Rebutting the DFEC Adjustment Factor: Ogilvie Revisited: Contra Costa County v. WCAB (Dahl)

By Robert G. Rassp, Esq.

In order to understand Contra Costa County v. Workers’ Comp. Appeals Bd. (Dahl), 240 Cal.App.4th 746, 80 Cal. Comp. Cases – [240 Cal.App.4th 746], it is important to first understand the facts of the case.

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Ms. Dahl was a medical records clerk for the County who claimed cumulative trauma to her neck and right shoulder through March 2005. She had been employed by the County for 8 years, has a bachelor’s degree from CSU Hayward and a felony conviction for possession and sale of methamphetamine. An AME opined that the Applicant had a WPI that resulted in an adjusted permanent disability rating of 59%. At trial, the Applicant tried to rebut the standard permanent disability rating by using the second of three rebuttal methods described in Ogilvie v. Workers’ Comp. Appeals Bd. (2011) 197 Cal.App.4th 1262, 76 Cal. Comp. Cases 624 [76 CCC 624], which is based on LeBoeuf v. Workers’ Comp. Appeals Bd. (1983) 34 Cal.3d 234, 48 Cal. Comp. Cases 587 [48 CCC 587].

Based on a review of the medical reports, interviews with the Applicant, and EDD data, the Applicant’s vocational expert opined she had a proportional earnings loss of about 87% that, according to the expert, equals a 77% permanent disability rating, based on an analysis of the same or similarly situated employees. A defense vocational expert opined the Applicant’s proportional earnings loss was only 30%. The defense expert considered all of the medical and vocational evidence submitted at trial and individualized his conclusions to the Applicant’s specific situation.

The WCJ found a 59% permanent disability and concluded that the Applicant did not rebut the rating. The WCAB reversed the WCJ and held that the Applicant could rebut the scheduled rating by showing the injury impaired her amenability to rehabilitation, even where there was less than 100% permanent total disability.

The Applicant’s vocational expert again tried to rebut the rating, stating the Applicant was a good rehabilitation candidate but her future earnings loss is based on a theoretical group of similarly situated employees which did not take into account her education. This time the WCJ awarded the Applicant a 79% permanent disability rating. The WCJ failed to consider whether the Applicant had shown her industrial injury impaired her ability to benefit from vocational rehabilitation, and whether her impairment caused her to suffer a greater loss of future earning capacity than what was taken into account in the standard DFEC adjustment factor in the standard rating. The WCAB affirmed the WCJ’s decision and defendant appealed to the Court of Appeal, which granted its writ and issued the published decision that reversed the WCJ and the WCAB.

Ogilvie Revisited: The Three Rebuttal Methods

A review of the three rebuttal methods discussed in Ogilvie is appropriate at this point. Remember, the Court of Appeal in Ogilvie described three ways to rebut a standard permanent disability rating focusing on the DFEC adjustment factor. The entire Ogilvie decision was based on the average permanent disability rating for each part of body divided by the proportional wage loss associated to that part of body over a three-year period after a date of injury.

So if EDD data shows that a person who is similarly situated as the Applicant would earn $50,000.00 per year for three years after the Applicant’s date of injury and the Applicant was only able to earn $50,000.00 for the entire three years, the injured worker would have a 67% proportional earnings loss (three years of earnings equal $150,000.00 for similarly situated employees compared with only $50,000.00 of earnings for the Applicant during the same period). Each of the eight DFEC adjustment factors is based on the average permanent disability rating for each of 22 parts of body to proportional wage loss data from the EDD for each of 22 parts of body injured.

For example, the 2004 RAND Corp. data showed in a sample of 39,000 cases of spinal injuries that the average spinal permanent disability rating for them was about 20%. This allowed an EDD analysis to conclude that the average 20% permanently disabled worker with a bad back loses a little more than 27% of his or her earnings in the three-year period after a date of injury. This is how a Rank 5 was born in the 2005 Permanent Disability Rating Schedule. In this article, once again, you are spared the algebra.

So the Court in Ogilvie recognizes only three ways to rebut the DFEC adjustment factor in a rating string [Ogilvie v. Workers’ Comp. Appeals Bd. (2011) 197 Cal.App.4th 1262, 76 Cal. Comp. Cases 624 [76 CCC 624]]:

1. There are factual errors in the calculation of or errors in applying the DFEC adjustment in a given case;

2. Due to the industrial injury, the employee is not amendable to vocational rehabilitation and therefore has suffered a greater loss of future earning capacity than is reflected in the scheduled rating; or

3. There is an omission of medical complications aggravating the employee’s disability in preparation of the rating schedule. A permanent disability based on medical complications can result in greater wage loss than an average permanent disability to proportional wage loss that standard DFEC adjustments are based on.

