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California: Vocational Rehabilitation Evidence May Be Used to Rebut the PDRS For Post 2012 Injuries

January 30, 2018 (17 min read)

By: Mark Gearheart

© Copyright Mark Gearheart 2018

January 8, 2018

Introduction:

Recently some have argued that vocational rehabilitation evidence cannot be used to rebut the Permanent Disability Rating Schedule (hereinafter referred to as the PDRS) for post-2012 injuries. This argument rests on two dubious propositions: That Labor Code Section 4660.1 “defines” permanent disability (PD) and an obscure dictum in a footnote in a WCAB Panel decision. The following discussion will demonstrate that neither premise is sound and that vocational rehabilitation evidence can be used to rebut the PDRS in post-2012 injury cases. Furthermore, the statutory mandate to consider “occupation” and the American Medical Association Guides, 5th Edition (hereinafter referred to as AMAG) endorsement of vocational evidence firmly establish that vocational evidence remains important and viable in rebutting the PDRS.

The Labor Code Does Not Define Permanent Disability:

A careful review of the statutory language demonstrates that the Labor Code has never actually defined permanent disability; rather it has indicated certain factors, which it does not make exclusive, that should be considered in evaluating permanent disability.[fn1] This is made clear by a review of the relevant code sections.

“Original” language of Labor Code Section 4660(a) until April 2004):

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.)

Language of Labor Code Section 4660(a) after SB 899 (after April 2004):

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

Language of Labor Code Section 4660.1(a) after SB 863 (injuries on or after January 1, 2013):

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 the injury.

It should be noted that Labor Code Section 4662 addressing permanent total disability has not changed. It states:

Any of the following permanent disabilities shall be conclusively presumed to be total in character:

(a) Loss of both eyes or the sight thereof.

(b) Loss of both hands or the use thereof.

(c) An injury resulting in a practically total paralysis.

(d) An injury to the brain resulting in an incurable mental incapacity or insanity.

In all other cases, permanent total disability shall be determined in accordance with the fact. (Emphasis added.)

First of all, there is a clear dichotomy between total disability under Labor Code Section 4662 and partial disability under Labor Code Section 4660. Permanent total disability is determined in accordance with the fact, which means outside the schedule. (The schedule is not based on facts; it is based upon a legal presumption.) On the other hand, permanent partial disability is to be determined based upon the rating schedule; however, that schedule is rebuttable.

None of the iterations of Labor Code Section 4660/4660.1 purport to define what permanent disability is. Rather they tell us that in determining permanent disability, we are to consider certain factors (permanent partial disability) and that permanent total disability is to be determined “in accordance with the fact”, i.e., outside the schedule.

This is a very important point because the first premise supporting the argument that vocational rehabilitation evidence is not admissible to rebut the schedule for post-2012 cases is the argument that the current iteration of Labor Code Section 4660.1(a) does not contain a reference to diminished future earning capacity nor a reference to diminished ability to compete in the open labor market. While it is true that those phrases have been removed, the statute still fails to define permanent disability. In fact, the definition of permanent disability has been left to the courts (this is discussed below). To argue that a change in the factors to be considered in determining permanent disability means that the definition of permanent disability has changed is a non sequitur. Let’s say that instead we are trying to assess the distance between two points. For centuries this has been done in feet and inches. However, now due to new regulations, we are mandated to use the metric system: Thus, we use centimeters and meters. We are still measuring distance, and the definition of distance has not changed; but rather the means of measuring it has changed.

While it is true that a radical enough change in the factors used to assess something may indicate some alteration in the thing being measured, a closer look at the statutory language, the case law, and the AMAG compels the conclusion that the definition of permanent disability has not materially changed and that vocational evidence remains relevant and useful to rebut an inaccurate scheduled rating. This is discussed in more detail below.

What is Permanent Disability?

Before analyzing how the PDRS may be rebutted, it is important to ask just what “permanent disability” is. Decades of California case law define permanent disability:

A permanent disability is the irreversible residual of a work related injury that causes impairment in earning capacity, impairment in the normal use of a member or a handicap in the open labor market." Brodie v. WCAB (2007) 40 Cal. 4th 1313, 1320, 72 Cal. Comp. Cases 565.

Payments for permanent disability are designed to compensate an injured employee both for physical loss and reduction in earning capacity (ibid).

