workers' compensation law

- Spring 2003 -

Claimant in Folk was injured in January 1994 and received benefits pursuant to a Notice of Compensation Payable. In April 1994, he returned with a 50 pound lifting restriction and benefits were suspended by Supplemental Agreement. He continued to work in this position until he was laid off several years later due to economic conditions unrelated to his work injury. Following lay-off, claimant petitioned to reinstate his total disability benefits.

observed that "a claimant seeking reinstatement following a suspension of benefits must prove that: (1) through no fault of his or her own, the claimant’s disability, i.e., earning power, is again adversely affected by the work-related injury, and (2) the disability which gave rise to the original claims continues." Because a suspension status is a legal acknowledgment of "a continuing medical injury," a claimant satisfies his burden of establishing that the work-related injury continues, by his own credible testimony.

Thus, Commonwealth Court ruled in 1995 in Crowell v. WCAB (Johnson Dairy Farm), that "a claimant who returns to a light-duty position following a suspension because he could not perform his pre-injury job without experiencing significant pain [and] is subsequently laid off due to lack of available work" is entitled to a reinstatement of benefits on the grounds that his earning power remains "adversely affected by his work injury." "Conversely, where a claimant returns to work under a suspension, without restriction, to his or her pre-injury job, is subsequently laid off, and then petitions for reinstatement, the claimant has the burden to affirmatively establish that it is the work-related injury which is causing his or her present loss of earnings." That is, "while the claimant still enjoys the presumption that some work-related medical injury continues,…the claimant is not entitled to the presumption that his or her present disability, i.e., loss of earnings, is causally related to that work injury," the court in 1997 held in Teledyne McKay v. WCAB (Osmolinski).

The present case, the court reasoned, is a "hybrid" situation where there are continuing medical restrictions which do not affect the claimant’s ability to perform all of the duties of his or her time of injury position. Here, "claimant was found to have returned to his time of injury position with a restriction, but the restriction did not require any job modification at all." The weight lifting restriction was "irrelevant to [claimant’s] continuing medical restrictions which do not affect the claimant’s ability to perform all of the duties of his or her time-of-injury position. Here, "claimant was found to have returned to his time of injury position with a restriction, but ability to perform his time of injury position." Under such circumstances, "we hold, [the court ruled,] that it is as though claimant returned without restriction and, therefore, is not entitled to the presumption that his loss of earnings is causally related to the work injury. We reach this conclusion because under [the reasoning of] Teledyne, the presumption applies where the claimant returns with restriction to a job other than the time- of-injury job… Clearly, that did not occur here… Further, because claimant has not shown that his lay off was caused by his work-related disability…the Reinstatement Petition is properly denied."

Employers should take careful note of this decision. When a claimant returns to work and executes a suspension supplemental agreement, language noting, where appropriate, that claimant is returning to his or her pre-injury job function without job restriction, limitation, modification, or loss of earnings, should be specifically utilized. The presence of medical restrictions alone is not sufficient to require reinstatement of benefits where there is a subsequent loss of earnings, as the focus is on whether the job duties are consistent with the restrictions.

Commonwealth Court Again Addresses No Lost Time Claims

Claimant in Waldameer Park, Inc. v. WCAB (Morrison) sustained a severe laceration to her right hand while helping to rescue a child who had become stuck in an amusement park ride. She received stitches in her right hand after being taken to the hospital by her employer. Though her pain subsided, she developed symptoms ultimately diagnosed as reflex sympathetic dystrophy, or more specifically, in the credible opinion of her expert witness, "Type 1 Complex Regional Pain Syndrome."

Claimant was a student who suffered through these pains for several years while finishing college and graduate school. Eventually, shortly before expiration of the three-year statute of repose at Section 315 of the Act, she filed a claim petition. "Claimant never did make any claim for wage-loss benefits. Rather, she only sought acknowledgment of the injury and the payment of any future medical expenses by filing the Claim Petition before her rights to those future benefits became barred…" The WCJ found the testimony of her expert credible, approved the claim, and ordered the payment of her medical bills. In addition, a penalty was assessed against employer due to its failure to file any Bureau document recognizing the work injury. On appeal, WCAB affirmed, so employer appealed to Commonwealth Court.

