David Wilkinson v Ontario Neon.
This is a case I tried a few years ago. The WCAB ended up having to issue an Opinion and Decision After Reconsideration. The defendants didn’t take the case seriously. I made a very reasonable settlement demand. They didn’t even respond to the demand. The case went to trial and the judge found the applicant to be 100% disabled. I used a vocational expert to prove 100%. It was appealed and upheld. I can say that the attorneys fees alone were in excess of $300K when the structure was finally effectuated. This case was found to be a significant case in the year of decision.
Opinion and Decision After Reconsideration
STATE COMPENSATION INSURANCE Defendant(s).
Compensation Insurance Fund (SCIF), and lien claimant, Shields, Hanna & (Shields). Each sought reconsideration of the Findings and Award issued by the workers’ compensation
administrative law judge (WCJ) on December 15, 2009. Therein, the WCJ found that applicant’s March 13, 2004 admitted industrial injury to his head, face, back, bilateral shoulders, ribs, lungs, psyche, and neck and in the form of post-traumatic head syndrome caused 100% permanent disability, with no basis for apportionment, and caused a need for further medical treatment. The WCJ further found that the reasonable value of the services rendered by applicant’s attorneys is $294,772.15, payable $290,000.00 to applicant’s current attorney and $4,772.15 to Shields, applicant’s former attorneys. We granted reconsideration in order to allow us time to further study the factual and legal issues in this case. We now issue our Decision After Reconsideration.In its petition for reconsideration, SCIF contends that the WCJ erred in finding applicant 100% permanently disabled Without apportionment. SCIF argues that the case 0f LeBoèuf v. Workers’ Comp. Appeals Bd. (1983) 34 Cal.3d 234 [48 Cal.Comp.Cases 587] (LeBoeuf) is not controlling and that the WCJ should have found apportionment on a psychiatric basis based on the medical opinion of its qualified medical examiner (QME) in psychology, Ismail Yassai, Ph.D. SCIF further contends that the WCJ erred in allowing $4,404.00 in costs for the report and testimony of Ray Largo (Largo), applicant’s vocational consultant, arguing that Largo is not an expert on diminished future earning capacity (DFEC).In its petition for reconsideration, Shields contends that the WCJ erred in allowing it only $4,772.15 out of the total attorney’s fee of$294,772.15. Shields argues that the WCJ did not take into account the considerable benefit it obtained on applicant’s behalf or the amount of responsibility and time it exerted.Applicant filed an answer. The WCJ issued a Report and Recommendation (Report) recommending that we deny SCIF’s petition, grant Shield’s petition, and return the matter to the trial level for further hearing on the issue of the division of the attorney’s fees.Based on our review of the record and for the reasons discussed below, we will affirm the WCJ’s finding of 100% permanent disability,amend the WCJ’s decision to defer the issue of att0mey’s fees, and return this matter to the WCJ for further proceedings and decision on the limited issues of both the amount and the allocation of a reasonable attorney’s fee.
On March 13, 2004, applicant, a sign installer, fell through a roof onto a concrete floor
approximately 15 to 20 feet below,sustaining injury to his head, face, back, bilateral shoulders,
ribs, lungs, psyche, and neck and developing post-traumatic head syndrome.As relevant to the issues raised herein, the evaluations that took place are summarized
and/or quoted below:
the range of motion method. I know that I utilized the 2-inclinometer technique for lumbar flexion, extension, and right and left lateral bending. The regional total impairment of 25% represents the total of 11% impairment in flexion in the lumbar region, 7% impairment in extension, and 5% impairment in right and left lateral bending, respectively, utilizing the
combined values chart.“The 35% of total impairment for the spine reflects the lumbar impairment of 25%, the thoracic impairment of 7%, and the cervical impairment of 7%,
utilizing the combined values chart.“I additionally determined that mental status impairment of 5% was appropriate for Mr. Wilkinson’s mental status residua of his head injury on 3/23/04, as reflected in table 13-6.“Finally, I rated Mr. Wilkinson’s dizziness involving a sense of imbalance or falling at 7% within Category I of Table 13-313 on page 334 of the AMA Guides.” (Dr. Kent’s 5/30/08 report, applicant’s Exhibit l, at pp. 1-2.)<br/ >
Ted R. Greenzang, MD., applicant’s QME in psychiatry. June 1, 2007 report:
Dr. Greenzang diagnosed depressive ‘and cognitive disorders. He further stated:“He reported that he was taken off work approximately one year prior to the current evaluation. He was not able to perform the duties of his employment. He has not been able to return to his usual and customary employment or to alternate employment subsequent to that time. He has continued to feel distraught, distress and frustrated. In my opinion he became totally temporarily disabled psychiatrically due to dysphoric symptoms, cognitive defects, and the emotional handicap precipitated by physical symptoms referable to his head, his right lower extremity, his left hand, and his lower
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multiple areas. He experiences mental clouding. He feels tired and weak. He has lost interest in things. He lacked motivation. He is more easily distracted. He is forgetful. he feels helpless and useless. He lacks self-confidence and self-esteem. He experiences increased self-doubt. He experiences difficulty making decisions. He sleeps excessively. He feels nervous and irritable. He feels edgy and impatient. He lacks frustration tolerance. He feels shaky at times. He worries about his health and his future. He worries about his finances. He experiences lightheaded. He experiences recurrent pain referable to his head. He experiences involuntary movements referable to his right lower extremity as well as referable to his left hand. He experiences
pain referable to his low back and stiffness referable to his neck. In my opinion given a persistent duration of his physical his emotional and physical symptoms, it would be reasonable to consider him permanent and stationary for practical rating purposes from a psychiatric standpoint as of the date of the current report. In my opinion he remained totally temporarily disabled psychiatrically due to the dysphoric symptoms, symptoms of anxiety, and cognitive defects, the emotional handicap precipitated by the physical symptoms referable to his head, his low back, his right lower extremity, and his left hand from the date on which he last worked for Ontario Neon approximately one year prior to the current evaluation until he obtained [a] Permanent and Stationary plateau from a psychiatric standpoint as of the date of the current report.“Mr. Wilkinson’s permanent psychiatric disability is rated as moderate to severe. Due to his persistent and prominent dysphoric symptoms, symptoms of anxiety, cognitive defects, and the emotional handicap precipitated by physical symptoms referable to multiple areas, he should avoid contact with the public or fellow workers or work environments that produce situations that would give rise to emotional stress. He should avoid working under close
deadlines, dealing with contentious, unreasonable or otherwise exasperating members of the public, or performing work which requires precision and attention to detail under distracting conditions. Due to his prominent dysphoric symptoms, symptoms of anxiety, cognitive deficits, and the emotional handicap precipitated by his physical symptoms he would manifest marked to severe work function impairment from a psychiatric standpoint even in a minimally stressful work environment. His overall residual permanent psychiatric disability is less rated as moderate to severe.“It is my understanding that based upon legislation recently passed by the
California’ State Legislature, it is now appropriate to assess residual permanent
tolerance, self-doubt and loss of motivation impact upon his social functioning. His cognitive deficits, dysphoric symptoms and diminished frustration tolerance impact significantly upon his ability to deal with increasing demands. In my opinion the combination of his dysphoric
symptoms,l symptoms of anxiety, cognitive defects, and emotional handicap precipitated by his physical symptoms impact to a very substantial degree upon both his social and occupational functioning as noted above.
