January 12, 2007 - Pennsylvania Workers' Compensation Update - 4th Quarter '06
Legislative Update
On November 9, 2006, Governor Edward Rendell signed Act 147 of 2006. In our last Quarterly update, we advised that that the House had passed Bill 2738. Governor Rendell's signing of this Bill makes it the law in Pennsylvania. We provided the highlights of the Bill back in October, 2006 and now provide this formal summary regarding these recent amendments to the Pennsylvania Workers' Compensation Act.
The major changes in the law are as follows:
- Any claimant that is receiving workers' compensation benefits for an injury that pre-dated August 31, 1993 and whose benefit rate is less than $100 per week, will receive an adjustment in the compensation rate so that the payment to the injured worker will be no less than $100 per week;
- Workers' Compensation Judges must set forth a mandatory trial schedule at the first hearing. No party will be excused from honoring the schedule absent good cause shown;
- Every trial schedule will include a specific date and time for a mediation conference which will take place no later than thirty days prior to the date set for filing proposed findings of fact, conclusions of law, and briefs, unless the WCJ determines that mediation would be futile;
- All compromise and release hearings must be held within fourteen (14) days of the Bureau's circulation of the Notice of Assignment of a Compromise and Release Petition;
- Workers' Compensation Judges must issue Decisions within five (5) business days of the Compromise and Release Hearing;
- Special new general rules for the Workers' Compensation Appeal Board, but not very relevant to the adjudication process;
- No Judge in any particular county can have more than 75% of the petitions in that county;
- An uninsured employer's guaranteed fund has been created. Prior to its creation, there was a guarantee fund for insolvent insurance companies and insolvent self-insurers but not for insolvent uninsured employers. Act 147 transfers one million dollars from the administration fund and then assesses insurers and self-insured employers as necessary to provide an amount sufficient to pay outstanding claims.
We are already seeing the effects of these amendments. At the first hearing, most Judges are following the new law and setting a mandatory trial schedule. Some Judges are setting a mediation date but many are making the determination that mediation would be futile at the initial hearing, and are not putting this event on their trial schedule. We are also seeing some Judges, who previously participated in the voluntary mediation program, decline to do so because of the increased use of their time for mandatory mediations. This was clearly an unintended consequence of Act 147, but one which may occur.
Of course, if you have any questions about Act 147 or about any other aspect of PA workers' compensation law, please feel free to contact any of our over 20 Pennsylvania workers' compensation attorneys.
Forms Update
The Department of Labor revised Bureau Form LIBC 380 (Third Party Settlement Agreement) back in March 2006. Effective January 1, 2007, this form is to be used in all cases involving third party settlements in the context of a workers' compensation claim. The form can be accessed through the link below.
http://www.dli.state.pa.us/landi/lib/landi/bwc/LIBC-380.pdf
SUPREME COURT CASES
Brookhaven Baptist Church v. WCAB (Halvorson), No. 35 MAP 2005 (Decided December 27, 2006).
Issue: Whether decedent was an employee or a volunteer for the church at the time of his death?
Answer: Decedent was partially and employee and partially a volunteer. The duties that he was performing at the time of his death were as a volunteer trustee, rather than as an employee, and, as a result, decedent was not in the course of his employment when he died.
Analysis: Decedent agreed to cut the grass for the employer, a church, for $25.00 per week, and was also appointed a trustee a few months later. The trustees, including decedent completed all other grounds maintenance, such as edging the gardens, planting flowers, and pruning the shrubs and trees on a voluntary basis. On the date of injury, decedent went to cut employer's grass (per his agreement with the church), but then also trimmed the bushes beneath one of employer's windows. Decedent then gathered up shrub clippings, piled them on the grass in the corner of employer's driveway, and set fire to them. As a result of the fire, decedent suffered severe burns and died nearly a month later. The WCJ held and the Board affirmed that decedent was employed to cut the grass and that trimming the bushes was merely incidental and necessary to cut the grass. The Commonwealth Court also affirmed, determining that decedent was an employee and not a volunteer because he received valuable consideration for cutting the grass. In essence, the WCJ, the WCAB, and the Commonwealth Court, all determined that decedent was in the course and scope of his employment at the time of his injury and that his death was therefore work related.
