Press Release

FOR IMMEDIATE RELEASE
December 23, 2004

Workers' Compensation Reforms Stay On-Track With New Permanent Disability Rating Schedule

New schedule will end use of subjective factors in rating permanent disabilities

SACRAMENTO, Calif. - The Workers' Compensation Action Network (WCAN) today applauded Governor Schwarzenegger's administration for releasing the new Permanent Disability Rating Schedule, ensuring that the comprehensive overhaul of California's workers' compensation system approved by the Legislature in April will remain on-track.

"For the first time, California will have a system that measures permanent impairment based on clear, objective factors," said Allan Zaremberg, president and CEO of the California Chamber of Commerce and co-chair of WCAN. "The new schedule will bring much-needed predictability to handling permanent disability claims, which account for most of the benefit costs in California. This is another critical step toward further reducing workers' compensation costs for California employers and improving our ability to get workers back on the job."

"The subjectivity in California's permanent disability rating schedule resulted in inconsistent ratings for the same injury," said Jack Stewart, president of the California Manufacturers & Technology Association and co-chair of WCAN. "The old system invited conflict and litigation, which has been a major cost-driver in California's worker's compensation system, with attorneys involved in more than three out of every four PD cases."

The new Permanent Disability Rating Schedule will utilize AMA Guides, a set of objective tools that will rate permanent impairment of an injured body part. The rating will correspond with a whole body impairment rating. Several conversion factors, including age, occupation and loss of future earning capacity, will then be applied to develop the permanent disability rating. In addition, an adjustment of 15 percent will be made to the disability payment based on whether an offer is made to an employee for alternative or modified work.

The future earning capacity conversion, which will be unique to California, is based on empirical wage loss data developed by the RAND Institute for Civil Justice.

"The new schedule brings California in line with 30 other states that use the AMA Guides to rate permanent disability," said Tim East, chair of California Coalition on Workers' Compensation and co-chair of WCAN. "Since the conversion factor for loss of future earning capacity is unique to California, we need time to gain experience with the new schedule. We do know, however, that this system will be more fair and predictable for both employers and injured workers."