Ogilvie Court Does a Disservice to California

The news of the morning actually occurred late Friday afternoon: The California First District Court of Appeals (DCA) handed down its review of the Ogilvie case, disapproved of the formula the Workers Compensation Appeals Board (WCAB) had devised to standardize rebuttal of the Diminished Future Earnings Component (DFEC) of a permanent disability rating string, and opened the gauntlet to further indemnity unpredictability and litigation.

The court upheld the WCAB's conclusion that nothing in SB 899 changed the ability of an injured worker to challenge a permanent disability rating. But it didn't like the WCAB coming up with a formula for doing so, stating that the WCAB exceeded its authority.

There are three avenues for challenging a rating according to the 1st DCA:

• A factual error in the calculation of a factor in the rating formula or its application.
• The applicant is "not amenable to rehabilitation" because of his injury and therefore suffered a greater loss of future earning capacity than was reflected in the scheduled rating: 

“Another way the cases have long recognized that a scheduled rating has been effectively rebutted is when the injury to the employee impairs his or her rehabilitation, and for that reason, the employee’s diminished future earning capacity is greater than reflected in the employee’s scheduled rating….An employee effectively rebuts the scheduled rating when the employee will have a greater loss of future earnings than reflected in a rating because, due to the industrial injury, the employee is not amenable to rehabilitation…”

• The omission of medical complications aggravating the injured workers' disability: 

“The briefs and arguments of the parties and amici also point out a third basis for rebuttal of a scheduled rating that is consistent with the statutory scheme. In certain rare cases, it appears the amalgamation of data used to arrive at a diminished future earning capacity adjustment may not capture the severity or all of the medical complications of an employee’s work-related injury. After all, the adjustment is a calculation based upon a summary of data that projects earning losses based upon wage information obtained from the California Employment Development Department for a finite period and comparing the earnings losses of certain disabled workers to the actual earnings of a control group of uninjured workers. (Working Paper at p. 3.) A scheduled rating may be rebutted when a claimant can demonstrate that the nature or severity of the claimant’s injury is not captured within the sampling of disabled workers that was used to compute the adjustment factor. For example, a claimant who sustains a compensable foot fracture with complications resulting from nerve damage may have greater permanent effects of the injury and thereby disprove the scheduled rating if the sampling used to arrive at the rating did not include any workers with similar complications.”

The first avenue is easy since it is a factually based element that is easy to rule on, easy to implement, and plug back into the rating formula.

The second and third create a destabilizing effect and will increase litigation at the trial level, and perhaps increase litigation at the review levels as well.

We are left without any guidance as to how to prove a loss of future earnings capacity. "Not amenable"? What does that mean? Does that include cases where the injured worker just says "no" to some form of rehabilitation?

At least the WCAB gave us a methodology for doing so, albeit a complicated one.

The 1st DCA said that everything we ever needed to know about DFEC has been published in earlier case law because even though SB 899 changed everything we thought we knew about permanent disability rating, it actually didn't:

“Senate Bill No. 899 amended section 4660 in two ways that affect the issue presented in this proceeding. The statute now provides that “an employee’s diminished future earning capacity shall be a numeric formula based upon empirical data and findings . . . prepared by the RAND Institute for Civil Justice.” (§ 4660, subd. (b)(2).) And a permanent disability award must now reflect consideration of an injured employee’s “diminished future earning capacity,” rather than the “ability of such injured employee to compete in an open labor market.” (Former § 4660, subd. (a).) This latter change is readily addressed… Indeed, the terms “diminished future earning capacity” and “ability to compete in an open labor market” suggest to us no meaningful difference, and nothing in Senate Bill No. 899 suggests that the Legislature intended to alter the purpose of an award of permanent disability through this change of phrase. Nor does its use suggest that a party seeking to rebut a permanent disability rating must make any particular showing.”

So we're back to "ability to compete in the open labor market" as a standard for challenging a rating without "any particular showing."

I think that participants in California workers' compensation want specificity, want routine, want clear direction. It benefits injured workers because then they don't have to spend a lot of time in litigation to either get, or not get, more money. It benefits employers and carriers because then they know exactly what they have to pay. Both benefit by getting cases get closed faster.

The 1st DCA creates a new level of pandemonium and litigation induced claim delay at a point in time when all of the participants in work comp cases are looking for some stability and predictability.

The court did a disservice to both the injured workers and employers of California.