Wanda Ogilvie v. City and County of San Francisco, Permissibly Self-Insured

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1 WORKERS’ COMPENSATION APPEALS BOARD 2 STATE OF CALIFORNIA 3 4 Case No. ADJ1177048 (SFO 0487779) WANDA OGILVIE, 5 Applicant, 6 vs. 7 8 OPINION AND DECISION AFTER RECONSIDERATION (EN BANC) CITY AND COUNTY OF SAN FRANCISCO, Permissibly Self-Insured, 9 Defendant(s). 10 11 12 In this en banc decision,1 we clarify the holdings reached in our en banc decision of February 3, 2009. 13 In our February 3, 2009 decision, we held that: (1) the diminished future earning capacity 14 (DFEC) portion of the current Schedule for Rating Permanent Disabilities (Schedule or 2005 15 Schedule)2 is rebuttable; (2) the DFEC portion of the 2005 Schedule ordinarily is not rebutted by 16 establishing the percentage to which an injured employee’s future earning capacity has been 17 diminished; (3) the DFEC portion of the 2005 Schedule is not rebutted by taking two-thirds of the 18 injured employee’s estimated diminished future earnings, and then comparing the resulting sum to 19 the permanent disability money chart to approximate a corresponding permanent disability rating; 20 and (4) the DFEC portion of the 2005 Schedule may be rebutted in a manner consistent with Labor 21 Code section 4660 – including section 4660(b)(2) and the RAND data to which section 4660(b)(2) 22 23 26 1 En banc decisions of the Appeals Board are binding precedent on all Appeals Board panels and workers’ compensation judges. (Lab. Code, § 115; Cal. Code Regs., tit. 8, § 10341; City of Long Beach v. Workers’ Comp. Appeals Bd. (Garcia) (2005) 126 Cal.App.4th 298, 313, fn. 5 [70 Cal.Comp.Cases 109, 120, fn. 5] (Garcia); Gee v. Workers’ Comp. Appeals Bd. (2002) 96 Cal.App.4th 1418, 1425, fn. 6 [67 Cal.Comp.Cases 236, 239, fn. 6].) In addition to being adopted as a precedent decision in accordance with Labor Code section 115 and Appeals Board Rule 10341, this en banc decision is also being adopted as a precedent decision in accordance with Government Code section 11425.60(b). 27 2 24 25 The complete Schedule may be found at http://www.dir.ca.gov/dwc/PDR.pdf. 1 refers.3 Further, the DFEC rebuttal approach that is consonant with section 4660 and the RAND 2 data to which it refers consists, in essence, of: (1) obtaining two sets of wage data (one for the 3 injured employee and one for similarly situated employees), generally through the Employment 4 Development Department (EDD); (2) doing some simple mathematical calculations with that wage 5 data to determine the injured employee’s individualized proportional earnings loss; (3) dividing 6 the employee’s whole person impairment by the proportional earnings loss to obtain a ratio; and 7 (4) seeing if the ratio falls within certain ranges of ratios in Table A of the 2005 Schedule. If it 8 does, the determination of the employee’s DFEC adjustment factor is simple and relates back to 9 the Schedule. If it does not, then a non-complex formula is used to perform a few additional 10 calculations to determine an individualized DFEC adjustment factor. 11 In this decision, we hold: (1) the language of section 4660(c), which provides that “the 12 schedule … shall be prima facie evidence of the percentage of permanent disability to be attributed 13 to each injury covered by the schedule,” unambiguously means that a permanent disability rating 14 established by the Schedule is rebuttable; (2) the burden of rebutting a scheduled permanent 15 disability rating rests with the party disputing that rating; and (3) one method of rebutting a 16 scheduled permanent disability rating is to successfully challenge one of the component elements 17 of that rating, such as the injured employee’s DFEC adjustment factor, which may be 18 accomplished by establishing that an individualized adjustment factor most accurately reflects the 19 injured employee’s DFEC. 20 consistent with section 4660(b)(2), the RAND data to which section 4660(b)(2) refers, and the 21 numeric formula adopted by the Administrative Director (AD) in the 2005 Schedule. 22 evidence presented to support a proposed individualized DFEC adjustment factor must constitute 23 substantial evidence upon which the Workers’ Compensation Appeals Board (WCAB) may rely. 24 Moreover, even if this rebuttal evidence is legally substantial, the WCAB as the trier-of-fact may 25 still determine that the evidence does not overcome the DFEC adjustment factor component of the 26 scheduled permanent disability rating. Otherwise, we affirm our prior decision. However, any individualized DFEC adjustment factor must be 27 3 Unless otherwise noted, all further statutory references are to the Labor Code. OGILVIE, Wanda 2 Any 1 I. BACKGROUND 2 3 The factual and procedural history through February 3, 2009 is set forth in our en banc opinion of that date, which we incorporate by reference. 4 On February 19, 2009, applicant filed a petition seeking reconsideration of our February 3, 5 2009 decision. In that petition, applicant contended in substance: (1) our suggestion that the 6 parties ordinarily should “establish the employee’s actual earnings in the three years following his 7 or her injury” is inconsistent with section 4660 and violates the mandate of Article XIV, section 4, 8 of the California Constitution that administration of the workers’ compensation system “shall 9 accomplish substantial justice in all cases expeditiously”; (2) it is improper to compare an injured 10 employee’s individualized rating to proportional earnings loss ratio to the aggregate average rating 11 to proportional earnings loss ratios in Table A of the 2005 Schedule, because the former ratio uses 12 the standard whole person impairment rating assigned by the AMA Guides4 while the latter ratios 13 use the standard rating under the 1988 Schedule, which is fundamentally different; (3) it is 14 improper to use the numerical formula adopted by the 2005 Schedule5 because that formula is not 15 based on empirical data, as required by section 4660(b)(2), and it has no purpose other than to 16 justify the arbitrary range of 1.1 to 1.4 for the DFEC adjustment factors contained in the Schedule; 17 (4) under section 4660(c), it is the permanent disability rating that is rebuttable, not an individual 18 element of the rating formula, and here applicant’s vocational expert was not challenging the 19 DFEC element of the rating formula, but instead was rebutting the scheduled rating by showing 20 that it was not rationally related to applicant’s true disability and her empirically established 21 diminished future earning capacity; (5) before section 4660 was amended by Senate Bill 899 (SB 22 899),6 case law made it clear that an injured employee’s percentage of permanent disability was 23 the same as the percentage of the open labor market from which he or she was precluded; 24 4 25 26 All references to the “AMA Guides” or to the “Guides” are to the American Medical Association’s Guides to the Evaluation of Permanent Impairment (5th Edition, 2001). 5 That is, ([1.81/a] x .1) + 1, where “a” is the standard permanent disability rating divided by the proportional earnings loss ratio. (See 2005 Schedule, at p. 1-6.) 27 6 Stats. 2004, ch. 34, § 32. OGILVIE, Wanda 3 1 therefore, after SB 899, an injured employee’s percentage of permanent disability is the same as 2 his or her percentage of diminished future earning capacity; (6) the Schedule is not the exclusive 3 method of calculating permanent disability; therefore, a scheduled permanent disability rating may 4 be rebutted by vocational expert evidence regarding the injured employee’s percentage of 5 diminished future earning capacity, which should be deemed to equate to his or her overall 6 percentage of permanent disability; (7) the purpose of the Schedule is to convert the non-empirical 7 AMA Guides whole person impairment (WPI) rating into an empirically-based measure of 8 diminished future earning capacity, and not to adjust WPI for diminished future earning capacity; 9 (8) the purpose of the Schedule’s DFEC adjustment factors is to assure that injured employees 10 with the same diminished future earning capacity will receive the same permanent disability rating 11 regardless of the part of body injured; however, the DFEC rebuttal method adopted by the Appeals 12 Board erroneously results in ratings that vary widely for workers with the same diminished future 13 earning capacity; (9) the language of the Schedule confirms that permanent disability is measured 14 by an injured employee’s percentage of diminished future earning capacity; (10) the Appeals 15 Board improperly concluded that an injured employee’s percentage of diminished future earning 16 capacity is not tantamount to the employee’s percentage of permanent disability; (11) the 17 permanent disability rating calculated by applicant’s vocational expert is a more accurate measure 18 of applicant’s true disability and, therefore, it rebuts the permanent disability rating assigned by 19 the Schedule; and (12) although the Appeals Board can disallow any DFEC rebuttal evidence that 20 does not comply with the requirements of section 4660, including the specific language of section 21 4660(b)(2), the Appeals Board cannot require that only a single rebuttal methodology – its own – 22 be used, because such a mandate is illegal under Rea v. Workers’ Comp. Appeals Bd. (Milbauer) 23 (2005) 127 Cal.App.4th 625 [70 Cal.Comp.Cases 312] (Milbauer). 24 On March 2, 2009, defendant, the City and County of San Francisco, also filed a petition 25 seeking reconsideration of our February 3, 2009 en banc decision. In that petition, defendant 26 contended in substance: (1) the DFEC component of the 2005 Schedule is defined by statute and 27 that definition cannot be altered by judicial intervention; (2) the Appeals Board usurped the AD’s OGILVIE, Wanda 4 1 regulatory authority over the 2005 Schedule; (3) the allowance of individualized rebuttal of the 2 Schedule’s DFEC adjustment factors conflicts with the requirement of section 4660(d) that “the 3 schedule shall promote consistency, uniformity and objectivity”; (4) the allowance of 4 individualized rebuttal of the Schedule’s DFEC adjustment factors conflicts with the intention of 5 section 49 of SB 899 to reduce workers’ compensation costs; and (4) the cases upon which the 6 Appeals Board relies do not support the holding that permanent disability ratings under the new 7 Schedule are rebuttable. 8 On April 6, 2009, we granted reconsideration.7 Concurrently, we invited any interested 9 person or entity to file and serve an amicus curiae brief by May 1. We also gave each party until 10 May 21 to file a single consolidated brief in reply to the amicus briefs. 11 Pursuant to our invitation, we received a number of amicus curiae briefs.8 Each party also 12 filed replies to the amicus briefs.9 13 II. DISCUSSION 14 In part, defendant’s petition for reconsideration challenges whether a scheduled permanent 15 disability rating or the DFEC component of it may be rebutted. Therefore, we will address its 16 petition first. Then we will turn to applicant’s contentions, and to some extent contentions by 17 defendant and some amicus curiae, regarding how a scheduled permanent disability rating or its 18 DFEC component may be rebutted. 19 A. A Brief History of Section 4660, SB 899 and the Adoption of the 2005 Schedule. 20 21 22 23 24 Beginning when the first mandatory Workers’ Compensation Act was enacted in 1917, 7 We concluded that our February 3, 2009 opinion was a “final” order because the question of whether a scheduled permanent disability rating may be rebutted by successfully challenging the DFEC adjustment factor component of that rating is a “threshold” issue that is “fundamental,” “critical,” and “basic” to the issue of permanent disability benefits. (Maranian v. Workers’ Comp. Appeals Bd. (2000) 81 Cal.App.4th 1068, 1073-1081 [65 Cal.Comp.Cases 650, 653-660]; Aldi v. Carr, McClellan, Ingersoll, Thompson & Horn (2006) 71 Cal.Comp.Cases 783, 784 (Appeals Board en banc).) 8 25 26 27 We have received and considered amicus curiae briefs from: the California Applicants’ Attorneys Association; the California Workers’ Compensation Institute; the International Association of Rehabilitation Professionals; Morrow & Morrow; the National Federation of Independent Business, Small Business Legal Center; Steve Poizner, Insurance Commissioner of the State of California; Safeway, Inc.; and The Travelers Companies, Inc. 9 Given our disposition, we deny the requests of defendant and various amicus that we stay our February 3, 2009 opinion. OGILVIE, Wanda 5 1 through the Act’s first codification in 1937, and on into 2004, section 4660(a) and its predecessors 2 provided: “In determining the percentages of permanent disability, account shall be taken of the 3 nature of the physical injury or disfigurement, the occupation of the injured employee, and his age 4 at the time of such injury, consideration being given to the diminished ability of such injured 5 employee to compete in an open labor market.”10 From 1937, when section 4660 first mandated 6 the adoption of a permanent disability Schedule, and until 2004, section 4660 set forth no guiding 7 principles regarding the formulation of the Schedule beyond the language of section 4660(a); 8 however, section 4660 consistently provided that “the schedule … shall be prima facie evidence of 9 the percentage of permanent disability to be attributed to each injury covered by the schedule.” 10 In 2004, SB 899 substantially amended section 4660. These changes included: 11 (1) amending section 4660(a) to read, “In determining the percentages of permanent disability, 12 account shall be taken of the nature of the physical injury or disfigurement, the occupation of the 13 injured employee, and his or her age at the time of the injury, consideration being given to an 14 employee’s diminished future earning capacity” (i.e., the amendment replaced the phrase 15 “consideration being given to the diminished ability of such injured employee to compete in an 16 open labor market,” which had been present since the Workers’ Compensation Act of 1917)11; 17 (2) adding new section 4660(b)(2) to provide, “For purposes of this section, an employee’s 18 diminished future earning capacity shall be a numeric formula based on empirical data and 19 findings that aggregate the average percentage of long-term loss of income resulting from each 20 type of injury for similarly situated employees. The administrative director shall formulate the 21 adjusted rating schedule based on empirical data and findings from the Evaluation of California’s 22 Permanent Disability Rating Schedule, Interim Report (December 2003), prepared by the RAND 23 Institute for Civil Justice, and upon data from additional empirical studies.”; and (3) amending 24 10 25 Stats. 1917, ch. 586, § 9(b)(7), p. 838; Stats. 1919, ch. 471, § 4, p. 915; Stats. 1925, ch. 354, § 1, p. 642; Stats. 1929, ch. 222, § 1, pp. 422-423; Stats. 1937, ch. 90, § 4660, p. 283; Stats. 1951, ch. 1683, § 1, p. 3880; Stats. 1965, ch. 1513, § 91, p. 3579; Stats. 1993, ch. 121, § 53. 26 11 27 Stats. 1917, ch. 586, § 9(b)(7), p. 838; Stats. 1919, ch. 471, § 4, p. 915; Stats. 1925, ch. 354, § 1, p. 642; Stats. 1929, ch. 222, § 1, pp. 422-423; Stats. 1937, ch. 90, § 4660, p. 283; Stats. 1951, ch. 1683, § 1, p. 3880; Stats. 1965, ch. 1513, § 91, p. 3579; Stats. 1993, ch. 121, § 53. OGILVIE, Wanda 6 1 section 4660(d) to provide, “The schedule shall promote consistency, uniformity, and objectivity.” 