July 31, 2007 - Pennsylvania Workers' Compensation Update - 2nd Quarter '07
Pennsylvania Supreme Court Cases
Lewis v. WCAB (Giles & Ransome, Inc.), 919 A.2d 922 (Filed April 18, 2007).
Issue: Whether an Employer must demonstrate a change in Claimant's physical condition following a WCJ decision in order to successfully prosecute a Petition to Terminate or Modify benefits?
Answer: Employer needs to establish a change in claimant's physical condition since the last disability adjudication in order to successfully prosecute a Petition for Termination due to a decrease in claimant's physical disability. Employer cannot merely challenge the diagnosis of claimant's injuries as determined by a prior proceeding.
Analysis: In October 1988, Claimant was injured when the forklift he was operating fell off the back of a truck. In April 1990, Employer filed its first Termination Petition which was denied in a July 12, 1993 decision. At that time, the WCJ found Claimant to be suffering from a C8-T1 radiculopathy as well as an aggravation of an underlying congenital syrinx and Arnold-Chiari formation. In January 1994, Employer filed a second Termination Petition which was also denied. In this second Termination Petition decision, the WCJ added an L5-S1 radiculopathy to the injury. Employer then filed a third Termination Petition in April 1999 and Claimant concurrently filed a Review Petition, seeking to expand the injury to include a left knee injury. The WCJ denied the third Termination Petition and granted the Review Petition which was affirmed on appeal to the WCAB.
Three days after the WCAB decision, Employer filed a fourth Termination Petition alleging full recovery based upon Dr. Stein's November 6, 2002 IME. Dr. Stein opined that Claimant's work-injury was limited to acute cervical and lumbosacral spine strains and asserted that the injuries found in the prior adjudications were not related to the work injury. The WCJ granted the Termination based upon Dr. Stein's opinions and both the WCAB and Commonwealth Court affirmed. The Commonwealth Court found that Dr. Stein's characterization of Claimant's injuries was not barred by res judicata.
The Pennsylvania Supreme Court vacated the Commonwealth Court's decision and expressly overruled King v. WCAB (K-Mart Corp.), 700 A.2d 431 (Pa. 1997) (employer need not establish a change in condition from the prior proceeding but need only show whether claimant's disability has changed or ceased as of the time of the proceeding). The Court acknowledged the inconsistency between the Act which speaks in terms of disability and the case law which uses the term condition when speaking of an employer's right to termination or modification. The Court avoided this apparent inconsistency through application of the Kachinski, two part test in which the employer must first show a change in.
In its conclusion the Court determined that Dr. Stein's opinion was insufficient to support the termination as he conceded that Claimant's condition had not changed but merely attributed his conditions to non-work-related causes in contradiction to the prior decisions.
Conclusion: There are two lessons from this decision. First, merely having a physician opine that Claimant has fully recovered without reference to a change in condition from a prior adjudication will not support a termination or suspension petition. Second, make sure the IME physician knows what injuries have been accepted or adjudicated and that the opinion as to full recovery is based upon a recovery from all of those injuries.
Dowhower v. WCAB (Capco Contracting), 919 A.2d 913 (Filed April 17, 2007)
Issue: Whether a Request for the Designation of a Physician to Perform an IRE made prior to the expiration of 104 weeks of total disability benefits is untimely?
Answer: Yes.
Analysis: Claimant suffered a work-related injury on September 13, 1996. In a decision circulated May 29, 1998, the WCJ granted claimant TTD benefits retroactive to April 18, 1997. Claimant had a brief return to work but subsequently went out again on TTD. On May 20, 1999 the carrier filed a Request for Designation of a Physician to perform an IRE, prior to the expiration of the 104 week period. The IRE physician evaluated claimant on September 1, 1999 (during the 60 day window) and found a 10% impairment. Employer issued a Notice of Change of status to reflect the change from total to partial disability.
Claimant filed a Review Petition asserting employer's IRE was untimely as the initial Request for Designation was made prior to expiration of 104 weeks of TTD. The WCJ agreed and on April 6, 2000, the WCJ issued a decision nullifying the IRE. Employer appealed to the WCAB.
On June 13, 2002 the WCAB reversed the WCJ decision, concluding that Claimant's attendance at the initial IRE waived any challenge to the timeliness of the IRE request. Claimant filed a Petition for Review with the Commonwealth Court.
The Commonwealth Court found the WCAB erred in holding that claimant waived his challenge to the timeliness of the IRE by attending the examination. However, the Court further held that the Act did not preclude an employer from Requesting the Designation of a Physician prior to the expiration of the 104 week period.
The Pennsylvania Supreme Court granted claimant's Petition for allowance of Appeal and vacated and reversed the Commonwealth Court's decision based upon Gardner. The Court explained that pursuant to Gardner, an employer is barred from obtaining automatic reduction of claimant's benefits unless the IRE request is made within the 60-day period following expiration of the employee's receipt of 104 weeks of TTD. The Court opined that because the language of Section 306 (a.2)(1) is mandatory, an insurer is obligated to request an IRE once the 104 weeks of TTD have expired. The Court further held that Claimant's attendance at the IRE did not waive a challenge to its timeliness nor did the occurrence of the IRE after expiration of the 104 weeks make the request timely when the Request for Designation preceded the 104th week.
