October 19, 2005 - Pennsylvania Workers' Compensation Update - 3rd Quarter '05
SUPREME COURT CASES
Reifsnyder et al v. WCAB (Dana Corp), Nos. 4, 5 & 6 EAP 2004 (Filed September 28, 2005).
ISSUE: Whether unemployment compensation benefits received during the year preceding a work injury are included in an Average Weekly Wage calculation?
ANSWER: Unemployment compensation benefits received during the year preceding a work injury are not included in an Average Weekly Wage calculation.
ANALYSIS: The Supreme Court accepted this matter consisting of three consolidated appeals to address how the Average Weekly Wage (AWW) should be calculated "in the situation where the injured employee was subject to work-related layoffs for business/economic reasons in the relevant look-back period." Under Section 309(d), the AWW is calculated by dividing by thirteen the total wages earned in the last four consecutive periods of thirteen calendar weeks in the fifty-two weeks immediately preceding the injury and by averaging the total amounts earned during the three highest thirteen (13)-week periods. However, Section 309(d) does not address the scenario where there are periodic layoffs each year. The Court ultimately determined that the claimant gets zero earnings included during periods of receipt of unemployment compensation and that the above four thirteen week period method is utilized if the claimant was employed for that long. This is a favorable decision since the Commonwealth Court had held that only the time periods where the claimants actually worked were utilized in the AWW calculation, a holding that resulted in a significantly higher AWW. As part of its analysis, the Court cited its recent AWW related Decision, Colpetzer v. Workers' Compensation Appeal Bd. (Standard Steel), 870 A.2d 875 (Pa. 2005). In Colpetzer, the Court held that if a claimant has a work injury, is on TTD, and then suffers a new work injury, the AWW for the first injury is utilized for periods where claimant had no earnings during the four 13 week periods preceding the new injury.
CONCLUSION: This ruling will reduce the calculated AWW in scenarios where a claimant has been periodically laid off. The claimant gets zero earnings toward calculating AWW, for periods when she received unemployment compensation. The claims professional should check his/her inventory for such cases and file an amended NCP if appropriate.
Denise Kramer v. WCAB (Rite Aid Corporation), Nos. 51& 52 MAP 2003 (Filed September 28, 2005).
ISSUES:
- Whether Section 204(a) of the Act allows for all employers, or only self-insured employers, to take an offset against a claimant's workers' compensation benefits in the amount of a severance payment made by the employer to the claimant?
- If such an offset is allowable, does Section 204(a) violate the equal protection clause under Pennsylvania and/or United States Constitutions?
ANSWER:
- Section 204(a) allows all employers to offset workers' compensation benefits in the amount of a severance payment; and
- Section 204(a) does not violate equal protection grounds.
ANALYSIS: Claimant worked for employer in its Pennsylvania facility where, after sustaining a work injury and collecting TTD benefits, claimant returned to work with work-related restrictions. Employer relocated its Pennsylvania facility to Maryland and as a consequence, claimant was laid off and employer reinstated TTD benefits. As part of a collective bargaining agreement, employer paid claimant a lump sum severance payment. Under Section 204(a) of the Act, an employer may take a credit against a claimant's workers' compensation benefits for the amount it has paid claimant in severance benefits. Accordingly, employer (who was privately insured) took an offset against claimant's reinstated TTD benefits. The Commonwealth Court disallowed the offset because the employer's insurance company paid the workers' compensation benefits while the employer paid the severance.
The Supreme Court reversed and granted the offset. It decided that the phrase "employer directly liable for compensation" of Section 204(a) was ambiguous with respect to whether all employers or only self-insured employers qualify for severance offsets. The Court held that the purpose for the phrase "employer directly liable for compensation" in Section 204(a) was for the situation where a claimant had more than one employer. In such an instance, Section 204(a) gives only the employer responsible for paying both workers' compensation benefits and severance benefits the entitlement to severance offsets. The Court noted that the term "employer" as used in the Act is used interchangeably to refer to both "masters" and "his duly authorized agent", or "his insurer" for purposes of remedies. Brown v. Travelers Ins. Cos., 37 Pa. D. & C.2d 111 (Phila.C.P. 1965), Applying the Brown analysis, the Court found that there is no distinction under the Act between "self-insured" and "privately insured" employers for the purpose of remedies. The Court also noted that it would be "absurd" to draw a distinction between self-insured employers and privately insured employers in light of the fact that Section 204(c) of the Act provides for criminal penalties for a claimant's failure to report severance benefits to the insurer.