2 The amendments to section 4660 also directed that “[o]n or before January 1, 2005, the 3 administrative director shall adopt regulations to implement the changes made to this section by 4 th[is] act … .” (Lab. Code, § 4660(e).) Accordingly, by regulation, the AD adopted the new 5 Schedule, which became effective on January 1, 2005. (See Cal. Code Regs., tit. 8, § 9805 (AD 6 Rule 9805).) 7 There are four component elements to the new Schedule’s formula for rating an injured 8 employee’s percentage of disability. The first component is the injured employee’s whole person 9 impairment, expressed as a percentage, based on the AMA Guides. (2005 Schedule, at pp. 1-2, 1-3, 10 & 1-4 – 1-5.)12 The second component involves multiplying this WPI percentage by a factor from 11 1.1 to 1.4 to adjust it for the injured employee’s DFEC. (Id., at pp. 1-2, 1-5 – 1-8, & 2-6 – 2-7.) 12 The third and fourth components further adjust the WPI percentage based, respectively, on the 13 injured employee’s occupation and age at the time of injury, leading to the final percentage 14 permanent disability rating. (Id., at pp. 1-2, 1-8 – 1-9, & 3-1 – 6-5.) 15 17 B. The Language of Section 4660(c), Providing that “the Schedule … Shall Be Prima Facie Evidence of the Percentage of Permanent Disability to Be Attributed to Each Injury Covered by the Schedule,” Unambiguously Means that any Permanent Disability Rating Established by the Schedule Is Rebuttable 18 The foundation of our February 3, 2009 opinion is the language of section 4660(c), which 19 provides that “the schedule … shall be prima facie evidence of the percentage of permanent 20 disability to be attributed to each injury covered by the schedule.” Our prior opinion concluded 21 that this language means that the Schedule and its component elements, including its DFEC 22 portion, are rebuttable. 16 23 For the reasons that follow, we largely adhere to this prior holding. We modify it only to 24 clarify that it is the permanent disability rating resulting from the application of the Schedule that 25 is rebuttable. Moreover, as discussed later, one way an injured employee or a defendant may rebut 26 27 12 The Schedule also assigns eight-digit “impairment numbers” that identify each injured body part or organ system. The first two digits correspond to the chapter of the AMA Guides relating to the particular body part or organ system. (2005 Schedule, at pp. 1-4 & 2-1 – 2-5.) OGILVIE, Wanda 7 1 a scheduled permanent disability rating is to successfully challenge one or more of the component 2 elements of the rating, such as the DFEC adjustment factor, which may be accomplished by 3 establishing that an alternative adjustment factor most accurately reflects the injured employee’s 4 DFEC. 5 The fundamental rule of statutory construction is to effectuate the Legislature’s intent. 6 (DuBois v. Workers’ Comp. Appeals Bd. (1993) 5 Cal.4th 382, 387 [58 Cal.Comp.Cases 286, 289] 7 (DuBois); Nickelsberg v. Workers’ Comp. Appeals Bd. (1991) 54 Cal.3d 288, 294 [56 8 Cal.Comp.Cases 476, 480] (Nickelsberg); Moyer v. Workmen’s Comp. Appeals Bd. (1973) 10 9 Cal.3d 222, 230 [38 Cal.Comp.Cases 652, 657].) The best indicator of legislative intent is the 10 clear, unambiguous, and plain meaning of the statutory language. (DuBois, supra, 5 Cal.4th at pp. 11 387-388 [58 Cal.Comp.Cases at p. 289].) When the statutory language is clear and unambiguous, 12 there is no room for interpretation and the WCAB must enforce the statute according to its plain 13 terms. (DuBois, supra, 5 Cal.4th at p. 387 [58 Cal.Comp.Cases at p. 289]; Atlantic Richfield Co. v. 14 Workers’ Comp. Appeals Bd. (Arvizu) (1982) 31 Cal.3d 715, 726 [47 Cal.Comp.Cases 500, 508].) 15 It is only when statutory language is ambiguous and susceptible of more than one reasonable 16 interpretation that the Appeals Board may look to other maxims of statutory construction, to 17 legislative history, or to other evidence of the Legislature’s intent. (Wells v. One2One Learning 18 Foundation (2006) 39 Cal.4th 1164, 1190; Benson v. Workers’ Comp. Appeals Bd. (2009) 170 19 Cal.App.4th 1535, 1543 [74 Cal.Comp.Cases 113, 117] (Benson).) 20 Here, the language of section 4660(c) that “the schedule … shall be prima facie evidence 21 of the percentage of permanent disability to be attributed to each injury covered by the schedule” 22 clearly and unambiguously establishes that an injured employee’s scheduled percentage permanent 23 disability rating is rebuttable. 24 The very nature of “prima facie evidence” is that it is rebuttable: “[P]rima facie evidence is 25 that which suffices for the proof of a particular fact, until contradicted and overcome by other 26 evidence. It may, however, be contradicted, and other evidence is always admissible for that 27 purpose.” (Vaca Valley & Clear Lake Railroad v. Mansfield (1890) 84 Cal. 560, 566; accord: In re OGILVIE, Wanda 8 1 Raymond G. (1991) 230 Cal.App.3d 964, 972.) This comports with standard legal dictionary 2 definitions of “prima facie evidence.”13 It also comports with Evidence Code section 602: “A 3 statute providing that a fact or group of facts is prima facie evidence of another fact establishes a 4 rebuttable presumption.” Therefore, we must apply section 4660(c) according to its plain terms. 5 Moreover, the language of section 4660 that “the schedule … shall be prima facie evidence 6 of the [injured employee’s] percentage of permanent disability” has long been interpreted to mean 7 that a permanent disability rating based on the Schedule is rebuttable. In some instances, the 8 appellate courts have explicitly pronounced that a scheduled permanent disability rating is 9 rebuttable.14 In other instances, this conclusion, though not expressly declared, has been an 10 indispensable underpinning of the court’s decision.15 11 Further, had the Legislature intended that a permanent disability rating established by the 12 Schedule was to be conclusive and unrebuttable, it could have expressly so stated. It did not. To 13 quote our Supreme Court, “As A. P. Herbert so unforgettably quipped: ‘If Parliament does not 14 mean what it says it must say so.’ ” (Flores v. Workmen’s Comp. Appeals Bd. (1974) 11 Cal.3d 15 13 16 17 18 19 20 21 22 23 24 25 26 27 See, e.g., Black’s Law Dictionary (6th ed. 1990), at p. 1190, which among other things defines “prima facie evidence” as: (1) “Evidence good and sufficient on its face. Such evidence as … is sufficient to establish a given fact … and which if not rebutted or contradicted, will remain sufficient. Evidence which, if unexplained or uncontradicted, is sufficient to sustain a judgment in favor of the issue which supports, but which may be contradicted by other evidence.”; (2) “That quantum of evidence that suffices for proof of a particular fact until the fact is contradicted by other evidence; once a trier of fact is faced with conflicting evidence, it must weigh the prima facie evidence with all of the other probative evidence presented.”; (3) “An inference or presumption of law, affirmative or negative of a fact, in the absence of proof, or until proof can be obtained or produced to overcome the inference.” 14 See Glass v. Workers’ Comp. Appeals Bd. (1980) 105 Cal.App.3d 297, 307 [45 Cal.Comp.Cases 441, 449] (Glass) (“While the Rating Schedule is prima facie evidence of the proper disability rating, it may be controverted and overcome.”); Universal Studios, Inc. v. Workers’ Comp. Appeals Bd. (Lewis) (1979) 99 Cal.App.3d 647, 662-663 [44 Cal.Comp.Cases 1133, 1143] (Lewis) (“[T]he rating schedule … is not absolute, binding and final. … It is therefore not to be considered all of the evidence on the degree or percentage of disability.”). 15 See Abril v. Workers’ Comp. Appeals Bd. (1976) 55 Cal.App.3d 480, 486 [40 Cal.Comp.Cases 804, 808] (Abril) (a rating must be “rationally related” to the employee’s disability; therefore, although the WCAB properly awarded an employee the scheduled rating for legal blindness of the left eye due to loss of the lens, the employee also should have been rated for work restrictions imposed to avoid the risk of retinal detachment and other eye problems); Luchini v. Workmen’s Comp. Appeals Bd. (1970) 7 Cal.App.3d 141, 146 [35 Cal.Comp.Cases 205, 209] (Luchini) (WCAB erred in concluding that prophylactic working restrictions are not ratable factors of permanent disability under the Schedule; “the [WCAB] cannot rely on some administrative procedure [(i.e., the Schedule)] to deny to petitioner a disability award commensurate with the disability that he has suffered.”); Young v. Industrial Acc. Com. (1940) 38 Cal.App.2d 250, 255 [5 Cal.Comp.Cases 67, 70] (“[i]t is apparent … from the … provisions of the Labor Code and the schedule itself, that it was not intended that [the schedule] should be applied in a case … where it did not even approximately cover the disability involved”). OGILVIE, Wanda 9 1 171, 177 [39 Cal.Comp.Cases 289, 293].) Certainly, the Legislature knew how to establish a 2 conclusive presumption if that was its intent.16 Indeed, it has done so many times, including in 3 two instances in SB 899. (See Lab. Code, §§ 4664(b), 5814(c).)17 4 Our conclusion that the “prima facie evidence” language of section 4660(c) is not 5 ambiguous obviates the need to address any of the arguments regarding the construction of 6 ambiguous language. 7 8 C. The Provisions of Section 4660(d) and Section 49 of SB 899 Are Not So Clearly Repugnant and Utterly Irreconcilable with the “Prima Facie Evidence” Provision of Section 4660(c) that They Compel the Conclusion that this Provision Was Impliedly Repealed 9 Although the “prima facie evidence” provision of section 4660(c) unambiguously means 10 that a scheduled permanent disability rating is rebuttable, even a plain and clear statutory provision 11 may not stand if it has been impliedly repealed. Here, some amicus curiae essentially contend that 12 the “prima facie evidence” provision of section 4660(c) was impliedly repealed by the provision of 13 section 4660(d) that the Schedule “shall promote consistency, uniformity, and objectivity” and/or 14 by the language of section 49 of SB 899 stating that the act was intended to “provide relief to the 15 state from the effects of the current workers’ compensation crisis.” 16 Repeals by implication are not favored. (Nickelsberg, supra, 5 Cal.4th at p. 298 [56 17 Cal.Comp.Cases at p. 483]; Fuentes v. Workers’ Comp. Appeals Bd. (1976) 16 Cal.3d 1, 7 [41 18 Cal.Comp.Cases 42, 46].) An implied repeal will be found “only when there is no rational basis 19 for harmonizing the two potentially conflicting statutes, and the statutes are irreconcilable, clearly 20 repugnant, and so inconsistent that the two cannot have concurrent operation.” (Schatz v. Allen 21 Matkins Leck Gamble & Mallory LLP (2009) 45 Cal.4th 557, 573-574 [internal citations and 22 23 24 25 26 16 Cf. Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1107 (“the Legislature certainly knows how to impose a penalty when it wants to, having established penalties in many Labor Code statutes by using the word ‘penalty.’ ”); Bryant v. Industrial Acc. Com. (1951) 37 Cal.2d 215, 223 [16 Cal.Comp.Cases 121, 126] (“If the Legislature had intended that the lien provided for in paragraph (f) [of Labor Code section 4903] should be against temporary disability compensation only[,] it could have said so; that it knew how to write an amendment with such an effect is demonstrable, for in 1949 it adopted paragraph (g) which expressly so provides as to unemployment compensation benefits.”) 27 17 See also, e.g., Ins. Code, § 11650; Lab. Code, §§ 3501(a)&(b), 4155, 4662. OGILVIE, Wanda 10 1 quotation marks omitted]; see also Western Oil & Gas Assn. v. Monterey Bay Unified Air Pollution 2 Control Dist. (1989) 49 Cal.3d 408, 419-420.) 3 5 1. There Is a Rational Basis for Harmonizing the Provision of Section 4660(d) that “[t]he Schedule Shall Promote Consistency, Uniformity, and Objectivity” and the Provision of Section 4660(c) that the Schedule “Shall Be Prima Facie Evidence of the Percentage of Permanent Disability” 6 The language of section 4660(d), which provides “[t]he schedule shall promote 7 consistency, uniformity, and objectivity,” is not so clearly repugnant and so inconsistent with the 8 language of section 4660(c), which provides that the Schedule “shall be prima facie evidence of 9 the percentage of permanent disability to be attributed to each injury covered by the schedule,” 10 that there is no way the two provisions could have concurrent operation. 4 11 Although section 4660(d) provides that the Schedule “shall promote consistency, 12 uniformity, and objectivity,” this does not necessarily mean that a scheduled permanent disability 13 rating cannot be “prima facie evidence” that may be rebutted. For example, in the context of this 14 case and as we will discuss in greater detail below, these two provisions may be rationally 15 interpreted and harmonized to mean that the scheduled DFEC adjustment factors will be the 16 starting point and, in most cases, will be the ending point of any assessment of the DFEC 17 component of a permanent disability rating. This will “promote” consistency, uniformity, and 18 objectivity in permanent disability ratings. However, consistent with the holding of our February 19 3, 2009 decision, a scheduled DFEC adjustment factor may be challenged in a manner consistent 20 with section 4660, including section 4660(b)(2) and the RAND data to which section 4660(b)(2) 21 refers. 22 24 2. The Declared Intention of Section 49 of SB 899, to “Provide Relief to the State from the Effects of the Current Workers’ Compensation Crisis,” Does Not Provide Undebatable Evidence of a Legislative Intent that the 2005 Schedule and Its Component Elements Cannot Be Rebutted 25 When SB 899 was enacted, the Legislature included section 49, which expressly declared 26 that “[t]his act is an urgency statute” and that “it is necessary for this act to take effect 27 immediately” to “provide relief to the state from the effects of the current workers’ compensation 23 OGILVIE, Wanda 11 1 crisis.” (Stats. 2004, ch. 34, § 49.) As the appellate courts have repeatedly made clear, this 2 statement means that, overall, SB 899 was intended to reduce the costs of the workers’ 3 compensation system.18 4 Nevertheless, while section 49 declared SB 899’s intent to reduce the overall costs of 5 workers’ compensation, section 49 does not reflect an intent to reduce the cost of each and every 6 workers’ compensation benefit in each and every possible way. To the contrary, “both workers 7 and employers were to benefit from Senate Bill No. 899 as a whole.” (Benson, supra, 170 8 Cal.App.4th at p. 1557 [74 Cal.Comp.Cases at p. 130]).) Certainly, some elements of SB 899 were 9 aimed at reducing the cost of permanent disability and the courts have so interpreted these 10 provisions.19 However, there also was some legislative concern about “diminishing the arguably 11 meager benefits injured workers received in this state.” (Benson, supra, 170 Cal.App.4th at p. 12 1557 [74 Cal.Comp.Cases at p. 131] (quoting from Sen. Rules Com., Off. of Sen. Floor Analyses, 13 3d reading analysis of Sen. Bill No. 899 (2003–2004 Reg. Sess.) as amended July 14, 2003, pp. 1– 14 2).) Consistent with this concern, SB 899 increased permanent disability benefits for those 15 employees who were the most disabled or who could not return to their work. (Lab. Code, § 16 4658(d)(1) (increasing the number of weeks of benefits for permanently disabled employees with 17 disability from 70% to 99.75%); § 4658(d)(2) (increasing by 15% benefits for permanently 18 disabled employees who were not promptly offered regular, modified or alternative work with the 19 same employer).) 