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Diminished Earning Capacity
There has been a movement afoot in the applicant’s attorney bar
to push the notion of Diminished Earning Capacity (DEC) in place of
the permanent disability rating. This issue has rearing its head
in Orange County and appears to have some legs.
The main thrust of the argument is that applicant attorneys feel
that the current rating manual is insufficient to determine the
actual wage loss suffered by applicants. This argument derives its
legal footing from Labor Code § 4660 which indicates that in
arriving at an applicant’s permanent disability, some “consideration
being given to an employee's diminished future earning capacity.”
It appears that applicant attorneys are attempting to determine what
the applicant’s DEC is and then argue that the percentage loss
should be the rating of permanent disability. CAAA has issued a five
step recommendation for attorneys making this argument. It is
summarized as follows:
Step one – Challenging the 2005 schedule
CAAA’s theory is the an attorney need only show that the 2005
schedule does not measure the true level of the applicant’s decrease
in functional earning capacity; CAAA does recommend that the
attorney leave open the argument that the 2005 schedule is invalid.
Step two – Start with the intake
Obtain as much detail about the pre-injury educational, background,
work, and earnings history at the intake of the claim in the
applicant’s attorney’s office. This will minimize the time necessary
gathering this info for the vocational rehabilitation expert, and
shortens preparation time between the final report and filing of the
Declaration of Readiness to Proceed.
Step Three – Developing the Medical Record
Once the vocational rehabilitation expert has an understanding of
the pre-injury earnings capacity of the employee, the expert needs
to determine how these factors will impact post-injury earnings
capacity. AMA guides provide for the physician to address other
factors in determining the impact of an injury on both the
Activities of Daily Living and Work functions. Page 15 of the Guides
is quoted: "it is the physician's responsibility to determine if the
impairment results in functional limitations."
Step Four – Quantifying DFEC with a Vocational Expert
Also refers to CAAA practice tip 35, which I have not seen. CAAA has
a directory of recommended voc experts. A "transferable skills
analysis" and the gathering of wage and physical limitation
information needs to be done. The skills analysis will assist in
using data from the government in determining pre-and-post-injury
job availability. The end goal is a DFEC expressed in terms of a
percentage loss from pre-injury wages.
STEP FIVE – The MSC Statement
If the goal is to also challenge the validity of the schedule in
general, the applicant’s attorney needs to include all of the
additional issues, exhibits, witnesses, etc per Practice Tip 33
(again, which I have not seen).
A list of suggested issues and evidence is outlined as follows:
* Proper calculation of DFEC
under SB899 and LC 4660, 5703, 4061.5, and 9805 8 CCRR;
* Pay of vocational rehabilitation expert under LC 5811;
* Judicial Notice of Chapters 1 & 2 AMA Guides, 5th Edition;
* Letter Offering to use an Agreed Vocational Rehabilitation
Expert;
* Curriculum Viti of the Vocational Expert;
* Article "proving permanent disability under SB899” (per
practice tip 28);
* "Percentage of Vocational Disability Defined by Billy
McCroskey, Ph.D. (2005);
* Determining Diminished Earning Capacity--the SEDEC Method by
Robert Hall, PhD (2005) (ref. Practice tipe 32);
* Judicial Notice of Federal Governments Dictionary of
Occupational Titles;
* Witness--the Vocational Rehabilitation Expert;
This argument should be expected at
any time with any case. Applicant’s attorneys have indicated that
anytime an applicant may be found a Qualified Injured Worker. It is
suggested that in defending against this argument that initially it
is argued that the schedule is valid and that this process of
determining the DEC is not necessary.
Another recommendation is carriers, TPAs and defense attorneys
generate a list of Vocational Rehabilitation Experts to use in case
this argument is made. Note that the Vocational Rehabilitation
Expert analysis does not have to be done before the Mandatory
Settlement Conference. However, the work up should be done and the
witness should be listed on the pre-trial conference statement.
*For further information go to
www.workcompcentral.com and find:
-Determining Diminished Earning Capacity: 'SEDEC' posted on
04/10/2005
-Measurement of future diminished earnings capacity posted
11/09/2005
Contact Parker & Irwin
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