WORKERS' COMPENSATION APPEALS BOARDSTATE OF CALIFORNIA

ADJ1177048 (SFO 0487779)WANDA OGILVIE, RECEIVED

State of CaliforniaApplicant, MAY 01 2009

V. Workers' Compensation Appeals BoardSAN FRANCISCO-RECONSIDERATIOJN UNIT

CITY AND COUNTY OF SAN FRANCISCOPermissibly Self-Insured,

Defendant(s).

AMICUS CURIAE BRIEF ON THE ISSUE OFREBUTTING THE 2005 PERMANENT DISABILITY RATING

SCHEDULE BECAUSE OF DIMINISHED FUTURE EARNING CAPACITY

Thomas W. Morrow (SBN 072026) Megan A. Morrow (SBN 167145)MORROW & MORROW MORROW & MORROWP.O. Box 5017 P.O. Box 5017Westlake Village, CA 91359 Westlake Village, CA 91359Telephone: (818) 991-8880 Telephone: (818) 991-8880Email: twmgmorrowandmorrow.net Email: mbraun(morrowandmorrow.net

Amicus Curiae Attorneys

TABLE OF CONTENTS

TABLE OF CONTENTS ........................................................ i

TABLE OF AUTHORITIES .................................................. ii; iii

INTRODUCTORY STATEMENT .............................................. 1,2

LEGAL ARGUMENTS ................................. 2,3,4,5,6,7, 8,9, 10, 11, 12

I. Permanent Disability Under the Schedule is a Rebuttable Presumption ....... 2

II. Overview of the Ogilvie Rebuttal Process .............................. 3

III. Comparative Ratings Under the Schedule and Ogilvie ................. 4, 5, 6

IV. MMI Status Necessary to Determine Diminished Earning Capacity ........ 6, 7

V. Ogilvie Does Not Properly Calculate Diminished Earning Capacity .......... 7

VI. The Ogilvie Process Violates Due Process ............................ 7, 8

VII. The Ogilvie Process Does Not Constitute Substantial Evidence ............. 8

VIII. The Ogilvie Process Will Significantly Increase Litigation ................. 9

IX. Schedule Rebuttal Should Require a Preliminary Hearing ............... 9, 10

X. Schedule Rebuttal Must Consider All Injury Claim Circumstances .... 10, 11, 12

XI. WCAB Clarification of Ancillary Legal Issues ......................... 12

CON CLU SION ........................................................... 12, 13

TABLE OF AUTHORITIES

Cases Page

Brodie v. WCAB(2007) 72 CCC 565 .............................................. 1,2,10,13

City of Bakersfield v. WCAB (Johnson)(1998) 63 CCC 1212 .................................................. 7,11

Glass v. WCAB(1980) 45 C C C 441 ...................................................... 2

Hale v. Morgan(1978) 22 C al.3d 388 ................................................... 12

Hyatt v. Sierra Boat Company(1978) 79 Cal.App. 3d 325, 338 ............................................. 8

Katzin (Guerra) v. WCAB(1992) 57 CCC 230, 236 .................................................. 8

LeBoeuf v. WCAB(1983) 48 CCC 587 ................................................... 2,11

Liberty Mutual Insurance Company v. IAC(1948) 13 CC C 267, 271 .................................................. 7

Nielsen v. WCAB(1994) 39 C C C 83 .................................................... 2,11

People v. Gardeley(1996) 14 Cal.4th 605, 618 ................................................ 8

Rodriguez v. McDonnell Douglas Corporation(1978) 87 Cal.App.3d 626, 656-657 ......................................... 7

Universal City Studios, Inc. v. WCAB (Lewis)44 C C C 1 133 ................................................. 1,2,11,12

Wanland v. Los Gatos Lodge, Inc.(1991) 230 Cal.App.3d 1507, 1518-1519 ..................................... 8

ii

Statutes Page

Labor Code Section 3600(a) .................................................... 11

Labor Code Section 4660(a) ............................................... 1, 10, 12

Labor Code Section 4660(c) ............................................... 2, 10, 12

Evidence Code Section 602 ...................................................... 2

Evidence Code Section 604 ..................................................... 12

Evidence Code Section 605 ..................................................... 12

Evidence Code Section 606 .. ................................................ 9

Evidence Code Section 801 ...................................................... 9

Constitution Page

California Constitution, Article XIV, Section 4 ....................................... 1

111

1

INTRODUCTORY STATEMENT2

3 Regarding the WCAB en banc decision of Ogilvie v. City and County of San Francisco

4 ("Ogilvie"), this law firm has been requested by employer groups that it represents to prepare and

5 submit this Amicus Curiae Brief on the issues raised in these proceedings.

6 The issues raised by this decision are matters of first impression and go to very important

7 questions of social policy. Specifically, a primary question is whether the 2005 Permanent

8 Disability Rating Schedule ("Schedule") is rebuttable because of diminished earning capacity

9 issues. The answer to this question concerns a need to balance and reconcile the legal requirement

10 to provide adequate permanent disability compensation with the objective of SB 899, which was

I I enacted as an urgency measure because of the need to reduce the highest state workers'

12 compensation costs in the nation. (Brodie v. WCAB (2007) 72 CCC 565, 578.)

13 This dichotomy of purpose is illustrated by the proper objective of SB 899 to eliminate

14 wasteful expense and excessive compensation within the workers' compensation system in contrast

15 to longstanding legal authority requiring the payment of adequate (which frequently resulted in

16 excessive) compensation. Specifically, Labor Code Section 4660(a), as amended by SB 899,

17 requires that account shall be taken of an "employee's diminished future earning capacity" in

18 determining the percentage of permanent disability caused by a work-related injury. When a work-

19 related injury causes a significant loss of future earning capacity, the law is not clear on whether

20 or how permanent disability under the Schedule should be rebutted because of the diminished

21 future earning capacity component of Labor Code Section 4660(a).

22 Regarding the above issue, the purpose of a workers' compensation award is not to make

23 the employee whole for the loss suffered but to prevent the injured worker and his dependents from

24 becoming public charges. (Universal City Studios, Inc. v. WCAB (Lewis) (1979) 44 CCC 1133,

25 1140.) Also, the California Constitution, ArticleXIV, Section 4, directs that workers' compensation

26 legislation shall accomplish substantial justice without incumbrance in all eases and that such a

27 requirement is expressly declared to be the public policy of California. Finally, case law has

28 consistently held that concepts of proportionality, rational relationship, and/or equity must be

1Q

I considered on the issue of whether permanent disability, under any rating schedule, should be

2 vacated as not accurately reflecting the true permanent disability of an injured worker because of

3 the unique facts of a particular work-related injury. (Nielsen v. WCAB (1994) 39 CCC 83, 84;

4 Universal City Studios, Inc. v. WCAB (Lewis) (1979) 44 CCC 1133, 1139-1143; Glass v. WCAB

5 (1980) 45 CCC 441, 449; LeBoeuf v. WCAB (1983) 48 CCC 587, 593-597.)

6

7 LEGAL ARGUMENTS

8 I.

9 Permanent Disability Under the Schedule is a Rebuttable Presumption

10 Evidence Code Section 602 requires that a statute providing that a fact or group of facts is

I I prima facie evidence of another fact establishes a rebuttable presumption. Labor Code Section

12 4660(c) states that the Schedule ".. . shall be prima facie evidence of the percentage of permanent

13 disability to be attributed.. ." to a work-related injury. California case law clearly holds that any

14 award of permanent disability shall be adequate despite the limitations of any rating schedule.

(Glass, supra, 45 CCC @ p. 449.) Also, pursuant to Labor Code Section 4660(c), case law holds

S$ 16 that permanent disability under the Schedule is only prima facie evidence and as such is notz~o-• 16

17 absolute, binding or final but rather establishes onlypresumptive evidence that may be controverted

18 and overcome. (Universal City Studios, Inc. v. WCAB, supra, 44 CCC @ p. 1143.) Finally, there

19 is no language contained within the statutes of SB 899, or legislative history, to indicate that there

20 was any intent by the Legislature to change the prima facie status of permanent disability under the

21 Schedule.

22 A reviewing Court does not presume that the Legislature intends, when it enacts a statute,

23 to overthrow long-established principals of law unless such intention is clearly expressed or

24 necessarily implied. (Brodie v. WCAB, supra, 72 CCC @. p. 574.) Here, there is no indication of

25 any such legislative intent to change the prima facie status of the percentage of permanent

26 disability under the Schedule. Hence, the percentage of permanent disability under the Schedule,

27 as a matter of law, is a rebuttable presumption.