The Supreme Court agreed that decedent was an employee for purposes of cutting the grass. However the main focus of the Supreme Court's analysis was not whether decedent was an employee of the church in general, but rather whether the trimming of the bushes and other tasks were incidental to the grass-cutting task and therefore within the course and scope of employment or outside of the employment relationship and outside of the course and scope of employment. The Court indicated that trimming of bushes and overhanging tree limbs, edging, picking up sticks, hand mowing, or garden work, all necessary to maintain employer's grounds, were not included in the fee to cut the grass. As a result, the Supreme Court reversed, finding that decedent was acting within his capacity as a trustee while trimming the bushes, rather than as an employee, and was not in the course of his employment when he was injured.
Conclusion: It is not clear whether this case will be limited to its facts, or whether it will be important in clarifying a claimant's eligibility for workers' compensation benefits when the claimant performs activities that are outside of the technical employment relationship. While the answer to this question is uncertain, we encourage you to evaluate each case carefully as to whether a claimant is outside the course and scope of employment when the claimant diverts from assigned duties and is thereby injured at work.
Pitt Ohio Express v. WCAB (Wolff), No. 54 WAP 2005 (Decided December 27, 2006).
Issue: Whether an employer must prove job availability following a period of total disability after an employee has made a bad faith rejection of an available modified position?
Answer: No.
Analysis: Claimant suffered a back injury while working for employer. He received total disability compensation benefits until a WCJ granted employer's suspension petition, concluding that claimant failed to pursue in good faith a modified position offered to him by employer. When claimant later underwent back surgery, the parties executed a supplemental agreement reinstating his total disability benefits. Approximately a year following the surgery, employer filed a new suspension petition, arguing that claimant had sufficiently recovered to perform the modified position. During a hearing, claimant acknowledged he was physically capable of performing the modified position. The WCJ suspended his benefits. The WCAB reversed, concluding that claimant's benefits could not be suspended because employer failed to show the modified position was still available. The Commonwealth Court reversed the Board and reinstated the WCJ's order suspending benefits, holding that employer did not have to again prove job availability when claimant was able to perform the modified position he previously rejected in bad faith. Pitt Ohio Express v. WCAB (Wolff), 2430 C.D. 2004, unpublished memorandum at 9-10 (Pa. Cmwlth. filed May 4, 2005). The Pennsylvania Supreme Court granted allowance of appeal to review this holding.
In its analysis, the Supreme Court addressed J.A. Jones Construction Company v. WCAB (Nelson), 784 A.2d 280, 283 (Pa. Cmwlth. 2001), a similar Commonwealth Court case. In Nelson, claimant initially rejected suitable, available employment in bad faith, and the WCJ granted the employer's petition to reduce the claimant's benefits. Thereafter, the claimant's condition worsened, but by the time he sought a reinstatement of full benefits, he had sufficiently recovered to perform the modified position. The Commonwealth Court agreed with the WCJ's decision to retroactively grant the claimant full benefits for the period of his worsened condition, but affirmed the WCAB's decision to reinstate reduced benefits from that point forward, without requiring the employer to reestablish job availability. The Commonwealth Court held that an employer is not required to again show the previously offered position remains available if the claimant initially rejected it in bad faith. See also Spinabelli v. WCAB (Massey Buick, Inc.), 614 A.2d 779 (Pa. Cmwlth. 1992).
The Supreme Court explained that the position offered to claimant was permanent and it was rejected in bad faith. Moreover, claimant admitted he was able to perform the position he previously rejected. The Supreme Court concluded that claimant's bad faith relieved employer of the requirement to again demonstrate that a continued suitable position was available, thereby affirming the Commonwealth Court.
