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PERMANENT DISABILITY (PD)

"While there is no statutory definition of permanent disability, it has been judicially recognized that a permanent disability is one which causes impairment of earning capacity, impairment of the normal use of a member, or a competitive handicap in the open labor market." Luchini v. WCAB (1970) 7 Cal.App.3d 141. "Permanent disability indemnity has a dual function: to compensate both for actual incapacity to work and for physical impairment of the worker's body, which may or may not be incapacitating." (J. T. Thorp, Inc. v. WCAB (1984) 153 Cal. App. 3d 327, 333

“Thus, permanent disability payments are intended to compensate workers for both physical loss and the loss of some or all of their future earning capacity.” Brodie v. WCAB

In Baker v. WCAB (2011) 52 Cal. 4th 434, the Supreme Court noted that "Permanent disability and life pension benefits are intended to compensate the injured worker for the long-term, residual effects of an industrial injury once the worker has attained maximum medical recovery."

Inability to compete in open labor market or diminished future earning capacity (DFEC):

Labor Code §§4660 and 4660.1: For many decades Labor Code §4660(a) provided:

 "(a) In determining the percentages of permanent disability, account shall be taken of the nature of the physical injury or disfigurement, the occupation of the injured employee, and his age at the time of such injury, consideration being given to the diminished ability of such injured employee to compete in an open labor market."

SB 899 changed subsection (a) to:

"(a) In determining the percentages of permanent disability, account shall be taken of the nature of the physical injury or disfigurement, the occupation of the injured employee, and his or her age at the time of the injury, consideration being given to an employee's diminished future earning capacity."

Presumably the change from "diminished ability of such injured employee to compete in an open labor market" to "diminished future earning capacity" was a sea change. But in Ogilvie v. WCAB (2011) 197 Cal. App. 4th 1262, the Court of Appeal opined:

"Indeed, the terms "diminished future earning capacity" and "ability to compete in an open labor market" suggest to us no meaningful difference, and nothing in Senate Bill No. 899 suggests that the Legislature intended to alter the purpose of an award of permanent disability through this change of phrase."

SB 863 addressed the issue by adding Labor Code §4660.1 for injuries on or after 1/1/13, which eliminated from consideration diminished future earning capacity or ability to compete in the labor market. Subsection (g) provides "Nothing in this section shall preclude a finding of permanent total disability in accordance with Section 4662,” so the concept of total loss of earning capacity or ability to compete in an open labor market lives on in relation to total disability.

Is it now, for injuries on or after 1/1/2013, all under Labor Code §4662 or nothing more than an AMA Guides or Guzman rating? Or will the appellate courts find that other factors need to be considered? The schedule is still rebuttable, and there is a long tradtion of viewing permanent disability as loss of earning capacity.

Also new in Labor Code §4660.1 is limiting permanent disability for certain compensable consequences of physical injuries. A worker can get treatment for sleep dysfunction, sexual dysfunction, or psychiatric disorder; but psychiatric permanent disability caused by a physical injury is compensable only if it results from either of the following:

(A) Being a victim of a violent act or direct exposure to a significant violent act within the meaning of Section 3208.3.
(B) A catastrophic injury, including, but not limited to, loss of a limb, paralysis, severe burn, or severe head injury.

SB 863 made some other significant changes to long-standing concepts: Revised Labor Code §4650 no longer requires permanent disability advances "if the employer has offered the employee a position that pays at least 85 percent of the wages and compensation paid to the employee at the time of injury or if the employee is employed in a position that pays at least 100 percent of the wages and compensation paid to the employee at the time of injury, provided that when an award of permanent disability indemnity is made, the amount then due shall be calculated from the last date for which temporary disability indemnity was paid, or the date the employee’s disability became permanent and stationary, whichever is earlier."

SB 863 also added subsection (i) to Labor Code §4061: “No issue relating to the existence or extent of permanent impairment and limitations resulting from the injury may be the subject of a declaration of readiness to proceed unless there has first been a medical evaluation by a treating physician and by either an agreed or qualified medical evaluator.”

In keeping with the policy that "The employer shall only be liable for the percentage of permanent disability directly caused by the injury arising out of and occurring in the course of employment," (Labor Code §4664(a)) permanent disability is subject to apportionment.

For how to compute, see Labor Code §4658 and PD Rating

Label Item Links Comments
Labor Code Labor Code §4660 for injuries before 1/1/13 (for DOI from 1/1/05 but may include some earlier DOIs)

Labor Code §4660.1 for injuries on or after 1/1/13

Labor Code §4662: total permanent disability
LC §4660


LC §4660.1

LC §4662
 
  Labor Code §4658 establishes rates based on percentage and date of injury

Permanent disability advances not required "if the employer has offered the employee a position that pays at least 85 percent of the wages and compensation paid to the employee at the time of injury or if the employee is employed in a position that pays at least 100 percent of the wages and compensation paid to the employee at the time of injury...."
LC §4658


LC §4650
 
Labor Code § §4663 & 4664: Apportionment LC §4663LC §4664  
Regulations/Rules  “Permanent and stationary status” is the point when the employee has reached maximal medical improvement, meaning his or her condition is well stabilized, and unlikely to change substantially in the next year with or without medical treatment. 8 CCR 9785  
Forms   
Cases   See above    
Websites    
Practice Tips    
Articles
SB 863 Checklist and Reference Guide by Robert G. Rassp, Esq. PD Checklist   
Magazine Articles
 
Article CSIMS: A Systematic Definition of “Catastrophic” from a Clincical Perspective
CSIMS on Catastrophic
Roundtable    
Miscellaneous      

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