CHEVRON U.S.A., INC., Petitioner, v. WORKERS’ COMPENSATION APPEALS BOARD and LUCILLE STEELE, Respondents.
No. S059214
Supreme Court of California
Jan. 25, 1999
19 Cal.4th 1182
CHEVRON U.S.A., INC., Petitioner, v. WORKERS’ COMPENSATION APPEALS BOARD and LUCILLE STEELE, Respondents.
Harbinson, Carlson & Tune, Joel D. Tondreau and Mark H. Tune for Petitioner.
Bryce C. Anderson; Kazan, McClain, Edises, Simon & Abrams, Victoria Edises, Anne Burr and Dianna Lyons for Respondent Lucille Steele.
BROWN, J.— Under the Workers’ Compensation Act, an employer must pay a death benefit to the dependents of an employee who dies as a result of a work-related injury. (
The income used as the basis on which to calculate the amount annually devoted to the partial dependents’ support may be easily ascertained when the time of injury occurs while the decedent was employed and receiving a paycheck, and wages are the sole source of support. Here, we are asked to decide how a surviving spouse‘s partial dependency death benefit should be computed when the amount of support contributed by the decedent at the time of injury includes income that is not lost as a result of his or her death.
The Court of Appeal concluded the partial dependency death benefit must be based on the amount of support lost or otherwise affected by the decedent‘s death, and cannot include income and investments which did not terminate or change as a result of death. Because we find the limitation imposed by the Court of Appeal‘s construction unsupported by the statutory language of
I. FACTUAL AND PROCEDURAL BACKGROUND
The parties in this matter have litigated numerous issues in the 11 years since the death benefit application was first filed, all but one of which are now resolved. The undisputed facts and procedural history relevant to the remaining question presented for this court‘s review are as follows.
The decedent, Harvey Steele, worked as an insulator for Chevron U.S.A., Inc. (Chevron), and was exposed to asbestos from 1951 through September 15, 1975. On September 28, 1976, he was diagnosed with parenchymal asbestosis due to asbestos inhalation. He filed a claim for workers’ compensation benefits and, in November 1981, was assigned a permanent disability rating of 63 percent for the asbestosis injury.
Lucille Steele, decedent‘s wife, applied for a workers’ compensation death benefit on December 2, 1987. Chevron paid Mrs. Steele a total of $8,041 in death benefits at the rate of $119 per week through February 1989, but terminated payments while contesting Mrs. Steele‘s claim that the date of injury for the mesothelioma was August 12, 1987. On June 7, 1989, the workers’ compensation judge (WCJ) determined the date of injury for the mesothelioma was August 12, 1987. Adopting the report and recommendation of the WCJ, the Workers’ Compensation Appeals Board (Board) denied Chevron‘s petition for reconsideration of the date of injury finding. Chevron challenged the Board‘s order in a petition for a writ of review. The Court of Appeal affirmed the order of the Board in a published opinion. (Chevron U.S.A., Inc. v. Workers’ Comp. Appeals Bd. (1990) 219 Cal.App.3d 1265, 1269-1273 [268 Cal.Rptr. 699] (Chevron I), review den. July 10, 1990 [single period of exposure to asbestos can result in more than one occupational disease and more than one date of injury].)
On remand from the Court of Appeal, the case went forward on the question of dependency. In a November 1990 decision, the WCJ found in relevant part that Mrs. Steele was partially dependent on decedent at the time of injury, and awarded her a death benefit in the amount of $63,600. Relying on Mrs. Steele‘s testimony at a June 13, 1989, hearing, and taking into account that both Mr. and Mrs. Steele were retired at the time of injury, the WCJ computed the amount of the death benefit on the basis of income from decedent‘s Social Security benefits and Army pension, and decedent‘s one-half community property interest in income from investment accounts, interest from a savings account, and mortgage payments received from a debtor. The WCJ did not include in the calculation the $3,350 received in 1987 from the sale of land and the $30,108.50 withdrawn in 1987 from an executive life annuity funded by decedent‘s lump-sum retirement benefit. Mrs. Steele and Chevron each sought reconsideration of the WCJ‘s findings. The Board granted both petitions and, on July 22, 1991, issued an opinion rescinding the WCJ‘s findings and award. In addition to making other findings not relevant here, the Board awarded to Mrs. Steele the applicable statutory maximum death benefit of $70,000, but failed to state its reasons for doing so.