previously done well in the course of that employment for several years. He had essentially been gainfully employed throughout his adult life. He has a reasonably stable personal life. Although he did acknowledge that he had taken Prozac for one year prior to his having incurred a severe physical injury in the course of his employment for Ontario Neon, there is no definitive
evidence in this matter to indicate that he was manifesting any work function impairment from a psychiatric standpoint during that time as a consequence of any emotional difficulties which may have necessitated his receiving treatment with Prozac. He clearly incurred a traumatic, debilitating and devastating physical injury in the course of his employment for Ontario Neon
on March 23, 2004. He has manifested substantial and significant residual impairment referable to several areas subsequent to that time. He has manifested cognitive defects and dysphoric symptoms. In my opinion one hundred percent of the residual permanent psychiatric disability noted above has been precipitated by his emotional reaction to the severe and dramatic physical injury which he incurred in the course of his employment for Ontario
Neon on March 23, 2004 as well as his emotional reaction to sequelae and altered life circumstances which he has experienced subsequent to and as a consequence of that physical injury. In my opinion zero percent of his residual permanent psychiatric disability .has been precipitated by his emotional reaction to any events or circumstances unrelated to his
employment for Ontario Neon which either preceded or occurred subsequent to the highly traumatic injury which he incurred in the course of that employment on March 23, 2004.
serving in the capacity of Qualified Medical Examiner in Psychiatry, indicated Mr. Wilkinson’s ‘overall residual permanent psychiatric disability is thus-rated as moderate to severe.’ Dr. Greenzang added, ‘Unfortunately, due to the combination of his emotional and physical symptoms and cognitive defects, his prognosis for successfully participating in and completing a retraining program re-entering the labor market is guarded to poor. In my opinion, there is reasonable likelihood that, due to his combination of his emotional and cognitive defects, as well as his physical symptoms and limitations in function, he may well be permanently and totally disabled.’ “(Ray Largo’s 9/23/08 report, applicant’s Exhibit 3, at p. 14.)
than reporting that he had taken Prozac for one year prior to the traumatic accident which had occurred in the course of his employment for Ontario Neon, Mr. Wilkinson had no history of having received psychiatric treatment, therapy, or counseling or having taken medication for prior to his employment for Ontario Neon. Prior to his having incurred a traumatic injury
in the course of his employment on March 23, 2004 Mr. Wilkinson reported that he had loved his job and he had gotten along well with co-workers and supervisors. He had received three or four raises in the course of his employment. He had no history of Workers’ Compensation litigation which had preceded his employment for Ontario Neon. His history and presentation
those incidents prior to his having incurred a highly debilitating and traumatic injury in the course of his employment for Ontario Neon on March 23, 2004. …Given the fact that he was not manifesting work function impairment during the course of his employment for Ontario Neon in response to those incidents which had occurred more than twenty-five years before the
traumatic injury which he incurred in the course of his employment for Ontario Neon and given the highly traumatic nature of the injury which he incurred in the course of his employment and the substantial emotional, physical, and cognitive sequelae which he manifested subsequent to and as a consequence of that physical injury, in my opinion it would be pure speculation unsubstantiated by the facts pertaining to this matter to apportion any of his residual permanent psychiatric disability to sexual molestation incidents which had occurred more than twenty-five years prior. Upon further consideration of this matter it therefore remains my opinion that one hundred percent of the residual permanent psychiatric disability previously
noted in regard to Mr. Wilkinson was precipitated by his emotional reaction to the severe and traumatic physical injury which he incurred in the course of his employment for Ontario Neon on March 23, 2004 as well as by his emotional reaction to sequelae and altered life circumstances which he experienced subsequent to and as a consequence of that physical injury. In my opinion zero percent of his residual permanent psychiatric disability was precipitated by his emotional reaction to any events or circumstances unrelated to his
employment for Ontario Neon which either preceded or occurred subsequent to the highly traumatic injury which he incurred in the course of that employment on March 23, 2004 including the incidents of sexual molestation to which he was subjected during his youth. The above noted conclusions in regard to apportionment are made in the light of the passing of SB 899 by the California State Legislature and in light of labor code sections 4663 and 4664.” (Dr. Greenzang’s 8/12/09 report, applicant’s Exhibit 10, at pp. 9-11.)
alcohol and drug abuse and ten years of being molested. 75% of the disability would be apportioned to industrial injury on 3/13/2004 and secondary to the physical symptoms causing stress and limitation.” (Dr. Yassai’s 9/14/09
Largo as summarized in the Minutes of Hearing and Summary of Evidence (MOH).
