Share this article:
Permanent disability benefits often are commuted to pay the fees of an applicant's attorney. Usually, the Workers' Compensation Appeals Board (WCAB) will order attorney fees to be commuted from the "far end" of the permanent disability award. That means the WCAB will commute a sufficient number of payments at the end of the award so that a lump sum can be issued to the attorney immediately without disrupting the flow of benefits to the injured worker. That reduces the number of weekly permanent disability payments made to an injured worker, and allows the attorney to receive the entire fee up front.
In contrast, in cases involving lifetime awards of permanent disability (that is, life pensions and permanent total disability), a commutation cannot be made from the far end of the award because nobody knows how long an injured worker will live. In such cases, a commutation from the "side of the award" (also known as horizontal or lateral commutation) is the general and normal approach. A commutation from the side of the award reduces the rate of weekly permanent disability payments over an employee's lifetime.
But when the specific dollar amount for an attorney's fee is fully paid via weekly reduction from the employee's indemnity payments, a critical question arises: Do the weekly deductions cease once the total fee amount has been collected, or does the reduced payment rate continue for the applicant's entire life? Moreover, because it could take many years to fully pay an attorney's fee award, when this issue is raised more than five years after the date of injury, does the five-year statute of limitations in Labor Code § 5804 preclude the WCAB from altering the payment rate?
On Jan. 8, 2026, the appeals board issued a significant panel decision in Rader v. Ticketmaster Corp. (2026) 91 CCC 11 that provided definitive answers. The board held that a commutation of attorney fees is limited to the specific dollar amount awarded, and that it retains jurisdiction under LC 5803 to enforce its awards by ordering the deductions to stop, even more than five years after the date of injury.
FACTS OF THE CASE
In 2011, the applicant was awarded 100 percent permanent total disability. As part of the award, his attorney was granted a fee of $39,444.71. The parties stipulated that the fee would be "commuted laterally" from the applicant's lifetime weekly indemnity payments. Accordingly, his weekly payment of $336 was reduced by $50.40, resulting in a net payment of $285.60 per week.
The deductions continued for more than a decade. In 2023, the applicant asserted that the cumulative reductions had fully satisfied the $39,444.71 fee, and requested that his weekly payments be restored to the full $336. The defendant argued that the 2011 award did not provide for any “automatic reversion on the payout rate,” nor specify “any period of commutation.”
The matter proceeded to trial, and the workers' compensation judge (WCJ) found that the WCAB lacked jurisdiction to alter the award, citing the five-year limitation in LC 5804. The applicant filed a petition for reconsideration.
APPEALS BOARD'S DECISION
The WCAB granted reconsideration and rescinded the WCJ's decision. It made two critical holdings.
One, it held that although LC 5804 directs that “[n]o award of compensation shall be rescinded, altered, or amended after five years from the date of the injury," the board retains jurisdiction to resolve the dispute under the principle of continuing jurisdiction to enforce its awards under LC 5803. It reasoned that it retains the jurisdiction under LC 5803 to make collateral changes to an award as long as the merits of the basic decision determining the worker’s right to benefits are not altered, and the amount of benefits remains unchanged. The board concluded that because its decision would not alter or amend the applicant’s underlying award of permanent and total disability, it retained jurisdiction.
Two, the appeals board held that the commutation was for a fixed, finite amount. The 2011 award approved a specific attorney fee of $39,444.71, and the commutation was merely the mechanism to pay that precise amount. It was not an agreement to permanently reduce the applicant's weekly indemnity rate. The board believed that a commutation that provides for an indefinite reduction in the benefits paid to a permanently disabled employee beyond the actual fees awarded is incompatible with the mandate of LC 5100 that commutations avoid inequity and undue expense or hardship to the applicant. It also believed that limiting the commutation to the specific dollar figure was consistent with the system's goal of protecting injured workers.
Accordingly, the WCAB concluded that once a defendant has deducted an aggregate amount commensurate with the specified commuted attorney fee, no further deduction from the applicant’s weekly indemnity payment is appropriate or permissible. The defendant was ordered to reimburse the applicant for all amounts withheld after the fee was satisfied, plus statutory interest. Penalties, however, were denied, as the defendant had a "genuine legal doubt" as to its liability.
ANALYSIS
The Rader decision provides a clear, bright line rule that resolves a significant point of ambiguity for lifetime awards. It firmly establishes that a lateral commutation of attorney fees is not a permanent reduction of the weekly benefit rate, but is limited to the specific dollar amount approved by the WCJ.
For defense practitioners, this decision eliminates any ambiguity. Claims administrators must now track the total amount withheld for commuted attorney fees. Once the aggregate deductions satisfy the total fee awarded, the deductions must cease, and the applicant's weekly benefit must be restored to its full, original amount. Continuing deductions beyond that point will expose the defendant to liability for reimbursement, statutory interest and potential penalties.
For injured workers, the decision confirms that the five-year jurisdictional limit in LC 5804 is not a barrier to changing the amount of payment of a lifetime award. The board's reasoning allows it to enforce the terms of its awards indefinitely, as long as the action does not fundamentally alter the underlying determination of benefits. It provides a path for injured workers to pursue the full measure of their permanent disability benefits after attorney fees have been satisfied.
For further discussion of this topic, see Section 6.31 Continuing Jurisdiction to Enforce.