Injured workers with higher disability ratings are entitled to more benefits compared to those with lower ratings in the state of California. The implementation of the AMA Guidelines Fifth Edition as its foundation for assessing permanent impairment, marked a departure from the PDRS-97, which was characterized by a California-specific schedule heavily reliant on work capacity guidelines for such evaluations. Coupled with additional reforms, this transition exerted three overarching effects on impairment ratings and compensation:
- Decreased the average rating across various impairment categories.
- Broadened the influence of apportionment to factors beyond industrial causes.
- Diminished the proportion of indemnity claims eligible for permanent disability ratings exceeding zero percent.
The AMA Guidelines Fifth Edition is based on objective findings such as physical examination maneuvers and diagnostic testing, are more conservative than the prior standards. For example, if an injured worker has back pain without stiffness or MRI findings, he or she will be awarded very little permanent disability. Even a pain award must be an add-on to another rating unless a discussion of Almaraz Guzman is present to justify a pain-only rating. Based on a study conducted several years after the AMA Guidelines Fifth Edition was implemented, we can visualize through the data how this new system impacted the Workers’ Compensation industry (1).
Reduction in Average Rating and Compensation
Transitioning to the AMA Guidelines Fifth Edition resulted in a substantial decrease in the average rating across impairment categories. Cases with ratings above 0% saw a decline of 40.1% for unrepresented cases and 28.4% for represented cases. The average compensation for these cases also decreased substantially, by 51.7% for unrepresented cases and 37.2% for represented cases.
Impact of Apportionment
Apportionment further diminished ratings by an average of 5.3% and compensation by 6.2%. However, the impact of apportionment on represented cases is higher.
Fraction of Cases with Zero Rating
A significant shift was observed wherein approximately 25% of cases previously eligible for positive ratings under the PDRS-97 were evaluated as having no impairment under the AMA Guidelines Fifth Edition. This indicates a substantial proportion of cases no longer meet the criteria for compensation under the revised guidelines.
Reduction in Overall PD Compensation
The overall permanent disability compensation decreased by an estimated 58%.
Differential Impact on Impairment Types
The influence of the AMA-based schedule varied across different impairment categories. Notably, impairments related to the back, knee, and foot experienced significant reductions in average rating, while some categories like grip saw an increase.
Estimating the Elimination of Positive Ratings
There was a notable decrease in the number of claims receiving positive permanent disability ratings under the AMA-based schedule compared to the preceding one. Estimates suggest that approximately 25% of permanent disability claims were eliminated due to the transition between schedules.
When the Workers’ Compensation system was formally established in California in 1913 with the passing of the Boyton Act, it marked a fundamental shift towards making compensation benefits a legal requirement for injured workers rather than an optional arrangement. This Act made it a requirement for employers to provide Workers’ Compensation insurance for their employees. In 1937, the California Labor Code went into effect, which was a significant piece of legislation that encompassed various labor-related regulations and laws in the state. It played a significant role in shaping labor and employment practices, including the introduction of safeguards for workers in hazardous work environments such as railroads, buildings, mines, and ships and vessels. The Workers’ Compensation system and accompanying rules and regulations were established to protect injured workers, ensuring they receive proper medical care and financial support.
The transition to the AMA Guidelines Fifth Edition reduced the number of claims receiving positive ratings, thereby lowering the total permanent disability compensation. This evolution has required QMEs to adapt to new evaluation criteria and has arguably increased the scrutiny and rigor involved in the assessment process. Using this new rating system diminishes the actual awards that injured workers are entitled to. Consequently, the role of QMEs has become even more pivotal in ensuring fair and accurate evaluations within the reformed Workers’ Compensation landscape.
Resources:
- Neuhauser, F. “Impact of the Adoption of AMA-based Permanent Disability Rating Schedule in California.” UC Berkeley Center for the Study of Social Insurance, January 19, 2012.
- American Medical Association. Guides to the Evaluation of Permanent Impairment, Fifth Edition. Edited by Linda Cocchiarella and Gunnar B.J. Andersson. Newburyport: American Medical Association, 2001.