20 18 25 See Brodie v. Workers’ Comp. Appeals Bd. (2007) 40 Cal.4th 1313, 1329 [72 Cal.Comp.Cases 565, 578] (SB 899 was adopted as “an urgency measure designed to alleviate a perceived crisis in skyrocketing workers’ compensation costs”); Benson, supra, 170 Cal.App.4th at p. 1555 [74 Cal.Comp.Cases at p. 128] (the legislative history of SB 899 reflects that “the Legislature repeatedly indicated its specific intent to reform apportionment rules to meet the overarching legislative goal of cost reduction”); Facundo-Guerrero v. Workers’ Comp. Appeals Bd. (2008) 163 Cal.App.4th 640, 655 [73 Cal.Comp.Cases 785, 796] (SB 899 represented “a major reform of the state’s workers’ compensation system, a system perceived to be in dire financial straits at the time”); Costco Wholesale Corp. v. Workers’ Comp. Appeals Bd. (Chavez) (2007) 151 Cal.App.4th 148, 155 [72 Cal.Comp.Cases 582, 587 (“the workers’ compensation … reforms [of SB 899] were enacted as urgency legislation to drastically reduce the cost of workers’ compensation insurance”). 26 19 21 22 23 24 27 E.g., Brodie, supra, 40 Cal.4th at pp. 1327, 1332 [72 Cal.Comp.Cases at pp. 576, 581] (SB 899’s changes to the statutory scheme governing the apportionment of permanent disability created a “new regime of apportionment based on causation” that “reflect[ed] a clear intent to charge employers only with that percentage of permanent disability directly caused by the current industrial injury”). OGILVIE, Wanda 12 1 Therefore, the fact that SB 899 left the “prima facie evidence” provision of section 4660(c) 2 fully intact is not inconsistent with section 49. That is, it appears the Legislature concluded that a 3 system-wide reduction in the total costs of permanent disability benefits could be accomplished by 4 making some changes to section 4660 – as well as making other changes to other statutes affecting 5 permanent disability, such as the apportionment to causation provisions of section 4663 and 6 4664 – without eliminating the right to rebut a scheduled permanent disability rating (or, as 7 discussed below, challenging the DFEC adjustment factor component of a scheduled permanent 8 disability rating) in any particular case. 9 Furthermore, in the context of challenging the DFEC adjustment factor component of a 10 scheduled permanent disability rating (see discussion below), we are not persuaded that the 11 continued existence of the “prima facie evidence” language of section 4660(c), as we have 12 interpreted it, will have any particular effect on the overall costs of permanent disability 13 indemnity. First, nothing in either this opinion or our February 3, 2009 opinion requires a party to 14 challenge the DFEC adjustment factor component of a scheduled permanent disability rating or 15 requires any WCJ or Appeals Board panel to follow the proposed rebuttal evidence if it is 16 introduced. Second, our interpretation of the “prima facie evidence” language of section 4660(c) 17 allows either party to challenge the DFEC adjustment factor component of a scheduled permanent 18 disability rating. 19 permanent disability rating, but in other cases a defendant may succeed in decreasing it. 20 21 D. The Burden of Rebutting a Scheduled Permanent Disability Rating Rests with the Party Disputing that Rating 22 Section 4660(c) provides, in relevant part, “[the] schedule … shall be prima facie evidence 23 of the percentage of permanent disability to be attributed to each injury covered by the schedule.” 24 We construe this language to mean that the burden of rebutting or contradicting the scheduled 25 percentage permanent disability rating is on the party disputing that rating. Thus, in some cases, an injured employee may succeed in increasing the 26 As stated above, Evidence Code section 602 provides: “A statute providing that a fact or 27 group of facts is prima facie evidence of another fact establishes a rebuttable presumption.” OGILVIE, Wanda 13 1 Therefore, the “prima facie evidence” provision of section 4660(c) establishes a rebuttable 2 presumption. 3 According to Evidence Code section 601: “Every rebuttable presumption is either (a) a 4 presumption affecting the burden of producing evidence or (b) a presumption affecting the burden 5 of proof.” Per Evidence Code section 603: “A presumption affecting the burden of producing 6 evidence is a presumption established to implement no public policy other than to facilitate the 7 determination of the particular action in which the presumption is applied.” Per Evidence Code 8 section 605: “A presumption affecting the burden of proof is a presumption established to 9 implement some public policy other than to facilitate the determination of the particular action in 10 which the presumption is applied … .” 11 We conclude that, particularly since section 4660’s amendment by SB 899, the “prima 12 facie evidence” rebuttable presumption established by section 4660(c) is a presumption affecting 13 the burden of proof. By providing that the scheduled permanent disability rating will apply unless 14 contradicted and overcome by other evidence, section 4660(c) helps implement the Legislature’s 15 expressly declared public policy of promoting “consistency, uniformity, and objectivity” in 16 permanent disability ratings (Lab. Code, § 4660(d)). (Cf. Garcia, supra, 126 Cal.App.4th at p. 314 17 [70 Cal.Comp.Cases at p. 118] (“ ‘[t]he presumptions of industrial causation found in sections 18 3212 et seq. are rebuttable; and, because they reflect public policy, they are presumptions affecting 19 the burden of proof’ ” [quoting from Reeves v. Workers’ Comp. Appeals Bd. (2000) 80 20 Cal.App.4th 22, 30 [65 Cal.Comp.Cases 359, 365]])20; Gee v. Workers’ Comp. Appeals Bd. (2002) 21 96 Cal.App.4th 1418, 1425-1426 [67 Cal.Comp.Cases 236, 240-241] (former section 4062.9, 22 which provided that “the findings of the treating physician are presumed to be correct,” was a 23 presumption affecting the burden of proof “ ‘because it was part of an effort by the Legislature to 24 implement a public policy of reducing medical-legal costs and expediting resolution of medically 25 26 27 20 See also Zipton v. Workers’ Comp. Appeals Bd. (1990) 218 Cal.App.3d 980, 988, fn. 4 [55 Cal.Comp.Cases 78, 84, fn. 4]; Gillette v. Workmen’s Comp. Appeals Bd. (1971) 20 Cal.App.3d 312, 319-320 [36 Cal.Comp.Cases 570, 575].) OGILVIE, Wanda 14 1 related issues’ ”)21; State Comp. Ins. Fund v. Workers’ Comp. Appeals Bd. (Welcher) (1995) 37 2 Cal.App.4th 675, 682-683 [60 Cal.Comp.Cases 717, 721-722] [section 5402(b), which provides 3 that “[i]f liability is not rejected within 90 days after the date the claim form is filed …, the injury 4 shall be presumed compensable,” is a presumption affecting the burden of proof “because it was 5 created by the Legislature to implement the public policy of expediting workers’ compensation 6 claims”].) 7 The effect of a presumption affecting the burden of proof is to impose upon the party 8 against whom the presumption operates the burden of overcoming the presumption. (Evid. Code, 9 § 606.) Therefore, the burden rests with the party, be it the injured employee or the defendant, 10 seeking to overcome the presumptively correct scheduled rating that is “prima facie evidence” of 11 the employee’s percentage of permanent disability. (See also Lab. Code, § 5705 (“[t]he burden of 12 proof rests upon the party … holding the affirmative of the issue”).) This party must carry its 13 burden by a preponderance of the evidence. (Lab. Code, § 3202.5; see Garcia, supra, 126 14 Cal.App.4th at p. 315 [70 Cal.Comp.Cases at p. 118] (applying section 3202.5 preponderance of 15 evidence standard to employer’s burden to controvert section 3212.1 cancer presumption, once 16 employee has produced evidence to trigger the presumption).) 17 19 E. One Method of Rebutting a Percentage Permanent Disability Rating Under the 2005 Schedule Is to Successfully Challenge One of the Component Elements of that Rating, Such as the DFEC Adjustment Factor, Which May Be Accomplished by Establishing that an Alternative Adjustment Factor Most Accurately Reflects the Injured Employee’s DFEC 20 Section 4660(c) provides that “[the] schedule … shall be prima facie evidence of the 21 percentage of permanent disability to be attributed to each injury covered by the schedule.” 22 (Emphasis added.) Therefore, it is the percentage of permanent disability established by the 23 /// 24 /// 25 /// 18 26 27 21 Quoting from Davis v. Interim Healthcare (2000) 65 Cal.Comp.Cases 1039, 1043 (Appeals Board en banc) [which cited to Minniear v. Mt. San Antonio Community College Dist. (1996) 61 Cal.Comp.Cases 1055, 1059-1060 (Appeals Board en banc)]. OGILVIE, Wanda 15 1 Schedule – i.e., the scheduled permanent disability rating – that is rebuttable.22 2 There are various ways that a permanent disability percentage rating established by the 3 2005 Schedule might be rebutted. This is illustrated by cases under the prior Schedules,23 when 4 diminished ability to compete in the open labor market was the foundational basis for assessing an 5 injured employee’s permanent disability (see former Lab. Code, § 4660(a)) and when the 6 component elements of the Schedule’s rating formula were the employee’s “disability” as 7 modified by his or her occupation and age at the time of injury. (See 1997 Schedule, at pp. 1-4 & 8 1-6; 1988 Schedule, at p. 1; see National Kinney v. Workers’ Comp. Appeals Bd. (Casillas) (1980) 9 113 Cal.App.3d 203, 209 [45 Cal.Comp.Cases 1266, 1270] (Casillas).) Under the prior Schedules, 10 the “disability” portion of the rating formula was based either on the employee’s work restrictions 11 or on his or her objective and subjective factors of disability. (See 1997 Schedule, at pp. 1-3 – 1- 12 6.) 13 With the prior Schedules, an injured employee or a defendant could attempt to challenge 14 any one of the individual component elements of the formula in an employee’s particular case. 15 Most commonly, an injured employee or a defendant would attempt to rebut the scheduled rating 16 by successfully challenging the index of “disability” used in the rating formula that, when 17 subsequently adjusted for age and occupation, would result in the scheduled percentage of 18 /// 19 /// 20 /// 21 /// 22 /// 23 24 25 26 27 22 See Lewis, supra, 99 Cal.App.3d at pp. 657, 662-663 [44 Cal.Comp.Cases at pp. 1138, 1143] (“The percentage of disability determined by use of the rating schedule is only prima facie evidence of the percentage of permanent disability to be attributed to each injury. Thus it is not absolute, binding and final. … It is therefore not to be considered all of the evidence on the degree or percentage of disability” (emphasis added)); Glass, supra, 105 Cal.App.3d at p. 307 [45 Cal.Comp.Cases at p. 449] (“While the Rating Schedule is prima facie evidence of the proper disability rating, it may be controverted and overcome”).) 23 For reference, the 1997 Schedule may be viewed at http://www.dir.ca.gov/DWC/PDR1997.pdf and one of the pre-1997 Schedules (i.e., the 1988 Schedule) may be viewed at http://www.dir.ca.gov/DWC/PDRSpre1997.pdf. OGILVIE, Wanda 16 1 disability. (See, e.g., Lewis, supra, 99 Cal.App.3d 647 [44 Cal.Comp.Cases 1133];24 Glass, supra, 2 105 Cal.App.3d 297 [45 Cal.Comp.Cases 441]25; Abril, supra, 55 Cal.App.3d 480 [40 3 Cal.Comp.Cases 804]26; Luchini, supra, 7 Cal.App.3d 141 [35 Cal.Comp.Cases 205]27.) Also, a 4 party could rebut the scheduled percentage of disability by successfully challenging the individual 5 component of the rating relating to the injured employee’s occupation at the time of injury. (Dalen 6 v. Workmen’s Comp. Appeals Bd. (1972) 26 Cal.App.3d 497 [37 Cal.Comp.Cases 393]28; see also 7 Casillas, supra, 113 Cal.App.3d 203 [45 Cal.Comp.Cases 1266].) 8 9 10 11 12 13 14 15 The 2005 Schedule also uses a formula made up of component elements to determine the percentage of permanent disability in any particular case. That is, the percentage rating 24 In Lewis, the Court of Appeal held that the WCAB erred in basing the scheduled rating on a semisedentary work restriction, where: the employee had merely sprained her ankle; there were only minimal objective findings; and the AME did not believe the employee’s condition would worsen if she exceeded a semisedentary restriction. The Court stated: “There is no objective evidence … that Lewis is permanently restricted … to semisedentary work. [There are no] findings of … any physical abnormality or any functional disability of Lewis’ left foot. … [¶] It is no answer to this lack of evidence to say that the rating[] schedule[] … cannot be questioned. The [cases cited] fully controvert any such ‘hands-off’ attitude toward the schedule or the presumptions used to create the schedule or resulting therefrom. [¶¶] The percentage of disability determined by use of the rating schedule is only prima facie evidence of the percentage of permanent disability to be attributed to each injury. Thus it is not absolute, binding and final. [Citations]. It is therefore not to be considered all of the evidence on the degree or percentage of disability. Being prima facie it establishes only presumptive evidence. Presumptive evidence is rebuttable, may be controverted and overcome.” 16 17 18 19 20 21 22 23 25 In Glass, the Court of Appeal held that WCAB erred in failing to include a limitation to light work as one of the employee’s factors of disability even though the “Guidelines for Work Capacity” of the Schedule then in effect provided that a limitation to light work applied only to other body parts. The Court said: “The Board may not rely upon alleged limitations in the Rating Schedule to deny the injured worker a permanent disability award which accurately reflects his true disability. … While the Rating Schedule is prima facie evidence of the proper disability rating, it may be controverted and overcome.” 26 In Abril, the Court of Appeal found that the WCAB erred when it awarded the injured employee only the scheduled rating for legal blindness of the left eye due to loss of the lens, without also including work restrictions imposed to avoid the risk of further retinal detachment and other eye problems. The Court declared: “The increase in disability [caused by the work restrictions] may be ‘intangible,’ but it is nonetheless real. … [¶] … [A] rating that ignores the intangible or non-bodily element ‘is not rationally related to Applicant’s diminished ability to compete on the open labor market … . It is, therefore, arbitrary, unreasonable and not supported by the evidence in light of the entire record.’ ” (55 Cal.App.3d at p. 486 [40 Cal.Comp.Cases at p. 808].) 25 27 In Luchini, the Court of Appeal held that the WCAB erred in concluding that prophylactic work restrictions are not ratable factors of permanent disability under the old Schedule. The Court stated “the [WCAB] cannot rely on some administrative procedure [(i.e., the Schedule)] to deny to petitioner a disability award commensurate with the disability that he has suffered.” 26 28 24 27 In Dalen, the expert opinion of the disability evaluation specialist (rater) was that the injured employee fell within Occupational Group 1, which was the scheduled Group for “house wrecker” in the Schedule. The Court of Appeal held, however, that the employee “was entitled to show that his actual duties did not conform to the duties contemplated under the generic term ‘house wrecker’ as found in the schedule.” OGILVIE, Wanda 17 1 established by the 2005 Schedule is arrived at by following a formula that takes the injured 2 employee’s WPI percentage as determined in accordance with the AMA Guides, multiplies this 3 WPI percentage by a DFEC adjustment factor, and then adjusts the result based on the employee’s 4 occupation and age at the time of injury to arrive at the final percentage rating. 