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Workers' Compensation

California: Dahl Reversed, Ability to Be Rehabilitated Key to Rebuttal of PDRS

The First Appellate District has issued its much anticipated decision in Contra Costa County v W.C.A.B. (Dahl) today. The court reversed the W.C.A.B. decision awarding 79% permanent disability in reliance upon vocation testimony holding that the expert testimony failed to meet the criterion set out in Ogilvie v W.C.A.B. In reversing the W.C.A.B., the court has dramatically changed the landscape of what it means to rebut the Permanent Disability Rating Schedule (PDRS). The case has been remanded to the W.C.A.B. for further proceedings.

The court noted under the holding in Ogilvie, a permanent disability could be rebutted in one of three ways. The applicant in this case sought to rebut the rating in the most common fashion to rebut the DEU rating of 59% by presenting vocational evidence that here combined impairments resulted in a greater diminished earning capacity than did the DUE rating. The court found the simple replacement of the DEU rating with another number based on upon a vocational expert’s opinion that the employee’s diminished earning capacity would be different from the DEU rating was not adequate to rebut the PDRS as the rebuttal failed to address the required rehabilitation element from Ogilvie :

“…Dahl sought to invoke the second method approved in Ogilvie (the “LeBoeuf method”)[fn1] under which the employee shows she “will have a greater loss of future earnings than reflected in a rating because, due to the industrial injury, the employee is not amenable to rehabilitation.” (Ogilvie, 197 Cal.App.4th at p. 1275.) Dahl’s “rebuttal,” however, included no evidence that the industrial injuries she sustained to her neck and shoulder rendered her incapable of rehabilitation. Rather, her “rebuttal” consisted solely of a vocational expert’s opinion that his method for determining Dahl’s diminished future earnings capacity produced a higher rating than that of the rating produced by the Schedule and that his method more accurately measured Dahl’s diminished future earnings.

Dahl’s attempted rebuttal did not comport with any of the methods approved in Ogilvie for rebutting the rating provided using the rating schedule and is therefore foreclosed by Ogilvie.  Accordingly, we reverse the WCAB’s decision, and annul the award.”

In discussing the facts of the case, the court focused on testimony from both vocational experts indicating that Dahl while vocationally limited based on her injury, was also an excellent candidate for vocational rehabilitation. While the defendant, and multiple amicus, raised multiple potential defects in the WCJ and W.C.A.B.’s analysis of the application of Ogilvie, the court focused on the failure to consider the employee’s ability to be rehabilitated as a result of the injury. Having found that Dahl’s rebuttal evidence was inadequate, the court declined to comment on the other raised defects in the process.

After discussing the development of case law leading up to Ogilvie (including references to the Supreme Court decision in LeBoeuf) the court found:

“Dahl’s attempt to rebut her disability rating bears little resemblance to any of the methods described in Ogilvie, including the rebuttal method derived from LeBoeuf. Dahl did not explain how her injury prevented her from participating in vocational rehabilitation. In fact, Dahl’s own vocational expert conceded that she was a good rehabilitation candidate and also stated a discussion of vocational rehabilitation was “irrelevant.” The gravamen of Dahl’s rebuttal is that her expert’s analysis of the earning capacity—based on the earnings loss of a group of individuals that the expert identified as more similarly situated to Dahl than the group identified in the Schedule for someone with her characteristics—is superior to the method and rating called for by the statute. This approach is at odds with Ogilvie, which rejected a similar attempt to simply substitute a vocational expert’s or judge- or board-preferred methodology for the statutorily prescribed rating system. Ogilvie signaled that it would be a rare case in which an applicant or employer could rebut a scheduled rating. Yet under the WCAB’s approach here, claimants would be permitted to rebut their scheduled rating in virtually all cases where an expert can provide a statistical analysis of a group of individuals he or she claims is more similarly situated to the applicant than that identified in the Schedule.”

The court emphasized in its opinion that both vocational experts agreed the applicant was able to benefit from vocational rehabilitation and has skills which made her employable. The court further rejected the rational of applicant’s vocational expert that rehabilitation was not feasible as it would not restore the applicant to her pre-injury earning capacity. The court pointed out that such an approach was contrary to the statutory scheme for compensating disability:

“…Malmuth concluded Dahl is not amenable to rehabilitation because it would not restore her, or a similarly situated worker, to full pre-injury earning capacity. But this is precisely what the statutory formula for diminished future earning capacity factor is intended to capture. Most work-related injuries that qualify an employee for workers’ compensation benefits reduce earning potential to some degree. Thus, allowing a claimant to rebut his or her permanent disability rating through a showing of some diminished future earning capacity would render the statutory formula virtually meaningless. Nothing in Ogilvie or any of the case law on which it relies suggests departure from the statutory rating system is permissible whenever an employee cannot be returned to his or her pre-injury earning capacity.”

The court also appeared to take issue with the initial W.C.A.B. finding in Dahl in the first Petition for Reconsideration. In that decision the W.C.A.B. rejected the WCJ’s opinion that the only rebuttal under Ogilvie was where the employee’s injury rendered the employee 100%. The W.C.A.B. reversed and remanded, indicating Ogilvie could be invoked to provide a rebuttal rating that was less than 100%. In Dahl the court commented:

“We are skeptical of WCAB’s conclusion that an employee may invoke the second Ogilvie rebuttal method where the inability to rehabilitate results in less than a 100-percent permanent disability.[fn2] However, we need not decide this issue since the County did not seek a writ from the WCAB decision adopting the partial impairment rule. In any event, even if an employee’s ability to rehabilitate need only be impaired (and not eliminated) in order to rebut the schedule, Dahl failed to make such a showing here…”

The court also rejected Dahl’s argument that the elimination of the vocational rehabilitation benefit was a basis for concluding vocational rehabilitation was not feasible. The court pointed to the existence of the SJDB voucher system, and also the language in LeBoeuf that extraneous factors were a consideration in rebutting the PDRS.

