Pennsylvania Workers' Compensation Update - 3rd Quarter '10

11.16.10

SUPREME COURT CASE

Diehl v. WCAB (I.A. Construction and Liberty Mutual Insurance), No. 26 WAP 2009 (Decided September 29, 2010)

Issue:               Whether employer must show job availability or earning power in order to change a claimant's workers' compensation disability status from total to partial disability following an IRE of less than 50% performed outside of the sixty day window following 104 weeks of TTD?

Answer:          No.

Analysis:         Claimant suffered a work injury on May 24, 1999 which was acknowledged via NCP. On April 4, 2002, greater than sixty days after claimant had received 104 weeks of TTD, Employer filed a request for designation of a physician to perform an IRE. The IRE physician found an impairment of 28 percent.

Employer ultimately filed a modification petition seeking to change claimant's status from TTD to TPD based upon the IRE determination of 28 percent impairment. The WCJ denied and dismissed the petition concluding that the Employer was not entitled to establish TPD without a showing of job availability.

On appeal to the WCAB, employer argued it was entitled to modification of Claimant's status based upon the IRE. The parties stipulated to a 28 percent impairment. The WCAB concluded that the WCJ erred in denying the modification petition. The WCAB found that neither the Act nor Gardner v. WCAB (Genesis Health Ventures), 888 A.2d 758 (Pa. 2005) imposed any burden on the employer to establish job availability or earning impairment.

A three member panel of the Commonwealth Court reversed the WCAB decision holding that an employer must demonstrate either job availability or earning power to change the status of claimant's benefits from total to partial. A request for reargument was granted. An en banc panel of the Court reversed, and affirmed the WCAB decision that the employer need not show job availability or earning power to accomplish a change in claimant's disability status based upon an IRE showing less than 50 percent impairment that was requested more than 60 days after receipt of 104 weeks of TTD benefits.

The Supreme Court affirmed. The Court found the distinction between impairment and disability to be central to its determination. While impairment deals with the physical aspect of the injury, it does not impact the claimant's earning power. Disability, however, concerns the loss of earning power without regard to the physical limitation of the injury. Therefore, the proof of impairment differs from the evidence of disability. The purpose of the IRE is to determine impairment not earning power.

The Court held that when an IRE is requested outside of the 60-day window, the IRE of less than 50 percent impairment does not entitle the employer to an automatic change in disability status. The IRE is evidence that may be presented to the WCJ who must consider it as any other report of physical examination of the claimant and must make appropriate credibility determinations. The claimant may subject the IRE physician to cross examination and present his own evidence of impairment to rebut the IRE findings. However, the employer is not required to show earning power.

Conclusion:    An employer who seeks to modify claimant's disability status from TTD to TPD, without a change in compensation rate, based upon an untimely IRE, need not present evidence of earning power or job availability.

COMMONWEALTH COURT CASES

Allegheny Ludlum Corp. V. WCAB (Holmes), No. 1623 C.D. 2009 (Filed April 22, 2010, designated Reported Opinion July 9, 2010)

Issue:               Whether a claimant can be charged with knowledge of work-related injury prior to receiving a medical diagnosis relating the injury to the employment?

Answer:          Yes.

Analysis:         Claimant began having foot problems in 1994 and underwent two surgeries in 1995 and 1998. After each surgery, claimant applied for and received sickness and accident benefits during the time she was off from work.  Claimant returned to work at her regular job after the surgeries. Claimant's symptoms returned after the surgeries and worsened over time. Claimant went out of work on June 10, 2003, had foot surgery the next day and never returned to her pre-injury job. Notice of the alleged work relatedness of the foot condition (Morton's Neuroma) was given on February 17, 2004. In addition to expert evidence on causation, failure to give timely notice was a major part of the defense. The WCJ and WCAB found notice to be timely.

The Commonwealth Court reversed, accepting employer's argument that claimant's time for giving notice began to run on the last day work. The Court rejected claimant's argument that the time for giving notice did not begin to run until she was provided with a medical diagnosis. The Court rejected claimant's "discovery rule' argument due to evidence that claimant had told her treating physician her condition was definitely aggravated by work nearly ten (10) years before notice was given to the Employer.