The California Supreme Court wrote in Livitsanos v. Superior Court (1992) 2 Cal. 4th 744, 57 Cal. Comp. Cases 355 at 36 that:

. . . “permanent disability” payments are provided for permanent bodily impairment, to indemnity for impaired future earning capacity or decreased ability to complete in an open labor market (citations omitted.) The basic purpose of the Workers' Compensation Act is to compensate for the disabled worker's diminished ability to compete in the open labor market.

In Ogilvie v. Workers’ Compensation Appeals Board (2011) Ogilvie v. Workers' Compensation Appeals Board (2011) 197 Cal. App. 4th 1262, 76 Cal. Comp. Cases 624 at 629, the Court of Appeal explained that:

For many years, determining the degree of permanent disability sustained due to an injury involved consideration of the opinions of vocational rehabilitation specialists concerning the employee's ability to compete in an open labor market. Ogilvie v. Workers' Compensation Appeals Board (2011) 197 Cal. App. 4th 1262, 76 Cal. Comp. Cases 624 at 629, citing Gill v. WCAB (1985) 167 Cal. App. 3d 306, 50 Cal. Comp. Cases 258.

We can conclude from these authorities that “permanent disability” is the permanent residual of an injury, either in the form of a physical or mental impairment per se or in its manifestations which affect a worker's ability to perform activities of daily living, ability to perform work activities, or impairs the ability to earn a living. As demonstrated above, the Labor Code has never defined “permanent disability;” rather, it has only specified certain minimum factors to be considered in determining permanent disability. Under SB 863, for injuries on or after January 1, 2013, these factors are an individualized assessment of impairment, occupation and age. As with the past configurations of Section 4660, as interpreted by the Courts, “permanent disability” does not exclude other relevant factors from consideration. In some cases consideration of vocational factors (occupation) may be required to determine disability, as distinguished from impairment.

The Farmer Case:

Those who assert that vocational rehabilitation evidence is no longer viable rely not only the statutory language changes but also a footnote in the case of Jeffrey Farmer v. City of Fremont, Subsequent Injuries Benefits Trust Fund 2017 Cal. Wrk. Comp. P.D. LEXIS 63. However, the Farmer case involved a dispute over whether claimant had met the requirements to trigger SIBTF liability; not with rebutting the PDRS. The Board held that because the applicant was a safety officer, the anti-attribution clause prohibited apportionment of his permanent disability and that once it was adjusted for the FEC factor, it met the 35% threshold for SIBTF benefits. The case did not address vocational rebuttal of the PDRS. The case involved a 2005 injury. However, for reasons that remain obscure, footnote 5 recites that under Labor Code Section 4660.1 there is no consideration of applicant’s inability to compete in the open labor market or their diminished future earning capacity and instead a base multiplier of 1.4 for all injuries and body parts was substituted. While this is obviously dicta, it is also a very misleading statement.

The statement that there is no consideration of the applicant’s lost earning capacity or inability to compete in the labor market ignores the fact that the schedule is rebuttable (Labor Code section 4660.1(d), Ogilvie, supra. SB 863 substituted at uniform 1.4 modifier in place of the old FEC factor; however, that simply creates a rating formula that generates a number that is “presumed” correct but is rebuttable. The elimination of the specific references to the open labor market and future earning capacity need to be viewed in context: The parties and the Board are still directed to consider “occupation”. That, combined with language in the AMAG completely undermines the conclusion that there is no consideration of diminished earning capacity or diminished ability to compete in the open labor market when rebutting the PDRS.

Furthermore, Board Panel decisions are not binding precedent. Gee v. WCAB (2002) 96 Cal. App. 4th 1418, 1425 footnote 6, 67 Cal. Comp. Cases 236. They certainly may be considered where their reasoning is persuasive; however, dicta in a footnote on a case involving unrelated issues should not be given much weight. It certainly does not overturn decades of appellate case law.

The Significance of “Occupation”:

As noted above, the Labor Code has never defined permanent disability. Does the elimination in contemporary Labor Code Section 4660.1(a) of any specific reference to diminished ability to compete in an open labor market or diminished future earning capacity mean that vocational evidence is forbidden? To answer this query in the affirmative requires that we ignore several other parts of Labor Code Section 4660.1. For example, Labor Code Section 4660.1(a) provides 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 (emphasis added). The requirement to consider occupation is extremely significant and means that vocational evidence is both relevant and admissible. After all, we are attempting to determine what work disability exists, and this cannot be determined without considering what occupation the employee performed.

It should be kept in mind that impairment ratings are non-empirical, “consensus-derived estimates” that purport to reflect the severity of a medical condition and the degree to which it may decrease an individual’s ability to perform activities of daily living excluding work. (Emphasis in original, AMAG, page 4.)

