Since the enactment of SB 899 in California on April 19, 2004, and the adoption by the Administrative Director of the 2005 Permanent Disability Rating Schedule (2005 PDRS), permanent disability awards have been reduced up to 40% from those awards that were made under the 1997 PDRS. After four years of studying awards made under the 2005 PDRS, policymakers have considered raising permanent disability rates since current premiums for workers’ compensation insurance coverage remains at least 55% of the rates paid prior to the 2004 reforms. In fact, the most recent major driving force of increased workers’ compensation costs has been increased medical treatment costs and not permanent disability awards.
In this context, the WCAB issued its decisions in the Almaraz-Guzman case – the original 7-0 WCAB en banc decision was issued on February 3, 2009 (“Almaraz-Guzman I”) and the revised 4-3 decision issued on September 3, 2009 (“Almaraz-Guzman II”) – and the cases have been separated by appeals to the appropriate District Courts of Appeal in the respective appellate district from which each case originated. Appellate decisions on whether or not to grant a writ of mandate are pending for both cases as this blog is being written.
The WCAB decision in Almaraz-Guzman II allows a party to rebut any factor that comprises a permanent disability rating under the 2005 PDRS. Labor Code section 4660(c) is cited by the WCAB for the authority that a permanent disability rating under the 2005 PDRS can be rebutted because a rating is only “prima facie evidence of the percentage of permanent disability to be attributed to each injury covered by the schedule.” The legislature did not mandate in section 4660(c) that a rating under the 2005 PDRS (or in any prior permanent disability rating schedules) is conclusive evidence of a person’s disability under the schedule and therefore could not be rebutted.
The WCAB’S decisions in Almaraz-Guzman I and II was in response to the inherent disconnect between the instructions in the AMA Guides 5th Edition for its purpose and use as opposed to obtaining a WPI rating that accurately reflects the effect of an impairment on an injured worker’s ability to perform work activities. Remember, the authors of the AMA Guides 5th Edition emphasize that the Guides are intended only to determine the effects of a listed impairment on a person’s activities of daily living (ADL functioning) and not on work function.
The Guides specifically state that they do not include work disability. See Chapter 1, section 1.2, page 4: “Impairment percentages or ratings developed by medical specialists are consensus-derived estimates that reflect the severity of the medical condition and the degree to which the impairment decreases an individual’s ability to perform common activities of daily living (ADL), excluding work.”
See section 1.2, page 9: “The Guides is not intended to be used for direct estimates of work disability. Impairment percentages derived according to the Guides criteria do not measure work disability. Therefore, it is inappropriate to use the Guides’ criteria or ratings to make direct estimates of work disability.”
Do you know what “consensus-derived estimates” means? It means that the WPI ratings for conditions listed in the Guides are not based on scientific study, controlled clinical studies or any other evidence based research. The term “consensus” means that there is a majority view and a minority view. The authors of the Guides never mention a minority view. Some critics say that the Guides are written by a bunch of insurance company doctors without regard to clinical medicine.
Rebutting the Guides
So in response to this disconnection, the WCAB in Almaraz-Guzman II mandated that a party can rebut a permanent disability rating under the 2005 PDRS by presenting evidence that the rating is not accurate and a party can challenge any component of the rating, including the WPI rating from the AMA Guides. The WCAB’s ultimate decision in Almaraz-Guzman II included the notion that the rebutting party has the burden of proof and if the rebutting party is challenging the WPI rating, only the chapters, tables and methods that are within the four corners of the AMA Guides 5th Edition can be used. The idea is in order for a rebuttal to be successful, a party needs to obtain the most accurate WPI rating within the four corners of the Guides and that alternative rating must constitute substantial evidence. The term “accuracy” means that the WPI rating must take into account an accurate description of the effects an impairment has on the injured worker’s ADL and work functioning based on permanent objective medical findings. Isn’t all of this another way of expressing existing law?
ADLs vs. Work Activities
Remember, there is an empirical difference between the effects an impairment has on ADL functioning and how the same impairment may permanently impact work activities. For example, an injured worker with an arm injury who can brush his or her teeth (a listed ADL in the Guides) may have permanent and significant impairment of function in performing keyboarding for six to eight hours a day, five days a week. Similarly, a construction worker who has severe post-traumatic osteoarthritis to the knee joints may not have any limitations for ADL functioning but permanently cannot work on a construction site that requires prolonged standing, walking and heavy lifting.
