workers' compensation law

- Winter 2003 -

The case of Gardner v. WCAB (Genesis Health Venture), published by the Pennsylvania Commonwealth Court on January 15, 2003, holds that an impairment rating evaluation (IRE) must be requested within 60 days of the expiration of 104 weeks of total disability benefits, or a defendant’s right to an IRE is forever lost. This case is more than merely an unfortunate holding for Pennsylvania employers and insurers. It is another judicial interpretation of the 1996 amendments to the Pennsylvania Workers’ Compensation Act which limit many of the most significant improvements in the prior law, and create more turmoil in the workers’ compensation system.

The Pennsylvania Commonwealth Court addressed the issue of whether or not an insurer can request an IRE later than expiration of the 60-day time period following the receipt of 104 weeks of total disability benefits. IRE’s were created by the 1996 Amendments known as Act 57, as a new means to limit total disability. Under Act 57, for injuries occurring on or after June 24, 1996, total disability benefits can be limited to 104 weeks where an IRE performed under the AMA Guides to the Evaluation of Permanent Impairment results in a work-related whole body impairment of less than 50 percent. Section 306(a.2)(1) of the Act provides the time frame within which an IRE may be scheduled. It states,

"When an employee has received total disability compensation… for a period of 104 weeks, unless otherwise agreed to, the employee shall be required to submit to a medical examination which shall be requested by the insurer within 60 days upon the expiration of the 104 weeks to determine the degree of impairment due to the compensable injury, if any."

Pennsylvania Commonwealth Court ruled that the language of this Section is clear and unambiguous, and relied upon the phrase, "shall be requested," as creating a mandatory deadline of the time within which an IRE may be requested or the right to an IRE lost. In addition, regulations adopted by the Bureau of Workers’ Compensation at Volume 34, Chapter 123 of the Pennsylvania Code, which allow IREs to be scheduled later than the 60-day time limit, contradict this Section of the Act, the court ruled, and are thus invalid.

The procedure for obtaining an IRE is set forth at Section 306(a.2)(6) of the Act and refers specifically to Section 314. That section was part of the Act prior to Act 57 but previously applied only to independent medical examinations where a claimant refused to submit to an examination when requested to do so byan employer or insurer. Section 314 states that at "any time" after an injury, if requested by an employer, an employee must submit to a physical examination by an appropriate healthcare provider.

Commonwealth Court ruled that the IRE provisions are "special" and conflict with the general provisions of Section 314. Relying on Section 1933 of the Statutory Construction Act of 1972, the court stated, "Indeed when a general provision is in conflict with a special provision in the same statute, and the conflict is irreconcilable, the special provision shall be construed as an exception to the general provision." Therefore, according to the court, "an employer may request a physical examination at ‘any time’ after an injury unless the employer is seeking an IRE, in which case the employer must initially request the examination within 60 days of the 104-week period."

Even more unfortunately, the court’s further explanation of this section seems to confuse IMEs with IREs and lumpsthem together. After asserting that the language of Section 306(a.2)(1) is "unambiguous," the court states, "This means that, under Section 306(a.2)(6) of the Act, when the insurer has initiated the procedure in a timely manner and has not obtained a claimant impairment rating less than fifty per centum, the insurer may seek additional independent medical examinations under Section 314 of the Act to obtain an IRE, but no more than two during the 12-month period." Thus, an employer may have more than one IRE long after the 104 week total disability period, but only if the first IRE was requested within 60 days of 104 weeks.

Obvious problems immediately come to mind. First, many IREs have already been performed and completed after the 104-week plus 60 day period prescribed in Section 306(a.2). In such situations, it is clear that claimants will now seek to review the change in their status based on the IRE, from partial back to total. Petitions to review the change in status, penalty petitions, and all other means at their disposal will be utilized to accomplish this objective. Another problematic scenario arises in the context of termination, suspension, or modification petitions filed by employers and in litigation around the time 104 weeks of total disability is reached. If that occurs while the case is in litigation, a defendant which loses that litigation may be precluded from pursuing an IRE to limit the duration of total disability. Important tactical decisions must be made because pursuit of one option may now preclude other important remedies under the Act to limit long-term exposure and the extent of liability.

A seven-judge panel of Pennsylvania Commonwealth Court participated in the Gardner opinion. Only Judge Renee Cohn dissented. The court’s opinion, she wrote, clearly frustrates the legislative intent. "The purpose behind statute was to reduce the rising cost of workers’ compensation and restore efficiency…" Gardner is only the most recent frustration by Pennsylvania Commonwealth Court of the legislative intent behind Act 57.

