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Summary of the Amicus Curiae Briefs in Almaraz/Guzman and Ogilvie

On February 6, 2009, the Appeals board issued an en banc decision in Mario Almaraz v. Environmental Recovery Services (a.k.a. Enviroserve) and State Compensation Insurance Fund and Joyce Guzman v. Milpital Unified School District and Keenan Associates (2009) 11 WCAB Rptr. , holding that: (1) the AMA Guides portion of the 2005 Schedule is rebuttable; (2) the AMA Guides portion of the 2005 Schedule is 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 (3) when an impairment rating based on the AMA Guides has been rebutted, the WCAB may make an impairment determination that considers medical opinions that are not based or are only partially based on the AMA Guides.

The Appeals Board explicitly emphasized that we are not determining whether the standards for rebutting the AMA Guides portion of the 2005 Schedule have been or may be met. Instead, in each case, the Board remanded to the assigned workers’ compensation administrative law judge (WCJ) to decide these questions in the first instance.

The Board also cautioned: “we expressly proclaim that our holding does not open the door to impairment ratings directly or indirectly based upon any Schedule in effect prior to 2005, regardless of how “fair” such a rating might seem to a physician, litigant, or trier-of-fact.”

On April 6, 2009, the Appeals Board granted reconsideration in order to allow further briefing by the parties and to allow amicus curiae briefing form other interested parties on the issue of how the 2005 Permanent Disability Rating Schedule may be rebutted.

A total of 17 amicus curiae briefs were filed with the Appeals Board in the Almaraz/Guzman en banc decision. The following are brief summaries of the issues raised in those briefs.

California Applicants’ Attorneys Association

CAAA submitted the Board’s initial decision was correct and that the decision should be affirmed in its entirety. CAAA specifically asserted that: (1) Labor Code §4660 requires that a physician’s impairment assessment include consideration of the impairment evaluation principles and percentages set forth in the Guides but does not establish the Guides as the sole determinant of an injured worker’s impairment; (2) the Guides text itself acknowledges it own limitations when used for disability determinations and expressly requires physicians to employ their training, expertise and independent clinical judgment and to consider information outside of the “four corners” of the Guides text when assessing permanent impairment; (3) actions by the Administrative Director also recognize the Guides’ inherent limitations; (4) the rebuttal standard elaborated by the Board is predictable, solidly grounded upon nearly four decades of consistent legal precedent and will not result in a flood of litigation, widely disparate results and system-wide chaos; and (5) the 2004 amendments of Labor Code n§4660 were not enacted solely to effect a reduction in permanent disability benefits.

California Chamber of Commerce

The California Chamber of Commerce urges the Board to reverse Almaraz/Guzman and Ogilvie. The Chamber argues that in the new Labor Code §4660, the Legislature exercised its plenary discretion over workers’ compensation. It decided, as a matter of state public policy, that costs, especially PD costs must be controlled. It sought to eliminate the vagueness and subjectivity of the old system by spelling out the mandatory method for calculating the percentage of PD. The stated purpose of the new statute was to promote “consistency, uniformity, and objectivity.” The statute accomplishes 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, the new system eliminates subjectivity and guesswork from Pd calculations thereby ensuring that similarly-situated employees are treated equally, promoting fairness and consistency across the board.

Insurance Commissioner of the State of California

The Insurance Commissioner urges and requests the decisions of the Appeals Board be measured by a way so as to allow for adequate and reasonable benefits for injured workers that are stable and predictable in their costs to the workers’ compensation system as mandate by the Legislature so as to provide for insurance rate adequacy to avoid insurance company solvency, The Insurance Commissioner pointed out that workers’ compensation premiums are based upon the estimate of costs to be incurred in the future and any changes to those future loss costs or loss adjustment expenses that create additional unpredicted costs may result in inadequate monies to pay claims even after taking into account amounts loaded into the rates for profit, contingencies and investment income. The Insurance Commissioner also argued that use of the Guides is mandatory for the nature of physical injury or disfigurement and cannot be substituted.