Prepare to Attack, All Hands Battle Stations!
Now in response to the WCAB’s decision in Almaraz-Guzman II, aside from the appellate actions being taken, stakeholders in the workers’ compensation system have dug their collective heels in and have drawn the lines in the sand, ready for battle. Some pundits predict, erroneously, a 23% or more increase in pure premium rates because of the WCAB decision. Others predict little or no effect on pure premium rates since some WPI ratings could decrease if challenged by the employer or claims administrators, and some injured workers will not try to rebut a WPI rating to begin with. Politicians are pointing to the recession and telling us that any additional costs to the employer community will, again, become so-called “job killers.” They, of course, say this without any empirical data to support their position, but it is a great sound bite in the news media and during political campaigns.
Even the respected Legislative Analyst Office has weighed in on the effects of the Almaraz-Guzman II decision. The LAO, a neutral organization, advises the legislature in developing legislation in areas of interest. In a report released this fall, the LAO concluded that it is too speculative to determine at this time how the WCAB decision will affect workers’ compensation premiums. The advice the LAO has given to the legislature to address the effects of the WCAB decision in Almaraz-Guzman II is to do nothing, get rid of section 4660(c) “prima facie evidence” and make a WPI rating conclusive evidence of permanent disability, or allow limited rebuttal evidence in low rating cases only.
One Size Fits All
One Size Fits All
Now add to the mix the business and employer community, which has weighed in with proposed legislation that has been endorsed by some policymakers within the Department of Industrial Relations and the “Management” part of Labor-Management. This proposal has been masked as a political “deal” made between Labor and Management within the Commission on Health, Safety and Workers’ Compensation (CHS&WC), which is not true. CHS&WC has not endorsed this “deal”, but two members have released a white paper outlining an agreement between a representative from Labor and one from Management for a framework to respond to the WCAB’s decision.
Sympathetic politicians have been asked to add teeth to the mandate in section 4660 that a permanent disability rating schedule promotes “uniformity, consistency and objectivity.” It is not enough that mere use of the 5th Edition of the AMA Guides promotes that goal. The business community is advocating, once again, the “one size fits all” paradigm. In other words, every typical back injury has to rate between 5% WPI and 13% WPI, period, and regardless of how a back injury affects a person’s work function.
Strict WPI Rating Not Rebuttable
Strict WPI Rating Not Rebuttable
The so-called CHS&WC proposal, or “Duncan” proposal – whatever you want to call it – advocates adoption of a strict use of the descriptions, measurements and “methodologies” of the 5th Edition of the AMA Guides, ignoring pages 4 and 9 in Chapter 1 that says don’t use the Guides to determine work disability. The advocates of this legislation go so far as to suggest that if an impairment is “ambiguous” in terms of how to rate it within the Guides, a physician shall utilize the examples to try and find something that fits. Then they want to impose a presumption that a strict WPI rating is correct and not rebuttable. In exchange for this strict use of the Guides, injured workers are promised an “increase in permanent disability rates” or an increase in the money chart as we call it. Of course, no one knows exactly how much of an increase in permanent disability money is on the table.
In addition to this proposed adoption of a strict interpretation of the AMA Guides with no rebuttal evidence allowed, the supporters of this proposal also want to eliminate QME evaluations and only allow a “super doctor” appointed by the state, euphemistically called an “Independent Medical Reviewer” to determine the ratings. This smacks of the wish list the radically right wing of the workers’ compensation community had just prior to the negotiations that led to SB 899. In fact, if you are old enough to remember life before SB 899, this proposal was dusted off from the old negotiations that threatened turning the
California workers’ compensation system into a purely administrative process, without lawyers and without due process of law for injured workers. In the 30 plus years this author has worked in the workers’ compensation system, this proposal was dusted off from the negotiations that led to the 1982 reforms! It is déjà vu, all over again.