Chevron again sought judicial review of the Board‘s decision after reconsideration, this time contesting the computation and amount of the partial
In a March 6, 1995, opinion following remand by the Court of Appeal, the Board determined Mrs. Steele was partially dependent on decedent at the time of injury and entitled to a death benefit of $64,657.92. Relying on the testimony of Mrs. Steele given at the June 13, 1989, hearing before the WCJ, the Board found all of decedent‘s income at the time of injury was used for the couple‘s mutual support and concluded that, at the time of injury, decedent was contributing the following annual amounts to Mrs. Steele‘s support: $8,646 in Social Security benefits, $756 in Army pension benefits, $418.26 in interest received in 1987 from a savings account funded by decedent‘s Social Security benefits, $2,159.47 and $2,209.70 representing decedent‘s one-half community property share of investment income from the Franklin Fund and Dean Witter, respectively, and $1,975.05 representing decedent‘s one-half community property share of mortgage payments received from a debtor. In its brief on remand, Chevron argued that the determination of the extent of Mrs. Steele‘s partial dependency should be based on the amount of support she lost as a result of decedent‘s death, pointing out that some of the support contributed by decedent to Mrs. Steele at the time of injury continued after decedent‘s death. The Board rejected Chevron‘s argument, finding no support for such an approach in the Labor Code or in the relevant decisional law.
Chevron petitioned the Board for reconsideration, asserting the Board erred in basing Mrs. Steele‘s death benefit on investment income which was not lost after decedent‘s death. On May 18, 1995, the Board issued an opinion and order denying reconsideration, and Chevron sought review in the Court of Appeal. Granting Chevron‘s petition for a writ of review, the Court of Appeal once again annulled the Board‘s order, concluding the Board erred in its partial dependency determination by including in the calculation community income Mrs. Steele continued to receive after decedent‘s death. The Court of Appeal remanded the matter to the Board with directions to redetermine Mrs. Steele‘s death benefit by verifying the amount of support lost or otherwise affected by decedent‘s death. The court opined that, subject to verification on remand, the death benefit calculation should
Mrs. Steele sought review of the Court of Appeal‘s determination that the partial dependency death benefit must be based on income lost as result of the decedent‘s death, and we granted her petition for review.
II. DISCUSSION
A. Overview of the Statutory Scheme
The death benefit is based on the number and type of dependents. (
The identity of dependents, whether their dependency is total or partial, and the extent of partial dependency are “determined in accordance with the facts as they exist at the time of the injury of the employee.” (
In order to substantiate partial dependency, the death benefit claimant must prove the actual dollar amount annually devoted by the decedent to his or her support. (ARCO, supra, 31 Cal.3d at p. 723.) Once the claimant has established partial dependency by proving the extent of the support actually contributed by the decedent, he or she has effectively proved “the amount annually devoted to the support of the partial dependent[]” within the meaning of
In the case of a partially dependent surviving spouse, the death benefit calculation involves “the actual amount which the deceased spouse devoted to the community and to the surviving spouse.” (ARCO, supra, 31 Cal.3d at p. 722.) The court in ARCO set forth the following approach for making the partial dependency determination in this context: “Commencing with the entire earnings of the decedent, the computation of allowances for actual support should include those fixed expenses which are an integral and reasonable part of the standard of living enjoyed by the community.” (Ibid.) As the court explained, “[e]xpenses related to the standard of living of the community are relevant. Expenses which are personal to the decedent are not.” (Id. at p. 723; see also Lynch v. Workers’ Comp. Appeals Bd. (1985) 164 Cal.App.3d 594, 598-599 [210 Cal.Rptr. 589] [applying approach prescribed in ARCO and observing that most married couples’ expenditures will be primarily related to benefit of community].)