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position, his neck pain is worse. When asked to describe his pain on a scale from 1 to 10, the witness testified his neck pain is a 7 or 8. His back pain is an 8 – 9 and his headaches are a 10. He fractured his ribs in the fall. His whole body hurts but nothing specific to his ribs.“He has memory problems. He forgets all of the time. He forgets to take his pills. He straightens the house and puts things away in the wrong place and cannot remember where he has put them. He remembers putting the salt and pepper shakers away but not where they are supposed to be put. One time he found a coffeepot in the refrigerator, which is not where it belongs. At one
time he had slurred speech. It is better now. He does have trouble stating what he wants to state, however.“His wife tells him he is depressed all the time. His ability to concentrate is bad and his brain wanders all of the time. He is tired all the time and takes naps. When asked how long the naps last, the witness testified if he lies down from 1:00 to 2:00 pm., it can last as long as 8:00 p.m. He takes a nap every day.“He returned to work a couple of times for Ontario Neon Company. He had no balance. He also had no coordination between his hands and feet. Standing lead to increased pain. He put protection on the table so that he can lean against the table.
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person works alone, and the 800 number is not a help. Witness further testifies that home appliance [repair] is heavy work. Witness is asked what about a toaster or a blender, and witness’s response is there is no job market for that type of repair because those items are disposable.“Witness is asked if applicant can work at home with voice-activated computers, and witness’s response is that applicant has no mental skills to do that. Witness further testifies that being able to use voice-activated computers does not equate to the ability to work. Witness is asked if Applicant could be retrained, and witness’s response is that applicant is not able to benefit from being trained.“Witness is asked about a home-based job such as travel agent or other sales, and witness’s response is that applicant is not able to do that because applicant has no concentration and is unable to do any multitasking to do that work. Witness further testified that if applicant cannot go to the bank for a simple transaction, applicant is not able to manage any type of job at home. Witness is asked what about medical back office accounts or filing, and witness’s response is Applicant is not able to handle that because the skills necessary for back office are testing and reading materials, and Applicant is not able to do that because of Applicants impaired memory, impaired concentration, and impaired understanding of materials Applicant reads. Witness is asked if Applicant can do a sedentary position at a business monitoring a security camera, and witness testified that that requires concentration, which applicant is unable to do.“Witness is reminded that on the first day of testimony applicant testified that with medications Applicant could drive two-and-a-half hours. Witness is then asked if Applicant can make short-run deliveries such as a florists, and witness’s response is number one, that because of Applicant’s pain, Applicant is forced to take medication, and Applicant should not be doing that kind of driving; and, secondly, applicant needs a consistent route schedule in order to be able to drive at all.” (5/7/10 MOH (morning), at pp. 3:21 – 5:1)
Nevertheless, LeBoeuf is instructive because, by analogy, it supports the concept that where an employee has a total loss of future earning capacity; the employee is permanently totally disabled. (See, e.g., Baldrige v. Swinerton, Inc. (2010) 2010 Cal. Wrk. Comp. P.D. LEXIS 271 (Appeals Board panel decision), writ den. sub nom. Zurich North American Ins. Co. v. Workers Comp. Appeals Bd. (Baldrige) (2011) _Cal.Comp.Cases_ [2011 Cal. Wrk. Comp. LEXIS 28]; Hudson v. County of San Diego (2010) 2010 Cal. Wrk. Comp. P.D. LEXIS 479 (Appeals Board panel decision); Gross v. Slater Brothers Markets (2010) 2010 Cal. Wrk. Comp. P.D. LEXIS 360(Appeals Board panel decisi0n).)
Moreover, the 2005 Schedule itself provides that “[p]ermanent total disability represents a level of disability at which an employee has sustained a total loss of earning capacity.” (2005 Schedule at p. 1-2, emphasis added.)
Furthermore, section 4662 provides, in its totality, that:
“Any of the following permanent disabilities shall be conclusively presumed
The specific version of section 4660 in effect at the time of LeBoeuf was enacted in 19 Stats. 1965, (See Stats. 1965, ch. 1513, § 91, p. 3579.) Nevertheless, the diminished ability to compete in the open labor market standard for rating permanent disability was in effect from 1917 (see Stats. 1917, ch. 586 § 9(b)(7), p.838; Stats. 1919, ch. 471, § 4, p. 915; Stats. 1925, ch. 354, §1, p.642; Stats 1929, ch. 222, § 1, pp. 422-423; Stats. 1937, ch. 90, § 4660, p. 283; Stats. 1951, ch. 1683, § 1, p. 3880; Stats. 1965, ch. 1513, § 91, p. 3579; Stats. 1993, ch. 121, § 53) until April 19, 2004 (see Stats. 2004, ch. 34 § 32)
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to be\total in character:
“(a) Loss of both eyes or the sight thereof.
“(b) Loss of both hands or the use thereof.
“(c) An injury resulting in a practically total paralysis.
“(d) An injury to the brain resulting in incurable mental incapacity or insanity.
“In all other cases, permanent total disability shall be determined in accordance with the fact.” (Lab. Code, 4662, emphasis added.)
The evidence in the record establishes that applicant has a total loss of earning capacity and, therefore, he is 100% permanently disabled overall, without regard to apportionment.
In his November 21, 2008 report, Largo took into consideration the work restrictions and impairments found by Dr. Kent, the AME in neurology, and Dr. Greenzang, applicant’s QME in psychiatry, whose reports we have summarized and/or extensively quoted from above. Largo also took in the consideration several other factors, including but not limited to applicant’s self-reported functional limitations, which were consistent with the limitations testified to by applicant and his wife at trial. Based on all this information, Largo opined that applicant is unable to return to the open labor market either on a part-time or a full-time basis due to his work restrictions, physical and psychological capacity, difficulties with activities of daily living, impaired concentration/memory, and medication intake. (Ray Largo’s 9/23/08 report, applicant’s Exhibit 3, at p. 14.) At trial, Largo provided essentially the same opinion regarding applicant’s inability to work in the open labor market either full-time or part-time. On May 7, 2009, Largo testified that there were no jobs applicant could effectively perform because of his physical and psychological conditions, including several jobs proposed during questioning such as repairing small household appliances, working with a voice-activated computer, home-based travel agent or other sales; medical back office or filing positions, security camera monitoring, and/or florist deliveries. Thus, Largo’s unimpeached and unrebutted testimony is that applicant has a total loss of earning capacity and is totally permanently disabled.