Turning to the Court's Analysis regarding whether Section 204(a) violates equal protection grounds, the Court found "nothing irrational or arbitrary in offsetting severance benefits irrespective of whether the employer is self-insured or privately insured." In this respect it concluded that the severance benefit offset is rationally related to the legislation's purpose of controlling workers' compensation costs.
CONCLUSION: Section 204(a), allows both self-insured and privately insured employers to take an offset from workers' compensation benefits in the amount of severance benefits paid to claimant. This ruling will allow insurers of privately insured employers to take an offset. This decision should also apply to pension benefits. The question remains as to whether a credit for gross or net benefits should be taken. We would suggest taking the gross and waiting for a challenge as the gross credit is supported by case law involving unemployment compensation benefits.
Westinghouse Electric Corporation/CBS v. Workers' Compensation Appeal Board (Korach) No. 73 WAP 2003 (Filed September 29, 2005).
ISSUES:
- Whether the doctrine of equitable estoppel tolls the statute of limitations for a Claim Petition when the record does not indicate that employer attempted to lure claimant into thinking that it had accepted responsibility for psychological treatment?
- Whether an NCP can be amended to include an additional injury following the running of the three year statute of limitations for commuted wage loss benefits?
- Whether contract principles apply to commutations?
ANSWER:
- No.
- No.
- No.
ANALYSIS: In 1984, by NCP, employer accepted responsibility for claimant's work injury in the nature of a "back sprain." In 1990, claimant's wage loss benefits were commuted. As part of the commutation, employer agreed to continue paying for claimant's reasonable and necessary medical bills related to the work injury. Between 1984 and 1989, claimant alleged that he became depressed as a result of the work injury and began receiving psychological care. Even though the commutation specifically denied any psychological component of claimant's work injury, employer paid for claimant's psychological care through August of 1998. Thereafter, employer refused to pay for claimant's psychological care. Claimant filed a Claim Petition alleging that he sustained a psychological injury that was caused by the 1984 back injury. The WCAB and the Commonwealth Court affirmed the WCJ's decision granting the Claim Petition.
Whether the Doctrine of Equitable Estoppel Applies
Employer argued that claimant was time barred from filing a Claim Petition by the three year statute of limitations period under Section 315 of the Act. Claimant argued that he was lulled into believing that employer had accepted the psychological injury because, following the commutation, employer had paid for claimant's psychological care. In this respect, claimant argued that the doctrine of equitable estoppel should toll the limitations period. The Court decided that the doctrine of equitable estoppel did not apply in this instance because "nothing exists in the record to demonstrate that employer attempted to lure claimant into thinking that psychiatric treatment was included within its sphere of responsibility."
Form of Petition
Employer also argued that claimant erred in filing a Claim Petition instead of a Petition to Review the Notice of Compensation Payable. The Court agreed that claimant erred by not filing the Petition to Review the Notice Of Compensation Payable because claimant alleged that his psychological condition arose as a direct result of his work related back injury. Nonetheless, the Court reiterated its opinion in General Refractories Co. v. WCAB (Wright), 635 A.2d 120 (Pa. 1993) that the form of the pleading is not controlling when a claimant is entitled to relief. However, the Court found that regardless of the form of the petition, it was too late to amend the NCP to include a psychological injury because the three year statute of limitations regarding claimant's commuted wage loss benefits had run. Claimant argued that the statute of limitations period should not apply because employer had continued to pay for claimant's medical treatment. However, the Court found that it did not matter that employer continued to pay for claimant's medical treatment after the commutation because under Section 413(a) medical expenses and wage loss benefits are considered separately for purposes of the statute of limitations. In this regard Section 306(f.1)(9) of the Act indicates that medical payments made by an employer do not act to revive compensation rights when a statute of limitations has expired. Accordingly, since the statute of limitations for claimant's commuted wage loss benefits had run in 1993 (three years post commutation), so too had the period for which claimant could file a Petition to Amend Notice Of Compensation Payable under Section 413(a), regardless of the fact that employer had continued to pay for claimant's medical treatment.
Contract Principles
The Commonwealth Court had reasoned that since employer, through commutation, had agreed to pay for claimant's ongoing medical benefits related the work injury, contract principles dictate that employer should pay for claimant's ongoing psychological treatment. However, the Supreme Court found that contract principles do not apply to a commutation because it is a "quasi judicial order". The Court went on to indicate that contract principles may apply to compromise and release agreements but did not elaborate on this point.
CONCLUSION:
- Although there are instances where the doctrine of equitable estoppel may apply to toll the statute of limitations regarding a Claim Petition, a case by case analysis must be made to determine whether the record demonstrates that an employer attempted to lure claimant into thinking that certain treatment was included within its sphere of responsibility.
