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Ogilvie III Tips

by Michael C. Grimes, Esq.

Michael C. Grimes is an applicant’s attorney in the San Francisco Bay Area. In this article he offers tips for dealing with Ogilvie in its latest incarnation.

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On July 29, 2011 the California Court of Appeal (1st Dist. Div. 3) reversed the case of Ogilvie v. WCAB, remanding it back to the WCAB. (2011) 197 Cal.App.4th 1262, 76 CCC 624. The opinion completely overturns the DFEC rebuttal formula devised in the WCAB en banc decisions in Ogilvie I (2/3/09) 74 CCC 248 and the re-recon in Ogilvie II (9/3/09) 74 CCC 1127 but also opens the door to other methods for challenging the FEC factor in the 2005 rating schedule and/or the final rating.

 
Ogilvie III” opens the door to other methods for challenging the FEC factor in the 2005 rating schedule and/or the final rating.
 
Ogilvie En Banc Overview

The Ogilvie cases represent the WCAB’s and the compensation community’s ongoing struggle to soften the harsh effects of SB 899 and the 2005 rating schedule which dropped PD ratings and value by a documented 50-70%. In Ogilvie I and II, the WCAB provided a step-by-step method of rebutting the diminished future earning capacity (“FEC”) adjustment factor in the 2005 rating schedule and replacing it with an “individualized rating to loss ratio” based on the methodology used in the RAND study. The method ordinarily resulted in significantly higher PD, sometimes as much as 50%, for those with a complete or steep loss of post injury wages.

The formula began as nearly straight wage loss math with the WCAB even advising that expert testimony would generally not be necessary. The formula focused on actual wage loss post-injury rather than on the more nebulous loss of “wage earning capacity” concept. It ultimately became more complicated with the 2010 panel decisions in Shini v. Pacific Coast Auto Body & Truck, 38 CWCR 38, and Garcia v. Hinrichsen, 2010 Cal. Wkr. Comp. PD Lexis 58. The new decisions focused more on wage earning capacity, required greater use of vocational experts and greater application of the so called Montana factors enunciated by the California Supreme Court in Argonaut Ins. Co. v. Industrial Acc. Com. (Montana) (1962) 57 C.2d 589, 27 CCC 130.
 
Applicants’ attorneys have struggled to soften the harsh effects of SB 899 and the 2005 rating schedule
 

Ogilvie III

What the Appellate Court Opinion does:

  • Invalidates the WCAB crafted formula for rebutting the FEC factor in the 2005 schedule (“FEC factor”) on grounds the board exceeded its authority.
  • Reaffirms that the FEC factor and the scheduled rating are rebuttable and that experts may be used to do so.
  • Warns that the FEC factor may not be rebutted by “impermissible factors” such as general economic conditions, illiteracy, inability to speak English or a lack of education.
  • Reaffirms that the FEC factor may be rebutted by factual error or discrepancy in any part of the calculation or underlying data including the type or use of data in the RAND study.
  • Reaffirms that the FEC factor may be rebutted by a LeBoeuf v. WCAB (1983) 34 C.3d 234,48 CCC 587 type vocational evaluation and argument showing that a limited or complete inability to be vocationally rehabilitated results in a higher wage loss than reflected by the scheduled FEC factor.
  • Stated that the FEC factor or scheduled rating can be rebutted by showing the severity or complexity of a worker’s injury is not reflected in the sampling of disabled workers used to compute the adjustment factor.
  • Stated that since the RAND study was based on the 1997 rating system injury categories but applied to injuries rated using the AMA Guides and no cross-walk has been done, the assumptions underlying the data may be incorrect and if so, therefore rebuttable.
  • Stated that there is no meaningful difference between the term “diminished future earning capacity” found in the new Labor Code § 4660(a) and (b)(2) and the prior wording “ability to compete in an open labor market.” This conclusion incidentally allowed the court to call upon a long, bountiful history of prior precedent referencing the “inability to compete in an open labor market.”
 
