What is a Workers’ Compensation Permanent Disability Percentage?

Why is it Important?

In California Workers’ Compensation Law, a Permanent Disability Percentage is a number which is assigned to an Injured Worker’s Permanent Disability.  In many circumstances, Permanent Disability Percentages make no sense. It is quite possible that two Injured Workers with identical injuries can end up with completely different Permanent Disability Percentages.  This article will explain how this process works and what it means for permanent disability benefits in California.

In order to calculate an Injured Worker’s Permanent Disability Percentage, an assessment of the Injured Worker’s Whole Person Impairment (WPI) is required.  This WPI is placed within a formula and the Permanent Disability Percentage is generated. The Permanent Disability Percentage is important to determine how much compensation an Injured Worker will receive as a result of their work injury.

What are the Ways that CA Permanent Disability is Calculated?

In California Workers’ Compensation Law, there are essentially three ways of determining a Permanent Disability Percentage.  The most common way of involves the determination of Whole Person Impairment (WPI.)  This number is generated through the Opinion of a Medical Expert.   In California, Medical Experts can be a Qualified Medical Evaluators, Agreed Medical Evaluators, Treating Physicians or Regular Physicians appointed by a Workers’ Compensation Judge.   With respect to Significantly Disabled Injured Workers, there are statutory laws or vocational experts that can be determinative.   These are the two other ways that disability may be assessed.

In order to calculate the Whole Person Impairment, the Medical Expert will look at the Injured Worker’s injuries, their residual medical problems and their difficulties in performing Activities of Daily Living (ADLs)  The Medical Expert will make an assessment in accordance with the American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment (5th Edition.)    (AMA Guides)

The AMA Guides were developed by medical specialists and are consensus-derived estimates that reflect the severity of the medical condition and the degree to which the impairment decreases an individual’s ability to perform common activities of daily living (ADL), excluding work. (Yes. The AMA Guides were not designed for the purposes of addressing work injuries. Additionally, the AMA Guides do not cover every body part or diagnosis that an Injured Worker may suffer.) Impairment ratings are designed to reflect functional limitations and not disability. In California Law, the Medical Experts are allowed to use the “four corners” of the Guides to provide the most accurate assessment of the Injured Worker’s disability.  This is very important.  As noted above, the AMA Guides do not address every possible body part or condition that may be result of an industrial injury.  Therefore, the Evaluator may have to find other sections of the Guides to address the impairment.

explaining permanent disability calculations

How are Psychiatric Injuries Calculated?

In California, Psychiatric Injuries are assessed differently. The Medical Evaluator usually assesses Whole Person Impairment by assigning a Global Assessment of Function Score or GAF Score.    The Medical Evaluators who generally make GAF assessments are Psychiatrists, Psychologists or Neuro-Psychiatrists.  The GAF Score measures both Symptom Severity and Level of Functioning. The GAF score is then translated into a Whole Person Impairment. The conversion chart is on is 1-16 of the Schedule for  Rating Permanent Disabilities. http://www.dir.ca.gov/dwc/PDR.pdf

When is a Permanent Disability Percentage Assigned?

In order to assess an Injured Worker’s Permanent Disability Percentage, it is necessary that the Injured Worker be found permanent and stationary.  Permanent and stationary is defined as the point in time when the employee has reached Maximal Medical Improvement (MMI.) This means that his or her condition is well stabilized and is unlikely to change substantially in the next year with or without medical treatment. (AMA Guides, P. 2.)

Do all Medical Evaluators Come Up with the Same Impairments?

The simple answer is “no.” As a practitioner, I have seen the opinions of Medical Evaluators can widely vary. In my practice, I have seen on doctor assign a 0 WPI and another doctor assign a 100 WPI on the same case.

How is the Permanent Disability Percentage Calculated?

Is there a Cap to the Percentage?

A Permanent Disability Percentage is calculated through a formula.  The State has a publication called the California Permanent Disability Rating Schedule. http://www.dir.ca.gov/dwc/PDR.pdf. A final permanent disability rating is obtained only after the impairment rating obtained from an evaluating physician is adjusted for diminished future earning capacity, occupation and age at the time of injury.  Please note that for injuries on or after 1/1/13, the DFEC multiplier is 1.4.

