SB 863: The Impact on Permanent Disability

In California, the passage of SB 863 signaled yet another attempt to control the costs of the $16 billion a year workers compensation system, by reducing costs and promoting efficiency, but also increasing the benefits to injured workers for permanent disability. In review of SB 863, there are many positive aspects that will help in the reduction of permanent disability, but there are also elements to the reform that may have negative consequences on your claim costs.

First, the positive: SB 863 eliminates the allowance for permanent disability due to “add-ons” such as psych, sexual dysfunction and sleep disorders. These were costly additions that in our experience were rarely supported by objective evidence. In litigated cases, the disallowance of these add-ons will generate significant cost savings.

Now, the negative:  While the FEC adjustment has been eliminated, making the rating strand a little less complicated, all whole person impairment ratings are now automatically provided an adjustment factor of 1.4. This was the highest FEC modifier under the old schedule, and means that all cases will see an increase in permanent disability percentages. On top of this, the legislature added hundreds of billions of dollars to the permanent disability schedule, and will phase in a max rate of $290 per week by 2014.

Our overall analysis is that while the problems of add-ons have been eliminated, these did not impact all cases. What will impact all cases is the max FEC adjustment, and the increase in value in the PD schedule. Our data, consistent with that published by the AMA in 2010, shows that there is a significant error rate in whole person impairment ratings assigned in California, about 70%, and that the rating assigned is typically twice what it should be. When factoring in the allowance for Almaraz/Guzman, SB 863 will provide little relief for the erroneous ratings being assigned in California, and has only exacerbated the costs of these errors.

For example, we took two common types of errors that we find in our reviews. The first is a lumbar spine injury that was assigned a DRE Lumbar Category III rating of 13% WP when the findings in the case would only support a DRE Lumbar Category II rating of 8% WP. The second is a multiple digit/hand injury that was assigned 10% whole person when the findings actually support a rating of 5% whole person. The charts below show the difference in value included in SB 863, and what the legislative changes mean when there is an error in the rating (examples use age at DOI of 45 and occ code of 350).

As illustrated above, an overrating of only 5% WP in the lumbar spine rating would currently result in a potential PD over payment of $7,648. After the reform, this error will cost $9,933. For the hand injury, an overrating of 5% WP would currently result in an over payment of $5,118. After the reform, this error will cost nearly twice that, at $9,715.

Therefore, once SB 863 takes full effect, it will be more important than ever to ensure that permanent disability on your files is based on an accurate impairment rating. Based on the historical evidence of error rates in California, the survival of Almaraz/Guzman, and the increase in both PD percentages and values allowed in SB 863, the cost of these errors will only increase, and could potentially offset any cost reductions brought about in the reform.

Deposition Strategies with iRatings

Partner with iRatings and Obtain Better Outcomes on Your Depositions

At iRatings, we are committed to ensuring that our clients are paying the appropriate permanent partial disability benefits based on an accurate impairment rating, and will work with our clients until full and final resolution of the case. This means that we are available to consult with your attorneys prior to depositions or hearings, and can testify as an expert witness at trial.

In partnership with defense attorneys, we have helped deliver successful outcomes to our clients at the time of deposition. By making sure you are fully prepared and ready to challenge a physician on their rating in a deposition, you will have a greater likelihood of having the rating changed on the spot. If not, we will help you present a solid case in the deposition as to the validity of the report, and whether or not it constitutes substantial medical evidence.

To read more about our services, click here. Below is a recommendation from a client, and their recent success with the use of our deposition services.

To Whom It May Concern:

I am writing this to recommend iRatings to rate difficult rating cases. I have been using them with great results. The following two examples illustrate their worth:

An applicant had an accepted left ankle injury and was claiming left knee seqeulae. The PQME rated the left ankle correctly at 21% PD. However the left knee of 10% PD was not supportable under the AMA Guides. With the help of Leslie Dilbeck, Certified Impairment Rater, I was able to get the PQME at her deposition to withdraw her rating of the left knee which resulted in PD saving of $18,415.50. This was well worth the expense of iRatings costs, which are very reasonable.

In another example, an applicant had an accepted upper extremity claim. The PQME rated the Shoulder, elbow/forearm and pain add-on correctly. However, the Arm-grip/pinch strength rating of 18% PD was not supportable under the AMA Guides. With the help of Charles McGhee, Certified Impairment Rater, I was able to get the PQME at his deposition to agree that his grip strength rating of was not supportable by the AMA guides. This resulted in a reduction from 41% PD to 23% PD, which resulted in saving in PD of $30,245.00.

Again, the Certified Impairment Raters at iRatings are fast, cost efficient and accurate. They know their stuff and I recommend them highly to help with complicated rating cases.