5 Therefore, consistent with case law on the prior Schedules, an injured employee or a 6 defendant may rebut the percentage of permanent disability under the 2005 Schedule by 7 successfully challenging any one of the individual component elements of the formula that resulted 8 in the employee’s scheduled rating, such as by establishing that an individualized adjustment 9 factor most accurately reflects the injured employee’s DFEC. (See Glass, supra, 105 Cal.App.3d at 10 p. 307 [45 Cal.Comp.Cases at p. 449] (“The Board may not rely upon alleged limitations in the 11 Rating Schedule to deny the injured worker a permanent disability award which accurately reflects 12 his true disability.”).) 13 14 F. The Ordinary Progression of a Challenge to the DFEC Adjustment Factor Component of a Scheduled Permanent Disability Rating 15 Section 4660(c) provides that “the schedule … shall be prima facie evidence of the 16 percentage of permanent disability to be attributed to each injury covered by the schedule.” 17 (Emphasis added.) Therefore, if read strictly, section 4660(c) would suggest that rebuttal evidence 18 may be presented only after the presumptively correct (prima facie) percentage of permanent 19 disability under the Schedule has been determined, i.e., after a trial and an initial decision on the 20 issue of permanent disability – thereby necessitating a second trial. However, by constitutional 21 mandate, workers’ compensation proceedings “shall accomplish substantial justice in all cases 22 expeditiously, inexpensively, and without incumbrance [sic] of any character.” (Cal. Const., art. 23 XIV, § 4.) This policy favoring expeditious proceedings is reflected by the fact that discovery 24 closes at the pre-trial mandatory settlement conference (MSC), except as to evidence that could not 25 have been discovered by the exercise of due diligence prior to that time. (Lab. Code, § 5502(e)(3).) 26 In the ordinary case, a party should be able to anticipate the approximate percentage of 27 permanent disability that would result from utilizing the scheduled DFEC adjustment factor in the OGILVIE, Wanda 18 1 Schedule’s rating formula.29 In turn, that party should be able to determine whether it wishes to 2 challenge the scheduled DFEC adjustment factor. If so, the party typically should be able to 3 obtain rebuttal evidence prior to the first MSC involving permanent disability issues. However, 4 although the prudent practitioner should exercise reasonable diligence to obtain rebuttal evidence 5 before the initial MSC relating to permanent disability, there may be instances where post-MSC 6 rebuttal evidence will be allowed. 7 An injured employee’s percentage of permanent disability is a question of fact to be 8 resolved by the WCAB. (Lab. Code, § 5953; Tanenbaum v. Industrial Acc. Com. (1935) 4 Cal.2d 9 615, 618 [20 I.A.C. 390, 391-392]; Subsequent Injuries Fund v. Industrial Acc. Com. (Rogers) 10 (1964) 226 Cal.App.2d 136, 152 [29 Cal.Comp.Cases 59, 69].) Therefore, once all of the evidence 11 relating to permanent disability has been presented, including evidence challenging the injured 12 employee’s DFEC adjustment factor, the WCAB will determine the percentage of permanent 13 disability. 14 Of course, to successfully challenge the DFEC adjustment factor component of a scheduled 15 permanent disability rating, the rebuttal evidence must be legally substantial. (See, generally, Lab. 16 Code, § 5952(d); Lamb v. Workmen’s Comp. Appeals Bd. (1974) 11 Cal.3d 274, 281 [39 17 Cal.Comp.Cases 310, 314] (“any award, order or decision of the board must be supported by 18 substantial evidence”).) Moreover, even if the rebuttal evidence is legally substantial, the WCAB 19 as the trier-of-fact may still determine that the evidence does not “overcome” the DFEC 20 adjustment factor component of the scheduled permanent disability rating. (See Glass, supra, 105 21 Cal.App.3d at p. 307 [45 Cal.Comp.Cases at p. 449] (“While the Rating Schedule is prima facie 22 evidence of the proper disability rating, it may be controverted and overcome.” (emphasis added); 23 see also Black’s Law Dictionary (6th ed. 1990), at p. 1190 (one definition of “prima facie 24 evidence” is “[t]hat quantum of evidence that suffices for proof of a particular fact until the fact is 25 26 27 29 The scheduled DFEC adjustment factor for any particular body part may be readily obtained from the Schedule. (See Schedule, at p. 1-7 [Tables A and B].) Alternatively, a party may obtain a summary rating, consultative rating, or informal rating determination from the Disability Evaluation Unit (DEU). (See Cal. Code Regs., tit. 8, § 10150 et seq.) OGILVIE, Wanda 19 1 contradicted by other evidence; once a trier of fact is faced with conflicting evidence, it must 2 weigh the prima facie evidence with all of the other probative evidence presented.” (emphasis 3 added).) 4 5 G. Any Individualized DFEC Adjustment Factor Must Be Consistent with Section 4660(b)(1), the RAND Data to which Section 4660(b)(1) Refers, and the Numeric Formula Adopted by the Administrative Director in the 2005 Schedule. 6 Having concluded that a scheduled permanent disability rating may be rebutted by 7 successfully challenging its DFEC adjustment factor component, and having set forth the burden 8 of proof and the ordinary timing of rebuttal evidence, we will now address various issues raised by 9 the parties and amicus curiae regarding the method of rebuttal discussed in our February 3, 2009 10 opinion, i.e., Ogilvie v. City and County of San Francisco (2009) 74 Cal.Comp.Cases 248 11 (Appeals Board en banc) (Ogilvie I). We begin by summarizing the relevant elements of that 12 decision. 13 In Ogilvie I, we observed that section 4660(b)(2) defined DFEC as “a numeric formula 14 based on empirical data and findings that aggregate the average percentage of long-term loss of 15 income resulting from each type of injury for similarly situated employees.” (Ogilvie I, supra, 74 16 Cal.Comp.Cases at pp. 261-262.) We also observed that section 4660(b)(2) stated that “[t]he 17 administrative director shall formulate the adjusted rating schedule based on empirical data and 18 findings from the [2003 RAND Study]30 and upon data from additional empirical studies.” (Id., at 19 p. 262.) Based on this language of section 4660(b)(2), the AD predicated the DFEC adjustment 20 factors of the 2005 Schedule on the empirical data from the 2003 RAND Study and on the 2004 21 RAND Study’s refinement of that empirical data. (Id.) Accordingly, we concluded that any valid 22 method of challenging the DFEC component of a scheduled permanent disability rating must be 23 consonant with the language of section 4660(b)(2), the RAND data to which section 4660(b)(2) 24 25 26 27 30 All references to the “2003 RAND Study” are to Reville, Robert T., et. al., “Evaluation of California’s Permanent Disability Rating Schedule – Interim Report,” RAND Institute for Civil Justice (December 2003). (See http://www.rand.org/pubs/documented_briefings/DB443/DB443.pdf.) All references to the “2004 RAND Study” are to Seabury, Seth A., et. al., “Data for Adjusting Disability Ratings to Reflect Diminished Future Earnings and Capacity in Compliance with SB 899,” RAND Institute for Civil Justice (December 2004). (See http://www.rand.org/pubs/working_papers/2004/RAND_WR214.pdf.) OGILVIE, Wanda 20 1 refers, and the numeric formula adopted by the AD in the Schedule. (Ogilvie I, supra, 74 2 Cal.Comp.Cases at pp. 265-266, 267, 269, 270, 273.)31 3 RAND studied 241,685 employees who had sustained industrial injuries over an 4 approximately six-year period. (Ogilvie I, supra, 74 Cal.Comp.Cases at p. 262.) RAND obtained 5 permanent disability ratings on these injured employees from the Disability Evaluation Unit 6 (DEU). (Id., at pp. 262-263) RAND also obtained post-injury wage data from EDD both on these 7 injured employees and on control groups of their co-employees who had similar pre-injury 8 earnings. (Id., at p. 263.) RAND concluded that the difference between the post-injury earnings of 9 each injured employee and the post-injury earnings of his or her corresponding control group 10 represented the estimated earnings loss of each injured employee. (Id.) RAND then divided each 11 injured employee’s estimated earnings loss by the average earnings of that employee’s 12 corresponding control group to obtain an estimate of each injured employee’s proportional 13 earnings loss. (Id.) Next, RAND separated the 241,685 injured employees into 27 groups based on 14 their types of impairments (i.e., injured body parts). (Id.) Then RAND took the permanent 15 disability rating for each injured employee within a particular group (e.g., all injured employees 16 having knee impairments) and divided that rating by his or her estimated proportional earnings 17 loss. (Id.) RAND aggregated the individual ratings to proportional earnings loss ratios of each 18 injured employee within each impairment group to determine an average permanent disability 19 rating over average proportional earnings loss ratio for that impairment group. (Id.) Finally, 20 RAND created a table of average permanent disability rating over average proportional earnings 21 loss ratios for each type of impairment. (Id., at p. 264.) 22 The 2005 Schedule adopted the RAND Studies’ average standard ratings to average 23 proportional earnings losses ratios for various impairments. (Ogilvie I, supra, 74 Cal.Comp.Cases 24 at p. 264.) The 2005 Schedule then consolidated these average ratings to proportional earnings 25 loss ratios into eight FEC Ranks. (Id.) Next, the Schedule established a series of eight DFEC 26 27 31 This is one of the main reasons we could not accept the DFEC adjustment factor rebuttal approaches suggested by the WCJ. (Id., at pp. 258-259, 260.) OGILVIE, Wanda 21 1 adjustment factors corresponding to each FEC Rank. (Id.) The minimum DFEC adjustment factor 2 is 1.100000 for FEC Rank One and the maximum DFEC adjustment factor is 1.400000 for FEC 3 Rank Eight. (Id.) These minimum and maximum DFEC adjustment factors established by the 4 Schedule were calculated by using the numeric formula ([1.81/a] x .1]) + 1, where “a” corresponds 5 to both the minimum and the maximum average standard ratings to average proportional earnings 6 losses ratios established by RAND. (Id., at pp. 264-265.) 7 Our February 3, 2009 opinion identified a method of challenging the DFEC adjustment 8 factor component of a scheduled permanent disability rating that is consistent with section 9 4660(b)(2), with the RAND data, and with the ([1.81/a] x .1]) + 1 numerical formula the AD 10 utilized in the Schedule. (Ogilvie I, supra, 74 Cal.Comp.Cases at pp. 265-266, 267, 269.) 11 First, the party seeking to rebut the scheduled rating presents evidence on the employee’s 12 actual post-injury earnings using EDD wage data (as did the RAND Studies) or other empirical 13 wage information. (Ogilvie I, supra, 74 Cal.Comp.Cases at p. 266.) 14 Second, that party presents evidence of what “similarly situated employees” earned during 15 the same period. (Ogilvie I, supra, 74 Cal.Comp.Cases at p. 267.) However, because EDD wage 16 data regarding co-employees is confidential (Unemp. Ins. Code, §§ 1094, 2111) and because there 17 are constitutional limits on when a co-employee may be compelled to disclose his or her wage 18 information to third parties (Cal. Const., art. I, § 1), we concluded that in many cases the earnings 19 of “similarly situated employees” will have to be estimated. (Id., at pp. 267-268.) Normally, this 20 estimated wage information will be obtained from EDD’s Labor Market Information Division 21 website, although it may be obtained from other sources. (Id., at pp. 268-269.) 22 23 Next, using this data, the injured employee’s estimated earnings loss and proportional earnings loss are calculated. (Ogilvie I, supra, 74 Cal.Comp.Cases at pp. 269-270.) 24 Thereafter, the injured employee’s standard WPI rating is divided by his or her estimated 25 proportional earnings loss, to come up with an individualized rating to proportional earnings loss 26 ratio (rating to loss ratio). (Ogilvie I, supra, 74 Cal.Comp.Cases at p. 270.) If the individualized 27 rating to loss ratio falls within the range of ratios of the scheduled FEC Rank for that impairment, OGILVIE, Wanda 22 1 then the party challenging the scheduled rating has not shown that an alternative adjustment factor 2 most accurately reflects the injured employee’s DFEC. (Id.) 3 proportional wage loss ratio falls outside the range of ratios of the scheduled FEC Rank for the 4 injured employee’s particular impairment, but falls within the range of ratios for one of the other 5 seven FEC Ranks, then the challenge has been successful and the scheduled DFEC adjustment 6 factor for that other FEC Rank is used. (Id., at pp. 271-273.) If the individualized rating to 7 proportional wage loss ratio falls outside all of the ranges of ratios for all of the FEC Ranks, then 8 the challenge has been successful and an alternative DFEC adjustment factor is calculated based 9 on the ([1.81/a] x .1]) + 1 numeric formula of the Schedule, where “a” is the employee’s 10 individualized rating to loss ratio. (Id., at pp. 273-274.)32 If the individualized rating to 11 Although not expressed, an important principle underlying our February 3, 2009 opinion is 12 that any valid method of challenging the DFEC adjustment factor component of a scheduled 13 permanent disability rating should be consistent with the constitutional mandate that “the 14 administration of [workers’ compensation] legislation shall accomplish substantial justice in all 15 cases expeditiously, inexpensively, and without incumbrance [sic] of any character; all of which 16 matters are expressly declared to be the social public policy of this State, binding upon all 17 departments of the State government.” (Cal. Const., art. XIV, § 4.) This constitutional mandate 18 underlies all of the workers’ compensation provisions of the Labor Code (Lab. Code, § 3201), 19 including section 4660. 20 /// 21 /// 22 /// 23 /// 24 /// 25 26 27 32 As discussed above, however, to successfully challenge the DFEC adjustment factor component of a scheduled permanent disability rating, the rebuttal evidence must be legally substantial. Further, even if the rebuttal evidence is legally substantial, the WCAB as the trier-of-fact may still determine that the evidence does not “overcome” the DFEC adjustment factor component of the scheduled permanent disability rating. OGILVIE, Wanda 23 1 A central theme of many of the arguments regarding our February 3, 2009 opinion is that 2 the rebuttal method we described is not consistent with the actual language of section 4660(b)(2).33 3 In essence, these arguments point out that the first sentence of section 4660(b)(2) defines 4 “diminished future earning capacity” as “a numeric formula based on empirical data and findings 5 that aggregate the average percentage of long-term loss of income resulting from each type of 6 injury for similarly situated employees.” They further highlight that the second sentence of section 7 4660(b)(2) indicates that the “empirical data and findings” to which the first sentence refers are 8 those of the 2003 RAND Study “and … data from additional empirical studies.”34 Based on this 9 statutory language, these arguments suggest among other things that a scheduled DFEC adjustment 10 factor may be challenged only by statistically valid empirical data regarding large numbers of 11 injured employees having different types of injuries that is then used to create new DFEC 12 modifiers based on ratios of ratings over proportional earnings losses for each of the body parts 13 covered by the Schedule, using the RAND methodology endorsed by the Legislature. Some of the 14 arguments further suggest that nothing in the statutory definition of DFEC suggests that it is 15 anything other than a statistical average for each type of injury, i.e., there is nothing 16 claimant-specific in the definition. 