Vocational Rehabilitation The Voucher Future Earning Capacity Presented By: Barbara Elliott, MA Elliott & Associates RIMS – San Diego April 24, 2008

Vocational Rehabilitation ►The purpose of Vocational Rehabilitation was to provide assistance with returning an injured worker to self-sufficiency as quickly as possible. ► VR provided a transition from medical treatment to return to work ► The end point of healthcare – people aren’t better until they are back to work

The End…  Vocational rehabilitation was eliminated as a mandatory benefit under workers’ compensation as of dates of injury 1/1/2004  Settlement of VR began as of 1/1/2003

Vocational Rehabilitation Sunset Clause (l) This section shall remain in effect only until January 1, 2009, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2009, deletes or extends that date.

Until the Sunset…  Close review of proper Notices  Increased demands for vocational rehabilitation by applicant for pre-2004 cases to create a “record of demand”  Increased litigation for 100% PD based on “non –feasible”

The CURRENT hot issue… Potential increase in PD due to “vocational feasibility” issues AKALeBoeuf!

What is “Vocational Feasibility?” §4635(a) “Qualified injured worker” means an employee who meets both of the following requirements: 1)The employee’s expected permanent disability as a result of the injury, whether or not combined with the effects of a prior injury or disability, if any, permanently precludes, or is likely to preclude, the employee from engaging in his or her usual occupation or the position in which he or she was engaged at the time of injury, hereafter referred to as “medical eligibility.” 2)The employee can reasonable be expected to return to suitable gainful employment through the provision of vocational rehabilitation services, hereafter referred to as “vocational feasibility.”

Process for determining Vocational Feasibility The QRR's determination of vocational feasibility may include the following steps: (1) an initial evaluation meeting; (2) an assessment of existing employment skills; (3) consideration of the current physical limitations and work restrictions contained in the medical record; (4) an assessment of the injured employee's perception of his or her physical capacities; (5) an identification of vocational strengths; (6) an identification of factors that may prevent or enhance participation in vocational rehabilitation services; and (7) the use of vocational testing and/or work evaluation services when appropriate. California Rules and Regulations §

LeBoeuf This is being hotly contested in San Diego…keep an eye on any case pre 2004

After the sunset… Who knows… case law may develop where the employer becomes obligated for VR services beyond the sunset… BUT at this time, as of 1/1/2009, there will be NO requirement to provide VR as the statute ceases to exist… Who knows what will happen with pre-2004 and failure to Notice issues…

Next… Injuries on or after 1/1/2004 Vocational rehabilitation may be “gone” but the importance of investigating modified or alternate work is stronger than ever…

Where will all the people go…  To the EEOC…85% of claims filed start with workers’ compensation  To FEHA…and there are NO caps on awards, damages…  Wrongful termination…

Post 2004 Forms  DWC Offer of Regular Work  DWC Request for Reimbursement of Accommodation Expenses  DWC Notice of Offer of Modified or Alternative Work  DWC Request for Dispute Resolution  DWC Notice of Potential Right to Supplemental Job Displacement Benefit Form  DWC Supplemental Job Displacement Nontransferable Training Voucher Form

Maximum Medical Improvement (aka Permanent & Stationary)  At point of MMI, and assuming TD stops at the same time, the claims administrator has 10 days to send Notice of Potential Right to the SJDB, even if the employee has RTW with the employer ( )

Notice of Offer of Regular Work DWC  Due to employee within 60 days of MMI for PD adjustment  Valid for PD reduction for employers 50+ regardless if employee accepts or rejects  Must be reasonable commuting distance from residence at time of injury & same wages

Modified or Alternate Work  For post 2004 DOI, the employer has 30 days from the termination of TD to offer modified or alternative work  The employer must use the mandated format set forth by the AR’s

DWC Notice of Offer of Modified or Alternative Work  Similar to the RU 94 used for DOI 1994 through 12/31/2003  Contains language as to job duties, wages and more  2 page form and is MANDATORY and filed with DWC

Modified Work  Modification includes, but is not limited to, changing or excluding certain tasks, reducing the time devoted to certain tasks, modifying the work station, changing the work location, and providing helpful equipment or tools. AR §10122  Meets the same requirements as Alternative Work

Alternative Work  The employee has the ability to perform the essential functions of the job provided  The job provided is in a regular position lasting at least 12 months  The job provided offers wages and compensation that are at least 85% of those paid at the time of injury  The job is located within reasonable commuting distance of the employee’s residence at the time of injury……. AR §

 A DECREASE of 15% in the weekly PD payment to injured employees whose employers DO offer/provide medically appropriate work.  Not retroactive to the date TD ceased.  The overall PD Rating is not affected.