Thomas E. Mullen Esq.
D’Andre, Peterson, Bobus & Rosenberg, LLP

Ask the Rating Experts – June 29, 2012

Ask the Rating Experts

iRatings, LLC would like to thank all those who submitted questions to our “Ask the Rating Experts” series. In this periodical, we will continue to answer your questions on the rating issues of the day. Topics include, but are not limited to, the proper application of any edition of the AMA Guides, common errors we see, and the assessment of impairment under Almaraz/Guzman in California.

As always, we invite you to submit your questions online, or via email.

This issue’s question deals with a familiar problem –  when to use the Range of Motion method for the spine under the 5th Edition.

The Range of Motion (ROM) Method

Q: I received a report where the physician cited imaging findings of “multilevel degenerative disc disease” as the basis for using the Range of Motion method. I was surprised to see the ROM method being used in this case, as there was only a history of a single level diskectomy based on a disk herniation at L5-S1 and electrodiagnostic findings of a left S1 radiculopathy. At the time of MMI, there were still complaints of radicular pain and the physician did document residual motor and sensory deficits in the left S1 distribution. Since there was no history of bilateral or multilevel radiculopathy, I thought the ROM method could not be used. However, the physician pointed to Section 15.2, Number 2, which states that the ROM can be used “When there is multilevel involvement in the same spinal region.” Is this correct? 

A:  No, this does not appear to be correct based on the history presented, and this is a very common error we see when rating the spine. Remember that the Guides state in Section 15.2 that “The DRE method is the principal methodology used to evaluate an individual who has had a distinct injury.” (p. 379) There are several situations where the Guides indicate the use of the ROM method, and multilevel involvement is the first criteria that must be met. It is not, however, the only criteria.

While the Guides do note in Section 15.2, Number 2, that the ROM can be used “When there is multilevel involvement in the same spinal region,” they clarify this to mean“fractures at multiple levels, disk herniations, or stenosis with radiculopathy at multiple levels or bilaterally.” The Guides break this down further in Section 15.2a, Number 4, which states the following:

Determine whether the individual has multilevel involvement or multiple recurrences/occasions within the same region of the spine. Use the ROM method if:

a. there are fractures at more than one level in a spinal region,
b. there is radiculopathy bilaterally or at multiple levels in the same spinal region,
c. there is multilevel motion segment alteration (such as a multilevel fusion) in the same spinal region, or
d. there is recurrent disk herniation or stenosis with radiculopathy at the same or a different level in the same spinal region; in this case, combine the ratings using the ROM method.

In this case, if there were findings of “multilevel degenerative disc disease” that would meet the first criteria. However, based on the findings you noted (electrodiagnostic evidence of single level radiculopathy, motor and sensory deficits of left S1 only), none of the other criteria are met. Remember that the Guides note that there are common developmental findings on imaging studies, and state that “the presence of these abnormalities on imaging studies does not necessarily mean the individual has an impairment due to an injury.” (p. 383) In order for there to be ratable impairment under any method, the Guides state that “clinical symptoms and signs must agree with the imaging findings.” (p. 378) Therefore, while there are imaging findings of multilevel involvement, the clinical signs and symptoms would not support the presence of a bilateral or multilevel radiculopathy. As such, the ROM method is not supported in this case.

Given the history of single level diskectomy and findings noted in this case, the injured worker would meet the criteria for rating under DRE Lumbar Category III, as there is both surgery and “Significant signs of radiculopathy.” This allows for a rating range of 10%-13% whole person. Based on the residual symptoms noted in this case and residual radicular findings, a rating of 13% whole person would be appropriate (see Ex 15-4).


iRatings LLC

Ask the Rating Experts

Ask the Rating Experts

iRatings, LLC, has launched a new monthly information series entitled “Ask the Rating Experts”. In this periodical, we will answer your questions on the rating issues of the day. Topics can range from the proper application of the AMA Guides all the way to common errors we see, even the assessment of impairment under Almaraz/Guzman in California.

We invite you to submit your questions online, or via email.

Our first question comes from California, where the physician used grip loss in place of motion for a wrist injury.

Use of Grip Loss

Q: I have a case where the injured worker sustained a fracture to the right wrist. There is some motion loss on exam that the doctor rated to 4% upper extremity. Instead of rating this, however, the physician used loss of grip strength on the right and gave a rating of 20% upper extremity. The injured worker also had significant complaints of pain. Am I correct that grip loss cannot be used in this case? How do I dispute this?

A: Yes, you are correct that the Guides strictly forbid the use of grip loss in this case. In Section 16.8, the Guides state that loss of strength cannot be rated in the presence of pain or motion loss, as these “prevent effective application of maximal force.” (p. 508) The Guides do state that strength loss can be used “in a rare case,” such as a “severe muscle tear,” but the examiner would still need to adequately explain why this is this case. In your example, however, it does not appear as though the Guides would support the rare case exception.

While we know that the Guides do not allow grip loss for most conditions, this sometimes is not enough to dispute the rating. We encourage you to look at the physical examination and ensure that the procedures outlined in Section 16.8b were followed. Ask the following questions:

1. Was grip strength measured in all five positions on the Jamar Dynomometer?
2. Is there a bell-shaped curve for these measurements?
3. Was rapid grip exchange performed?
4. Was grip measured at different times throughout the examination?