B. Determination of the Amount Annually Devoted to the Partial Dependents’ Support
In the decision below, the Court of Appeal directed the Board to recalculate Mrs. Steele‘s death benefit based on the actual loss of annual support from decedent at the time of injury, excluding from the computation any income that did not terminate or change as a result of decedent‘s death. In the Court of Appeal‘s view, it is the loss of annual monetary support to the dependent and the marital community that controls the calculation of death benefits under the statutory scheme. The court reasoned that because the death benefit depends on the extent of actual dependency, the only way the amount annually devoted to the support of the dependent can be reasonably and consistently determined is to identify support at the date of injury that terminated with the death of the decedent. The court found further support for its construction of
In reaching its conclusion in this case, the Court of Appeal read into the statutory provision governing the calculation of Mrs. Steele‘s death benefit a limitation as to the type of income on which the amount devoted to the
On its face,
Nor is the Court of Appeal‘s limiting construction of
Finally, the Court of Appeal‘s construction of
The statutory command that the time of injury, rather than the date of death, controls the dependency determination also underlies the decision in Pacific Employers Ins. Co. v. Chavez (1936) 5 Cal.2d 247, 252-253 [54 P.2d 701], in which this court concluded the calculation of a death benefit to the deceased employee‘s wholly dependent mother was unaffected by the mother‘s receipt of the proceeds of a life insurance policy made payable on the death of her son.
Chevron argues decisions of this court support a construction of
Although the cases Chevron relies on as support for the Court of Appeal‘s construction of
In Spreckels, supra, 186 Cal. 256, 257, the deceased employee had been supporting his brother and brother‘s family for several years with a monthly contribution of $145. Three months prior to the employee‘s fatal injury, the contributions dropped to $45 per month. Finding the brother
In another case cited by Chevron, ARCO, supra, 31 Cal.3d 715, 719-723, this court addressed the specific question of how to determine partial dependency in cases where the surviving spouse is employed at the time of injury. In resolving this question, the court considered whether to adopt one approach to determining the appropriate death benefit under former section 4702, subdivision (d), which called for simply dividing the earnings of the decedent in half and multiplying this amount by four. The court observed that the suggested method failed to consider the standard of living of the surviving spouse and the amount actually contributed to his or her support. In rejecting the proposed approach, the court relied in part on the passage cited by Chevron above. (ARCO, supra, 31 Cal.3d at pp. 720-721.)
Contrary to Chevron‘s argument, nothing in these cases can be taken as an endorsement by this court of the Court of Appeal‘s loss of support construction of
Chevron argues finally that the term “support” in
In Great Western Power, the decedent had been working for the employer for only a few months at the time the fatal injury occurred. Prior to his employment there, the decedent engaged in contracting work and earned wages hiring out himself and his team of horses. (191 Cal. at pp. 732, 736.) During the four-and-a-half-month period preceding his fatal injury, the decedent also had income from sales of furs, livestock, and milk. (Id. at p. 734.)
The court annulled an award of death benefits to the decedent‘s dependent family members, finding the Industrial Accident Commission erred in determining the amount devoted by the decedent to their support. (Great Western Power, supra, 191 Cal. at pp. 733-738.) Relying on the reasoning of Spreckels, supra, 186 Cal. 256, the court faulted the commission for including income other than the wages paid by the employer in its calculation of the amount devoted to the dependents’ support. The court concluded such income bore no relation to the rate of contribution at the time of the decedent‘s death.4 (Great Western Power, supra, 191 Cal. at p. 736.) More specifically, the court found the amounts paid to the decedent for the hire of his team of horses should not have been included in the calculation because they were “disconnected from and far disassociated from his employment
Great Western Power affirms that, under the applicable statutory framework, the partial dependency death benefit is based on the amount decedent was devoting to the dependents at the time of injury. The measure of support is an amount ascertainable at a single point in time, the time of injury, and multiplied accordingly to reach the annual rate of contribution. Although the decedent‘s earnings from employment undoubtedly provide a meaningful and ascertainable measure of his contribution to the dependents’ support, nothing in the reasoning of Great Western Power suggests the death benefit calculation is limited to income that is employment-derived. Like the Spreckels decision on which it relied, Great Western Power focused on the requisite temporal connection between the support devoted by the decedent and the time of injury, not on the character of the income itself. Notwithstanding Chevron‘s contrary contention, so long as the decedent‘s income is capable of measurement as a rate of contribution at the time of injury, it may properly be included as part of “the amount annually devoted to the support of the partial dependents” within the meaning of
Chevron also finds support for its argument that only earnings from decedent‘s employment constitute support within the meaning of
Nor are we persuaded that because the partial dependency death benefit statute previously referenced “average annual earnings,” it should be interpreted as if it still did. As originally enacted in 1937, section 4702 provided that the death benefit in a case of total dependency was “three times the
At a minimum, the elimination of the phrase “average annual earnings” from the total dependency formula renders the partial dependency formula ambiguous. As discussed above, when provisions of the workers’ compensation laws relating to death benefits are ambiguous, they must be construed favorably to the dependent. (See ante, at pp. 1192-1193.) Although
III. CONCLUSION AND DISPOSITION
For the foregoing reasons, the judgment of the Court of Appeal, annulling the order of the Board, is reversed, except to the extent the Court of Appeal reversed the statutory penalty the Board had imposed on Chevron. (See ante, p. 1189, fn. 1.) The matter is remanded to the Court of Appeal with instructions to reinstate the Board‘s order and award with the exception of the statutory penalty.
