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F I S C A L I M P A C T R E P O R T
SPONSOR Leavell
ORIGINAL DATE
LAST UPDATED
3/11/07
HB
SHORT TITLE Workers’ Comp “Loss of Use" Compensation
SB SM 73
ANALYST Lucero
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)
FY07
FY08 FY09 3 Year
Total Cost
Recurring
or Non-Rec
Fund
Affected
Total
Minimal
Minimal
Non-
Recurring
Workers’
Compensation
Administration
(Parenthesis ( ) Indicate Expenditure Decreases)
Relates to SB153
SOURCES OF INFORMATION
LFC Files
SUMMARY
Synopsis of Bill
Senate Memorial 73 requests a review and reconsideration of “Loss of Use" compensation under
the Workers’ Compensation Act. The memorial identifies that the current law assigning a fixed
time period to a schedule of benefits under the Workers’ Compensation Act is very specific and
loss of use of a body part is not always considered in the assignment of impairment.
The memorial also recognizes that loss of use is considered in the evaluation for awarding
benefits and that there currently is a lack of objective criteria for such evaluation. The memorial
suggests that the American Medical Association’s Guides to the Evaluation of Permanent
Impairment should be used as an objective criteria guide.
The memorial requests that the Director of the Workers’ Compensation Administration convene
a task force to review the current law and valuation of “loss of use" of various parts of the body.
The task force shall include representatives of labor, business, the insurance industry and
workers’ compensation attorneys.
The task force shall report to an appropriate interim committee of the legislature by November
2007.
pg_0002
Senate Memorial 73 – Page
2
Copies of the memorial are to be transmitted to the director of the Workers’ Compensation
Administration, the Advisory Council on Workers’ Compensation, the Superintendent of
Insurance, the State Bar Association, and the New Mexico Trial Lawyers Association.
FISCAL IMPLICATIONS
There may be a slight administrative cost associated with staff time, travel, and meeting space
which is not addressed in the bill.
SIGNIFICANT ISSUES
Use of the American Medical Association’s Guides to the Evaluation of Permanent Impairment
essentially removes the subjective assignment of a “loss of use" percentage by a workers’
compensation judge (WCJ); on the other hand, use of the guide would ensure fiscal predictability
for benefits paid.
ADMINISTRATIVE IMPLICATIONS
There may be a slight administrative cost associated with staff time, travel, and meeting space
which is not addressed in the bill.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
Senate Bill 153
TECHNICAL ISSUES
It is unclear whether one of the goals of convening the task force is to recommend legislation for
the 2008 legislative session.
OTHER SUBSTANTIVE ISSUES
The memorial identifies the American Medical Association’s (AMA) Guides to the Evaluation of
Permanent Impairment which is among the most widely accepted systems of rating permanent
impairment.
The AMA guidelines are comprehensive and provide a system of rating impairment that includes
a wide range of conditions. The guidelines provide an objective and reliable system of rating
permanent impairment.
DL/nt