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The board will reconsider its en banc decisions in Almaraz v. Environmental Recovery Services, Guzman v. Milpitas Unified School District, and Ogilvie v. City and County of San Francisco. The decisions, insurance insiders said, could have far-reaching impacts on the amount of future permanent disability awards, which were targeted in the 2004 workers' comp reforms.

In Almaraz and Guzman, the board held that the American Medical Association's Guides to the Evaluation of Permanent Impairment could be rebutted even though the reform legislation expressly requires that physicians use the Guides. In Ogilvie, the board ruled that an injured worker can rebut the Diminished Future Earnings Capacity adjustment factor of the 2005 Schedule for Rating Permanent Disabilities.

In late March, John C. Duncan, administrator of the California Uninsured Employers Benefits Trust Fund and the Subsequent Injuries Benefits Trust Fund, urged the board to vacate its decisions in the cases. He said that both funds will be greatly affected by the decisions and pointed out that the board should consider soliciting argument from a broader range of stakeholders in the workers' comp system as was done in the past when the board invited amicus briefing in matters of potentially far-reaching effect.

"These decisions already are having substantial impact both on the administration of the workers' compensation adjudication system and on the level of workers' compensation benefits due injured workers," Duncan said. "Recently, for example, the WCIRB announced a large mid-term proposed premium rate increase, of which 5.8 percent was directly attributed to the board decisions."

Governor approves board's decision. Gov. Arnold Schwarzenegger said he was pleased with the board's announcement, saying that permanent disability rating schedule is supposed to promote consistency, uniformity and objectivity and that the board's decisions run contrary to that mandate.

"It's absolutely right for the Workers' Compensation Appeals Board to reconsider its earlier decision, and its decision to do so shows that board members recognize the importance of this issue," he said.

Schwarzenegger has been adamant about keeping workers' comp rates low in the state. Rates have fallen more than 63 percent since the comprehensive reforms were signed into law in 2004. Schwarzenegger sent a letter to Insurance Commissioner Steve Poizner, urging him to reject the proposed rate increase. Poizner has called for a hearing to investigate why medical costs are increasing so rapidly. The Department of Insurance, however, has no authority to set workers' comp rates in California.

May 4, 2009

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