Justice Baer dissented. He felt the Majority did not comport with Pennsylvania law and the humanitarian purposes of the Workers' Compensation Act. Justice Baer believed that the Majority ignored the fact that claimant's benefits were reduced after he had refused light duty work, but that he was receiving total disability benefits at the time employer sought a new suspension of benefits. Justice Baer averred that, where the claimant is reinstated to full benefits based upon an uncontested change in his physical status, such that he can no longer perform light duty work, all of the Kachinski requirements should be met anew, including the employer's requirement to demonstrate job availability, if the employer seeks to again suspend his benefits. Justice Baer noted that a contrary decision would permit employers to permanently lock in the claimant's disability status at the time of his bad faith refusal regardless of a change in physical condition.
Conclusion: This ruling clarifies that an employer is not forced to prove job availability following a period of total disability after an employee has made a bad faith rejection of an available modified position. While Judge Baer's dissent is published, it is not the law and is irrelevant at the present time.
Commonwealth Court Cases
Schacter v. WCAB (SPS Technologies), No. 320 C.D. 2006 (Filed October 12, 2006).
Issue: Whether a finding of permanent impairment through an impairment rating evaluation precludes a subsequent Petition for Termination asserting full recovery?
Answer: No.
Analysis: Claimant suffered a right knee injury in December, 2000. In November, 2003, claimant underwent an impairment rating evaluation (IRE) and the evaluating physician found a 6% total body impairment relative to claimant's knee injury. Employer then had claimant examined for an independent medical examination (IME) just over a month later and the evaluating physician determined that claimant had fully recovered from his December 1, 2000 injury. Employer filed a Petition for Termination.
During the course of litigation, both parties' presented evidence and claimant's counsel presented a quantum meruit fee for unreasonable contest, asserting that employer's contest was unreasonable because employer could not litigate a subsequent Termination Petition in the face of a 6% permanent impairment by an IRE. The Judge found for the claimant in all respects, and agreed that the contest was not reasonable. Employer appealed and the WCAB reversed on the issue of counsel fees and found that employer's contest was reasonable.
The Commonwealth Court affirmed the WCAB's reversal on the counsel fee issue. Citing Hebden v. WCAB (Bethenergy Mines, Inc.), 632 A.2d 1302 (Pa. 1993), the Commonwealth Court reiterated that an employer is only precluded from challenging a prior finding of permanency if the particular condition, by its very nature, is irreversible. Hebden dealt with Pneumoconiosis, an irreversible and progressive condition. Because claimant's right knee injury, by virtue of the specific diagnosis, was not, by definition irreversible, the Commonwealth Court held that the employer's contest was reasonable and upheld the denial of counsel fees.
Conclusion: This is an important decision because a Termination Petition is not barred, as a matter of law, by a prior impairment rating of permanent impairment. However, the practitioner must be cautious in litigating such a petition if it is not being litigated for leverage purposes for settlement. The chance of succeeding on such a petition is extraordinarily slim but at least there is no danger of an award of counsel fees, assuming the condition at issue is not, by definition, irreversible. Claimant recently requested a re-hearing which was denied. We expect that claimant will file a request that this matter be heard before the Pennsylvania Supreme Court.
City of Scranton v. WCAB (Roche), No. 1243 C.D. 2006, (Filed November 2, 2006).
Issue: Whether a claim for hearing loss due to repetitive trauma must be filed within three years of the last date of exposure or within three years of the date a claimant discovered his or her hearing loss was work-related?
Answer: A claim for hearing loss due to repetitive trauma must be filed within three years of the last date of exposure.
Analysis: Regarding when an action has to be brought for hearing loss caused by long-term exposure to occupational noise, Act 1 added Section 306(c)(8)(viii) of the Workers Compensation Act, which provides: "Whenever an occupational hearing loss caused by long term exposure to hazardous occupational noise is the basis for compensation or additional compensation, the claim shall be barred unless a petition is filed within three years after the date of last exposure to hazardous occupational noise in the employ of the employer against whom benefits are sought." In the instant matter, the claimant did not file a claim petition until ten years after he was last exposed to hazardous occupational noise, well beyond the three-year period in which to bring a claim, thus the Board erred in affirming the WCJ's decision that Claimant's petition was not time-barred.
