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DWC Unveils Proposed Rules
On May 9, 2008, the Division of Workers’ Compensation announced the long awaited revision of the permanent disability rating schedule (PDRS) which changes the arrangement of FEC adjustments for each injured part of body and also increases each FEC multiplier as well.
Effective Dates for 2009 PDRS
The proposed 2009 PDRS, mandated by Cal. Lab. Code § 4660(b)(2) and 8 Cal. Code Reg. § 9805, is effective for injuries occurring on or after 1/1/09 while the 2005 PDRS applies to injuries occurring between 1/1/05 and 12/31/08 and injuries that occurred prior to 1/1/05 that are not exempt pursuant to Cal. Lab. Code § 4660(d).
Noteworthy Changes of 2009 PDRS
Cal. Lab. Code § 4660(c) mandates revision of the PDRS at least every five years and any such revision must be based upon empirical evidence including data of loss of future earning capacity caused by injuries to specific parts of body. The proposed 2009 PDRS will increase the adopted 2005 PDRS FEC multipliers from the range of 1.1 to 1.4 to the proposed range of 1.2 to 1.5. When WPI ratings are converted to permanent disability ratings, the FEC adjustment will increase the WPI rating between 20% and 50%, depending upon the injured part of body.
Also, in the proposed 2009 PDRS, the assigned FEC multipliers for injured body parts are also “re-stacked” compared to the 2005 PDRS. For example, an injury to the spine under the 2005 PDRS has an FEC of 5 with the WPI rating increased by 35% and under the proposed 2009 PDRS, the spine has an FEC of 8 with a WPI rating increased by 50%. Knee injuries change from an FEC 2 under the 2005 PDRS with a WPI rating increasing by 10% to an FEC 1 under the 2009 PDRS with a WPI rating increasing by 20%. So there is a net increase of permanent disability even if a part of body injured results in a lower FEC multiplier category.
In addition, the proposed 2009 PDRS changes the adjustment for age – there are no adjustments for age except for an increase if the injured employee is under 21 or over 52 years of age.
The proposed changes for the 2009 PDRS are a welcome sign that injured workers are finally going to see some movement towards increasing permanent disability benefits. However, SB 899 reduced permanent disability benefits by an average of 40% and this proposed increase is a modest 16% increase over the benefits awarded under the 2005 PDRS, by the DWC’s own account. Whether these numbers truly reflect loss of future wages for a worker with a specific type of injury remains to be seen and these adjustments may be merely a product of political expedience rather than based upon hard data.
The age adjustment for the proposed 2009 PDRS makes empirical sense since it always seemed contrary to common sense that if a person has a loss of future earnings from an injury, an adjustment for the worker’s age should be completely the opposite of the increasing PD for age adjustments under both the 1997 and 2005 PDRS since the younger the injured worker, the more loss of earnings will usually occur as the young injured worker gets older.
If, in fact, the 2009 PDRS is based upon more solid, reliable and objective data of loss wages from specific types of injuries then the 2005 PDRS may be obsolete since it was based upon wage loss data that is stale and was not based on ratings under the AMA Guides 5th Edition. Remember, the 2005 PDRS was developed from April 19, 2004 when SB 899 was signed into law and December 31, 2004 when the 2005 PDRS was adopted by the DWC Administrative Director. The wage loss data was based upon the RAND study that was made public in December 2004 and was not based upon WPI ratings under the AMA Guides 5th Edition since there was insufficient data to use with WPI ratings at the time. The 2009 PDRS is based upon more recent empirical data that did not exist when the 2005 PDRS was developed and adopted.
This will create potential litigation in pending cases and perhaps cause Petitions to Reopen to be filed in cases involving resolved Findings and Awards and Stipulated Awards where more recent empirical data may be the basis of arguing that the 2009 PDRS should apply retroactively since it is based on better empirical data than upon which the 2005 PDRS was based.
Trial judges, the WCAB and probably the appellate courts will have to determine whether the 2009 PDRS should apply in current cases where the date of injury is before or after 1/1/09 notwithstanding the contrary language in 8 Cal. Code Reg. § 9805. Remember, the California Labor Code provisions in Section 4660(a), (b) and (c) take precedence over any administrative rule that implements those provisions and since the proposed 2009 PDRS has more recent and presumably more accurate empirical wage loss data, the argument is strong that it should apply to all cases, regardless of the date of injury, except those cases exempt under Section 4660(d).
In any event, attorneys and claims administrators may have to grapple with not one, not two, but now three separate permanent disability rating schedules since April 1997, and even a fourth one before that one. Who said reforms were intended to simplify the workers’ compensation system? Now, on to discuss the ramifications of having four separate permanent disability rating schedules under the WCAB en banc decision of Benson… Are your heads spinning yet?
Robert G. Rassp is the author of The Lawyer's Guide to the AMA Guides and California Workers' Compensation (LexisNexis Matthew Bender).
When will you be updating your book The Lawyer''s Guide to the AMA Guides and California Workers'' Compensation with this new information on the 2009 PDRS?
When will these changes be addressed in your book The Lawyer''s Guide to the AMA Guides and California Workers'' Compensation?
LexisNexis has agreed to publish a supplement to the 2008 edition of "The Lawyer''s Guide" this summer. It''ll include the necessary elements of the new 2009 PDRS along with explanation for using the new PDRS.<BR><BR>I look forward to incorporating the 2009 PDRS and additional instructions & commentary in the 2009 edition of "The Lawyer''s Guide". We plan to include both the 2005 and 2009 PDRS along with detailed revisions of Chs 1, 2, and 3 of "The Lawyer''s Guide" to incorporate the regulation changes and to update existing material.<BR><BR>As I told our readers in the Foreword to the 2006 Edition of "The Lawyer''s Guide", this book is a living document and needs to be updated every year since things are changing so rapidly in workers'' compensation law.<BR>
Will there be attempts by insurance companies to use the 2009 PDRS in conjunction with the AMA Guides 6th Edition to bring down the amount of benefits for injured workers?
Thank you for your comment. The 2009 PDRS will not be used with the 6th Edition of the AMA Guides because in order to use the 6th edition of the AMA Guides the California legislature needs to amend Labor Code Section 4660(b)(1) which it is not likely to do in the foreseeable future.
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