April 27, 2006 - Pennsylvania Workers' Compensation Update - 1st Quarter '06
SUPREME COURT CASES
Renee Snizaski, Widow of Randy Snizaski, Deceased v. WCAB (Rox Coal Company), No. 36 WAP 2004 (Decided February 22, 2006).
ISSUE: Whether the Workers' Compensation Judge ("WCJ") erred in granting claimant's penalty petition against an employer who failed to pay a workers' compensation award within thirty (30) days of the decision of the Workers' Compensation Appeal Board ("the Board"), but where the employer had filed a timely supersedeas request?
ANSWER: An employer who fails to pay a compensation award during the pendency of a timely-filed supersedeas petition authorized under the Board's regulations is not subject to a penalty.
ANALYSIS: The Supreme Court addressed an alleged tension between the Act's penalty provisions and the Board's supersedeas regulations. The question was a purely legal one concerning whether a WCJ should assess a penalty against an employer who fails to pay compensation benefits within 30 days of an award, where the employer timely availed itself of the supersedeas procedures. The Commonwealth Court affirmed the Board's holding that the WCJ erred in awarding a penalty for the period during which the employer's supersedeas request was pending before the Board. The Commonwealth Court overruled Hoover v. WCAB (ABF Freight Systems), 820 A.2d 843 (Pa. Cmwlth. 2003), where the panel majority held that a WCJ did not abuse his discretion in awarding a penalty for an employer's failure to pay an award within 30 days, notwithstanding that a supersedeas request was filed and pending.
Under the Act, the power to assess a penalty is dependent upon the party violating the Act or pertinent rules and regulations. One way an employer may violate the Act and become subject to a penalty is to refuse to make a payment provided for in a compensation decision within 30 days, in the absence of a supersedeas being sought and actually granted.
The Act also recognizes that an employer or insurer may seek a supersedeas. The Act duly authorizes the Board to adopt procedures and rules which are reasonably calculated to expedite the hearing and determination of appeals to the board and to insure full payment of compensation when due. The Board's regulations contemplate that the entire procedure from supersedeas request to a ruling or deemed denial, will take a maximum of fifty days (in the case of an appeal from the WCJ to the Board), or sixty days (in the case of an appeal from the Board to the Commonwealth Court).
The Supreme Court ultimately reached the conclusion that an employer can be deemed in default only if it fails to seek supersedeas while pursuing additional review or refuses to make a compensation payment after its supersedeas request is denied. To hold otherwise would render the Board's supersedeas regulations and authority a nullity. Moreover, it is absurd and unreasonable to construe the Act as if it intended that the prospect of a penalty assessment should depend upon the unpredictable fortuity of the outcome of the supersedeas request. Penalties should be tied to some discernible and avoidable wrongful conduct. The Supreme Court thus affirmed the order of the Commonwealth Court.
CONCLUSION: This ruling clarifies that an employer who timely files a supersedeas request pursuant to the Board's regulations cannot be subject to a penalty award for failing to pay the underlying benefit during the pendency of the supersedeas petition.
COMMONWEALTH COURT CASES
Acme Markets, Inc. v. W.C.A.B. (Brown), No. 163 C.D. 2005 (Filed January 3, 2006)
ISSUE: The essential issue in this case was whether claimant's net income rather than gross income from self-employment actually reflects claimant's earning power?
ANSWER: Whether claimant's net or gross income accurately reflects his earnings from self-employment is a question of fact to be determined by the WCJ and here, the WCJ found claimant's net earnings accurately reflected his actual earnings from self-employment.
ANALYSIS: The claimant did not return to work with his pre-injury employer but became a self-employed real estate appraiser. Under Bi-Thor Electric, Inc. v. W.C.A.B. (Thornton), 702 A.2d 1145 (Pa. Cmwlth. 1997), where a claimant does not return to work with his pre-injury employer, but becomes self-employed, the WCJ has to determine by the facts of the case whether the claimant's net or gross income more accurately reflects his earnings from self-employment.
Here, the WCJ found claimant's net earnings accurately reflected his self-employment earnings. The WCAB affirmed the WCJ's decision. The WCJ found claimant's testimony regarding his business deductions relating to his business credible and additionally found claimant supported his deduction of his wife's salary he paid for her secretary/bookkeeper services. The Board stated that the wife performed the work of two people and her salary was commensurate with her efforts.