The DCA Ogilvie opinion invalidated the WCAB crafted formula for rebutting the FEC factor in the 2005 schedule and seemingly brought back LeBoeuf

What it doesn’t do:

  • While the decision describes specific ways to rebut the schedule, it provides little guidance on what to do when rebuttal is successful, instead punting back to the WCAB: “We leave it to the WCAB in the first instance to prescribe the exact method for such recalculation that factors the employee’s anticipated diminished earning capacity into the data used by the RAND Institute.” Ogilvie, supra, 197 Cal.App.4th at 1276.
  • The decision does not limit the ways in which the FEC factor may be rebutted to those discussed in the opinion.
 
Ogilvie III provides little guidance on what to do when rebuttal is successful, and instead punts back to the WCAB.
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Current Status of Ogilvie III

On October 26, 2011, the California Supreme Court issued an order denying defendant City and County of San Francisco’s Petition for Review. Ogilvie v. WCAB (2011) 197 Cal.App.4th 1262, 76 CCC 624 is thus binding precedent.
 
This continues to be a very unsettled area of the law, as we now await further development of the issue at the WCAB level, consistent with the DCA’s opinion in Ogilvie III.
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What to Do?

Consider these steps:

Step One. Make sure that the medical record contains comprehensive Residual Functional Capacity (or lack thereof) (“RFC”) information.

The attorney needs to consider this step early because getting this information takes some time and can slow down resolution of your case. The value of RFC information cannot be emphasized enough and is absolutely essential to any authoritative vocational evaluation. Vocational Evaluators do not evaluate loss of wage earning capacity on the basis of the WPI. They do it on the basis of an inability to perform the specific mental or physical requirements of a range of jobs otherwise available to the applicant.

Occasionally, a good Qualified Medical evaluator or Primary Treating Physician will describe an applicant’s work preclusions. Rarely is this sufficient because it is intended mainly for work status but not for a vocational evaluation to determine loss of earnings capacity—very different things. When in doubt, check with a vocational evaluator or assume it is insufficient.

The best way to get RFC information is by asking the PTP, or less preferably the QME/AME, to complete a standardized “check the box” RFC form. The PTP is preferred because they’ve seen the applicant more frequently during the healing process and are in a better position to know applicant’s tolerable limits. The PTP is usually more credible. The best place the undersigned has found to get these RFC forms is on Jeff Malmuth’s website http://www.jmalmuth.com/index.html . The site has a dozen or more specialized forms for many different types of injuries such as psych, pulmonary, upper extremity, etc. Another place to get such forms is from Social Security at https://secure.ssa.gov/poms.nsf/lnx/0424510066 for physical and https://secure.ssa.gov/poms.nsf/lnx/0424510090 for mental. There may be other places to get such forms.

Often, a PTP or QME will not want to complete an RFC form. If that happens, consider a deposition of either or both asking the same questions as are on the forms or consider getting a professional Functional Capacity Evaluation. All these costs, if reasonable and necessary, are reimbursable under Labor Code § 5811 or as med-legal evaluations.

Have complete RFC information at the ready for your vocational evaluator.

Step Two. Decide whether this is a case with a significant drop in earnings post-injury. If so,

Step Three. Identify the range of strategies available to you to increase the size of the award.

Quite often a doctor deposition on a Guzman III type issue will achieve a reasonable increase in the award without venturing into the unsettled waters of Ogilvie and the FEC factor in the 2005 schedule.

Step Four. Get a preliminary report from a Vocational Evaluator to use in settlement discussions.

At this time, Jeff Malmuth & Co. has an online service rendering “preliminary” DFEC analysis for $129.95 at http://www.jmalmuth.com/index.html . Since this issue is new, I would expect Med-Legal and PDRater, among others, to provide similar services soon. This type of report can be used in settlement negotiations or to decide if further vocational workup would be worthwhile.

Step Five. Get a full Vocational Analysis.


Regardless of the method used, the Vocational Evaluator will rely heavily on the RFC information you give them. It is worth noting here that one method of performing a DFEC analysis appears consistent with the Appellate Court’s Ogilvie III opinion and is well within the capacity of Vocational Evaluators to do. This is the method I believe Jeff Malmuth uses. It involves identifying a group of “similarly situated workers” who do a job closest in duties and location to your client through sources at the EDD and Dept. of Labor. The Vocational Evaluator then overlays functional limitations and capacities resulting solely from your client’s injury, and not the “impermissible” non-industrial factors, onto the “similarly situated workers.” The Vocational Evaluator identifies transferrable skills and jobs that someone with your client’s injuries could do. The earnings of this group are then compared with the earnings of the “similarly situated workers” and the resulting figure is the DFEC for your client. This approach has the advantage of avoiding the “impermissible factors” identified in Ogilvie III of illiteracy, general economic conditions, English proficiency and lack of education.