Largo’s opinion is consistent with that of Dr. Greenzang. Dr. Greenzang extensively discussed applicant’s very significant psychiatric impairment and limitations, only some of which
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are highlighted above. (See, e.g., Dr. Greenzang’s 6/1/07 report; applicant’s Exhibit 2, at
pp. 15,16, 17, 19, 20-22, 23.) In light of all of these problems, Dr. Greenzang stated among other things:
“Due to his prominent dysphoric symptoms, symptoms of anxiety, cognitive deficits, and the emotional handicap precipitated by his physical symptoms would manifest marked to severe work function impairment from a psychiatric standpoint even in a minimally stressful work environment.” (Dr. Greenzang’s 6/1/07 report, applicant’s Exhibit 2, at p. 22.)
“Due to the’ combination of his emotional and physical symptoms and cognitive defects, his prognosis for successfully participating in and completing a retraining program and reentering the labor market is guarded to poor. In my opinion there is a reasonable likelihood that due to the combination of his emotional and cognitive defects as well as his physical symptoms and limitations in function, he may well be permanently and totally disabled. (Dr. Greenzang’s 6/1/07 report, applicant’s Exhibit 2, at p. 25.)
The trial testimony of applicant and his wife corroborates the opinions of Dr. Greenzang and Largo. Applicant testified: he has problems with balance which impacts his ability to stand, walk, dress himself, and lift; he has headaches and feels dazed; he experiences a significant amount of pain in his neck, shoulder, and left hand which prevents him from using his fingers; he has memory and concentration problems; and he has problems speaking including slurred speech. In addition, he testified that he returned to work a couple of times but was unable to work due to lack of balance and coordination between his hands and feet and increased pain. (MOH, 3/25/10 (afternoon), at pp. 2:21 – 5:l-6.)’ Applicant’s wife testified that applicant’s personality has changed significantly and that he is very shut off, does not want to be around other people, sleeps 16 hours per day, has problems with balance, cannot stand because he weaves back and forth, his right leg does not work when he is walking, and he stumbles because he cannot control his right leg. (MOH 5/7/10(morning), at pp. 6:23 – 7:4.)
We recognize, of course, that Dr. Yassai, SCIF’s QME in psychology, had a very different assessment of applicant’s psychiatric impairment. However, it is well established that the WCAB may rely‘ on the relevant and considered opinion of one physician, provided it constitutes
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substantial evidence. (Braewood Convalescent Hosp. v. Workers’ Comp. Appeals Bd. (Bolton) (1983) 34 Cal.3d 159, 169 [48 Cal.Comp.Cases 566, 573]; Smith v. Workmen’s Comp. Appeals Bd. (1969) 71 Cal.2d 588, 592 [34 Ca1.Comp.Cases 424, 427].) SCIF does not argue that Dr. Greenzang’s opinions on applicant’s psychiatric impairments and work preclusions are not legally substantial, so it has waived this issue. (Lab. Code, 5902, 5904.) In any event, we discern no basis upon which to deem Dr. Greenzang’s opinions insubstantial. To the contrary, it is the opinions of Dr. Yassai that do not constitute substantial evidence because they are inconsistent with the trial testimony of applicant and his wife, which the implicitly found to be credible.
Therefore, we are persuaded that applicant has suffered a total loss of earning capacity and, therefore, is permanently totally disabled. (See Lab. Code, 4662.)
II. The WCJ Properly Found No Basis for Apportionment
It is settled law that the defendant has the burden of proof on apportionment. (Pullman Kellogg v. Workers’ Comp. Appeals Bd. (Normand) (1980) 26 Cal.3d 450, 456 [45 Cal.Comp.Cases 170, 173-174]; Kopping Workers’ Comp. Appeals Bd. (2006) 142 Cal.App.4th 1099, 1115 [71 Cal.Comp.Cases 1229, 1243]; Escobedo v. Marshalls (2005) 70.Cal.Comp.Cases 604, 613 (Appeals Board en banc) (Escobedo).) Moreover, the defendant must carry this burden through the presentation of substantial evidence, which includes a requirement that any medical opinion must not be conclusory but instead must set forth the facts and the reasoning behind it. (Escobedo, 70 Cal.Comp.Cases at pp. 620-621.) Here, we are persuaded that SCIF has not carried its burden.
SCIF argues that the WC] should have found apportionment on a psychiatric basis based on Dr. Yassai’s opinion. We disagree.
In his September 14, 2009 supplemental QME report, Dr. Yassai stated that, based on applicant’s trial testimony, he had been given “new and pertinent” information that was relevant to the issue of psychiatric disability and apportionment, i.e., that applicant had had problems with alcohol one to one and a half years before his injury and that applicant had been molested for a period of 10 years. Based on this new information, Dr. Yassai recited that “[l]ong and recent
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history of alcohol abuse and a ten year period of being molested requir[ing] the use of medication to deal with his emotional problems are significant factors in regards to permanent disability and apportionment of permanent disability.”3 (Dr. Yassai’s 9/14/09 report, defendant’s Exhibit F, at p. 1.) Dr. Yassai then said, “[i]t is my opinion that the examinee’s permanent residual psychiatric impairment … would be apportioned 25% to non-industrial pre-existing emotional problems due to the history of alcohol and drug abuse and 10 years of being molested.” (Id. at p. 2.)
However, other than pointing out that applicant had testified to these facts at trial, Dr. Yassai gave absolutely no explanation of the basis for his opinion. In particular, we have found that applicant is permanently totally disabled because he has suffered a total loss of earning capacity. Yet, Dr. Yassai cites to no evidence whatsoever which suggests that applicant’s history of alcohol and drug abuse and molestation were causing any loss of earning capacity at the time of his injury. Furthermore, Dr. Yassai appears to be completely oblivious to the fact that the 10 years of molestation began when applicant was six years old. (Dr. Greenzang’s 6/1/07 report, applicant’s Exhibit 2,-at p. 7.) Therefore, at the time of applicant’s March 13, 2004 injury, which occurred when he was 42, the abuse had ended more than 25 years previously.