Although the WCJ took into account the employer's vocational expert, he found her testimony did not apply to the claimant because claimant was paid on a fee-per-job basis, making it difficult to compare his yearly salary with the vocational expert's regional average. The regional average presumably included appraisers who are not self-employed. Also, his wife's earnings were unusual because she had two different job functions as a secretary and a bookkeeper.
CONCLUSION: The Court affirmed the Board's decision and agreed that net earnings were appropriate in this setting. However, the question of whether net or gross earnings is appropriate is a question of fact for the WCJ.
Blong v. W.C.A.B. (Fluid Containment, Inserco Insurance Service and Gallagher Bassett Services), No. 1569 C.D. 2005 (Filed January 19, 2006)
ISSUE: Whether a claimant who moves to New Zealand removed himself from the workforce, thereby authorizing the suspension of benefits?
ANSWER: A claimant, who has made himself unavailable for jobs in his usual employment area by moving out of the country, has officially removed himself from that workplace and his benefits can be suspended.
ANALYSIS: In this case, the WCJ concluded that the claimant voluntarily had removed himself from the workplace when he moved to New Zealand and suspended claimant's benefits. The WCAB affirmed the WCJ's decision. Claimant petitioned to the Commonwealth Court for review.
Under Section 306(b)(2) of the Act, 77 P.S. §512(2), the employer must present evidence that the employee can perform jobs in the employee's "usual employment area." Claimant contended that the employer should be required to prove that there were jobs in the Mt. Union area, where he had been employed at the time he was injured, that he was capable of performing.
However, the WCJ followed the Court's holding in Smith v. W.C.A.B. (Dunhill Temporary Systems), 725 A.2d 1285 (Pa. Cmwlth. 1999). In Smith, the employer was permitted to suspend benefits when a claimant voluntarily removed himself from the workplace to accept a position with the Peace Corps in Africa while receiving total disability benefits. The Court's rationale in Smith was claimant could not perform activities with the Peace Corps in Africa and at the same time be available for job referrals in Wilkes-Barre, Pennsylvania. The claimant in this case tried to distinguish his situation from Smith, in that he was not working in New Zealand, but rather just living there.
The Court found that claimant removed himself from his usual employment area and did not offer an indication that he intended to move back to the United States. More specifically, the Court stated the critical fact is removal. As in Smith, the employer would be making a futile attempt to find jobs in the Mt. Union area, if the claimant had removed himself from the workforce and offered no indication he planned to return to the United States. Therefore, the employer was entitled to suspend claimant's benefits. The Commonwealth Court affirmed the Board's decision.
CONCLUSION: This decision illustrates an important factor for employers to examine when they have a situation where the claimant has moved out of the original employment area to another country, or possibly even to another state. The key factor to look at is whether claimant has temporary or permanently removed himself from the workforce. In either case, a suspension is possible - the length of the suspension, however, depends primarily on the duration of the removal and the purpose of the relocation.
ConocoPhillips formerly Tosco Oil v. W.C.A.B. (Logan), No. 515 C.D. 2005 (Filed January 19, 2006)
ISSUE: Whether the employer is entitled to reimbursement from the Supersedeas Fund where the employer made payment of compensation before the Board formally denied its request for supersedeas, to avoid a penalty?
ANSWER: The employer is not entitled to reimbursement from the Supersedeas Fund because the employer failed to meet the requirement under Section 443(a) of the Act, which mandates that the payment of compensation has to be made as a result of a denial of its request for supersedeas.
ANALYSIS: In this case, the employer was ordered to pay the claimant hearing loss benefits. Twenty days later, the employer appealed and requested supersedeas. The WCAB granted the supersedeas request within the 50-day period in which the Board has to issue a decision on a supersedeas request. On the same day, the employer, unaware of the grant of supersedeas, and in an effect to avoid a penalty. paid the claimant a lump sum award. The Board later reduced the amount of the claimant's award. The employer contended reimbursement should be awarded because under Section 431, 77 Pa. Stat. Ann. § 971(b) the employer is required to make payment to the claimant within 30 days or be subject to the penalties. The employer argued that the supersedeas request should have been "deemed denied" as a matter of law under 77 Pa. Stat. Ann. § 999 within 30 days.
