Permanent Impairment and the 18% Threshold – What It Means and What to Expect in the Coming Years

Permanent impairment has been in the news in recent months. With the Law Court’s decision in Bailey v. City of Lewiston (2017 ME 160), it has held that an established permanent impairment rating is not subject to revision, even in the face of changed medical circumstances. In Somers v. S.D. Warren Co. (Maine Workers’ Comp Board [WCB] App. Div. No. 17-38 [November 13, 2017]), the Appellate Division held that the WCB may not revise a previously established permanency rating in an upward manner.

With the recent focus on permanent impairment, it is worth addressing the current permanency threshold and what it means for ongoing benefits.

Permanent impairment is “any anatomic or functional abnormality or loss existing after the date of maximum medical improvement that results from the injury” (39-A M.R.S.A. § 102). Maximum medical improvement is defined as, “the date after which further recovery and further restoration of function can no longer be reasonably anticipated, based upon reasonable medical probability.”

For injuries on or after January 1, 1993, permanent impairment no longer means additional benefits for an injured worker, but it plays a significant role in determining how long partial incapacity benefits can be received (the level of permanent impairment does not come into play for total incapacity benefits, which must be paid for the duration of disability).

If permanent impairment is below the applicable threshold, injured workers may not receive partial benefits beyond 520 weeks. However, if permanent impairment exceeds the threshold, benefits may continue for the duration of disability.

The permanent impairment threshold for injuries is as follows:

• Injuries from January 1, 1993, to December 31, 1997, the threshold is 15%
• Injuries from January 1, 1991, to December 31, 2001, the threshold is 11.8%
• Injuries from January 1, 2002, to December 31, 2003, the threshold is 13.2%
• Injuries from January 1, 2004, to December 31, 2005, the threshold is 13.4%
• Injuries from January 1, 2006, to December 31, 2012, the threshold is 12%

For injuries on or after January 1, 2013, if, at 520 weeks, the partially incapacitated employee is working, earning 65% or less of his average weekly wage, and permanent impairment attributable to the injury is “in excess of 18%,” partial incapacity benefits may be required beyond 520 weeks so long as the employee continues to work and earn less than his average weekly wage. Regardless of the extent of permanent impairment or level of earnings, partial incapacity benefits may be extended beyond 520 weeks if the employee proves “extreme financial hardship due to inability to return to gainful employment.”

We are just over five years into a new permanent impairment threshold. In less than five years, those employees with injuries in early 2013 will be involved in litigation over cessation of benefits. The changes for injuries on or after January 1, 1993, will not begin to have a major impact until approximately 2022 or 2023, when the first group of employees with 2013 injuries will be involved in litigation over permanent impairment and cessation of benefits. Still, the threshold has an immediate impact when valuing cases for settlement purposes and planning for the future. Expect to see increased instances where individuals claim financial hardship, or continuing cases where employees try to allege they have 18% or more whole person permanent impairment. With this increased permanency threshold, generally only more serious injuries and/or injuries involving permanency from a psychological sequela will exceed the threshold.