The Dahl decision (click to read) came down from the First Appellate District Court of Appeal last month, which is the latest in a whole series of cases that define HOW parties should present REBUTTAL evidence to overcome a rating calculated under the 2005 Permanent Disability Rating Schedule. In Dahl, the Court Of Appeal AGAIN shot down the concept of using a vocational expert as a general method of getting to a higher diminished future earning capacity than what is provided through the Schedule.
The PROBLEM injured workers keep bumping into is they can’t seem to break out of their historical reliance on VOCATIONAL EXPERTS when trying to overcome the presumptive percentage of permanent disability as calculated under the Schedule. Use of vocational experts is the proverbial SQUARE PEG that employees keep trying to fit into the ROUND HOLE established by the Court of Appeal in Ogilvie III. Employees keep saying “can we do it like this?”… and the Court Of Appeal keeps saying “no”. The Court Of Appeal insists that rebuttal evidence of percentage of permanent disability must fit through the following ROUND HOLE:
- A “numeric formula”…
- Based on “empirical data and findings”…
- That aggregates the average percentage of long term loss of income resulting from each type of “injury”…
- Where “injury” is expressed through the descriptions and measurements in the AMA Guides, 5th Edition.
- The Court of Appeal is also insistent that the “empirical data” used, at least as far as the percentage of long term loss of income is concerned, be based on the data in the 2003 RAND Report on permanent disability.
In Dahl, the employee tried to rebut the 2005 PDRS by using the LeBoeuf method, but the twist was interpreting the meaning of “not amenable to rehabilitation” as something LESS THAN totally disabled. By relaxing the “total disability” standard, Dahl attempted to create a LeBoeuf method that could be applied to nearly any case. The Court Of Appeal said, in effect: “Nope… a system where dueling experts are used to establish permanent disability would not promote consistency, uniformity and objectivity as required by Labor Code Section 4660(d). Experts may only be used in 100% disability situations.”
It was a great try, and Dahl even got the WCAB to buy into it… but the Court Of Appeal isn’t having it.
THE ROUND PEG
I’ve been deeply involved in the permanent disability rating system since about 1995, and have been on the design team for PD Rating programs distributed for both the 1997 and 2005 PDRS systems, AMA Guides Impairment rating programs, PD charts, Tables books, and even a system for rebutting the Schedule under the prior Ogilvie II method. I’ve studied all of the RAND data and reports on permanent disability in detail, as well as the reports from the DWC and CHSWC on permanent disability over the last ten years. I’ve spoken at CAAA chapter meetings on the subject of the RAND data and permanent disability in the past. I’ve even discussed the RAND findings directly with members of the RAND team that authored the report. My unique experience and study of this system has given me a vision for what the Court Of Appeal is looking for in Ogilvie III and Dahl, and what they would likely accept as rebuttal evidence to the ratings provided by the 2005 PDRS – which we all know is FLAWED.
I intend to provide this vision for the “ROUND PEG” that injured workers have been searching for through my blog over the next few weeks, right here at http://www.scanfiles.com/blog/. For those of you familiar with the software and publications I mentioned above, you know those were a collaboration between my father Warren Schneider and myself, so you will be comforted to know that everything I am going to tell you has been discussed in detail with Warren, and he fully supports the new concept.
FIRST… A LITTLE HISTORY ON REBUTTING THE 2005 PDRS
Since the 2005 PDRS was first adopted by the DWC in January 2005, injured workers have been trying to come up with a REBUTTAL method that the courts will allow so that some of that massive REDUCTION in average ratings that was CAUSED by the 2005 Schedule can be recouped. You can read “Study Finds SB 899 Cut Permanent Disability Benefits 58% (click)” on WorkCompCentral if you aren’t aware of how badly the 2005 PDRS reduced PD from the previous version. There are several CHSWC and DWC studies that support similar findings.
It’s important that you refresh your memory about the history of the 2005 PDRS “wars” over the last 10 years to fully grasp what CAN’T be used to rebut the Schedule today. So, please bear with me on this short journey…
Costa: In Costa (EN BANC, Dec 2006 – click) employees tried to prove the Schedule was “Invalid” because the FEC adjustment factors provided in the Schedule were not based on AMA Guides-derived average ratings. The ratings used to formulate the 2005 Schedule were based on the old 1997 California System ratings studied by RAND, which are entirely different from the AMA Guides ratings which would be needed to formulate a Schedule for use in 2005. The WCAB (EN BANC) found that applicant FAILED to prove the 2005 PDRS was entirely INVALID, because the Schedule met the minimum standard of being based on a formula, using empirical data, and aggregated average PD ratings with average wage loss percentage from the 2003 RAND Study. There were four separate Costa decisions, but all stand for basically the same thing: the 2005 PDRS is VALID but rebuttable.
