California Applicants' Attorneys Association:
New RAND Injured Workers’ Earnings Loss Study Shows Permanent Disability Compensation “Appallingly Inadequate”
Injured Workers not Returning to Former Job Suffer Total Earnings Loss, 25% of Injured Workers Lost Disability Ratings under SB 899
Contact: Steve Hopcraft 916/457-5546, Steve@hopcraft.com; Twitter: @shopcraft
SACRAMENTO, CA - The California Applicants’ Attorneys Association (CAAA), whose members represent Californians injured on the job, today responded to new findings in a RAND Institute study of permanent disability compensation. CAAA commented in writing to the Commission on Health, Safety and Workers Compensation (CHSWC) that workers who do not return to their at-injury employer experience an almost total loss of earnings, and that compensation for permanent disabilities is “grossly inadequate.” The RAND study found that the 25% of disabled workers who would have received a disability rating before SB 899, but receives no impairment rating under the SB 899 AMA Guides system, suffered significant lost earnings.
“This Working Paper confirms the findings from all previous RAND wage loss studies that permanent disability benefits in California are grossly inadequate,” said CAAA President Jim Butler. “Data in this study clearly show that California workers with permanently disabling work injuries experience high earnings losses, and that permanent disability benefits replace only a small fraction of those earnings losses.”
Butler also noted:
• Alarmingly, even those workers with the least severe impairments – those with a rating of 1% through 4% – experience an earnings loss of 30.9%, or almost one-third.
• Workers assigned ratings between 30% and 34% experience a 50% drop in earnings.
• Workers with even higher ratings experience an almost total loss of earnings.
• Workers with both low and high permanent disability ratings who do not return to their at-injury employer experience an almost total loss of earnings.
CAAA cited examples of the impacts on individuals disabled by work injuries:
• Workers assigned disability ratings between 1% and 4% will lose almost $142,000 in wages over the 10 year period following their injury, yet will receive permanent disability compensation ranging from just $870 (for a 1% rating) to $3,480 (for a 4% rating). Over a 10 year period following a disabling work injury, workers with ratings between 1% and 4% will suffer an earnings loss of almost $142,000.
• Workers assigned ratings between 30% and 35% will have earnings losses of $245,000 over 10 years
• Workers assigned ratings between 55% and 59% will lose over $305,000 in earnings over 10 years.
Butler also noted that, “Although all parties have acknowledged that many injured workers were cut out of the system by SB 899, how that change affected workers has been basically ignored.” In his letter to CHSWC, Butler pointed out that this study reveals that workers who were made ineligible for permanent disability compensation under SB 899 experience a major loss of earnings following their work injury.
The purpose of the RAND Working Paper is to "help DIR and CHSWC to develop a methodology for the eligibility determination and benefit amounts for the new Return-to-Work program." CAAA called for the “Return-to-Work” program included in SB 863 to provide supplemental permanent disability compensation to all injured workers who do not return to their at-injury job, as all of them experience high loss of earnings.
CAAA also strongly objected to RAND’s suggestion that a worker’s eligibility for this program can be determined only several years after the injury. “That suggestion essentially dismisses the findings of this study. This study found that virtually all workers who do not return to their at-injury employer – regardless of their assigned disability rating – experience an almost total loss of earnings. When it is already known that certain workers will experience a total loss of earnings, requiring those workers to wait several years to prove that earnings loss would be unconscionable,” wrote Butler.
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