Summary :
In the early 2000s, California workers’ compensation insurance premiums were skyrocketing and the system was in crisis. Plagued by high costs and inefficiency, this prompted a sweeping reform bill in April 2004 that, among other things, dramatically changed the way individuals with permanent partial disability (PPD) claims were compensated. In particular, the 2004 reform bill (California Senate Bill 899, 2004) required disability ratings to be based on the fifth edition of the American Medical Association’s Guides to the Evaluation of Permanent Impairment (Cocchiarella and Andersson, 2001). The AMA Guides are measures of functional impairment based on “objective” clinical evidence, and are thought to be less subjective than the old California system. In addition to adopting the AMA Guides, SB 899 also required the use of empirical data on earnings losses to determine benefit levels. The purpose of these adjustments was to correct for inconsistencies that were found between disability ratings and earnings loss estimates across different types of injuries (Reville et al., 2005). The earnings loss estimates were applied to the disability ratings through what are called future earnings capacity (FEC) adjustments. These FEC adjustments were multipliers from 1.1 to 1.4, depending on the type of injury. For a period, costs fell and the system appeared to be stabilizing.

Copies :