Before Commonwealth Court, employer argued it had no duty under the Workers’ Compensation Act to issue a Notice of Compensation Payable, "because claimant did not suffer any loss of wages, nor did she have any unpaid medical bills." The court affirmed, citing its 1999 opinion in Lemansky v. WCAB (Hagan Ice Cream Co.), reasoning, "Thus, pursuant to Section 406.1 of the Act, Employer did have a duty to investigate Claimant’s claim that she suffered an injury and then issue a Notice of Compensation Payable or Denial. Because it is uncontradicted that Claimant did in fact suffer an injury, the proper course of action would have been for Employer to issue a ‘medical only’ Notice of Compensation Payable. Then, Employer could challenge any future medical bills that were unreasonable or not causally related to the injury or any wage loss benefits that were unwarranted rather than forcing Claimant to file a claim petition prior to the expiration of the three-year statute of [repose] for the purpose of preserving her right to any future benefits."

Commonwealth Court Rules Sexual Harassment Not Compensable

The section provides, in relevant part, "The term ‘injury arising in the course of his employment,’… shall not include an injury caused by an act of a third person intend to injure the employee because of reasons personal to him, and not directed against him as an employee or because of his employment."

Claimant worked as a parole agent in a prison. Her immediate supervisor invited her to join him for social events on several occasions, but claimant said she was not interested. Her supervisor later began to discuss "personal issues and problems" and also began to pursue claimant romantically. His conduct lasted for several months, on each occasion rebuked by claimant. Once, when a love song came on the radio at work, claimant’s supervisor moved close to her and said it was a "sexy, sweet" song. He would often stand behind claimant at her desk "making sucking sounds and sitting near [her] and staring at her." After claimant finally made it clear she would not respond to his advances, her supervisor "began to burden claimant with additional work assignments, which required her to put aside her normal case load and to fall behind." Claimant finally filed "a written complaint of sexual harassment against" her supervisor. Even though the supervisor was instructed to have no contact with claimant, he continued his efforts to contact her. Eventually, at her own request, claimant was transferred to a different location but she was not provided with a desk, had almost no work to do, and was not issued a weapon, as required by the employer’s policy.

As a result of this conduct, claimant began experiencing anxiety, chest pains, and heart palpitations. She contacted the State Employee Assistance Program and was referred to a psychologist. She was determined to be disabled by the psychologist as a result of "acute stress disorder," a diagnosis confirmed by a panel physician.

Finally, claimant filed a claim petition for workers’ compensation benefits, but it was denied by a WCJ. She claimed disability due to a mental stress injury as the result of sexual harassment by her supervisor, and other alleged retaliatory acts of her employer. Although her petition was granted by a WCJ, it was reversed by the WCAB on employer’s appeal on the ground that "claimant provided no corroborative testimony that these occurrences were actual incidents of harassment."

Claimant appealed to Commonwealth Court, contending the Board erred in concluding that corroborative evidence of sexual harassment is required and that the conditions she was exposed to were not abnormal working conditions. Noting that the court "may affirm the order of a lower tribunal if the result reached is correct without regard to the grounds relied upon by that tribunal," Commonwealth Court began its analysis by observing that the exclusion for intentional acts of a third person found at Section 301(c)(1) of the Act is one of subject matter jurisdiction. "Because subject matter jurisdiction cannot be waived, we may raise this issue on our own motion," the court ruled. The court noted that Pennsylvania Superior Court has considered a number of such claims as tort actions, and in those cases "has consistently held that the third party exception of Section 301(c)(1) operates to take these cases out of the realm of workers’ compensation law."

Moreover, Commonwealth Court noted "that when employees have sued employers under Title VII of the Civil Rights Act of 1964…for injuries occurring as a result of sexual harassment in the work place, the Federal District Courts of Pennsylvania have consistently rejected the defense of employers to these suits that the employee’s exclusive remedy is under the Workers’ Compensation Act." Thus, ruled the court, even though this defense was not raised by employer, any such injury "is not compensable under the Act…" The court concluded, "We reach this conclusion because any sexual harassment that claimant did experience was personal, not work-related, and is certainly not part of the proper employer/employee relationship."