17 However, the rebuttal method discussed in our February 3, 2009 opinion is consistent with 18 the language of section 4660(b)(2), the RAND data to which section 4660(b)(2) refers, and the 19 ([1.81/a] x .1]) + 1 “numeric formula” that the AD adopted in the Schedule. It is also objective, 20 21 22 23 24 25 26 27 33 Defendant also asserts that our February 3, 2009 decision and, presumably, our current decision usurp the Administrative Director’s regulatory authority to create a Schedule. However, the Administrative Director’s authority to create a Schedule does not encompass the authority to determine under section 4660(c) either how a prima facie correct scheduled permanent disability rating may be rebutted or whether such a rating has been rebutted. It is the WCAB, and not the Administrative Director, that is charged with interpreting and enforcing the Labor Code in workers’ compensation proceedings. (Lab. Code, §§ 5300, 5301; see also, e.g., Foster v. Workers’ Comp. Appeals Bd. (2008) 161 Cal.App.4th 1505, 1511 [73 Cal.Comp.Cases 466, 470] (the WCAB is “the constitutional agency charged with enforcement and interpretation of the Workers’ Compensation Law”).) 34 All references to the “2003 RAND Study” are to Reville, Robert T., et. al., “Evaluation of California’s Permanent Disability Rating Schedule – Interim Report,” RAND Institute for Civil Justice (December 2003). (See http://www.rand.org/pubs/documented_briefings/DB443/DB443.pdf.) All references to the “2004 RAND Study” are to Seabury, Seth A., et. al., “Data for Adjusting Disability Ratings to Reflect Diminished Future Earnings and Capacity in Compliance with SB 899,” RAND Institute for Civil Justice (December 2004). (See http://www.rand.org/pubs/working_papers/2004/RAND_WR214.pdf.) OGILVIE, Wanda 24 1 practical, and consistent with our Constitutional mandate to “accomplish substantial justice in all 2 cases expeditiously, inexpensively, and without incumbrance [sic] of any character.” (Cal. Const., 3 art. XIV, § 4.) That is, the rebuttal method in our February 3, 2009 opinion takes “empirical data” 4 regarding the wages of both the injured employee and “similarly situated employees” to assess the 5 injured employee’s “long-term loss of income.” Moreover, like the RAND Studies, this “empirical 6 data” is generally obtained from EDD and it is used to establish an injured employee’s rating to 7 proportional earnings loss ratio. 8 proportional earnings loss ratio falls outside the ranges of ratios for all of the FEC Ranks in the 9 Schedule, then the ([1.81/a] x .1]) + 1 “numeric formula” of the Schedule is used to determine the 10 injured employee’s individualized DFEC adjustment factor. Further, if an injured employee’s individualized rating to 11 For the reasons that follow, we rejected any rebuttal method that would require a party to 12 present evidence that aggregates empirical data regarding large numbers of injured employees with 13 multiple types of injuries. 14 As discussed above, the “prima facie evidence” language of section 4660(c) 15 unambiguously establishes that a scheduled permanent disability rating is rebuttable. Further, the 16 case law establishes that one method of rebutting a scheduled rating is to successfully challenge 17 one of its component elements, such as the DFEC adjustment factor. Given that a scheduled 18 permanent disability rating cannot be absolutely conclusive, we were obliged to identify at least 19 one valid method of successfully challenging a DFEC adjustment factor. 20 Yet, to conclude that a scheduled DFEC adjustment factor may be challenged only by 21 statistically valid empirical data regarding large numbers of injured employees with multiple types 22 of injuries that utilizes the RAND methodology, which is then used to create new DFEC 23 adjustment factors for each of the body parts covered by the Schedule, would effectively mean that 24 the resulting permanent disability rating would be conclusive and non-rebuttable, absent a 25 successful challenge to other components of the scheduled rating. This would be inconsistent with 26 the language of section 4660(c) that “the schedule … shall be prima facie evidence of the 27 percentage of permanent disability to be attributed to each injury covered by the schedule.” OGILVIE, Wanda 25 1 (Emphasis added.) 2 It would be extraordinarily unlikely, if not virtually impossible, for either party to gather 3 statistically valid empirical data, using the RAND methodology, to create new DFEC adjustment 4 factors and yet do so “expeditiously, inexpensively, and without incumbrance [sic]” as required by 5 Article XIV, section 4, of the California Constitution. This is particularly true in cases where a 6 self-represented injured employee is seeking to challenge the DFEC component of a scheduled 7 permanent disability rating. 8 As discussed in our February 3, 2009 opinion, RAND’s “statistically valid” empirical data 9 was derived from a study of 241,685 injured employees who had sustained industrial injuries over 10 an approximately six-year period. (Ogilvie I, supra, 74 Cal.Comp.Cases at pp. 262-263.) In order 11 to perform its study, RAND was given access both to the DEU’s permanent disability ratings on 12 those 241,685 injured employees and to wage data maintained by the EDD on those 241,685 13 injured employees and on many thousands more co-employees at the same workplaces who had 14 similar pre-injury earnings to the injured employees. (Id.) RAND used social security numbers to 15 link the injured employees’ DEU ratings with their EDD wage information and to link the injured 16 employees’ EDD wage information with the EDD wage information on their co-workers.35 17 Yet, to gather “statistically valid” empirical data using the RAND methodology, a party 18 seeking to challenge the DFEC adjustment factor component of a scheduled permanent disability 19 rating in a particular case would have to: (1) gather thousands of DEU permanent disability ratings 20 on employees with injuries to particular body parts; (2) correlate those ratings with EDD wage 21 data on those thousands of injured employees; (3) correlate the wage data on those thousands of 22 injured employees with EDD wage data on many more thousands of co-employees in each injured 23 employee’s control group; (4) determine the estimated earnings loss of each of those thousands of 24 injured employees by subtracting that employee’s post-injury earnings from the average 25 post-injury earnings of his or her control group; (5) divide each of those thousands of injured 26 27 35 Reville, Robert T., et. al., “An Evaluation of California’s Permanent Disability Rating System,” RAND Institute for Civil Justice (2005), at p. 44 (2005 RAND Study). (See http://www.rand.org/pubs/documented_briefings/DB443/DB443.pdf.) OGILVIE, Wanda 26 1 employee’s estimated earnings loss by the average earnings of that employee’s control group to 2 obtain an estimate of each injured employee’s proportional earnings loss; (6) divide each of those 3 thousands of injured employee’s ratings by his or her proportional earnings loss to determine a 4 rating to proportional earnings loss ratio for each injured employee; and (7) aggregate the 5 individual ratings to proportional earnings loss ratios of each of those thousands of injured 6 employees within each impairment group to determine an average rating to average proportional 7 earnings loss ratio for that impairment group. 8 No party or amicus explains how this massive task could be achieved. Even if a party 9 obtained thousands of permanent disability ratings on thousands of non-party injured employees 10 through Public Records Act requests to the DEU, that party could not match the DEU ratings to 11 each non-party injured employee’s corresponding EDD wage data and could not match each 12 non-party injured employee’s EDD wage data to the wage data for non-party co-employees in the 13 corresponding control group. To begin with, the EDD wage data on those thousands of non-party 14 employees is confidential. (Unemp. Ins. Code, §§ 1094, 2111.) Also, even if this particular 15 confidentiality problem did not exist, the only way to reliably correlate various injured employees’ 16 EDD wage data with their corresponding DEU ratings would be by matching social security 17 numbers. 18 confidential. Yet, various provisions of federal and state law make social security numbers 19 Therefore, as a practical matter, use of this approach would effectively make the DFEC 20 adjustment factor component of a scheduled permanent disability rating conclusive and 21 non-rebuttable – contrary to the provisions of section 4660(c). 22 Moreover, even if all of these obstacles could be overcome, some person or entity (like 23 RAND) would have to be hired to undertake the seven steps outlined above. Therefore, the entire 24 process, beginning with the data-gathering and continuing through the development of 25 “statistically valid empirical data,” would not be expeditious, inexpensive, and without 26 encumbrance as mandated by the California Constitution. (Cal. Const., art. XIV, § 4.) 27 Also, this approach would mean creating an entirely new range of ratings over proportional OGILVIE, Wanda 27 1 earnings loss ratios and substituting them for the presumptively correct ratios and corresponding 2 DFEC adjustment factors adopted by the Administrative Director in the 2005 Schedule. This, in 3 essence, would constitute an attempt to entirely invalidate the DFEC portion of the Schedule rather 4 than an attempt to challenge the DFEC adjustment factor component of a scheduled permanent 5 disability rating in an individual case. (See Boughner v. Comp USA, Inc. (2008) 73 6 Cal.Comp.Cases 856 (Appeals Board en banc) (Boughner);36 Costa v. Hardy Diagnostic (2006) 71 7 Cal.Comp.Cases 1797(Appeals Board en banc) (Costa I).) Therefore, even if a party hired a 8 statistician or some other qualified expert to re-analyze the existing 2003 and 2004 RAND data 9 (instead of undertaking the extensive data gathering discussed in the paragraphs above), this 10 rebuttal evidence would not be appropriate since it too would be an attempt to entirely invalidate 11 the DFEC portion of the Schedule and not an attempt to successfully challenge the DFEC 12 adjustment factor in a particular case. 13 On the other hand, the method of challenging the DFEC adjustment factor component of a 14 scheduled permanent disability rating set forth in our February 3, 2009 opinion is simple, 15 expeditious, inexpensive, based on reliable data, and applies in the context of rebutting a 16 scheduled permanent disability rating in an individual case, not an attempt to invalidate the entire 17 DFEC portion of the Schedule. At the same time, it is consistent with the language of section 18 4660(b)(2), 19 ([1.81/a] x .1]) + 1 “numeric formula” that the AD adopted for the Schedule. 20 21 H. Our February 3, 2009 Opinion Properly Allows a Party to Present Evidence Regarding an Injured Employee’s Individualized DFEC Adjustment Factor 22 Applicant’s petition states that the DFEC adjustment factors of the Schedule are intended 23 to assure that injured employees with the same DFEC will receive the same permanent disability 24 rating irrespective of what body parts they injure. Applicant argues that allowing parties to 25 challenge the DFEC component of a scheduled permanent disability rating through individualized 26 DFEC adjustment factors will improperly cause widely varying ratings for injured employees with the RAND methodology to which section 4660(b)(2) refers, 27 36 Writ den. sub nom. Boughner v. Workers’ Comp. Appeals Bd. (2009) 74 Cal.Comp.Cases 770. OGILVIE, Wanda 28 and the 1 the same DFEC. 2 The DFEC adjustment factors of the 2005 Schedule are based in part on data from the 2003 3 RAND Study (which data was later refined by the 2004 RAND Study). The 2003 RAND Study 4 concluded that, under the prior Schedules, injured workers with the same overall permanent 5 disability rating (e.g., 5%) had disparate average proportional earnings losses – and disparate 6 average rating to proportional earnings loss ratios – depending on the body part that was injured. 7 (See 2003 RAND Study, at pp. 24-25, 27, 28-31, 44.)37 Therefore, one of the recommendations of 8 the 2003 RAND Study was that to improve equity in the system any new rating Schedule should 9 contain adjustments to reduce the disparities in compensation for different types of impairments. 10 (Id., at p. 44.) This, of course, is one of the purposes of the DFEC adjustment factors in the 2005 11 Schedule. 12 However, when the 2003 RAND Study reached its conclusions regarding disparate 13 proportional earnings losses – and disparate rating to proportional earnings loss ratios – for 14 different types of impairments, the Study was averaging data on 241,685 injured employees. 15 (Ogilvie I, supra, 74 Cal.Comp.Cases at p. 262.) Consequently, in the case of a specific injured 16 employee, that employee might have had a significantly higher or lower proportional earnings 17 loss – and, therefore, a significantly higher or lower rating to proportional earnings loss 18 ratio – than average. 19 The method set forth in our February 3, 2009 opinion allows a party to challenge the DFEC 20 adjustment factor component of a scheduled permanent disability rating in a particular employee’s 21 case. That is, a party may show that an individual employee’s own rating to proportional earnings 22 loss ratio for an impairment is significantly above or below the average rating to average 23 proportional earnings loss ratio for that impairment in the Schedule, thus justifying the use of an 24 individualized DFEC adjustment factor. As discussed above, this method is consistent with the 25 26 27 37 For example, average proportional earnings losses for knee injuries rating 5% were significantly lower than average proportional earnings losses for back injuries rating 5%, and average proportional earnings losses for shoulder injuries rating 5% were significantly higher than average proportional earnings losses for back injuries rating 5%. (See 2003 RAND Study, at pp. 24-25.) OGILVIE, Wanda 29 1 language of section 4660(b)(2), the methodology of the RAND Study to which section 4660(b)(2) 2 refers, and the numeric formula adopted by the AD in the Schedule. Moreover, in keeping with 3 the rationale that underlies the scheduled DFEC adjustment factors, injured employees with the 4 same individualized DFEC adjustment factor will receive the same ratings for different types of 5 impairments, if those impairments result in the same WPI. 6 Furthermore, if applicant’s argument is carried to its logical conclusion, the effective result 7 would be that no party could challenge the DFEC adjustment factor component of a scheduled 8 permanent disability rating, thus effectively making the resulting permanent disability rating 9 conclusive and non-rebuttable, absent a successful challenge to other components of the scheduled 10 rating. This would not comport with the language of section 4660(c) that “the schedule … shall be 11 prima facie evidence of the percentage of permanent disability to be attributed to each injury 12 covered by the schedule.” (Emphasis added.) 