It’s COMPlicated – Is the Bargain Still Grand?

Everyone agrees that workers’ compensation is too complicated. But one aspect of it rises above others on the complicated scale – permanent partial disability benefits.

The difficulty of finding the right balance for permanent partial disability benefits is at the heart of the differences among approaches, and it started with the grand bargain itself.

The grand bargain means that benefits for workers’ compensation claims aren’t determined like claims based on the negligence of another party. Workers’ compensation entitles workers to benefits if their injury happened in the course and scope of their employment, even if the injury didn’t result from anyone’s negligence. It’s a tradeoff: benefits are available for all work-related injuries, but they’re not as large as they would be if the employer’s negligence had caused the injury. The question for which no universal answer exists is, what’s a fair trade-off for injured workers between what they gave up and what they gained?

If you looked for answers in state statutes, you’d find overwhelming the permutations in permanent partial benefits. My state studied the differences in 2011 for only eleven states, and the report was thirty-two pages long. This year, the table on permanent partial disability in the joint publication of WCRI and the IAIABC on workers’ compensation laws was only six pages, but the print was very small.

Among the differences among states were:

Basis of Benefits. Many states base certain permanent partial disability benefits on the injured worker’s impairment. Most of them use the AMA Guides to the Evaluation of Permanent Impairment to measure the impairment. However, six hardbound editions are published, and beginning in 2021, the first of what will be annual virtual updates became available. Currently, states only use the third, fourth, fifth, sixth, sixth 2021, and sixth 2022. Impairment ratings for the same condition are different in each edition, which brings up the question of, which is the right one to use?

The impact of the choice of edition is significant enough that a Kansas Court of Appeals opined in Howard Johnson v. U.S. Food Service (Kansas Court of Appeals No. 117,725; August 3, 2018) that Kansas’s move from the fourth edition of the guides to the sixth edition was unconstitutional. The opinion stated, “(T)he gradual erosion of the fair exchange between rights under the Act and common-law rights to tort recovery have, for the injured worker, amounted to death by a thousand paper cuts. What is the last slice that tips the balance from a fair exchange of rights and remedies to one that is unconstitutionally inadequate from the injured worker’s point of view?”

The Supreme Court of Kansas later overturned. But the question of what constitutes the appropriate quid pro quo lingers. It’s interesting to note that the correctness of the editions wasn’t a prime consideration in the appeals court’s analysis, but the disparate impact of the two editions on the amount of compensation an injured worker would receive was. If the goal is a fair exchange between a no-fault system and a tort system, shouldn’t a correct assessment of the impairment or disability of the injured worker be pertinent?

Increased benefits. Basing benefits on impairment doesn’t end the options. Some states provide benefits if the injured worker doesn’t lose income and has returned to work; others don’t. Others start the calculation of benefits with the impairment rating and increase it based on factors such as age, education, and lack of transferable skills, when injured workers are unable to return to meaningful employment.

Nonscheduled or scheduled. Some states use the impairment on nonscheduled injuries (“body as a whole”) and not on scheduled injuries, which could be a lengthy list of injuries such as “one arm and the other hand” or “one eye and a foot.” Other states treat all injuries as nonscheduled injuries.

Earning capacity. Still other states base permanent partial disability benefit on loss of earning capacity. This requires a forecast of the future or loss of actual wages, which can lead to litigation, as the parties may disagree on the true loss.

Truly, a 1,000-piece jigsaw puzzle might be easier to put together than a coherent picture of permanent partial benefits in this country under workers’ compensation.

It’s hardly surprising that questions have arisen about whether permanent partial disability benefits have veered away from the initial goal: offering just, timely compensation for injuries that occur in the course and scope of employment and enabling employees to return to their jobs and normal lives, uninterrupted by contentious litigation.

What would it take to determine a simple but fair method of determining benefits in keeping with the grand bargain?