Tuesday, February 14, 2012

Diminished Earning Power and its Social-Scientific Expressions

A worker who suffers a work-related injury faces numerous burdens—medical bills, lost time from work, lasting bodily impairment—and the workers’ compensation system has its methods (fair or otherwise) for addressing these various issues. One area, however, on which the law provides less clarity is how a worker’s weakened job prospects impact his or her right to workers’ compensation permanent disability payments. This is a dynamic and live question, fraught with ambiguity.

Everyone involved agrees that the loss in employment opportunities can give a right to increased permanent disability money. And all parties also agree that the California state legislature, in enacting SB899, the 2004 workers’ comp system overhaul, intended to change the system used to calculate that increase. But the nature of that change is a point of much ongoing and confusing debate, facilitated (as ever) by cryptic statutory language and pseudo-elucidating appellate holdings.

While it is surely too soon to tell, the Oakland Workers’ Comp Appeals Board recently issued a ruling in the case of Gonzalez v. McCullock that indicates one possible new way that applicants, attorneys, and courts may bring evidence to bear on this important question.

By way of background, SB899, the 2004 change in law, reformed the system with the ostensive aim of turning to scientific methods—a court must use “a numeric formula based on empirical data and findings that aggregate the average percentage of long-term loss of income resulting from each type of injury for similarly situated employees.” No more speculative dueling experts; no more wild-eyed armchair conjecture—workers’ compensation for the twenty-first century requires a scientific, socially-informed perspective.

The Court of Appeals gave its various thoughts on a couple of occasions. The one that matters now, Ogilvie-2011 (not to be confused with any earlier Ogilvie) clarified the proper approach. First, apply the default ratings on earnings losses (based on an approved social study by the RAND Institute for Social Justice). Second, rebut those ratings, in the few situations where you can—if the ratings reflect a faulty assumption for the case at hand; if the injury not only impairs the worker but also actively interferes with the worker’s rehabilitation; or if the relevant study sample does not include cases similar to the case you’re dealing with.

But once you show that a case is the sort that falls outside the default rules for future earnings loss—what then must you do? It is here that Ogilvie-2011 becomes less clear. (This is hardly an attack on the judges; it is not easy business prescribing sound methods in social science to anyone, let alone the most interested parties imaginable.) We have clear guidelines about what we must not do: do not consider the impact of factors other than the work injury; do not look at the final calculation and attack it without explaining what went wrong in its genesis. But granting all that, still—what is to be done?

This is where the new Gonzalez decision offers its suggestion.

To sum it up: dueling experts stood before the court, one Stauber for the defense, and one Malmuth for the applicant. The former appears not to have impressed the court much, and the opinion says little of him. But the board was quite smitten with Malmuth’s method, and subjects it to the dual tributes of exposition and endorsement.

First, Dr. Malmuth suggests looking at two populations: one the one hand, the population of workers who are generally similar to the particular worker (in skills, position, &c.) but who are not injured; and on the other, a population of workers who are similar to the worker and who also share the same kind of injury. EDD and the Federal Government have relevant data for the attainment of these data. Second, compare the earnings between the two groups to find out how much this sort of impairment impacts earning capacity.

It is simple and elegant. It is perhaps as close as a workers’ comp calculation can get to a controlled experiment, as it is designed to weed out all distinctions between the two groups of workers apart from the a particular type of work-related injury. It thus delivers good evidence about the impact of the work injury, while ignoring extraneous factors that might give one worker an unduly high or low estimate of lost future earnings. The Ogilvie-2011 court was quite concerned about this.

There are other virtues, as well. The legislature and the Ogilvie-2011 court sought to filter out the particulars of one worker’s situation and look at the sort of injury at hand, rather than this particular injury. (The quixotic task—as old as mankind itself—of converting suffering into an abstraction.) Malmuth shows a path forward on this front.

Finally, this new take on Malmuth’s method helps clarify how future earnings capacity interacts with other permanent disability adjustment factors—like age and occupation. Does the future earnings adjustment replace the other adjustments? Since Malmuth controls for factors like age and profession, there is no replacement.

It certainly remains to be seen whether this method is a blueprint for social-scientific diminished earnings’ capacity calculations for years to come, or a mere flash in the pan. Quite possibly it will only be one of several formulae that fall within Ogilvie’s constraints. There is also a real chance that higher courts will not treat it kindly. Nevertheless, this noble attempt to resolve the conundrum has hit most of the marks that were set for it by the legislature and by the Court of Appeals. We do not know for now whether Dr. Malmuth and the WCAB have shown us what lies at the end of this tortuous path. But at the very least, they have given us a helpful lesson on constructing the sort of lamp we will need to tread boldly forward.