- When wage loss benefits have been commuted but medical benefits are still being paid, the three year statute of limitations regarding the commuted wage loss benefits ends the period for which the description of injury may be amended under Section 413(a). This holding serves to shorten the period for which a claimant may file a Petition to Review the Notice of Compensation Payable under Section 413(a).
- The Court has held that commutations are not governed by contract principles. Accordingly, a claimant cannot make a successful argument that under contract principles an employer must continue to pay for treatment of injuries that have not been accepted by NCP.
COMMONWEALTH COURT CASES
Weissman v. WCAB (Podiatry Care Center, P.C.), 878 A.2d 953 (Filed July 8, 2005).
ISSUE: Whether an employer utilizes claimant's self-employment earnings that are present both before and after an injury in the calculation of partial disability benefits?
ANSWER: Because self-employment income is excluded from a claimant's pre-injury AWW, only the increase in self employment income post injury is considered in the calculation of partial disability.
ANALYSIS: Claimant sustained a torn rotator cuff injury to his right shoulder on March 28, 1997, while working for his employer as a podiatrist. Prior to sustaining the work injury, claimant held two jobs and received income from both. In one job, the claimant was employed by the podiatry care center. In the second job, the claimant was self employed through a sole proprietorship trading under the name Diagnostic X-ray Lab. Both before and after his work injury, claimant performed his self-employment work at Diagnostic X-ray. Claimant began receiving total disability benefits as of May 30, 1997 pursuant to a Notice of Compensation Payable. Employer filed a Termination Petition (treated by the Judge as a Suspension Petition) in May of 1998 alleging claimant had returned to work without a loss of earnings because he earned more in his post injury self-employment compared to his pre-injury AWW (which excluded the self employment income). After lengthy litigation, the Commonwealth Court ultimately held that since one is precluded from using self-employment income in the calculation of a claimant's pre-injury average weekly wage, fairness dictates that only the increase in monies earned in such self-employment, after the work injury, should be included for calculation of post injury wages.
CONCLUSION: This clarifies that in situations where a claimant is employed and self employed pre-injury, only the increase from the self-employment income may be considered for calculation of post-injury earnings/partial disability.
Howrie v. WCAB (CMC Equipment Rental), 879 A.2d 820 (Filed July 20, 2005).
ISSUE: Whether a URO review opinion violated Section 127.471(a) of The Medical Cost Containment Regulations when the reviewer found that the treatment was of little value?
ANSWER: No.
ANALYSIS: Claimant sustained a work related injury to his right shoulder during his employment with CMC Equipment Rental in 1990. Claimant was treated by various doctors between April of 1991 and June of 1995, including the provider in question who saw claimant approximately 300 times for various right shoulder problems. The employer filed an initial Utilization Review Request in 1994 seeking review of the provider's treatment of the claimant. After an independent review, the treatment was determined not reasonable or necessary. The provider filed a Petition for Review of the utilization review determination. The provider testified that he could not cure the claimant as the injury is permanent in nature. Provider further testified that claimant attained maximum medical improvement, after which point claimant's treatment was supportive in nature. The Reviewer testified that the treatment was of little value.
The WCJ credited the reviewer's testimony over the provider and concluded the employer sustained its burden to demonstrate the treatment rendered was not reasonable and necessary.
Claimant's primary appeal focused on the argument that the reviewer's opinions violated Section 127.471(a) of the cost containment regulations. This Section states that "reviewers may not determine that the treatment under review is unreasonable and unnecessary solely on the basis that other courses of treatment exist" The Commonwealth Court concluded the reviewer's opinion indicated that the treatments were not reasonable or necessary because the treatments were of little value not because other treatment existed. For these reasons, the Board affirmed the decision to find the treatment not reasonable or necessary.
CONCLUSION: This ruling dictates that although a reviewer may not solely rely on the fact that there are other treatment possibilities, in finding the treatment under review not reasonable or necessary, the reviewer may rely on the fact that the treatment was of little value when determining that the treatment was not reasonable or necessary. This case also presents a good summary of the case law concerning the reasonableness and necessity of palliative care.
William D. Rex v. WCAB (City of Oil City), 879 A.2d 854 (Filed July 25, 2005).
ISSUE: Whether claimant who suffered from a non-Q-wave heart attack caused by a vasospasm constitutes a disease of the heart such that the claimant is entitled to the presumption that he suffers from occupational disease which arose out of and in the course of his employment?
ANSWER: No.