California Workers’ Compensation Institute

The California Workers’ Compensation Institute contended that because the Legislature has the constitutional authority to create the permanent disability rating system, the Appeals Board cannot under the guise of interpretation or rebuttal, accept evidence contrary to or inconsistent with the Legislature’s mandated parameters. More specifically, the Institute contends that the Appeals Board’s en banc decision is in excess of its powers insofar as it: (1) rewrites Labor Code §4660(b)(1) contrary to its express terms and legislative intent; (2) recasts the permanent disability system as one of subjective “fairness” without regard to the impairment relativity inherent within the structure/definitions adopted by the Legislature and permits unfettered use of guidelines not adopted by the Legislature; (3) creates a more contentious, litigious and unpredictable system in contravention of the express legislative purpose behind SB899’s reforms; (4) overrides the Legislature’s decision to use age, occupation and DFEC modifier to convert impairments into disability and compensation, and erroneously substitutes therefore the AMA Guides’ authors opinion on how to do so; and (5) improperly relies upon other states’ laws to override the California Legislature’s decision to use age, education and DFEC modifier to convert impairment to disability.

Director of Industrial Relations

The Director argued that the announced scheme of rebuttal undermines consistency, uniformity, and objectivity in the permanent disability rating system in contravention of Labor Code §4660(d). The Director argues that the Board erred when it assumed that each element of the permanent disability rating schedule is rebuttable just because the schedule was a whole is prima facie evidence of the percentage of permanent disability as a result of each injury. When examining the language of the new statute, and in comparing and analyzing the old and new statutes, the Director argues that it is evident that the definition of physical impairment in Labor Code §4660(b)1) as incorporating the AMA Guides leaves no room for alternative means of measurement and descriptions of those impairments by such means as “clinical judgment” or fairness and equity. Following the reforms introduced in 2004 by SB899, the Director contends that rebuttal is limited to showing errors in application of the schedule.

California Self-Insurers Association

The California Self-Insurers Association urges the Board to re-analyze the Commissioners’ reasoning. CSIA argues that the en banc decision is inconsistent with the purposes of SB899, adversely impacts the administration of the workers’ compensation system, and more importantly, would delay the prompt flow of benefits to injured workers. CSIA contends that the en banc decision as originally issued: increases litigation; causes delays in providing benefits; makes it impossible for claims administrators to promptly determine the obligation to pay workers’ compensation benefits to injured workers; and, makes it impossible for employers and carriers to properly reserve files. The contention is also made that the purpose of adopting the AMA Guides was to speed the delivery of benefits to injured workers, to avoid conflicting medical experts, to establish an objective standard of permanent disability determination, to have uniformity and consistency of benefit determination, to reduce litigation, along with controlling costs.

California Society of Industrial Medicine & Surgery

The California Society of Industrial Medicine & Surgery argues that the existence of a rebuttable disability schedule does no harm to the Legislative desire to promote consistency, uniformity, and objectivity. The AMA Guides represent prima facie evidence of impairment and on a case by case basis, this prima facie evidence may be rebutted. The existence of rebuttal insures that the physical impairment is well defined and objective and rebuttal still requires substantial evidence. On a case by case basis, the mechanisms for dispute resolution are in place to insure that not only are the ratings consistent, uniform and objective, and are also a fair and accurate reflection of the injured worker’s disability.

County of Los Angeles

The County of Los Angeles framed the issue as whether whole person impairment ratings based on the AMA Guides can be rebutted when used in determining an injured worker’s level of permanent disability. The County argues that the AMA Guides cannot be rebutted as this contradicts the Legislature’s intent to create a consistent, uniform, and objective permanent disability system in which employees with similar injuries receive similar permanent disability awards. The County suggested that if the Board does not reverse its prior decision permitting the rebuttal of the AMA Guides, the County requests that the Board clarify its opinion and provide further explanation of situations in which the AMA Guises can be rebutted if the injured worker’s whole person impairment is found to be disproportionately greater than the injured worker’s true disability level.

