Strong Association Exists Between AMA Guides Impairment Ratings and Earnings Losses, But Losses Vary Significantly Across Body Regions

Strong Association Exists Between AMA Guides Impairment Ratings and Earnings Losses, But Losses Vary Significantly Across Body Regions

 By Robert G. Rassp, Esq. and Robin E. Kobayashi, J.D.

A new major study funded by the California Commission on Health and Safety and Workers’ Compensation (CHSWC) focuses on the AMA Guides Fifth Edition in California but has implications for the AMA Guides Fourth and Sixth Editions used in other states. The study purports to quell the main criticism that the AMA Guides can only measure severity of impairment and not disability.

The study examines whether there is a strong association between AMA-based impairment ratings and earnings losses for workers’ comp claimants with permanent disabilities, thereby indicating that impairment ratings accurately reflect the effect of impairments on the ability to work.

The study also examines whether the association between impairment ratings and earnings losses varies systematically across body regions, thereby indicating that impairment ratings favor certain body regions.

The just-released study, “American Medical Association Impairment Ratings and Earnings Losses Due to Disability,” by Seth A. Seabury, PhD, Frank Neuhauser, MPP, and Teryl Nuckols, MD, MSHS, will be published in the Journal of Occupational and Environmental Medicine.

Case-control study

The authors’ analysis focused on a variety of factors, including most notably:

  • 21,663 workers’ compensation claimants in California with impairment ratings under the AMA Guides Fifth Edition during the years 2005 to 2008, with each case matched to one to five control workers at the same employer who had similar earnings and tenure but did not suffer from a disabling workplace injury during this time period
  • Impairment ratings from 1 to 30, before any adjustments “to translate AMA impairment ratings into statutory benefit payments” in the California workers’ compensation system
  • Claimants other than those with multiple impairments or a psychiatric impairment, or who were younger than 18 years or older than 60 years
  • Claimants’ and control workers’ earnings, including wages, salary and tips, but not self-employment earnings, workers’ comp benefits, or other disability compensation
  • “Earnings loss” defined as the percentage derived from the difference between the expected earnings that the claimants would receive in the absence of an injury and their actual earnings, determined from linked EDD earnings data
  • Six body regions, i.e., spine, knee, other lower extremities, hand/wrist, shoulder, and other upper extremities

Key characteristics of cases studied

Some of the key characteristics found in the cases studied were:

  • The average impairment rating was 7.7
  • The spine, knee, hand/wrist, and shoulder combined represented 87.4% of the most commonly affected body region, with the spine representing 38.5%
  • Median age was 43.6 years
  • Baseline earnings were $46,541
  • Number of claimants represented by counsel was 10,566, which is less than half of the total sample studied
  • The most common occupations were drivers, technicians and operators, administrative services, sales and management, construction, maintenance, and production workers
  • Other occupations of note were police, health care workers, electrical, laborers, food services, teacher, fire protection, agricultural and correctional
  • 50.1 percent of the claimants worked for an employer with 1,000 or more employees, while 20 percent worked for an employer with 101 to 500 employees.

Key Findings

Some of the noteworthy findings by the authors were:

  • Earnings fell to 77% in the quarter immediately after the claimant’s “onset of injury”
  • Earnings recovered to 81% in quarters 9 through 12
  • Each additional impairment rating point equated with a 1.8% higher earnings loss on average (authors’ unadjusted, univariate analysis)
  • Each additional impairment rating point equated with a 1.1% higher earnings loss on average, with earning losses increasing at a “moderately decreasing rate at higher ratings” (authors’ regression adjusted analysis), e.g.:

Impairment Rating      Mean Predicted Earning Loss

1                                9.0%

7.7                            18.4%

10                             21.9%

20                             34.6%

  • Predicted earnings losses varied across body parts, with such losses, for example, higher for the spine (21%) than the knee (17.2%), while the highest predicted earnings losses belonged to “other” body parts (23%)

Takeaways

The authors offer various conclusions and insights, including most notably:

  • AMA Guides-based impairment ratings do indeed have a significant association with earnings losses as a result of disability in that claimants with higher impairment ratings had higher earnings losses due to their inability to work; thus, the AMA Guides is an effective tool for measuring disability and not just severity of impairment; in fact, the authors say the AMA Guides Fifth being used today in California is a more accurate and consistent rating tool than what was previously used in that state’s system
  • A major concern, however, is that there are differences across body regions in the association between impairment ratings and earnings losses, suggesting that disability varies across body regions; in other words, a claimant receiving an AMA Guides rating for a spine injury might be underpaid in workers’ comp benefits in comparison to someone with a knee injury
  • Another concern is that “the level of impairment ratings did not reflect the level of earnings loss” because even very low impairment ratings indicated substantial earnings losses; thus, without consideration of other factors such as the age of the injured worker, his or her occupation, and changes in the economy, an impairment rating by itself may not be an adequate measure of the financial consequence of a disabling injury
  • Earnings losses may also differ across other individual characteristics, such as age or occupation, but more studies are needed in this regard
  • The study did not examine the impact of disability on the quality of life for the claimants
  • The average ratings under the Fourth, Fifth, and Sixth Editions are similar, with the one exception being spine impairments, which is lower under the Sixth Edition (see above regarding the authors’ findings of already low ratings for spine impairments in relation to earnings losses)

Commentary by Robert G. Rassp, Esq.

The authors of this study did not point out any data for heart and cardiovascular injuries with respect to proportionate wage loss. It should be noted that the Six Edition of the Guides also lowers ratings for heart related impairments compared to those in the Fifth Edition. In addition, the study did not compare WPI ratings to proportional wage loss ratios based on strict WPI ratings from the AMA Guides 5th Edition as opposed to using alternative WPI ratings derived pursuant to case law.

The three-year loss of earnings period is a moving target from a research standpoint and depends on the definition of “disability onset.” The term “disability onset” is not well defined in the study and can affect the validity of the study authors' conclusions. Is the “disability onset” date the date of injury or is it the first date the injured worker misses time from work due to the industrial injury, or is it the date on which the injured worker's medical condition has stabilized and he or she suffers from permanent partial disability? In previous studies, including the RAND report of December 2003, the same authors used the date of injury as the start date for the three-year period, but in this study, the authors used the “date of onset” as the date of injury defined by the authors as “the date the individual first goes to the doctor or misses work due to the condition and realizes (or a physician determines) it was work related. The quarter of injury and quarter of disability onset are the same in most cases, even if the exact dates differ.” This definition creates a data bias since the authors did not compare impairment to proportional wage loss from specific injuries to those from cumulative trauma injuries. 

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