28

2 _ 0

1 II.

2 Overview of the Ogilvie Rebuttal Process

3 In Ogilvie, the WCAB (1) held that the diminished future earning capacity ("DFEC")

4 component of the Schedule is rebuttable, and (2) provided a process to determine whether the

5 DFEC component of the Schedule is rebutted and, if so, (3) set forth a formula to calculate the

6 DFEC adjustment factor to be used in determining permanent disability.

7 Having held that the DFEC component of the Schedule is rebuttable, the WCAB outlined

8 a process to ascertain whether there is DFEC rebuttal. The first step of the Ogilvie rebuttal process

9 is to (1) establish the three year earnings history of Applicant immediately after the injury, (2)

10 establish the three year earnings history for similarly situated employees, (3) subtract the post-

I I injury earnings of Applicant from the earnings of the similarly situated employees, and (4) divide

12 the above earnings of Applicant by the earnings of the similarly situated employees to establish the

13 Individualized Proportional Earnings Loss ("IPEL") of Applicant.

14 The second step of the Ogilvie rebuttal process is to determine the Individualized Rating

15 to Loss Ratio ("Loss Ratio") for the injury by dividing the standard medical disability Whole

S 16 Person Impairment ("WPI") by the IPEL for the injury in question.

17 Under the Ogilvie process, the DFEC component of the Schedule is rebutted if the Loss

18 Ratio does not equal the ratio contained in Table B of the Schedule for the same impairment and

19 if the Loss Ratio falls outside the range of ratios of the FEC Rank for the same impairment as

20 contained in Table A of the Schedule.

21 Ogilvie then provides a formula for calculating the DFEC adjustment factor to be used. If

22 there is rebuttal because of diminished earning capacity issues and the Loss Ratio falls within one

23 ofthe other seven FEC Ranks of Table A, then the FEC Rank corresponding to that particular range

24 of ratios shall be used as the adjusted DFEC rating. However, if the Loss Ratio falls outside all of

25 the range of ratios for all FEC Ranks, Ogilvie requires the following formula to determine the

26 adjusted DFEC rating:

27 ([1.81 - Loss Ratio] x .1) + 1 x WPI

28

1 IlI.

2 Comparative Ratings Under the Schedule and Ogilvie

3 For the purpose of illustrating the economic impact of the Ogilvie DFEC rebuttal process,

4 the following assumed injury facts will be utilized:

5 1. Applicant alleges a cumulative trauma injury to multiple parts of the body.

6 2. Applicant sustained a low back cumulative trauma injury.

7 3. There is a good faith dispute regarding all other injury claims.

8 4. Low back disability first manifested on January 5, 2007.

9 5. Applicant was 48 years old when disability first manifested.

10 6. Occupational Group No. of Applicant is 380.

11 7. Average weekly wage of Applicant is $1,350.00.

12 8. Applicant is medically precluded from returning to his pre-injury occupation.

13 9. Applicant had post-injury earnings of $2,500.00.

1 •10. Similarly situated employees had post-injury earnings of $150,000.00.A 15 11. Pursuant to Ogilvie, the IPEL of Applicant is 83%.

5 16 [$125,000.00 + $150,000.00 = 83%]

9 17 12. Under AMA Guides, the low back injury resulted in a 5% WPI.

18 13. Pursuant to Ogilvie, the low back Loss Ratio is 0.0602.

19 [5 - 83 = 0.0602]

20 The above assumed injury facts do not represent unusual circumstances for many litigated

21 workers' compensation claims. Based upon the above assumed injury facts for a low back injury

22 only, the presumed permanent disability or impairment as contemplated by SB 899, and the

23 Schedule, would be as follows:

24

25 15.03.01.00- 5 - [516 - 380H - 8-9

26 ($6,210.00)

27

28

4O

1 However, with a Loss Ratio of 0.0602, as determined by the Ogilvie process, there would

2 be DFEC rebuttal and the fully adjusted rating would be as follows:

3 15.03.01.00 - 5 - [x120 - 380H - 25 - 28

4 ($27,312.50)

5 The Adjusted DFEC Rating Factor for the Low Back Injury is 20[5 r 83 = 0.0602.1.81 + 0.0602 x.1 + 1 x 5 = 20]

67 Regarding the above assumed injury facts, the following permanent disability ratings under

8 the Schedule will result if the injury claim also includes a finding of psychiatric injury with a GAF

9 score of 62:

10 15.03.01.00 - 5 - [5]6 - 380H - 8 - 914.01.00.00 - 12 - [8117.-.380H - 21 - 24

11 31%$31,740.00

12

13 However, by applying the Ogilvie process to the above assumed injury facts, there would

2 14 again be DFEC rebuttal and the fully adjusted rating would be as follows:

15 15.03.01.00 - 5 - [x]20 - 380H - 25 - 2814.01.00.00 - 12 - fx]27 - 380H - 33 - 37

16 $71,587.5017 The Adjusted DFEC Rating Factor for the Low Back Injury is 20

18 [5 ÷ 83 = 0.0602.1.81 + 0.0602 x 1 + 1 x 5 - 20]

19 The Adjusted DFEC Rating Factor for the Psychiatric Injury is 27[12 + 83 - 0.1445. 1.81 + 0.1445 x.1 + 1 x 12 = 27]

20

21 For further purposes of illustration, a finding of injury to multiple parts of the body could

22 very easily rate out as follows based upon the Schedule:23 Psyche 14.01.00.00 - 9 - [8]13 - 380H - 17 - 19

24 Neck 15.01.01.00 - 5 - [5]6 - 380H - 8 - 9Low Back 15.03.01.00 - 7 - [5]9 - 380H - 12 - 14

25 Left CTS 16.01.04.00 - 6 - [4]7 - 380J - 12 - 14Right CTS 16.01.04.00 - 12 - [4115 - 380J - 23 - 26

26 59%$78,974.50

27

28

5

4 1

Based upon the Ogilvie process, the above assumed injury facts will result in DFEC rebuttal

2 and the fully adjusted ratings would be as follows:

3 Psyche 14.01.00.00 - 9 - [x]24 - 380H - 29 - 32Low Back 15.03.01.00 - 5 - [x]20 - 380H - 25 - 28

4 Neck 15.01.01.00 - 7 - [x]22 - 380H - 27 - 30Left CTS 16.01.04.00 - 6 - [x]21 - 380J - 31 - 35

5 Right CTS 16.01.04.00 - 12 - [x]27 - 380J - 38 - 4287%

6 $190,417.50 + potential life pension liability

7 The Adjusted DFEC Rating Factor for the Psychiatric Injury is 248 [9-83 =0.1084. 1.81 -0.1084x.1 + 1 x9=24]

9 The Adjusted DFEC Rating Factor for the Low Back Injury is 20[5 ÷ 83 = 0.0602. 1.81 - 0.0602 x . + 1 x 5 = 20]

10 The Adjusted DFEC Rating Factor for the Neck Injury is 2211 [7 ÷ 83 = 0.0843 .1.81 - 0.0843 x.1 + 1 x 7 = 22]

12 The Adjusted DFEC Rating Factor for the Left Carpal Tunnel Syndrome Injury is 21[6-83--0.0722. 1.81 - 0.0722 x.1 + 1 x6=21]

13 The Adjusted DFEC Rating Factor for the Right Carpal Tunnel Syndrome Injury is 2714 [12 ÷ 83 = 0.1445. 1.81 - 0.1445 x.1 + 1 x 12 = 27]

15 The Ogilvie process will result in excessive permanent disability awards that are not15

S 16 justified or proportionate to medical permanent disability issues. However, excessive permanent

17 disability awards under Ogilvie will be unavoidable because diminished earning capacity is not

18 determined in a manner that is reliable or accurate. As discussed below, Amicus contends that

19 diminished earning capacity should be calculated in a manner consistent with California law so that

20 proportional earnings loss caused by a work-related injury is based upon methodology that is

21 reliable and accurate.

22 IV.

23 MMI Status Necessary to Determine Diminished Earning Capacity

24 The primary problem with the Ogilvie process is that proportional earnings loss is

25 calculated during significant periods of time when the injured worker is incapacitated. Hence,

26 proportional earnings loss under the Ogilvie process will be disproportionately inflated, will not

27 accurately reflect actual diminished earning capacity caused by a work-related injury, and will

28 cause excessive permanent disability ratings disproportionate to actual diminished earning capacity.

6 a9

I No accurate or reliable determination of diminished earning capacity is possible until after

2 Applicant recuperates from the injury and resumes full participation in the open labor market. The

3 IPEL Ogilvie process is therefore contrary to the intent of the Legislature because permanent

4 disability is not based upon reliable and verifiable evidence, but upon unreliable and speculative

5 diminished earning capacity evidence. To be reliable and accurate, any diminished earning

6 capacity calculation should be determined or deferred until after Applicant reaches MMI status.

