has more general application. It did not believe that § 4662(b) allowed the WCAB to engage in "ad hoc decisionmaking." Instead, the injured worker may rebut the scheduled rating under only one of the legally established methods: (1) establishing that the worker is not amenable to rehabilitation per ''LeBoeuf,'' ''Ogilvie'' and ''Dahl'' ^{''Contra Costa County v. WCAB (Dahl)'' (2015) 240 Cal. App. 4th 746}; or (2) challenging the standard rating within the four corners of the AMA guides under ''Guzman. The WCAB may not broadly review the evidence and determine that a worker is 100 percent disabled. It must explain how and why the worker was able to rebut the scheduled rating under these two established methods.

Applied Materials'' also provides guidance on the evidence that may be used to prove that a worker is not amenable to rehabilitation. Specifically, the court adopted the defendant's argument that Dr. Sidle was not qualified to opine on the worker's ability to participate in vocational rehabilitation, take advantage of training opportunities or find work from a vocational perspective because he was not a vocational expert. So, under the decision, a doctor's opinion alone that a worker is not amenable to rehabilitation might be insufficient to support a 100 percent award unless it can be justified within the four corners of the AMA guides. Any effort to rebut a scheduled rating under ''LeBoeuf,'' ''Ogilvie'' and ''Dahl would need to be supported by vocational expertise.

Although the case was remanded for further proceedings on the issue of permanent disability, it remains to be seen how the WCAB will deal with the issue. The court held that the worker did not meet her burden of rebutting the scheduled rating based on the current evidence, but there are no instructions requiring the WCAB to issue a decision based on the current evidence. In Applied Materials, no vocational evidence was admitted, and it's possible that the WCAB will order further development of the record with such evidence. Moving forward, workers should obtain vocational evidence if they want to prove that they cannot compete in the open labor market and are not amenable to rehabilitation.