California: Labor Code §4660.1 Excludes Vocational Rehabilitation Evidence to Rebut the PDRS for Injuries Occurring On or After 1/1/13

By: Christian P. Kerry, Esq.

Introduction

Labor Code §4660.1(a), by its express terms, applies to all injuries occurring on or after January 1, 2013. It provides in pertinent part that in determining the percentages of permanent partial or permanent total disability, account shall be taken of the nature of the physical injury or disfigurement, the occupation of the injured employee, and his or her age at the time of injury. These factors are inclusive. Unlike prior iterations of the formulae for calculating permanent impairment, vocational rehabilitation evidence would not be relevant to augment or “rebut” these factors. The nature of the physical injury or disfigurement is determined by a medical expert; the occupation of the injured employee is a factual issue to be decided by the trier-of-fact; the age of the employee at the time of injury is a mathematical calculation. Therefore, vocational rehabilitation evidence is not relevant, and thus not admissible, for claims with dates of injury pre-existing January 1, 2013.

Labor Code §4660 for Injuries Prior to 1/1/05

Understanding why vocational rehabilitation evidence was relevant to prior versions of the Labor Code but is no longer applicable to Labor Code §4660.1 requires a review of the pertinent history of the evolution of how permanent impairment was calculated before, and how it is calculated now. As Mr. Gearheart correctly identifies, Labor Code §4660(a) as it existed until April 2004 provided as follows:

In determining the percentages of permanent disability, account shall be taken of the nature of the physical injury or disfigurement, the occupation of the injured employee, and his age at the time of such injury, consideration being given to the diminished ability of such injured employee to compete in an open labor market. (Emphasis added.)

There is no dispute that Labor Code §4660(c) permits rebuttal of the PDRS. It clearly provides that the PDRS shall be prima facie evidence of the percentage of permanent disability. As courts have determined, the very nature of prima facie evidence is that it is rebuttable. (Universal City Studios, Inc. v. Workers’ Comp. Appeals Bd. (Lewis) (1979) 99 Cal.App.3d 647, 662-663.) Indeed, if the legislature intended the PDRS to be irrebuttable it is noteworthy it would have used the language “conclusive.”

With the understanding that a medical expert is necessary to determine the nature of the physical injury or disfigurement, and that the occupation of the injured employee and his age at the time of injury are relatively immutable, representatives of injured workers thus cleverly sought to use vocational rehabilitation evidence to rebut an injured employees diminished ability to compete in the open labor market. The strategy was undeniably successful. In several instances the Appeals Board held that an injured worker was totally and permanently disabled based upon an injured worker’s inability to compete in the open labor market even though permanent disability under Labor Code §4660(a) would have been less than 100%. (See generally, Sharp Grossmont Hospital v. Workers’ Comp. Appeals Bd. (Powell) (2006) 71 Cal.Comp.Cases 85 (writ den.); South Coast Air Quality, Management District v. Workers’ Comp. Appeals Bd. (Zapfel) (2001) 66 Cal.Comp.Cases 1239 (writ den.); C & C Industries v. Workers’ Comp. Appeals Bd. (Fraga) (2001) 66 Cal.Comp.Cases 1186 (writ den.); Contra Costa County v. Workers’ Comp. Appeals Bd. (Knox) (1994) 59 Cal.Comp.Cases 221 (writ den.).)

Revised Labor Code §4660 under Senate Bill 899

Under Senate Bill 899 the calculation for permanent impairment was fundamentally changed. Effective for injuries on or after 1/1/05, Labor Code §4660(a) was revised to calculate permanent disability as follows:

In determining the percentages of permanent disability, account shall be taken of the nature of the physical injury or disfigurement, the occupation of the injured employee, and his or her age at the time of injury, consideration being given to an employee’s diminished future earning capacity. (Emphasis added.)

Labor Code §4660(b)(1) explained that the “nature of the physical injury or disfigurement” meant the percentages of permanent impairment as calculated under the AMA guides. Labor Code §4660(b)(2) explained that “diminished future earnings capacity” shall be calculated based on empirical data and findings that aggregate the average percentage of long-term loss of income resulting from each injury for similarly situated employees.

Predictably, representatives of injured employees seized on rebutting the PDRS, with a focus on rebutting the “nature of the physical injury or disfigurement” under Labor Code §4660(b)(1), and the calculation of “diminished future earning capacity” under Labor Code §4660(b)(2). Notably, an employee’s ability to compete in an open labor market was eliminated from consideration of permanent impairment. Once again, the injured employee’s representatives efforts were remarkably successful. Although examining the “nature of the physical injury or disfigurement” remained within the purview of a medical expert, in the landmark case of Almaraz Environmental Recovery Services/Guzman v. Milpitas Unified School District 74 Cal.Comp.Cases 1084 (en banc) (hereafter Almaraz/Guzman) the Workers Compensation Appeals Board held that a medical evaluator had flexibility in applying the AMA guides. It was no longer necessary to rotely base an opinion of an injured workers permanent impairment using a strict application of the AMA guides; the medical evaluator was more liberally permitted to apply any chapters within the “four corners” of the AMA guides.

The Almaraz/Guzman cases signified a fundamental shift in the workers compensation system. Whereas Labor Code §4660 under Senate Bill 899 had expressly explained the intention was to promote uniformity, the result of the interpretation under Almaraz/Guzman was chaos. The interpretation of the flexibility permitted for a medical examiner under Almaraz/Guzman was expanded even further by the Court of Appeals in City of Sacramento v. Workers’ Comp. Appeals Bd (Cannon) (2013) 222 Cal.App.4th 1360 to hold that a medical examiner does not even need to apply a chapter of the AMA guides addressing the same body part. Thus, absurd results followed wherein courts held medical evaluators could apply any chapter of the AMA guides “by analogy” to any body part.

