(January 6, 2010) The California Chamber of Commerce has gone to court to overturn three cases that weaken 2004 workers’ compensation reforms enacted to make the calculation of permanent disability (PD) awards more objective.

Use of American Medical Association Guidelines

The required use of the American Medical Association (AMA) guidelines is at risk in what are commonly referred to as the Almaraz/Guzman decisions issued by the Workers' Compensation Appeals Board (WCAB) last September.  These cases are on appeal and the CalChamber filed a friend-of-the-court brief because the WCAB has erroneously treated one element of the calculation—the AMA guidelines—as rebuttable even though the law does not permit rebuttal of any of the elements that go into calculating the percentage of permanent disability.

A February 2009 decision issued by the entire WCAB consolidated the 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). The decision held  that (1) The 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 WCAB may make an impairment determination that considers medical opinions not based on or only partially based on the AMA guidelines.

In response to requests for reconsideration, WCAB agreed to rehear the cases.  In its orders granting reconsideration, the WCAB requested input from amici curiae.  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 September WCAB issued its new decisions in the Almaraz/Guzman cases. While the new decision marked a significant departure from the broad ruling issued in February 2009, it nonetheless still leaves room for rebutting the permanent disability rating schedule through the guidelines. 

Calculating Future Earning Capacity

The method for calculating an injured worker’s diminished future earning capacity is at issue in the case of Ogilvie v. Workers’ Compensation Appeals Board.

In Ogilive, the WCAB held that the diminished future earning capacity adjustment used by the 2005 PD schedule could also be rebutted. The WCAB provided an alternate means to determine this adjustment, and held that the adjustment used by the 2005 PD schedule was rebutted whenever the WCAB's method reached a different result. 

As with the Almaraz/Guzman cases, WCAB also agreed to reconsider Ogilvie, and issued its new ruling along with the Almaraz/Guzman cases.  Here, the WCAB reaffirmed its original decision concluding that the FEC factor can be rebutted.  In keeping in step with Almaraz/Guzman, the WCAB reiterated its position that the PD schedule is rebuttable. This case is also on appeal.

The CalChamber filed a friend-of-the-court brief in Ogilvie, arguing that the WCAB’s ruling created an ad hoc approach to the PD calculations and reintroduces the use of subjective, unquantifiable factors that the Legislature had squarely rejected.

Legislative Intent

In both briefs, the CalChamber notes that in enacting the 2004 reform legislation (SB 899), the Legislature considered the cost of the old system to employers, and the economic crisis that threatened the very viability of the system as whole. It concluded that something must be done, and did it. The policy decision must be respected and implemented as intended, the CalChamber argues.

The Legislature sought to eliminate the vagueness and subjectivity of the old system by mandating the method for calculating the percentage of permanent disability. In short, the new system eliminated subjectivity and guesswork from PD calculations, thereby ensuring that similarly situated employees are treated equally, promoting fairness and consistency.

Permitting the use of the AMA guidelines to be rebutted on an individualized basis or allowing a specific element of the PD calculation to be rebutted by creating an individualized factor for determining diminished future earning capacity “would increase costs to the employers virtually across the board and is flatly irreconcilable” with the express intention of the Legislature in enacting the workers’ compensation reform law, the CalChamber argues in its brief.

The CalChamber is urging the court to overturn both of these erroneous WCAB decisions.

Staff Contact: Erika Frank