The other type of vocational DFEC analysis is the standard LeBoeuf type analysis for the individualized worker, comparing pre-injury actual earnings with labor market job availability for workers with your client’s residual disabilities, skills and abilities and the resulting income, if any, therefrom.

How is this percentage of reduction in future earning capacity figure used? Many argue that this percentage figure becomes the PD rating citing Chevron USA v. WCAB (Arnold) (2000) 65 CCC 922 (a pre-SB899 panel writ denied case where a DEU evaluator said if he could not use the scheduled rating, he would adopt the vocational evaluator’s DFEC percent as the PD percent on special facts. The opinion was not cited again.) This is also the approach of Commissioner Ronnie Caplane in her dissents in both Ogilvie WCAB En banc decisions. This is also the result in some other forums such as the USDOL applying the Longshore and Harborworkers’ Act for non-scheduled injuries (using a slightly different process). The undersigned did not see in the Ogilvie III opinion, an endorsement of this or any other approach. Another approach would be to use the percentage figure to increase the DFEC factor using a formula based on the percentage. This issue will be the subject of litigation.

Another consideration in determining the final PD rating may be whether RAND study data was appropriately applied as required by Labor Code §4660(b)(2). It bears repeating that the Ogilvie DCA opinion states: “We leave it to the WCAB in the first instance to prescribe the exact method for such recalculation that factors the employee’s anticipated diminished earnings capacity into the data used by the RAND Institute.” Ogilvie, supra, 197 Cal.App.4th at 1276.

Step Six. Serve defendants with either a Request for Rating or Request for Rating Instruction to DEU with your Ogilvie vocational report, calculations and briefed legal points well before the MSC.

I continue to recommend this step. Early disclosure has many advantages. If the other side wants a deposition on Ogilvie issues, early disclosure mitigates against an Order Taking Off Calendar at the Mandatory Settlement Conference (“MSC”) for further discovery. It strengthens your settlement posture. It has the inherent strength of the high road. The data is not going to change because it is disclosed.

A Request for Rating (by the WCJ) is useful where the judge will decide how to rate the injury. A Request for Rating Instruction is useful where the usual practice for that judge or board is to refer the rating to the DEU. The Request for Rating Instruction has the added advantage that if the judge does not issue the rating instructions requested, we can move to strike the rating instruction within 12 (7 + 5) days from service and request a hearing. 8 CCR § 10602. This provides another opportunity to brief and argue the point to educate the judge further and it shows seriousness.

 

 
The Ogilvie III decision created as many questions as it answered. The FEC factor in the 2005 schedule is clearly rebuttable. Using vocational experts is the usual means. However, the WCAB’s complex formula is gone. This continues to be a very unsettled area of the law, as we now await further development of the issue at the WCAB level, consistent with the DCA’s opinion in Ogilvie III. Future decisions will turn on such issues as: 1) whether the Vocational Evaluator’s opinion of the percent of reduced earnings capacity (minus the “impermissible factors”) becomes the overall PD rate, 2) whether some other standard applies and if so what, and, 3) whether the new standard affects only the FEC factor or the overall rating.
 
The Ogilvie III decision created as many questions as it answered
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Michael Grimes began practicing law in 1984 after a 10 year career staffing for the National, California and San Francisco AFL-CIOs including a stint on Hubert Humphrey’s Presidential Campaign staff in 1972. He has represented injured workers from the beginning, more or less exclusively since 1996 at the San Francisco, San Jose and occasionally Oakland venues. He is a member of the Labor Committee of the California Applicants’ Attorneys’ Association.


Law Offices of Michael C. Grimes
795 4th Ave., Suite 207
Redwood City, CA 94063-3936
(650) 261-1754
Fax 261-1755
mgrimes@sbcglobal.net