The PD Rate: A 60-Second Seminar in Workers’ Compensation Claims Handling

For several years, the California Applicant Attorney Association (CAAA) has complained about the low weekly permanent disability rate being paid to injured workers. The applicants’ bar asserts that a disabled employee cannot survive on a compensation rate of only $290.00 per week. It is especially devastating when injured workers exhaust their entitlement to temporary disability only to see their TD benefits replaced by a $290 per week PD payment.  We can certainly understand the hardship some injured workers may endure trying to survive off such a low rate, which has remained unchanged since 2014.  New legislation sponsored by CAAA is anticipated.

Based on past precedent, any legislation to increase the maximum weekly PPD rate will require some “give and take” on both sides.  In other words, to provide a benefit to injured workers an offset to employers is required.  With that said we recommend that the maximum weekly PPD rate be increased by doubling it to $580 per week, while reducing the number of payable weeks in half.  Injured workers will still end up receiving the same total amount, but their award would be paid at double the current rate in half the time.  Even with this proposal, employers would still lose out on the deal as life pensions would begin earlier and some investment interest would be lost. Therefore, to fulfill the “give and take” offset requirements it is proposed that the FEC conversion factor, which applies to every PPD calculation, be lowered from 40% to 35%.

If we are going to amend the workers’ compensation PD laws, we should not stop here.  We must also consider closing a tremendous loophole in the law that does not allow for garnishment of PD to pay child support obligations.  When support payments cease once PD begins, the effects can be devastating on a helpless child.  Ironically, only “two words” need to be added in four locations to existing law to correct this injustice. CCP §704.160(b) & (c) can be amended to add the same two words in four locations as demonstrated below:

(b) … during the payment of workers’ compensation temporary or permanent disability benefits described in subdivision (a) to a support …  the appropriate local child support agency, seek to apply the workers’ compensation temporary or permanent disability benefit payment to satisfy the support judgment as provided by Section 17404 of the Family Code

c) …during the payment of workers’ compensation temporary or permanent disability benefits … to a support … the appropriate local child support agency, seek to apply the temporary or permanent disability benefit payments to satisfy the support judgment by an earnings assignment order for support …

If your organization is active in workers’ compensation reform, we are pleased to have provided you with two options to consider when the issue of PD reform is raised.  Our suggestions not only make sense, but they are the proper thing to do.