Conclusion: We believe that the Supreme Court's decision is wrong, but it is the law and we have to abide by it. Nothing in Gardner discusses when the Request for Designation can be made. Gardner discusses when the IRE should take place. It seems perfectly logical for an employer to file the Request for Designation before the 104th week, so that the IRE can take place during the 60 days following the 104th week. Despite our frustration, it is now clear that not even the Request for Designation can be filed prior to the expiration of the 104th week, unless claimant agrees.
Commonwealth Court Cases
Risius v. WCAB (Penn State University) and Barbara Pennypacker V. WCAB (Penn State University), 922 A.2d 72 (Filed April 18, 2007).
Issues: Whether an Employer may transfer its liability and subrogation rights to a third party?
Who has the burden of proving that bills paid by the employer are related to the work-injury in the context of subrogation?
Answer: An employer may transfer its liability and subrogation rights to a third party.
The burden is on the claimant to establish that medical bills paid by the employer were not related to the work injury.
Analysis: Claimants appealed the WCAB decisions granting Safety subrogation rights against their respective third party settlements. Both claimants were employed by Penn State University at a time when Penn State was self-insured. Penn State subsequently entered into a Self-Insurance Loss Portfolio Transfer Assumption Agreement with Safety whereby Safety assumed liability for its workers' compensation claims, including those of the present claimants.
The claimants subsequently entered into a settlement with the third party tortfeasor. Safety, as successor in interest to Penn State by virtue of the agreement, filed Review Petitions requesting subrogation of its payments to Claimants as a result of the third party settlement. The WCJ granted the petitions. In addition to finding that Safety met its burden of establishing a subrogation interest as to each claimant, the WCJ further found that claimant Pennypacker had failed to prove that medical treatment paid for by defendants were entirely unrelated to the work injury.
Both Claimants appealed to the WCAB. The WCAB affirmed.
Both Claimants then appealed to the Commonwealth Court, alleging that Safety never paid any benefits to or on behalf of claimants and therefore was not entitled to subrogation. In rejecting the appeals, the Court noted that the WCJ found that Safety made payments to or on behalf of each claimant in addition to those payments made by the employer. The Court further explained that because the Act permits the employer to transfer liability and neither the Act nor regulations prohibit the transfer of the subrogation rights, the employer may also transfer its subrogation rights.
Claimants next argued that Safety had failed to meet its burden of establishing that the medical bills which it paid were related to the work injury. The Court found that it was the Claimants' burden of proof and because the WCJ held that the treatment was related to the work injury, the claimants could not sustain their burden.
Conclusion: This is a common sense interpretation of the Act which places the burden squarely upon the claimant challenging the employer's or carrier's subrogation interests and exemplifies the power of Section 319 of the Act.
Mercer Lime and Stone Company v. WCAB (McGallis), 923 A.2d 1251, (Decided May 17, 2007).
Issue: Whether employer paid claimant untimely, in violation of the Act, when it paid more than 30 days after the date of the WCJ's decision, and, if so, whether the late payment warranted imposition of a penalty?
Answer: Yes. An employer's obligation to pay award of benefits is immediate; however, imposition of a penalty is discretionary.
Analysis: The facts of this case are not particularly relevant to the importance of this ruling. Briefly, the parties entered into a Compromise and Release Agreement. Employer issued a check without a signature on it to claimant 17 days after the decision was circulated. In the end, another check was issued 36 days after the decision was circulated. Claimant did not receive this check. Claimant filed a penalty petition alleging a violation of the Act due to late payment. The WCJ found that the payment was late, and imposed a 5% penalty. The employer appealed to the WCAB, alleging that, while payment may have been late, the penalty imposed was excessive. The WCAB affirmed. Employer then appealed to the Commonwealth Court.
The Commonwealth Court reviewed the Pennsylvania Supreme Court ruling in Snizaski v. WCAB (Rox Oil Co.), 891 A. 2d 1267 (2006), which addressed when an employer was obligated to pay an award of benefits if it requested supersedeas in connection with an appeal. In Snizaski, the PA Supreme Court determined that the employer technically violates the Act if it does not immediately pay an award of benefits where it does not appeal the decision and request supersedeas. Drawing on this prior ruling, the Commonwealth Court determined that there is no 30-day safe harbor for employers. As such, the employer in this case was in default since it did not issue payment immediately. The Commonwealth Court affirmed the WCAB, finding that the 5% penalty was appropriate as it was within the WCJ's discretion. Importantly, the Commonwealth Court discussed, in a footnote, that while the obligation to pay arises immediately, instantaneous payment is not practical, and Snizaski seems to eschew a rule of reason that should be applied by the WCJ when assessing whether a penalty is appropriate.
Conclusion: This decision is concerning as it potentially creates the possibility of a penalty, even where payment is made prior to the expiration of 30 days. Despite the language in this decision, we find it unlikely that a WCJ would award a penalty if payment has been made within the 30-day window, the time period previously seen as a grace period to pay pursuant to a decision. Only time will tell, however, and to avoid a potential problem, payments should be made as soon as practicable.
