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Story Courtesy of CalChamber
The California Supreme Court has rejected the City and County of San Francisco's petition for review of the First District Court of Appeal's earlier decision in the Ogilvie case. The case involves how permanent disability (PD) payments are calculated in the workers’ compensation system.
The California Chamber of Commerce had urged the California Supreme Court to review and overturn a decision rendered by the First District Court of Appeal last year that created an ad hoc approach to PD calculations.
That decision reintroduced the use of subjective, unquantifiable factors that the Legislature had squarely rejected when they enacted reforms in 2004. CalChamber believes more workers compensation litigation and higher costs across the board for California businesses may result from allowing the First District Court of Appeal’s decision to stand.
As a result of the Supreme Court’s denial, participants in the workers’ compensation system will be forced to litigate aspects of the permanent disability calculation that were thought to have been resolved in the 2004 reform legislation. By opening up the calculation to individualized determinations based on “expert witnesses,” the decision will largely obliterate the cost savings to employers that the Legislature worked so hard to achieve.
The First District's decision largely supports the Workers' Compensation Appeals Board's (WCAB) contention that the diminished future earnings capacity (DFEC) adjustment in the calculation of permanent disability awards could be rebutted. But it disagreed with the WCAB's methodology and remanded the case to the board to further develop the record on how rebuttal can occur.
In its brief urging Supreme Court review, CalChamber explained that the Legislature sought to eliminate the vagueness and subjectivity of the old workers’ comp system by spelling out the mandatory method for calculating the percentage of PD. The stated purpose of the statute enacted in 2004 was to promote “consistency, uniformity and objectivity.”
CalChamber argued that the 2004 reforms accomplished that goal by defining the elements that make up the PD percentage calculation in terms of objective, measurable factors, empirical evidence and aggregate and averaged data.
In short, CalChamber pointed out that the new system was designed to eliminate subjectivity and guess work from PD calculations, thereby ensuring that similarly-situated employees are treated equally, promoting fairness and consistency across the board.