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Recent Developments in Loss of Wage Earning Capacity

On 11/3/16, the Appellate Division, Third Department ruled in three decisions that the Board can consider vocational factors in determining the weekly rate of compensation for permanently partially disabled claimants. Prior to this, the Appellate Division consistently held that vocational factors were relevant only with respect to the duration of benefits for a permanently partially disabled claimant and had no bearing on the rate of compensation. The 11/3/16 decisions are a departure from prior decisions regarding the determination of a claimant's weekly compensation rate and clarify that the Board need not base the compensation rate for permanently partially disabled claimants solely on medical impairment. 

Allowing the consideration of vocational factors in setting the rate of compensation for permanently partially disabled claimants is surprising, given that Section 15(5-a), the statutory basis for setting the rate of compensation for both temporary and permanent disability, contains no reference to vocational factors—a point often made by the Appellate Division in its decisions prior to 11/3/16 on this issue.

The lead decision on this issue was Rosales v. Eugene J. Felice Landscaping, in which the Court explicitly declined to extend its ruling in Canales v. Pinnacle Foods, LLC, to permanent partial disability claims. Canales concerned a dispute over whether vocational factors could be considered in determining the rate of compensation during a period of temporary disability. Although language in Canales and the subsequently decided Franklin v. New England Motor Freight stated that vocational factors are only relevant in determining the duration of a claimant's permanent partial disability benefits, the Court in Rosales decided that vocational factors could be considered in determining the rate of compensation for a permanently partially disabled claimant. In distinguishing Canales, the Court relied on what it called a “key distinction” between temporary and permanent disability: that permanently partially disabled claimants have “no expectation” of returning to their former or similar employment and thus it is “necessary” to consider vocational factors in such cases even though it is not appropriate to do so for temporarily disabled claimants.

Any hopes that the Court’s decision in Rosales was an anomaly were dashed by Sarbo v. Tri-Valley Plumbing & Heating in which the Court applied its holding in Rosales to a different fact pattern, making it clear that the Rosales rule applies to all permanent partial disability claims.

Finally, in Till v. Apex Rehabilitation the Court held that, for a non-working claimant, "loss of wage earning capacity" is not automatically the inverse of the claimant’s "wage earning capacity." Rather, the claimant’s wage earning capacity is a separate and distinct factual determination from loss of wage earning capacity.

In light of these recent decisions, it is important to remember that vocational factors can affect the rate of compensation as well as the duration of PPD benefits. Thus, employers and carriers should obtain and use vocational evidence such as vocational expert reports in appropriate cases to develop the best defenses on their cases.

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