Conclusion:    In cumulative trauma cases, if the claimant suspects that her problem is work related, the time period for giving notice to the employer of a work related injury begins to run on the last day the employee works, even if no medical diagnosis connecting the injury to the employment has been obtained.

Six L's Packing v. WCAB (Williamson), No. 686 C.D. 2009 (Filed July 23, 2010)

Issue:               Whether Claimant is required to establish the elements of the MacDonald test when attempting to prove a statutory employer under Section 302(a) of the Act?

Answer:          No.

Analysis:         Six L's Packing owned fields upon which tomatoes were grown, a warehouse where they were packed, and processing centers to which they were delivered. Six L Packing contracted with Garcia &Son for services including harvesting and hauling of tomatoes. Claimant was employed by Garcia & Sons and was injured in a motor vehicle accident while hauling tomatoes. Claimant filed claim petitions against both Garcia & Sons and Six L Packing.

The WCJ found that Six L Packing was the statutory employer under Section 203 of the Act and relied upon the MacDonald test in reaching this conclusion.

The WCAB affirmed but rejected the WCJ's reliance upon the MacDonald test. The WCAB noted that although the test would apply to a statutory employer analysis under Section 302(b) it would not apply to the analysis under Section 302(a).The WCAB found that Six L Packing was a statutory employer under Section 302(a). Six L Packing appealed and the Court affirmed.

In rejecting the employer's argument that the MacDonald test would apply to the analysis of whether an entity is a statutory employer pursuant to Section 302(a) of the Act, the Court noted that the relevant language of the Section provided: "a person who contracts with another (1) to have work performed consisting of (i) the removal, excavation or drilling of soil, rock or minerals, of (ii) the cutting or removal of timber from lands, or (iii) to have work performed of the kind which is a regular or recurrent part of the business, occupation, profession or trade of such person shall be deemed a contractor and such other person a subcontractor." Based upon this language, and prior precedent, the Court held that if the circumstances set forth in Section 302(b) are found to exist, the claimant need not establish the elements set forth in the MacDonald test. The Court held that hauling tomatoes was a regular and recurrent part of the business of Six L Packing and therefore, it was the statutory employer of claimant.

Conclusion:    The MacDonald test does not apply to the statutory employer analysis under Section 302(a).

 

Dept. of Labor and Industry v. WCAB (Old Republic Insurance Co., No. 1762 C.D. 2009 (Filed July 28, 2010)

Issue:               Whether an employer is entitled to Supersedeas Fund reimbursement when an application is made following a third party recovery?

Answer:          Yes.

Analysis:         Employer filed a termination petition and requested supersedeas, which was denied. The termination was later granted. In the interim, employer recovered funds through claimant's third party recovery. Employer applied to the Supersedeas Fund for reimbursement for indemnity and medical paid between the date of the supersedeas request and the termination. The Supersedeas Fund challenged employer's request. The issue was the interplay between Section 443(a) and Section 319 of the Act. The Commonwealth Court, relying on Dept. of Labor and Industry v. WCAB (Excelsier Ins.), 987 A.2d 855 (Pa. Cmwlth. 2010) held that recovery fees incurred pursuant to Section 319 to as a result of the third party settlement are compensation as defined by Section 443(a) and therefore recoverable from the Supersedeas Fund. The Court explained that the proper amount of reimbursement would be calculated by reducing the total amount of benefits paid during the applicable period by the amount of the third party recovery attributable to that same period.

Conclusion:    Recovery fees incurred pursuant to Section 319 in connection with a third-party case are compensation under Section 443(a) and are therefore reimbursable by the Supersedeas Fund, but only after the amount received from the third party case is subtracted from the amount due from the Fund.

Gauphin v. WCAB (Pennsylvania State Police), No. 2472 C.D. 2009 (Filed July 28, 2010)

Issue:               Whether pension contributions made by various departments of the Commonwealth constitute payments by the Commonwealth, as responsible employer, for the purpose of calculating offsets for state employees?

Answer:          Yes.

