California: By the Numbers

California: By the Numbers

What was the impact of the adoption of an AMA-based permanent disability rating schedule in California?

That was the question addressed in a significant new study by Frank Neuhauser, Executive Director of the UC Berkeley based Center for the Study of Social Insurance.

My last post briefly covered a presentation Neuhauser gave to last week's meeting of the California Commission on Health, Safety and Workers' Compensation.

Neuhauser's study compared permanent disability claims evaluated by the DEU for the years 2003 and 2004 with claims during the 1/1/2010 to 6/30/2011 period. The study notes that "By using claims from the most recent data period available (1/1/2010-6/30/2011) we are evaluating the PDRS-05 schedule after the parties have adjusted to the new schedule and include the impact of the Almaraz/Guzman/Ogilvie case law as interpreted during the period."

At the bottom of this post I've included a link to a pdf version of the study.

But let's look at some of the key findings and "do the numbers".

Average permanent disability ratings for cases with ratings of more than zero decreased overall by 31.5% (40.1% for unrepresented cases and 28.4% for represented cases). As you might expect, ratings dropped at various percentages depending on the body part involved. Neuhauser's report did not explain the phenomenon, but it is widely noted among doctors and lawyers that some of the AMA chapters are particularly strict compared to other chapters.

Average compensation for cases with ratings of more than zero decreased overall by 40.4% (51.7% for unrepresented cases and 37.2% for represented cases).

At least 25% of the cases which received a permanent disability rating of more than zero under the old rating system now are rated as "zero".

The effect of changes in the law on apportionment was to reduce the average rating for unrepresented workers by 5.3% and to reduce the average compensation for unrepresented workers by 6.2% (note: apportionment reductions might be higher in represented cases "because apportionment is more likely to be an issue in litigated cases").

The bottom line?

Neuhauser notes that:

"If one assumes the fraction of apportioned cases was the same for represented and unrepresented cases, and the average "zero" case eliminated was similar in rating to cases not eliminated, then the impact of the PDRS-05, the change in apportionment, and the case law involving Almaraz, Guzman, and Ogilvie was to reduce PD compensation by 58%".

Although Neuhauser didn't specifically say it, it is obvious that without the Almaraz/Guzman/Ogilvie cases that the overall drop in PD compensation would have been even more than 58%.

If the Brown Administration and some in the labor movement had been tempted to latch on to arguments advanced by some stakeholders that would do away with the Almaraz/Guzman and Ogilvie cases, Neuhauser's study will make that less appealing.

A 58% reduction EVEN WITH Almaraz-Guzman and Ogilvie.

Any legislation that may cause workers to lose even more ground in permanent disability awards and payouts would seem likely to receive even higher scrutiny after the Neuhauser study.

Here's the link to the study, which is a draft posted for public comment on the CHSWC website:

Stay tuned.

Julius Young
Julius Young This blog originally appeared on WorkersComp Zone. Reprinted with permission.


Herlick, California Workers' Compensation Handbook, 2012 Edition (LexisNexis)

Editors-in-Chief: Julius Young, Esq., Richard Jacobsmeyer, Esq., Barry D. Bloom

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California Workers' Compensation Handbook, 2012 Edition


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