Conclusion: Here, the Court's decision reiterates McIlnay v. WCAB (Standard Steel), 870 A.2d 395 (Pa. Cmwlth.), petition for allowance of appeal denied, 584 Pa. 711, 885 A.2d 44 (2005). In Standard Steel, the Court explained that since the passage of Act 1, the "discovery rule" under Section 315 of the Workers' Compensation Act, 77 P.S. §602, was no longer applicable to repetitive trauma hearing loss cases. However, it must be noted that the discovery rule is still applicable in single event hearing loss cases.
Harburg Medical Sales Co. v. BWC (Employer's Mutual Casualty Co.), No. 1334 C.D. 2006, (Filed November 15, 2006).
Issue: Whether a provider is permitted to file a fee review application during the Utilization Review process?
Answer: No. A provider may only proceed with a fee review application when a final decision on the merits of the Utilization Review has resulted in at least a partially favorable outcome for the provider.
Analysis: Here, the provider under review filed an appeal following the Hearing Officer's dismissal of its fee review application. The Hearing Officer had found that the provider's application was premature as a Utilization Review for the same treatment was pending before a WCJ. In its appeal, the Provider maintained that the Insurer failed to request a timely Utilization Review of the treatment at issue within the 30-day period from the receipt of the bill as required by the regulations and that it therefore had waived its right to retrospective Utilization Review of the treatment. The Court rejected the Provider's argument, finding that the Provider was not permitted to seek fee review during the utilization process until at least some of the treatment at issue has been determined to be reasonable and necessary.
Conclusion: This Decision further expands the growing body of case law under County of Allegheny (John J. Kane Ctr. - Ross) v. WCAB (Geisler), 875 A.2d 1222 (Pa. Cmwlth. 2005) which found that where the provider fails to submit its records timely to the URO, the URO must issue a determination that the treatment at issue is unreasonable and unnecessary.
Penn State (PMA) v. WCAB (Hensal), No. 144 C.D. 2005, (Filed November 17, 2006).
Issue: Whether an employer may meet its burden of proving entitlement to an offset with actuarial testimony with regard to a defined benefit pension plan?
Answer: Yes.
Analysis: The Commonwealth Court has concluded that an employer is not required to prove actual contributions to a particular employee's pension account before an offset will be permitted, and that use of an actuarial formula is sufficient to meet its burden of proof. The Court noted that the Legislature failed to specify the method of calculating the offset or proving the extent to which the employer funded the pension at issue. However, the Court confirmed that the applicable regulations require that the portion of the annuity purchased by the liable Employer must be determined by the pension fund's actuary. So long as the Employer presents the pension fund's actuary and the actuary can explain the extent to which the Employer funded the pension at issue, the Employer can meet its burden of proof.
Conclusion: In the context an employer's burden of proving the extent to which it funded a defined benefit pension plan so as to qualify for the offset, the Commonwealth Court has relieved the employer from offering evidence of specific past amounts paid by the Employer to the plan on account of an employee. The employer may offer expert actuarial opinion of its past and future funding to the plan. This issue is of considerable importance because most public employees in Pennsylvania are members of a defined benefit pension plan. It is important to note that President Judge Colins issued a dissenting opinion, stating that the Employer's actuarial evidence, even if found credible, was too speculative to sustain its burden of proof. Judge Smith-Ribner joined in Judge Colins' dissent and concluded that the Employer's methodology was inherently flawed and therefore cannot meet its burden of proof. It remains to be seen whether the claimant will file a request for allocatur with the Pennsylvania Supreme Court.
Gazzola v. WCAB (Ikon Office Solutions), Bo. 1138 C.D. 2006, (Filed November 22, 2006).
Issue: Whether a WCJ has jurisdiction to decide the issues of the adequacy of the URO's pursuit of records, the URO's compliance with obtaining records, and the provider's compliance with a records request in a UR context?
Answer: In this case, The Commonwealth Court has held that the WCJ has jurisdiction to decide the aforementioned issues and can either uphold the Utilization Review Determination based on the failure of the provider in question to supply records or to vacate the Utilization Review Determination and issue an Order that the records be sent to a reviewer for a Utilization Review on the merits of whether the treatment in question was reasonable and necessary.