13 14 I. Our February 3, 2009 Opinion Does Not Violate the Mandate of Article XIV, Section 4, of the California Constitution 15 In our February 3, 2009 opinion, we stated: “In determining an individual employee’s 16 proportional earnings loss, the first step ordinarily will be to establish the employee’s actual 17 earnings in the three years following his or her injury (as did the RAND Studies), using the 18 employee’s EDD wage data or other empirical wage information.” (Ogilvie v. City and County of 19 San Francisco (2009) 74 Cal.Comp.Cases 248, 266 (Appeals Board en banc) (Ogilvie I).)38 20 Applicant contends that this statement violates the mandate of Article XIV, section 4, of the 21 California Constitution that administration of the workers’ compensation system “shall accomplish 22 substantial justice in all cases expeditiously.” In essence, applicant claims that because most 23 temporary disability benefits are currently limited to no more than 104 weeks within five years 24 after the date of injury (see Lab. Code, § 4656(c)(1) & (c)(2)), “many workers – including those 25 26 27 38 As explained in our February 3, 2009 opinion, we focused on an injured employee’s actual earnings in the three years following his or her injury because this is the period used by the 2003 and 2004 RAND Studies, which, in accordance with section 4660(b)(2), are the studies on which the Administrative Director based the DFEC adjustment factors of the 2005 Schedule. (Ogilvie I, supra, 74 Cal.Comp.Cases at pp. 265-266.) OGILVIE, Wanda 30 1 who are most seriously injured and who collect temporary disability benefits for the 104 weeks 2 immediately following the injury – will be forced to wait at least one year, and likely longer” for a 3 determination of their individualized proportional earnings loss. 4 5 There are several flaws in applicant’s argument that employees will have to wait at least three years after their dates of injury for a permanent disability determination. 6 First, nothing in our February 3, 2009 opinion mandates that a party must challenge the 7 DFEC component of a scheduled permanent disability rating. In cases where the scheduled DFEC 8 adjustment factor is used, the injured employee will not have to wait an additional year or more 9 after temporary disability payments cease before his or her permanent disability rating can be 10 established. 11 Second, even if a party elects to challenge the DFEC component of a scheduled permanent 12 disability rating, nothing in our February 3, 2009 opinion requires that the first three years of 13 post-injury earnings be used. Although we stated that this period “ordinarily” would be used 14 (Ogilvie I, supra, 74 Cal.Comp.Cases at p. 266), we went on to state: 15 16 17 18 19 20 “Yet, although the 2003 and 2004 RAND Studies used three years of post-injury earnings as the basis for their proportional earnings loss calculations, there is nothing magical about a three-year period. This is because the 2003 and 2004 RAND Studies used three-year proportional earnings losses only ‘because these data provide the best balance between representing long-term outcomes and a sufficient number of observations with which to conduct [an] analysis’ for a large-scale study. (See 2004 RAND Study, at p. 3.) In cases of individual injured employees, however, a longer or shorter period of post-injury earnings may be appropriate.” (Ogilvie I, supra, 74 Cal.Comp.Cases at p. 266.) 21 Third, we recognize that, by definition, when an employee is receiving temporary disability 22 indemnity he or she is unable to work or is unable to work for full wages. Indeed, “[t]he primary 23 element of temporary disability is wage loss.” (Granado v. Workers’ Comp. Appeals Bd. (1968) 69 24 Cal.2d 399, 403 [33 Cal.Comp.Cases 647, 650]; see also Signature Fruit Co. v. Workers’ Comp. 25 Appeals Bd. (Ochoa) (2006) 142 Cal.App.4th 790, 801 [71 Cal.Comp.Cases 1044, 1052-1053].) 26 Accordingly, where an injured employee has been off work (or partially off work) and receiving 27 temporary disability indemnity for a period of two years, it may be difficult to assess the OGILVIE, Wanda 31 1 employee’s actual earning capacity for a three-year period. In such a circumstance, however, the 2 scheduled DFEC adjustment factor may be used to initially rate the employee’s permanent 3 disability. Then, if within five years of the date of injury it later becomes clear that the employee’s 4 individualized proportional earnings loss is significantly higher or lower than anticipated, a party 5 may seek to reopen the issue of permanent disability by challenging the originally used DFEC 6 adjustment factor. (Lab. Code, §§ 5410, 5803, 5804; see LeBoeuf v. Workers’ Comp. Appeals Bd. 7 (1983) 34 Cal.3d 234, 242-243 [48 Cal.Comp.Cases 587, 594] (original 60% permanent disability 8 rating reopened and increased to 100% after it was later determined that the injured employee 9 could not be vocationally retrained for suitable gainful employment) (LeBoeuf).) 10 11 J. Our February 3, 2009 Opinion Properly Used the Whole Person Impairment Rating Assigned by the AMA Guides for the Numerator of the Employee’s Individualized Rating to Proportional Earnings Loss Ratio 12 In our February 3, 2009 opinion, we stated that the second phase of our method for 13 determining whether the DFEC adjustment factor component of a scheduled permanent disability 14 rating has been successfully challenged “is to take the injured employee’s standard WPI rating and 15 then divide this rating by his or her estimated proportional earnings loss, to come up with an 16 individualized rating to proportional earnings loss ratio (rating to loss ratio).” (Ogilvie I, supra, 74 17 Cal.Comp.Cases at p. 270.) 18 February 3, 2009 opinion was based on the RAND Studies, which took the standard permanent 19 disability rating for each employee within a particular impairment group, divided that rating by his 20 or her estimated proportional earnings loss, and then averaged all of those rating to loss ratios. 21 (Ogilvie I, supra, 74 Cal.Comp.Cases at pp. 263-264.) The RAND average standard ratings to 22 average proportional earnings losses ratios for various impairments were then adopted by the 23 Schedule, which used them to establish the FEC Ranks with their corresponding DFEC adjustment 24 factors. (Ogilvie I, supra, 74 Cal.Comp.Cases at p. 264.) This particular aspect of the rebuttal method described in our 25 Applicant contends it is improper to compare an injured employee’s individualized rating 26 to proportional earnings loss ratio to the aggregate average rating to proportional earnings loss 27 ratios in the 2005 Schedule, because the former ratio uses the standard whole person impairment OGILVIE, Wanda 32 1 rating assigned by the AMA Guides while the latter ratios use the standard rating under the 1988 2 Schedule, which is fundamentally different. 3 Applicant is correct that the RAND Studies used standard permanent disability ratings 4 under the 1988 Schedule.39 She is also correct that the 2005 Schedule uses the standard whole 5 person impairment rating assigned by the AMA Guides and that this rating is fundamentally 6 different than a standard rating under the 1988 Schedule, which was based on work preclusions 7 and/or objective and subjective factors of disability. (Cf. 1997 Schedule, at pp. 1-3 – 1-4, 1-7 – 1- 8 8.)40 9 What applicant disregards, however, is that section 4660(b)(1) now defines the “nature of 10 the physical injury or disfigurement” by reference to the AMA Guides, not the work preclusions 11 and/or objective and subjective factors of disability of the 1988 Schedule. Consistent with section 12 4660(b)(1), the AMA Guides were adopted and incorporated into the 2005 Schedule. (Cal. Code 13 Regs., tit. 8, § 9805.) Because both section 4660(b)(1) and the Schedule now require use of the 14 WPI rating assigned by the AMA Guides, this WPI rating must also be used in determining an 15 injured employee’s individualized rating to proportional earnings loss ratio. 16 Therefore, our February 3, 2009 opinion allows a party to establish an individualized DFEC 17 adjustment factor by a method that is consistent with section 4660(b)(1), with the language of 18 section 4660(b)(2), the methodology used by RAND, and the numeric formula adopted by the AD 19 in the Schedule; however, instead of using the injured employee’s standard rating under the 1988 20 Schedule for the numerator of an individualized rating to proportional earnings loss ratio, it uses 21 22 23 24 25 39 The RAND Studies assessed 241,685 employees who had sustained industrial injuries between January 1, 1991 and April 1, 1997 and who had received formal permanent disability ratings from the DEU. (Ogilvie I, supra, 74 Cal.Comp.Cases at pp. 262-263; see also 2003 RAND Study, at p. 18.) The period between January 1, 1991 and April 1, 1997 appears to have been used partly because, by using April 1, 1997 as the cut-off date, all of the injuries were rated under the 1988 Schedule, which applied to injuries from July 1, 1988 through March 31, 1997. (See http://www.dir.ca.gov/DWC/PDRSpre1997.pdf.) 40 26 27 The 1997 Schedule may be viewed at http://www.dir.ca.gov/DWC/PDR1997.pdf. Although the 1988 and 1997 Schedules largely assessed permanent disability in the same way, there were some differences. For example, the 1997 Schedule made some changes to the work capacity guidelines for pulmonary, heart, abdominal and spinal disabilities (compare 1988 Schedule, at pp. 1-A, 5-A & 13-A, to 1997 Schedule, at pp. 2-12 – 2-15) and it added work capacity guidelines for rating lower extremity disabilities (see 1997 Schedule, at p. 2-19). OGILVIE, Wanda 33 1 the employee’s whole person impairment rating under the AMA Guides.41 2 K. Our February 3, 2009 Opinion Properly Concluded That, in Situations Where the Injured Employee’s Individualized Rating to Proportional Earnings Loss Ratio Does Not Fall Within the Range of Ratios for Any of the Eight FEC Ranks of the Schedule, Then the Employee’s DFEC Adjustment Factor May Be Determined by Applying the Formula of ([1.81/a] x .1) + 1, Where “a” is the Employee’s Individualized Rating to Loss Ratio 3 4 5 6 In our February 3, 2009 opinion, we concluded that if an injured employee’s individualized 7 rating to loss ratio does not fall within the ranges of ratios for any of the eight FEC Ranks of the 8 Schedule, then the employee’s DFEC adjustment factor may be determined by applying the 9 formula of ([1.81/a] x .1) + 1, where “a” is the injured employee’s standard WPI divided by his or 10 her proportional earnings loss ratio. (Ogilvie I, supra, 74 Cal.Comp.Cases at p. 273.) 11 concluded that this approach was consistent with section 4660(b)(2)’s requirement that a “numeric 12 formula” be used because the Schedule used this very same numeric formula for determining its 13 minimum and maximum DFEC adjustment factors. (Ogilvie I, supra, 74 Cal.Comp.Cases at p. 14 273.) We 15 Applicant contends that our February 3, 2009 opinion improperly used the 16 ([1.81/a] x .1) + 1 numerical formula adopted by the 2005 Schedule because that formula was not 17 based on empirical data, as required by section 4660(b)(2), and it has no purpose other than to 18 justify the arbitrary range of 1.1 to 1.4 for the DFEC adjustment factors contained in the Schedule. 19 The 2005 Schedule, including the numeric formula used in determining its minimum and 20 maximum DFEC adjustment factors, was adopted by regulation. (Cal. Code Regs., tit. 8, § 9805.) 21 Therefore, in arguing that the ([1.81/a] x .1) + 1 numerical formula adopted by the 2005 Schedule 22 is arbitrary, applicant in essence is challenging the validity of the regulation that adopted the 23 Schedule. As pointed out in our February 3, 2009 opinion, an attempt to rebut a scheduled permanent 24 25 26 27 41 Indeed, it would be problematic to do otherwise. For one thing, disabilities under the 1988 Schedule could be rated based on objective and subjective factors of disability or on work preclusions; therefore, it cannot be known whether the standard ratings used in the RAND Studies were based on the objective/subjective factors, the work preclusions, or both. Moreover, if an employee were required to establish his or her standard rating under the 1988 Schedule in order to rebut the DFEC component of a scheduled permanent disability rating, this could be difficult because fewer and fewer physicians are versed in how to assess disability under the 1988 Schedule. OGILVIE, Wanda 34 1 disability rating in a particular case is entirely different from a challenge to the Schedule itself. 2 (Ogilvie I, supra, 74 Cal.Comp.Cases at p. 280.) Here, at trial, applicant did not assert that the 3 2005 Schedule – or, at least, the formula used to create the DFEC adjustment factor component of 4 it – is invalid. Instead, she sought to rebut the scheduled permanent disability rating. Therefore, 5 she has waived any challenge to the Schedule itself. (Griffith v. Workers’ Comp. Appeals Bd. 6 (1989) 209 Cal.App.3d 1260, 1265 [54 Cal.Comp.Cases 145, 148] (issue not raised at trial level is 7 waived); see also New United Motors Mfg., Inc. v. Workers’ Comp. Appeals Bd. (Gallegos) (2006) 8 141 Cal.App.4th 1533, 1540 & fn. 4 [71 Cal.Comp.Cases 1037, 1042 & fn. 4].) 9 Moreover, even assuming that applicant has not waived the question of whether the 10 numeric formula portion of the permanent disability schedule regulation is arbitrary or capricious, 11 she has not carried her burden of proving that the regulation was not based on empirical data. In 12 Boughner and in Costa I, we concluded that the petitioners did not meet their burdens of proving 13 that the 2005 Schedule is not empirically based. In both cases, we emphasized that an agency’s 14 regulation carries a “strong presumption” of validity, that the party challenging the regulation has 15 the burden of demonstrating its invalidity, and that in order to carry this burden the party must 16 demonstrate that the regulation is arbitrary and capricious. (Boughner, supra, 73 Cal.Comp.Cases 17 at pp. 859-861; Costa I, supra, 71 Cal.Comp.Cases at pp. 1810-1812.) Furthermore, in Boughner, 18 we pointed out that any challenge to a regulation must be based solely on the rule-making record. 19 (Boughner, supra, 73 Cal.Comp.Cases at pp. 861-862.) Here, too, applicant has not carried her 20 burden of establishing, based on the rule-making record, that the numerical formula of 21 ([1.81/a] x .1) + 1 adopted by the AD in the 2005 Schedule is arbitrary and capricious because it is 22 not based on empirical data. Accordingly, she has not established that our use of that numerical 23 formula in determining an injured employee’s individualized DFEC adjustment factor was 24 improper. 25 /// 26 /// 27 /// OGILVIE, Wanda 35 1 2 L. Under Section 4660, an Injured Employee’s Percentage of Permanent Disability Does Not Equate to His or Her Percentage of Diminished Future Earning Capacity 3 Much of the balance of applicant’s petition for reconsideration argues, in various ways, that 4 “the percentage of diminished future earning capacity is the permanent disability percentage.” 5 Therefore, she concludes that a permanent disability rating established by the Schedule may be 6 rebutted by vocational expert opinion on the injured employee’s DFEC percentage, where this 7 DFEC percentage results from dividing the amount the expert believes the injured employee likely 8 will earn over his or her remaining expected work life, after the injury, by the amount the expert 9 believes the injured employee likely would have earned over his or her remaining expected work 10 life, absent the injury. 11 12 However, an injured employee’s percentage of permanent disability does not equate to his or her percentage of diminished future earning capacity. 