PD Award Adjustment Applies to Employers of 50 or more  An INCREASE of 15% in the weekly PD payment to injured employees whose employers do not offer/provide medically appropriate work.  Not retroactive to the date TD ceased.  The overall PD rating is not affected.

AR  Return to Work Program shall be funded by the Return to Work Fund which shall consist of all penalties collected pursuant to Labor Code section and transfers made to this fund by the Administrative Director from the Workers’ Compensation Administrative Revolving Fund… LC and Admin regs & 10005

Ergonomic Reimbursements DWC $1,250 to accommodate each temporarily disabled employee, for expenses incurred in allowing such employee to perform modified or alternative work within physician-imposed temporary work restrictions; and $2,500 to accommodate each permanently disabled employee, for expenses incurred in returning such employee to sustained modified or alternative work within physician-imposed permanent work restrictions; However, if an employer who has received reimbursement for a temporarily disabled employee under paragraph (1) is also requesting reimbursement for the same employee for accommodation of permanent disability, the maximum available reimbursement is $2,500.

What if there is not Modified or Alternate Work? The injured employee is then eligible to receive the Supplemental Job Displacement Voucher Benefit.

Supplemental Job Displacement Voucher Benefit  The “Voucher” was created in AB 227 to replace vocational rehabilitation for those injured after 1/1/2004  LC §4658.5

What is the Voucher? “If the injured employee does not return to work for the employer within 60 days of the termination of temporary disability, the injured employee shall be eligible for a supplemental job displacement benefit in the form of a nontransferable voucher for education-related retraining or skill development, or both, at state approved or accredited schools…” “If the injured employee does not return to work for the employer within 60 days of the termination of temporary disability, the injured employee shall be eligible for a supplemental job displacement benefit in the form of a nontransferable voucher for education-related retraining or skill development, or both, at state approved or accredited schools…”

Voucher Notice  The employee is noticed within 10 days of the end of TTD of Rights by certified mail  The Notice includes information about potential of modified or alternate work offer within 30 days  The Notice must contain information as to the voucher amounts  This is a MANDATORY notice set forth in AR §

Voucher Values Based on Permanent Partial Disability Awards  Up to $4,000 for < 15%  Up to $6,000 for between 15% and 25%  Up to $8,000 for between 26% and 49%  Up to $10,000 for between 50% and 100%

What the Voucher can pay for:  Tuition, fees, books and other expenses required by the school for retraining or skills enhancement  Up to 10% of the Voucher can be for VRTWC fees (a counselor)  Does NOT provide weekly living allotment, mileage, child care and other costs

Voucher Payment  WHEN they get paid – 25 days after finding of PPD by the Judge  Upon submission of receipts or directly to an approved training facility, school must have state accreditation or approval  Reimbursement by the claims administrator must be within 45 calendar days of receipt of documentation There is NO EXPIRATION date on the voucher

Settlement of the Voucher  AR § states that the potential eligibility for the voucher may be settled as part of a compromise and release settlement for a lump sum payment.  Settlement of the voucher must be approved by a Judge and set forth on C&R

When Employer NOT liable for Voucher  When the employee has been released to return to usual & customary and the Offer of Regular Work is completed  When an offer of modified or alternative work has been made within 30 days of the termination of TD

Liability for provision of the Voucher ends:  Settlement  All $$ spent, could be in bits over years  Claimant dies There is no form for termination of the Voucher!

Other Circumstances  Employee has multiple dates of injury  Seasonal employees  Out of state – Employee has moved  Terminated Employee  Undocumented Workers  Disputes raised by the employee

Seasonal Employees  AR § (a)(1)(A)  Offer of modified or alternative employment must be on a similar seasonal basis to the employee’s previous employment  Therefore, for modified or alternative employment to meet AR, the employee has to return on the same schedule as prior to DOI

Out of State The employee may move out of state for a variety of reasons. Once eligible for the voucher, they remain eligible. The schools or training must be accredited by a parallel organization.