Analysis: This case clarifies County of Allegheny (John J. Kane Ctr. - Ross) v. WCAB (Geisler), 875 A.2d 1222 (Pa. Cmwlth. 2005) which held that a WCJ lacks jurisdiction to hear a Petition to Review a Utilization Review Determination where the provider under review did not timely provide records as required by the regulations. In the instant matter, the WCJ denied Claimant's Petition as the Utilization Review Determination indicated that records were not provided by the provider under review in accordance with the regulations. Claimant appealed and the Board affirmed the WCJ's order. The Commonwealth Court distinguished the facts of the instant case from Geisler, noting that here, the parties submitted evidence to demonstrate what efforts were made to obtain the medical records and what happened in response. The Court found that a decision by the WCJ on the issues of the adequacy of the Utilization Review Organization's pursuit of the records, the URO's compliance with 34 Pa. Code Section 127.464(b) (its pursuit of the records) and whether the provider complied would not be a decision on the merits regarding whether the treatment in question was reasonable and necessary. The Court concluded that the WCJ has jurisdiction to decide those issues and based on the evidence either to uphold the Determination based upon the failure to provide records or to vacate the Determination and Order that the records be sent to a reviewer for a Utilization Review Determination on the merits of whether the treatment was reasonable and necessary. Accordingly, the Court vacated the Board's order and remanded the matter for a Decision on Claimant's Petition to Review.
Conclusion: The Commonwealth Court further clarifies the law established under Geisler. While the WCJ does not have jurisdiction to rule on the question of reasonableness and necessity of treatment, if the provider offers evidence of a good faith attempt to provide records to the URO which the WCJ finds to be credible, the WCJ may vacate the Utilization Review Determination and Order that the provider's records be submitted to the URO so that there can be a determination as to whether the treatment at issue is reasonable and necessary.
Allegheny Ludlum Corp. v. W.C.A.B. (Hines), No. 1022 C.D. 2006 (Filed December 19, 2006).
Issue: Whether the decedent, who was struck by a drunk driver while walking on a public sidewalk towards the plant gate to report to his shift, was furthering the employer's business at the time of his death?
Answer: Yes.
Analysis: Employer petitioned for review of an adjudication of the Workers' Compensation Appeal Board affirming the decision of a WCJ to grant fatal claim benefits to claimant for the work-related death of her husband, the decedent. On the date of the accident, decedent arrived with other employees and parked in employer's parking lot approximately 20 to 25 minutes prior to the start of the work day. Decedent walked towards Gate 5 with other employees to report for his shift when he was fatally injured on the sidewalk along River Road, the only authorized route from the Gate 7 parking lot to Gate 5. A pickup truck crossed the center line of River Road, jumped the curb and fatally struck decedent. The WCJ granted claimant's fatal claim petition, and the Board affirmed. Employer appealed to the Commonwealth Court, arguing that the Board erred in determining that decedent's fatal injuries were in the course of his employment.
In its analysis, the Court noted that the three-part Slaugenhaupt test, established for cases where an employee is injured on the employer's premises but not actually furthering employer's business at the time of the accident, is not the test to apply simply because the employee had not yet punched in at the moment of injury. The Court explained that an employee, even though not actually engaged in the employer's work, is considered to have suffered an injury in the course of employment if the injury occurred on the employer's premises at a reasonable time before or after the work period. Newhouse v. WCAB (Harris Cleaning Services, Inc.), 530 A.2d 545 (Pa. Cmwlth. 1987). Arrival 15 to 30 minutes prior to work is reasonable, and actually arriving to the employee's work station is a necessary part of the employee's employment and furthers the employer's interests. Fashion Hosiery Shops v. WCAB, 423 A.2d 792 (Pa. Cmwlth. 1980); Motion Control Industries v. WCAB (Buck), 603 A.2d 675 (Pa. Cmwlth. 1992).
Employer made a creative public policy argument that compensation should not be awarded where the injury was caused by a criminal act of a third party prior to the commencement of the decedent's work shift. The Court rejected this public policy argument because employer's argument did not relate to any provision of the Act.
Conclusion: This case reinforces the established principle that injuries are compensable if they occur on the premises and in reasonable proximity to the start or completion of the claimant's work day.