RESULTS ON EARNINGS LOSSES AND REPLACEMENT RATES
BY SEVERITY OF INJURY
Over the years, California has developed a complicated formula used nowhere else that attempts to rank the severity of physical impairments in terms of their impact on workers (categorized by age and occupation). This ranking is done to ensure that those with the greatest loss of ability to compete in the labor market receive the largest compensation.
In particular, upon the worker s reaching permanent and stationary status, after which no further improvement is expected, a medical report is obtained with information on the impairment and in some instances a doctor s assessment of the need for work restrictions and an assessment of the worker s injury-associated pain is obtained. This information, along with the age and occupation of the worker, is then scaled and weighted to provide a disability rating that ranks workers by the severity of their disability so that the level of benefits can be set to compensate the appropriate fraction of their loss.1
By comparison, many other states take a much more rigid approach to compensating disability, emphasizing objective medical criteria for the determination of impairment, and typically ignoring work restrictions, pain, and pre-injury occupation.2
California s liberal construction of disability is controversial. On the one hand, if successful in targeting benefits to workers with a greater loss of ability to compete in the labor market, it may lead to greater equity. More workers with a disability (but without associated objective medical conditions) can receive benefits. Among those with a disability, if subjective and nonmedical factors are important and correctly scaled by the disability rating, then benefits will be distributed more effectively to those with the greatest losses, thereby achieving greater equity.____________________