7

8 V.

9 Ogilvie Does Not Properly Calculate Diminished Earning Capacity

10 The Ogilvie process to calculate diminished earning capacity includes actual post-injury

I I earnings of the injured worker and the earnings of substantially similar employees. However,

12 California law has long held and recognized that earning capacity is not a matter of actual earnings.

13 Rather, the test for determining or calculating loss of earning capacity is what the individual "could

14 have earned" and not the earnings that the individual did earn. (Rodriguez v. McDonnell Douglas

Corporation (1978) 87 Cal.App.3d 626, 656-657.) Hence, the Ogilvie process to calculate

16 -diminished earning capacity is contrary to California law and does not represent an accurate• 16

17 reflection of diminished earning capacity caused by a work-related injury.

18 VI.

19 The Ogilvie Process Violates Due Process

20 The Ogilvie process directs and controls what evidence will be considered and admitted into

21 evidence on the issue of whether the DFEC component of the Schedule has been rebutted. The

22 issue of permanent disability to be attributed to any work-related injury is a question of fact to be

23 determined by a workers' compensation judge or the WCAB. (City of Bakersfield (Johnson) v.

24 WCAB (1998) 63 CCC 1212, 1219.) A significant due process argument will arise if the Ogilvie

25 process is used to preclude the right of a workers' compensation defendant to offer relevant and

26 probative expert evidence to dispute DFEC issues. First, the California Supreme Court long ago

27 held that expert evidence in a workers' compensation case is necessary to rebut other expert

28 evidence. (Liberty Mutual Insurance Company v. IAC (1948) 13 CCC 267, 271.) Also, it is

7 410 t5

1 fundamental that due process requires that all parties be allowed the opportunity to offer relevant

2 evidence in explanation or rebuttal. In no other way can a party maintain its rights or make its

3 defense. (Katzin (Guerra) v. WCAB (1992) 57 CCC 230, 236) Hence, due process requires that

4 a workers' compensation defendant be allowed the opportunity to present relevant and reliable

5 expert evidence to establish the actual proportional diminished earning capacity caused by a work-

6 related injury. Any legal holding precluding the admission of such relevant evidence violates

7 fundamental due process.

8 VII.

9 The Ogilvie Process Does Not Constitute Substantial Evidence

10 A significant issue is whether the Ogilvie process includes speculative expert evidence as

I I opposed to reliable and probable expert evidence on the issue of diminished earning capacity

12 caused by a work-related injury. (People v. Gardeley (1996) 14 Cal.4th 605, 618.) There is a

13 serious question about whether the Ogilvie process will produce reliable evidence on the issue of

N- 14 diminished earning capacity caused by a work-related injury. The Ogilvie process requires that

15 diminished earning capacity include a period of time when the injured worker was temporarily

•a 16 totally disabled and therefore incapacitated from any gainful employment or earnings. The question

17 is whether it is appropriate to include a period oftemporary total disability (when the employee will

18 have no earnings) in the diminished earning capacity calculation. As indicated above, there is a

19 good faith argument to indicate that the question of diminished earning capacity will not be reliable

20 unless it is calculated when the injured worker reaches MMI status. Otherwise, a reliable and

21 accurate determination of diminished earning capacity is not possible. Hence, Amicus contends

22 that the Ogilvie process to calculate and/or determine the issue of diminished earning capacity is

23 improper speculation and does not constitute substantial evidence. (Hyatt v. Sierra Boat Company

24 (1978) 79 Cal.App.3d 325, 338.)

25 Expert evidence does not constitute substantial evidence if it is based upon matters not

26 reasonably relied upon by other experts, or upon factors that are remote, speculative or conjectural.

27 Expert opinion that lacks evidentiary value on the issue or question to be determined will not

28 constitute substantial evidence. (Wanland v. Los Gatos Lodge, Inc. (1991) 230 Cal.App.3d 1507,

8

1 1518-1519.) Here, there is an issue of whether the Ogilvie process includes evidence not generally

2 relied upon by most economic experts to establish diminished earning capacity conclusions. Also,

3 the Ogilvie process significantly relies upon the 2003 RAND Study which includes data for the

4 period of January 1991 to April 1997 to formulate diminished earning capacity conclusions. A

5 further issue, therefore, is whether the diminished earning capacity findings of the 2003 RAND

6 Study will constitute substantial evidence because those findings are now remote in time.

7

8 VIII.

9 The Ogilvie Process Will Significantly Increase Litigation

10 The Ogilvie process to calculate diminished earning capacity is an attempt by the WCAB

I I to provide a reasonable and inexpensive process to determine if the DFEC component of the

12 Schedule will be rebutted. Assuming that the percentage of permanent disability under the

13 Schedule is a presumption affecting the burden of proof, and that Applicant is asserting that

14 permanent disability should be increased because of DFEC issues, the burden of proof will be on

15 Applicant to establish that the Schedule has been rebutted. (Evidence Code Section 606.) Hence,

- 16 in most situations, the Applicant will present some type of expert evidence to determine if the

17 DFEC component of the Schedule has been rebutted. If the workers' compensation defendant does

18 not object to the initial expert evidence of Applicant, the Ogilvie process will succeed in

19 eliminating additional expert evidence and cost. Unfortunately, the Ogilvie process will usually

20 result in Schedule rebuttal, with significant increased litigation and expert evidence cost, when the

21 injured worker is temporarily totally disabled for a substantial period of time after an injury

22 regardless of actual earning capacity upon reaching MMI status.

23 The issue of diminished earning capacity, like medical disability, requires expert evidence

24 because it is a subject that is beyond common experience and will assist the trier of fact in

25 ascertaining whether a work-related injury caused diminished earning capacity so as to rebut the

26 DFEC component of the Schedule. (Evidence Code Section 801.) The Ogilvie process will require

27 the injured worker to obtain some type of initial expert evidence to ascertain whether the DFEC

28 component of the Schedule has been rebutted. Hence, despite good intentions, the Ogilvie process

9 &ýý-

I will not prevent expenses associated with expert economic evidence on the issue of diminished

2 earning capacity if there is a defense objection to the Applicant DFEC evidence.

3 IX.

4 Schedule Rebuttal Should Require a Preliminary Hearing

5 The Legislature enacted SB 899 as a comprehensive plan to reform the California workers'

6 compensation system to reduce the highest state workers' compensation costs in the nation. (Brodie

7 v. WCAB, supra, 72 CCC @ p. 578). Among the reforms, Labor Code Section 4660(a) was

8 amended to indicate that account shall be taken of an employee's diminished future earning

9 capacity. Amicus contends that consideration of diminished earning capacity could significantly

10 increase litigation costs because of unintended consequences relating to diminished earning

I I capacity issues.

12 A clear objective of SB 899 is to reduce costs within the California workers' compensation

13 system. Amicus believes that a preliminary hearing at the WCAB, conducted on an expedited

14 basis, should be required before expert evidence to challenge or rebut the Schedule is allowed or

• 15 incurred by any party. The primary purpose of such a preliminary hearing would be to effectuate

S 16 a settlement ofthe claim without incurring expense to challenge or rebut permanent disability under

17 the Schedule. Also, at any such hearing, a party seeking to challenge or rebut the Schedule should

18 be required to submit a written offer of proof to the workers' compensation judge to demonstrate

19 that there is a good faith belief concerning the possibility that the Schedule could be rebutted.

20 Such a preliminary hearing would allow the parties the opportunity to effectuate a

21 settlement expeditiously without incurring additional and significant expense that would otherwise

22 be unavoidable. Pursuant to the urgency measures and cost savings objective of SB 899, Amicus

23 believes that the WCAB should immediately enact Regulations to require a preliminary WCAB

24 hearing before any party is allowed to obtain evidence for the purpose of rebutting or challenging

25 the Schedule.

26 X.

27 Schedule Rebuttal Must Consider All Injury Claim Circumstances

28 Labor Code Section 4660(c) provides that the Schedule "...shall be prima facie evidence

10

I of the percentage of permanent disability to be attributed to each injury covered by the Schedule."

2 Hence, the fully adjusted percentage of permanent disability under the Schedule is prima facie

3 evidence. Separate permanent disability components of the Schedule are not deemed prima facie

4 evidence. As such, the issue of Schedule rebuttal should only be reviewed after all permanent

5 disability rating factors are fully adjusted under the Schedule.

