Ogilvie Reveral Creates Chaos

Ogilvie v. Workers’ Comp. Appeals Bd. (2011): The First Appellate District has issued its long awaited decision in Ogilvie. Initially defendants were overjoyed to discover the Court had reversed the WCAB’s en banc decision. However, after reading the decision in its entirety joy quickly turned to outrage. Meanwhile applicant’s attorneys statewide will be planning celebrations.

Background

The Court of Appeal’s decision starts out very favorably for defendants. The Court explains that “workers’ compensation benefits are not damages awarded due to injury, and are not designed to restore to the worker all he has lost. … Benefits are designed to rehabilitate, not indemnify.” The court then explains that prior to Senate Bill 899 and its changes to Labor Code section 4660 permanent disability ratings were based in part on “the diminished ability of [the] injured employee to compete in an open labor market.” The Court observes that vocational experts opinions were used to reach such determinations. However, the frequency of use of such experts pre-SB 899 seems to be misunderstood by the Justices.

The Court then discusses how SB 899 deleted reference to the “ability of such injured employee to compete in an open labor market” and replaced it with an injured employee’s “diminished future earning capacity.” The court observes that Labor Code section 4660, subdivision (b)(2) 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.” After that, the Court takes the case in a direction wholly unanticipated and unexplainable.

When A Change Is Not A Change

After the above discussion the Court states that prior to SB 899 the phrases “impaired future earning capacity” and “decreased ability to compete in an open labor market” were used interchangeably by the courts. The Court then explains that 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.” In making bold statement the Court ignores several facts.

First, the cases it cites were all Court of Appeal cases where the legal terms of art used in workers’ compensation rating was misused. Second, the pre-SB 899 phrase was “impaired” not “diminished” future earning capacity. Third, and most importantly, since the Legislature changed the language, there was obviously an intention to change its meaning.

How To Rebut The Rating

After this startling revelation, the Opinion takes even more turns. In providing its reasoning the Court of Appeal ignores the WCAB’s fine line analysis which differentiated between rebutting the rating and its component parts. The Court explains there are two pre-SB 899 rebuttal methods that have survived the changes.

The first method is when there has been a factual error in the “application of a formula or the preparation of the schedule.” For example when the AMA Guides do not cover the impairment. Alternatively, a party can challenge how the RAND study was used to compute the FEC adjustment factors. The Court unequivocally states that the FEC adjustment is rebuttable. It does not however explain how.

LeBoeuf Rises From The Dead

The second legacy rebuttal method is the one which should throw the entire workers’ compensation community into chaos. The Court of Appeal reasons that since there is no difference in the phrases “diminished future earning capacity” and “ability to compete in the open labor market,” the methodology used by the Supreme Court in LeBoeuf v. Workers’ Comp. Appeals Bd. (1983) 34 Cal.3d 234 [48 Cal. Comp. Cases 587] still applies. In other words, the Court held that the scheduled is rebutted “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.” The Court did throw some scraps to defendants by clarifying that a defendant is not liable for non-industrial factors which contribute to diminished future earnings such as “general economic conditions, illiteracy, proficiency to speak English, or an employee’s lack of education.” The Court then continues by explaining “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.”

There Is A Third Way

As if its decision does not create enough ambiguity and uncertainty the Court also acknowledges a third way to rebut the schedule which the briefs proposed. Specifically the Court explained that the “amalgamation of data” used to create the DFEC adjustments “may not capture the severity or all of the medical complications of an employee’s work-related injury.”

“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. In such cases, the scheduled rating should be recalculated taking into account the extent to which the claimant’s disability has been aggravated by complications not considered within the sampling used to compute the adjustment factor.”

Of course this analysis ignores the very nature of the rating scheduled. It was intended to be a compromise rating based on consensus data. By definition, half of all injured workers will be either over or under compensated in their ratings.

Problem Created Not Solved

The Court of Appeal’s decision goes a long way to opening up the flood gates of litigation. Yet it gives Workers’ Compensation Judges no direction as to how to deal with the waters. While the Court endorses three separate methods to rebut the scheduled rating it gives absolutely no direction as to what to do thereafter. It also does not explain how the RAND requirements should be applied upon rebuttal. It is one thing to say the schedule is rebutted. It is another to make a finding of the correct rating after rebuttal. Instead of giving some guidance the Court punts. “We leave it to the WCAB in the first instance to prescribe the exact method for such a recalculation that factors the employee’s anticipated diminished earning capacity into the data used by the RAND Institute.”

Aftermath

The Court’s opinion is a classic example of the law of unintended consequences. Even the most zealous applicant’s advocate will conceded that the framers of SB 899 intended the changes to the rating system to remove work restrictions and LeBoeuf from consideration in computing permanent disability. The framers wanted to remove subjectivity. The Court’s decision returns us to the status quo ante.

The only real question is what does it all mean? It is now up to the WCAB, to whom the matter what remanded to make sense out of, to tell us. At this point is unclear how the WCAB can reconcile SB 899, RAND and LeBoeuf. In all likelihood it will remand the case to the trial judge for further proceedings, meaning the issue will be unsettled for at least a few more years. Concurrency it is inconceivable that the City and County of San Francisco will not seek review from the Supreme Court. However, no one knows if it will be granted.

The workers’ compensation community has now been turned upside down yet again. Unless something changes soon work restrictions and vocational experts now become crucial in every case. Every applicant’s attorney in every case will seek to retain an expert and make the defendant pay for it under Costa. Each doctor will be asked to provide work restrictions. The expert will then be asked to determine what the job market is for the injured worker with those restrictions. Defendants will also likely retain experts as well. In selected cases, defendants may choose to challenge the schedule as well. It will be up to the trial judges to decide if the schedule is rebutted and what the appropriate rating should be. All predictability will leave the system. Costs will soar yet again. As we all know that will lead to media coverage and legislative action. Maybe this time, they’ll ask the community for input on how to “fix” the system.

Opinion filed July 29, 2011.

Heggeness,Sweet, Simington & Patrico, A.P.C

Ogilvie Reveral Creates Chaos