Workers’ Compensation Update

The Workers Compensation Reform Law of 2007 significantly increased the maximum benefit rates, but simultaneously set forth a mandate to limit or cap permanent partial disability awards in accordance with a pre-determined schedule of weeks payable based on a percentage of lost wage earning capacity. These permanent partial disability awards generally apply to injuries of the back, neck and head, but can also apply to injuries or occupational diseases involving the heart and lungs, as well as any other body parts and systems which lead to long term or non-stable medical conditions. Once the percentage loss of wage earning capacity is determined or negotiated, the dollar compensation rate and the duration of weeks are then calculated. However, in spite of the legislative mandate, the Workers Compensation Board did not immediately promulgate any concrete methodology for determining the percent loss of wage earning capacity. Nevertheless, major developments took place:

For the period March 13, 2007 until November 2009, the stakeholders in the system had little to work on, except the 1996 Medical Guidelines combined with their own experience with the system. Then one Board Panel did issue a very comprehensive decision on November 12, 2009 which delineates some interim methodology for determining a percentage of impairment. Much of the 11 page decision is highly technical language dealing with the history of benefit rates and determinations. However, there was a significant aspect of the ruling in that the Board decided that until such time there are new guidelines, the parties must abide by the 1996 Medical Guidelines which have not been rescinded. This is favorable because the claimant’s bar had attempted to deny the imposition of any capped permanent partial disability awards pending the new guidelines. By imposing the caps we were able to begin the process of containing costs and limiting liability.

The Board issued another significant ruling dated November 10, 2010 regarding awards for permanent partial disability. This involved a Lovell Safety Management claim. The essence of this decision is that the capped disability award shall begin once there is a finding of permanency from a medical standpoint, even if the non-medical factors such as education, transferrable skills, and age have not yet been fully analyzed and calculated in determining a percentage loss of earning capacity. This is very favorable decision in that the clock starts ticking on the claimant’s capped permanent benefits as soon as a medical decision of permanency is made, rather than forcing the employer/carrier to pay temporary partial benefits indefinitely while awaiting the outcome of many months of hearings and appeals regarding non-medical factors. Besides the direct savings attributable to the estimated 6 to12 months of temporary benefits no longer payable after a medical finding of permanency, the employer and the insurance carrier then have much greater leverage in terms of negotiating fair and reasonable settlements as the claimants realize their benefits have a real end date.

The major roadblock to the development of guidelines was the weight that should be afforded to the non-medical factors cited above. A secondary but important issue was determining a precise medical percentage of impairment prior to applying the non-medical factors. Finally, on November 3, 2011, the Board announced the “Guidelines for Determining Permanent Impairment and Loss of Wage Earning Capacity” to take effect on January 1, 2012.