Moreover, we find Dr. Greenzang’s opinion on apportionment to be more persuasive. In this regard, Dr. Greenzang reported: that applicant had no history of psychiatric treatment, therapy, counseling or psychiatric medication prior to his employment with Ontario Neon; and that, prior to his injury, applicant had loved his job, had gotten along with his co-employees and supervisors, and had received three or four raises in the course of his employment. Dr. Greenzang specifically noted that:
“Given the fact that he was not manifesting work function impairment during the course of his employment for Ontario Neon in response to those incidents which had occurred more than twenty-five years before the traumatic injury which he incurred in the course of his employment for Ontario Neon and given the highly traumatic nature of the injury which he incurred in the course
3 Dr. Yassai’s July 17, 2007 report had said “there does not appear to be any reason, suggesting possibility of apportionment.”
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of his employment and the substantial emotional, physical, and cognitive sequelae which he manifested subsequent to and as a consequence of that physical injury, in my opinion it would be pure speculation unsubstantiated by ‘ the facts pertaining to this matter to apportion any of his residual permanent psychiatric disability to sexual molestation incidents which had occurred more than twenty-five years prior. Upon further consideration of this matter it therefore remains my opinion that one hundred percent of the residual permanent psychiatric; disability previously noted in regard to Mr. Wilkinson was precipitated by his emotional reaction to the severe and traumatic physical injury which he incurred in the course of his employment for Ontario Neon on March 23, 2004…” (Dr. Greenzang’s 8/12/09 report, applicant’s Exhibit 10, at pp. 10-11.)
Thus, we are persuaded that SCIF did not establish apportionment on a psychiatric basis.
III. The WCJ Properly Allowed Largo’s Fees
Next, we address the issue of the allowance of Largo’s vocational expert ‘fees in the amount of $4,404.00. SCIF argues that these fees should not have been allowed because Largo is not a DFEC expert and because his report and testimony were unnecessary. Again, we disagree.
Vocational expert opinions have long been used in assessing an injured employee’s permanent disability. (E.g., LeBoeuf, supra, 34 Cal.3d 234 [48 Cal.Comp.Cases 587]; Grupe Co. v. Workers’ Comp. Appeals Bd. (Ridgeway) (2005) 132 Cal.App.4th 977 [70 Cal.Comp.Cases 1232]; Gill v. Workers’ Comp. Appeals Bd. (1985) 167 Cal.App.3d 306 [50 Ca1.Comp.Cases 258].)
In Costa v. Hardy Diagnostic (2007) 72 Cal.Comp.Cases 1492 (Appeals Board en banc’)
(Costa II), we held that, pursuant to section 5811, the WCAB is generally authorized to award the
reasonable costs of a vocational expert “for the presentation of evidence on and/or in rebuttal to a
permanent disability rating under the new PDRS” where that witness qualifies as an expert. (See
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Evid. Code, §§720, 801)4 Costa II stated that:
“[R]ehabilitation counselors would appear, in general, to be qualified with respect to diminished future earning capacity (DFEC) issues under the new PDRS, [although] the qualifications of each purported expert must, of course, be determined on a case by case basis. Once a person has qualified as an expert, the costs of the expert’s testimony and/or his or her reports may be allowable under section 5811. …
“At the same time, however, the WCAB has the discretion to balance the amount of such costs against the benefit obtained. [Citation] Moreover, as with medical-legal costs, reimbursement will-not be allowed-if the report and/0r testimony is premised on facts or assumptions so false as to render it worthless. [Citations] Furthermore, as medical-legal costs are not recoverable with respect to reports, for example, that are incapable of proving or disproving a disputed fact, or whose conclusions are totally lacking in credibility [citation], reports and testimony of a vocational rehabilitation expert must at least have the potential to affect a permanent disability rating in order for their costs to be recoverable.”
(Costa II, supra, 72 Cal.Comp.Cases at pp. 1498-1499.)
We observe that Costa II was affirmed by the Court of Appeal in Barr v. Workers’ Comp. Appeals Bd. (2008) 164 Cal.App.4th 173 [73 Cal.Comp.Cases 763].
Here as part of applicant’s Exhibit 3, applicant submitted Largo’s resume outlining his experience in rehabilitation, employability, and disability management from 1980 through the present. He holds professional certifications as a Certified Rehabilitation Counselor, a Certified Disability Management Specialist, and a Certified Professional Disability Manager. At trial on
Evidence Code section 720 provides: “(a) A person is qualified as an expert if he has special knowledge, skill, experience, training or education sufficient to qualify him as an expert on the subject to which his testimony relates. Against the objection of a party, such special knowledge, skill, experience, training or education must be shown before the witness may testify as an expert. (b) A witness‘ special knowledge, skill, experience, training or education may be shown by any otherwise admissible evidence, including his own testimony.”
Evidence Code section 801 provides: “If a witness is testifying as an expert his testimony in the mm of an opinion is limited to such an opinion as is: (a) Related to a subject that is sufficiently beyond common experience that the opinion of an expert would assist the trier of fact, and (b) Based on matter (including his special knowledge, skill, experience, training, and education) perceived by or personally known to the witness or made known to him at or before the hearing, whether or not admissible, that is of a type that reasonably may be relied upon by an expert in forming an opinion upon the subject to which his testimony relates, unless an expert is precluded by law from using such matter as a basis for his opinion.”
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March 25, 2009 and on May 7, 2009, Largo testified in great detail regarding his qualifications and experience. Based on this record, we are persuaded that Largo qualifies as an expert on diminished future earning capacity issues. Moreover, we have substantially relied on Largo’s report and testimony in determining that applicant has suffered a total loss of future earning capacity and, therefore, is permanently totally disabled. Thus, Largo’s report and testimony had an actual, not merely potential, effect on the permanent disability rating. Accordingly, we will affirm the WCJ’s allowance of costs under section 5811.
IV. The Issues of the Amount and of the Allocation of the Attorney’s Fees Will Be Returned to the Trial Level
Finally, as to Shields’ petition for reconsideration, we will amend the WCJ’s decision to defer the issue of attorney fees, both as to their allocation and their amount.5 In violation of section 5313, the WCJ’s Opinion on Decision failed to explain how she arrived at a $294,772.15 attorney’s fee or how she determined that $4,772.15 of that fee should be paid to Shields. Moreover, her Report fails to cure that defect.
