View this article online: https://www.insurancejournal.com/news/west/2009/04/07/99404.htm
The California Workers’ Compensation Appeals Board recently ruled on two permanent disability (PD) workers’ compensation insurance cases that physicians are not necessarily bound by the American Medical Association’s “Guides to the Evaluation of Permanent Impairment” portion of the 2005 Schedule for Rating Permanent Disabilities — the implications of which could affect future PD impairment ratings.
In en banc decisions on Almaraz v. Environmental Recovery Services and Guzman v. Milpitas Unified School District, WCAB held that the AMA Guides portion of the 2005 Schedule is rebuttable by “showing that an impairment rating based on the AMA Guides would result in a permanent disability award that would be inequitable, disproportionate, and not a fair and accurate measure of the employee’s permanent disability … and when an impairment rating based on the AMA Guides has been rebutted, the WCAB may make an impairment determination that considers medical opinions that are not based or are only partially based on the AMA Guides.”
In the Almaraz case, applicant Mario Almaraz suffered an industrial injury to his back while employed by Environmental Recovery Services, which was insured by the State Compensation Insurance Fund. The workers’ compensation administrative law judge concluded he was not free to make a PD finding based on the work preclusions set forth by the doctor and found that the PD was 14 percent after apportionment of 20 percent of his disability to non-industrial causes. Almaraz filed for reconsideration.
In the Guzman case, Joyce Guzman sustained an industrial injury to her bilateral upper extremities while employed as a secretary by the Milpitas Unified School District. Her doctor concluded that her injury caused 3 percent whole person impairment (WPI) under the AMA Guides, and also that her injury caused a 25 percent loss of her pre-injury capacity for pushing, pulling, grasping, gripping, keyboarding and fine manipulation.
Yet he further stated:
“You are aware by now that there is often a discrepancy between the disability and the impairment. The type of problem [applicant] has is legitimate but does not rate very much (if anything) under the AMA Guides. Based on her ADL [(i.e., activities of daily living)] losses, each upper extremity would have a 15 percent WPI … This is not a method that is sanctioned by the AMA Guides.”
In Guzman’s recommended PD rating, the disability evaluation specialist found 12 percent permanent disability, which was the adjusted rating for her upper extremities based on 3 percent WPI for each extremity, but the rater testified that if she were allowed to consider the doctor’s 15 percent WIP for each upper extremity, then Guzman’s final PD rating would be 39 percent, after adjustment for age and occupation. Guzman filed for reconsideration.
“We specifically conclude that the AMA Guides portion of the 2005 Schedule is rebuttable. Nothing in [Labor Code] section 4660 suggests otherwise,” the WCAB wrote. “Once again, section 4660(c) still provides that the Schedule is ‘prima facie evidence of the percentage of permanent disability to be attributed to each injury covered by the schedule.’ Because section 4660(c) still provides that the Schedule is rebuttable, then no portion of it — including the AMA Guides portion — is conclusive. Any contrary interpretation would nullify, at least in part, the language of section 4660(c). Moreover, had the Legislature intended that the AMA Guides portion of the Schedule be unrebuttable, it could have expressly so stated. It did not.”
WCAB said the state Supreme Court defined prima facie as “evidence is that which suffices for the proof of a particular fact, until contradicted and overcome by other evidence.”
WCAB said the case law of other jurisdictions such as Florida, Hawaii, South Dakota and New Mexico recognizes that the AMA Guides need not always be followed. Furthermore, the Appeals Board wrote, “Because the AMA Guides does not actually measure work impairment, the AMA Guides also indicates it is but a component or tool for assessing such impairment. Accordingly, the Guides provides [sic] that when making a work impairment assessment, it is appropriate in some cases for a physician to consider factors outside the Guides, including the injured employee’s ability to perform work and his or her need for work restrictions or accommodations.”
In another case, Wanda Ogilvie v. City and County of San Francisco, WCAB issued another en banc decision noting how to determine if the diminished future earning capacity (DFEC) portion of the 2005 Schedule is rebuttable, and what system to use to correct the mathematical calculations.
In that case, Wanda Ogilvie sustained an industrial injury to her right knee, low back and neck while employed as a transit operator. Her doctor found 4 percent WPI of the right knee and 8 percent WPI of the lumbar spine, resulting in a combined 10 percent WPI under the AMA Guides. He never provided a post-surgical assessment of her disability under the AMA Guides. The WCJ used three methods to determine Ogilvie’s disability award, which she ultimately asked to be reconsidered.
The WCAB said the DFEC portion of the new rating schedule may be rebutted by obtaining two sets of wage data (one for the injured employee and one for similarly situated employees); doing “some simple mathematical calculations with that wage data to determine the injured employee’s individualized proportional earnings loss; dividing the employee’s whole person impairment by the proportional earnings loss to obtain a ratio; and seeing if the ration falls within certain ranges of ratios in Table A of the 2005 Schedule.”
If it does, “the determination of the employee’s DFEC adjustment factor is simple and relates back to the Schedule,” WCAB said. “If it does not, then a non-complex formula is used to perform a few additional calculations to determine an individualized DFEC adjustment factor.”
Workers’ comp reforms including SB 899 were implemented to try to cut down the dispute level between all the players involved (doctors, lawyers, employers, employees) in a workers’ compensation award, according to David Torres, senior partner with the Advocacy Division of Employer Support Services Group Inc. based in Rancho Cucamonga, Calif. He predicted the en banc decisions will “open the door again” for insurance costs to escalate, and that the state is headed toward pre-reform cost levels that will be passed onto employers.
“We may not be there overnight, but as costs escalate and profits shrink, carriers will get out of the business,” he said. “The next thing you know, there will be fewer players, and with less competition, the workers’ comp insurance costs will go up.”
Torres explained that the major factor in workers’ comp insurance cost increases will likely be to adjust for increased litigation costs. If a doctor has to issue a report, that will take more time, and the doctor will charge for that, he said. Frictional costs — costs that arise when the employee disputes his workers’ comp award — could be as high as $15,000 per file. “On any given file, you could spend $5,000 for expert testimony and $15,000 for friction costs, and then you have an extra cost of $20,000 to determine if the applicant gets more money. Why not just give the applicant the extra money?” he said.
In the meantime, the claimant also will be waiting longer for his or her award when there is litigation.
John C. Duncan, administrator of the Uninsured Employers Benefits Trust Fund and the Subsequent Injuries Benefits Trust Fund, has requested Chairman Miller and the Commissioners to vacate their en banc decisions. His reason: Among other things, “the announced rebuttal criteria discussed in Almaraz and Guzman are unclear and the lack of clarity is having far-reaching, system-wide effects.”
He pointed out that the Board should consider soliciting argument from a broader range of stakeholders in the workers’ compensation system as was done in the past when the board invited amicus briefing in matters of potentially far-reaching effect.
“These decisions already are having substantial impact both on the administration of the workers’ compensation adjudication system and on the level of workers’ compensation benefits due injured workers,” Duncan added.
For instance, the Workers’ Compensation Insurance Rating Bureau of California recently submitted a filing to the California Department of Insurance recommending a 24.4 percent increase in pure premium rates. WCIRB said 5.8 percent of that recommendation would to accommodate for the estimated impact of the en banc decisions. The other 17.6 percent would be to account for high medical costs.
And, Jack Hannan, marketing and communications for the WCIRB, said the 5.8 percent was a modest estimate of the cost impact. “I think everyone thought that would be the minimum impact those cases may have on permanent disability costs on California,” he said.
To view the decisions, visit http://www.dir.ca.gov/wcab/wcab_enbanc.htm.