George, C. J., Kennard, J., Baxter, J., and Werdegar, J., concurred.
MOSK, J.—I dissent.
In what the majority explain as an attempt to avoid a harsh result for the applicant in this matter, they construe
For the reasons discussed below, I conclude that in a case of partial dependency, the Labor Code provides for a death benefit of four times the amount of earnings from employment annually devoted to the support of the partial dependent at the time of the decedent‘s injury. (
I
A brief summary of the relevant background is as follows.
Decedent Harvey Steele, an employee of defendant Chevron, U.S.A., Inc., (hereafter Chevron), filed a claim for workers’ compensation benefits after
In December 1987, decedent‘s wife, Lucille, applied for a workers’ compensation death benefit. In June 1989, the Workers’ Compensation Appeals Board (hereafter the board) ordered that the date of injury for the purposes of the death benefits was August 12, 1987. The Court of Appeal affirmed the order. (Chevron U.S.A., Inc. v. Workers’ Comp. Appeals Bd. (1990) 219 Cal.App.3d 1265, 1269-1273 [268 Cal.Rptr. 699].)
In March 1995, the board determined that Lucille, also retired, was only a partial dependent at the time of her husband‘s diagnosis with mesothelioma; it was undisputed that she was receiving both Social Security and pension benefits. The board awarded her a death benefit of $64,657.92. It computed the amount based on decedent‘s Army pension, Social Security benefits, interest from a savings account, and his community property interest in investment income and in mortgage payments from a debtor.
The Court of Appeal annulled the board‘s order, concluding that the amount of death benefit should be based only on the amount of support Lucille lost as a result of decedent‘s death. Thus, it concluded, the death benefit should be based only on decedent‘s Social Security benefits and Army pension, which terminated at the time of decedent‘s death.1
We granted review; I would now reverse.
II
It is undisputed that decedent‘s wife was a partial dependent at the time of the injury, i.e., the date when decedent was diagnosed with mesothelioma. Accordingly, the extent of her dependency must be determined by the facts as they existed at that time. (
The provision refers to a benefit for partial dependents of “four times the amount annually devoted to the support of the partial dependents.” (Italics added.) The critical question, then, is “amount” of what? The Court of Appeal concluded that the “amount” consisted of income from any source whatsoever that was “lost” as a result of the employee‘s death. Thus, it could be based on decedent‘s Army pension and possibly his Social Security benefits—because those benefits would terminate with his death—but could not include any income that would continue to be received by the partial dependent. The majority reject that view, concluding that the “plain meaning” of the phrase “amount annually devoted to the support” necessarily includes all income from any source whatsoever, including investment income and interest from savings, regardless of whether the partial dependent will continue to receive that income after the employee‘s death.
I disagree. The phrase “amount annually devoted” is not susceptible of either the Court of Appeal‘s or the majority‘s broad reading.
The statutory phrase, “amount annually devoted to the support of the partial dependents,” has not changed since 1937, when the statute was first enacted. The original form of the statute was: “The death benefit shall be a sum sufficient to equal: (a) In a case of total dependency, three times the average annual earnings of the deceased employee. (b) In a case of partial dependency only, three times the amount annually devoted to support of the dependents by the employee.” (Stats. 1937, ch. 90, § 4702, p. 284.) In context, the term “amount” clearly, though implicitly, meant the “amount of earnings” annually devoted to support of the dependents“—not the amount of all income from any source whatsoever, or even the amount of income from any source whatsoever that was “lost” as a result of the employee‘s death.