With respect to the $294,772.15 amount of the fee, we are aware that an attorney’s fee calculation from the Disability Evaluation Unit (DEU) was appended to the WCJ’s Findings and Award. This calculation indicates that: (1) the permanent total disability indemnity (PTD) accrued through the proposed December 22, 2009 commutation date equals $138,944.66; (2) the commuted present value of the remaining PTD equals $1,826,203.00, assuming an average annual cost of living adjustment (COLA) of 4.7%; (3) when these two figures are added together, it results in a $1,965,147.66 basis for the attorney’s fee; and (4) if a 15% attorney’s fee is taken from this total amount, the overall attorney’s fee would equal $294,772.15.
Nevertheless, this DEU calculation~ does not necessarily justify an overall fee of
5 We are aware that Shields’ petition challenges only the allocation of the attorney’s fee and not its overall amount. Nevertheless, when the Appeals Board grants reconsideration, it has the authority to reconsider all issues that were presented for determination at the trial level, including issues not specifically raised in the petition for reconsideration. (See Pasquotto v. Hayward Lumber (2006) 71 Cal.Comp.Cases 223, 229, fn. 7 (Appeals Board en banc) and the cases cited therein.) Accordingly, we can address ‘the amount of the fee. ‘
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$294,772.15, without regard to its allocation. Although we will not now discuss this issue in great detail, we will highlight some essential points.
Preliminarily, the DEU’s attorney’s fee calculation should have been served on applicant, SCIF, and applicant’s present and past attorneys before the Findings and Award was issued, thereby giving them notice and an opportunity to be heard. The DEU calculation is, in effect, opinion evidence that the WCJ relied upon in making the attorney’s fee determination. Therefore, the parties and the attorneys should have been given an opportunity to object to it and to present rebuttal evidence and/or cross-examine the DEU rater who-prepared the calculation. This is particularly significant because: (1) the DEU made assumptions regarding the average annual COLA that significantly affected the present value determination of the PTD award and, therefore, significantly affected the amount of fee to be commuted; and (2) the interests of the applicant and her present and past attorneys are adverse when it comes to calculating the fee. (Cf. Cal. Code Regs, tit. 8, § 10778.)
Moreover, apart from this due process issue, there are certain factors the WCAB should take into consideration in setting an attorney’s fee.
When it awards an attorney’s fee, the WCAB’s basic statutory injunction is that the fee awarded must be “reasonable.” (Lab. Code, §§ 4903(c), 4906(a) & (d).) In determining what constitutes a “reasonable” attorney’s fee, the WCAB must take into consideration: (1) the responsibility assumed by the attorney; (2) the care exercised by the attorney; (3) the time expended by the attorney; and (4) the results obtained by the attorney. (Lab. Code, § 4906(d); see also Cal. Code Regs., tit. 8, 10775.) In addition, under WCAB Rule 10775, the WCAB must make reference to the attorney’s fee guidelines contained in its Policy and Procedure Manual. (Cal. Code Regs, tit. 8, 10775.)
Here, as noted above, the DEU applied an estimated average annual COLA of 4,7% in
calculating the present value of applicant’s PTD award.6 This appears to have been done’ in
6 Each annual COLA is based on “the percentage increase-in the ‘state average weekly wage’ [SAWW] as compared to the prior year.” (Lab. Code, § 4659(c).)
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accordance with DEU policy.7 Nevertheless, this is an internal DEU policy, not a regulation, and therefore it is not mandatory. Accordingly, it might have been appropriate for the WCJ to Consider using some other estimated average annual COLA. In this regard, the percentage increase in the SAWW has been almost uniformly less than 4.7% over the last eight years, from 2004 through 2011. The only year during that span in which the SAW increased by more than 4.7% was 2007, which saw a 4.96% increase. However, the percentage increases of the SAWW for the years 2005, 2006, 2008, 2009, and 2010 were, respectively, 1.97%, 4.01%, 3.93%, 4.55%, and 2.99%; moreover, the years 2004 and 2011 had increase in the SAWW. (See http://www.dir.ca.gov/DWC/educonfl7/Commutations/CommutationsandSAWW.pdf, at p. 3; The Workers’ Compensation Laws of California (LexisNexis) (2011 ed.), at p. 1660, Table 14.)8 Also, the 50-year average annual SAWW is a moving target because it may change somewhat when a new year of SAWW data comes in. In fact, more recent materials from the DEU assume an average annual increase in the SAWW of 4.6% over the 50-year period from 1952 through 2011.9 We infer that this slightly lower assumed SAWW percentage takes into account that there was no
7 The DEU has apparently calculated that the average annual increase in the state average weekly wage (SAWW) over the prior 50 years was approximately 4.7%; therefore, in the absence of a request by the WC] or the parties to use a different percentage, the DEU will use 4.7% as the estimated average annual COLA in determining the present value of a PTD or life pension award (See http://www.dir.ca.gov/dwceduconf15/commutations/commutations.pdf, at p. 3; http://www.dir.ca.gov/DWC/educonf17/Commutations/CommutationsandSAWW.pdf, at p. 4 Bacha v. State of California (2009) 2009 Cal. Wrk. Comp. P.D. LEXIS 613 (Appeals Board panel); Pan v. State of California (2007) 2007 Cal. Wrk. Comp. P.D. LEXIS 227 (Appeals Board panel); Munoz v. Barrocas Construction (2007) 2007 Cal. Wrk. Comp. P.D. LEXIS 197 (Appeals Board panel).)
8 These figures are all based on DWC Newsline announcements regarding the SAWW for those years: http://www.dir.ca.gov/dwc/dwc_newslines/2010/newsline_56-10.pdf (for 2011);http://www.dir.ca.gov/dwc/dwc_newslines/2009/newsline_52-09.pdf (for 2010);
9 See the DEU Commutation Training materials that have been prepared for DWC’s 18th Annual Educational Conference in early 2011, at http://www.dir.ca.gov/DWC/educonf18/Commutations/Commutations.pdf, p. 14 (slide 28).
