Decoding Permanent Disability with Core Concepts and Commentary

Permanent Disability (PD) is a defined workers’ compensation benefit and a critical medical and legal concept. It represents indemnity payments for lasting physical or psychological restrictions resulting from work-related injuries or illnesses. PD is central to the workers’ compensation system, compensating for the loss of a body part (or its function) or the diminished ability to earn income after reaching Maximum Medical Improvement (MMI).

Despite its importance, the definitions and calculations of PD vary significantly across jurisdictions, creating challenges in ensuring timely, accurate, and equitable assessments. A primary goal of the workers’ compensation system is to pay consistent PD benefits.

Consistency refers to the principle that similar injuries or impairments should result in comparable compensation and benefits, regardless of the evaluator, jurisdiction, or external circumstances. This ensures fairness, predictability, and equity, promoting trust among stakeholders. Consistency fosters confidence among all parties, particularly injured workers and employers. For injured workers, consistency ensures that similar injuries result in equitable benefits, providing a sense of fairness and predictability during a challenging time. This reliability helps build trust, making workers feel their needs are addressed. For employers and claims administrators, consistency reduces disputes, enhances efficiency, and creates a predictable framework for managing claims. A transparent and equitable system fosters smoother resolutions and minimizes litigation.

However, some parties may benefit from inconsistency. For example, attorneys often exploit variability in PD ratings to litigate or negotiate higher or lower settlements. Similarly, specific medical-legal evaluators may take advantage of inconsistencies to justify higher fees or align their findings with the interests of those hiring them. These practices erode trust in the system, increase costs, and delay resolutions. Addressing these issues requires greater oversight, transparency, and adherence to objective standards.

This paper aims to foster a consistent framework for understanding and evaluating PD. It highlights current challenges and offers potential solutions to enhance the workers’ compensation system.

Defining Permanent Disability

There is no universally agreed-upon definition of Permanent Disability. The definition of PD is important because it determines what is measured. Throughout my career, the definition of PD has been fluid. Every definition of PD has its strengths and pitfalls. Defining Permanent Disability involves measuring a lasting impairment, functional limitations, or economic impairments resulting from a work- related injury or illness. As medical technology has evolved, it has become more difficult to accurately differentiate between the natural aging process, prior injuries and disease, and the specific industrial injury or illness. The measurement is usually done after the employee reaches “Maximum Medical Improvement” (MMI) or “Medical Permanent and Stationary” (P&S).

Common definitions of PD include:

• • Reduced Capacity to Compete in the Open Job Market: PD reflects the worker’s diminished ability to compete in the open job market due to their injury.
  • Compensation for Permanent Loss or Loss of Use: PD reimburses the lasting loss of a body part or function.
  • Reimbursement for economic loss: PD compensates for the worker’s reduced earning potential.
  • “PD is just Money”: John Burton, the California Politician’s definition of P.D.

Key Components of PD

Types of Permanent Disability:

1. Permanent Partial Disability (PPD):  PPD involves a lasting impairment that allows the injured worker to return to work in a limited or modified capacity.

Example: A worker with restricted shoulder mobility can perform light-duty tasks but cannot lift heavy objects.

2. Life pensions: Some jurisdictions have a PD life pension that is paid once the scheduled amount of PD has been paid to the injured worker. One example is that California has a “life pension” PD payment for all disabilities that exceed 70% PD.

3.   Permanent Total Disability (PTD): PTD represents a complete inability to engage in gainful employment due to the injury.

Example: A catastrophic injury resulting in paralysis or the loss of both hands.

Components:

• • Permanent Impairment: A measurable anatomical or functional abnormality.
  • Residual Functional Capacity: The ability to perform daily activities and work despite the impairment.
  • Earning Capacity is the injured worker’s potential to earn income, factoring in skills, education, and experience.

Maximum Medical Improvement (MMI):

MMI marks the point where the worker’s condition has stabilized, and no significant improvement is expected. At this stage, the worker’s PD can be evaluated and rated.

AMA Guides and Jurisdictional Schedules

Some jurisdictions rely on the AMA Guides to evaluate Permanent Impairment for standardized assessments, while others use their state-specific schedules to calculate permanent disability ratings.

Scheduled vs. Unscheduled Disabilities

Scheduled disabilities are predefined and assigned specific compensation values, typically for losing particular body parts such as limbs, fingers, arms, hands, or legs. These predefined values help provide consistency and predictability in compensating workers for specific injuries.

Unscheduled disabilities, by contrast, are often associated with the core of the body, such as back injuries, kidney loss, or other internal impairments. These cases are evaluated case-by-case, reflecting their more complex and individualized nature. Both scheduled and unscheduled losses related to disfigurement exist, and may vary significantly by jurisdiction.