The Board issued the Special Rule in 1989 that stated there was a deemed denial if the Board did not act on the request within 50 days from the date of the award. However, the employer is in a quandary, because employers are required to pay compensation under the Act within 30 days of the award or be subject to penalties under Section 431(b) of the Act, 77 P.S. §971(b). There is no corresponding duty imposed on the Board to act on a supersedeas request within 30 days; therefore, the employer in this case virtually had no choice but to pay compensation or face penalties.
The Court stated that the decision in Snizaski, solves the problem. In Snizaski v. W.C.A.B. (Rox Coal Co.), 847 A.2d 139 (Pa. Cmwlth. 2004), the Court held there is an abuse of discretion for a workers' compensation judge to impose penalties on an employer for not paying an award of benefits within 30 days while a supersedeas request was pending. The reasoning behind the holding was the Board's Special Rules operated as a stay of an employer's obligation to pay under the Act while supersedeas request was being processed or 50 days had past, whichever occurred first. However, in this case there was no formal or deemed denial at the time payment of compensation was made, the employer failed to meet the prerequisites of § 999 needed to obtain reimbursement from the fund. The Court affirmed the Board's order.
CONCLUSION: In February, 2006, the Pennsylvania Supreme Court decided Snizaski (supra). The Snizaski Court concluded that the employee is no longer in a penalty situation if it fails to pay during the pending of a supersedeas request. As a result, the employer may now wait for the supersedeas order to pay (or not pay - if granted) and not fear a penalty.
John Fratta and/or Kathleen Fratta, as the Administratrix and Personal Representative of the Estate of John Fratta, Deceased v. WCAB (Austin Truck Rental), No. 1916 C.D. 2005 (Filed February 16, 2006).
ISSUE: Whether Section 449 (Compromise and Release) of the Pennsylvania Workers' Compensation Act is constitutional?
ANSWER: Section 449 of the Pennsylvania Workers' Compensation Act does not violate the Equal Protection Clause. The Court found no due process violation, as the compromise and release of workers' compensation claims is not a constitutionally protected interest.
ANALYSIS: In this case, claimant and employer entered into a Compromise and Release Agreement, and claimant died of an unrelated condition prior to the hearing. At the hearing, decedent's widow (claimant), as personal representative of his estate, tried to enforce the Compromise and Release Agreement. The WCJ determined that a valid Compromise and Release Agreement did not exist because the requirements of Section 449 of the Act had not been met. The Board affirmed the WCJ's decision. Claimant appealed to the Commonwealth Court, alleging that Section 449 is unconstitutional.
This was a question of first impression. Claimant argued that (1) the right of the deceased claimant's estate to equal protection was violated because she was not allowed to participate in a compromise and release of the decedent claimant's workers' compensation claim; and (2) that her substantive and procedural due process rights were infringed by not being allowed to participate in the compromise and release process.
The Court noted that different governmental classifications are subject to different levels of scrutiny based on the type of classification. Correll v. Department of Transportation, Bureau of Driver Licensing, 726 A.2d 427, 430 (Pa. Cmwlth. 1999). The Court indicated that Section 449 is facially non-discriminatory, makes no distinction between two different groups of "claimants" and makes no classification between the dependents of employees who die as a result of a work-related accident and the beneficiaries of a deceased claimant who was receiving workers' compensation benefits and who died from something other than a work-related accident and was thus not able to attend the compromise and release agreement hearing. Therefore, the Court did not need to address the appropriate level of scrutiny that should be applied. Id.
The Court explained that a neutral statute may still be invalid if it reflects invidious discrimination. Furthermore, the impact of that discrimination must be traceable to purposeful discrimination in order to be constitutionally invalid. See Klesh v. Department of Public Welfare, 423 A.2d 1348, 1351 (Pa. Cmwlth. 1980) (citing Personnel Administrator of Massachusetts v. Feeney, 442 U.S. 256, 99 S.Ct. 2282, 60 L.Ed.2d 870 (1979) and Washington v. Davis, 426 U.S. 229, 96 S.Ct. 2040, 48 L.Ed.2d 597 (1976)). In this case, the Court determined that there was no evidence that the Legislature purposefully discriminated against the beneficiaries of deceased claimants with regard to the compromise and release of workers' compensation claims. The Court rejected claimant's argument that Section 449 violates the Equal Protection Clause.