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SAWW increase in 2011. Therefore, we will return the matter to the WC] to refer this matter to the DEU to calculate the present value of applicant’s PTD award, using whatever average future annual COLA, if any, that the rater deems appropriate.10
Moreover, regardless of what average future annual COLA, if any, is used, this does not mean that the overall attorney’s fee should necessarily be based on the full present value of applicant’s PTD award. As already discussed, when making its determination of a “reasonable” attorney’s fee, the WCAB must take into consideration, among other things, the “results obtained” by the attorney. (Lab. Code, § 4906(d); see also Cal. Code Regs., tit. 10775(d); Wheeler & Beaton v. Workers’ Comp. Appeals Bd. (Tomlinson) (1995) 40 Cal.App.4th 389 [60 Cal.Comp.Cases 1075]; Lawrence ;Drasin & Associates v. Workers’ Comp. Bd. (Pilkenton) (1992) 3 Cal.App.4th 1564 [57 Cal.Comp.Cases 142].) Accordingly, the present value of injured employee’s PTD award, with an’ appropriate average annual COLA, if any, is a significant factor in determining a “reasonable” attorney’s fee. (See City of Foster City v. Workers’ Comp. Appeals Bd. (Sanchez) (2001) 66 CalCompCases 742, 746 (writ den.) [“the Board properly commuted the attomey’s fee here based on the present value of applicant’s permanent, total disability award ….”].)
Nevertheless, the “results obtained” by the attorney are not the only factor. Instead, the WCAB also must take into consideration the time expended, care exercised, and responsibility assumed by the att0rney(s). (Lab. Code, § 4906(d); Cal. Code Regs, tit. 8, 10775(a)-(c); see also
10 Of course, either before or after the DEU’s present value calculation(s), it might be appropriate for the parties and applicant’s attorneys to stipulate to the use of a particular estimated average annual COLA. Nevertheless, the WCJ should proceed extremely cautiously before accepting any such stipulation. (See Lab. Code. § 5702; Cal. Code Regs., tit. 8, § 10497.) This is because applicant and her attorneys necessarily have adverse interest with respect to the estimated average annual COLA, i.e., a higher COLA means a higher attorney’s fee and lower PTD indemnity payments to applicant and vice versa. Therefore, if a stipulated estimated average annual COLA is proposed, the WCJ should carefully question applicant to determine whether he has a “full appreciation” of its consequences (see Jefferson v. Dept of Youth Authority (2002) 28 Cal.4th 299, 304 [67 Cal.Comp.Cases 727, 730)], whether he might have “agree[d] to [an] unfortunate [stipulation] because of economic pressure or lack of competent advice” (see Johnson v. Workmen Comp. Appeals Bd. (1970) 2 Cal.3d 964, 973 [35 Ca1.Comp.Cases 362, 368]), and whether he had notice of the attorneys’ adverse interest and of his right to seek independent counsel (cf. Cal. Code Regs., tit. 8, § 10778).
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Tomlinson, 40 Cal.App.4th at p. 395 [60 Cal.Comp.Cases at pp. 1078-1079].)11 Accordingly, a reasonable attorney’s fee in a 100% lease ordinarily should not be based strictly on the PTD award’s present value, with an appropriate average annual COLA, if any.
In this regard, it must be remembered that, normally, the attorney’s fee in a 100% case is commuted from each and every bi-weekly PTD payment over the injured employee’s entire lifetime. This is significant in two respects.
First, section 5100 sets “conditions” on any commutation of disability indemnity. Among other things, section 5100(a) allows a commutation where the “commutation is for the best interest of the applicant” and further provides that, determining what is in the best interest of the applicant, the [WCAB] shall consider the general financial condition of the applicant, including but not limited to, the applicant’s ability to live without periodic indemnity payments and to discharge debts incurred prior to the date of injury.” Also, section 5100(b) sets another condition that the “commutation will avoid inequity and will not cause undue expense or hardship to the applicant.” (See Hulse v. Workers’ Comp. Appeals Ed. (1976) 63 Cal.App.3d 221, 229 [41 Cal.Comp.Cases 691, 696] [“[T]he Legislature has not intended that the [commutation] device should be employed except in the urgency situations to which the [WCAB] ha[s] limited it, upon a case-by-case basis, for more than a half century.”].) Accordingly, when an attorney’s fee‘in a 100% case is to be commuted from the periodic payments under the injured employee’s PTD award, the WCAB must consider whether the commutation is in the employee’s best interest. It also must consider whether the reduced periodic payments after commutation will affect the employee’s ability to live or otherwise cause the employee undue hardship. If the amount of the fee to be commuted would be contrary to these standards, the WCAB may decide to allow a lesser attorney’s fee, provided the fee is still “reasonable.”
11 Neither Shields nor applicant’s present attorneys submitted any time sheets in support of the “time expended” element of the reasonable attorney’s fee calculation. Although that element is only one factor to be considered, we observe that applicant’s attorneys would have had to have expended an extraordinary number of hours to warrant a nearly $300,000.00 overall fee.
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Second, a commuted attorney’s fee is based on the estimated present value of the employee’s lifetime PTD award using a predicted average annual increase in the SAWW and,therefore, a predicted average future COLA. But over his or her lifetime, the employee will receive actual annual COLAs based on the actual annual increase in the SAWW from year to year, if any. Accordingly, if the predicted average COLA (e.g., 4.6%) is less than the actual COLA (e.g., 2.99% in 2010 or 0% in 2011) in any given year, then the employee’s commuted bi-weekly benefits for that year will have been disproportionately reduced to accommodate the attorney’s fee. Moreover, this disproportionate reduction is exaggerated in each and every following year because the assumed 4.6% average future COLA compounds. This means that the attorney’s fee being commuted will be based on ever escalating assumed PTD payments, the injured employee’s actual PTD payments may not increase by nearly as much.12 Of course, we realize there may be years during an injured employee’s expected lifetime where the actual annual COLA will be greater than the assumed COLA. However, provided that the attorney’s fee being commuted is “reasonable” in light of the responsibility assumed, care exercised, time involved, and results obtained (Lab. Code, § 4906(d); Cal. Code Regs, tit. 8, § 10775), we believe the risk that the actual COLA will be greater than the assumed COLA is better borne by the attorney. After all, it is the attorney, not the injured employee, who benefits from the commutation of the attorney’s fee.
