Our research provides a mixed picture of California’s PPD process, disability schedule, and the adequacy of benefits. Almost every person we interviewed expressed concerns about the PPD system and made
suggestions for reform. Our quantitative analyses suggest that many of the criticisms raised by interviewees were applicable to only part of California’s PPD system and were not accurate descriptions of the entire system. On the other hand, our quantitative studies suggest basic
inefficiencies and problems with the PPD system that are broader and more systematic than most interviewees noted.
When we integrate our qualitative and quantitative findings, the following problem areas emerge.
Low-Rated PPD Claims: Need for a Simple Process
California’s present PPD process is poorly suited to deal with minor injury claims, which dominate the numbers, the claims process, and every element of cost except rehabilitation. These claims, which
involved relatively low stakes, should be resolved quickly and easily. Nevertheless, they go through the same process as the more complex, higher-stakes, serious disability claims and consume most of the legal fees (and presumably, other transaction expenses) involved in handling PPD claims. This process produces disability ratings for minor claims that do not seem to be consistently determined and that have little relation to the wages lost by workers. The failure to recognize and deal effectively with low-rated PPD claims not only burdens injured workers and employers, but also clogs the entire workers’ compensation system in California.
High-Rated Claims--Need to Validate the Disability Schedule
Our wage loss analysis shows greater validity to ratings for high- rated claims, yet our analyses of DEU and WCIRB ratings suggest that different raters substantially disagree about ratings for the same case.
The relatively low predictability of ratings indicates that parties must be uncertain about the appropriate disability rating for these serious claims--a lack of certainty that probably contributes to litigation. Uncertainty and unpredictability allow parties to
manipulate the rating process. The high financial stakes of indemnity payments for serious disability claims provide an incentive to do so. Both applicant and defense lawyers reported to us that they can and do manipulate the present rating process.
Limited Wage Recovery for All Injured Workers
Our wage loss analyses indicate that under the current workers’ compensation system there are substantial wage losses for workers at all disability levels and only limited wage recoveries. When we consider both injured workers who leave the labor force as well as the reduced level of wages among those who return, indemnity payments available through the California workers’ compensation system seem inadequate for workers at all levels of disability. On the other hand, when we
consider only the relative wages of workers who return to work, the indemnity payments approach reasonable compensation for workers with the most serious injuries. Under either analysis, the amount of
compensation for workers with less serious injuries seems neither related to the amount of their wage loss nor adequate to compensate wages lost.
The Problem of Return to Work
The wage loss analysis also indicates that the return of injured workers to work is a significant and complex problem, one that is not well addressed by the current workers’ compensation system in
California. Many injured workers, even those with relatively minor injuries, permanently exit the California workplace. Many others intermittently enter, leave, and re-enter the workforce after their workplace injuries. These losses to the workforce represent not only
wage losses to injured workers, but also a loss of productivity and output for California’s economy.
Improving the Utility of Medical Evaluations
The process for obtaining medical evaluations of injured workers and the quality of medical evaluation reports are of concern to almost everyone we interviewed. California’s current reliance on treating doctors as the principal source of evaluations was broadly criticized because (1) treating doctors are often unfamiliar with the language and needs of the workers’ compensation system, (2) treating physicians are perceived by some to be biased, and (3) the legal presumption of
correctness for a treating doctor’s evaluation creates an arbitrary tactical advantage to the party selecting that doctor. Because treating doctors are at times chosen more for their forensic than their treating skills, some interviewees are concerned that the quality of a worker’s medical care is compromised.
Reducing Burdens on the WCAB
Our interviews with participants and stakeholders suggest that the WCAB court system is poorly utilized and burdened by unnecessary
paperwork and litigation issues.
Obtaining Needed Information
Finally, both our analysis of existing workers’ compensation data as well as our efforts at proposing feasible reforms confront a pressing need to develop comprehensive and useful claims-level data for PPD
claims. The databases that we used in this report provide valuable, but limited, information. They were not designed to support research, are inadequate for needed analysis of the California PPD system, and limit changes that could improve the treatment of PPD claims.