ANALYSIS: Claimant was a firefighter that suffered a small "non-Q-wave" heart attack. Claimant suffered the heart attack the evening after he was in the course and scope of his duties as a fireman performing manual labor opening fire hydrants. Testimony indicated that the type of heart attack claimant suffered from was not a routine heart attack, but caused by an acute event which was a vasospasm. On appeal, the claimant argued that since he suffered from a heart attack he suffered from an occupational disease and was accordingly entitled to a presumption that the occupational disease arose out of and in the course of his employment, pursuant to Section 301(e) of the Act. This section provides for a procedural evidentiary advantage for the claimant once he establishes that he suffers from an occupational disease specified under Section 108 of the Act. The Commonwealth Court affirmed the order of the Board and found that the claimant was not entitled to a presumption that the condition was work related because the claimant's non-Q-wave heart attack was not a condition that developed over time. As claimant's condition was not one that was developed over time it could not be described as an occupational disease under Section 108.
CONCLUSION: This ruling clarifies the difference between an occupational disease and an injury. Even though the claimant suffers a heart attack, it does not always mean that the heart attack is, in fact, a product of an occupational disease. If the condition is not caused or developed over time, then the claimant will have a difficult task in establishing that he has suffered from an occupational disease.
Morris v. WCAB (Walmart Stores, Inc.) 879 A.2d 869 (Filed July 27, 2005).
ISSUE: Whether an employee's knee injury, sustained while off duty and shopping in the store where she was using her employee discount, was in the course and scope of her duties?
ANSWER: No.
ANALYSIS: The claimant appealed an order of the WCAB that affirmed the decision of the WCJ that had denied claimant's Claim Petition. The claimant was employed at Walmart Stores in Fairless Hills, PA. On the date of her injury, the claimant's shift was to begin between 5 p.m. and 6 p.m. In the early afternoon on that date, claimant and her two daughters walked from their nearby apartment to the employer's store to purchase school supplies, using claimant's employee discount to do so. It was claimant's intention to begin her shift after concluding her shopping. While walking in an aisle of the store, claimant slipped and fell injuring her right knee. Claimant filed a Claim Petition wherein she alleged that she was on the employer's premises and accordingly, in the course and scope of her duties. The Commonwealth Court disagreed with claimant, concluding that using an employee discount while shopping during non work hours is not a fundamental aspect of her employment. In addition, the Court distinguished the claimant's case from its prior decision of Thomas Jefferson University Hospital v. WCAB (Cattalo), 601 A.2d 476 (1991). In Cattalo, the employer required the employees to purchase tokens to get to work on the employee's own time. In Cattalo, the claimant's injury was held compensable because the act of buying tokens occurred on hospital property by people that work for the hospital and the claimant's presence at the employer's selected site was required to obtain the tokens. The Commonwealth Court in the instant matter distinguished the underlying facts by noting that there was nothing relative to the claimant's work which required the claimant to shop only at the employer owned store or use her own employee discount.
CONCLUSION: This case clarifies that simply because a claimant is injured on the employer's premises, the claimant is not necessarily entitled to benefits if she was not required to be on the premises and the act that he or she was performing was not a fundamental aspect of his or her employment.
Alan J. Clayton v. WCAB (Carpentry Concepts, Inc.), No. 2744 C.D. 2004. (Filed August 18, 2005).
ISSUE: Where the Workers' Compensation Judge fails to indicate otherwise and the claimant's petition is dismissed, is the petition presumed to be dismissed without prejudice?
ANSWER: No.
ANALYSIS: In this matter, the claimant failed, at three separate hearings, to offer any evidence in support of his claim or to demonstrate any effort to prosecute his claim. The employer motioned for the matter to be dismissed and the WCJ dismissed the claim by an order but did not state whether it was with or without prejudice. The claimant appealed to the WCAB requesting a remand for further proceedings. The WCAB concluded that the WCJ intended to dismiss the claim with prejudice, and affirmed the WCJ's order. The Commonwealth Court held that the WCAB properly found that the WCJ intended to dismiss the claim with prejudice, thereby prohibiting the claimant from refiling his claim. The Court found that the claimant had acted in a dilatory manner by failing to prosecute his claim, requesting three continuances, and failing to appear at the third hearing.
CONCLUSION: From a defense perspective, this ruling is very favorable and confirms the general legal principle that no party is allowed "a second bite of the apple", especially where that party simply fails to move forward in its litigation. When in litigation, the employer, carrier, and/or defense team should be mindful of the number of continuances that it does not oppose, and, when deemed appropriate, ask for dismissal of the petition with prejudice.
American Rock Mechanics, Inc. v. WCAB (Bik and Lehigh Concrete Technologies), 519 C.D. 2005. (Filed August 19, 2005).