Our conclusion that a “reasonable” attorney’s fee in a 100% case should not be based strictly on the present value of the lifetime PTD award—as increased by any appropriate average annual COLA—is consistent with the basic and overriding purpose of the California workers
12 For example, let us assume that an injured employee’s PTD payments in year 1 are $500 per week and that the COLA begins in year 2. If a 4.6% assumed annual COLA is used for calculating an attorney’s fee, the the assumed PTD payments in year 2 will be taken at $523 per week (i.e. $500 as increased by 4.6%) In year 3, the assumed PTD will be taken at $547.06 per week (i.e., $523 as increased by 4.6%) and so on. However, if the actual COLAS in years 2 and 3 are 1% and 2%, respectively, then the actual PTD payments in the year 1 would be $505 per week (i.e., $500 as increased by 1%) and $515.10 per week in year 3 (i.e., $505 as increased by 2%).
For a more graphic illustration of this potentially increasing disproportionality, go to page 3, slide 6, at http://www.dir.ca.gov/dwc/educonf15/commutations/Commutations.pdf, which shows how a $100 per week PTD rate would stay constant over an approximately 50-year period if a 0% COLA is assumed, but would eventually increase to nearly $1000 per week if a 4.7% COLA is assumed.
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compensation system, which is to extend “adequate” benefits to industrially-injured employees and to compensate them for the effects of their injuries. (See Cal. Const., art. XIV, § 4.)13 Of course, attorney’s fees should not be fixed in a manner that discourages competent attorneys from accepting employment in workers’ compensation matters. (E.g., Pilkenton, 3 Cal.App. 4th at p.157 [57 Cal. Comp. Cases at p.147].) Nevertheless, an attorney’s fee comes out of the benefits awarded to the injured employee (Lab. Code, § 4903(a))14 and has expressly limited the WCAB to allowing only a “reasonable” attorney’s fee. (Lab. Code, §§ 4903(a), 4906(a).) The fee should be “reasonable” both for the employee and the attorney. Moreover, section 1.140 of the WCAB’s P&P Manual declares: “The WCAB emphatically rejects the theory that [an] applicant … should pay a higher fee to provide an offset for the cases which counsel handles at a loss. There is no reason for the deserving widow, the blind, the paraplegic or other employee with a major disability to underwrite the case of the employee with a minor or questionable claim.”15
Accordingly, in light of the “results obtained,” the present value of the injured employee’s PTD award, with any appropriate COLA, is an element to be considered in determining a
13 Article XIV, section 4, vests the Legislature “with plenary power… to create, and enforce a complete system of workers‘ compensation … to compensate … workers for injury or disability … . A complete system of workers’ compensation includes adequate provisions for the … general welfare of [injured] workers … . [These provisions] are expressly declared to be the social public policy of this State, binding upon all departments of the State government.”
14 As a workers’ compensation treatise said some time ago:
“Ordinarily the amount [of workers’ compensation benefits] recovered by the injured worker or his or her dependents is for necessary support, and lies between them and destitution. If back payments of indemnity have accrued, usually all of it is necessary to cover debts incurred during the period of litigation. If the fee comes out of future payments, again it competes with the claimant’s requirements for bread and butter.” (IA Hanna, Cal. Law of Employee Injuries and Workmen’s Compensation (2d ed. 1988 rev.) §l6.03, pp. 16-17 – 16-18.)
This statement applies with particular force where the injured employee is permanently totally disabled (100%). In many or most such cases, the employee’s PTD has a total loss of future earning capacity and is unable to effectively compete in the open labor market. Therefore, the PTD award may be what the employee will largely have to rely upon for the rest of his or her life.
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“reasonable” attorney’s fee in a 100% case. However, a reasonable attorney’s fee in a 1,00% case ordinarily should not be based strictly on the PTD award’s present value.
For the reasons discussed above, we will affirm the WCJ’s decision with regard to the finding of permanent total disability and the allowance of Largo’s lien. However, we will amend the WCJ’s decision to defer the issue of attorney’s fees and return this matter to the trial level for further proceedings and decision by the WC] consistent with this opinion. Pending the WCJ’s new decision, SCIF shall continue to pay PTD benefits at the commuted rate set forth in the WCJ’s original decision, but withhold all attorney’s fees in trust. The WCJ will be directed, upon issuance of her new decision on attorney’s fees, to serve a copy of it on the Appeals Board under a cover letter addressed to Rick Dietrich, Secretary, explaining that the panel in this case has requested such service.
For the foregoing reasons,
IT IS ORDERED, as the Decision After Reconsideration of the Workers’ Compensation Appeals Board, that the December 15, 2009 Findings and Award is AFFIRMED, EXCEPT that Finding of Fact N0. 6 and paragraph (a) of the Award are AMENDED as set forth below and that the following Orders are ADDED thereto:
FINDINGS OF FACT
6. The issue of attorney’s fees, as to amount and allocation, is deferred. Defendant shall hold all attorney’s fees in trust pending a new decision.
(a) Permanent disability in accordance with Findings of Fact number 5, less attorney’s fees to be determined by WCJ in further proceedings.
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IT IS ORDERED that, pending the WCJ’s new decision on the amount and allocation of reasonable attorney’s fees, SCIF shall continue to pay permanent total disability benefits at the commuted rate set forth in the WCJ’s original decision, but shall withhold all attorney’s fees in trust.
IT IS FURTHER ORDERED that, upon issuance of her new decision on attorney’s fees, the WCJ shall serve a copy of it on the Appeals Board under a cover letter addressed to Rick Dietrich, Secretary, explaining that the panel in this case has requested such service.
IT IS FURTHER ORDERED that this matter is RETURNED to the trial level for further
proceedings and a new decision by the WCJ consistent with this opinion.
WORKERS’ COMPENSATION APPEALS BOARD
DEPUTY NEIL P. SULLIVAN
ALFONSO J. MORESI
JAMES C. CUNEO
DATED AND FILED AT SAN FRANCISCO, CALIFORNIA
MAR 25, 2011
SERVICE MADE BY MAIL ON ABOVE DA TE ON THE PERSONS LISTED BELOW AT THEIR ADDRESSES AS SHOWN ON THE CURRENT OFFICIAL ADDRESS RECORD:
SHIELDS, HANNA & HAYTON
STATE COMPENSATION INSURANCE FUND
PAG & NPS/csl
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