2010-EB-11 (2010). Cynthia Blackledge vs. Bank of America; and Ace American Insurance Company.

• Court: California

California Workers Compensation Decisions 2010. 2010-EB-11 (2010). Cynthia Blackledge vs. Bank of America; and Ace American Insurance Company WORKERS' COMPENSATION APPEALS BOARD STATE OF CALIFORNIACYNTHIA BLACKLEDGE,Applicantvs. BANK OF AMERICA; and ACE AMERICAN INSURANCE COMPANY,Defendant(s).Case No. ADJ1735018 (LBO 0375311)OPINION AND DECISION AFTER RECONSIDERATION (EN BANC)We granted the petition for reconsideration filed by defendant, ACE American Insurance Company (ACE). Thereafter, to secure uniformity of decision in the future, the Chairman of the Appeals Board, upon a majority vote of its members, assigned this case to the Appeals Board as a whole for an en banc decision(fn1) on the respective roles of the evaluating physician, the workers' compensation administrative law judge (WCJ), and the disability evaluation specialist (rater) in determining whole person impairment (WPI) under the AMA Guides.(fn2) We hold:

(1) the physician's role is to assess the injured employee's whole person impairment percentage(s) by a report that sets forth facts and reasoning to support its conclusions and that comports with the AMA Guides and case law;(fn3)

(2) in the context of a formal rating, the WCJ's role is to frame instructions, based on substantial medical evidence, that specifically and fully describe the whole person impairment(s) to be rated; in addition, a WCJ's instructions may ask a rater to offer an expert opinion on what whole person impairment(s) should or should not be rated;

(3) in the context of a formal rating, the rater's role is to issue a recommended permanent disability rating based solely on the WCJ's formal rating instructions; unless specifically instructed to do so, a rater has no authority to issue a rating based on the rater's own assessment of whether the whole person impairment rating(s) referred to in the WCJ's instructions are based on substantial evidence or are consistent with the AMA Guides;

(4) a WCJ is not bound by a rater's recommended permanent disability rating and a WCJ may elect to independently rate an employee's permanent disability; however, a WCJ's rating still must be based on substantial evidence;

(5) potential AMA Guides rating problems may be minimized by the early and proper use of non-formal ratings; and

(6) in the context of a formal rating, there must be no ex parte communication between the WCJ and the assigned rater.

In light of these holdings and our application of them to this case, we will amend the WCJ's November 19, 2009 decision to defer the issues of permanent disability and attorney's fees and remand these issues to the trial level. The WCJ, in his discretion, may direct further development of the record. After the further proceedings, if any, the WCJ shall issue a new decision consistent with this opinion. I. BACKGROUND Applicant, Cynthia Blackledge (Blackledge), sustained an admitted industrial injury to her low back and her right wrist, hip, and knee on October 26, 2005 when she slipped while descending a flight of stairs. The parties selected David B. Pechman, M.D., as the agreed medical evaluator (AME) in orthopedics. Dr. Pechman evaluated Blackledge and issued a report on May 14, 2007. Dr. Pechman's report concluded by stating, "I have completed an AMA impairment rating, which is attached to the body of this report. Total whole person impairment is 10% WP - SEE ATTACHED." With regard to the low back, Dr. Pechman opined in his Impairment Rating Report that applicant "qualifies for ... DRE [Lumbar] Category II, which allows a 5%-8% WP impairment." In concluding that DRE Lumbar Category II (DRE II) applied, Dr. Pechman referred to Chapter 15 of the AMA Guides, pages 384 to 386 and Table 15-3. Dr. Pechman said the "calculated" WPI using DRE II was 5%, but the "assigned" WPI was 8%, adding that "some ADL [activities of daily living] changes are noted." For the right wrist, Dr. Pechman's Impairment Rating Report found no impairment. For the right hip and knee, Dr. Pechman's Impairment Rating Report found 5% lower extremity impairment based on patellofemoral pain syndrome, referring to Chapter 17 of the AMA Guides, at pages 544-545 and Table 17-31. This equated to a WPI of 2%. At trial, Dr. Pechman's report was admitted in evidence. Ultimately, the WCJ issued formal rating instructions to the Disability Evaluation Unit (DEU). In issuing these instructions, the WCJ used a "fill in the blanks" template available to WCJs within the Electronic Adjudication Management System (EAMS). The instructions were as follows, with the underscored text being the filled-in language:

"PLEASE DETERMINE THE PERCENTAGES OF PERMANENT DISABILITY BY TAKING INTO ACCOUNT THE NATURE OF THE PHYSICAL INJURY OR DISFIGUREMENT INCLUDING THE DESCRIPTIONS AND MEASUREMENTS OF PHYSICAL IMPAIRMENTS AND THE CORRESPONDING PERCENTAGES OF IMPAIRMENTS PUBLISHED IN THE AMERICAN MEDICAL ASSOCIATION (AMA) GUIDES TO THE EVALUATION OF PERMANENT IMPAIRMENT (5TH EDITION) FOR THE Low Back, Right Wrist, Right Hip and Right Knee . {body part(s)}

IN REPORT OF: David B. Pechman, M.D. DATED: May 14, 2007 ADDITONAL [sic] INSTRUCTIONS:

( X ) Consider a 3% add-on for pain.