13 One argument applicant makes is that the Schedule itself confirms that permanent disability 14 is measured by an injured employee’s DFEC percentage. In making this argument, applicant relies 15 on the following statement in the 2005 Schedule: 16 17 18 19 “A permanent disability rating can range from 0% to 100%. Zero percent signifies no reduction of earning capacity, while 100% represents permanent total disability. A rating between 0% and 100% represents permanent partial disability. Permanent total disability represents a level of disability at which an employee has sustained a total loss of earning capacity.” (2005 Schedule, at pp. 1-2 – 1-3.) 20 21 As explained by our February 3, 2009 opinion, however, this statement does not mean that an 22 injured employee’s permanent disability percentage is the same as the employee’s DFEC 23 percentage – i.e., it is not true that an estimated 10% loss of pre-injury earning capacity equates to 24 a 10% permanent disability rating, an estimated 20% loss of pre-injury earning capacity equates to 25 a 20% permanent disability rating, etc. 26 27 For one, the language of section 4660 belies any such conclusion. It provides, “In determining the percentages of permanent disability, account shall be taken of the nature of the OGILVIE, Wanda 36 1 physical injury or disfigurement, the occupation of the injured employee, and his or her age at the 2 time of injury, consideration being given to an employee’s diminished future earning capacity.” 3 (Lab. Code, § 4660(a).) Thus, at least ordinarily, an injured employee’s permanent disability 4 rating is a function of a combination of factors, i.e., the employee’s WPI, DFEC, age, and 5 occupation; it is not a function of DFEC alone. (Id.; see also Lab. Code, § 4660(b)(1) & (b)(2); 6 2005 Schedule, at pp. 1-4 – 1-10.) Accordingly, in the usual case, there is not a one-to-one 7 correlation between DFEC and disability. (See (Ogilvie I, supra, 74 Cal.Comp.Cases at p. 260.) 8 Moreover, section 4660(b)(2) defines “diminished future earning capacity” and does not 9 declare that it is tantamount to the injured employee’s percentage of permanent disability. Instead, 10 section 4660(b)(2) specifically defines “diminished future earning capacity” to mean “a numeric 11 formula based on empirical data and findings that aggregate the average percentage of long-term 12 loss of income resulting from each type of injury for similarly situated employees.” 13 Another of applicant’s arguments begins by pointing out that, prior to SB 899, section 14 4660(a) provided: “In determining the percentages of permanent disability, account shall be taken 15 of the nature of the physical injury or disfigurement, the occupation of the injured employee, and 16 his age at the time of such injury, consideration being given to the diminished ability of such 17 injured employee to compete in an open labor market.” Applicant then points out that, when 18 section 4660(a) was amended by SB 899, the only substantive change was to substitute “an 19 employee’s diminished future earning capacity” for “the diminished ability of such injured 20 employee to compete in an open labor market.” Applicant next goes on to assert that, under 21 former section 4660(a), the California courts equated permanent disability with diminished ability 22 to compete in an open labor market. 23 statement in LeBoeuf, supra that “[a] permanent disability rating should reflect as accurately as 24 possible an injured employee’s diminished ability to compete in the open labor market.” (34 25 Cal.3d at pp. 245-246 [48 Cal.Comp.Cases at p. 597].) Therefore, applicant claims that because 26 permanent disability was equated with a diminished ability to compete in the open labor market 27 under former section 4660(a), permanent disability now must be equated with diminished future OGILVIE, Wanda For example, applicant cites to the Supreme Court’s 37 1 earning capacity under current section 4660(a). 2 There are several problems with this argument. 3 Like current section 4660(a), former section 4660(a) listed four factors to be considered in 4 determining permanent disability, i.e., (1) the nature of the physical injury or disfigurement, (2) the 5 occupation of the injured employee, (3) the employee’s age at the time of the injury, and (4) the 6 employee’s diminished ability to compete in the open labor market. As illustrated by the 1997 7 Schedule, all of these factors were considered in arriving at a scheduled permanent disability 8 rating. (See 1997 Schedule, at pp. 1-1 – 1-12.) Although diminished ability to compete in the open 9 labor market was the most significant factor in a permanent disability determination under former 10 section 4660(a), and although in some instances the appellate courts would simplify any 11 permanent disability discussion by focusing on that one factor, the reality is that diminished ability 12 to compete in the open labor market was almost never the sole factor in a permanent disability 13 assessment. The exceptions were cases like LeBoeuf, in which the injured employee not only 14 could not return to his job as a bus driver, but he also could not be vocationally rehabilitated into 15 any suitable gainful employment. Therefore, the complete inability of such employees to compete 16 in any segment of the open labor market rendered them permanently totally disabled. (Cf. Lab. 17 Code, § 4662.)42 18 Also, until SB 899 section 4660 set forth no guiding principles regarding how percentages 19 of permanent disability were to be determined, beyond the language of former section 4660(a). 20 However, when SB 899 amended section 4660, it not only substituted “diminished future earning 21 capacity” for “diminished ability … to compete in an open labor market,” but it also defined both 22 /// 23 /// 24 /// 25 /// 26 27 42 As noted in Ogilvie I, a complete loss of earning capacity might justify a finding of permanent total disability under section 4662, but that issue is not before us here. (Ogilvie I, supra, 74 Cal.Comp.Cases at p. 260, fn. 11.) OGILVIE, Wanda 38 1 //“diminished future earning capacity” and “nature of the physical injury or disfigurement.”43 2 Accordingly, the change in the nature and structure of section 4660 now means that permanent 3 disability cannot simply be equated to diminished future earning capacity, even if it could be said 4 that, under former section 4660, permanent disability could be equated to diminished ability to 5 compete in the open labor market. 6 For the reasons outlined above, we also reject applicant’s contention that the purpose of the 7 Schedule is to convert a non-empirical AMA Guides whole person impairment rating into an 8 empirically-based measure of the injured employee’s diminished future earning capacity, and not 9 to adjust the employee’s WPI for diminished future earning capacity. 10 Also, for these same reasons, we cannot accept applicant’s view that a scheduled 11 permanent disability rating may be rebutted by a vocational expert’s opinion on the injured 12 employee’s DFEC percentage, which the expert arrives at by dividing the injured employee’s 13 estimated lifetime post-injury earning capacity by the injured employee’s estimated lifetime pre- 14 injury earning capacity. As we said in our February 3, 2009 opinion: 15 “[I]f the Legislature had intended that an injured employee’s permanent disability percentage could be the same as a vocational rehabilitation expert’s opinion of the employee’s DFEC percentage, then why did the Legislature not say so? Indeed, why would the Legislature even require a Schedule at all? A Schedule would not be needed to determine a percentage of permanent disability if that percentage could simply be established by the DFEC opinion of a vocational rehabilitation expert who, in reaching his or her DFEC opinion, took into consideration the employee’s age and occupation and the nature of the employee’s physical injury or disfigurement.” (Ogilvie, supra, 74 Cal.Comp.Cases at p. 258.) 16 17 18 19 20 21 Applicant’s petition claims that the answer to the first question is that “the Legislature did 22 say that the permanent disability percentage is the same thing as diminished future earning 23 capacity.” (Applicant’s italics.) Yet, as we have demonstrated above, applicant misconstrues 24 25 26 27 43 That is, SB 899 added section 4660(b)(1), which provides, “For purposes of this section, the ‘nature of the physical injury or disfigurement’ shall incorporate the descriptions and measurements of physical impairments in the corresponding percentages of impairments published in the [AMA Guides].” It also added section 4660(b)(2), which provides, “For purposes of this section, an employee’s diminished future earning capacity shall be a numeric formula based on empirical data and findings that aggregate the average percentage of long-term loss of income resulting from each type of injury for similarly situated employees.” OGILVIE, Wanda 39 1 section 4660 in this regard. 2 Applicant’s petition claims that the answer to the second question is that “[t]he Legislature 3 directed adoption of a revised rating schedule because it did not intend to require a vocational 4 expert’s input and testimony in every case. A rating schedule provides a cost effective method of 5 assigning ratings that also provides consistency and uniformity of ratings. However, none of those 6 goals are compromised by the fact that permanent disability ratings under the 2005 Schedule 7 should be a measure of the injured worker’s diminished future earning capacity, because that is 8 what is required by §4660.” We certainly agree with applicant’s statements that the Legislature 9 did not intend to require vocational expert testimony in every case and that the rating schedule 10 provides a cost-effective method of assigning ratings. Again, though, applicant is mistaken in 11 believing that an injured employee’s permanent disability is simply a measure of his or her 12 diminished future earning capacity. 13 M. Our February 3, 2009 Opinion Is Not an Invalid “Regulation” 14 Applicant’s final contention is that our February 3, 2009 opinion requires that only one 15 methodology shall be used for challenging the DFEC component of a scheduled permanent 16 disability rating. Applicant asserts that, by issuing an en banc decision which requires the use of a 17 single rebuttal methodology, we have issued a “regulation” that, under Milbauer, supra, 127 18 Cal.App.4th 625 [70 Cal.Comp.Cases 312], is invalid because it was not adopted in accordance 19 with the rule-making provisions of the Administrative Procedures Act (APA). (Gov. Code, § 20 11340 et seq.) 21 Milbauer was based in large part on the Supreme Court’s decision in Tidewater Marine 22 Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557 (Tidewater). 23 “regulation” not adopted in accordance with the rule-making provisions of the APA is “void.” 24 (Tidewater, supra, 14 Cal.4th at p. 572.) In reaching this holding Tidewater stated, “The APA … 25 defines ‘regulation’ very broadly to include ‘every rule, regulation, order, or standard of general 26 application … adopted by any state agency to implement, interpret, or make specific the law 27 enforced or administered by it, or to govern its procedure … .’ ” (Tidewater, supra, 14 Cal.4th at OGILVIE, Wanda 40 Tidewater held that any 1 p. 571 [quoting from former Gov. Code, § 11342(g) (now, § 11342.600)].) Tidewater then said: 2 “A regulation subject to the APA thus has two principal identifying characteristics. First, the 3 agency must intend its rule to apply generally, rather than in a specific case. The rule need not, 4 however, apply universally; a rule applies generally so long as it declares how a certain class of 5 cases will be decided. Second, the rule must ‘implement, interpret, or make specific the law 6 enforced or administered by [the agency], or … govern [the agency’s] procedure.’ ” (Tidewater, 7 supra, 14 Cal.4th at p. 571 [internal citations omitted].) 8 Milbauer held that the principles articulated in Tidewater apply to the Appeals Board. 9 (Milbauer, supra, 127 Cal.App.4th at p. 646 [70 Cal.Comp.Cases at p. 329].) While the Board’s 10 rule-making powers are largely governed by the Labor Code (Lab. Code, §§ 5307, 5307.4; see also 11 §§ 133, 5309, 5708), the Board is also subject to the APA to some extent (Gov. Code, § 11351), 12 including its definition of a “regulation.” (Gov. Code, § 11342.600.) 13 Yet, in asserting that our February 3, 2009 en banc decision constitutes an invalid 14 regulation, applicant disregards the further holding of Tidewater, which states: “Of course, 15 interpretations that arise in the course of case-specific adjudication are not regulations, though 16 they may be persuasive as precedents in similar subsequent cases.” (Tidewater, supra, 14 Cal.4th 17 at p. 571 (emphasis added).) 18 Also, applicant disregards Government Code section 11425.60(b), which became effective 19 after Tidewater (Milbauer, supra, 127 Cal.App.4th at p. 647 [70 Cal.Comp.Cases at p. 331]) and 20 which “is applicable to the WCAB.” (Id., 127 Cal.App.4th at p. 646 [70 Cal.Comp.Cases at p. 21 330].) Section 11425.60(b) specifically states: 22 “An agency may designate as a precedent decision a decision or part of a decision that contains a significant legal or policy determination of general application that is likely to recur. Designation of a decision or part of a decision as a precedent decision is not rulemaking and need not be done 23 24 25 /// 26 /// 27 /// OGILVIE, Wanda 41 1 under Chapter 3.5 (commencing with Section 11340) [i.e., rule-making provisions of the APA].” (Gov. Code, § 11425.60(b) (emphasis added).)44 2 3 Moreover, the Law Revision Committee comments on section 11425.60(b) state, in relevant part: “The first sentence of subdivision (b) recognizes the need of agencies to be able to make law and policy through adjudication as well as through rulemaking. … Under the second sentence of subdivision (b), this section applies notwithstanding Section 11340.5 (‘underground regulations’).” (Emphasis added.) 4 5 6 7 Therefore, section 11425.60(b) expressly allows the Appeals Board to issue a “precedent” decision 8 that addresses a significant legal or policy issue of general application that is likely to recur. 9 Furthermore, section 11425.60(b) expressly provides that such a precedent decision “is not 10 rulemaking” and need not be issued in accordance with the rule-making provisions of the 11 APA – i.e., a precedent decision is not an illegal “underground regulation.” (See Plumbers & 12 Steamfitters, Local 290 v. Duncan (2007) 157 Cal.App.4th 1083, 1095 (citing to section 13 11425.60(b) and stating, “The department designated [its] decision in this case as precedential, 14 thereby exercising its ability to make law and policy through adjudication.”).) 15 Finally, applicant disregards the express provisions of Labor Code section 115, which 16 specifically allows “the appeals board as a whole” to issue en banc decisions “in order to achieve 17 uniformity of decision, or in cases presenting novel issues.” (Lab. Code, § 115 (emphasis added).) 