At a special Supersedeas hearing relating to an Employee Challenge to a timely Notification of Suspension under Section 413(c) of the Act, evidence can be presented by the employer regarding the reason claimant is no longer working, and the inquiry may not be limited solely to whether claimant is still working at the time of the hearing, according to Commonwealth Court, in U.S. Airways, et al. v. WCAB (Rumbaugh).

Claimant, a flight attendant, was injured on August 26, 1999. A Notice of Compensation Payable describing her injury as "acute cervical trapezius strain and left shoulder contusion" was issued. Claimant received benefits until she returned to work full duty on October 29, 1999 after her treating physician released

her. On November 1, 1999, US Airways filed a Notification of Suspension. Claimant filed a timely Challenge, alleging she stopped working on November 13, 1999 as a result of a low back problem.

Although US Airways also filed a Suspension Petition on December 9, 1999, a hearing was held on December 15, 1999, regarding only the Challenge. Claimant testified that, when she ceased working in November 1999, her neck and shoulder were not bothering her. Instead, she described lower back and leg problems that kept her from working. The judge rescheduled the case for February and did not hear any evidence with respect to the Suspension Petition until that time.

On February 15, 2000 the judge issued an Order denying the Challenge and found that claimant’s inability to continue working after November 13, 1999 was not related to the accepted work injury. Claimant’s testimony was not found credible that her lower back and leg were injured as a result of the August 1999 injury.

Claimant appealed and the Board reversed the judge’s denial of her Challenge, concluding that the only relevant inquiry at the time of the Challenge hearing was whether or not the claimant had returned to work at wages equal to or in excess of a pre-injury wage, and was still working. The Board held the judge erred in considering evidence that claimant’s failure to continue work after November 13, 1999 was for non-work related reasons. US Airways appealed to Commonwealth Court, which reversed the Board.

Observing that "Section 413(c) does not explicitly define the parameters for special supersedeas hearings," Commonwealth Court agreed that an employer "should be permitted to present evidence on the underlying reason or cause for [a claimant’s] inability to work and whether that inability was related to [a work] injury."

Judge Smith-Ridner, writing for the court, acknowledged that the unilateral suspension permitted by Section 413(c) may take place only "during the time the employee has returned to work…" but stated, "Nevertheless the court cannot agree with the Board’s conclusion that a special supersedeas hearing pursuant to a challenge under Section 413(c) is limited to the questions of whether the employee has returned to work without a wage loss, when the employee returned to work, and the length of time that the employee remained working." Rather, the court concluded that a timely challenge by the claimant "effectively converts the employer’s notification of suspension into a request for supersedeas."

Moreover, "It makes no sense to require a judge to turn a blind eye to evidence that the employer is entitled to a supersedeas when all of the parties are already assembled before him or her for an expedited hearing." Most importantly, the court noted, "It is fundamental that in any proceeding under the Act the parties have a right to be heard, and the Court cannot conceive of any circumstance under which the legislature intended to deprive either party an opportunity to be heard in the challenge proceeding." Requiring the employer to reinstate benefits when the claimant has only offered evidence of disability from a non-work-related condition would be "an absurd result," according to Commonwealth Court.

Meretricious Relationship Terminates Entitlement to Benefits

I t has long been the law in Pennsylvania that when a fatal work
related injury occurs, the dependent widow and children are entitled to workers’ compensation benefits. Recently, Commonwealth Court considered again the circumstances in which a subsequent "meretricious relationship" will require termination of those benefits.

In J.H. v. WCAB (Oley Twp.), Dallas H. was an employee of Oley Twp., and died in an accident at work on June 21, 1983. He was survived by his wife, J.H., and one son, who began collecting workers’ compensation benefits. Almost five years after his death, the employer, Oley Twp., discovered that J.H. was living with another man named Stephen G., in a marriage-like relationship. The employer filed a Petition to Terminate J.H.’s benefits, relying on Section 307(7) of the Act, which states: "If, upon investigation and hearing, it shall be ascertained that the widow or widower is living with a man or woman, as the case may be, in a meretricious relationship and not married, or the widow living a life of prostitution, the board may order the termination of compensation payable to such widow or widower."

