California Court Denies Appeal of Closely-Watched Workers’ Comp Case

By | August 25, 2011

The California Supreme Court has rejected an appeal of a case many workers’ compensation insurers and businesses were hoping would be reversed.

Yesterday, the Supreme Court announced that it was not going to review the decision of the Fifth District Court of Appeal in the case State Compensation Insurance Fund v. W.C.A.B. [Workers’ Compensation Appeals Board], known popularly as the Almaraz case after the applicant in the original case, Mario Almaraz.

The rejection means that one of the pillars of the reforms to the California workers’ compensation system fashioned in 2004 has been knocked down, probably meaning there will be higher costs and greater uncertainty for workers’ compensation insurers.

“It’s pretty unequivocal that costs will continue to go up in California,” said Jerry Azevedo, of the Workers’ Compensation Action Network, a group that represents the interests of employers.

“We have to look to other ways to restore the predictability that the legislators [who enacted the 2004 reforms] were looking for,” he added.

The Almaraz case involved a trucker driver, Mario Almaraz, who sustained a back injury on the job. According to the 2004 reforms, physicians examining persons making workers’ compensation claims were supposed to follow the AMA Guides 5th edition very strictly when assessing the injured workers’ degree of permanent disability. Almaraz’s physician rated his disability at 12 percent, but also noted that the 12 percent degree of impairment did not adequately describe the extent and impact of the injury. His injury prevented him from prolonged sitting, so he could not do trucking at all.

He appealed to the Workers’ Compensation Appeals Board. His attorneys argued that a physician had to have latitude from the schedules in the AMA Guides when the Guides did not adequately capture the injury. The Appeals Board agreed, though it said that when a physician decides to rebut the schedule he still has to remain inside the Guides in finding his rationale for the disability rating he gives.

That is the decision the Fifth District Court of Appeals affirmed.

Azevedo said that freeing physicians to use their discretion this way undermines what the reformers were trying to achieve in 2004 — imposing a strict schedule to ensure that compensation awards were standard and predictable — and opens the door to more cases going to court, and perhaps some higher claims awards.

The Supreme Court rejection of the Almaraz case comes on the heels of final decisions in two other cases that also allow for greater physician discretion in assessing impairment — also, perhaps, promising more disputes and more variability. One of those cases is popularly known as the Guzman case. It was paired with the Almaraz case by the Workers’ Compensation Appeals Board, as it addressed the same issue. The other case is known popularly as the Ogilvie case. That case likewise concerned whether one could challenge the schedule. The decision in the case said that one could.

“The Supreme Court’s denial of review is disappointing but it is not completely unexpected in light of the High Court’s previous denial of review of the Sixth district Court of Appeal’s decision in Guzman on the same issue,” said Gina Simons, a spokesperson for the State Compensation Insurance Fund.

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