18 The Appeals Board’s statutory authority to issue en banc decisions “in order to achieve uniformity 19 of decision” is consistent with the fact that the Board is vested with “judicial powers.” (Lab. Code, 20 § 111(a) (emphasis added).) In accordance with its judicial status and the authority granted it by 21 section 115, the Appeals Board periodically issues en banc decisions that “are binding on [all] 22 panels of the Appeals Board and workers’ compensation judges as legal precedent under the 23 44 24 25 26 27 Section 11425.60(b) falls within the administrative adjudication provisions of the APA. (Gov. Code, § 11400 et seq.) These APA administrative adjudication provisions apply to all state “agencies” (see Gov. Code, § 11500), except as otherwise expressly provided by statute. (Gov. Code, § 11410.20(a); see also, § 11415.10(a).) The WCAB falls within a statutory exclusion because its adjudicative proceedings are expressly governed by the Labor Code and by its own rules of practice and procedures and because it is not bound by any other statutory rules of procedure. (Lab. Code, § 5708; see also § 5309.) Nevertheless, “by regulation, ordinance, or other appropriate action, an agency may adopt [the APA’s administrative adjudication] chapter or any of its provisions for the formulation and issuance of a decision, even though the agency or decision is exempt from application of this chapter.” (Gov. Code, § 11410.40.) Here, in issuing our en banc decision, we have expressly declared it to be precedent decision and, in doing so, we have expressly invoked the provisions of section 11425.60(b). (See fn. 1, supra.) OGILVIE, Wanda 42 1 principle of stare decisis.” (Cal. Code Regs., tit. 8, § 10341.)45 In the context of proceedings 2 before the WCAB, en banc decisions of the Appeals Board have the same effect as published 3 appellate opinions. (Signature Fruit Co. v. Workers’ Comp. Appeals Bd. (Ochoa) (2006) 142 4 Cal.App.4th 790, 796, fn. 2 [71 Cal.Comp.Cases 1044, 1047, fn. 2] (“An en banc decision of the 5 WCAB binds future WCAB panels and WCJ’s as legal precedent in the same manner as a 6 published appellate opinion.”); accord: Garcia, supra, 126 Cal.App.4th at p. 313, fn. 5 [70 7 Cal.Comp.Cases at p. 120, fn. 5].) 8 Therefore, our February 3, 2009 en banc decision is not a regulation because it was issued 9 both under the authority of section 115 “in order to achieve uniformity of decision” and under the 10 authority of section 11425.60(b) to designate as precedent a “decision that contains a significant 11 legal or policy determination of general application that is likely to recur” without having to 12 undertake rulemaking. Our February 3, 2009 decision also accords with the holding of Tidewater 13 that “interpretations that arise in the course of case-specific adjudication are not regulations, 14 though they may be persuasive as precedents in similar subsequent cases.” (Tidewater, supra, 14 15 Cal.4th at p. 571 (emphasis added).) 16 We recognize that, in Milbauer, the Court concluded that the Appeals Board’s power to 17 issue en banc decisions in lieu of regulations is not unlimited. (Milbauer, supra, 127 Cal.App.4th 18 at pp. 647-649 [70 Cal.Comp.Cases at pp. 329-332].) In Milbauer, the Court was reviewing an en 19 banc decision of the Appeals Board which had determined that the Uninsured Employers Fund 20 (UEF) could be ordered to provisionally appear at a hearing to assist an employee of an illegally 21 uninsured employer in determining the employer’s correct legal identity; then, when the illegally 22 uninsured employer had been properly named and served with an application and special notice of 23 lawsuit, UEF could be formally joined as a party defendant and its statutory liability for benefits 24 would attach. The Court concluded that the procedures set forth in the Board’s en banc decision 25 violated the APA and Tidewater. However, the Court reached this conclusion because the Board’s 26 en banc decision had “adopted and announced a whole body of entirely new procedures” relating 27 45 WCAB Rule 10341 was adopted through the rule-making provisions of Labor Code section 5306. OGILVIE, Wanda 43 1 to the joinder and the responsibilities of UEF and because these “new procedures [were] much 2 more extensive than general legal conclusions or policies produced after interpretation of 3 applicable statutes or law in the context of a specific case.” (Milbauer, supra, 127 Cal.App.4th at 4 p. 648 [70 Cal.Comp.Cases at p. 331].) 5 Our February 3, 2009 en banc decision is readily distinguishable because it did not impose 6 a whole series of new procedural requirements. To the contrary, our decision simply interpreted 7 the “prima facie evidence” language of section 4660(c) to mean that a permanent disability rating 8 established by the Schedule is rebuttable – including by rebutting a component element of that 9 rating, e.g., the DFEC adjustment factor. Moreover, our decision further held that, if a party seeks 10 to challenge a scheduled DFEC adjustment factor, any rebuttal evidence must be consonant with 11 the provisions of section 4660(b)(2) and the RAND data to which section 4660(b)(2) refers. We 12 then identified steps for challenging a scheduled DFEC adjustment factor that would be consonant 13 with section 4660(b)(2) and the RAND data. Our decision, however, did not mandate that any 14 party must challenge a scheduled DFEC adjustment factor; it did not mandate that if any such 15 attempt is made it must be done in any particular manner (other than it must be consistent with 16 section 4660(b)(2) and the RAND data to which section 4660(b)(2) refers); and it did not mandate 17 that a WCJ or Appeals Board panel must admit or follow any rebuttal evidence presented. 18 Moreover, in keeping with Tidewater’s holding that “interpretations that arise in the course 19 of case-specific adjudication are not regulations” (Tidewater, supra, 14 Cal.4th at p. 571), we 20 reached our holdings in the context of a specific case in which the injured employee was 21 presenting evidence in rebuttal to the permanent disability rating called for by the 2005 Schedule. 22 If the Milbauer case were interpreted to apply in this context, this would effectively eradicate both 23 the Appeals Board’s power to issue en banc decisions “in order to achieve uniformity of decision” 24 (Lab. Code, § 115) and its power to “designate as a precedent decision … a decision that contains 25 a significant legal or policy determination of general application that is likely to recur [and that] is 26 not rulemaking” (Gov. Code, § 11425.60(b)). 27 /// OGILVIE, Wanda 44 1 III. CONCLUSION 2 For the reasons above, we clarify our February 3, 2009 en banc decision by holding that: 3 (1) the language of section 4660(c), which provides that “the schedule … shall be prima facie 4 evidence of the percentage of permanent disability to be attributed to each injury covered by the 5 schedule,” unambiguously means that a permanent disability rating established by the Schedule is 6 rebuttable; (2) the burden of rebutting a scheduled permanent disability rating rests with the party 7 disputing that rating; and (3) one method of rebutting a scheduled permanent disability rating is to 8 successfully challenge one of the component elements of that rating, such as the injured 9 employee’s DFEC adjustment factor, which may be accomplished by establishing that an 10 alternative adjustment factor most accurately reflects the injured employee’s DFEC. However, 11 any individualized DFEC adjustment factor must be consistent with section 4660(b)(1), the RAND 12 data to which section 4660(b)(1) refers, and the numeric formula adopted by the Administrative 13 Director in the 2005 Schedule. Otherwise, we affirm our prior decision. 14 For the foregoing reasons, 15 IT IS ORDERED, as the Decision After Reconsideration of the Workers’ Compensation 16 /// 17 /// 18 /// 19 /// 20 /// 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// OGILVIE, Wanda 45 1 Appeals Board (en banc), that the joint en banc decision issued on February 3, 2009 is 2 AFFIRMED. 3 WORKERS’ COMPENSATION APPEALS BOARD 4 /s/ Joseph M. Miller____________________________ JOSEPH M. MILLER, Chairman 5 6 /s/ James C. Cuneo_____________________________ JAMES C. CUNEO, Commissioner 7 8 /s/ Frank M. Brass_____________________________ FRANK M. BRASS, Commissioner 9 10 /s/ Alfonso J. Moresi___________________________ ALFONSO J. MORESI, Commissioner 11 12 /s/ Deidra .E. Lowe____________________________ DEIDRA E. LOWE, Commissioner 13 14 /s/ Gregory G. Aghazarian______________________ GREGORY G. AGHAZARIAN, Commissioner 15 16 I DISSENT (See attached Dissenting Opinion) 17 18 /s/ Ronnie G. Caplane__________________________ RONNIE G. CAPLANE, Commissioner 19 20 21 22 DATED AND FILED AT SAN FRANCISCO, CALIFORNIA 9/3/09 26 SERVICE MADE BY MAIL ON ABOVE DATE ON THE PERSONS LISTED BELOW AT THEIR ADDRESSES AS SHOWN ON THE CURRENT OFFICIAL ADDRESS RECORD: Wanda Ogilvie Law Office of Joseph C. Waxman, 114 Sansome Street, Ste. 1205, San Francisco, CA 94104 Office of the City Attorney, Fox Plaza, 1390 Market Street, 7th Floor, San Francisco, CA 94102-5408 27 NPS/jr 23 24 25 OGILVIE, Wanda 46 1 DISSENTING OPINION OF COMMISSIONER CAPLANE 2 3 For the reasons set forth in my February 3, 2009 dissenting opinion, which I adopt and 4 incorporate by reference, and for the following reasons, I again dissent. Although I concur with 5 the majority’s holding that the percentage of permanent disability established by the Schedule is 6 rebuttable, I still disagree with the majority’s restrictions on the nature and scope of the evidence a 7 party may offer in rebuttal. 8 Section 4660 is a permanent disability schedule statute, not a permanent disability statute. 9 That is, section 4660 sets forth the criteria that the Administrative Director must use in preparing 10 and amending the Schedule, but section 4660 does not limit the evidence a party may present to 11 rebut a prima facie correct permanent disability rating established by the Schedule. 12 In this regard, the Court of Appeal recently confirmed my view that, even after the 13 amendments to it by SB 899, section 4660 does not define “permanent disability.” (Benson v. 14 Workers’ Comp. Appeals Bd. (2009) 170 Cal.App.4th 1535, 1544 [74 Cal.Comp.Cases 113, 118] 15 (Benson) (“The Labor Code does not define ‘permanent disability.’ ”).) Moreover, in its decision 16 in Brodie v. Workers’ Comp. Appeals Bd. (2007) 40 Cal.4th 1313 [72 Cal.Comp.Cases 565] 17 (Brodie), which addressed permanent disability in the post-SB 899 context, the Supreme Court 18 described what permanent disability is and what purpose permanent disability indemnity serves: 19 20 21 22 23 24 25 26 27 “ ‘[P]ermanent disability is understood as “the irreversible residual of an injury.” ’ (Kopping v. Workers’ Comp. Appeals Bd. (2006) 142 Cal.App.4th 1099, 1111 [71 Cal.Comp.Cases 1229], quoting 1 Cal. Workers’ Compensation Practice (Cont.Ed.Bar 4th ed. 2005) § 5.1, p. 276, italics omitted.) ‘A permanent disability is one “… which causes impairment of earning capacity, impairment of the normal use of a member, or a competitive handicap in the open labor market.” ’ (State Compensation Ins. Fund v. Industrial Acc. Com. [(Hutchinson)] (1963) 59 Cal.2d 45, 52 [28 Cal.Comp.Cases 20].) Thus, permanent disability payments are intended to compensate workers for both physical loss and the loss of some or all of their future earning capacity. (Lab. Code, § 4660, subd. (a); Livitsanos v. Superior Court (1992) 2 Cal.4th 744, 753 [57 Cal.Comp.Cases 355].)” (Brodie, 40 Cal.4th at p. 1320 [72 Cal.Comp.Cases at p. 571] (footnote omitted; Cal.Comp.Cases citations substituted for other parallel citations); accord: Benson, supra, 170 Cal.App.4th at p. 1544 [74 Cal.Comp.Cases at p. 118].) 1 Because section 4660 does not define “permanent disability,” then the language of section 2 4660(b)(2) cannot limit the nature and scope of the evidence a party may offer in rebuttal to a 3 scheduled permanent disability rating. Also, because Brodie establishes, even after SB 899, that 4 permanent disability means an impairment of earning capacity, an impairment of the normal use of 5 a member, or a competitive handicap in the open labor market – and that permanent disability 6 payments are intended to compensate workers for both physical loss and the loss of some or all of 7 their future earning capacity – then it is entirely appropriate for a party to present expert evidence 8 on the effect of an injury on the employee’s earning capacity as rebuttal to a scheduled permanent 9 disability rating. Moreover, if this expert evidence is credible and legally substantial, the WCAB 10 may accept the percentage of lost future earning capacity as establishing the injured employee’s 11 percentage of permanent disability. 12 The right to present rebuttal evidence through expert opinion is not limited by section 13 4660. On the contrary, it is guaranteed by other provisions of law. Section 5704 expressly 14 provides that “an opportunity shall be given to produce evidence in … rebuttal.” It has been held 15 that “improper restrictions on the right to present evidence in rebuttal is [sic] a deprivation of the 16 constitutional guaranty of due process of law.” (Pence v. Industrial Acc. Com. (1965) 63 Cal.2d 17 48, 50-51 [30 Cal.Comp.Cases 207, 208-209] (internal citations omitted); accord: Hegglin v. 18 Workmen’s Comp. Appeals Bd. (1971) 4 Cal.3d 162, 175 [36 Cal.Comp.Cases 93, 102].) 19 Therefore, an injured employee or a defendant may have an absolute right to expert opinion – or, 20 indeed, any other probative evidence – to rebut a scheduled percentage of permanent disability 21 rating. 22 Finally, section 4660(a) provides: “In determining the percentages of permanent disability, 23 account shall be taken of the nature of the physical injury or disfigurement, the occupation of the 24 injured employee, and his or her age at the time of injury, consideration being given to an 25 employee’s diminished future earning capacity.” 26 diminished future earning capacity was 51% and defendant’s expert estimated that her diminished 27 future earning capacity ranged from 51.31% to 53.77%. In reaching these DFEC opinions, the OGILVIE, Wanda 48 Here, applicant’s expert estimated that her 1 experts divided the amount that applicant likely will earn over her remaining expected work life 2 after the injury by the amount she likely would have earned over her remaining expected work life 3 absent the injury.46 4 considering the nature of applicant’s physical injury (i.e., the medical evidence regarding 5 applicant’s impairments and work restrictions), her occupation at the time of injury, and her age at 6 the time of injury. Thus, the experts took into account all of the factors set forth in section 7 4660(a). Therefore, these experts’ opinions constituted proper rebuttal to the scheduled permanent 8 disability rating. 9 They arrived at these pre-injury and post-injury earnings estimates by Accordingly, I dissent. 10 /s/ Ronnie G. Caplane__________________________ RONNIE G. CAPLANE, Commissioner 11 12 13 14 15 DATED AND FILED AT SAN FRANCISCO, CALIFORNIA 16 9/3/09 17 18 19 20 21 22 SERVICE MADE BY MAIL ON ABOVE DATE ON THE PERSONS LISTED BELOW AT THEIR ADDRESSES AS SHOWN ON THE CURRENT OFFICIAL ADDRESS RECORD: Wanda Ogilvie Law Office of Joseph C. Waxman, 114 Sansome Street, Ste. 1205, San Francisco, CA 94104 Office of the City Attorney, Fox Plaza, 1390 Market Street, 7th Floor, San Francisco, CA 94102-5408 NPS/jr 23 24 25 26 27 46 Defendant’s expert estimated that, absent her industrial injury, applicant likely would have earned $335,680.80 during the remaining 6.09 years of her expected work life. He also estimated that, after sustaining her industrial injury, applicant could likely earn either $169,391.25 or $177,654.88 during her remaining expected work life. Applicant’s expert estimated that, but for her injury, applicant likely would have earned $364,482.24 during the 6.26 years of her expected work life. He also estimated that, following the injury, applicant’s earning capacity over the same time period would be $178,562.88 OGILVIE, Wanda 49