W.C.A.B. Rules PDRS Validly Adopted - Allows VR Evidence for Rebuttal

In a decision that is sure to find a mixed review from both the applicant and the employer and carrier community; the Workers' Compensation Appeals Board has finally issued its en banc decision in Costa v. State Compensation Insurance Fund.  In his appeal, the attorney for applicant had raised two specific issues that the Board determined were of significant public policy interest and required an en banc decision to address. 

The two main issues presented were:

1.       The validity of the permanent disability rating schedule adopted by former Administrative Director Andrea Hoch effective 1/1/05 and

2.      The ability to rebut that schedule through use of vocational testimony.

In a lengthy en banc decision the Appeals Board determined that the rating schedule adopted by the Administrative Director was a valid exercise of her policy-making authority and that the legislature did not express any intent to preclude the ability to rebut the rating schedule much as the prior rating schedule had been rebutted through use of vocational testimony.

A:     Rating Schedule Ruled Valid:

The Board reviewed the history involving the adoption of the 2005 rating schedule in detail as well as the records  that were  submitted for it to it to consider.  The Board had previously issued a Notice of Intent to admit some of the evidence submitted by applicant on the admissibility of the schedule even though there was a question as to whether the evidence was properly presented at the WCAB.  The Board considered the testimony of the Administrative Director before the legislature along with testimony by Dr. Robert Reville.  They also considered reports prepared for the WCIRB by Dr. Christopher Bighman and a report by Dr. Lewis from UC Davis reviewing the impact of the new rating schedule on various disabilities.  The Board was clearly swayed by the fact that the Administrative Director was given a very difficult job to perform in a very limited period of time.   Even the testimony of Dr. Reville noted that there really was no "empiric evidence" that the Administrative Director could utilize other than the information presented in the 2003 interim Rand study.  This was the study the legislation specifically ordered the Administrative Director to consider and the Board determined that she did so appropriately.  The W.C.A.B. notice the decisions of the Administrative Director in adopting regulations are presumptively valid and the attorney for applicant presented no significant compelling evidence that the Administrative Director was capricious or arbitrary in creating the new rating schedule.  The applicant attorney may not like the new rating schedule but that is not a basis for rejecting same.

B: Use of Vocational Testimony to Rebut the PDRS

The court then considered the issue of applicant's use of vocational testimony to rebut the PDRS.  The Board noted that the language in Labor Code § 4660 still contained description of the schedule as "prima facie" evidence as to the relationship of the factors of disability to the level of PD.  This is not a conclusive or even rebuttable presumption but merely a first showing as to the level of disability.  The Board noted that existing case law established by multiple decisions including those of the California Supreme Court allowed rebuttal of the permanent disability rating schedule through use of various methodologies including vocational rehabilitation testimony citing the LeBoeuf v. WCAB case and other authorities.  Since the language in the legislation is identical for that purpose there was no indication that the legislature intended to change the ability of the schedule to be rebutted through use of intrinsic evidence including expert testimony.

While the Board found that it was possible to rebut the schedule in this case they specifically rejected the testimony of the vocational counselor holding that it was unpersuasive and based upon inaccurate and false assumptions.   However the W.C.A.B. ordered the parties to adjust the applicant's claim for reimbursement of the expenses with language that suggests a good deal of the cost should be paid under Labor Code § 5811 (the W.C.A.B.'s discretionary authority to award costs).

The W.C.A.B. also rejected other arguments by applicant that the 2005 PDRS should not apply to this case.

The Board issued essentially the same decision as was issued by the WCJ awarding 6 percent partial permanent disability and ruling on the other matters before it.

Impact of Case:

A decision in this case portends several fairly serious consequences including the following:

1.       While nobody should very surprised that the WCAB is allowing the use of expert witnesses to rebut the schedule, what is problematic is that this decision gives us no actual answer on what we are to do with that testimony.  The legislation says that the earnings capacity factor shall be a modifier of the ratings.  It is unclear whether the Board accepts the analysis that somehow the vocational expert testimony is to be used to "modify" the standard rating or if it is to be in place of the standard rating.  Further this gives us no idea as to whether the same kinds of restrictions on use of vocational testimony also apply in the post 1/1/05 cases.