The AMAG does not evaluate work disability (AMAG, page 5).

However, the AMAG provides something that the Labor Code does not: A definition of permanent disability. Table 1-1 at page 3 lists various definitions of disability from various organizations including the Social Security Administration.

However, as is relevant to the AMAG, they define disability as: “An alteration of an individual’s capacity to meet personal, social, or occupational demands because of an impairment.” Pursuant to Guzman and Labor Code Section 4660.1 (h), the legislature in SB 863 adopted not just the impairments but the instructions for use in Chapters 1 and 2 of the AMAG.

The importance of Chapters 1 and 2 is reiterated throughout the AMAG. Each Chapter (except Chapter 4) begins “Principles of Assessment” with the sentence: “Before using the information in this chapter the Guides user should become familiar with Chapters 1 and 2 and the Glossary.”

Thus, by statute and published appellate case law, permanent disability includes an alteration of an individual’s capacity to meet occupational demands. This dovetails with the use of the term “occupation” as one of the mandatory factors to consider in Labor Code Section 4660.1(a).

The difference between impairment and disability and the importance of considering vocational evidence including an analysis of the effect of the injury on occupational capacity is driven home at page 9 of the AMAG which states: “An individual with a medical impairment can have no disability for some occupations, yet be very disabled for others.” They point out that a nurse and a bank president both may have a disc injury which limits their activities of daily living in very similar ways. However, in terms of occupation, the bank president is less likely to be disabled by his impairment than the nurse. Thus occupation (vocational evidence) is key to evaluating disability.

The example given at AMAG page 5 is illustrative:

The medical judgment used to determine the original impairment percentages could not account for the diversity or complexity of work but could account for daily activities common to most people. Work is not included in the clinical judgment for impairment percentages for several reasons: (1) Work involves many simple and complex activities; (2) Work is highly individualized, making generalizations inaccurate; (3) Impairment percentages are unchanged for stable conditions, but work and occupations change; and (4) Impairments interact with such other factors as the worker’s age, education, and prior experience to determine the extent of work disability. For example, an individual who receives a 30% whole person impairment due to pericardial heart disease is considered from a clinical standpoint to have a 30% reduction in general functioning as represented in a decrease in the ability to perform activities of daily living. For individuals who work in sedentary jobs, there may be no decline in their work ability although their overall functioning is decreased. Thus, a 30% impairment rating does not correspond to a 30% reduction in work capability. Similarly a manual laborer with this 30% impairment rating due to pericardial disease may be completely unable to do his or her regular job and, thus, may have a 100% work disability.

This example from the directions to the AMAG makes it quite clear that an analysis of occupation is mandatory to determine permanent disability. This is consistent with the requirement in the Labor Code itself [Labor Code Section 4660.1(a)] that occupation be considered. There is an occupational variable in the rating schedule. Is it always accurate? No. One size does not fit all. In addition the scheduled effect of the occupational variants are not empirical: They are simply more consensus derived estimates used for administrative expediency. They are not based upon anything empirical, and just as they may be accurate in some cases, they will be inaccurate in others. Sorting this out requires vocational expert analysis.

Perhaps due to the key role of occupation (vocational analysis) in determining permanent disability, the AMAG expressly endorses vocational evidence. The AMAG notes that where a broad judgment needs to be made about an individual’s ability to return to the workplace, the analysis is complicated, and a decision of this scope usually requires input from both medical and non-medical experts, such as vocational specialists. In other words, the directions for the AMAG which have been adopted by statute (Labor Code Section 4660.1(h)) and through the Guzman appellate decision specifically endorse vocational evidence to help determine an accurate disability rating.

There is Scant Evidence to Support the Idea That SB 863 Eliminated Vocational Evidence:

Labor Code Section 4660.1(h) adopts the court’s opinion in the Guzman case (187 Cal. App. 4th 808) as a correct statement of the law. The Guzman court wrote that the Labor Code incorporates not just the “impairments” from the AMAG but also its instructions for use including Chapters 1 and 2. The AMAG at page 14 specifically endorses the use of vocational experts to address “work disability” as distinct from impairment. (Keep in mind that impairment ratings by definition ignore work.)

