Permanent Disability Determinations in California After Almaraz/Guzman and Ogilvie

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The California Worker's Compensation Appeals Board (WCAB) reconsidered two cases with important implications for determining permanent disability ratings in worker's compensation cases this September. The first is two joined cases, Mario Almaraz vs. Environmental Recovery Services and Joyce Guzman vs. Milpitas Unified School District. The second case is Wanda Ogilvie v. City and County of San Francisco.

While the reconsidered opinion in the Ogilvie case basically reaffirmed the appeal board's previous February ruling, the reconsidered opinion in Almaraz/Guzman is likely to have a greater impact on the ability of medical professionals to fairly determine an injured worker's true level of permanent disability.

Senate Bill 899 and the AMA Guides

In 2004, California passed Senate Bill 899, which was meant to reduce the overall costs of worker's compensation cases in the state by limiting the number of permanent disability payouts, among other things. One of the ways the bill sought to achieve this goal was by eliminating the amount of subjectivity used to determine an individual's disability impairment rating. The legislature believed that using an objective, standardized rating system would decrease the number of permanent disability payouts and create stability and predictability in the system.

To this end, California Labor Code §4660 was amended to require physicians to use the AMA's Guides to the Evaluation of Permanent Impairment (5th Ed.) in order to establish "…prima facie evidence of the percentage of permanent disability…."

The AMA Guides have been heavily criticized by physicians and others for being draconian in nature and consistently underrating a person's true level of impairment. Before the passage of SB 899, physicians were allowed to use many different factors to determine a person's impairment rating and not solely rely on the AMA Guides.

Almaraz/Guzman I

In the original Almaraz/Guzman ruling, the WCAB considered whether or not the AMA Guides are the only source that can be used or whether they are just a starting point. The WCAB found the following:

The AMA Guides are, in fact, rebuttable
To rebut the impairment rating, it must be shown relying on the impairment rating in the Guides would result in a permanent disability award that is "inequitable, disproportionate and not a fair and accurate measure of the employee's permanent disability"
Once the AMA Guides impairment rating has been successfully rebutted, then the WCAB would make an impairment determination that considers other medical opinions that may be partially based on the Guides or not at all

This opinion was important because it provided a means for those with permanent disabilities to move beyond the restrictive and limiting impairment ratings in the AMA Guides so long as they could show relying on the Guides would produce an inequitable, disproportionate and unfair result.

Almaraz/Guzman II

In the en banc reconsidered opinion in Almaraz/Guzman issued this September, the WCAB affirmed that the AMA Guides still are rebuttable, but once they have been rebutted, the physician is required to stay within the four corners of the AMA Guides when determining the appropriate impairment rating.

The revised holding also stated that the burden of rebutting the permanent disability rating in the AMA Guides belongs to the party seeking to challenge the rating. Additionally, the holding rejected the standard from the previous opinion. Now, in order to successfully rebut the AMA Guides impairment rating, one of the component elements of the rating must be challenged — a challenge that must be based on other information provided in the AMA Guides, whether found in a different section, chapter, table or method.

Thus, while the revised opinion in Almaraz/Guzman significantly reduced the ability of physicians to set a more accurate and fair permanent disability impairment rating, it did not eliminate the ability to do so altogether. There is still room in the reconsidered opinion for physicians to find creative solutions within the AMA Guides.

Ogilvie I and II

A person's permanent disability rating may be subject to a Diminished Future Earnings Capacity, or DFEC, adjustment. The Ogilvie case concerned whether the DFEC adjustment is rebuttable and, if it is, how to calculate an accurate increase or decrease in the rating.

In the first Ogilvie decision, the WCAB held that the DFEC schedule is rebuttable. In order to do this, a complex mathematical formula must be used that involves imputing numbers collected from 3 years of post-injury earnings for the injured worker and 3 years of earnings for similarly situated workers, among other empirical data as required by the Labor Code.

In the reconsidered decision, the WCAB basically upheld its previous decision and made sure it was consistent with the reconsidered opinion in Almaraz/Guzman. The opinion refined how the DFEC must be calculated, including using data consistent with RAND data, the numeric formula adopted by the Administrative Director and data from the Employment Development Department.

The decision also explicitly stated that vocational experts are not necessary for rebutting the DFEC component. The opinion cited the expense of using vocational experts as well as the complicated, long reports they issue as reasons to limit or eliminate altogether their use in these types of cases.

Conclusion

Many legal experts believe that the Almaraz/Guzman and Ogilvie opinions will be appealed to the California Appellate Courts. However, until a new decision is issued, the WCAB rulings in these two cases must be followed by the courts.

The Almaraz/Guzman and Ogilvie cases did not help simplify the complex area of worker's compensation and permanent disability ratings. If you have suffered a permanent disability after a work-related injury, contact an experienced worker's compensation attorney for assistance. It is much easier to navigate this difficult system with the guidance of a knowledgeable attorney than trying to go it on your own.