Boughner: Next came Boughner (EN BANC) (click) in June 2008, which basically just upheld the findings in Costa, affirming that the 2005 PDRS was VALID, but subject to rebuttal. Again they didn’t say HOW one might successfully rebut the scheduled rating, but the WCAB was not satisfied with simply using a vocational expert to establish a different diminished future earning capacity percentage.
Ogilvie I: In February 2009 the first Ogilive (EN BANC) decision came along. Ogilvie I finally told us all HOW the Schedule may be rebutted, and gave specific steps and formulas for doing so. In Ogilvie, the WCAB insisted that rebutting the Schedule did NOT include using a vocational expert to establish the percentage that the employee’s future earning capacity had been diminished. Instead, the WCAB came up with their own PROCESS for establishing a diminished future earning capacity modifier (FEC) that could be used in lieu of the modifier calculated using the Schedule’s formula. However, the employee in Ogilvie wasn’t happy with that solution, so….
Ogilvie II: Applicant petitioned the WCAB for reconsideration of Ogilvie 1, which was granted, but the WCAB merely affirmed their decision. In Ogilvie II (EN BANC) (click), the WCAB affirmed their same basic formula they devised in Ogilvie I, but clarified a few details, such as who has the burden of proof, further affirming their “individualized” rating approach, and required that any such rebuttal must be consistent with the RAND study and must constitute substantial evidence. This was great – finally, applicants had a way to recoup some of the losses from the new PDRS.
Ogilvie III (Court Of Appeal) – Previous Rebuttal Methods Annulled: Both parties appealed the Ogilvie II decision, so in July 2011, Division Three of the First Appellate Court Of Appeal filed the Ogilive III decision (click). The Court Of Appeal reviewed the situation and decided that the legislative intent of the changes in Labor Code Section 4660 was that the employee’s diminished future earning capacity “shall be” a numeric formula based upon the RAND Institute’s report, and cannot simply be a vocational expert’s opinion (based on his/her own gathered data) unless there is a LeBoeuf situation (100% disability). The Court Of Appeal shot down the WCAB’s alternative “individualized” method for rebutting the Schedule as not being consistent with the plain language of Labor Code Section 4660(b)(2).
THE THREE REBUTTAL METHODS DEFINED IN OGILVIE III
In Ogilvie III, the Court Of Appeal established only THREE methods for rebutting the Schedule: (1) showing a factual error in the calculation of a factor in the rating formula or application of the formula, (2) showing the employee is not amenable to rehabilitation due to the industrial injury, or (3) showing there was an omission of medical complications aggravating the employee’s disability in the rating schedule.
DAHL – THE COURT OF APPEAL CLARIFIES THE USE OF METHOD 2 IN OGILVIE III, THE LeBOEUF METHOD
Since Ogilvie III, employee’s have not attempted to rebut the Schedule using either Method 1 (error in the formula or application of the formula) or Method 3 (omission of critical medical condition in the rating data). With Dahl, the employee interpreted the phrase “not amenable to rehabilitation” in LeBoeuf and Ogilvie III as including “Partial Impairment” of the employee’s permanent disability, as opposed to the historical limitation of “Total Disability” – 100%. This was a critical point because, if successful, it would open the door to using vocational experts to rebut the Schedule in MORE than just total (100%) disability cases. THAT’S what makes Dahl such a big deal, and what’s more… the WCAB agreed with Dahl.
Historical LeBoeuf Method: Historically, the LeBoeuf method could be described as challenging the presumptive percentage of permanent disability as calculated under the Schedule by demonstrating the employee is 100% disabled due to a work related injury, is NOT amenable to rehabilitation, and therefore has suffered a greater loss of future earning capacity than reflected in the scheduled rating.