"The rule in [workers’] compensation is dictated by overriding consideration that compensation is not a private matter to be arranged by two parties; the public has a profound interest in the matter which cannot be altered by any individual agreements," according to Arthur Larson, writing in his landmark treatise, The Law of Workmen’s’ Compensation, and cited approvingly by Pennsylvania Supreme Court in McIlvaine Trucking, Inc. v. WCAB (States). Thus, employment agreements which contain a choice of law provision in which the parties agree to pursue all legal action in the courts of a certain state, and agree that the laws of that state will govern disputes arising out of the contract, are void where such agreements provide that a work-related injury occurring in Pennsylvania is not subject to the Pennsylvania Workers’ Compensation Act, according to Pennsylvania Supreme Court.

McIlvaine Trucking, Inc. is a liquid bulk carrier headquartered in Ohio and operating primarily there, Pennsylvania, Virginia and West Virginia. As a condition of Claimant’s employment with the company, he was required to sign an employment agreement that contained the following provision:

In June 1992, claimant injured his leg and lower back while performing his work duties at the Employer’s facility in New Stanton, PA. He missed five days of work, during which time he applied for, and received benefits under the West Virginia Workers’ Compensation Act. Claimant then returned to work, and worked for nearly two years before being diagnosed with a disabling back injury in the spring of 1994; doctors determined that his back condition was a result of his 1992 work injury. Subsequently, claimant filed a claim petition under the Pennsylvania Workers’ Compensation Act. Employer responded by: a) acknowledging claimant had suffered a work-related injury, and b) asserting that Pennsylvania lacked jurisdiction to adjudicate claimant’s petition in light of claimant’s agreement to be bound by the laws of West Virginia. Pointing to the signed employment agreement, employer argued that Section 305.2(d)(5) of the Pennsylvania Workers’ Compensation Act authorizes agreements that provide a specific choice of law provision. It states:

The WCJ determined, because claimant’s injury occurred in Pennsylvania, that claimant is entitled to compensation under the Pennsylvania Act, notwithstanding the contrary terms of the employment agreement. The judge cited Section 101 of the Act, which states that it applies "to all injuries occurring within this Commonwealth." On appeal, the Appeal Board affirmed.

On further appeal, Commonwealth Court reversed, giving effect to the signed employment agreement’s choice of law provision. The Supreme Court of Pennsylvania accepted claimant’s appeal to determine whether the provisions of the Act pertaining to extraterritorial jurisdiction at Section 305.2 may be invoked to foreclose invocation of the Act where a worker was injured in Pennsylvania; and whether the judge and

Workers’ Compensation Appeal Board were correct in invoking the policy of the Act to negate the effect of the parties’ choice of law agreement. Before the Supreme Court, claimant argued that the Pennsylvania Act in no way sanctions a choice of law provision in an agreement that would negate Pennsylvania jurisdiction over an in-state injury. Employer argued that the Act explicitly authorizes choice-of-law agreements and that giving deference to such contract terms fosters the "broad predictability" sought by the workers’ compensation process, and also relieves the administrative burden of dealing with a case that may involve conflicting workers’ compensation systems from two different states.

Supreme Court concluded that a natural interpretation of the Pennsylvania Workers’ Compensation Act does not extend the authority to private parties to alter the applicability of the Act to in-state injuries. In ruling for claimant, Supreme Court also set forth: "Courts do not lightly override private contractual undertakings. Nevertheless, agreements may be avoided where, as here, their terms offend public policy as reflected…in express legislative provisions such as [the directive] that the Act applies to in-state injuries."

The Court’s reasoning in McIlvaine Trucking does not apply to injuries which occur outside of Pennsylvania, but does negate the applicability of such agreements where the injury occurs in Pennsylvania. Multi-state employers, such as trucking companies where such agreements are common, will need to reassess their workers’ compensation liabilities in Pennsylvania in light of this case.

"The consequence of [a] Claimant’s criminal conduct [is] to shift the burden of proof to her on the ‘relevant inquiry’ of whether Claimant’s loss in earnings [is] the result of her work-related injury." Thus, according to Commonwealth Court, a claimant receiving partial disability benefits due to a work injury, seeking to reinstate total disability benefits after the termination of her employment due to criminal convictions or activities unrelated to work "must bear the consequences of criminal convictions, or the result will be illogical. A serious, physical violence against a child will not be deemed a job forfeiture but tardy attendance will."