We so interpreted the statute in Atlantic Richfield Co. v. Workers’ Comp. Appeals Bd., supra, 31 Cal.3d at page 722. There, the death benefit for
In Power Co. v. Industrial Acc. Com. (1923) 191 Cal. 724 [218 P. 1009], we focused on the character of the income to be considered in determining the extent of partial dependency. We found certain of the decedent‘s income to be “disconnected from and far disassociated from his employment and earnings.” (Power Co., supra, 191 Cal. at p. 736, italics added; see also id. at p. 730 [“The fact of [the family members‘] dependency on the earnings of the employee, and the degree thereof, must therefore, be determined in accordance with the existing fact at the time of the injury.” (Italics added.)].) We concluded therein that the award of death benefits to the decedent‘s partial dependents should be based solely on his earnings from employment, i.e., wages, and could not include his income from other sources or the value of services he rendered to the household.
Spreckels S. Co. v. Industrial Acc. Com. (1921) 186 Cal. 256, 257 [199 P. 8], similarly, describes the purpose of the death benefit as compensating dependents for loss of support, in that case the loss of the decedent‘s monthly contribution to his brother‘s family to supplement their earnings. “The whole theory of the compensation act as to death cases is that the dependents of the employee killed through some hazard of his employment shall be compensated for the loss of support they were receiving . . . at the time of his injury.” (Id. at p. 258; see also Insurance Co. v. Industrial Acc. Com. (1921) 186 Cal. 517, 519 [199 P. 796] [“The purpose of the [workers’ compensation] act is to provide a compensation to the dependent person for the loss such person will sustain because of the death of the decedent. . . . [T]he loss to be compensated for . . . is to be confined to the loss of support from the decedent.“]; Moore S. Corp. v. Industrial Acc. Com. (1921) 185 Cal. 200, 205 [196 P. 257, 13 A.L.R. 676] [“[T]he benefits of this law are not provided as an indemnity for negligent acts committed or as compensation for legal damages sustained, but [as] an economic insurance measure to prevent a sudden break in the contribution of the worker to [dependent
To be sure,
The majority acknowledge the fact that ” ‘the amount annually devoted to support of the dependents” meant, as originally enacted, ” ‘the amount of earnings annually devoted to support of the dependents’ ” (maj. opn., ante, at p. 1198). They conclude, however, that subsequent amendments to the statute with regard to benefits for total dependents have “[a]t a minimum” resulted in an ambiguity that must be resolved favorably to decedent‘s wife here. This is unpersuasive. There is no ambiguity when the provision for partial dependents is, as it must be, read in the context of its legislative history. As we stated in Nickelsberg v. Workers’ Comp. Appeals Bd. (1991) 54 Cal.3d 288, 298 [285 Cal.Rptr. 86, 814 P.2d 1328], “the rule of liberal construction stated in
The majority also assert that their construction of the term “amount” to mean amount of income from any source whatsoever is supported by the general principle, derived from
Moreover, as the majority read it, the provision computes the level of a benefit based on investment income unrelated to employment. They point to no other provision in the Workers Compensation Act that has a similar effect. Rather, other workers’ compensation benefits are calculated based on the employee‘s earnings. (See
Nor does the majority‘s approach appear consistent with the purpose of the workers’ compensation laws: the partial dependents of an indigent employee unemployed at time of an injury resulting in death will receive nothing, while the partial dependents of an affluent employee also unemployed at the time of an injury resulting in death but who has income from independent sources will receive a benefit tied to how much he or she received from those sources. Moreover, under the majority‘s reasoning this peculiar result must apply not only in the relatively rare case of postemployment injury, e.g., from latent disease caused by industrial exposure to asbestos, but equally in the more usual case of an employee dying from an injury on the job. I doubt that this is what the Legislature intended.
In the case of death from an employment-related injury, like mesothelioma, that occurs after retirement—i.e., when the employee is no longer receiving any earnings from employment—construing the provision to refer to “the amount [of earnings]” is a potentially harsh result for partial dependents. That is, while a total dependent would presumably be entitled to the
The Legislature, of course, may not have intended to create a gap in coverage for partial dependents in the case of latent illness. But it is a problem for the Legislature to fix. “[T]he adjustment of workers’ compensation death benefits is properly and primarily a legislative function.” (Atlantic Richfield Co. v. Workers’ Comp. Appeals Bd., supra, 31 Cal.3d at p. 722.) In my view, all we can do without distorting the statutory language and purpose is call the problem to the Legislature‘s attention.
Chin, J., concurred.