Commentary: 100 Percent PD Award Encourages Discrimination

By Mark Fletcher | March 22, 2011

Bradford & Barthel has filed a Petition for Review with the California Supreme Court questioning whether the Workers’ Compensation Appeals Board may make a 100 percent permanent disability award that ignores the American Medical Association (AMA) Guides and Almaraz/Guzman, and is based on a physician’s opinion that potential future employers would illegally discriminate against the injured worker were he to apply for hire.

In the City of Irvine v. WCAB (Hansen) a police officer suffered a disabling stroke, causing some paralysis, weakness and psychological problems. The panel qualified medical evaluation (PQME) provided various impairments from the AMA Guides. Taken in combination with psych impairment outlined by a second qualified medical evaluator (QME), the Disability Evaluation Unit (DEU) determined permanent disability (PD) rated to 98 percent.

However, largely based on the PQME’s assertions that the officer would never work again, in part because no employer would hire him and, thus, he was permanently totally disabled, the workers’ compensation judge (WCJ) awarded 100 percent PD. The judge also relied on a vocational rehabilitation expert’s testimony that the officer had lost the ability to compete in the labor market, despite that expert’s admission that she was not differentiating between the inability to compete in the open labor market from the loss of future earning capacity (DFEC), and her concession that she had performed no testing for, nor analysis of, loss of earning capacity.

This case involves the interplay between Labor Code §4660 and §4662. §4660 (a) and (b)(2) mandate that in determining ‘percentages’ of PD account ‘shall’ be taken of, among other things, the diminished earning capacity of the employee, and that the determination of diminished FEC use a numeric formula based on the RAND study. §4662((b)(1) provides that the nature of the injury ‘shall’ incorporate the AMA Guides percentages of disability. In this decision, these mandates have been wholly ignored.

While Labor Code §4662 provides a list of conditions conclusively presumed to produce permanent total disability — such as total blindness or loss of use of one’s hands — the statute concludes with a curious sentence: “In all other cases, permanent total disability shall be determined in accordance with the fact.” This has been interpreted by various recent panel decisions to mean that permanent total disability might not need to be derived by the mandates of Labor Code §4660.

Don Barthel, the defense attorney who argued Guzman before the 6th District Court of Appeal, described the WCAB’s interpretation of §4662 as “the exception that swallows the rule.” Stated Barthel, “We had thought that, if an injured worker was unhappy with a PD award based on the AMA Guides and rating schedule, his options were to rebut the Guides by applying alternative chapters, tables or methods within the four corners of the Guides, or — per Ogilive — rebutting the DFEC. Now the WCAB tells us in that — if the applicant seeks 100 percent PD — he need not even bother with the Guides or DFEC. Apparently a doctor’s bare assertion of lack of employability is enough. This doesn’t sound like substantial evidence to me.”

The defense petition argues §4660 and §4662 must be interpreted in a consistent manner. For medical evidence, the AMA Guides must be used, consistent with Guzman; and for vocational (non-medical) evidence, the standard for 100 percent PD must be a complete loss of earning capacity.

This case also undercuts state and federal anti-discrimination law. The WCJ relied on the doctor’s assertion that no employer will hire Hansen. This anticipates unlawful discrimination on the part of prospective employers. As such, an award of 100 percent PD violates public policy. Rather than provide the required reasonable accommodations, employers and prospective employers will be freer to discriminate against severely disabled individuals, if they know that it is likely that 100 percent PD will be awarded in the WC system. And injured workers will more likely give up a job search in favor of WC benefits if they know such benefits are available based on anticipated discrimination.

“Mr Hansen himself testified he himself did not even look for work after his injury. No effort was made — none whatsoever — despite the PQME’s observation that applicant could do sedentary work. This decision rewards and encourages applicants to not look for work. Thus, it contravenes one of SB 899’s primary objectives: returning injured employees to work,” Barthel said.

Download a copy of Bradford & Barthel’s Petition for Review here.

Mark Fletcher is the managing partner for Bradford & Barthel, overseeing the day-to-day operations of the firm’s 13 offices. His primary area of practice is workers’ compensation. Founded in 1997 by Thomas Bradford and Donald Barthel, Bradford & Barthel LLP is a leader in the aggressive defense of workers’ compensation, subrogation, and employment, and labor matters.

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