Something From Nothing
Something From Nothing
The proposal to adopt a strict interpretation of the AMA Guides 5th Edition with no rebuttal evidence allowed with a concurrent increase in permanent disability money rates under Labor Code section 4658 is purely illusory. Take a carpal tunnel syndrome case for example. A strict interpretation of the AMA Guides will emerge in over 85% of these cases, and a rating will be derived from the instructions on page 495 of the Guides. Basically, in the absence of permanent nerve damage, a person will get a 3% WPI rating, regardless of how the carpal tunnel syndrome affects the person’s ability to perform work activities. How can this WPI rating be meaningfully increased by a dollar figure increase in Labor Code section 4658? It is impossible to imagine anyone being adequately compensated for the permanent effects of carpal tunnel syndrome with a 3% WPI rating, or someone with a one level disc herniation in the lumbar spine receiving a maximum of 10-13% WPI.
The point is that since the AMA Guides do not account for work function impairment, strict use of the Guides with a modest increase in the PD rates would mean the nearest thing to nothing you could still call “something.” That is the illusory part of the picture. However, believe it or not, a reasonable solution is at hand and is right on the shelf.
Remember, in 2008, the Administrative Director announced a proposed new “2009 PDRS”? The “2009 PDRS” was never adopted by the Administrative Director for apparently political reasons. Had it been adopted, permanent disability awards would have increased a modest 16% in dollars with a nominal effect on pure premiums.
The interesting fact about the proposed 2009 PDRS is that each of the eight DFEC adjustments were increased because they were based on better data than the DFEC adjustments that exist in the 2005 PDRS. In addition, parts of body were reassigned new DFEC adjustment factors to more accurately reflect WPI ratings to wage loss ratios for different parts of body injured. This means that injured body parts were “restacked” to more accurately reflect how an injured part of body affects an injured worker’s future earning capacity. The 2009 PDRS was based on more accurate data because the
RAND studies that were used to develop the 2005 PDRS did not use WPI ratings. The authors of the 2005 PDRS used
RAND data that was based on permanent disability ratings from the 1988 PDRS!
Why is this important here? How does this affect the debate about strict versus accurate WPI ratings from the 5th Edition of the AMA Guides? Perhaps some common sense will prevail in the next year. Everyone should be mindful that Labor Code section 4660(c) mandates “The administrative director shall amend the schedule for the determination of permanent disability in accordance with this section at least once every five years.” The first time the 2005 PDRS was adopted by the Administrative Director was on December 31, 2004. We are now five years from the adoption of the 2005 PDRS, aren’t we?
My suggestion is that the workers’ compensation community lives with two things for the time being:
1. Let’s not run to the legislature with an old wish list to scuttle the whole system as we know it, again. Let’s wait and see what impact, if any, the Almaraz-Guzman II case will have on the costs of the workers’ compensation system. Let’s let the appellate process in Almaraz-Guzman take its course. It is too speculative to conclude that the WCAB decision will increase workers’ compensation premiums and costs. After all, the burden of rebutting a WPI rating is on a party who disagrees with a rating in the first place and it is unknown how many cases will result in a higher or lower rating than was reserved in the first place. The LAO was right when it suggested for the legislature to do nothing. The year 2010 is an election year, and history says that workers’ compensation reforms should not be on anyone’s radar in an election year.
2. The Administrative Director needs to dust off the proposed-but-not-adopted 2009 PDRS and adopt it for injuries occurring on or after 7/1/2010. This will increase ratings modestly, as any injured worker deserves, since awards have been based on old obsolete ratings to wage loss ratio data for the last five years. With the WCAB decision in Almaraz-Guzman II intact and a modest increase in the dollar values that are based on empirical data, our system can survive for the foreseeable future as is.
This common-sense solution will provide cover for the time being. Adoption of the proposed 2009 PDRS results in immediate compliance with Labor Code section 4660(c) to revise the PDRS every five years with minimal overall costs to the system. Leaving Almaraz-Guzman II to the appellate courts and, if upheld, allowing the market to determine whether WPI ratings significantly add costs to the workers’ compensation system, will show fiscal responsibility and will provide empirical fodder for any legislative change that needs to be made in the coming years.
Author’s Note: This article is written not as an academic treatment but as an editorial commentary by the author.
© Copyright 2009 Robert G. Rassp. All rights reserved.