Board Issues Two En Bancs Challenging New Schedule and AMA Guides
After an uneventful, somnolent January, the Appeals Board has come out with two blockbuster en banc decisions issued on February 3, 2009, seriously challenging the power of the AMA Guides to dictate permanent disability ratings on the one hand (see Almaraz v. SCIF (ADJ1078163/BAK 0145426) and Guzman v. Milpitas USD (ADJ3341185/SJO 0254688) and on the other, describing with some specificity the ways to challenge the diminished future earning capacity (DFEC) component of the 2005 Schedule (Ogilvie v. City and County of San Francisco (ADJ1177048/SFO 0487779).
The 54 page opinion in Almaraz/Guzman was unanimous, including new Commissioner Aghazarian, and the 48 page opinion in Ogilvie was 6-1, with Commissioner Caplane dissenting in favor of a simple rule that the new schedule is rebutted when an individual applicant proves that his personal diminished future earning capacity is disproportionate to the rating under the 2005 Schedule.
Both decisions may well lead to a serious increase in litigation as the applicant's bar will take them as encouragement to challenge and limit the 2005 Schedule, though the Board majority in Ogilvie believes that its mathematical formulas to challenge the DFEC factor are simple and easy to apply and will not require expert testimony. That belief is likely unfounded, but even if it is true, it does not stop parties from challenging the DFEC portion of a rating formula and asking a judge to make a different, higher rating decision.
Almaraz/Guzman is actually a scholarly, broadly researched decision, citing decisions in Arizona, Florida, New Hampshire, Hawaii and New Mexico about the shortcomings of exclusive use of the AMA Guides for rating permanent impairment/disability. The Board holds that the AMA Guides may be rebutted by a showing that an impairment rating based on it "would result in a permanent disability award that would be inequitable, disproportionate, and not a fair and accurate measure of the employee's permanent disability." In place of the exclusive use of the Guides, the WCAB judges can make an impairment determination that is not at all based or only partially based on the Guides. The Board "proclaims" that its holding does not mean that the old rating schedule is to be resurrected, "regardless of how 'fair' such a rating [based on the old schedule] might seem to a physician, litigant, or trier-of-fact."
Factually, Almaraz involved a truck driver suffering a low back injury leading to surgery. The AME gave him a 12% whole person impairment standard under the Guides. He also indicated that applicant was permanently restricted to light duty and must avoid prolonged sitting. There was an unchallenged 20% apportionment to nonindustrial factors. He clearly could not do certain aspects of his former job. At trial, the parties stipulated that the rating under the AMA Guides before apportionment was 17% and 58% under the old schedule. The judge awarded 14% after apportionment under the new Schedule, finding he was not free to make any determination based on the work preclusions mentioned by the AME.
The applicant's attorney challenged the decision as inequitable and failing to fully describe the injured worker's impairment. Counsel claimed that the AMA Guides was only to be taken into account in issuing an impairment rating and not an absolute. In Guzman, the AME reported on bilateral carpal tunnel syndrome causing a 25% loss of preinjury capacity to push, pull, grasp, keyboard, etc. Under the new Schedule, there was a 3% whole person impairment standard for each side. The doctor was of the opinion that based on applicant's ADL losses she actually had a 15% WPI on each side, though he recognized that his opinion did not provide "a method that is sanctioned by the AMA Guides." The judge made an award under the AMA Guides.
The Board found that there was nothing in the new legislation nor in case law to conclude that the AMA Guides portion of the 2005 Schedule is not rebuttable. It is rebuttable. It is not conclusive. The Board faulted the Guides for its inherent limitations in assessing occupational impairment. At least in some cases, "it cannot be the only or ultimate determining factor of an industrially-caused impairment." The Guides acknowledges that its impairment ratings estimate the impact of an injury on a person's overall ability to perform activities of daily living, excluding work. Therefore, factors outside the Guides may be considered to determine impairment, including the injury's impact on the worker's ability to perform work activity. The Board points to older case law in California in which the courts ruled that a particular rating may be arbitrary or unreasonable or not supported by the evidence. If it is established that the Guides impairment rating does not "accurately reflect the employee's true disability," it is rebutted.
