Nothing more quickly allows me as a teacher to reveal and explore the fault lines of workers’ compensation theory than the subject of permanent partial disability.

Michael C. Duff

I teach — both in my class and in my workers’ compensation textbook — a simplified wage loss model. This reflects my background as a Maine lawyer cutting his teeth on the subject during the period 1995-1997: Simply take some percentage of the difference between the pre-injury average weekly wage and post injury wage (e.g., 2/3 of the gross or 80% of the net). Whatever that figure is, pay it for the duration of the disability/incapacity for work.

The approach is analytically “clean” and helps students to quickly distinguish between total benefits (2/3 of the AWW) and partial benefits (2/3 of the difference, as just explained).

There are all kinds of problems with this model. It seems consistent with the overall quid pro quo of workers’ compensation: A hypothetical worker who would have had a meritorious tort suit could have received damages in excess of this benefit amount, plus medical treatment.

But imagine the worker who would not have had a meritorious tort suit. Is such a worker receiving a windfall that is more equivalent to a welfare benefit? Some state legislatures seem to think so, though they simultaneously vastly underestimate the impact of successful negligence lawsuits by those who have not suffered injury from a pure “accident.”

Then there are issues with duration. States utilizing wage loss models may set a durational limit (which is also true of total benefits). Leaving issues of morality to one side, are durational limits on the amount of time a worker can receive workers’ compensation benefits for an established work-related injury legally defensible?

I would argue not for our hypothetical, successful injured worker-tort plaintiff. But perhaps limits can be legally defended with respect to the injured worker who is a victim of pure accident. And, fair or not, attempting to calculate actual wage loss imposes the administrative burden of monitoring wage losses for many workers on an ongoing basis.

Alas, I must, accordingly, at least allude to other, less simple partial benefit models, especially since there is a more-or-less three-way split of approaches throughout the country (including in Wyoming, which expresses partial benefits both in terms of work incapacity and physical impairment).

Basing partial benefits on a loss of an injured worker’s post-injury earning capacity, another approach to calculating partial benefits, presents its own difficulties. On what is this earning capacity to be based? One possibility centers on post-injury employment.

When I practiced in Maine, post-injury wages were prima facie the measure of post injury earning capacity. The burden was on the employer-carrier to have it otherwise. But suppose the partially incapacitated employee loses his “injury job” and is thereafter unable to obtain employment. How will post-injury earning capacity be measured then (not to mention the problem with supplemental claims that benefits should be paid at a total rate during the period of accompanying unemployment)?

Or suppose an employee sustains an injury resulting in physical limitation likely to impact earning capacity in the future, but causing no immediate wage loss. How is that future loss to be accounted for?

Enter the erratic topic of permanent impairment. Permanent impairment, in many states, kinda, sorta acts as a proxy for earning capacity through the vehicle of schedule benefits. But few are those who can explain just how. The analytical basis for specific determinations seem lost in the mists of time.

From the very beginning of the American workers' compensation system, in the 1910s, we have been assured of proclamations such as a lost arm is worth 312 weeks of compensation, a hand 244 weeks, and so forth. I’m inclined to blame the Europeans, because “schedule injuries” were an original feature of 19th-century European workers’ compensation laws.

Indeed, the West Virginia State compensation commissioner, reputedly early-on, prepared tables “from a combination of the tables used in Germany and Russia for compensation purposes.”

In all of this I am leaving out the awkward fact that Massachusetts originally did not connect permanent impairment benefits to work incapacity at all, even by proxy. And, in my fair home state of bar admission, Maine, the Legislature first proxy-connected permanent impairment to wage loss benefits, then reversed itself in 1965 by providing standalone PI benefits, and then reversed course again by providing "alternative" schedule benefits that must be set off against “general” partial benefits.

These are, of course, exceedingly delightful details for law students to encounter. I hope you will forgive me for emphasizing the simplified wage loss model in the interest of Vygotsky’s Zone of Proximal Development.   

Michael C. Duff is associate dean for student programs and external relations, and is professor of law, at the University of Wyoming College of Law. This entry is republished from the Workers' Compensation Law Professors blog, with permission.