(June 11, 2009) In an unusual move, the Workers’ Compensation Appeals Board (WCAB) has decided to reconsider two of its en banc decisions that could have a significant impact on the amount of future permanent disability (PD)  awards, which were addressed under the state Legislature's workers' comp reforms in 2004.

In February 2009, the WCAB issued an en banc decision in the consolidated cases of Mario Almaraz v. Environmental Recovery Services  and State Compensation Insurance Fund and Joyce Guzman v. Milpitas Unified School District and Keenan Associates (2009), holding  that:

1. The American Medical Association (AMA) guidelines portion of the 2005 PD schedule is rebuttable;
2. The AMA guidelines portion of the 2005 PD schedule is rebutted by showing that an impairment rating based on the AMA guidelines would result in a PD award that would be inequitable, disproportionate, and not a fair and accurate measure of the employee’s permanent disability; and
3. When an impairment rating based on the AMA guidelines has been rebutted, the Board may make an impairment determination that considers medical opinions that are not based or are only partially based on the AMA guidelines.

At the same time, the WCAB issued an en banc decision in Ogilvie v. City and County of San Francisco which held that the diminished future earning capacity adjustment used by the 2005 PD schedule could also be rebutted. The Board provided an alternate means to determine this adjustment, and held that the adjustment used by the 2005 PD Schedule was rebutted whenever the Board's method reached a different result. 

The California Chamber of Commerce believes that the Board’s rulings create an ad hoc approach to the PD calculations and reintroduce the use of subjective, unquantifiable factors that the Legislature had squarely rejected.

In its orders granting reconsideration, the WCAB requested input from amicus curie.  In response, CalChamber filed an amicus brief which focused on the plain language of the statute and the Legislature's intent in passing the workers’ compensation reforms of 2004 to support a reversal of the board's findings.

In its brief, CalChamber explained that the Legislature sought to eliminate the vagueness and subjectivity of the old workers’ comp system by spelling out the mandatory method for calculating the percentage of PD. The stated purpose of the new statute is to promote “consistency, uniformity and objectivity.” CalChamber argued that the reforms accomplished that goal by defining the elements that make up the PD percentage calculation in terms of objective, measurable factors, empirical evidence and aggregate and averaged data. In short, CalChamber pointed out that the new system eliminates subjectivity and guess work from PD calculations, thereby ensuring that similarly-situated employees are treated equally, promoting fairness and consistency across the board.

In closing, CalChamber said that as a judicial body, the Board’s duty is to enforce the statue and the authorizing regulations as the Legislature intended and called on the Board to rescind its decision in Guzman/Almaraz and Ogilvie.

In addition, in light of the dramatic departure from the 2005 PD schedule proposed by Guzman/ Almaraz and Ogilvie, CalChamber urged the Board to stay the effect of these decisions pending their reconsideration, or, alternatively, declare a moratorium on PD awards pending reconsideration.

Staff Contact: Erika Frank