IR #2004-19
Thursday, December 23, 2004

Rick Rice
(916) 327-9064

Division of Workers' Compensation submits permanent disability rating schedule emergency regulations to Office of Administrative Law for approval

SAN FRANCISCO - In an effort to meet the Legislature's stringent requirement for regulations implementing SB 899 by January 1, 2005, the California Department of Industrial Relations' (DIR), Division of Workers' Compensation (DWC) today filed its permanent disability rating schedule emergency regulations with the Office of Administrative Law (OAL), according to Andrea Hoch, administrative director of DWC.

"Earlier this year, the Legislature overwhelmingly passed workers' compensation reforms to fix a broken system in which costs were out of control," said Victoria Bradshaw, Secretary of the Labor and Workforce Development Agency, which oversees DIR. "Once these regulations are in place, California's disability rating system will for the first time, be based on objective medical findings instead of subjective factors and work restrictions manipulated by the legal system, just as intended by SB 899."

Permanent disability benefits are paid to injured workers who will never recover completely from their injury and will always be somewhat limited in their ability to work. Before those benefits can be paid, a worker's level of disability must be rated.

"This new schedule represents a fundamental shift in the way disabilities are rated and promotes consistency, uniformity and objectivity," Bradshaw said. "As a result, the new rating method will bring about the cost savings desired by an overwhelming majority of the Legislature and the Governor."

Once a worker's injury is well stabilized and unlikely to change substantially, the worker's level of disability can be assessed. Under the new regulations, an evaluating physician first rates the worker's impairment based on American Medical Association (AMA) guides. Then the impairment ratings are converted to a whole person impairment standard. The impairment standard is then adjusted to account for the worker's diminished future earning capacity - a completely new factor - occupation, and age at the time of injury to obtain a final permanent disability rating. The diminished future earning capacity adjustment is based on a numeric formula using the empirical data from the December 2003 study by the Rand Institute for Civil Justice. All categories of disability are increased to some extent under the new rating schedule based on the diminished future earnings capacity factor.

"Under the new schedule, workers with the most serious injuries, as measured by doctors using the AMA guides, will receive increased disability benefits while workers with less serious injuries may receive somewhat lower amounts," said Bradshaw. "This method will rid the disability rating system of subjective drivers that increase costs, which is a critical component of SB 899."

The proposed PDRS regulations have been provided to a diverse advisory group that includes employer, labor, medical provider, applicant and defense counsel and insurer representatives for comment - the same process used to develop the medical provider network (MPN) regulations.

OAL has up to 10 days to consider the regulations, but may approve them before 10 days have elapsed. The DWC has requested a Jan. 1, 2005 effective date for the regulations, which is consistent with deadlines contained in SB 899, enacted as an urgency measure by the Legislature.

The emergency regulations are posted on Internet at , click on rulemaking - proposed regulations in the left navigation bar. For more information on SB 899, workers' compensation reforms passed in April, visit the DWC Web site at