Similarly, representatives of injured workers challenged whether the calculation of “diminished future earning capacity” could be rebutted. Unquestionably, the landmark case of Ogilvie v. City and County of San Francisco (2011) 197 Cal.App.4th 1262 held the affirmative. However, it placed certain parameters on doing so. One method was to demonstrate that one of the component factors was incorrectly calculated or applied. (Id. at 1273.) Another method is to demonstrate the injury impaired the employee’s rehabilitation. (Id. at 1274.) The court noted a third basis for the employee to rebut the schedule is to demonstrate that the nature or severity of his or her injury is not captured within the sampling of disabled workers that was used to compute the adjustment factor. (Id. at 1275-1276.) Representatives of injured workers primarily focused on using vocational rehabilitation evidence to rebut the PDRS using the second method. Thus, with the enactment of Labor Code §4660 under Senate Bill 899, representatives of injured workers found a new way to utilize vocational rehabilitation evidence.

Enactment of Labor Code §4660.1 under Senate Bill 863

The enactment of Labor Code §4660.1 under Senate Bill 863 represented a fundamental sea-change in how permanent disability was calculated, with profound and immediate impacts. It expressly applies to all injuries occurring on or after January 1, 2013. Labor Code §4660.1(a) provides,

In determining percentages of permanent partial for permanent total disability, account shall be taken of the nature of the physical injury or disfigurement, the occupation of the injured employee, and his or her age at the time of injury.

Significantly, “diminished future earning capacity” was eliminated from consideration as a factor to determine permanent impairment. Unlike prior versions of Labor Code §4660, it eliminated one of the factors to consider without replacing it with another standard. Thus, for all intents and purposes Ogilvie and its progeny permitting rebuttal of the PDRS using vocational rehabilitation evidence was eliminated.

What remains under Labor Code §4660.1 are the only factors that can be considered in calculating permanent impairment under the PDRS, and the only factors that can be rebutted. Employee representatives may still rebut the “nature of the physical injury or disfigurement” using medical evidence. Indeed, the Legislature was so clear with this intention that it was codified in Labor Code §4660.1(h), which recognized the Guzman case by name and citation.

Mr. Gearheart cites Labor Code §4662 as authority to utilize vocational rehabilitation evidence. [See https://www.lexisnexis.com/legalnewsroom/workers-compensation/b/recent-cases-news-trends-developments/archive/2018/01/30/california-vocational-rehabilitation-evidence-may-be-used-to-rebut-the-pdrs-for-post-2012-injuries.aspx] This position is misplaced. Contrary to Mr. Gearheart’s application of the statute, it does not grant the trier-of-fact with a license to find an injured worker is totally and permanently disabled based on some undefined standard. The section merely delineates a compendium of specific medical conditions for which the injured worker would be considered totally and permanently disabled. These conditions consist inclusively of the following:

            1. Loss of both eyes or eyesight

            2. Loss of both hands for the use thereof

            3. An injury resulting in a practically total paralysis (sic)

            4. An injury to the brain resulting in permanent mental incapacity

Labor Code §4662(b) provides that “in all other cases, permanent total disability shall be determined in accordance with the fact (sic).” That general language was never intended to permit a trier-of-fact to consider additional factors outside of what was delineated in the statute itself. To the contrary, it was intended to eliminate all other medical conditions that would presumptively be considered totally and permanently disabled. All other conditions would be decided under Labor Code §4660 and subsequently the current Labor Code §4660.1 “in accordance with the fact.” Thus, an injured worker with loss of both eyes or eyesight who was calculated under the AMA guides to have a rating less than 100% would be entitled to a 100% award.

Finally, Mr. Gearheart astutely references that 8 CCR §10606.5 was enacted in 2013, that it specifically sanctions the use of vocational expert reports. From this observation he concludes there is no date of injury limitation. He then asked why it would be necessary to delineate the need specifications for the components of a vocational rehabilitation expert report if those reports have been eliminated. The answer to the question is obvious: vocational rehabilitation reports are still admissible occurring prior to 1/1/13. Therefore, it is entirely logical, and even commendable, that the administration would address the specifications for the components of a vocational expert report in order to promote consistency and avoid uncertainty for those ongoing cases with dates of injury prior to 1/1/13. The WCAB in Godinez v. Buffets, Inc. (2004) 69 Cal.Comp.Cases 1311 poetically referred to such statutes as “ghost statutes,” “‘doomed for a certain term to walk the night’ (Hamlet, v), the statutes have no material existence but linger until their work is done.”

Conclusion

In conclusion, with the enactment of Labor Code §4660.1 in Senate Bill 863 there is no alternative interpretation than vocational rehabilitation evidence is inadmissible to rebut the PDRS. In the workers compensation system, vocational rehabilitation evidence had previously been used, first, to rebut the employees ability to “compete in an open labor market” under Labor Code §4660, and subsequently an employee’s “diminished future earnings capacity.” With the enactment of Labor Code §4660.1, both of these factors have been deleted. Now, the only factors to consider are the nature of the physical injury or disfigurement, the occupation of the injured employee, and his or her age at the time of injury. Of these factors, only the nature of the physical injury or disfigurement can be rebutted under Almaraz/Guzman. The other two factors are fixed, not subject to interpretation by any experts.

© Copyright 2018 Christian P. Kerry. All rights reserved. Reprinted with permission.