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It reformed its workers' comp system about five years ago, and claims costs plummeted on the order of 50 percent. Now, a court has thrown out a key reform provision.

Any self-respecting workers' comp system, here or Mongolia's, must include a way to make permanent disability awards predictable and swift. It also should be used infrequently. A permanent disability is a sign of failure in employer practices and restorative medicine.

The legislature enacted Senate Bill 899 in 2004. It said that permanent disability awards must be based on the gold standard of the American Medical Association's protocol for measuring impairment on a scale from one to 100. This single step brought predictability. It effectively threw impairment duels out of the courtroom.

Note that impairment and disability ratings are separate and different. The latter takes into account factors an examining physician can at best speculate about. These factors include the effects of aging upon work, earning capacity and adaptability. Doctors make impairment ratings. Courts decide on disability ratings. Not a bad plan.

When combined with other factors that went into the computation of awards, the average impairment score generated through using the AMA guides led to lower disability ratings.

In Guzman vs. Milpitas Unified School District, the AMA guides produced a 3 percent "whole personal impairment" rating, which would lead toward a 12 percent disability rating. The physician who did the impairment exam came up with an alternative rating, based only in part on the AMA guides, of 15 percent. The injured worker, Joyce Guzman, a public school office employee, sought a disability award of 39 percent. The judge decided on 12 percent.

On Feb. 3, 2009, the highest workers' comp court overturned the Guzman decision, sending the case back to the judge. The court said that Guzman should be allowed to present information to rebut the AMA guides rating, potentially sending the disability rating to 39 percent.

The AMA guides did reduce uncertainty in ratings. SB 889 mandated use of the then current fifth edition. Since then, a sixth edition was published, which is even more reliable and logical. Its impairment ratings tend to average below those of the prior editions.

Lasting impairments, accurately measured, are in fact less severe in today's society. That's called medical progress, in spinal and knee surgeries, for example.

The court erred by conflating impairments with disability ratings. The decision's language seems to me to reason backward from a desire to reduce the number of hard-luck cases. It could have adjusted the disability rating process but decided to beat up on the AMA guides.

Claimant attorneys despise the guides. So do some doctors. Who wants to defend the AMA anyway, far away in Chicago? The AMA, by the way, is moribund. Its outreach efforts could fit in a mole's pituitary gland.

Bill Zachry, risk manager of Safeway, one of the largest private-sector employers in California, has written that Guzman and a paired case, Alvaraz, "have resulted in incentives to litigate virtually every injury in the system."

PETER ROUSMANIERE is an expert on the workers' compensation industry.

June 1, 2009

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