Certain kinds of injuries and losses, such as quadriplegia, paraplegia, total loss of vision, or severe head injuries, are classified as “total permanent disability” (total PD). These injuries result in significant impairments that justify maximum compensation, regardless of the individual’s ability to return to work.

Challenges in Medical-Legal Evaluations

Conducting a thorough and accurate medical-legal evaluation for Permanent Disability is complex and nuanced. Many challenges arise when doctors lack a deep understanding of the AMA Guides used to evaluate Permanent Impairment or do not have access to the proper tools to perform evaluations effectively. For example, measuring the range of motion—a critical component of many evaluations—requires precise instrumentation and patient cooperation. When patients are unwilling to exert maximum effort or misunderstand the testing process, results may not accurately reflect their actual level of impairment.

Further complicating matters, the subjective nature of pain and functional limitations can lead to significant assessment variability. Physicians tasked with these evaluations must balance clinical expertise with adherence to regulatory standards, which may not always align. Some doctors struggle to provide consistent and reliable reports without proper training and resources, leading to disputes and delays in claims resolution. Addressing these issues requires investment in physician education, standardization of tools, and improved mechanisms to ensure patient compliance during evaluations.

Permanent Disability Axioms Consistency and Fairness

1. Consistency in PD Ratings: Multiple evaluators should arrive at similar PD ratings for the same injured employee to ensure fairness.

2. State-Level Uniformity: Most states now use the AMA Guides for permanent However, there are several different versions of the Guides. States should strive for consistent PD ratings within their jurisdictions, ensuring equitable benefits for comparable disabilities using the most recent Guides.

3. Interstate Consistency: Similar disabilities should result in comparable compensation across states, promoting fairness regardless of location.

4. Objective Measurement: PD ratings should rely primarily on objective criteria and minimize the influence of subjective factors such as pain or personal bias.

5. Avoidance of Over-Simplification: While standardization is important, oversimplification can lead to inequities; individual circumstances should still be considered.

Process Efficiency

6. Timeliness and Efficiency: PD evaluations must be conducted promptly to ensure accuracy, timely benefit distribution, and claims resolution. Delayed benefits are benefits denied.
7. Leveraging Technology: Tools like Plethy improve the accuracy and efficiency of PD evaluations.
8. Transparency and Communication: Injured workers should receive clear explanations to build trust in the PD evaluation and rating

Holistic Considerations

9. Occupation-Specific Adjustments: PD ratings should account for the injured worker’s occupation at the time of injury, acknowledging how specific injuries affect different professions.

10. Exclusion of Age-Based Adjustments: Age alone should not influence PD ratings, as this currently lacks empirical support and can lead to unfair outcomes.

11. Acknowledgment of Mental Health Impacts: Psychological conditions such as PTSD or depression must be integrated into PD assessments where relevant.

12. Cultural and Language Sensitivity: PD evaluations should address cultural and linguistic differences to ensure accurate

13. Incorporation of Vocational Rehabilitation: PD evaluations should consider the worker’s potential for retraining and returning to

Apportionment Challenges

14. Apportionment is a California Issue: The California workers’ compensation system allows employers to apportion PD to pre- existing or underlying conditions. This increases system costs by encouraging the subpoenaing of medical records and the complexity of the medical-legal evaluations. No study has examined the costs versus the benefits of this process.

15. Clarity in Apportionment: Apportioning PD for prior injuries or pre-existing conditions is problematic. The fundamental concept of apportionment is that the employer should only pay for the injury or illness they caused and not for disability caused by non-industrial factors. However, apportionment creates additional system-wide expenses and is challenging to measure accurately, particularly when differentiating between the natural aging process and residuals from an industrial accident or illness.

Fairness and Equity

16. Pain: Though pain may be included in measuring the extent or nature of the PD, paying for pain and suffering is not a defined workers’ compensation benefit.

17. Loss of Income: Tying PD to loss of income is An injured worker’s return to work can be impacted by economic issues outside the employer’s or claims administrator’s control and unrelated to the injury or illness. For example, the injured worker may decide to retire or change occupations, which could affect the “loss of income calculation.”

18. No Social Welfare System is Always “Fair”: Every social welfare system with defined benefits has individual inconsistencies, which are unfair to some injured workers. For example, a broken and frozen finger for a concert pianist will not result in much scheduled PD but a significant loss for the individual. Conversely, some injured workers with very high PD ratings will still return to work at full salaries.

19. “Fairness”: One approach of creating a consistent rating process would be to “schedule” every disability. Doctors and attorneys would then review any “new” ratings for consistency within the overall system. The state of Oregon has been developing a version of this.

Commitment to Progress

20. Commitment to Continuous Improvement: Those who oversee the workers’ compensation system tend to ignore the PD process. To remain effective and fair, PD systems must evolve with advancements in medicine, technology, and societal expectations.