Analysis:         Claimant, a State Trooper, took regular retirement while receiving TTD benefits for an accepted work injury. Employer sought an offset against claimant's pension pursuant to Section 204(a) of the Act. Ultimately, the issue was that part of the pension that had been funded by the Motor License Fund (MLF), which is part of the Governor's executive budget. Claimant argued that employer's offset should be reduced by the amount the MLF contributed to the pension fund as it was not the party liable for payments. The issue was whether the Commonwealth was the same entity that funded the pension, regardless of whether the money had been allocated to the MLF or otherwise. The Court ultimately determined that the monies used to fund the pension were derived from the Commonwealth budget and hence constituted employer funded money.

Conclusion:    When considering pension offsets for Commonwealth employees, all monies received from the Commonwealth's Treasury, irrespective of allocation, are deemed Commonwealth funding.

Williams v. WCAB (Pohl Transportation), No. 2422 C.D. 2009 (Filed July 29, 2010)

Issue:               Whether the extraterritorial provisions of the Act extend Pennsylvania jurisdiction over a claimant injured outside of Pennsylvania but whose work time is spent more in Pennsylvania than in any other one state?

Answer:          Yes.

Analysis:         Claimant filed a claim petition alleging a right leg injury that occurred outside of Pennsylvania. Claimant, a truck driver, resided in Williamsport, PA but Employer did not have a place of business in Pennsylvania such that neither Section 305.2 (d)(4) (i) or (ii) applied. Therefore, claimant bore the burden of proving jurisdiction utilizing the "substantial part of his working time" test represented in Section 305.2(d)(4)(iii). The Court explained that "principally localized" under Section 305.2(d)(4)(iii) does not require that the majority of the employee's time be spent in Pennsylvania but rather that "substantial" should be given its customary meaning.

To determine what constituted a substantial amount of time the Court compared claimant's time spent in Pennsylvania with his time spent in other states. Claimant drove a total of 110,000 miles for employer prior to his injury. Of those miles, 42,000 or 38% were driven in Pennsylvania, 32% were driven in Ohio and the remaining 30% of his miles were driven between six other states. Because claimant was domiciled in Pennsylvania and spent more time working in Pennsylvania than any one other state, the Court held that jurisdiction was proper. The Court rejected the argument that claimant spent the majority of his time (62%) driving in various places outside of Pennsylvania.

Conclusion:    The "substantial part of working time" test for jurisdiction under Section 305.2(d)(4)(iii) does not require a majority of the employee's working time, but rather is determined by comparing the amounts of working time the employee spends in Pennsylvania with the amount of time spent working elsewhere.

McKenna v. WCAB (SSM Industries, Inc. and Liberty Mutual Insurance Company), No. 454 C.D. 2010 (Filed August 18, 2010)

Issue:               Whether employer's refusal to proceed to a hearing to approve a compromise and release, after the agreement is executed, because claimant refuses to sign a letter of resignation, is a violation of the Act?

Answer:          No.    

Analysis:         The parties reached settlement terms at a mediation which included claimant's resignation.  The parties then executed a compromise and release agreement but claimant refused to sign the resignation. Employer then refused to proceed with the hearing.  Claimant filed a penalty petition. The WCJ found that employer had violated the Act by refusing to proceed with the C&R hearing after executing the agreement and imposed a fifty percent (50%) penalty.

Employer appealed and the WCAB reversed.  The Commonwealth Court affirmed. The Court, citing to Section 449 of the Act, explained that although the employer may submit the C&R agreement to the WCJ, the Act does not prohibit the employer from withdrawing the petition for approval. The Court further noted that, pursuant to the Act, the C&R is not valid until approved by the WCJ and therefore, the employer could seek to amend and/or  withdraw the petition when the terms were not formally agreed to by claimant.

Conclusion:    Because a C&R is not valid until approved by a WCJ, the employer (or claimant) may elect not to proceed with the C&R at any point prior to the WCJ approving the agreement, even on the date of the hearing to seek approval of the agreement.

Editor
David G. Greene, Esq.

Co-Editor
Renee M. Porada, Esq.

Contributing Author
Melissa Smith, Esq.

Media Contacts

Sara L. De Long
267.295.3377
sdelong@wglaw.com

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