Protected Insurance Program for Schools

The Protected Insurance Program for Schools argues that in a perhaps well intentioned but legally unsupportable decision, the Appeals Board has strayed from its mission to interpret the California workers’ compensation statues consistent with the legislative intent as well as the plain language of the statutory scheme. As a result, it argues that the Appeals Board has injected an illogical and legally unsupportable subjective element into the permanent disability rating system which is inconsistent with the legislatively mandate to promote “consistency, uniformity, and objectivity” pursuant to Labor Code §4660(d). The contention is made that the Board has risked eliminating this specific legislative mandate by injecting consideration into the permanent disability system of factors which are not statutorily supported and for which there is not legal basis for consideration.

San Diego and Imperial County Schools Joint Powers Authority

This schools joint powers authority contends that until the filing of the en banc decision holding the AMA Guides are rebuttable, there had been an increased degree of predictability about permanent disability ratings since the 2005 Permanent Disability Rating Schedule went into effect. Given the fixed budgets of its member districts, which are trying very hard in these difficult economic times to avoid reducing their teaching staffs, increasing class sixes, closing schools, ending programs, reducing transportation, or having to take other measures which will negatively affect the delivery of public education at all levels. The more realistic and consistent permanent disability awards have been a positive result of the reform legislation. The volatility resulting from this en banc decision threatens to overwhelm resources, judicial as well as financial.

International Association of Rehabilitation Professionals

IARP supports this en banc decision and reiterates the important contributions that vocational rehabilitation experts can make to ensure just and equitable permanent disability awards, awards which take into account the worker’s physical loss and loss of future earning capacity. The argument is made that rehabilitation experts can provide qualified opinions quantifying how a worker’s impairment affects his or her ability to work and earn income, thus bridging the gap between an impairment rating under the Guides and a finding of work disability by the WCJ.

Employers Direct Insurance Company

This workers’ compensation insurance company argues that this en banc decision stands for the proposition that the language of Labor Code §4660(d) does not change the nature of the presumption in Labor Code §4660(c) but rather only operates as a guide to the adoption of the rating schedule. The contention is made that this is not supported by any reasonable rules of statutory construction and that given both the content in which SB899 was enacted and the express legislative intent, it is clear that the presumption created by Labor Code §4660(c) is now a presumption affecting the burden of proof.

California Workers' Compensation Defense Attorneys Association

CWCDAA is asking the Sixth District Court of Appeal to allow it to file an amicus brief in support of Milpitas Unified School District in the Guzman case, which is still pending before it. The defense bar argues that the Workers' Compensation Appeals Board's decision to allow impairment ratings based on subjective criteria is inconsistent with the plain language and legislative intent of Labor Code section 4660. It also challenges the Board's reliance on pre-SB 899 law that was expressly repealed by the Legislature, as well as the findings cited from out-of-state cases allowing rebuttal of the AMA Guides. The defense bar also argues that the board overstepped its authority in modifying the 2005 Rating Schedule, maintaining that the "Legislature imbued the [Division of Workers’ Compensation administrative director], and only the AD, with the authority to develop, adopt and amend the 2005 schedule."

Summary of Amicus Curiae briefs in Ogilvie

On February 6, 2009, the Appeals Board issued an en banc decision in Wanda Ogilvie v. City and County of San Francisco (2009) 11 WCAB Rptr. _____, holding that: (1) the DFEC portion of the 2005 Schedule is rebuttable; (2) the DFEC portion of the 2005 Schedule ordinarily is not rebutted by establishing the percentage to which an injured employee’s future earning capacity has been diminished; (3) the DFEC portion of the 2005 Schedule is 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 (4) the DFEC portion of the 2005 Schedule may be rebutted in a manner consistent with Labor Code section 4660 – including section 4660(b)(2) and the RAND data to which section 4660(b)(2) refers. Further, the DFEC rebuttal approach that is consonant with section 4660 and the RAND data to which it refers consists, in essence, of: (1) obtaining two sets of wage data (one for the injured employee and one for similarly situated employees), generally through the Employment Development Department (EDD); (2) doing some simple mathematical calculations with that wage data to determine the injured employee’s individualized proportional earnings loss; (3) dividing the employee’s whole person impairment by the proportional earnings loss to obtain a ratio; and (4) seeing if the ratio falls within certain ranges of ratios in Table A of the 2005 Schedule. If it does, the determination of the employee’s DFEC adjustment factor is simple and relates back to the Schedule. If it does not, then a non-complex formula is used to perform a few additional calculations to determine an individualized DFEC adjustment factor.