Terminated Employees  If terminated after a return to work, and terminated for CAUSE, then most likely not eligible for the voucher (but may get a PD payment increase)  If terminated while on TTD, must still follow determination procedures and processes for modified or alternate work

Undocumented Workers  If the employer was aware the employee was undocumented, the employee would be eligible for the voucher  If the employer was not aware, and the employer can offer modified or alternate work, the employer would NOT be obligated for the voucher

DWC Request for Dispute Resolution DWC Request for Dispute Resolution  If the employee has any disputes regarding return to work either regular, modified or alternative, refer them to the DWC for Dispute Resolution  DWC Request for Dispute Resolution to be filed

Next….. Future Earning Capacity

Disability Rating   1 - AMA Guides whole person impairment (WPI) rating determined by physician   2 - WPI rating adjusted for age, occupation, and FEC to determine final permanent disability rating

Future Earning Capacity FEC Labor Code section 4660(b)(2) states: “An employee’s diminished future earning capacity shall be a numeric formula based on empirical data and findings that aggregate the average percentage of long-term loss of income resulting from each type of injury for similarly situated employees”

Labor Code section 4660(c) notes that the 2005 Schedule “shall be prima facie evidence. Costa v. Hardy Diagnostic and State Compensation Insurance Fund (2006, 2007), the (WCAB) stated that the California Legislature intent was to allow rebuttal evidence regarding the Rating Schedule and that the effect of such evidence will likely be decided on a case by case basis…and the DFEC evaluation by the applicants needed to be paid for by the defendants. Van de Bittner, 2007

Empirical Formula  3 or 4 formulas have been developed by vocational experts to determine DFEC in California.  A function of work life pre and post injury, factored into earnings pre injury and estimated return to work wages, considering time off work and time needed to return to work….

Quick Case Review Of 20 cases where the use of a Diminished Earning Capacity evaluation was presented:  15: Defendants ordered to pay applicant’s DFEC evaluation  12: Expert’s opinion used to rebut PD Rating Van de Bittner, 2007

So…you decide…  Work with applicant side to AGREE to an expert to compile ONE Diminished Earning Capacity Evaluation  Ignore and hope it goes away An old Chinese proverb.... “The older I get, the less I know, but the wiser I am.”

The BEST way out of this… Effective return to work programs that minimize or eliminate TD, protracted claims, litigation and disgruntled employees!

Disability Discrimination Awards (Employment: Practice Liability - Jury Verdict Research - LRP Publications )  State Median $194,245 $194,245  Federal Median $250,000 $250,000

Compensatory Awards (Employment: Practice Liability - Jury Verdict Research - LRP Publications )  Average Disability Award in State Courts $365,444  Total Range $200 - $4,545,000

Merck / Rutgers Study Merck / Rutgers Study (J. Douglas Phillips, Director of Corporate Planning, Merck & Co.)  As % of annual salary:  Hourly = 75%  Management = 150% Employee replacement cost

Merck / Rutgers Study (J. Douglas Phillips, Director of Corporate Planning, Merck & Co.)  Time for employee to reach 100% productivity:  <13 months/new employee  taking 30-36% of co-workers’ time Employee replacement cost

  Average cost (JAN) $935   Median cost (JAN) $200   Employer study $230 Source: Job Accommodation Network The Cost of Accommodations

Job Analysis The Key to Cost Containment

 Determination by employer of transitional work  Determination of return to work full duty  Determination of permanent modifications  Determination of proper occupational ID  Critical to an effective Interactive Process WHY a JA?

The best tool…  To open up communication between the employee and employer  To obtain accurate information and start the claim right  To facilitate a decision by the doctor that is based on fact

Question: How can a doctor state in a report that an individual cannot return to regular job duties if there is not an objective, clear, agreed upon analysis of what those duties are? Question: How can an employer effectively determine an employees status to return to without regular job duties if there is not an objective, clear, agreed upon analysis of what those duties are? Question: What is the first piece of information the EEOC and the DFEH will ask for in an employment discrimination matter?

Resources Job Accommodation Network: The Searchable Online Accommodation Resource (SOAR), which can be accessed at allows you to locate accommodation options for a worker with a disability by providing information on disabling conditions, accommodation products and techniques. Division of Workers’ Compensation: for forms, information, labor code and fact sheets.