IEA is fortunate to count Allen Leno as one of its senior instructors and course authors.  Allen sheds some interesting light on the lesser-known case of the "Almarez/Ogilvie" rulings recently revised by the WCAB.  In this article, Allen points out that the key problem for claims adjusters and employers is earnings capacity after an injury.  Here is Allen's article:

In Ogilvie, the Board made few substantive changes from its prior decision. The parties must use the RAND methodology and formula which means that the formula from the original decision still applies. The problem is that the RAND researchers did not fully understand the impact of the terminology they used and the Board compounded the problem by failing to consider the impact of events following injury. The Board confirmed that the calculation should consider earnings for the three years pre and post injury. Earnings for the three year period pre-injury should be for a “similarly situated” worker meaning that we may not use actual wages but wages for the average worker in the industry in question in the worker’s geographic area. The real problem is the post-injury earnings which are often zero or are very low because the employee was TTD for a significant portion of the three year period (TD payments cannot be included in the calculation). Thus we would often have to enter $0.00 for the post-injury earnings capacity, giving the worker a 100% earnings loss. This results in a calculated DFEC modifier that can go as high as 6 compared to the 1.1 to 1.4 range in Table A from the 2005 PDRS. Thus we have modest WPIs doubling, tripling, or worse compared to the 10% to 40% increases contemplated by the Table A. The Board does leave some room for contemplation of earnings capacity rather than actual earnings for the post-injury period although when and how substitution is appropriate is vague. Taken as a whole, the Board’s decision suggests that calculating and applying the DFEC modifier is not a simple calculation that can be done by any claims administrator or attorney. The involvement of vocational experts seems a certainty for the foreseeable future.
 
The real issue in the Ogilvie formula is earnings capacity after injury. It seems pretty clear that the Legislature had earnings capacity in mind and the RAND research discusses earnings capacity. Unfortunately, the RAND researchers apparently did not understand that an injured worker is usually not going to be in a position to earn wages until s/he is P&S/MMI. Thus the three year post-injury period should not begin until the employee is P&S – at the very least. We cannot count TTD as earnings and the worker cannot earn wages and received TTD. Beyond that simple fact is terminology itself. We use a DFEC value from Table A or calculate a DFEC value for the modifier. It is a Diminished Future Earnings Capacity modifier NOT a Diminished Future Earnings modifier. A simple example might best serve to clarify the Board’s perceptual error: