18 Sep 2018

California: Determining Permanent Disability When There Is No Rating Schedule Nor Any Clear Rules

Any discussion concerning the appropriate calculation of the permanent disability in California’s Workers’ Compensation System should start with Labor Code Section 4660(a). This section basically states that the percentage of PD should reflect the “nature of the physical injury or disfigurement” (explained in section 4660(b)(1) to be done by application of the AMA Guides), the employee’s age, occupation and diminished future earning capacity.

Importantly, Labor Code Section 4660(c) provides that the administrative director (AD) shall amend the schedule used for determining PD at least once every five years. It is this schedule that is to be consistently amended and it is this schedule that constitutes prima facie evidence of the correct percentage of permanent disability.

However, since Senate Bill 899 was passed on April 19, 2004, the AD has never amended the PDRS. Significantly, the Labor Code has been amended, as of January 1, 2013, so as to make the PDRS for injuries after that date no longer applicable. This is made clear by reading Labor Code section 4660.1(d) wherein it is explained that until the AD adopts a new PDRS, for injuries occurring on or after January 1, 2013, permanent disabilities shall be rated only using the age and occupational modifiers taken from the 2005 PDRS. Importantly, this does not say that permanent disabilities shall be rated by using the 2005 PDRS, only that the age and occupational modifiers are to be used from that schedule.

This takes us to the second fundamental problem with how we calculate the permanent disability benefit in California. In the vast majority of cases before the Workers’ Compensation Appeals Board (WCAB), PD continues to be determined by coming up with the strict AMA Guides impairment and then plugging it through the formula provided for by the antiquated PDRS. There is very little consideration given to what the employee’s actual disability is or what would be, in fact, a fair rating for a particular case.

This is where recent cases like Casado v. Kaiser Permanente, 2018 Cal. Wrk. Comp. P.D. LEXIS -- help. Although Casado did not address the fact that there is no applicable PDRS for the date of injury involved with that case, it did conclude that the rating produced by the 2005 PDRS could be rebutted. Specifically, the panel of WCAB commissioners found that a “strict” application of the AMA Guides may not accurately reflect an employee’s impairment. The panel stated that the Guides are not to be “literally and mechanically” applied. Instead, the evaluating physician may use his or her experience and expertise in applying any portion of the Guides to any given case.

In conclusion, cases like Casado are really only a bandage on a hemorrhaging wound. First, the system is applying the 2005 PDRS which has not been updated or amended since 2005. Second, the system is applying a PDRS that has been legislatively eliminated for injuries occurring on or after January 1, 2013; and, thirdly, in the vast majority of cases, the AMA Guides continue to be “literally and mechanically” applied.

Workers’ Compensation is a volume business. In order for PD to be fairly determined in all cases, the Legislature needs to act and adopt laws that specifically say, if the AMA Guides are going to be used, that those guides are not be “literally and mechanically” applied and enact a rating schedule that is updated and makes some reasonable sense.

NOTE: THE PDF FOR THE CASADO DECISION IS BELOW.

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