A total of 5 amicus curiae briefs were filed with the Appeals Board in the Ogilvie en banc decision. The following are brief summaries of the issues raised in those briefs.

Insurance Commissioner of the State of California

The Insurance Commissioner urged the Appeals Board to address the Legislature’s clear intent that the Permanent Disability Rating Schedule and the determinations of permanent disability be consistent, uniform and objective. In addition, the suggested that any determinations of the Appeals Board whereby the Permanent Disability Rating Schedule or methods determining permanent disability are revised or altered should be applied prospectively. This approach is argued promotes the public policy of a predictable and equitable workers’ compensation insurance system for both injured workers and their employers; insurance rate adequacy; and insurance company solvency.

California Workers' Compensation Institute

The Institute contends that the Appeals Board’s decision to incorporate claimant-specific individualized loss of earnings informatio9n into the DFEC adjustment is not supported by the statutory language, is contrary to the express definition of the DFEC mandated by the statute, and misconstrues the RAND study relied upon by the Legislature, which was a study of “benefit equity” intended to reorder scheduled permanent disability ratings so that different body parts having the same percentage rating under the Schedule would reflect the same disability, using “proportional wage loss” or “loss of future earnings” merely as the comparison point.

Travelers Companies Inc.

Travelers argues that the Ogilvie decision is contrary to the legislative intent behind the creation of SB899 which enacted reforms resulting in a significant cost saving impact on the workers’ compensation system. Travelers points out that the California appellate courts have upheld and safeguarded the spirit of SB899 in all recent decisions. Travelers contends that Labor Code §4660(b)(2) was purposely added by the Legislature to further the spirit of consistency, uniformity and objectivity and the Ogilvie decision will have a negative financial impact on the California Workers’ Compensation system.

International Association of Rehabilitation Professionals

The IARP believes that its members are in a position to provide through, consistent and uniform assessments of injured workers’ residual functional capacity and help determine the scientific validity of various empirical sources, what sources are appropriate to the injured worker involved, and how to interpret the data to arrive at the appropriate DFEC calculation. The IARP further asserts that a WCJ is not limited to the methodologies utilized by the RAND Institute of Civil Justice’s December 2003 study, but that Labor Code §4660 contemplates only that the Administrative Director shall base the Schedule’s DFEC adjustments on the RAND study. The IARP also contends that where the Schedule’s rating does not adequately account for the particular workers’ diminished earning capacity, the large body of case law interpreting Labor Code §4660 requires the Appeals Board to consider the separate question of whether the scheduled rating is not rebutted by an evaluation of diminished future earning capacity, an evaluation which is beyond the expertise of those without the extensive training of a vocational expert, and which thus requires expert testimony.

Morrow & Morrow

In this scholarly written amicus brief, the authors submit that the Appeals Board should issue a final order holding: (1) the percentage of permanent disability under the Schedule is a rebuttable presumption; (2) that the calculation of proportional earnings loss created by a work-related injury msut be deferred until the injured worker reaches maximum medical improvement status; (3) the Appeals Board regulations should be immediately enacted to prohibit any party from obtaining expert evidence to rebut the Schedule until after a preliminary hearing at the trial level is conducted in each case; (4) the issue of Schedule rebuttal should be based upon a fully adjusted rating under the Schedule and must consider all injury claim circumstances; and (5) the percentage of permanent disability under the Schedule is a presumption affecting the burden of proof.