Two Important Decisions Involving Use of AMA Guides and Diminished Future Earnings Capacity
On September 3, 2009, the Workers’ Compensation Appeals Board (WCAB) of California issued two important en banc decisions regarding the use of the AMA Guides to the Evaluation of Permanent Impairment (AMA Guides) and the determination of the so-called “Diminished Future Earnings Capacity.” In both cases, the WCAB had already rendered decisions adjudicating the rights of the litigants but, because of the important issues involved had granted applicants’ and defendants’ petitions for reconsideration and allowed additional time for interested parties to file amicus briefs on the issues addressed in the appeals.
Almaraz/Guzman II [Almaraz – ADJ 1078163 (BAK 0145426); Guzman – ADJ 3341185 (SJO 0254688)]
The core issue in these companion cases was the application and interpretation of California Labor Code § 4660, which states in relevant part (a) that in determining the percentages of permanent disability, “account shall be taken of the nature of the physical injury or disfigurement, the occupation of the injured employee, and his or her age at the time of the injury, consideration being given to an employee’s diminished future earning capacity,” (b) that the “nature of the physical injury or disfigurement” shall incorporate the descriptions and measurements of physical impairments and the corresponding percentages of impairments published in the AMA Guides (5th Edition), and (c), that “[t]his schedule … shall be prima facie evidence of the percentage of permanent disability….”
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In Almaraz/Guzman I, the WCAB had determined, in relevant part, that schedule determinations utilizing the AMA Guides were rebuttable, that schedule determinations utilizing the AMA Guides could be rebutted by showing that an impairment rating based on the AMA Guides would result in a permanent disability award that would be “inequitable, disproportionate, and not a fair and accurate measure of the employee’s permanent disability,” and that once an impairment rating based on the AMA Guides had been rebutted, the WCAB was free to consider medical opinions that were not based upon or were only partially based upon the AMA Guides.
In its September 3, 2009 Decision After Reconsideration, the WCAB modified its earlier decision, holding that the language of Labor Code section 4660(c) unambiguously meant that a permanent disability rating established by the Schedule was rebuttable, that the burden of rebutting the scheduled permanent disability rating resided with the party disputing that rating, that a method of rebutting a scheduled permanent disability rating was to challenge one of the component elements of that rating-for example, the employee’s whole person impairment (WPI) under the AMA Guides, and that in determining an employee’s WPI, it was not permissible to go outside the “four corners” of the AMA Guides. The WCAB indicated that in offering a medical opinion a physician could make use of any chapter, table, or method within the AMA Guides that most accurately reflected the employee’s impairment. The WCAB specifically rejected the “inequitable, disproportionate, and not a fair and accurate measure of the employee’s permanent disability” standard set forth in its earlier Almaraz/Gulman I opinion.
Ogilvie II [ADJ 1177048 (SFO 0487779)]
The decision also involved the interpretation of California Labor Code § 4660, specifically the portions defining the Diminished Future Earnings Capacity (DFEC) portion of the § 4660 schedule. In Ogilvie I, the WCAB had determined, in relevant part, that the DFEC portion of the schedule was rebuttable, that the DFEC portion of the schedule was not ordinarily rebutted by establishing the percentage to which an employee’s future earning capacity has been diminished, that the DFEC portion of the schedule was not rebutted by taking two-thirds of the injured employee’s estimated diminished future earnings and then comparing the resulting sum to the permanent disability money chart to approximate a corresponding permanent disability rating, and that ordinarily, the DFEC portion of the schedule could be rebutted only in a manner consistent with Labor Code section 4660 – including section 4660(b)(2) and data from empirical studies, such as the RAND Institute for Civil Justice.
In its September 3, 2009 Decision After Reconsideration, the WCAB modified Ogilvie I and, consistent with Almaraz/Gusman II, held that the language of § 4660(c) unambiguously meant that a permanent disability rating established by the schedule was rebuttable, that the burden of rebutting the scheduled permanent disability rating resided with the party disputing that rating, and that one method of rebutting a scheduled permanent disability rating was to challenge one of the component elements of that rating, such as the injured employee’s DFEC adjustment factor, which could be accomplished by establishing that an individualized adjustment factor most accurately reflected the injured employee’s DFEC. The WCAB indicated that the individualized DFEC adjustment factor not only must be consistent with § 4660(b)(2), the RAND data to which section 4660(b)(2) referred, and the numeric formula adopted by the Administrative Director in the § 4660 schedule, it must also constitute substantial evidence that the WCAB determined was sufficient to overcome the DFEC adjustment factor component of the scheduled permanent disability rating. The WCAB indicated that in other respects it affirmed Ogilvie I.
Tom Robinson, J.D. is the primary upkeep writer for Larson’s Workers’ Compensation Law (LexisNexis) and Larson’s Workers’ Compensation, Desk Edition (LexisNexis). He is a contributing writer for California Compensation Cases (LexisNexis) and Benefits Review Board – Longshore Reporter(LexisNexis), and is a contributing author to New York Workers’ Compensation Handbook(LexisNexis). Robinson is an authority in the area of workers’ compensation and we are happy to have him as a Guest Contributor to Workers’ Comp Kit Blog. Tom can be reached at: compwriter@gmail.com.
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