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Applicant’s attorney Thomas F. Martin has been presenting seminars and workshops around California on how to use vocational analysis to
prove diminished future earning capacity (DFEC).
His approach complies with the Labor Code and addresses the deficiencies of the new Permanent
Disability Rating Schedule’s FEC modifier. In this
interview with Marjory Harris, Tom Martin explains
the legal underpinnings and process for complying
with Labor Code §4660, as amended by SB 899.




HARRIS: Everyone from judges to claims adjusters
seems to be talking about using vocational experts
to prove the “new” permanent disability. Why?


MARTIN: SB 899 changed the measurement of permanent disability from “the ability of such injured employee to compete in an open labor market” to one based on “an employee’s diminished future earning capacity.” (L.C.4660(a)

The new L.C. 4660(b)(1) requires that the American Medical Association (AMA) Guides to the Evaluation
of Permanent Impairment (5th Edition) “descriptions”
shall be “incorporated” into the definition of what a
physical injury is, which is not to say they are the
“exclusive method” of measurement, despite the
“spin” of some. There is simply no way to avoid the clear mandate of L.C. 4660(b)(2) which requires that
diminished 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.”

Any methodology that does not do this is, in a word, invalid.



How SB 899 Changed
Labor Code §4660
4660 Pre-SB 899:
(a) In determining the percentages of permanent disability, account shall be taken of the nature of the physical injury or disfigurement, the occupation of the injured employee, and his age at the time of such injury, consideration being given to the diminished ability of such injured employee to compete in an open labor market.
(b)
The administrative director may prepare, adopt, and from time to time amend, a schedule for the determination of the percentage of permanent disabilities in accordance with this section. Such schedule shall be available for public inspection, inspection, and without formal introduction in evidence shall be prima facie evidence of the percentage of permanent disability to be attributed to each injury covered by the schedule.

Up till now, the workers’ compensation community
has been preoccupied with the procedural
retroactivity of SB 899. Now that doctors are starting
to include “whole person impairments (WPI)” in their reporting, we are seeing how the new PDRS utterly
failed to comply with the legislative mandates of
SB 899/L.C. 4660. The WPI percentages and the adjustment for diminished future earning capacity (FEC) result in ratings that do not in any way
approximate an employee's diminished future
earning capacity.

This failure to incorporate the RAND data into the new PDRS has burdened the applicants’ attorneys with the task of establishing the “long-term loss of income” the applicant is entitled to under L.C. 4660.

HARRIS: There has been a lot of talk about the
“RAND Study” [Evaluation of California's
Permanent Disability Rating Schedule, Interim
Report (December 2003), prepared by the RAND
Institute for Civil Justice] and whether the Administrative Director (AD) complied with the legislative mandate to base the FEC adjustment on
empirical data and findings from this study, which,
unlike the AMA Guides, is available to the public
online (click here). What do you think?


MARTIN: A growing number of judges, attorneys and adjusters are now realizing the significance of this study. Rand made two major findings regarding the equity and adequacy of the “old” Schedule.

First, The “old” schedule did not adequately compensate injured workers for permanent
disability. “Adequacy” is defined by RAND as
66-2/3% reimbursement of the injured worker’s long
term loss of income. RAND found that the “old”
schedule only reimbursed 37.2%.

Second, the “old” schedule was not equitable.
RAND foundthat injured workers with identical long term loss of income would get different PD awards
depending on the body part injured ( e.g., knee vs.
shoulder) This is not surprising given the fact that the
“old” schedule was based on a 19th century
Prussian compensation system for injured soldiers.
Yes, you heard me right. What RAND suggested in
its study is that to equalize this disparity, a numerical
multiplier should be applied to each body part in the
“old” schedule. For example, the standard rating for
a back injury should be multiplied by 1.27 to bring it
in line with the rest of the body parts listed in the
“old” schedule.

So, the reason understanding the RAND Study is critical is because the AD adopted the “equity” adjustments to the “old” schedule, and called them “Future Earnings Capacity” adjustments, when they had absolutely nothing to do with FEC. That is why when someone says they intend to rely on the new schedule as the measure of PD, I know that they have not carefully read L.C. 4660 or the RAND Study.

For those of your readers who want to really
appreciate the fine points of why the new schedule
utterly fails as evidence of the “new” PD, they should
read the Petition for Writ of Mandate filed in the
Supreme Court by VotersInjuredatWork.org, et al.
§4660 Post-SB 899:
4660.  (a) In determining the percentages of permanent disability, account shall be taken of the nature of the physical injury or disfigurement, the occupation of the injured employee, and his or her age
at the time of the injury,
consideration being given to an employee's diminished future earning capacity.
(b) (1) For purposes of this section, the "nature of the physical injury or disfigurement" shall incorporate the descriptions and measurements of physical impairments and the corresponding percentages of impairments published in the American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment (5th Edition).
(2) 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. The administrative director shall formulate the adjusted rating schedule based on empirical data and findings from the Evaluation of California's Permanent Disability Rating Schedule, Interim Report (December 2003), prepared by the RAND Institute for Civil Justice, and upon data from additional empirical studies.
(c) The administrative director shall amend the schedule for the determination of the percentage of permanent disability in accordance with this section at least once every five years. This schedule shall be available for public inspection and, without formal introduction in evidence, shall be prima facie evidence of the percentage of permanent disability to be attributed to each injury covered by the schedule.

Next Page >

Proving Permanent Disability
Under New Labor Code §4660
> Proving PD Under New LC §4660
> Determining DFEC with "SEDEC"
> How to Review Subpoenaed Records
> + Excel Organizers
> Interview with Jettie Pierce Selvig
> Interview with John Parente
> Smoking Gun