6 The Ogilvie holding represents a departure from prior case law on how permanent disability

7 under the Schedule will be deemed rebutted. Specifically, prior case law indicates that the issue of

8 Schedule rebuttal will be determined after permanent disability is fully adjusted under the

9 Schedule. However, the Ogilvie holding indicates that Schedule rebuttal is possible based upon the

10 separate diminished future earning capacity component of the Schedule without regard to the fully

I I adjusted permanent disability rating. (Nielsen, supra, 39 CCC @ p. 84; LeBoeuf supra, 48 CCC

12 @pp. 593-597; Universal CityStudios, Inc., supra, 44 CCC @pp. 1139-1140.)

13 Amicus contends that the issue of Schedule rebuttal should be considered based upon a fair

! 14 view of all injury circumstances after a fully adjusted rating under the Schedule is obtained. (City

15 of Bakersfield, supra, 63 CCC @ p. 1219.) Specifically, for the purpose of determining if the

16 Schedule should be rebutted because of fairness issues, and not for the purpose of determining

17 liability under Labor Code Section 3600(a), all injury circumstances should be considered. For

18 example, Amicus contends that there would be no proper basis to set aside a permanent disability

19 award of 5% ($3,450.00) under the Schedule if the injury did not involve any employer fault or

20 negligence. Under such circumstances, Applicant is only entitled to benefits because of the

21 workers' compensation bargain. Based upon common law principles of liability, Applicant would

22 not be entitled to any benefits or compensation from the employer if there was no employer fault

23 or negligence. Under the workers' compensation bargain, if Applicant received maximum

24 temporary disability compensation payments of $95,298.32 ($916.33 per week for 104 weeks) plus

25 multiple surgical procedures with a cost of $125,000.00, a workers' compensation defendant

26 should be allowed to argue that no issue of fairness would justify Schedule rebuttal. Under such

27 circumstances, total workers' compensation payments to or on behalf of Applicant would equal

28 $223,748.32 for temporary disability, medical treatment, and permanent disability under the

1 Schedule.

2 When a work-related injury results in temporary disability and medical treatment liability

3 under the workers' compensation laws of California, there is no justification to set aside permanent

4 disability under the Schedule based upon fairness, or any other concept, if there is no employer

5 fault or negligence connected to the injury. However, under Ogilvie, the factor ofdiminished future

6 earning capacity alone is a basis to justify Schedule rebuttal without regard to other facts or injury

7 claim circumstances being considered. Amicus therefore submits that rebuttal of the Schedule

8 should require consideration of all injury circumstances after a fully adjusted rating is obtained.

9 Amicus further contends that consideration must be given to whether permanent disability

10 liability under the Schedule could in certain circumstances violate constitutional standards because

I I of excessive liability issues that must be examined on a case-by-case basis to protect against an

12 inequitable result. (Hale v. Morgan (1978) 22 Cal.3d 388; Universal City Studios, Inc. v. WCAB,

13 supra, 44CCC@pp. 1138-1140.)

14 XI.

S 15 WCAB Clarification of Ancillary Legal Issues

16 Amicus believes the WCAB should confirm that the percentage of permanent disability

17 under the Schedule is a presumption affecting the burden of proof as defined by Evidence Code

18 Section 605 and not a presumption affecting the production of evidence as defined by Evidence

19 Code Section 604. Such a judicial clarification is necessary to avoid unnecessary litigation on this

20 issue in the future.

21 CONCLUSION

22 Based upon the language of Labor Code Section 4660(c), Amicus agrees with the WCAB

23 that the percentage of permanent disability attributed to a work-related injury under the Schedule

24 is a rebuttable presumption. As indicated above, Ogilvie diminished future earning capacity issues

25 are a matter of first impression because said standard as a factor in determining permanent

26 disability was enacted as part of SB 899 with the amendment of Labor Code Section 4660(a).

27 Hence, before the WCAB en banc Ogilvie decision, the workers' compensation community had

28 very little guidance on how Schedule rebuttal might be addressed because of diminished future

12

I earning capacity issues. In that regard, the expertise of the WCAB in interpreting and applying the

2 workers' compensation scheme to determine a DFEC rebuttal process will be critical and be given

3 great weight by reviewing courts unless that directive is clearly erroneous. (Brodie v. WCAB, supra,

4 72 CCC @ p. 580.) Amicus contends that a reliable finding of proportional earnings loss caused

5 by a work-related injury will not be possible unless that calculation is deferred until the injured

6 worker fully re-enters the open labor market, which will probably necessitate MMI status.

7 Otherwise, reliable evidence on the earning capacity of any injured worker will not be possible.

8 For the reasons set forth above, Amicus submits that the WCAB should issue a final Order

9 holding that:

10 1. The percentage of permanent disability under the Schedule is a rebuttable

II presumption;

12 2. That the calculation of proportional earnings loss caused by a work-related injury

13 must generally be deferred until the injured worker reaches MMI status;

14 3. WCAB Regulations should be immediately enacted to prohibit any party from

15 obtaining expert evidence to rebut the Schedule until after a preliminary hearing at the WCAB is

S 16 conducted;

17 4. The issue of Schedule rebuttal should be based upon a fully adjusted rating under

18 the Schedule and must consider all injury claim circumstances; and

19 5. The percentage of permanent disability under the Schedule is a presumption

20 affecting the burden of proof

21

22

23 Dated: April 28, 2009 Respectfully submitted,

24 MORROW & MORROW

25 By: koaaa W.Ytoawet&26 THOMAS W. MORROW

Amicus Curiae Attorney

27

28

1340

I PROOF OF SERVICE - 1013a, 2015.5 C.C.P.

2 STATE OF CALIFORNIA ]] SS.

3 COUNTY OF VENTURA ]

4 I am employed in the County of Ventura, State of California. I am over the age of 18 and

5 not a party to the within action; my business address is Post Office Box 5017, Westlake Village,

6 California 91359-5017.

7 On April 30, 2009, 1 served the foregoing document described as AMICUS CURIAE

8 BRIEF ON THE ISSUE OF REBUTTING THE 2005 PERMANENT DISABILITY RATING

9 SCHEDULE BECAUSE OF DIMINISHED FUTURE EARNING CAPACITY on the

10 interested parties in Wanda Ogilvie v. City and County of San Francisco, PSI, Case Number

II ADJ1 177048 (SFO 0487779), by placing a true copy thereof enclosed in a sealed envelope

12 addressed as follows:

13 SEE ATTACHED SERVICE LIST

14 I caused such envelope with postage thereon fully prepaid to be placed in the United States

.2 •, 15 mail at Westlake Village, California. I am "readily familiar" with the firm's practice of collection

16 and processing correspondence for mailing. Under that practice it would be deposited with U.S.

17 postal service on that same day with postage thereon fully prepaid at Westlake Village, California,

18 in the ordinary course of business. I am aware that on motion of the party served, service is

19 presumed invalid if postal cancellation date or postage meter date is more than one day after date

20 of deposit for mailing in affidavit.

21 I declare under penalty of perjury under the laws of the State of California that the above

22 is true and correct.

23 Executed on April 30, 2009, at Westlake Village, California.

24

2526 RGARET ENLOE

26

27

284/30257 1WATWIMvAGGIAMICLIS AMICUS CURIAE BRIEF ON THE ISSUE OF REBUTTING THE 2005 PERMANENT DISABILITY RATING SCHEDULE BECAUSE OF DIMINISHED FUTURE EARNINGBRIEFS\POS 4-30-09 .wpd CAPACITY

AMICUS CURIAE BRIEF ON THE ISSUE OFREBUTTING THE 2005 PERMANENT DISABILITY RATING

2 SCHEDULE BECAUSE OF DIMINISHED FUTURE EARNING CAPACITY

3

4 WORKERS' COMPENSATION APPEALSBOARD

5 455 Golden Gate Avenue, 9 th FloorSan Francisco, CA 94102

6 (Original & 7 Copies)

7 WORKERS' COMPENSATION APPEALSBOARD

8 455 Golden Gave Avenue, 2 "d FloorSan Francisco, CA 94102

9Law Office of Joseph Waxman Attorney for Applicant: Wanda Ogilvie

10 114 Sansome Street, Suite 1205San Francisco, CA 94104

11Office of the City Attorney

12 Fox Plaza, 1390 Market Street, 7 'h FloorSan Francisco, CA 94102-5408

13

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284/30 257 2W.\TWM\MAGGIEýAMICUS AMICUS CURIAE BRIEF ON THE ISSUE OF REBUTTING THE 2005 PERMANENT DISABILITY RATING SCHEDULE BECAUSE OF DIMINISHED FUTURE EARNINGB R IE F S IP O S 4 -3 0 -0 9 .wp d C A P A C IT Y 40 ý