Wayne Weismantle v. WCAB (Lucent Technology), No. 1393 C.D. 2006, (Filed June 18, 2007).
Issue: Whether an employer can proceed with a Petition for Termination when it obtains an impairment rating and files a notice of change of status subsequent to the effective date of requested termination relief?
Answer: Yes.
Analysis: Claimant suffered a low back injury in 1999 and began collecting total disability benefits for that injury in November, 2001. In January, 2003, employer filed a Termination Petition alleging that claimant had fully recovered from his work-related low back injury as of August 26, 2002. During the pendency of the Termination Petition, claimant was out of work for his 104th week and the employer requested that claimant attend an IRE. Claimant attended and the evaluating physician found a 10% permanent impairment. Employer filed a notice of change of status.
Thereafter, the WCJ denied employer's Petition for Termination, concluding that the post Termination Petition IRE rendered the employer incapable of satisfying its burden of proof. The employer appealed and the WCAB reversed, concluding that the employer could prosecute a Petition for Termination in the face of a 10% impairment rating. The Board vacated the decision and remanded it back to the WCJ to rule on the merits of the Termination Petition. Surprisingly, the WCJ issued a decision terminating claimant's benefits. Claimant appealed and the Board affirmed.
On his petition to review to the Commonwealth Court, claimant raised one issue - whether employer was foreclosed from litigating its Petition for Termination in light of the subsequent IRE? Ultimately, the Commonwealth Court found in the employer's favor, primarily because of the stringent IRE requirements as outlined by the Supreme Court in Gardner v. WCAB (Genesis Health Ventures), 888 A.2d 758 (Pa. 2005) and Dowhower v. WCAB (Catco Contracting), 919 A.2d 813 (Pa. 2007).
Conclusion: This is a great case for employers/insurers because it allows them to reduce exposure to 500 weeks of partial disability while not fearing unreasonable contest on a Petition for Termination. We would still recommend caution in obtaining an IRE during the litigation of a Termination Petition since even though the employer was successful in obtaining a full recovery in this case, the likelihood of obtaining a full recovery once there has been an impairment rating of anything but zero, is slim.
Brendley v. The Pennsylvania Department of Labor and Industry, Pennsylvania Bureau of Workers' Compensation, Pennsylvania Workers' Compensation Appeal Board and Rohm and Haas Company, No. 544 M.D. 2006, (Filed June 26, 2007).
Issues: Whether the Pennsylvania Workers' Compensation Act provides compensation for uninjured claimants seeking "medical monitoring";
Whether the Pennsylvania Workers' Compensation Act provides a mechanism for a Class Action Petition for a large group of claimants seeking the above relief?
Answer: A claim for medical monitoring is compensable under the Workers' Compensation Act so long as the claimant can satisfy all other elements for an award; and
There is no mechanism in the Pennsylvania Workers' Compensation Act for a Class Action Lawsuit. All claims must be filed separately.
Analysis: This case had a detailed procedural history before the Claimant filed a direct action with the Commonwealth Court of Pennsylvania, essentially seeking declaratory judgment relief on the above issues. The claim for medical monitoring sought costs associated with diagnostic testing to aid in the early detection of glioblastoma, a dangerous and deadly form of brain cancer as well as other brain cancers that allegedly stemmed from exposure at a Rohm and Haas facility. Through the Commonwealth Court's original jurisdiction, the claimant sought a determination as to whether the Act provides compensation for uninjured claimants seeking medical monitoring and whether a Class Action Lawsuit is permissible. The class potentially includes up to 6,000 workers.
The Court determined that the term "injury" encompasses all work related harm including any harmful or damaging effects which may be suffered by anyone. The Court also determined that "risk of harm" may, under certain circumstances, constitute a compensable injury. Accordingly, the Commonwealth Court determined that although Claimant is asymptomatic (the other potential class members may be asymptomatic as well), he may be entitled to workers' compensation benefits. The issue of whether or not the claim was otherwise compensable was not ruled upon since the Commonwealth Court's obligation in this case was to ascertain whether this relief was permissible. The Commonwealth Court instructed Claimant to file a standard Claim Petition in the workers' compensation system.
As to whether a class action was appropriate, the Commonwealth Court determined that it was not. Rather, the Commonwealth Court instructed that each claimant seeking to receive workers' compensation benefits for medical monitoring must file an individual Claim Petition and then, some or all of the similarly filed matters could be consolidated for purposes of evidentiary proofs. However, whether or not some or all of those cases could be consolidated would be left to the discretion of the workers' compensation Judge.
Conclusion: This case confirms that a claim for medical monitoring can be compensable in Pennsylvania so long as the claimant can establish all other elements necessary to support an award. The most common example of this type of case is a needle stick case where the claimant, albeit asymptomatic, is concerned about the contracting of an infectious disease. The more complicated circumstance surrounds the workplace where there are potentially harmful exposures and claimants, who are asymptomatic, use this case as the basis to have all medical monitoring type care paid for by the employer when the risk of the contraction of any ailment is extraordinarily small.