The court in its parting language on the case also emphasized the very limited nature of rebuttal and the presumption in favor of the PDRS.

“In sum, we find WCAB’s approach in this case flies in the face of Ogilvie and the 2004 amendments to the workers’ compensation scheme. Under the 2004 amendments, a claimant’s scheduled rating is presumptively correct. Ogilvie confirmed the Legislature meant what it said, and that claimants may not rebut their disability rating merely by offering an alternative calculation of their diminished future earning capacity. While Ogilvie found the 2004 amendments did not overthrow certain long-held approaches to calculating earning capacity, it clearly did not intend those approaches to be construed so broadly as to return us to the ad-hoc decision making that prevailed prior to 2004. Following the WCAB’s approach in this case would do just that. Claimants could rebut their presumptively correct disability rating merely by presenting an analysis that shows a greater diminished future earning capacity than that determined by applying the Schedule. As Ogilvie makes clear, this approach is no longer permissible.”

Comments and Conclusions:

To quote Ignacio Montoya from the movie The Princess Bride:

“You keep using that word, I do not think it means what you think it means”

Like the character Fezzik in the movie, the workers’ compensation community has been using words that appear to not mean what we think they mean. Words such as “rebuttal”, “Ogilvie” and “LeBoeuf”. After the court’s decision in this case, we should all have a much better idea not only what those words mean but even more importantly, what they do not mean.

For defendants, there is lots in this case to like and little to quibble with. One of the points that is made over and over in the decision is the limited nature of rebuttal to the PDRS. The court comments in multiple places in the decision that the W.C.A.B.’s approach allows rebuttal in almost every case—one of the criticisms of the DFEC approach to the rebuttal of the PDRS. The court specifically rejects the concept that rebuttal is simply a matter of providing a different number for the DFEC.

“…To hold otherwise would mean every employee could now rebut their scheduled rating using a LeBoeuf analysis, turning a limited exception into the general rule. There is no indication Ogilvie intended the second rebuttal method to be so broad and all-encompassing.”

Prior to the oral argument the court provided the parties with some hint that the approach indicated above was being considered. The court sent to the parties a list of questions that it wanted considered. Those issues focused squarely on the applicant’s ability to be rehabilitated, whether there was evidence the employee could not be rehabilitated and further asking for discussion on the different methodologies used by both experts (and other issues including some procedural). The court gave every indication that the issue of the employee’s ability to be rehabilitated was a central question in the court’s mind.

The court comes very close to holding that under Ogilvie and LeBoeuf, rebuttal requires a showing that the injury completely eliminates the ability to be rehabilitated. However, the rational given by the court, and the reliance on the language in LeBoeuf, suggest that such an approach may be legally supportable. The court comments that the entire concept of permanent disability indicates there is some diminution of earning capacity.

This decision should significantly limit the application of Ogilvie to a very few cases where the employee’s ability to be rehabilitated, due to the work injury alone, has a significant impact on the ability to be rehabilitated. It may end up limiting the ability to rebut the PDRS to cases where the employee has completely lost the ability to be rehabilitated. The court certainly did not spend any time trying to clarify exactly how one evaluates the partial loss of ability to be rehabilitated and instead focused on the language in both LeBoeuf and Ogilvie about the actual ability to be rehabilitated.

The area where I practice, Oakland/San Francisco, has been one of the hotbeds of Ogilvie litigation (Ogilvie was in SF with Dahl in Oakland). Even in cases where an applicant attorney did not obtain rebuttal reports, there were frequently threats that such a step was being considered in an effort to bolster the value of settlement. The court’s language in Dahl suggest strongly that application of Ogilvie is much more limited than WCJs, the W.C.A.B. and most attorneys have been considering. One of the criticisms of the approach to Ogilvie litigation to the present has been the ease with which a different “number” could be generated. I have yet to see a case where the number under the PDRS is the same as a DFEC analysis. The Dahl court appears to acknowledge that such rebuttal figures do not meet the Ogilvie criterion. The key is rehabilitation. From a defense perspective we also need to focus on the repeated references in Dahl to the language in both Ogilvie and LeBoeuf that only the effect of the work injury can be considered in determining whether the PDRS can be rebutted and factors such as education, language, etc. are to be excluded.

Court footnotes:

1. The method was approved by the California Supreme Court in LeBoeuf v. Workers’ Compensation Appeals Board (1983) 34 Cal.3d 234 (LeBoeuf).

2. For the same reason as the rule advocated by Malmuth allowing rebuttal whenever an employee shows she cannot be expected to earn the same as she did prior to injury, a partial impairment rule would allow for rebuttal in a wide swath of cases. Many injured employees cannot return to the precise position they held before their injury or to an equally remunerative one. Ogilvie does not appear to contemplate rebuttal of the scheduled rating in this circumstance, since the Schedule’s formula for determining diminished future earning capacity takes into account such limitations. Notably, the two cases cited by Ogilvie which found claimants were unable to rehabilitate involved injuries that rendered the claimants unable to return to any type of gainful employment. (See LeBoeuf, supra, 34 Cal.3d at pp. 239–240; Gottschalks v. Workers’ Compensation Appeals Bd., supra, 68 Cal.Comp.Cases at p.1716.)

© Copyright 2015 Shaw, Jacobsmeyer, Crain & Claffey PC. All rights reserved. Reprinted with permission.