STATE OF CALIFORNIADWC DISTRICT OFFICE

DOCUMENT COVER SHEETIs hisiioII nII I ii mIIII I nInII I uiII IIu II ~I lu I III1111 111111IIItha new case? Yes N] No Z Companion Cases Exist E Waikthrough Yes No ElMore than 15 Companion Cases E]04/27/2009 SSN:Date:(MM/DDJYYYY)

R1 Specific InjuryADJI 177048 04/01/2004Case Number I F1 Cumulative Injury (Start Date: MM/DDPYYYY) (End Date: MMIDD/YYYY)

(If Specific Injury, use the start date as the specific date of injury)

Body Part 1: 420 + Body Part 3:

Body Part 2: 513 Body Part 4:

Other Body Parts:

Please check unit to be filed on (check only one box)

ElDJ [] DEU El SIF El UEF E] voc INT RSUCompanion Cases

El Specific Injury

Case Number 2 El Cumulative Injury (Start Date: MM/DD/YYYY) (End Date: MM/DD/YYYY)(If Specific Injury, use the start date as the specific date of injury)

Body Part 1: Body Part 3:

Body Part 2: Body Part 4:

e ther Body Parts:

DWC-CA form 10232.1 Rev. 11/2008 - Page 1 of 8

Th(ý

DOCUMENT SEPARATOR SHEET

Product Delivery Unit ADJ

Document Type LEGAL DOCS

Document Title PETITION - OTHER

Document Date 04/27/2009MM/DD/YYYY

Author CITY ATTORNEY SAN FRANCISCO

Office Use Only

RECEIVEDStale of California

Received Date mmA9F * ^^^2009

Workers' Compersation Appeals BoardSAN FRANCISCO-RECONSiDERATION UN,

DWC-CA form 10232.2 Rev. 11/2008 Page 1

.9 321/

1 DENNIS J. HERRERA, State Bar #139669City Attorney

2 DYANA M. LECHUGA, State Bar #164699Deputy City Attorney

3 PETER J. SCHERR, State Bar #207530Deputy City Attorney

4 1390 Market Street, Seventh FloorSan Francisco, California 94102-5408

5 Telephone: (415) 554-3952Facsimile: (415) 554-3985 RECEIVE D

6 E-Mail: peter.scherr@sfgov.org S19te ot camo

7 APR 2 8 21009Attorneys for Defendant W ,,, AmP n 2,,8 pea20 BOW

8 City and County of San Francisco SAN FR' -

9

10WORKERS' COMPENSATION APPEALS BOARD11

STATE OF CALIFORNIA12

WANDA OGILVIE, WCAB Case No. ADJ 117704813 (SFO 0487779)

14 Applicant, DEFENDANT'S PETITION TOvs. STAY THE EN BANC DECISION

15 OF FEBRUARY 3, 2009CITY AND COUNTY OF SAN FRANCISCO,16

Defendant.17

18

19Defendant City and County of San Francisco, hereinafter the City or Defendant, hereby

20petitions the Workers' Compensation Appeals Board (Board) stay the legal and binding precedential21

22 effect of its February 3, 2009 en banc decision pending the issuance of its further decision.

23 As noted by Commissioner Aghazarian in the concurring opinion to the Order Granting

24 Reconsideration of April 6, 2009, the Board cannot determine what the final outcome will be. In

25 fact, in this case, the matter was remanded and a pre-trial conference was indeed scheduled. At the

26 agreement of the parties, and recognizing that the appeals process was well under way, that hearing

27 was taken off calendar, Defendant and Applicant both understood that given the importance of the28

117

1 issue to the community, that the appellate process would need to be completed prior to moving the

* 2 case forward.

3 In this case discovery was virtually completed regarding the applicant's future earnings

4 capacity, at no small expense. In many other cases involving defendant, parties are already incurring

5 substantial additional discovery expense developing the record under the first en bane decision.

6 Anecdotally, Defendant is aware of parties throughout the state engaging in new and additional

7 discovery based on the original decision. Unfortunately, the expense and time may all be for naught

8 should the Board come to a different conclusion.

9 Therefore, Defendant respectfully requests that the Board acknowledge the far reaching

10 impact of it decision and stay the legal impact of its February 9, 2009 en bane decision.

11

12

13 DATE: April 27, 2009

14 Respectfully Submitted,@15 DENNIS J. HERRERA

16 City Attorney

17

18

19 By:

20 DYANA M. LECHUGA

21 Deputy City AttorneyPETER J. SCHERR

22 Deputy City AttorneyAttorneys for Defendant

23

24

25

26

@ 2728

2 1

VERIFICATION@ 2

3 I, Peter Scherr, hereby verify that I have read the foregoing DEFENDANT'S PETITION TO

STAY THE EN BANC DECISION OF FEBRUARY 3, 2009 and know the contents thereof, that4the facts contained in said document are true and correct, except to matters stated on information5and belief, and as to those matters I believe them to be true; that I make this verification on behalf

6 of the officers of the party defendant because, as counsel, I am more familiar with the facts of this

7 case than are the officers.

8Sworn under penalty of perjury under the laws of he State of California this 27 day

9 of April 2009, at San Francisco, California.10

11 ;ET SCRRDeputy City Attorney.

12

13

14

@15

16

17

1819 RECEIVED

State of California

20 APR 2 8 200921 Workers' Compensation Appeais Board

SAN FRANCJSCO-RECONSIDERATION UNIT

22

23

24

25

26S27

28

3

If

Wanda Ogilvie v. CCSF

PROOF OF SERVICE

WCAB Nos. ADJ1177048/SFO No. 487779

I, CASSANDRA ALLEN-SAVOY, declare as follows:

I am a citizen of the United States, over the age of eighteen years and not a party to theabove-entitled action. I am employed at the City Attorney's Office of San Francisco, Fox PlazaBuilding, 1390 Market Street, Suite 700, San Francisco, CA 94102.

On April 27, 2009, I served the following document(s):

DEFENDANT'S PETITION TO STAY THE EN BANC DECISIONDATED FEBRUARY 3, 2009

on the following persons at the locations specified:

Joseph C. Waxman, Esq. Cathy Higuchi, Claims Examiner114 Sansome Street, Suite 1205 Sedgwick CMSSan Francisco, CA 94104 P.O. Box 14433

Lexington, KY 40512

WCABReconsideration Unit

455 Golden Gate Avenue, 9"' FloorSan Francisco, CA 94102

in the manner indicated below:

V BY UNITED STATES MAIL: Following ordinary business practices, I sealed true andcorrect copies of the above documents in addressed envelope(s) and placed them at myworkplace for collection and mailing with the United States Postal Service. I am readilyfamiliar with the practices of the San Francisco City Attorney's Office for collecting andprocessing mail. In the ordinary course of business, the sealed envelope(s) that I placedfor collection would be deposited, postage prepaid, with the United States Postal Servicethat same day.

I declare under penalty of peijury pursuant to the laws of the State of California that theforegoing is true and correct.

Executed April 27, 2009, at San Francisco, California.

CAVILýDý N-SAVO

1 DENNIS J. HERRERA, State Bar #139669City Attorney

2 DYANA M. LECHUGA, State Bar #164699 RECEIVEDDeputy City Attorney California

3 PETER J. SCHERR, State Bar #207530Deputy City Attorney

4 SEAN M. SULLIVAN, State Bar #203634 2 oarDeputy City Attorney • p, PP6 loard

5 Fox Plaza SA(RL SCc.....1390 Market Street, Seventh Floor

6 San Francisco, California 94102-5408Telephone: (415) 554-3952Facsimile: (415) 554-3985 Ra CEIVEDE-Mail: peter.scherr@sfgov.org State 0Ffitornia

8 MAP, ozzo

9 Attorneys for Defendant ,ork r•City and County of San Francisco 08ftrictomw10 MOMW

11

12 WORKERS' COMPENSATION APPEALS BOARD

13 STATE OF CALIFORNIA

14 WANDA OGILVIE, WCAB Case No. SFO 0487779

15 Applicant, DEFENDANT'S ANSWER TOAPPLICANT'S PETITION FOR

16 vs. RECONSIDERATION ANDPETITION FOR

17 CITY AND COUNTY OF SAN FRANCISCO, RECONSIDERATION

18 Defendant.

19

20

21 Defendant City and County of San Francisco, hereinafter the City or Defendant, is aggrieved

22 by the en banc decision of the WCAB (Board) and hereby petitions for reconsideration. Further

23 Defendant herein answers Applicant's Petition For Reconsideration on the following grounds:

24

25 (a) That by the order, decision or award made and filed by the Board, the appeals board acted

26 without or in excess of its powers.

