• Court of Appeal Affirms WCAB Decision on Good Faith Personnel Action Defense in Psych Claims in San Francisco Unified School District v. WCAB and Linda Cardozo (75 Cal. Comp. Cases 1251)
  • June 9, 2014
  • Law Firm: Grancell Stander Reubens Thomas Kinsey A Professional Corporation - El Segundo Office
  • On November 16, 2010, the 1 st District Court of Appeal affirmed a WCAB decision which found that all industrial and nonindustrial causal factors must be considered when determining if a psychiatric injury is substantially caused by “good faith personnel actions.”

    In this case, the applicant, Linda Cardozo, was employed by San Francisco Unified School District as bilingual teacher at an elementary school for 20 years. She claimed a cumulative trauma to her psyche arising out of her teaching position. She argued that her psychiatric injury was caused by the stress of teaching a class in two languages that involved two different grade levels in addition to conflicts with the school principal.

    Ms. Cardozo was evaluated by Dr. Gordon Baumbacher who opined that she sustained a psychiatric injury caused as follows: 15 percent due to nonindustrial factors, 51 percent due to activities as a teacher and 34 percent due to the principal’s “personnel actions.”

    Labor Code Section 3208.3(h) states that the employer will owe no benefits for a psychiatric injury if the injury is substantially caused by a lawful, nondiscriminatory, good faith personnel action. Substantial cause is defined in the same Labor Code section as “at least 35 to 40 percent of the causation from all sources combined.”

    The School District asserted the defense and had the burden of proving that the principal’s good faith personnel actions precluded the applicant’s psychiatric injury claim. However, the WCAB judge stated that the School District failed to meet its burden of proof since only 34 percent of the injury’s causation related to good faith personnel actions. This did not meet the 35 to 40 threshold percent mandated by the Labor Code.

    Thereafter, the School District appealed the WCAB decision to the appellate court and argued that the “substantial cause” determination should not include nonindustrial causes thereby eliminating the 15 percent apportionment to nonindustrial causes in this instance (leaving only 85 percent causation). The School District further argued that if nonindustrial causes were not accounted for then 34 percent divided by 85 percent would equal 40 percent of the psychiatric injury attributable to the good faith personnel actions.

    The appellate court did not agree. In making its determination the appellate court considered the plain language of Labor Code Section 3208.3(h), the legislative history of the statute and the wider historical circumstances of the statute’s enactment. The court referenced the 1989 reform act and stated that it was the Legislature’s intent to limit claims for psychiatric benefits due to their potential for fraud and abuse. Even so, the opinion states that Labor Code Section 3208.3(b)(3) directs the reader to look at “all sources combined” when calculating the amount of psychiatric injury caused by good faith personnel actions. The court held that “all sources combined” can only reasonably be interpreted to mean industrial and nonindustrial causes. Therefore, the WCAB decision was affirmed. Nonindustrial causes must be considered when calculating the percentage of causation to attributable to the good faith personnel actions.

    Oftentimes psychiatric cases are denied on the basis of good faith personnel action. However, this case brings to light to need to conduct due diligence during the discovery period and attain the applicant’s personnel file (including performance reviews, etc.) and secure witnesses who can testify to the applicant’s shortcomings at work. A solid evidentiary basis for the good faith personnel defense must be developed since nonindustrial factors, as in this case, can push the good faith personnel causes beneath the threshold mandated by the Labor Code.