Opinion by JUDGE RULAND

Petitioners, James C. Morris (employer) and its insurer, the Colorado Compensation Insurance Authority (CCIA), seek review of a final order of the Industrial Claim Appeals Office (Panel), awarding Bianca P. Storlazzi (claimant) permanent partial disability benefits based upon a whole person impairment. We set aside the order and remand with directions.

The relevant facts are not in dispute. Claimant suffered an admitted injury to her left wrist and arm in May 1992. A level II accredited physician rated claimant's permanent impairment as a scheduled injury to the left extremity of 42%. Neither party requested an independent medical examination (IME) on this issue.

Claimant was also treated for anxiety and depression stemming from her inability to perform a number of functions because of the pain and the physical limitations from the injury. One level II physician opined that claimant sustained a six percent whole person psychiatric impairment from this component of her injury under the American Medical Association Guides to the Evaluation of Permanent Impairment (AMA Guides). In contrast, however, a division-selected examiner conducted an IME on claimant and rated her permanent psychiatric impairment at zero percent under the AMA Guides.

The Administrative Law Judge (ALJ) found that the IME was credible and persuasive and that claimant had not shown by clear and convincing evidence that the IME rating of zero percent was incorrect. However, based on a reference to dysphoria in the IME report, the report of the level II physician adopting a six percent rating, and a psychotherapist's report, the ALJ also found that claimant had suffered a "functional psychiatric impairment" from the injury.

Because the psychiatric impairment was not included on the schedule of injuries set forth in § 8-42-107(2), C.R.S. (1996 Cum. Supp.), the ALJ concluded that the arm injury should be compensated as a whole-person impairment pursuant to this court's decision in Mountain City Meat Co. v. Industrial Claim Appeals Office, 904 P.2d 1333 (Colo.App. 1995) (Mountain City Meat I). The ALJ awarded claimant permanent medical benefits based upon a whole person impairment of 23%. The Panel agreed and affirmed.

Petitioners contend that the ALJ and the Panel erred in combining the injuries to award a whole person impairment of 23% under the circumstances of this case. We agree.

Section 8-42-107, C.R.S. (1996 Cum. Supp.) establishes two different methods for awarding compensation benefits based upon a permanent impairment. If the injury is one of those described in the schedule contained in § 8-42-107(2), the benefits delineated in this schedule are awarded. If, on the other hand, the injury does not fall under the schedule, § 8-42-107(8), C.R.S. (1996 Cum. Supp.) provides that the rating shall be determined pursuant to the AMA Guides as a whole person rating.

These statutes were interpreted in Mountain City Meat I to allow a single whole person impairment rating under § 8-42-107(8) if a claimant suffers two or more impairments, one of which falls under the schedule and one of which is a non-scheduled impairment. See §§ 8-42-107(8)(b.5)(I)(A) and (II), C.R.S. (1996 Cum. Supp.).

However, in Mountain City Meat Co. v. Oqueda, 919 P.2d 246 (Colo. 1996) (Mountain City Meat II), announced after entry of the Panel's ruling in this case, our supreme court reviewed five decisions from this court addressing the issue of compensation for permanent impairment resulting from both scheduled and non-scheduled injuries. The court held:

[W]hen an employee is involved in a work-related accident that results in both a scheduled injury and a non-scheduled injury, the scheduled injury must be converted to a whole person impairment rating and combined with the non-scheduled injury's whole person impairment rating in calculating permanent disability benefits.

Mountain City Meat II, supra, 919 P.2d at 254 (emphasis supplied).

We view the holding of our supreme court in Mountain City Meat II as instructive in resolving the issue before us, and we conclude that an injury must be ratable under the AMA Guides before such is compensable under § 8-42-107(8). Hence, we hold that a functional impairment that rates at zero percent under the AMA Guides is not a compensable injury under § 8-42-107(8).

Contrary to respondent's contention, we do not view Strauch v. PSL Swedish Healthcare System, 917 P.2d 366 (Colo.App. 1996) as pertinent to the resolution of the issue here. In Strauch, a division of this court held that the determination of the situs of any functional impairment due to an injury may be distinct from the situs of the initial harm. As a result, an injury to the shoulder may only impair use of the arm and thus become an injury for which benefits under the schedule are provided. The Strauch court further concluded that while the rating system for physical impairment under the AMA Guides may be considered in resolving the location of the permanent impairment, the AMA Guides are not determinative.

Nor do we view Advanced Component Systems v. Gonzales, ___ P.2d ___ (Colo.App. No. 95CA0768, April 4, 1996) as applicable in resolving the issue before us. In that case, a division of this court addressed the issue whether facial disfigurement resulting from an injury must constitute a medical impairment that interferes with a physical function before benefits may be awarded under § 8-42-107(8). The court held that the issue whether a medical impairment existed must be determined based upon the use of that term in the statute and not the AMA Guides. Once a medical impairment does in fact exist, the rating under the AMA Guides becomes applicable.

Unlike Strauch and Advanced Component Systems, the issue here is whether a non-scheduled injury must be ratable under the AMA Guides before the benefits provided under § 8-42-107(8) may be awarded. As noted, we conclude that it must.

Because the ALJ made no finding concerning the rating that the level II physician attributed to claimant's scheduled physical injury, we conclude it is necessary to remand this case for further findings.

The Panel's order is set aside and the cause is remanded with directions that the ALJ be instructed to enter an award for impairment to claimant's left extremity as a scheduled injury.

JUSTICE ERICKSON and JUSTICE KIRSHBAUM concur.