Maine attorney for workers' compensation, criminal defense, civil litigation, and small business matters.

Maine Workers' Compensation Law blog

A humble collection of pieces about issues in Maine workers' compensation law by Attorney Zachary J. Smith.

Permanent Impairment

Permanent impairment as a concept used to be an important component of Maine’s workers’ compensation statute. In the old days of Maine workers’ compensation law, back when excessive and unsustainable costs were driving insurers out of the state and triggering a shutdown of the state government in the early 1990s, injured employees could get money for permanent impairment. Later, after the major overhaul of Maine’s workers’ compensation statute in 1992, permanent impairment thresholds determined whether a partially incapacitated employee could get lifetime partial-incapacity compensation. Now it is dwindling in importance because of further statutory changes. So what is permanent impairment? And how do these different permanent impairment issues work?

First, in essence, permanent impairment refers to the effects of specific injuries or conditions on someone’s ability to function. The permanent impairment rating is established by a doctor who determines the patient (for our purposes an injured worker) is at “maximum medical improvement” and consults the American Medical Association’s published guides to assign a percentage of impairment to the “whole person.” As usual, I’m simplifying things here for the sake of brevity and readability, but the impairment rating is a logical way to approximate how much a given individual’s ability to perform work or non-work activities is impaired by a given injury or condition. So, for example, someone who has fully recovered from an injury has 0% permanent impairment, whereas someone else with a damaged back, painful knees, and severe nerve damage in his arms despite surgery might have more than 50% impairment.

Second, under the pre-1993 workers’ compensation law an injured worker who suffered permanent impairment was entitled to an amount of compensation set out by a schedule that assigned values to various levels of permanent impairment rating. This cash benefit came in addition to wage-loss compensation. The rationale, I assume, was to compensate people for the lifestyle effects that serious work injuries could cause, because someone’s lost income doesn’t always reflect the full effect on his or her life of an injury. Injured employees often are able to return to work after serious accidents or surgery for gradual injuries and miss a fairly insignificant amount of income. However, if they have permanent impairment, they may never be able to engage in the same recreational activities, housework tasks, or other functions of everyday life. Unfortunately, the cost of this benefit contributed to the financial crisis of workers’ compensation in Maine in the 1980s and early 1990s.

Third, for injuries dated from January 1, 1993, until December 31, 2012, if someone was only partly incapacitated by a work injury, he or she might be entitled to lifelong partial-incapacity compensation. This depends on the person’s ability to earn, actual earnings, and permanent impairment rating. If the percentage is over a certain number, depending on the year, the injured worker has the possibility of lifetime entitlement to benefits, whereas if the percentage falls below that “threshold” compensation may be stopped after ten years.

Fourth, for more recent injuries, there’s little importance to the permanent impairment rating. If you’re partially incapacitated, you’re probably cut off after ten years of benefit payments. I find this unfair because workers’ compensation is a no-fault system built on the idea of wage replacement, and some people can never return to their pre-injury earning capacity. Some people inevitably will become dependent on other forms of income replacement, like Social Security disability, early retirement, and public assistance, to supplement their reduced income. Such a result runs contrary to the main rationale behind workers’ compensation: that work-related injuries are an unavoidable consequence of doing business whose cost should be passed on the consumers of goods and services. If I’m ever in the state legislature, I’ll push for a change.