State News : Pennsylvania

Background

The facts are as follows: Pharmacy filed the Application with the Bureau, and Insurer replied that the prescriptions were the product of a prohibited self-referral, and the Applications were assigned to Hearing Officer. Claimant’s treating physician wrote or supervised the prescriptions for the medications at issue, and acknowledged they have a financial interest in Pharmacy. Pharmacy’s founder, Phillip Shin, testified he owns and serves as managing member of an employee leasing company called Induction Works, which employs the pharmacists who work at Pharmacy, and a management company called Medicine Works. The Hearing Officer found as fact that the business of Shin’s enterprises were commingled. Ultimately, the Hearing Officer concluded the Insurer met its burden of proving a prohibited self-referral because the physician who wrote the prescriptions had an admitted financial interest in Pharmacy. He explained that though pharmacists and pharmaceutical supplies are not specifically mentioned in the anti-referral provision, “goods and services” captures prescriptions for medications.

700 Pharm. v. Bur of WC (State Workers' Ins. Fund) - No. 100 MAP 2024

Summary

Section 306(f.1)(3)(iii) of Act 44 amending the Workers’ Compensation Act, commonly referred to as the Anti-Referral Provision, states that it is unlawful for a provider to refer a person for laboratory, physical therapy, rehabilitation, chiropractic, radiation oncology, psychometric, home infusion therapy or diagnostic imaging, goods or services pursuant to this section if the provider has a financial interest with the person or in the entity that receives the referral. The consolidated appeals have presented to the Court the issue of whether the Anti-Referral Provision’s prohibition on self-referrals is limited to the eight enumerated categories of services of if the phrase “good or services” acts as a catch-all category. The Supreme Court held self-referrals were limited to the enumerated list, therefore reversing the holding of the Commonwealth Court.

The Supreme Court reasoned that the Commonwealth Court adopted its prior determination that the Anti-referral Provision could be read as “it is unlawful for a provider to refer a person for . . . goods or services.” However, this interpretation only appears reasonable if the phrase “good and services” is read in isolation, but the Supreme Court interprets statutory language in reference to the context which it appears. The proper reading of the Anti-Referral Provision’s plain language is that the phrase “goods or services” modifies the enumerated medical services such that it is necessary to read “good or services” after each enumerated service. For example, “it is unlawful for a provider to refer a person for physical therapy… good or services pursuant to this section.” The Court found this was the only interpretation that gives effect to the entirety of the Anti-Referral Provision, and plain language of the statute makes clear the General Assembly did not intend for “good or services” to be a catchall category.

The Court further found that if the General Assembly intended “goods and services” to be included in the list of the eight enumerated services, it would have place an “or” between “diagnostic imaging” and “good and services” to create a list of nine alternative categories of prohibited self-referrals. The Court rejected the notion, as found in Justice McCaffery’s dissent, that the Provision was not ambiguous. The Court noted that only when the plain language of the statute is not explicit may they consider other matters to ascertain the legislature’s intent, such as the mischief to be remedied.

Finally, other provisions of Section 306(f.1)(3) support the Court’s interpretation that self-referrals for prescription drugs and professional pharmaceutical services are not included in the Anti-Referral Provision’s ban. The omission of language regarding prescription drugs and professional pharmaceutical services in the Anti-Referral Provision while including such language in the provision addressing reimbursement is significant in showing the General Assembly did not intend to include prescription drugs and professional pharmaceutical services in the prohibition. Under the circumstances, omitting those services from the Provision supports the Court’s conclusion that those services are not included in the Anti-Referral Provision’s self-referral prohibition.

Dissent

Justice Wecht: Justice Wetch finds that a statute cannot be unambiguous if a “proper reading” requires ignoring part of it and that the Majority’s interpretation is plausible only if one ignores the provision’s punctuation. Justice Wetch specifically contends that the last two items on the list (“goods and services”) should not be treated as a single qualifying phrase that modifies the preceding list items, and that “goods” and “services” are the last two list items. He further conceded that the legislature did not need to include the first eight example of prohibited self-referrals as the last two are broad enough to encompass the first eight. Though odd, it is not unheard of for the General Assembly to engage in surplusage. 

Justice McCaffery: Justice McCaffery contends that under a plain reading of the provision, “goods and services” is a catchall phrase, which includes prescription drugs (goods) and pharmaceutical services (services). He further contends the interpretation of the Majority undermines the undisputed intent of the Anti-Referral Provision, which is “to contain costs by preventing physicians from acting in their own self-interest.” Thus, in his view, “goods and services” unambiguously refers to all goods and services in which the provider has a financial interest. Justice McCaffery notes the “mischief to be remedied” by the Anti-referral Provision was to prevent “physicians from acting in their own self-interest” which favors a broad reading of “goods and services.” He further contends that if the General Assembly intended to prohibit self-referrals for drugs and pharmaceutical services, as the Majority asserts, it could have explicitly done so in Section 306(f.1)(3)(vi) which addresses reimbursements for prescription drugs and pharmaceutical service.