ATTACH PERMANENT DISABILITY RATING BASED ON ABOVE INSTRUCTIONS"

Subsequently, the rater issued a formal recommended rating stating that Dr. Pechman's report "rates 0% final PD [permanent disability]." Blackledge made a timely request to cross-examine the rater regarding the 0% recommended rating. At his cross-examination, the rater testified that he received the WCJ's rating instructions but that he "had to exercise some judgment" and, therefore, he "mechanically applied the AMA Guides" to find no ratable permanent disability. Notwithstanding the 8% WPI found by Dr. Pechman based on DRE II, the rater testified that he "assessed" a 0% WPI based on his conclusion that, pursuant to page 384 of the AMA Guides, DRE II requires disc disease and "radiculopathy, spasm, and loss of motion." The rater acknowledged that Dr. Pechman had found lumbar disc disease, but the rater implicitly concluded that Dr. Pechman had not found "radiculopathy, spasm, and loss of motion." Similarly, the rater assigned 0% WPI for patellofemoral pain syndrome, even though Dr. Pechman had found 2% WPI. The rater said that, per Table 17-31 at page 544 of the AMA Guides, "direct trauma" is required for patellofemoral pain syndrome. The rater then testified: "In reviewing the Pechman report, [he] did not see a direct trauma. It must be a direct trauma. If a direct trauma were found, then the rating indicated by Pechman would be appropriate." On November 19, 2009, the WCJ issued the Findings and Award from which ACE sought reconsideration. In relevant part, the WCJ found that Blackledge's low back and right wrist, hip, and knee injury caused 10% permanent disability. The WCJ's Opinion on Decision explained that he instructed the rater to rate Dr. Pechman's May 14, 2007 report using the AMA Guides and to "consider" a 3% add-on for pain. The rater then issued his 0% recommended rating, which the WCJ rejected because the rater testified he had "mechanically applied" the AMA Guides. Therefore, the WCJ rated Blackledge's permanent disability himself using the 10% WPI found by Dr. Pechman in his report, which the WCJ then adjusted for diminished future earning capacity, occupation, and age in accordance with the 2005 Schedule for Rating Permanent Disabilities (the Schedule or 2005 Schedule). ACE then filed its petition for reconsideration. ACE contends that the WCJ should have accepted the rater's expert opinion of 0% permanent disability. In support of this contention, ACE argues that Dr. Pechman inappropriately relied on a "computerized impairment rating" that "does not reflect Dr. Pechman's opinion at all but attempts to take the objective factors of disability in Dr. Pechman's report and apply these objective factors to the AMA Guides." ACE also relies on the rater's testimony that Dr. Pechman's report does not support a DRE II rating for the low back and that Dr. Pechman's right lower extremity rating is not justified because there was no direct trauma. ACE further contends that the 10% permanent disability rating is not justified under the Appeals Board's en banc decision in Almaraz/Guzman II. Blackledge filed an answer to the petition for reconsideration. The WCJ filed a Report and Recommendation (Report) recommending denial of ACE's petition.(fn4) On February 4, 2010, we granted reconsideration to further study the factual and legal issues presented. We now issue our Decision After Reconsideration. II. DISCUSSION A. The Physician, the WCJ, and the Rater Have Distinct Roles in Determining Whole Person Impairment under the AMA Guides For a great many years, permanent disability was based on a rating of either the employee's work restrictions or the employee's objective and subjective factors of disability; this "standard" rating was then adjusted based on the employee's occupation and age at the time of injury. (See 1997 Schedule, at pp. 1-3 - 1-4, 1-7 - 1-8; 1988 Schedule, at p. 1.)(fn5) Because the "old" system for rating permanent disabilities had been in place for a very long time most physicians, WCJs, and raters were familiar and comfortable with it. In 2004 the Legislature enacted Senate Bill 899 (SB 899), which mandates that the AMA Guides be used as a component element of an injured employee's permanent disability rating. SB 899 did not change the portion of Labor Code section...