California: Labor Code Section 4660.1 and the Repeal of Diminished Future Earnings Capacity

Recently, a panel of three commissioners with the Workers’ Compensation Appeals Board (WCAB) in Hennessey v. Compass Group, 2018 Cal. Wrk. Comp. P.D. LEXIS --, addressed one of the most important issues arising out of Senate Bill 863 that has not yet been decided by the WCAB or the appellate courts. The issue is whether Labor Code Section 4660.1, applicable to dates of injury after January 1, 2013, precludes the WCAB from finding that a permanent disability rating (PD) rating under the AMA Guides can be rebutted by vocational rehabilitation or labor market evidence. Such an interpretation of Labor Code Section 4660.1 would effectively nullify LeBoeuf v. Workers’ Comp. Appeals Bd. (1983) 48 Cal. Comp. Cases 587 (Sup. Ct. in bank) and Ogilvie v. Workers’ Comp. Appeals Bd. (2011) 197 Cal. App. 4th 1262, 76 Cal. Comp. Cases 624. The Workers’ Compensation Administrative Law Judge (WCALJ) as well as the three commissioners with the Workers’ Compensation Appeals Board (WCAB) panel concluded that the injured worker was not precluded from obtaining vocational rehabilitation or labor market evidence.

The defendant in Hennessey argued that because SB863 removed the previous language contained in Labor Code Section 4660(a), which indicated that in determining permanent disability, account shall be taken of the employee’s “diminished future earning capacity”, vocational rehabilitation evidence establishing applicant’s diminished future earning capacity was irrelevant and inadmissible. However, SB863 also replaced Labor Code Section 4660(c) with Labor Code Section 4660.1(d), which specifically provides that the administrative director’s Schedule for Rating Permanent Disabilities (PDRS), including its incorporation of the AMA Guides and the schedule for age and occupational modifiers, shall only constitute prima facie evidence of the percentage of permanent disability. Even more importantly, the “diminished future earning capacity” language was added to Labor Code Section 4660 as part of Senate Bill 899. Prior to SB899, account was to be taken of the employee’s diminished ability to “compete in the open labor market”.

Indeed, many of the older cases addressing the admissibility of vocational rehabilitation evidence existed prior to either SB899 or SB863. Though these cases dealt with the different language regarding an employee’s “ability to compete in the open labor market”, these cases more importantly emphasized the need of the trier of fact to be able to consider evidence outside of the PDRS in arriving at the most accurate PD rating possible.

In conclusion, although defendant makes a very interesting argument in Hennessey, it may prove difficult to establish that by removing this language, the Legislature intended to transform the prima facie evidence of the PDRS into a conclusive finding of PD, at least as it relates to vocational rehabilitation evidence.

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