In order to prove that J.H. had begun a meretricious relationship with Stephen G., the employer presented the following evidence: 1) a deed dated December 1989 that conveyed property to J.H. and Stephen G. as joint tenants with right of survivorship, 2) a mortgage note signed by J.H. and Stephen G., 3) a copy of Stephen G.’s voter registration application noting his address change to the property noted in the 1989 deed, and 4) a 1998 real estate tax bill listing J.H. and Stephen G. as the taxpayers for their jointly-held property.

At hearings before the WCJ, the employer called J.H. on cross-examination and elicited the following facts from her: she and Stephen G. had a child together, Dylan G., born in September 1989, and she and Stephen G. were living together at their jointly-owned home. The employer also presented deposition testimony from J.H.’s obstetrician-gynecologist, Dr. Frank, who treated J.H. since 1983. Dr. Frank testified that, during a February 1989 visit, J.H. informed the doctor that she and her live-in "boyfriend or possible fiance" of six months were thinking about having a child. Dr. Frank also testified that on September 28, 1989, J.H. delivered her son, Dylan G. Dr. Frank understood Stephen G. to be J.H.’s sexual partner, and the father of their child, Dylan G. Dr. Frank also testified that from November 1989 (after the delivery of Dylan G.) through 1999, he had prescribed birth-control medication for J.H., specifically for the purpose of preventing pregnancy.

The judge found as fact that J.H. was involved in a meretricious relationship with Stephen G. from December 1988 through 1999. As a result, her benefits were terminated effective December 1988. The W.C.A.B. affirmed the decision, and J.H. appealed to Commonwealth Court, arguing that the earliest date her benefits should be terminated would be December 23, 1998 - the date the employer filed its Petition to Terminate after discovering J.H.’s relationship with Stephen G. The court disagreed, and held that the employer met its burden of proving that a meretricious relationship had existed long before December 1998.

To terminate benefits under Section 307(7), an employer must prove that on the date the petition is filed, the claimant is: 1) living with the partner or companion, 2) in a sexual relationship, and 3) not married to this person. In J.H.’s case, the employer fulfilled all three requirements. First, the deed and Stephen G.’s voter registration address proved the co-habitation. Second, Dr. Frank’s testimony proved the existence of a sexual relationship.

And third, J.H.’s statement to Dr. Frank that she and her live-in "boyfriend or possible fiance" were planning to have a child, proved that J.H. and Stephen G. were not married. In finding for the employer, the court pointed out that the Act treats both remarried dependents and those engaged in meretricious relationships the same, and that, "to hold otherwise would encourage persons not to marry in order to continue benefits," citing Supreme Court’s 1994 Opinion, McCuster v. WCAB (Rushton Mining Co.). In that case, the Supreme Court reasoned that "The [Workers’ Compensation] Act was intended to encourage, not discourage, the institution of marriage."

Weeks of suspension may or may not count against the maximum 500 week partial disability period in Section 306(b) of the Workers’ Compensation Act, according to Pennsylvania Commonwealth Court in Cytemp Specialty Steel v. WCAB (Servey). "Provided a claimant’s partial disability benefits are reinstated during the 500 week statute of repose [at Section 413(a)], the claimant can continue to receive any remaining partial disability payments up to a maximum of 500 weeks even beyond the statutory period. However, in the event that partial disability benefits are suspended in the post-statutory period, the claimant would no longer be eligible to have his partial disability benefits reinstated," the court ruled.

This case presents a procedural scenario which appears to fall squarely within circumstances contemplated by the Pennsylvania Supreme Court in its opinions in Dillon v. WCAB (Greenwich Collieries), issued in 1994, and Stewart v. WCAB (Pennsylvania Glass Sand/U.S. Silica), from 2000. In Dillon, the Supreme Court stated, "[A]n employee who returns to work at wages equal to or greater than his pre-injury wages, and thus has his compensation suspended, is in the same position after 500 weeks…as an employee who returned to work at reduced wages and thus receives compensation for partial disability, i.e., the employer’s liability for benefits is terminated." In Stewart, the court considered whether the three year statute of repose applies to petitions to reinstate filed after expiration of the 500 week period, calculated by counting weeks of suspension as part of the total. Ruling that the suspension weeks must be counted, the court stated, "The statute also requires that periods of suspension be included within the 500-week calculation for purposes of determining when partial disability benefits have expired."