For EXAMPLE, let’s say an employee suffers a work-related injury that under the Schedule rates a 59%; HOWEVER, the employee is so psychologically impaired that he/she cannot work at all, and expert testimony reveals that no amount of rehabilitation would retrain the employee for ANY suitable employment. In other words, there are no jobs available to this injured employee now, and he/she cannot be re-trained to perform any other job. IN THIS SITUATION, the employee is not really 59% disabled, as the Schedule shows… the employee is actually 100% disabled because they are not amenable to rehabilitation.
WCAB’S Partial Impairment Rule: The phrase “not amenable to rehabilitation” is the cornerstone of Dahl. Here, the WCAB agreed with Dahl that “not amenable to rehabilitation” should be interpreted to mean that no amount of rehabilitation will RESTORE the employee to FULL pre-injury earning capacity. This is a very DIFFERENT interpretation from the historical version where the employee is 100% disabled. Thus, the new LeBoeuf STANDARD the WCAB attempted to create under Dahl was that if an injured employee can show that: (1) rehabilitation will NOT restore them to their pre-injury earning potential AND (2) they can show a diminished future earning capacity (DFEC) that is HIGHER than calculated under the PD Schedule, THEN they have successfully rebutted the Schedule.
Partial Impairment Rule Reversed: The Court Of Appeal said the inability to be rehabilitated to 100% of pre-injury earning capacity was the very foundation of permanent disability in general, and that such a standard as proposed by the WCAB and Dahl would mean that EVERY permanently disabled employee could now rebut their scheduled rating using a LeBoeuf analysis, turning a limited exception into the general rule. So… they annulled the WCAB’s decision in Dahl.
How Dahl Got Shot Down: You can read the case for yourself, but in Dahl the PD rating calculated under the 2005 PDRS and the AME report was a 59%, and Dahl’s vocational expert, Jeffrey Malmuth, opined that “the most accurate measure of [Dahl’s] lost earning capacity” was about 87%.” Pow! There goes one of the major prerequisites of a historical LeBoeuf situation (must be 100% disabled). Under cross examination, Malmuth testified that Dahl would be helped by rehabilitation, and if she participated in rehabilitation her earning capacity would rise. Bang! There goes the other major prerequisite for a historical LeBoeuf situation (must NOT be amenable to rehabilitation). So, if you were familiar already with Ogilvie III, it should be no great surprise that the Court Of Appeal came to the conclusion that Dahl had FAILED to rebut the rating calculated under the Schedule using this method.
OGILVIE AND DAHL CONTINUE TO ALLOW THE SCHEDULE TO BE REBUTTED
The Court Of Appeal continues to encourage parties to rebut the 2005 Permanent Disability Rating Schedule, but only by following three VERY NARROWLY defined methods. These are:
Method Number 1: By showing a factual error in the calculation of a factor in the rating formula or application of the formula in the 2005 PDRS…
Method Number 2: By showing the employee is not amenable to rehabilitation (100% disabled) due to the work related injury (LeBoeuf)…
Method Number 3: By showing the nature or severity of the employee’s injury is not captured within the sampling of disabled workers that was used to compute the adjustment factor in the 2005 PDRS.
THE SOLUTION – GET IT HERE NEXT WEEK…
Next week, I will explain the vision we have that should allow employees to rebut the Schedule successfully under Ogilvie III, and significantly increase current PD ratings. Our suggested formula is based on RAND data and aggregates long term average wage loss with average AMA-derived ratings to adjust the PDRS final ratings to be consistent with average proportional losses for each impairment category. In other words, it CORRECTS the 2005 PDRS ratings to be consistent with losses exactly as suggested in the 2003 RAND Interim Study that forms the basis of Labor Code Section 4660.
For example, our method wold correct a final rating for a SHOULDER as calculated by the 2005 PDRS from say a 12% to a 19%. The same formula and data is available for all body categories in the Schedule.
The solution is as simple as a chart of “Adjustment Factors” that can be applied to a final rating as formulated with the 2005 PDRS.
The data used to build the chart will be based on evidence that may be received by the appeals board under Labor Code Section 5703(e) and (f).
This method isn’t intended to give employees some advantage to “game the system”… the goal is to allow employees to ACCURATELY calculate their percentage of permanent disability using the exact methods suggested by RAND and LC Section 4660 so that benefits can appropriately be PAID under Labor Code Section 4658(d).
Check back at http://www.scanfiles.com/blog/ and follow our new approach…