Workers Compensation Reform 2012 Part III: Permanent Disability Benefits

By Charles Cleveland | December 3, 2012

In 2004, Senate Bill 899 workers compensation reform slashed permanent disability benefits by as much as 70% to California injured workers. The 2005 permanent disability rating schedule drafted for injuries occurring on or after January 1, 2005 was rigged by the business and insurance community to give injured workers much lower disability ratings than the previous system. By law in SB 899, the permanent disability rating schedule in 2005 was supposed to be updated but that law was largely ignored up until the reform bill passed recently.

Thanks largely to the efforts of the California Applicants Attorneys Association, a group of dedicated workers compensation attorneys solely devoted to the rights of injured workers, as well as several labor unions, this Bill was a success in the improvement of permanent disability benefits for California injured workers. The Bill in its original form was another devastating cuts in benefits but it’s final form signed by Gov. Jerry Brown is an improvement overall.

The workers compensation reform of 2012 increases permanent disability benefits overall by 30% and both the minimum and maximum weekly rates will increase. These increases will be phased over a period of two years. There were some changes to the way permanent disability is rated. The reform of workers compensation benefits no longer allows for permanent disability to be awarded for psychiatric, sleep disorders, or sexual dysfunction problems that are not a direct result of the injury however will be allowed in catastrophic cases or a violent crime victim cases. Due to the complex nature of what a catastrophic injury could possibly be, it is highly recommended you hire an experienced local workers compensation attorney to guide you through this process. Workers compensation is full of pitfalls for the uninitiated so if you think your case is going to result in any level of permanent disability, make the call and higher and a knowledgeable Worker’s Compensation lawyer.

Senate Bill 863 also established a $120 million return to work fund for injured workers whose awards are disproportionately low compared to their wage losses after their workplace injuries. As of today is largely a mystery how to access this return to work fund however it is likely to be worked out by way of regulations which will probably be implemented within the next year.

The following is a list of questions and answers posted by the California Division of Worker’s Compensation:

How does SB 863 affect permanent disability (PD) benefits?

PD benefits will increase overall by 30%, as both the minimum and maximum weekly rates will increase. The increases will be phased in over a two year period.

The new minimum rate will be $160 per week, for all injuries on or after Jan. 1, 2013.

The new maximum rate, for injuries between Jan. 1 and Dec. 31, 2013, will be:

$230 per week for PD ratings less than 55 percent
$270 for ratings between 55 and 69 percent
$290 for ratings between 70 and 99 percent.

For injuries on or after Jan. 1, 2014, the new maximum rate will be $290 per week for all PD levels.

Are there changes regarding the types of injuries that benefits are available for?

In cases involving a physical injury, injured workers will no longer be able to collect additional PD benefits for sleep disorders or sexual dysfunction that did not directly result from those injuries. Additional PD for add-on psychiatric injuries will be limited to cases in which the physical injury is “catastrophic,” or where the injured worker was the victim of or a witness to a violent crime.

What effect will the elimination of sleep disorder, sexual dysfunction and psychological add-ons have on QMEs?

QMEs, like treating physicians, will not be able to comment on PD arising from sleep disorder, sexual dysfunction and non-excepted psychological add-ons, but can still comment on an injured worker’s need for treatment for any of those conditions.

Will PD ratings still take into account loss of future earning capacity?

The current method of modifying PD ratings to take into account an injured worker’s decreased future earning capacity, if any, has been removed, for injuries that occur on or after Jan. 1, 2013.

Are there changes in how or when PD benefits will be paid?

The current requirement that PD payments begin within 14 days of the last payment of temporary disability benefits is still in effect. However, PD payments made before a formal award of those benefits (called “advances”) may be deferred when an injured worker has returned to the same employer he or she worked for at the time of the injury and earns at least 85 percent of his or her pre-injury wages and compensation. An injured worker who moves on to another employer must earn 100 percent of pre-injury wages and compensation for PD advances to be deferred.

What is the “Return to Work Fund?”

SB 863 creates a “Return to Work Fund” that will be established and administered by the DIR. The fund is intended to provide an additional payment to injured workers whose PD ratings are disproportionately low compared to their wage losses after a workplace injury.