The legislative history of SB 863 provides that among its goals was ensuring that no class of injured workers would receive a lower award than under the existing system and that PD awards more accurately reflected loss of future earnings (Senate Committee on Labor and Industrial Relations Analysis of Senate Bill 863 (August 31, 2012), page 6-7, available at: http://www.leginfo.ca.gov/pub/11-12/bill/sen/sb_0851-0900/sb_863_cfa_20120901_013451_sen_comm.html).

Barring vocational evidence regarding PD to rebut the PDRS would violate this objective by divorcing the rating from occupation (work disability) and leaving some injured workers worse off than under the prior rating/rebuttal regime.

Furthermore, if the legislature was eliminating vocational evidence, why did they create Labor Code Section 5703(j) as part of SB 863? That section provides that vocational rehabilitation expert opinions are admissible and that written reports are preferred. There is no restriction on the date of injury. This is directly contradictory to the argument that vocational evidence has been eliminated.

In addition, SB 863 created Labor Code Section 5307.7(a) which requires the Administrative Director to create a fee schedule for vocational rehabilitation expert reports. There is no restriction as to the date of injury. This is inconsistent with the argument that vocational evidence has been eliminated.

Also contrary to the contention that vocational evidence has been eliminated, SB 863 enacted new Labor Code Section 139.32(a)(3)(A)(ii) which refers to evaluations of injured workers’ future earning capacity. Labor Code Section 4660.1(i) mandates a study comparing average loss of earnings to permanent disability ratings under the PDRS. Why the focus on lost earning capacity if we are not supposed to consider it anymore and it’s irrelevant?

Labor Code Section 4660.1(d) maintains the longstanding language providing that the PDRS is rebuttable. However, it does not in any way limit the rebuttal methodology. Are we to assume the Legislature repealed decades of case law sub silentio?

Interestingly, the administration enacted 8 CCR Section 10606.5 in 2013 setting forth the mandatory components for vocational expert reports. There is no date of injury limitation. Why do we need specifications for the components of a vocational expert report if we are eliminating those reports?

Vocational Rehabilitation Evidence is More Empirical Than the PDRS:

It must be recalled that impairment ratings are not now and never have been evidence based. In the years since publication of the 1st Edition, the AMA has never made an attempt to conduct validation studies.

There has never been an effort to correlate the percentage values in the AMAG to work disability. In fact, they expressly exclude consideration of work.

The development of the AMA impairment numbers was neither scientific nor transparent. The numbers were developed based upon a consensus of a small number of physicians. There was not and never has been a possibility of public discussion or input.

In contrast, a high quality vocational analysis is empirical. It is based upon actual medical opinions from physician experts who have examined and interviewed the injured worker, reviewed his or her medical file, and conducted appropriate diagnostic studies, and in some cases functional capacity evaluations. These physicians are providing a direct empirical opinion regarding the individual injured worker’s functional capacity.

This functional capacity is then analyzed by a vocational expert using empirical data from the Department of Labor to determine the impact of the injury on the individual’s ability to work; that is, their work disability. So a quality vocational disability evaluation is based upon a scientific medical expert’s individual analysis of the real patient including a direct physical examination, and a vocational analysis of empirical data regarding the residual occupational base and the resulting diminished labor market. (This is how we meet the requirement in the code to consider “occupation”.) The vocational approach, if properly done, is likely to be much more accurate than the scheduled rating because the scheduled rating is based upon consensus derived, non-empirical estimates which were created in secret by a small group of people and not based upon any particular individual, and are therefore based upon numerous explicit and implicit assumptions and averages plus there is no empirical consideration of the impact of the injury upon a person’s ability to work.

Conclusion:

Because the schedule is rebuttable, and permanent disability is a decreased capacity to meet occupational demands, then vocational evidence is relevant to prove the extent of work disability. The Labor Code requires that the Board consider occupation in determining disability, and the AMAG (which has been adopted by statute) explicitly endorses vocational evidence. Nothing in the statute or the case law provides otherwise. Thus vocational evidence remains relevant and admissible to rebut an inaccurate scheduled PD rating.

Footnote:

1. The Labor Code does not define temporary disability either: that too has been left to the Courts.

© Copyright 2018 Mark Gearheart. All rights reserved. Reprinted with permission.

(Publisher’s Note: To read the defense rebuttal to Mr. Gearheart's article, see the article written by Christian P. Kerry at https://www.lexisnexis.com/legalnewsroom/workers-compensation/b/recent-cases-news-trends-developments/archive/2018/01/30/california-labor-code-167-4660-1-excludes-vocational-rehabilitation-evidence-to-rebut-the-pdrs-for-injuries-occurring-on-or-after-1-1-13.aspx)

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