          Under the rules we have customarily used where vocational testimony is used to rebut the "ability to compete in the open labor market" standard, the vocational counselor is to consider only the injured worker's disability in relationship to ability to compete in the open labor market.  They were to exclude other factors such as age, linguistic difficulties, other non‑industrial conditions (i.e. obesity or non‑industrial health issues) and other factors.  It is unclear in this decision whether the Board intends the same limitations to apply.  If injured workers are entitled to include as factors of disability the inability to read or comprehend English, other non‑industrial factors which may not be particularly relevant to their disability, then we are looking at entirely different kind of rebuttal testimony with a much greater potential to dramatically increase PD ratins..

2.      Surprisingly the Appeals Board appears to be allowing the bills for the expert testimony to be presented as an expense under Labor Code § 5811 even though It rejected the testimony of the vocational counselor as being unsubstantial.  Traditionally vocational testimony has been ordered reimbursed when it was considered to be useful to the Board or relied upon by a judge in arriving at some or all of the decision on the issue of permanent disability.  In this case the trial judge and the Board rejected the testimony of the vocational counselor finding it to be completely useless and supported by any evidence.  Yet the Board indicates that the costs for the vocational expert are to be adjusted by the parties implying that the vocational counselor is entitled to be paid for her time in testifying and preparation even though the testimony proved to be absolutely useless before the Board.

          This certainly has a significant impact from a day‑to‑day practice standpoint.  If vocational counselors get paid for providing testimony which is useless to the Board, there is absolutely no disincentive to an applicant attorney to hiring a counselor in every single case where there is a potential to expand the permanent disability rating.  Even if the testimony is rejected, considered unhelpful or useless, based on the holding in Costa the applicant attorney has an excellent chance of getting the costs paid for by defendants.  One of the limiting factors in the litigation over PD and the use of vocational counselors, has been the potential that an applicant attorney, if the testimony turned out to be useless or not relevant, might not have been reimbursed for the costs and would have to have the cost assessed against their client as a litigation cost.  Since the holding of the Board in this case supports the concept that regardless of the usefulness, admissibility or value of the testimony, the cost is reimbursable, there is nothing to prevent applicants from hiring such experts in any case where they or their client is unhappy with the PD rating.  Given that almost all applicant attorneys, and many WCJ's, are unhappy with the results of the new PDRS, the potential for a dramatic expansion of expert witnesses, with the attendant $5000- $10,000.00 expense for dueling experts certainly exists.  There is nothing to prevent the use of such experts in a much higher percentage of cases than before as there is absolutely no disincentive for Applicant Attorneys not to hire a vocational counselor except in those cases were the AMA Guides provide for a higher rating than vocational testimony would support.  And in those cases the defendants may very well be interested in hiring vocational counselors to rebut the schedule in order to show that impairments which rate very highly under the AMA Guides actually result in no loss of earnings capacity.

          While the recent amendments to the Labor Code will tend to eliminate the reliance by Applicant Attorney's (and defendants) on a "stable" of doctors, we will now have an new kind of expert, perhaps as important and a likely to make efforts to manipulate the data presented to the W.C.A.B. to favor the hiring party much the same as many complained about the polarized medical-legal community

3.      The Board ruled that the applicant attorney with this evidence had not demonstrated that the rating schedule is invalid.  It is unclear whether the Board thinks there might be other evidence out there which could be used to invalidate the schedule.  It seems unlikely, but their cautionary language certainly keeps their door open for applicant attorneys to keep running at this issue and developing more and more evidence on it.  The one argument that the Board did firmly reject was the assertions by applicant that the legislative intent was to have a new PDRS which would increase the permanent disability Awards.  The Board found no evidence at all in the legislative history of the statute which supported this conclusion and firmly rejected the argument.

Since the case is one which the defendant won, the above issues are not likely to be challenged by defendant in further appeals by defendant.  It is certainly possible that the applicant attorney may take this case up further in reality the court's decision regarding use of rebuttal testimony provides a substantial victory for the applicant's bar.  It is entirely possible that this case will not be challenged with further appeal and we will have to wait for the next series of decisions to develop these issues further.

A copy of the decision can be found by clicking on the name above,

Richard M. Jacobsmeyer*