It is well-settled that a statute violates substantive due process by depriving a person of a constitutionally protected interest through means that are not rationally related to a valid state objective. Pennsylvania Medical Society v. Foster, 608 A.2d 633 (Pa. Cmwlth. 1992). In this case, the Court found no due process violation because the compromise and release of workers' compensation claims is not a constitutionally protected interest. The Court affirmed the order of the Board.
CONCLUSION: This ruling clarifies that Section 449 of the Pennsylvania Workers' Compensation Act does not violate the Equal Protection Clause. As the compromise and release of workers' compensation claims is not a constitutionally protected interest, there is no due process violation in a widow (in a non fatal claim petition) not being allowed to participate in the compromise and release process. A Compromise and Release Agreement must be approved by a WCJ. The fact that parties agree in principal to a compromise and release is not enough.
Meadowlakes Apartments v. WCAB (Spencer), No. 350 C.D. 2005 (Decided 3/10/06)
ISSUE: Whether claimant's medical expert opinion that claimant had "pain" in new body parts was sufficient testimony to expand the Notice of Compensation Payable to include additional injuries?
ANSWER: The Notice of Compensation Payable can be expanded to include additional injuries where the Judge accepts as credible that claimant has pain in other body parts, and finds that the pain in causally related to the original work injury.
ANALYSIS: Claimant, a carpenter, sustained a severe right knee injury in the course of his employment in November, 1997. The injury was accepted by the employer as compensable, and the Notice of Compensation Payable described the injury as a medial meniscal tear of the right knee. The injury was further described in a Supplemental Agreement as Grade II chondromalacia. In 2001, claimant filed a Petition for Review, alleging that the NCP should be expanded to include a medial meniscal tear right knee, right foot, low back and left knee. In support of his petition, claimant presented medical testimony of his treating physician. Claimant's physician stated that as a result of the work injury, claimant was having problems with his left knee, right hip and low back, but provided no diagnoses for those conditions. In fact, claimant's treating physician admitted that he mentioned these additional conditions in the "present complaint" section of his reports, rather than in the "diagnosis" section.
The WCJ accepted claimant's evidence as credible, but found that he could not expand the description of injury on the Notice of Compensation Payable because claimant's medical expert did not define the pain or present any medical diagnoses with regard to the low back, hip and left knee. Therefore, the Review Petition was denied. Claimant appealed, and the Workers' Compensation Appeal Board reversed and found that claimant did prove additional injuries in the nature of overuse injuries to the left knee, low back, and left hip.
Employer filed an appeal, alleging that there was not substantial evidence to support the Board's findings that claimant had overuse injuries. The Commonwealth Court relied on its prior decision in Jeanes Hospital, indicating that Section 413(a) of the Workers' Compensation Act indicates that a WCJ may amend an NCP if it is materially incorrect or if the disability status of the injured employee has changed. An NCP is materially incorrect if the accepted injury does not reflect all of the injuries sustained in the initial work incident. Also covered by Section 413(a) are injuries that result or flow from the original injury, or represent an increase in disability. The Commonwealth Court also relied on its prior decision in Campbell v. WCAB (Antietam Animal Hospital), 705 A.2d 503 (Pa. Cmwlth. 1998). In that case, the Notice of Compensation Payable was expanded without any medical testimony of a specific medical diagnosis. However, the Court pointed out that the Judge accepted claimant's testimony of pain, and accepted that the pain was related to the accepted work injury.
CONCLUSION: This case follows prior case law in concluding that the claimant's medical expert does not need to testify to any specific diagnoses in order to expand the Notice of Compensation Payable, but there must be substantial evidence that claimant has pain in different body parts than those accepted on the Notice of Compensation Payable, and that the pain is causally related to the accepted work injury.
Howard W. Mark and Cincinnati Insurance Co. v. WCAB (McCurdy), No. 2753 C.D. 2004 (Decided 3/10/06)
ISSUE: Whether an employer/insurer is entitled to reimbursement from the Supersedeas Fund for all payments made after supersedeas denial, including payment of benefits paid retroactively for earlier periods of disability?
ANSWER: If supersedeas is denied on appeal from a Claim Petition, benefits are paid, and the Appeal Board later determines that compensation was not payable, the carrier is entitled to Supersedeas Fund reimbursement for all payments made after the denial of supersedeas, including retroactive payment.