27 (b) That the evidence does not justify the findings of fact.

1

2 INTRODUCTION

3 Upon the Petition for Reconsideration by Defendant, the Board issued an en bane opinion

4 allowing for the rebuttal of the Diminished Future Earning Capacity (DFEC) portion of the 2005

5 Schedule for Rating Permanent Disabilities(Schedule). The case was remanded and further

6 proceedings have been scheduled for April 13, 2009.

7The Board held that: (1) the DFEC portion of the 2005 Schedule is rebuttable; (2) the DFEC

8portion of the 2005 Schedule ordinarily is not rebutted by establishing the percentage to which an

9

10 injured employee's future earnings capacity has been diminished; (3) the DFEC portion of the 2005

11 Schedule is not rebutted by taking two-thirds of the injured employee's estimated diminished future

12 earnings, and then comparing the resulting sum to the permanent disability money chart to

13 approximate corresponding permanent disability rating; and (4) the DFEC portion of the 200514ý

14 Schedule may be rebutted in a manner consistent with Labor Code §4660- including §4660(b)(2)

15and the RAND data to which §4600(b)(2) refers.

16ISSUES

17

18 A. WHETHER THE DFEC COMPONENT OF THE 2005 SCHEDULE IS DEFINEDBY STATUTE AND WHETHER THAT DEFINITION CANNOT BE ALTERED

19 BY JUDICIAL INTERVENTION?B. WHETHER THE CASES UPON WHICH THE BOARD RELIES DO NOT

PROVIDE SUBSTANTIVE LEGAL JUSTIFICATION FOR A WHOLESALE21 REBUTTAL OF THE 2005 SCHEDULE?

22 ARGUMENT

23 A. THE DFEC COMPONENT OF THE 2005 SCHEDULE IS DEFINED BY STATUTE ANDTHAT DEFINITION CANNOT BE ALTERED BY JUDICIAL INTERVENTION.

24 1) THE BOARD ACTED IN EXCESS OF ITS AUTHORITY AND USURPS THE

25 ADMINISTRATIVE DIRECTOR'S REGULATORY AUTHORITY TO CREATETHE SCHEDULE AS SET FORTH IN LABOR CODE 04660

26 When the legislature enacted Senate Bill 899 (SB 899) and specifically Labor Code §466027

(c) and (e), it's intent was clear and unambiguous when it charged the Administrative Director (AD)28

with developing, adopting and amending the 2005 Schedule for determining permanent disability.

The California Legislature's "plenary power" "to create and enforce "a complete system of

2 workers' compensation, by appropriate legislation..." is provided by the Constitution of California.

3 See Cal. Const., Art.14, § 4. By extension of these Legislatures powers, Labor Code §55 charges the

4 AD with "...rmak[ing] rules and regulations that are reasonably necessary to carry out the provisions

of this chapter and to effectuate its purposes."6

The Board's opinion is inconsistent with this legislative delegation of authority to the AD

8 when it judicially redefines the DFEC portion of the 2005 Schedule codified in §4660(b)(2). By

9 providing this alternative method for determining permanent disability, the Board has also acted in

10 excess of its authority and has substituted its own concept of fairness rather than interpreting the

clear policy decisions of the legislature in addressing the workers' compensation crisis. See Rio

12Linda Union Sch. Dist. v. Workers' Comp. Appeals Bd. [Scheftner] (2005) 131 Cal. App. 4th 517,

13532 [31 Cal. Rptr. 3d 789, 70 Cal. Comp. Cases 9991.14

15 Specifically, the Board has usurped the AD's regulatory authority to create a schedule as set forth

16 in §4660. This violates California's Administrative Procedure Act (APA), Cal. Gov't Code §1134017 et seq. "The Legislature expressly stated that APA is enacted to clarify and reduce the amount of18

administrative regulations, which saves time and money and promotes business and social goals.19

20 (Gov. Code, §§ 11340, 11340.].) The APA provides procedures for state agencies to adopt

21 regulations. (Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 571 [59 Cal. Rptr.

22 2d 186, 927 P.2d 296]) The procedures include public notice of the proposed regulation, an

23 opportunity for comment by interested parties, and review by the Office of Administrative Law.

24 (Ibid.)", Rea v. Workers; Comp. Appeals Bd. (2005) 127 Cal. App. 4" 625. The Board has acted in

25 excess of its powers by substituting its own method for the clearly defined statutory method for26

"determining the percentages of permanent disability" §4660(a).27

28

When the Board issued the instant decision, it created a new system for determining injured

2 worker's diminished future earning capacity. Yet, the language of §4660(b)(2) already defines

3 "diminished future earning capacity" and expressly charges the Administrative Director in

4 formulating the adjusted rating Schedule. This formulation is based on empirical data and findings

from the Evaluation of California's Permanent Disability Rating Schedule, Interim Report6

(December 2003), prepared by the RAND Institute for Civil Justice, and upon data from additional7

empirical studies.8

9 Again, the Board's decision is an attempt to legislate an alternative measure for determining

10 the DFEC factor, which oversteps it's power and the legislative intent of SB 899.

2) THE BOARD'S DECISION TO PERMIT INDIVIDUALIZED DFEC

12 CALCULATIONS IS IN CONFLICT WITH THE LANGUAGE OF LABOR CODE§4660(D) REQUIRING CONSISTENCY, UNIFORMITY, AND OBJECTIVITY.

13 The mandate of §4660 (d) is clear. It provides, in part, "the schedule shall promote

14consistency, uniformity and objectivity." Emphasis added.

15

16 As discussed in section iii., below, §4660, as amended, was created as part of an emergency

17 overhaul of the workers' compensation system. The above quoted language of subsection (d) was

18 specifically added to address disparate results in cases with similar facts and findings.

19The Board ignores this mandate to achieve greater uniformity by allowing alternative

20methods for calculating the DFEC factor in individual cases. They suggest that parties inundate21

22 already economically stressed public entities such as the California Employment Development

23 Department and/or the United States Department of Labor for information already taken into account

24 by the AD and as set forth in §4660(b)(2). If the aforementioned resources do not provide the25 necessary information, the Board suggests a party may turn to public employment cases, collective26

bargaining agreements and vocational experts. In essence, the Board has provided that almost any27

type of evidence which may tend to show diminished future earnings can be taken into account if, in28

the judge's discretion, such evidence is relevant.

4

These amorphous guidelines will lead to significantly increased litigation, increased

2 discovery costs and wide-ranging results based on a parties source - and cost - of information. As a

3 result, the Board's opinion is actually in opposition to the mandate of §4660(d) to promote

4 consistency, uniformity and objectively.

5The facts of the instant case illustrate this position. It was noted by the DFEC evaluators that

67 applicant had limited employment skills and very limited education. As a result, there were only 3

8 job matches from a database of 2975 jobs frequently available in the applicant's area of residency.

9 Yet, applicant earned significant wages as a transit operator for the City, even with her industrial

10 injuries.

11Conversely, had applicant earned less, had a higher level of education, had requested an

12

13 ADA accommodation through the City, or had the same position but for lower wages, the DFEC

14 analysis in each specific circumstance would produce different results. Of note is the fact that had

15 applicant returned to work, her loss of future earnings would likely lower her permanent disability

16 described by the medical-legal evaluators and stipulated to by the parties at 25%, after

17 apportionment.

18

19 The above case shows that the Board's decision to allow for the rebuttal of the DFEC

20 component removes the "consistency, uniformity and objectivity" specifically determined by the

21 legislature to be paramount in determining an injured worker's percentage of permanent disability.

22 As such, the WCJ's reliance on a set of facts unique only to applicant violates the clear legislative

23 intent as contained in §4660. In addition, the DFEC determination provided by the schedule does

24not consider whether an injured worker has returned to work, in any capacity, at any wage and in any

25location. As such, allowing these factors to be considered when determining one's DFEC is

2627 contrary to §4660(d).

3) THE BOARDS DECISION INDIVIDUALIZED REBUTTAL OF THEDFEC FACTOR IN THE 2005 SCHEDULE CONFLICTS WITH THE LEGISLATIVE

2 INTENT OF SB 899.In 2004 and facing a "workers' compensation crisis" in California, the Legislature passed SB

34 899, which reformed the workers' compensation statutes in an effort to reduce costs to employers.

