When an employee reaches maximum medical improvement (MMI) but still has medical issues from his/her on the job injury or occupational disease, the employee will normally be eligible for permanent disability benefits. Most of the states recognize two types of permanent disability benefits. While the names vary by state, the most common used names are:
- Permanent partial disability (PPD)
- Permanent total disability (PTD)
Independent Medical Evaluation:
In most jurisdictions when the treating physician states the employee has reached MMI, the workers compensation adjuster reviews the medical report and evaluates the disability rating assigned by the treating physician. If the disability rating is high, or if the adjuster has any reason to suspect it is not correct (for example – the treating physician has a history of providing high disability ratings), the adjuster will request an independent medical evaluation (IME) [also known as an independent medical examination]. The IME doctor reviews the medical records and performs an examination of the employee. The IME doctor then provides a disability rating based upon the results of the examination.
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Employment:
If the medical providers – the treating physician and the IME doctor – agree the employee has recovered enough to return to some type of employment, but will always be partially disabled, the employee is classified as PPD and will be paid PPD benefits per the state statutes. If the medical providers both agree the employee is unable to return to any type of employment, the employee will be considered PTD and will be paid PTD benefits per the limitations in the state workers comp statutes.
Permanent Partial Disability:
PPD benefits are paid to employees who have a permanent physical impairment but can return to some type of work. The amount of PPD benefits can be either a percentage of a body part, a percentage of the body as a whole, or a set scheduled amount. The calculation of the benefit amount will depend on which of these three types of ratings is given.
When a percentage of a body part or a percentage of the whole body is used by the physicians to give their opinion of the disability rating, in most jurisdictions they use the American Medical Association (AMA) Guide to the Evaluation of Permanent Impairment. The physician will review the employee’s disability and compare it to the description provided in the AMA Guide. An example – the physician following the AMA Guide determines the employee has a 15% loss of use of a leg. [When the employee is given any rating to a body part, as opposed to a whole body rating, the employee will be classified as permanent partial disabled.]
The adjuster will then take the disability rating for the leg and multiply it by the number of weeks the state statutes allow for a leg. If the state law states a leg is worth 200 weeks, a 15% rating for the leg would equal 30 weeks (200 X .15). The adjuster would then multiply the number of weeks by the PPD compensation rate. (Most states set the PPD compensation rate at the same level as they set the temporary total disability rate paid to the employee before the employee reached MMI). If the PPD rate is $500, then the amount paid for PPD would equal $15,000 ($500 x 30).
In about 40 states, the statutes have a schedule for the lost of a body part. Examples of body parts listed on the state schedule would include an eye, an ear (hearing), a finger, a hand, an arm, a toe, a foot and a leg. The complete loss of the body part is still considered as PPD as the employee will still be able to return to some type of employment. An example would be the complete loss of a finger. Per the state schedule the finger is worth 10 weeks. With the PPD rate of $500, the PPD benefit paid to the employee would be $5,000 (10 x $500).
Permanent Total Disability:
When the treating physician and the IME doctor agree the employee will never be able to return to any type of employment, the employee is given a disability rating of 100%. With a 100% whole body disability rating, a PTD rating is almost automatic.
The adjuster will take the 100% disability rating for the whole body and multiply it by the number of weeks the state statutes allow for whole body. If the statutes states the whole body is worth 400 weeks, a 100% rating equals 400 weeks. The adjuster would then multiply the number of weeks by the PTD compensation rate. (Most states set the PTD compensation rate at the same level as they set the temporary total disability rate paid to the employee before the employee reached MMI, but some states have a lower PTD rate then the rate for temporary disability). If the PTD rate is $500, then the amount paid for PTD would equal $200,000 ($500 x 400). [It should be noted that some states do not put a cap on the maximum number of weeks a PTD person may receive. The employees in those states receive their disability payments for life].
It is not unusual for the treating physician to give a higher rating than the IME doctor (especially in states where the employee selects the treating physician). If the treating physician rates the employee as 100% disabled, but the IME doctor (reviewing the same medical records and AMA Guide) rates the employee at 60% disabled, it becomes a question for the Workers Compensation Board (also known as the Industrial Commission in some states) to determine whether or not the employee is PTD. The Workers Comp Board will often have a doctor they select examine the employee and give a third opinion as to the level of disability before making a final decision.
Another area where disagreement arises about PTD is when the employee has suffered severe injuries and is unable to return to work for your company, but is not classified by the doctors as 100% disabled. A number of issues will come into play in determining PTD. The nature and degree of physical impairment, the educational level of the employee, the age of the employee, the ability of the employee to be retrained for other suitable work, and the availability of suitable work, are all factors in a determination of PTD.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. Contact: RShafer@ReduceYourWorkersComp.com
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
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