Court of Appeal strikes down Ogilvie

Today, the 1st District Court of Appeal issued its unanimous decision in Ogilvie v. Workers’ Compensation Appeals Board.  The court reversed the decision and remanded the matter to the WCAB for a determination of whether the applicant effectively rebutted the permanent disability rating schedule.  Accordingly, the WCAB’s prior Ogilvie decision is no longer good law.

The court sought to address the following question: Is it permissible to depart from a scheduled rating on the basis of vocational expert opinion that an employee has a greater loss of future earning capacity than a scheduled rating? The court noted that Labor Code 4660(b)(2) specifies that the earning capacity adjustment factor shall be the numeric formula based upon the RAND Institute’s report. The court saw nothing ambiguous or unclear in this language and opined that the standard earning capacity adjustment factor must be initially applied.

The court then addressed how an applicant’s overall rating and its component parts may be rebutted while remaining loyal to the Legislature’s intent to provide a system that is objective and uniform in application. First, the court noted that the permanent disability rating schedule can always be rebutted when a party can show a factual error in the application of a formula or the preparation of the schedule. The court suggested that an applicant may be able to demonstrate such an error in the earning capacity adjustment factor based on the RAND data.  The court noted that the RAND data was assembled to consider earnings loss attributable to certain injuries was based on descriptions in the California PDRS. However, SB 899 expressly requires injury descriptions based on the AMA Guides.  The court noted that the two sets of descriptions were quire different and that there was no direct link between the RAND date and the AMA Guides.  The RAND study also made certain assumptions that are critical when diminished earning capacity ratings are applied. The court opined that a party could conceivably rebut the earning capacity adjustment factor by showing these facts or assumptions were incorrect.

Second, the court noted that a scheduled rating can be effectively rebutted when the injury impairs the applicant’s rehabilitation and, therefore, the applicant’s diminished future earning capacity is greater than reflected in the scheduled rating. The court specifically cited LeBouef with respect to this second point.  However, the court expressly noted that such rebuttal is widely accepted to be limited to situations where the applicant’s diminished future earning capacity is directly attributable to the applicant’s work related injury, and not due to factors such as general economic factors, illiteracy, ability to speak English or lack of education. The court summarized its views by stating the schedule could be rebutted when the applicant will have a greater loss of future earnings than reflected in a rating because, due to the industrial injury, the applicant is not amenable to rehabilitation.

Finally, the court noted that in rare cases, the data used to arrive at a diminished future earning capacity adjustment may not capture the severity of all the complications of the applicant’s work related injury. Therefore, a scheduled rating may be rebutted where the applicant can demonstrate that the nature and severity of the applicant’s injury is not captured within the sampling of disabled workers used to compute the adjustment factor.  For example, a foot fracture with nerve damage might have greater permanent effects than a worker with a simple foot fracture.

The court indicated it would remand the case to the WCAB to allow the WCAB the first chance to prescribe the exact method for a recalculation that factors the applicant’s anticipated diminished earning capacity into the data used by RAND. The court specifically held that the alternative diminished earning capacity adjustment formula created by the WCAB in the Ogilvie decision was impermissible.

In summary, the court concluded that there were three ways to rebut a scheduled rating.  First, the applicant can show a factual error in the calculation of a factor in the rating formula or application of the formula. Second, the applicant can show the omission of medical complications aggravating the applicant’s disability in preparation of the rating schedule itself. Third, the applicant can demonstrate that, due to the industrial injury, the applicant is not amenable to rehabilitation and therefore has suffered a greater loss of future earning capacity than reflected in the scheduled rating.

The court’s decision in Ogilvie expressly allows rebuttal of a standard permanent disability rating. The WCAB will now have to re-address the vocational experts’ testimony and reports to determine if the applicant’s industrial injury caused a greater loss of earning capacity than is reflected in a standard permanent disability rating based on the schedule.  The court specifically noted that non-industrial factors should not be considered in determination of loss of earning capacity.  Apportionment to those non-industrial factors should still be permitted.  However, the decision establishes that LeBouef is still good law in that vocational rehabilitation issues will need to be taken into account.

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