5 (Stats. 2004, ch. 34, § 49. As explained by the Assembly Republican Caucus in its Analysis of

6 Senate Bill No. 899,

7 California has the highest workers' compensation costs in the nation. Thesehigh costs are killing jobs for hard-working California. SB 899 contains a8 series of reforms to eventually lower cost experienced by self-insured

9 employers and premiums for businesses, the state and local governments, andnonprofits. (Assem. Republican Caucus, analysis of Sen. Bill No. 899 (2003-

10 2004 Reg. Sess as amended Apr. 15, 2004, p. 6.)In order to reduce these costs, the Legislature, among other things, amended the Schedule11

for determining permanent disability. The relevant changes discussed herein occur in the amendment12 Z

13 of §4600. These changes were as follows: (1) it added subsection (b)(2) defining the diminished

14 future earning capacity factor used when adjusting a "standard" level of disability under the AMA

15 Guides and the information upon which that DFEC factor is to be based; and (2) amended subsection

16 (d) by adding to the beginning of that subsection, "The schedule shall promote consistency,

17uniformity, and objectivity."

18

19 The Board's decision to allow for the rebuttal of the DFEC factor based on an individualized

20 proportional earnings loss ignores the call for uniformity, ignores the call to reduce workers'

21 compensation costs in California and ignores the plain language in §4660 (b)(2).

22Moreover, the Board's decision is an attempt to circumvent the intent and mandate of SB

23899, which previously has been rejected by the California Supreme Court and Court of Appeals in24

25 the WelcheriBrodie decision and Benson decision.

26 In Welcher/Brodie the Supreme Court recognized that changes to the apportionment statutes

27 were meant to curtail employer costs when it provided, "In the end, the relevant portions of SB 899

1 with that percentage of permanent disability directly caused by the current industrial injuryl.

2 Welcherv. Workers'Comp. Appeals Bd.(2007), 40 Cal. 4th 1313, 156P.3d 1110, 57 Cal. Rptr. 3d

3 644.

4Similarly, in Benson, the Court of Appeals overturned a long-standing legal principle of

5apportionment established by Wilkinson v. Workers' Corp. Appeals Bd. (1977) 19 Cal.3d 491 [42

67 Cal.Comp.Cases 406]. The Court of Appeal recognized that SB 899 had changed the manner in

8 which apportionment was calculated, including the observation that one must interpret the plain

9 language of a statute which in that case provided that an employer shall only be responsible for that

10 portion of the disability the employer actually caused. Dianne Benson. v. The Permanente Medical

11 IGroup(2008), A120462, CA Crt. ofAppeals, First Appellate District, Div Two.

12

13 Based on the above, the Board's finding that the DFEC component of the 2005 Schedule is

14 rebuttable is contrary to the legislative intent behind SB 899. Moreover and as noted above, the

15 California Supreme Court and the Court of Appeals made it clear that the legislative intent of SB

16 899 must be considered by the Board when issuing its decisions.

17B) THE CASES UPON WHICH THE WCAB RELIES DO NOT PROVIDE SUBSTANTIVE

18 LEGAL JUSTIFICATION FOR A WHOLESALE REBUTTAL OF THE 2005 SCHEDULE.

19 The WCAB relies almost entirely on 3 cases to substantiate its holding that the 2005

20 Schedule is rebuttable. These cases are:

211) Liberty Mutual Ins. Co. v. Industrial Ace. Corn (Serafin) (1948) 33 Cal.2d 89, 93 [13

22Cal. Comp. Cases 267]

23

24 2) Universal Studios, Inc. v. WCAB (Lewis)(1979) 99 Cal.App.3d 647 [44 CCC 1133] and

253) Glass v. WCAR (1980) 105 Cal.App.3d 297, 307 [45 Cal. Comp. Cases 441, 449]

26

27 A more detailed review of these case reveals that they do not support the holding that the

1 In Serafin the issue presented was whether there was substantial evidence to support a WCJ's

2 "range of evidence" award of permanent disability which was based on multiple efforts made by the

3 injured worker while being evaluated by the physicians in the case. Applicant demonstrated strong

4 grip strength measurements, resulting in a low level of permanent disability while being evaluated

by one physician. Yet, while being evaluated by Dr. Harrison. applicant demonstrated6

extraordinarily weak grip strength measurements, resulting in a much higher level of permanent77 disability. Dr. Harrison also provided that applicant put forth a less than best effort while

9 undergoing these tests.

10 The WCJ issued a findings and award based upon grip strength measurements which would

provide a compromise between the measurements taken by the various physicians. The WCJ12

acknowledged that Dr. Harrison felt that the applicant was exaggerating. However, the WCJ also13

14 gave applicant the benefit of the doubt by issuing an award based upon the range of evidence by

15 finding that applicant's grip strength testing results were 50% better than as measured by Dr.

16 Harrison.

17 The California Supreme Court ruled that the WCJ's award was the product of mere guess-

18work and thereby not based upon substantial medical evidence as the WCJ was not present while

19these grip strength measurements were performed. The Court determined that the Commission had20

21 the power to choose between expert medical opinions, but that the WCJ had not done this in the

22 instant case. (Liberty Mut. Ins. Co. v. Industrial Acc. Com., 73 Cal. App. 2d 555, [166 Pac.2d 908,

23 11 Cal. Comp. Cases 66]) The Court reasoned that had the WCJ relied on an actual measurement,

24 his award would constitute substantial evidence. The Court further acknowledged that had the WCJ25 determined applicant was a credible witness and accepted Dr. Harrison's reported grip strength26

measurements, his award would constitute substantial evidence. But since the referee made the27

Prhitrnrv dete~rminntinn thnt nnnlin~nt wnQ nnlv Pevrtino nn nrhitrnrv Sno/. Pffnrt the SirlnmrP rn'iirt

The Court held that there was no basis in the evidence for the WCJ's determination based

2 upon unverified Miip strength measurements. The Court further held that Defendant was entitled to

3 have an award against it based on substantial evidence rather than merely surmise and conjecture.

4 The Board was misplaced in citing the Liberty case, supra, as a basis to expand a WCJs5

discretion to determine that the 2005 Schedule is rebuttable. In this case, the Supreme Court does67 the opposite and actually limits a WCJ's discretion by mandating that awards of permanent disability

be based on substantial evidence. As a result, the Liberty case does not support nor provide legal

9 justification for the Board's ruling that the 2005 Schedule is rebuttable.

10The second case upon which the Board relies to substantiate its holding that the 2005

11Schedule is rebuttable is the case of Lewis. This case, much like Liberty, stands for the proposition

12

13 that an award of permanent disability must be based upon substantial evidence. In Lewis, the Board

14 awarded permanent disability of 61% based on the factor of slight tenderness or discomfort resulting

15 from a sprained ankle.

16The decision was annulled by the Court of Appeals. Although the parties relied upon the

17medical opinion of an AME, Dr. Rolston, his report was not supported by adequate evidence of18

19 actual impairment. The Court noted that there was no testimony or objective evidence,

20 physiologically or functionally, which showed applicant was disabled from performing whatever

21 work she could have or would have performed in the future.

22The court further noted that the record did not reflect that the WCJ had weighed and

23considered all of the evidence relative to the physical ability and the impairment of the employee and24

25 that the WCJ has simply referred the AME report to the DEU rater to determine the level of

26 permanent disability sustained by applicant. The court noted, "'Expert medical opinion does not

27 always constitute substantial evidence on which the Board may rest its decision. Courts have held

1 [(1971)], 5 Cal.3d 83, 96 [36 Cal. Comp. Cases 371, 95 Cal. Rptr. 447, 485 P.2d 799].) The Court

ultimately found the Board's award defective.

3, The Board was again misplaced in citing Lewis to support its holding that a WCJ has the4

discretion to rebut the 2005 Schedule. What this case does stand for is the proposition that any5

physicians opinion on the issue of permanent disability must be supported by substantial medical6

evidence..7

8 The third case upon which the WCAB relies to substantiate its holding that the 2005

9 Schedule is rebuttable is the case of Glass. This case, like the others mentioned above, does not10

support the finding that the 2005 Schedule is rebuttable. This case involved a 1976 injury to the11

head and nervous system, resulting in an award of permanent disability of 57.5 % based upon a12

13 limitation to light work restriction. The Schedule applicable to a 1976 date of injury provided that a

14 light duty work restriction was applicable only to pulmonary, heart disease, abdominal weakness and

15 spinal disabilities and not to head and nervous system disabilities.

16The Court of Appeals ruled that the light duty work restriction may extend to head and

17 nervous system injuries as these body parts were not specifically addressed in the Schedule and the18

19 rater must evaluate the standard rating appropriate for the work restriction by analogy or comparison

20 and achieve a judgment rating. This holding was based on the premise that "judgment" or "non-

21 scheduled" ratings were an accepted part of the rating process under the former Schedule due to the

22 fact that not all disabilities were expressly covered. (See Department of Motor Vehicles 20 Cal.

