XCVIII The Phony War

By: Publius

Remember about six months ago when the California Workers’ Compensation Appeals Board (WCAB) declared war on SB 899? The Almaraz, Guzman and Ogilvie decisions were widely viewed as a full-scale blitzkrieg on the permanent disability rating reforms of 2004.

And why shouldn’t they have been? In two lengthy decisions, WCAB basically eviscerated use of the AMA Guides and rewrote the diminished future earnings capacity (DFEC) modifier in ways the parties to these cases never contemplated. Yet, with France virtually defenseless, WCAB has yet to write its next iteration of these cases on reconsideration. The workers’ comp community is waiting in nervous anticipation, but there is still no reasonable expectation that the Maginot Line will hold.

While legal experts and system analysts have expounded continuously on the dangers of these cases and the threats they pose to the workers’ comp system, those charged with actually paying the bills have been remarkably quiet.

Insurance companies that file public financial statements have alluded to WCAB’s decisions but are far more likely to explain that their poor results are due to increased competition and recession-prompted drops in payroll. Self-insureds see “something,” but this is more in the realm of an occasional skirmish rather than a full-scale invasion. Almaraz/Guzman was supposed to have opened the door for every AME and QME disgruntled by the drop in payments to injured workers to right the wrongs of SB 899 under the banner of “fairness.” This does not appear to be happening.

This is even more curious when looking at the Ogilvie rating calculations. As one entrepreneurial commentator – a mathematically inclined defense attorney, mind you – has figured out, the curious math that makes up this decision basically adds 18 points to a PD rating when the injured worker has lost all of his or her income post-injury. That the injured worker may have been collecting temporary or state disability during this entire period is of no import under the decision. That, it seems, would be fertile ground for the oft-maligned applicant attorneys, who are said to be motivationally challenged on low-end PD cases.

Indeed, use of this formula, making its way through the cyber-community with the same speed as other vendors’ products and services (R.I.P., Billy Mays), also would seem to be a natural for the DEU for consultative ratings and information and assistance officers when looking at the adequacy of settlements for unrepresented workers.

And yet the much-anticipated cataclysm has yet to occur. Insurers are gambling because today’s experience is coloring tomorrow’s reserves. Self-insureds can adjust if and when they see it. It took years for the last infamous WCAB decision, Minnear, to work its way into the reserves and loss costs. By that time, it was too late. But in these cases, the words in these decisions are clearly and unmistakably a vast departure from the rules everyone thought they were operating under from 2004-2009. The sooner that departure is recognized, the better off everyone will be.

In the meantime, enjoy the baguette and the Bordeaux while you can.




PUBLISHERS' NOTE: Publius is written by a consortium of writers, sometimes internal, most frequently external. Workers' Comp Executive believes that it has the responsibility to air most viewpoints and welcomes the comments of its community on any subject. Publius does not necessarily represent the views of this publication.