ANALYSIS: In this matter, claimant filed a Claim Petition, alleging that she had contact dermatitis as a result of her work as a dental assistant. After extensive litigation, the Workers' Compensation Judge granted claimant ongoing benefits retroactive to September, 1993. Defendant appealed, and requested supersedeas, which was denied by the Appeal Board. As a result of the denial of supersedeas, defendant was required to pay claimant disability benefits dating back to September, 1993.
By way of further procedural history, the Board remanded the matter back to the Workers' Compensation Judge to determine whether claimant had fully recovered. On remand, the Workers' Compensation Judge found that claimant had recovered as of August, 1995. On appeal, the Board affirmed. As a result of the final order of the Board, defendant filed for Supersedeas Fund reimbursement, seeking reimbursement for payments made to claimant from September, 1993 through the date of the Judge's final Appeal Board order. The Bureau took the position that defendant was only entitled to benefits paid by defendant after its supersedeas request in June, 1997, when it lost the Claim Petition.
In its analysis, the Commonwealth Court looked at the provisions of Section 413 and Section 430 of the Workers' Compensation Act. The Court reasoned that when supersedeas is requested under Section 430 in connection with an appeal from a Claim Petition, there is nothing in the Workers' Compensation Act that would preclude an employer from obtaining Supersedeas Fund reimbursement for all payments made after the request for supersedeas was denied, including those retroactive payments. The Court indicated that this is a different situation from a request for supersedeas under Section 413 of the Act, which applies to change of status petitions, such as Termination, Modification and Suspension Petitions. In reaching its decision, the Commonwealth Court has effectively overruled the prior Commonwealth Court decision in Wausau Insurance Company v. WCAB (Cmwlth. of PA), 826 A.2d 21 (Pa. Cmwlth. 2003).
CONCLUSION: This case is very favorable to insurance carriers and employers, in that we now have the ability to obtain Supersedeas Fund reimbursement when we are unsuccessful on a Claim Petition, an appeal is filed by the employer, supersedeas is denied, and as a result the employer is required to pay the benefits ordered by the Judge. Under prior case law, Supersedeas Fund reimbursement was arguably only obtainable for benefits paid for the disability after supersedeas was denied. Now, as a result of this case, we can obtain Supersedeas Fund reimbursement for payments made retroactively to the original date of disability, if a subsequent decision later finds that the compensation was not, in fact, payable.
Paul Linton v. WCAB (Amcast Industrial Corp.), No. 1915 C.D. 2005 (Decided 3/28/06)
ISSUE: Whether employer is entitled to a second vocational interview under Section 306(b)(2) and Section 314(a) of the Workers' Compensation Act?
ANSWER: Employer is entitled to repeat vocational interviews to assess claimant's earning power so long as the request is reasonable and necessary.
ANALYSIS: Claimant was receiving temporary total disability benefits for an April, 1998 work injury. Claimant participated in a vocational interview on March 15, 2001. As a result of that interview, defendant filed a Petition for Modification, which was denied by the Workers' Compensation Judge on January 30, 2003. Claimant was evaluated for an independent medical evaluation on May 21, 2004. Thereafter, defendant requested that claimant participate in a second vocational interview. Claimant refused to attend the interview, on the basis that he had already attended an interview back in 2001. Employer filed a Petition to Compel the vocational interview.
By decision and order dated November 30, 2004, the WCJ concluded that Section 306(b)(2) of the Workers' Compensation Act provides that an insurer may require an employee to submit to an interview by a vocational expert for purposes of determining the employee's earning power, that Section 314(a) of the Act authorizes a Workers' Compensation Judge to order a claimant to attend "such further...expert interviews as the WCJ shall deem reasonable and necessary", and that applicable regulations do not address the number of vocational interview permitted or prohibited. The Judge concluded that it is reasonable and necessary for the employer to assess the earning power and physical capabilities of an injured worker, which may change over time, and that it is reasonable for the employer to reassess claimant's earning power three years after the last vocational assessment and following the new independent medical evaluation.