ISSUE: Whether an employer who leases equipment and an employee to operate it and who does not control authority to hire, fire, or the manner in which the work is done is considered the employee's employer for purposes of the Act?
ANSWER: No.
ANALYSIS: American Rock Mechanics (Amroc) petitioned the Commonwealth Court to review a WCAB decision that affirmed the Workers' Compensation Judge's grant of claimant's Claim Petition. Amroc argued that it was not the employer as defined by the Act at the time of the incident because it had leased the equipment and the claimant to operate it, to Lehigh Concrete Technologies (Lehigh). Amroc argued that Lehigh was the employer under the Act because the claimant was a "borrowed" employee and Lehigh "maintained control" over the claimant's work site. The Commonwealth Court stated that the claimant was not a "borrowed" employee; rather, he was a "leased employee" who operated leased equipment. Under the leased employee analysis of Mature, 97 A.2d 59 (1953) , where the employer is in the business of renting machinery and furnishes the driver, the employee is presumed to remain in the employ of the original employer unless the second employer assumes control of the employee's manner of work. A Court looks at several factors in determining who the lawful employer is, including hiring/firing power, the right to direct the manner and place of work, the loaned employee's possession of a skill or special training required by the work of the second employer, and the employment at a daily rate or hourly rate for no definite period. Where the facts are disputed, the determination of the lawful employer is a matter of fact; where the facts are undisputed, the determination is one of law. The Commonwealth Court concluded that Lehigh did not have authority to hire, fire, or select claimant as the operator of the equipment. Moreover, claimant was trained how to do his work by Amroc. The Court found that Amroc was the rightful employer, and it was liable under the Act for claimant's injuries.
CONCLUSION: This case confirms the rule that an employer who leases equipment and furnishes an employee to operate it remains, more likely than not, the lawful employer for purposes of the Act. Unlike a factual inquiry that is performed in the case of the "borrowed" employee, the leased employee is presumed to remain in the employ of the original employer until proven otherwise. The original employer and/or its carrier must keep in mind that the law presumes that they are the employer, and look to working on the back end to limit their exposure. On the other hand, the second employer and/or its carrier would be wise to keep an eye on the litigation and work diligently to prove its status as the leasing employer.
Allegis Group (Onsite) and ITT Hartford v. WCAB (Henry), No. 2231 C.D. 2004 (Filed September 5, 2005).
ISSUE: Whether an employer is entitled to a suspension of benefits based on a light duty job offer when it fails to issue a "Notice Of Ability To Return To Work" as required under Section 306(b)(3) of the Act?
ANSWER: No.
ANALYSIS: Employer had accepted the injury by TNCP which, converted into a NCP. The WCJ found that claimant sustained an injury, and that employer had offered claimant a light-duty position within his restrictions. As a result, the WCJ awarded benefits as of the date of claimant's injury, and suspended benefits as of the date of the job offer. On appeal the WCAB reversed the WCJ's suspension of benefits on the grounds that employer had not issued a Notice Of Ability To Return To Work as was required by Section 306(b)(3) of the Act. See Hoover v. Workers' Comp. Appeal Bd. (Harris Masonry, Inc.), 783 A.2d 886 (Pa. Cmwlth. 2001), petition for allowance of appeal denied, 569 Pa. 725, 806 A.2d 864 (2002).
Section 306(b)(3) of the Act states in relevant part (emphasis added):
- (3) If the insurer receives medical evidence that the claimant is able to return to work in any capacity, then the insurer must provide prompt written notice, on a form prescribed by the department, to the claimant.
The prescribed form is the LIBC- 757 "Notice Of Ability To Return To Work" form. The Commonwealth Court held that compliance with the provisions of Section 306(b)(3) is a threshold requirement for a modification or suspension of claimant's benefits unless the employer seeks to modify benefits based on expert vocational testimony and surveillance evidence showing that the claimant already returned to work for another employer rather than based on new medical evidence (emphasis added). Burrell v. Workers' Comp. Appeal Bd. (Phila.) Gas Works & Compservices Inc.), 849 A.2d 1282 (Pa. Cmwlth. 2004).
CONCLUSION: Compliance with Section 306(b)(3) of the Act (issuing a LIBC- 757, "Notice Of Ability To Return To Work" form) is mandatory when seeking to suspend or modify a claimant's benefits in all instances where the suspension or modification is based on new medical evidence. The only instance where an employer is not required to issue a Notice Of Ability To Return To Work form is when the employer seeks to modify benefits based on expert vocational testimony and surveillance evidence showing that the claimant already returned to work for another employer.