Yet, in its recent case, Cytemp Specialty Steel, Commonwealth Court reasoned that a hard and fast rule counting weeks of suspension against the 500 week limitation for partial disability benefits under Section 306(b) does not exist unless the Supreme Court’s statements are taken out of context. In context, according to Commonwealth Court, weeks of suspension may be counted in some circumstances, but not in this one. In Cytemp, claimant was injured in January 1990 and returned to work without a loss of earnings in July 1990, when his benefits were suspended. The suspension lasted until August 1993, or about 162 weeks. Thereafter, partial disability benefits were reinstated.

In July 1998, the employer filed a modification petition seeking only to clarify whether weeks of suspension counted against the 500 week maximum period for partial disability in Section 306(b). The parties stipulated that if the weeks of suspension counted, at the time of the petition claimant would have 71 more weeks of partial disability remaining, and if not, he would have in excess of 230 weeks. Relying on Supreme Court’s opinions in Dillon and Stewart, the judge counted the weeks of suspension, but on claimant’s appeal, the W.C.A.B. reversed.

On further appeal, Commonwealth Court affirmed the Board. The court reasoned that its 1995 opinion in Palmierre v. WCAB (East End Trucking), and its 1978 opinion in D&T Brooks, Inc. v. WCAB (Knight) compel a different result. In those cases, Commonwealth Court interpreted Section 413(a) as providing for a

reinstatement of benefits if disability recurs "at any time during the [500 week] period for which partial disability is payable…" Hence, where claimant seeks a reinstatement before expiration of the 500 week period, weeks of suspension do not count. Yet, under Dillon and Stewart, if reinstatement is requested after a period of 500 weeks which includes suspension, it is barred by the same section of the Act.

This case will complicate the calculation of benefits payable in many cases, extend the time for which benefits may be resumed in many more, and draws a distinction that does not seem to be present in the actual language of the Act. It is well-established that a period of suspension is a period of partial disability, though not reflected in a loss of earnings. Commonwealth Court’s decision in Cytemp Specialty Steel counts suspension as partial disability in some situations, but not in others.

Employee Challenge Petitions

Can Be Amended by Judge

Following its decision in US Airways v. WCAB (Rumbaugh), Commonwealth Court considered another case with similar issues. In Hinkle v. WCAB (General Electric Company), the court decided in favor of the employer, because the claimant failed to raise timely objections to procedural rulings during the course of the litigation, which included twice amending the pending Challenge filed by claimant into petitions of the Employer.

Claimant sustained a work injury in 1994 to his left heel and left ankle. From May 1995 until April 1998 he was totally disabled. In April 1998, claimant returned to work as a machine operator, a different position than his pre-injury job, but at the same rate of pay. Claimant worked for only three days. He eventually returned to work again in May 1998, but at another job with GE, with a loss in earnings.

GE issued a timely Notification of Suspension pursuant to Section 413 (c). Claimant filed a prompt Challenge. A Special Supersedeas hearing was held in May 1998. At that time, the workers’ compensation judge (WCJ) stated he would treat the Challenge as a Petition for Suspension and "…Significantly, [the Court observed,] neither party objected." Thereafter in December 1998, the employer requested that the pending petition be amended to a Termination Petition based on medical evidence claimant was fully recovered. This second amendment was permitted, again without objection from Claimant.

Medical depositions, surveillance evidence, and claimant’s testimony were submitted, and the WCJ issued an Interlocutory Supersedeas, suspending claimant’s benefits in February 1999. Thereafter, the WCJ issued his final decision in October 2000 terminating claimant’s benefits. Claimant appealed to the Board, which affirmed the WCJ, so claimant appealed to Commonwealth Court. To Commonwealth Court, claimant argued that it was improper for the WCJ to convert the Challenge Petition into a Suspension Petition because it increased the claimant’s burden of proof, as well as allowing the introduction of medical and other evidence into the proceedings.

Quoting its opinion of the same day in US Airways v. WCAB (Rumbaugh), Commonwealth Court reasoned that "the 1996 amendment was meant to streamline procedures in those cases where there is no dispute that a claimant has returned to work." The court stated that the lack of a formal petition or formal Answer from either party was troublesome, and the question then arose "how the issues may be designated where neither party has filed a formal petition or answer." The court stated that it views with "disfavor oral amendments in Special Supersedeas cases, and…" encouraged WCJ’s to require that actual petitions be filed by the parties.