How do you judge what is an accurate reflection of "true disability"? It would appear that this standard calls for a generous dose of subjectivity and reliance on a trial judge to come up with such a decision. Further, the Board leaves it to the expertise of an evaluating, and perhaps a treating, physician to invoke his or her judgment based upon his or her experience, training and skill "to evaluate the numerous factors relating to an individual's impairment rating." Again, reliance is placed on the (subjective) expertise of the evaluating physician, to describe the disability--a clarion call to medical pontification, followed by a multitude of doctor depositions and trials.
The Board concludes, "We do not suggest that this approach to evaluating impairment is perfect. The reality is that, at present, there is no simple method by which evidence regarding an employee's medical condition can be combined with other evidence to calculate the percentage to which an injured employee is occupationally impaired." The permanent disability findings were rescinded in both cases and the matters returned to the trial judges for new decisions, employing the principles enunciated in this decision. In essence, the Board has placed the AMA Guides on life support, if not having pulled the plug altogether.
Turning to Ogilvie, the Board , for the first time, provides the comp community with some specific guidelines as to how to rebut the diminished future earning capacity portion of the 2005 Schedule. As broadly subjective as the Board's approach was in Almaraz/Guzman, the Board is exceedingly mathematical and seemingly objective here, though the result may generate as much contentiousness and litigation as the other en banc promises.
Let's explain briefly. The decision explains how the DFEC factor was calculated for the 2005 Schedule, using the 2003 and 2004 RAND studies, a method which was held appropriate in Boughner v. Comp USA (2008) 36 Cal. Workers' Comp Reporter 111, 73 CCC 854. As explained in the Schedule itself, the DFEC adjustments fall into eight rankings with statistical average proportional earnings losses graded for various impairments (see 2005 Schedule, pages 1-5 to 1-8).
To rebut the listed DFEC ranking, the injured worker (or possibly, though rarely, the defendant) has to prove that the actual future earning capacity loss is greater than what is described in those eight rankings.
First of all, the worker needs to determine his or her proportional earnings loss and this is preferably done with actual earnings in the three years following the injury (similar to the way the RAND studies measured earning loss). But how do you deal with the situation where a worker's temporary disability goes on for a long time, perhaps more than three years? How do you then figure out the long-term loss of income? How many years can you wait to make that decision? How do you extrapolate if you don't have the preferred time frame to use?
Apart from those questions, the employee also has to establish what "similarly situated employees" earned during that same time frame. The RAND studies used as a control group workers at the same firm/company with similar pre-injury earnings. The Board tells us that it should not be that difficult to establish the earnings of "similarly situated employees" through the EDD Labor Market Information Division (LMID) website. That remains to be seen.
Assuming that information on the first two elements above is obtainable, the Board then goes into the mathematics of how to determine the injured employee's proportional earnings loss to plug into the DFEC calculations to see if the worker has a greater proportional loss than the range the Schedule deals with.
The Board tells us that if the ratio goes beyond the FEC range in the Schedule for the particular body part, say a knee which takes an FEC rank of 2, but with the worker actually suffering an earnings loss ratio much higher than that, for example an FEC rank of 5, the worker can use that higher rank and plug it into the rating formula under the new Schedule, as long as it is still within the range of those eight FEC rankings. If the ratio is outside the range in the Schedule, that actual earnings loss ratio is plugged into the rating formula in place of the eight listed rankings. In other words, the overall rating formula that we have in the 2005 Schedule is used and the DFEC factor is adjusted by this complex formula within the overall rating structure.
Although this decision is ingenious and perhaps accurate and fair, it is far from simple and we can see it leading to disputes in virtually every case. The Board believes that outside rehab experts need not be called in to make these determinations, but reality tells us that they will be called in and we will have dueling rehab experts testifying about their version of the employee's actual loss of earning capacity and what similarly situated employees have earned over the same period, not particularly different than what we have now. There is one major difference and that is that the Board has now told the vocational experts exactly what to disagree about!. Further, how do you deal with loss of earning capacity based on malingering or lack of motivation or lack of intelligence or lack of facility in English? How do you deal with loss of earning capacity caused by the deep recession we are in right now? Do you look at earnings in the county where the injury occurred or where the plant or the employee is located, or the state, or the nation? In any event, the dissent may prove correct when she says that, in adopting a plan that is complicated and limited, litigation may well be encouraged. It will come to pass.
These decisions are complex and far-reaching. This is merely our first impression of what is going to be a lively and contentious period as opposing counsel and the Board's trial judges feel their oats and attempt to implement and interpret what the Board has proclaimed in Almaraz/Guzman and Ogilvie.
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