The Dahl Decision

In Dahl, the Applicant tried to rebut the DFEC adjustment by a combination of Methods 1 and 2 and failed miserably in terms of presentation of evidence in her failure to commit to one method only. Applicant raised as her rebuttal a combination of factual or applied errors in the schedule using EDD data with a LeBoeuf rebuttal but without first proving that the Applicant was not amenable to vocational retraining. The WCJ and the WCAB got confused about the methods used by Dahl.

The Court of Appeal in Dahl basically says if you want to try and rebut the DFEC adjustment using Method 2, you need to follow LeBoeuf, proving by a preponderance of the evidence that due to the industrial injury, the Applicant is not amenable to vocational retraining which affects her future earning capacity. In addition, the court expressed its doubt that an injured employee can use a Method 2 LeBoeuf rebuttal to prove she is not amenable for vocational rehabilitation where there is less than 100% permanent total disability.

In this case, the Applicant has a bachelor’s degree and she was amenable to vocational rehabilitation by going and getting a Master’s degree or using her bachelor’s degree towards a non-clerical position in the open labor market. The Applicant’s expert did not present any evidence that the Applicant was NOT amenable to vocational rehabilitation, which proved fatal to his testimony. The court essentially interpreted Method 2 in Ogilvie to be a verbatim restatement of the principles in LeBoeuf where an applicant tries to prove that the industrial injury has caused a total loss of future earning capacity.

In addition, the court indicates that vocational expert testimony or reports must include an individual analysis rather than a generalized analysis based solely on “same or similarly situated employees.” The court in Dahl expressly says: “The first step in any LeBoeuf analysis is to determine whether a work-related injury precludes the claimant from taking advantage of vocational rehabilitation and participating in the labor force. This necessarily requires an individualized approach.” The court goes on the remind us that even though vocational rehabilitation as a stand-alone benefit was abolished in 2009, the Supplemental Job Displacement Benefit was in effect when the Court of Appeal decision in Ogilvie was issued.

The court in Dahl makes the axiomatic statement that “Most work-related injuries that qualify an employee for workers’ compensation benefits reduce earning potential to some degree.” But then the court offers the following dicta that apply to the second rebuttal method: “We are skeptical of WCAB’s conclusion that an employee may invoke the second Ogilvie rebuttal method where the inability to rehabilitate results in less than a 100 percent permanent disability.”

The court goes on to state that Dahl was a good candidate for vocational rehabilitation and she failed to make a showing that her ability to rehabilitate was either impaired or eliminated because of the industrial injury. Therefore, there was no evidence that she could rebut the DFEC adjustment using the second method under LeBoeuf.

Key Takeaways From Dahl

What are the lessons learned in the Dahl case? First of all, rebuttal of the DFEC adjustment factor is alive and well under Ogilvie for dates of injury prior to 1/1/13. If you intend to rebut the DFEC adjustment factor by any of the three methods, you must be very selective in who your vocational expert is and his or her experience in applying the principles in Ogilvie and Dahl. In many respects, using a vocational expert whose main experience is testifying in social security disability cases would result in a higher level of skill needed to present credible evidence of rebuttal of the DFEC adjustment for any of the three methods. This is because these vocational experts can utilize the sequential step analysis of impairment to disability that is needed in all three methods. Their access to and experience with national, regional, and local job markets, plus their extensive experience in establishing past relevant work activities and transferable skills, can produce more reliable evidence along with EDD data showing post injury earnings for similarly situated employees.

How important is the Dahl case to us in our law practices? Not very. It is a reminder to not attempt an Ogilvie rebuttal in every case that comes close to a life pension standard adjusted rating. Perhaps alternative ratings methods under Guzman III [Milpitas Unified School District v. Workers’ Comp. Appeals Bd. (Guzman) (2010) 187 Cal.App.4th 808, 75 Cal. Comp. Cases 837 [75 CCC 837]] or on occupational group would have been more effective to raise the 59% rating to a life pension level. Use the Ogilvie rebuttal methods sparingly and as a last resort but do not screw it up for all of us using the wrong facts or the wrong expert witness. Best practices dictate that you use Method 2 under LeBoeuf only when the Applicant is not able to be rehabilitated due to the industrial injury and has significant diminished future earning capacity, or none at all. Always individualize your expert witness information to the Applicant first and then compare his or her post injury earning capacity to similarly situated employees using EDD data. This must be done in all three methods.

Are Dahl and Ogilvie still relevant for injuries that occur on or after 1/1/13? Method 2 under Ogilvie using the LeBoeuf case is still viable for cases where the injured worker is permanently totally disabled and cannot be rehabilitated because of the industrial injury. It remains to be seen whether Methods 1 and 3 can be used to rebut the “adjustment factor” of 1.4 that applies in every permanent disability rating for injuries that occur on or after 1/1/13. Hopefully, the right case will come along to eventually tell us.

© Copyright 2015 Robert Rassp, Esq. All rights reserved. Reprinted with permission.