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Defending the DFEC Assault: Thoughts from the Front Lines

Defending the DFEC Assault: Thoughts from the Front Lines. Christopher S. Chen NA Legal. DFEC Overview. Expert Fees The DFEC Claim The Future DFEC Database. Bad Faith?. Labor Code §§ 5813 & 5814 Bad Faith Not to Pay Barrios (SFO) & Navarro (Oak) August 2008 Memo

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Defending the DFEC Assault: Thoughts from the Front Lines

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  1. Defending the DFEC Assault:Thoughts from the Front Lines Christopher S. Chen NA Legal

  2. DFEC Overview • Expert Fees • The DFEC Claim • The Future • DFEC Database

  3. Bad Faith? • Labor Code §§ 5813 & 5814 • Bad Faith Not to Pay • Barrios (SFO) & Navarro (Oak) • August 2008 Memo • Apply Costa II Factors • Sample Costs Letters • DFEC Database

  4. When are DFEC Costs Recoverable? • Labor Code § 5811 • Costa II En Banc • “Potential” to Affect PD rating • Evidence “does not necessarily have to successfully affect the permanent disability rating to be reimbursable” • Barr vs. WCAB

  5. When are DFEC Costs Recoverable? • WCAB has “the discretion to balance the amount of such costs against the benefit obtained” • Broad discretion • Abuse of discretion • 12 of 13 trial decisions costs awarded

  6. When are DFEC Costs NOT Recoverable? • NO “Potential” to affect PD • Low wage earner/High Earning prospects • College degree working as laborer • Inquiry made at time expert hired • Not Qualified as DFEC Expert • Vocational Rehabilitation Counselor • Economist • Not Substantial Evidence • Wrong facts/assumptions • Conclusions totally lack credibility

  7. How Much? • No Schedule • Reasonable and Necessary? • $3k for interview, VR analysis and 20 pp report • Hourly Rate?

  8. Defending the DFEC Claim • Analyze • Settle • Litigate

  9. Analyze • Review DFEC Report • Depose DFEC expert • Consider: • How does expert rebut PDRS • What methodology?

  10. How Does Expert Rebut? • Must explain how FEC modifier is insufficient (See p. 1-5 PDRS) • Must understand • RAND Study • Ratios • FEC Rank

  11. What Methodology? LC § 4660 (b)(2)– DFEC “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”

  12. Four Methods

  13. 1. Malmuth Method • Barrios vs. WCAB • Earnings History • Work Restrictions • Transferable Skills • Post-injury occupations • Formula: • (Pre Injury Earnings – Post Injury Earnings) / Pre Injury Earnings • (100K – 30K) / 100K = 70% PD

  14. 2. Lam Approach • Cordon v. WCAB • WCJ Lam • Hybrid Malmuth/FEC • Recon granted for further study

  15. 3. WCJ Hettick’s Way • Ogilvie v. WCAB • Dueling Experts • Universal Studios • Tripartite Test • Reconned

  16. 4. Bencko Method • Bencko v. Emcor • WCJ Succa • DFEC + WPI • No Recon

  17. Attacking the Methodology • Individualized Report LC § 4660(b)(2) • DFEC 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 injury type for similarly situated employees • Fails to promote consistency, uniformity, and objectivity LC § 4660 (d)

  18. Attacking the Methodology • Accurate History • Transferrable Skills • Formula Used • Work Restrictions vs. ADL’s

  19. Attacking the Methods • Magana - “To simply convert a DFEC percentage to the overall percentage of PD . . . is invalid under LC 4660(b)” • Expertise • No Retraining

  20. Settle After deposition, DFEC rating is low enough that a split between DFEC and WPI makes sense • 20% WPI vs. 40% DFEC • 30% is a split • 25% due to Recons

  21. Litigate • Object to DFEC Report Admissibility • Issue not ripe until Rating issued • Doesn’t explain why PDRS should be rebutted • Methodology is Wrong

  22. Litigate • Obtain own DFEC expert? • Generally, No • Recommended in high value cases • Small pool of experts • No Agreed DFEC expert • Make sure expert understands law • SCIF Expert Undercuts AA Expert per Costa II

  23. What Now? • Where is the fight now? • What rebuts PDRS? • How calculate PD? • Possible methods • Recon unit

  24. Proposed Regulation 8 CCR § 9805 (2009) For the FEC adjustment factors to appropriately address the correlation of permanent disability ratings to proportional wage loss, the basis for the FEC adjustment, they must be updated to reflect average standard ratings under the 2005 PDRS, the adopted schedule that utilizes the AMA Guides, and more recent wage loss data.

  25. CAAA Interpretation • Current FEC modifiers use data under OLD PDRS • Evidence that the 2005 PDRS FEC modifiers are invalid and therefore, the 2005 PDRS is, de facto, rebuttable

  26. CAAA DFEC Seminar • Refining Expert Reports • Understand FEC so can rebut • ADL’s vs. Work Restrictions • Lebouef Ressurected

  27. New CAAA Model • Moving towards a generalized approach • Evidence of earnings of similarly situated workers (OES/EDD) • Transferrable skills of similarly situated workers • Suitable Jobs (SOC) • Moving to civil litigation

  28. DFEC Database • Legal worksite • “DFEC” on left column • Defending Against the Use of DFEC Experts • 2007 SCIF Attorney Conference Materials • May 2008 NC Claims • This Presentation

  29. DFEC Database Please help keep DFEC Database Current Laura Hanes LmHanes@scif.com Christopher S. Chen cschen@scif.com 415.581.4558

  30. Questions?

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