Claimant in St. Luke’s Hospital v. WCAB (Ingle) is not entitled to the reinstatement of her total disability benefits after a serious act of child abuse leading to the termination of her employment, even where the employee handbook does not address this precise situation and the employer has no written policy regarding criminal conduct. Claimant in this case injured her left shoulder in 1995 while working as a licensed practical nurse. After surgery, she returned to a light-duty job in October 1996, working 20 hours per week. She received partial disability benefits while working light duty.

In 1998, after learning "that criminal charges of child abuse have been lodged against" her, she was fired by her employer. Nonetheless, the employer "continued to pay Claimant partial disability benefits to account for the loss of earning power caused by her injury." Claimant subsequently filed a petition to reinstate total disability benefits as of the date of her discharge, as well as a penalty petition, contending that her conduct as a child abuser was unrelated to her employment, and therefore that the termination of her employment was unjustified. She argued, as a result, that she is entitled to a reinstatement of her total disability benefits, having lost her job through no fault of her own.

The workers’ compensation judge approved her petition and reinstated total disability benefits, and the Workers’ Compensation Appeal Board affirmed on employer’s appeal. Commonwealth Court, however, reversed following employer’s further appeal.

The court’s analysis is premised on the fundamental rule, often forgotten in workers’ compensation cases, that unemployment compensation and workers’ compensation standards for fault and misconduct analyses are not the same. The court cited Supreme Court’s 1996 opinion in Hertz-Penske Truck Leasing Company v. WCAB (Bowers) for the proposition that "Issues of misconduct or fault, if any, on the part of a [workers’ compensation] claimant do not impact upon [the] determination" of eligibility for compensation under the Workers’ Compensation Act. "[T]he fault-based concept of ‘willful misconduct’ or ‘good cause’ from the unemployment compensation arena" is not relevant to workers’ compensation law, the Supreme Court ruled in Hertz-Penske. Instead, "the relevant inquiry is whether the claimant’s loss in earnings was the result of claimant’s work injury."

Applying these principles, Commonwealth Court reasoned that "reinstatement of total disability benefits will not be permitted where work was available ‘or would have been available but for circumstances which merit allocation of the consequences of the discharge to the Claimant such as Claimant’s lack of good faith.’" The allocation of consequences is not limited solely to circumstances where a claimant acts in bad faith with respect to the employment situation. "It is still the obligation of a claimant to demonstrate that loss of earnings is attributable to the work-related injury and not to some other reason."

Thus, Commonwealth Court concluded that in this case, "Claimant’s criminal conduct, which resulted in the termination of her employment, did not transform her into a totally disabled person. She was able to do the job as an admissions clerk and would still be doing that job, but for her criminal assault upon a nine-year old boy committed to her care. One of the consequences of this conduct was her discharge from employment, and so Claimant, not Employer, is responsible for the lack of available suitable work."

Commonwealth Court’s holding in the St. Luke Hospital is instructive for several significant reasons as it touches on a theme which occurs frequently in workers’ compensation. There is a distinct difference between the fault standards and the proof applicable to workers’ compensation cases compared to unemployment compensation, and the concept of willful misconduct seen in unemployment compensation law is of no relevance in workers’ compensation. Even more importantly, the court has clarified that the actions giving rise to an employment termination as a defense to the reinstatement of total disability are not limited to actions arising in the work place. The case has broad implications for employers and their insurers.

Claimant in McGovern experienced work-related bilateral carpel tunnel syndrome while employed as a receiving clerk. A claim petition was filed and ultimately resulted in the claim being awarded. Employer was ordered to pay partial disability benefits for time claimant missed due to leaving early on Friday to receive treatment. WCAB affirmed on employer’s appeal. Thereafter, employer appealed to Commonwealth Court, which reversed the award of partial disability benefits.

Commonwealth Court explained that in Pennsylvania the term disability "links two discrete concepts: 1) a physical injury, that 2) results in loss of earning power." As such, an employee who sustains a physical injury does not, absent additional circumstances, necessarily receive wage loss benefits. The court observed that it has long held that the word "disability" is synonymous with "loss of earning power." The court reasoned to that "although claimant testified that he lost approximately eight hours per month to treat with Dr. Broad, in fact the lost time was attributable to claimant’s preference to pursue treatment during work hours." Testimony of record revealed that the doctor’s office was open in the evenings so the claimant could have gone at other times. Loss of earnings resulting from an employee’s personal preference or voluntary conduct is not compensable, according to the court.