There is a range of percentages. A Permanent Disability Percentage can range from 0% to 100%. Zero percent signifies no reduction of earning capacity while 100% represents permanent total disability. A Permanent Rating Percentage between 0% and 100% represents Permanent Partial Disability.

Permanent Total Disability is considered 100% disability.   One Hundred Percent disability represents a level of disability at which an employee has sustained a total loss of earning capacity. Some impairments are conclusively presumed to be totally disabling. (Lab. Code, §4662.)  In certain circumstances, however,  an Injured Worker could obtain a 100 percent award and still be able to work.

What is the Formula that Permanent Disability Percentage Calculated?

A final Permanent Disability Rating Percentage is obtained only after the impairment rating, Whole Person Impairment, which is obtained from the Evaluating Physician is then adjusted for Diminished Future Earning Capacity, Occupation and Age at the time of injury.  In some cases, there can be multiple evaluators and multiple ratings.

Within the calculation, the Disability percentages varied on based upon occupations and age. For example, a Furniture Mover would their rating adjusted higher for a Back Injury. A  Secretary would have their rating adjusted lower for a Back Injury. For Injured Workers who are under the age of 39, their Permanent Disability Percentage is reduced. For Injured Workers who are above the age of 39, their Permanent Disability Percentage is increased.

California Worker’s Compensation Law also allows for Insurance companies to reduce awards via apportionment. This means that the insurance company is only responsible for the Permanent Disability caused by the work injury.

How does the Rating Percentage Translate into Money?

Each Rating corresponds to a fixed number of weeks of compensation. Compensation is paid based on the number of weeks and the weekly compensation rate, in accordance with

Labor Code section 4658.  The compensation rate will be based upon the Injured Worker’s Average Weekly Wage.

Why are Permanent Disability Percentages Important?

Certain Permanent Disability Percentages can trigger special benefits under California Workers’ Compensation Law.  There are two percentages which are very important in California Workers’ Compensation Law, 70 and 100 percent.

A 70 percent disability provides for a Life Pension. The Life Pension is paid out after the Permanent Disability percentage has been fully paid.  Therefore, the difference between 69 percent and 70 percent is very significant.   Insurance Companies will fight very hard to prevent an Injured Worker’s claim from reaching 70 percent.  Also, the payment rate of the weekly benefit may also increase as well if a disability percentage reaches 70 percent.

A 100 percent disability is the most significant rating of all.   This percentage results in a payment of at the rate of Total Temporary Disability (TTD)  for the Injured Worker’s life.  Therefore, there is a significant difference from a 99 percent award and a 100 percent award.  The TTD rate will usually be higher than the indemnity rate for the weekly payments under a 99 percent award.  Again, just like the 70 percent disability, the Insurance Companies will fight hard to keep an Injured Worker’s claim to be below 100 percent.

How is the Disability Assessed?

A single injury can result in multiple impairments to several parts of the body. For example, an injury to the arm could result in limited elbow range of motion and shoulder instability. Multiple impairments must be combined in a prescribed manner to produce a final overall rating.

Similarly, if an Injured Worker has a number of injured body systems, each of them needs to be combined to come up with the overall Permanent Disability Percentage.  For example, an Injured Worker can have an orthopedic injury and an internal medicine injury.

What does a Final Rating Look Like?

Final ratings come out in strings. The following is a string: – 8 – [5]10 – 470H – 13 – 11%

This includes the rating code, the WPI, the FEC adjustment, the rating after the FEC adjustment, the Occupational Group, the Occupational Group adjustment Letter Code, the Occupational Group Adjustment and the Age Adjustment.

Who Rates Reports?

The State of California employs trained specialists who are charged with the rating of medical reports. They work for the Disability Evaluation Unit (DEU) and are labeled as Disability Evaluators.   Parties to a Workers’ Compensation claim can request a consultative rating from the Disability Evaluation Unit.

Also, in workers’ compensation law, there are many skilled attorneys and rating specialists who are able to rate reports. A skilled Applicant’s Attorney should be able to rate reports.  The ability to rate reports is important in both determining and increasing permanent disability.
