For the California employer paying some of the highest premiums in the nation for workers’ compensation, the new wave of accountability is taking hold.  They are asking the questions where does the money go and how much is the injured worker actually receiving in benefits.

In February, 2009 the Commissioners issued an en banc opinion, Ogilve v San Francisco.  This decision which is binding upon all the trial judges throughout the state, until the Commissioners or a Court of Appeal makes a change, is to lay out a fairly complicated formula where cases with lower permanent disability (PD) ratings can be significantly increased.

And who pays for the experts needed by the injured worker to increase his/her PD rating?   You guessed it … the defense, (i.e. the insurance carrier or the employer).

These hidden costs of litigation for example are reported to be as high as $3500 for the experts to wend their way through complicated data analysis as to the future earning capacity of the injured worker and how it has been diminished as a result of the injury.  If you didn’t know it, the defense pays for experts on both sides.

Interestingly the Commissioners have disregarded the explicit language of the statute regarding that Future Earning Capacity is solely within the jurisdiction of the administrative director. The word ‘shall means mandatory.

Labor Code §4660 (b)(2) states,

“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.” (bold italics added for emphasis)

The Commissioners feel that since the Schedule is rebuttable, then everything within it can be challenged.  But what about the principles of certainty and speed?

It is reported at WorkCompCentral that at yesterday’s California Workers’ Compensation Institute held in Long Beach that several defense attorneys raised arguments and methods to challenge the implementation of the new formula.  Each one has an added cost.

From a business perspective in challenging economic times, some of these costs may be prohibitive.  Can you really afford to spend $1000 to save $100?

Thanks for your attention.

— Steve Kline