On April 19, 2004, the California Legislature approved SB 899, a law that overhauled the entire workers’ compensation system. The centerpiece of this bill was the radical change in the permanent partial disability system. The original California permanent disability system was completely abolished. The legislature changed the definition of permanent disability from diminished ability to compete in the labor market to an employee’s long term diminished future earnings capacity. An employee’s diminished future earnings capacity is defined as a numeric formula based on empherical data and findings that aggregate the average percentage of long-term loss of income resulting from each type of injury for similarly situated employees.
The law says that in determining the percentage 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 employees diminished future earnings capacity.
The law further states 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 American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment (5th edition). The purpose of the new permanent disability rating system is to promote uniformity, consistency, and objectivity.
I realize that the previous three paragraphs are complex and difficult to understand. In fact the new rating system makes even less sense and is less logical than the old system. The system, as it now works is very confusing, not based on any empherical data, and is now even more convoluted given recent rulings by the Workers’ Compensation Appeals Board.
The AMA Guides to the Evaluation of Permanent Impairment is published by the American Medical Association. The Guides give percentages for impairment. The AMA defines impairment as the loss of function of a body organ or system. The percentages are the loss of ability to engage in activities of daily living such as bathing, eating, elimination, sex and exclude the diminished ability to engage in work activities. The percentages in the Guides are not based on any science or studies. One Guides editor testified at a deposition, when asked why the impairment percentages for upper extremity injures were decreased in the 5th edition from what they were in the 4th edition, admitted that there was no science involved in the decrease, that the AMA had many constituencies to answer to, and that the percentages were arrived through consensus. There are no studies that show that a single level back injury with leg pain has a lower impairment percentage than a multi level back injury with the same pain. At a lecture I attended, one of the consultants for Chapter 18, the pain chapter, told us that the consultants responsible for that chapter wanted up to 80 points as an add on. The insurance industry was not going to like this, so the limit to add on for pain is a measly 3%.