In our experience, most examiners measure grip only once in the examination and at one position of the Jamar Dynomometer. In these cases, it is not possible to accurately rate for grip, as the findings have not been tested for consistency and reliability. Given the lack of reliability, we note that even in the unlikely event that grip loss could be used to rate impairment, there are insufficient physical examination findings to rate for grip under Section 16.8.


iRatings LLC

Need a Physician Signature on Your Report?

iRatings is now proud to announce the enlistment of David Bachman, MD, to provide a physician peer review to our rating reviews.

Dr. Bachman is a board-certified Orthopaedic Surgeon with over 40 years of experience practicing as a Specialist in private practice and as a Senior Area Medical Director and National Medical Administrator for the U.S. Postal Service. He received his medical degree from Northwestern University Medical School and Orthopaedic training in the Northwestern Orthopaedic Residency Program. He is well qualified in the use of the AMA Guides to the Evaluation of Permanent Impairment and has worked with the U.S. Department of Labor to assist in implementing appropriate impairment rating protocols.

iRatings Announces Hiring of Leslie Dilbeck as Vice President of Marketing and Sales

San Diego, CA, March 22, 2012iRatings LLC, a San Diego based consulting firm uniquely positioned in the field of impairment validation, announces the appointment of Leslie Dilbeck to the position of Vice President of Sales and Marketing. In this role, Dilbeck assumes responsibility for assisting with the expansion of all iRatings services on a national basis. She will interact directly with the organization’s clients, including workers’ compensation insurance carriers, brokers, third party administrators, and self-insured employers. Additionally, she will develop and implement sales and marketing strategies for workers’ compensation markets across the nation.

Dilbeck is regarded as an industry leader in the field of impairment assessment. She brings over 16 years of experience in the workers’ compensation industry in various capacities, including claims handling, occupational medicine program management, consulting, marketing, sales and account management. She has successfully managed accounts throughout the U.S. via program implementation and service recovery. In that time, she has developed and maintained close working relationships with clients. Over the last several years she has worked with national clients, lending her expertise on the AMA Guides to the Evaluation of Permanent Impairment byreviewing thousands medical reports for accurate assessment of impairment and providing clients with strategies to ensure the proper payment of permanent disability. These ­­­­­strategies have resulted in significant return on investment. Dilbeck has also provided national training sessions on the 5th and 6th edition of the AMA Guides, she is a published contributor to the Guides Newsletter, The Journal of Workers’ Compensation, IAIABC Journal and the Guides Case Book, 6th edition.

Charles McGhee, President of iRatings is excited that Leslie has joined the iRatings team. “Leslie is well respected throughout the insurance industry and brings a level of expertise in the field of impairment assessment that will further increase our credibility in the marketplace as the leading experts in impairment rating review,” said Charles. “We look forward to her being an integral part in growing our organization in the workers’ compensation arena.”

About iRatings LLC

iRatings offers a versatile suite of services aimed at assisting their clients with identifying inaccurate impairment ratings, correcting the identified errors, and disputing erroneous ratings through litigation or other claims strategies. The core services are rating reviews, correspondence, and consultation. For more information on these services, visit


Charles McGhee, President

Announcing the Launch of iRatings

San Diego, CA – February 20, 2012 –iRatings launches in California with the mission of ensuring that national and regional insurance carriers, third party administrators and employers pay appropriate permanent partial disability benefits based on objectively verified impairment ratings. In pursuit of this mission, iRatings offers its clients the expertise necessary to identify errors in impairment rating reports and empowers them to dispute these errors with effective claims strategies.

President of iRatings, Charles McGhee, brings years of experience in reviewing impairment ratings in accordance with the AMA Guides to the Evaluation of Permanent Impairment. He has reviewed over 1,500 medical reports under several editions of the AMA Guides for multiple jurisdictions, is a published contributor of the AMA Guides Newsletter, and has qualified as an expert witness before the California Workers Compensation Appeals Board. With 10 years of combined experience in claims management and impairment ratings, Charles also understands the challenges faced by employers and claims organizations in their attempts to pay appropriate permanent disability benefits.

“I am excited at the opportunity to provide our clients the training, consultation, and review services necessary to combat the significant cost of unsubstantiated impairment ratings,” said Charles. He added, “employers and claims organizations who are able to effectively manage this issue will not only see direct reductions in their claims costs, they will be taking part in a paradigm shift in the way we determine permanent disability benefits in Workers’ Compensation systems.”

About iRatings

iRatings offers a versatile suite of services aimed at assisting their clients with identifying inaccurate impairment ratings, correcting the identified errors, and disputing erroneous ratings through litigation or other claims strategies. The core services are rating reviews, correspondence, and consultation. For more information on these services, visit