23 App. 3d atpp. 1043-1045, Fidelity & Cas. Co., 252 Cal. App. 2d 327; Young v. Industrial Acc. Corn.24

(1940) 38 Cal. App. 2d 250-255 [5 Cal. Comp. Cases 67, 100 P.2d 1062].) The court further25

26 pointed out that the former rating Schedule itself directed the evaluation of non-scheduled

27 disabilities and provided general rules applicable to cases in which a disability was not specifically

covered. The former Schedule specifically stated that omission of a disability from the Schedule did1

2 not necessarily signify that the disability was not ratable.

3 The holding in Glass was not that the Schedule was rebutted in coming to a determination of4 permanent disability. Rather, Glass dealt with ratings in which a disability was not specifically5

covered by the Schedule. As such, the Glass case does not stand for the proposition that the 20056

Schedule may be rebutted and therefore should not have been relied upon by the Board in the instant

8 case.

9 As a result of a closer reading of the above cases, it becomes clear that the authority relied10

upon by the Board does not stand for the proposition that the 2005 Schedule may be wholesale11

rebutted. The above cases address (1) an abuse of discretion by a WCJ by basing an award of12

13 permanent disability on speculation and conjecture as in Liberty; (2) that an award of permanent

14 disability must be based on substantial evidence and that it is a WCJ's obligation to determine that

15 the foundation upon which a medical opinion is based constitutes substantial evidence as in the

16 Lewis case; and (3) that a WCJ does have discretion to go beyond the Schedule when said Schedule17 is silent on a specific body part and when the Schedule expressly authorizes going beyond the plain

18language of the Schedule as in Glass.

19

20 Applicant cites the case of LeBoeuf v. WCAB (1983) 34 Cal.3d 234 [48 CCC 587] to support

21 the contention that the 2005 Schedule can be rebutted. This case is no longer relevant as the holding

22 is based entirely upon pre-SB 899 law. This case involved the interplay of vocational rehabilitation

23 benefits, a determination by the Rehabilitation Bureau, and the interpretation of §4660 in its pre SB

24899 form which required that in determining percentages of PD consideration should be given to

25

26 applicant's diminished ability to compete in the open labor market. In LeBoeuf the Court held that a

27 permanent disability award could be reopened based upon a determination by the Rehabilitation

Section 4660 has been significantly amended pursuant to SB 899 since the holding in

2 LeBoeuf The requirement to consider the diminished ability to compete in the open labor market

3 was specifically removed from the statute. An applicant's eligibility for vocational rehabilitation

4 benefits is also no longer a factor in determining permanent disability as vocational rehabilitation

benefits have been specifically removed as a statutory benefit.6

Section 4660 now requires that in determining percentages of PD consideration should be7

8 given to diminished future earning capacity. Section 4660 states that an employee's diminished

9 future earning capacity shall be a numeric formula based upon empirical data encompassed within

10 the rating schedule designed to promote consistency, uniformity and objectivity. Notably, this new

2005 Schedule gives consideration to an employee's diminished future earning capacity by providing

a DFEC adjustment. The older Schedule did not have adjustments for diminished ability to compete13

in the open labor market thus supporting the argument that additional evidence could be introduced14

on the issue of determining permanent disability. As the 2005 Schedule gives consideration to an

16 employee's diminished future earning capacity by providing a DFEC adjustment there is no basis for

17 supplementing the record with additional evidence to address this issue.

18CONCLUSION

19The Board has improperly attempted to redefine the DFEC component of the 2005 Schedule

20

21 in excess of its authority and has attempted to usurp the legislative delegation of authority that has

22 been bestowed upon the Administrative Director.

23 By the Board permitting a party to present evidence of an individualized DFEC calculation, it

24ignores the mandates of SB 899 and §4660 to provide emergency relief to a system in crisis by

25providing a uniform, consistent and objective means to deliver benefits.

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27

1 Despite the Supreme Court and the Court of Appeals holding that the legislative intent

2 behind SB-899 must be taken into account, the Board has continued to ignore this directive when

3 issuing its decisions.

4Finally, the concept of the Schedule being wholesale rebuttable by traditional means has been

5abrogated by SB 899. Indeed a clear reading of the cases relied upon by the Board and applicant

6show that these cases are completely distinguishable on the facts and do not stand for the proposition7

8 that the 2005 Schedule is wholesale rebuttable.

9 DATE: Respectfully Submitted,

10DENNIS J. HERRERA

11 City Attorney

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13 7 g/

14 By:

15 DYANA M. LECHUGA

16 Deputy City AttorneyPETER J. SCHERR

17 Deputy City AttorneySEAN SULLIVAN

18 Deputy City AttorneyAttorneys for Defendant

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1VERIFICATION

3 I, Peter Scherr, hereby verify that I have read the foregoing Defendant's Petition for

4 Reconsideration and know the contents thereof; that the facts contained in said document are true

5 and correct, except to matters stated on information and belief, and as to those matters I believe them

6 to be true; that I make this verification on behalf of the officers of the party defendant because, as

7 counsel, I am more familiar with the facts of this case than are the officers.

8 Sworn under penalty of perjury under the laws of the State of California this 2 ND day

9 of March, 2009, at San Francisco, California.

1011 PE ERSC

Deputy City Attorney.12

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Wanda Ogilvie v. CCSF

1 PROOF OF SERVICE

2 WCAB NO. SFO 487778

I, Theresa Lacson-Kuan, declare as follows:

4 I am a citizen of the United States, over the age of eighteen years and not a party to theabove-entitled action. I am employed at the City Attorney's Office of San Francisco, Fox Plaza

5 Building, 1390 Market Street, Suite 700, San Francisco, CA 94102.

6 On March 2, 2009, 1 served the following document(s):

7 DEFENDANT'S ANSWER TO APPLICANT'S PETITION FOR RECONSIDERATION ANDPETITION FOR RECONSIDERATION

8

9 on the following persons at the locations specified:

10Joseph C. Waxman, Esq. Cathy Higuchi, Claims Examine

11 114 Sansome Street, Suite 1205 Sedgwick CMSSan Francisco, CA 94104 P.O. Box 14433

12 Lexington, KY 40512Workers' Compensation Appeals Board

13 Post Office Box 429459San Francisco CA 94142-9459

14

15 in the manner indicated below:

16 D BY UNITED STATES MAIL: Following ordinary business practices, I sealed true andcorrect copies of the above documents in addressed envelope(s) and placed them at my

17 workplace for collection and mailing with the United States Postal Service. I am readilyfamiliar with the practices of the San Francisco City Attorney's Office for collecting and

18 processing mail. In the ordinary course of business, the sealed envelope(s) that I placed forcollection would be deposited, postage prepaid, with the United States Postal Service that

19 same day.

20

21 1 declare under penalty of perjury pursuant to the laws of the State of California that theforegoing is true and correct.

22

23Executed March 2, 2009, at San Francisco, Califo ia.

24

25

2627 T resa Lacson-Kuan

STATE OF CALIFORNIADWC DISTRICT OFFICE

DOCUMENT COVER SHEET

ai eIJIII 11100 I IIIIII 111111 110 III 11111 BIl~l IIIII l IlIIs this a new case? yes N No 7/ Companion Cases Exist [ Walkthrough Yes No

More than 15 Companion Cases

03/02/2009 SSN: 559-76-0287Date: (MMIDDIYYYY)

F Specific InjuryADJ 1177048 04/01/2004Case Number I Cumulative Injury (Start Date. MM/DDIYYYY) (End Date: MMIDDIYYYY)

(if Specific Injury, use the start date as the specific date of injury)

Body Part 1: 319 + Body Part 3: 513

Body Part 2: 420 Body Part 4:

Other Body Parts:

Please check unit to be filed on ( check only one box)

[7 ADJ [] DEU [] SIF [] UEF Z VOC D INT ZRSU

Companion CasesD Specific Injury

Case Number 2 F Cumulative injury (Start Date: MM/DD/YYYY) (End Date: MM/DDfYYYY)(if Specific Injury, use the start date as the specific date of injury)

Body Part 1: Body Part 3:

Body Part 2; Body Partý, __ _

Other Body Parts: . : '"

DOCUMENT SEPARATOR SHEETIIIIIIII 1111IIIIII 11IIIIIII 11111 Rill11111 111111Product Delivery Unit ADJ

Document Type LEGAL DOCS

Document Title PETITION FOR RECONSIDERATION

Document Date 03/02/2009MM/DD/YYYY

Author CITY ATTORNEY SAN FRANCISCO

Office Use Only

Received DateMM/DDiYYYY