Is Employer or Employee Knowledge of a Pre-Existing Disability Required for SIBTF Benefit Eligibility?

That was the question at the heart of Ferguson v. IAC (1958) 50 Cal.2d 469.

Lester Ferguson was a 43 year old meat cutter who fractured his right hip at work in 1956. After the fracture, it was discovered that Mr. Ferguson suffered from progressive muscular dystrophy. This was not known to either Mr. Ferguson or his employer until after his fracture.

At trial, the WCJ found that Mr. Ferguson’s permanent disability rated 14.5% and that he “had a previous permanent partial disability consisting of primary progressive muscular dystrophy affecting …. lower extremities.” The WCJ also found that the combination of the disability resulted in 100% permanent disability which would entitle Mr. Ferguson to SIBTF benefits.

The IAC granted reconsideration and based on the fact that Mr. Ferguson had failed to prove that his employer knew of the pre-existing disability concluded that Mr. Ferguson was NOT entitled to SIBTF benefits.

On appeal, the California Supreme Court disagreed. It reasoned, “… the statute contemplates that the previous condition must be actually ‘labor disabling,’ and that such disablement, rather than ‘employer knowledge,’ is the pertinent factor to be considered in determining whether the employee is entitled to subsequent injuries payments under the terms of section 4751.”

SIF v. IAC, Charles Allen (1961) 56 Cal. 2d 842 provides a similar example.

Petitioner SIF sought annulment of an award to injured worker Charles Allen. In August 1956, Allen, in his capacity as a structural iron worker, fell 20-30 feet landings on his hands and head. After the fall, he complained of partial deafness as well as other injuries. Prior to this injury, he was unaware of any deafness. A medical evaluator noted that Allen 37% hearing loss in the left ear and 95% hearing loss in the right ear compared to 25% hearing loss in each ear prior to the fall. The commission provided 85.5% permanent disability to Allen of which 79% was attributed to the 1956 industrial injury and 6.5% to pre-existing hearing loss and other pre-existing factors. He was awarded SIF benefits on the basis of the 6.5% pre-existing disability, notwithstanding his lack of awareness of hearing loss prior to the industrial injury.

SIF argued that the award should be annulled because Allen’s pre-existing hearing loss did not constitute a “previous disability or impairment” consistent with Labor Code 4751 as it was not “labor disabling.”

The Court disagreed with SIF’s argument reasoning, “the prior disablement need not be reflected in the form of net loss of earnings received, but … it should at least be of a kind which could ground an award of permanent partial disability and that to qualify for resort to the SIF an employee must show that prior to the occurrence of the subsequent industrial injury he had attained the factual status of the ‘permanently partially disabled’ and that such previously incepted disability was labor disabling, but that previous knowledge thereof by the employer is not inherently as a matter of law required as a condition to an award to the employee of payments from the Subsequent Injuries Fund.”

The Court went on to state, “It is clear under these tests Allen’s preexisting permanent partial loss of hearing was sufficient … to support the finding that he was permanent partially disabled, that such disability was labor disabling even though it had not resulted in loss of earning and had not interfered with his employment in the particular field in which he was then working, and that it was of a kind which could ground an award of permanent partial disability. … a condition of substantial deafness can reasonably be expected to handicap an employee’s ability in the general labor market to get and hold a new job …”

It was on this basis that the California Supreme Court affirmed the award of SIF benefits to Allen.

This remains the standard in California today. Neither employer nor employee knowledge of a pre-existing disability is required for the employee to be eligible for SIBTF benefits.

Disclaimer: The information in this article is for general information purposes and is not intended, nor should be it construed, as legal advice. You should consult with an attorney for legal advice on a specific matter.

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