Claimant appealed to the Board, and also filed a request for supersedeas. At first, the Board granted supersedeas, but later revoked its prior order and denied supersedeas, thus requiring claimant to attend the vocational evaluation while the appeal was pending. The Commonwealth Court indicated that it was completely within the Board's power to grant or deny supersedeas. There was no allegation by claimant that he would suffer a reputable harm if supersedeas were denied. Accordingly, the Commonwealth Court concluded that the Board did not abuse its discretion in denying claimant's request for supersedeas.
In terms of the merits of the case, the Commonwealth Court held that Section 314(a) does not apply only to physical examinations, but also applies to expert interviews, which would entitle defendant to further expert interviews at any time that such interview is reasonable and necessary. It further reasoned that because there are no Bureau forms that claimants are required to submit to reflect a change in their education, training or skills, a subsequent vocational interview may be the only means by which an employer may obtain this updated information. Based upon the plain language of Section 306(b) and 314(a) of the Act, as supported by Bureau Regulations and Practices, the Commonwealth Court concluded that the Act and its Regulations do permit multiple interviews by a vocational expert. The Commonwealth Court concluded that the standard to be applied to Petitions to Compel vocational interviews is a standard of abuse of discretion. Therefore, if the Workers' Compensation Judge finds the request for an expert interview to be reasonable and necessary, the finding cannot be overturned by the Board unless it finds that the WCJ abused its discretion in granting the petition.
CONCLUSION: This case stands for the proposition that we can request a subsequent vocational interview even after being unsuccessful on a Petition for Modification, where we have new medical restrictions, and can prove to a Workers' Compensation Judge that the request for a subsequent examination is reasonable and necessary. This does not guarantee that a Judge will grant a Petition to Compel vocational evaluation, but does set forth the proposition that under the Workers' Compensation Act, its Rules and Regulations, multiple examinations can be appropriate.
Burkhart Refractory Installation v. WCAB (Christ), No. 2275 C.D. 2005 (Decided 3/30/06)
ISSUE: This case addressed the method of calculating an average weekly wage where claimant was technically employed for 16 weeks prior to the work injury, but only had wages for 12 of those weeks.
ANSWER: The Commonwealth Court held that it was appropriate to divide claimant's total wages by the 12 weeks he worked, where claimant had 4 weeks with no earnings due to lack of available work.
ANALYSIS: Claimant sustained a work injury on June 24, 2002. He had only begun employment with employer on March 8, 2002, a period of 16 weeks. Defendant calculated claimant's average weekly wage by utilizing the last 13 weeks of work, where claimant had 4 weeks where he had zero earnings. Claimant filed a Petition to Review, alleging that the 4 weeks that claimant had no earnings should not be included in the average weekly wage. During the petition before the WCJ, defendant presented testimony of the insured, who indicated that the work was sporadic, and that claimant had no specific number of hours he was expected to work. The WCJ found that claimant's average weekly wage was $311.82, which included weeks that claimant had no earnings. Claimant appealed, and the Board agreed with claimant that the average weekly wage as found by the WCJ did not adequately reflect claimant's earnings, because claimant did not work 13 weeks at the time of his injury, and did not have an expected number of weekly hours to work. The Board found that the appropriate way of calculating claimant's average weekly wage was to add up claimant's actual earnings, and divide by the 12 weeks that claimant actually had earnings. The Board based its decision on the recent Supreme Court case of Hannaberry v. WCAB (Snyder, Jr.), 834 A.2d 524 (Pa. 2003). Employer appealed, arguing that claimant was employed for one complete 13 week period, and that his earnings during that 13 week period should be utilized to calculate the average weekly wage.
The Commonwealth Court agreed with the Board's calculation, finding that it would be unfair to claimant to include the 4 weeks where claimant earned no wages, and that including those weeks would penalize claimant for sustaining a work injury close to a time where employer did not have work available for him every week. The Commonwealth Court held that this was a fair way to calculate claimant's benefits, where he did have 12 weeks of earnings, but did not have a complete quarter due to the employer's lack of work availability. The Court believed that this approach was correct in accordance with the Hannaberry decision, as it fairly assesses claimant's earnings when he was actually working and advanced the humanitarian purposes of the Act.
CONCLUSION: It is unclear what the reach of this decision could be. It may only apply to situations where claimant was "employed" for greater than 13 weeks but did not have 13 weeks of earnings. It shows, however, that the Courts are trying to fairly estimate claimant's true earning capacity in an average weekly wage calculation.