However, because a " WCJ is allowed to waive or modify the Special Rules of Practice," and since the Challenge was ultimately resolved by the Interlocutory Supersedeas issued in February 1999, despite claimant’s failure to timely preserve an objection to the two amendments, the WCJ’s decision was upheld.

The court concluded that Claimant’s failure to object to either amendment to the Challenge Petition served to deprive the WCJ of the "opportunity to cure any error." Moreover, based on U.S. Airways, the Challenge proceeding itself is not limited as Claimant contended. Because there was no error on the part of the WCJ and the termination of benefits was supported by unequivocal, substantial evidence, the decision of the Board was affirmed.

Commonwealth Court Addresses

Pre-certification of Treatment

"[T]he party disputing the reasonableness or necessity of [medical treatment] must seek a prospective, concurrent or retrospective UR determination in accordance with the exclusive procedure set forth in Section 306(f.1)(6) of the [Workers’ Compensation] Act," according to Commonwealth Court in McLaughlin v. WCAB (St. Francis Country House). Where a defendant refuses, solely on the basis of a pending Termination Petition, "to pre-approve a scheduled surgery recommended by Claimant’s treating physician without obtaining a supersedeas or any other authority to do so and without disputing the reasonableness or the necessity of the surgery in accordance with [the Utilization Review provisions] of the . . . Act," a violation of the Act sufficient to justify the imposition of a penalty has occurred.

McLaughlin reiterates the well-known rule in a new context. It has long been the law that "once the employer’s liability for the work injury has been established, the employer may not unilaterally stop making benefit payments in the absence of a final receipt, an agreement, a supersedeas or any other order of the judge authorizing such action," or, in the case of medical treatment, without resorting to the UR procedures of the Act. In McLaughlin, the issue was whether Section 306(f.1) supports the proposition that an employer "has no obligation…to pre-certify or pre-approve a scheduled treatment or seek a prospective UR determination to dispute the reasonableness or necessity of the treatment."

Claimant was receiving benefits pursuant to a judge’s decision finding that he sustained a low back injury. The

employer was also ordered to pay for all future related medical care. While litigating employer’s subsequent Termination Petition, claimant’s physician reported that claimant was not recovered from the work injury and "recommended that Claimant undergo a lumbar laminectomy." The surgeon’s staff contacted the carrier’s claim representative for pre-approval of the scheduled surgery, but she declined, stating in a letter that "a Termination Petition has been filed and is presently pending…Since this case is presently in litigation, I am not authorizing any treatment. This case will go to a decision."

Claimant promptly filed a Petition for Penalties contending that the defendant "intentionally engaged in a course of conduct effectively preventing him from being admitted to the hospital for the surgery recommended by his treating physician." The judge denied employer’s Termination Petition and assessed penalties. On employer’s appeal, the Board reversed, reasoning that "Section 306(f.1)(5) of the Act only requires an employer to make payment for the treatment [actually rendered] within thirty days after receiving medical bills and records from the provider, and that the employer has no obligation under the Act to pre-certify or pre-approve a scheduled treatment or seek a prospective UR determination to dispute the reasonableness or necessity of the treatment."

On claimant’s appeal, Commonwealth Court reversed the Board and ruled that the "plain language" of the UR provisions relied upon by the Board and the defendant are "applicable only where the

claimant has actually received medical treatment from the providers generating medical bills and records." According to the court, the employer’s refusal to pre-certify "effectively prevented claimant from receiving the recommended treatment in the first place."

McLaughlin does not require pre-approval or pre-certification of medical treatment in every open claim, and does not change the law in any significant way. It does not deal with a dispute over causal relationship between recommended treatment and the work injury, but merely a dispute over the reasonableness and necessity of treatment where causal relationship is admitted. In that case, McLaughlin restates long-standing principles that an employer may not unilaterally refuse to pay any benefits due in an open case.

What seems to be required is that the defendant take two steps to comply with McLaughlin. First, a written denial of pre-certification on the ground that recommended treatment is not reasonable or necessary should be issued, and simultaneously, the employer should file a Request for Prospective Utilization Review. Prior to McLaughlin, it was common to rely upon the claimant or the provider to request prospective review where treatment was denied on such grounds. Whether such a request is filed by the defendant, the claimant, or the provider, it must be kept in mind that the Act requires the first level review to be paid by the defendant regardless of the result, so that this procedure does not add to the cost of litigating or administering the claim, but will insulate the defendant from the imposition of penalties.