Comparison with the Commonwealth Court

700 Pharmacy (Pharmacy) and State Workers’ Insurance Fund (Insurer) cross-petition for review of the decision denying and dismissing five fee review applications Pharmacy brought in connection with prescriptions it filled for a Claimant. Insurer argued the Hearing Officer erred in concluding Pharmacy, staffed by a pharmacist by an employee leasing agency, amounted to a provider as defined by Section 109 of the Workers’ Compensation Act, with standing to bring a fee review application under Section 306(f.1)(5). Pharmacy argued the Hearing Officer erred in concluding the prescriptions forming the basis of the Applications were the product of an unlawful self-referral under Section 306(f.1)(3)(iii). After review, the Court affirmed.

Insurer argued that because Pharmacist is employed by Induction Works and because employee leasing companies are not providers, Pharmacy is therefore not a provider. Pharmacy uses the employee leasing agreements which provides that Pharmacy directed the employees leased by Induction works, and that Pharmacist was acting on behalf of Pharmacy when he dispensed medications.

Both the Commonwealth Court and Supreme Court agree Pharmacy is considered a provider under the Workers’ Compensation Act and could therefore file a fee review application. The key disagreement between the Courts is the meaning of “goods and services” in relation to

In regard to the Anti-Referral provision, Pharmacy argues that because Section 306(f.1)(3)(iii) does not specifically list pharmacies and pharmaceuticals, the anti-referral provision does not encompass them. Furthermore, Pharmacy cited Fonner v. Shandon, Inc., which states that “where the legislature includes specific language in one section of a statute and excludes it from another section, the language may not be implied where excluded.” The Commonwealth Court found that statutory language could be read as, “it is unlawful for a provider to refer a person for . . . goods or services.” As such, the language suggests the General Assembly did not intent to restrict the ant-referral provision’s sweep only to the specific items enumerated but as broad language. The Court further reasoned that drugs are “goods” for purposes of the Anti-Referral provision, and ultimately that “goods and services” is sufficiently broad to cover drugs and pharmaceutical services.

As mentioned, the Supreme Court held that “goods and services” does not create a catchall category but instead modifies the eight enumerated categories specifically mentioned in the statute. Since pharmacies and prescriptions drugs are not explicitly mentioned in the statute, the Anti-Referral provision is not triggered the present case.

The Courts further disagreed on the statutory interpretation of the statute. The Commonwealth Court looked towards the dictionary definition of “goods,” leading them to find that drugs are “goods” for purposes of the Anti-Referral provision. The Court further found that the enumerated items were wide-ranging topics across medical disciplines, and that drugs and pharmaceutical services fell within the “same general nature or class of those enumerated.”  Where the Commonwealth Court looked towards dictionary definitions, the Supreme Court focused more heavily on the grammatical structure of the provision as well as the context in which the phrase in contention appeared. The Court further looked to the statute’s plain language when interpreting the provision, and considered the general intent of the General Assembly in enacting the Anti-Referral Provision which was to prevent physicians from acting in their own self-interest. However, the Court concluded general intent does not alter the plain language. As such, the interpretation fails to bar referrals for 

Stephanie Ringbloom, Esq.:

The Pennsylvania Supreme Court issued an unpublished opinion in the case of Yoder v. McCarthy Construction, Inc., et. al., No. 43 EAP 2024, 2025 WL 2981889 (Pa. Oct. 23, 2025). In this decision, the Court confirmed the applicability of the McDonald test for coverage of a subcontractor. The Court noted that “Under the Workers’ Compensation Act (Act), as  interpreted  by  this  Court  for decades, a general contractor that hires a subcontractor to perform work on a jobsite is deemed  an  “employer”  that  is  secondarily  liable  to  the  injured  employee  of  the subcontractor  for  the  payment  of  compensation  under  the  Act, provided  that  the subcontractor—the  one primarily  liable—fails  to  make  payment.” They cited to Section  302(b)  of  the Act, 77 P.S. § 462. A general contractor can thereby avail itself of the same tort immunity afforded to the subcontractor by way of this secondary liability.

There are five elements that must be met under the McDonald test for a general contractor to qualify as a statutory employer: (1) the existence of a contract with an owner or one in the position of an owner; (2) occupancy and/or control of the premises upon which the work is being performed; (3) the existence of a subcontract with the general contractor; (4) entrustment of part of the general contractor’s regular business to the subcontractor; and (5) the claimant is an employee of that subcontractor. The Supreme Court determined that McCarthy Construction had demonstrated all five elements in the claim filed by Yoder, thereby granting it statutory immunity for the civil claim that the injured worker had tried to file against McCarthy.

We are honored and pleased to announce that Melissa Petersen, who has been a long-term Attorney with Rulis & Bochicchio was appointed to take a position as a Workers’ Compensation Judge for the State of Pennsylvania effective 12/1/2025.

Also, we are pleased to report that Attorneys Vito Bochicchio and Brad Andreen published with the WorkComp College content on PA for the State Education program.

The Pennsylvania Supreme Court issued a recent decision on 03/20/25 relative to the case of Schmidt v. Schmidt, Kirifides & Rassias, PC (WCAB), No. 32 MAP 2024, 2025 WL 864223 (Pa. Mar. 20, 2025) which may significantly impact payment for “medical treatment” in Pennsylvania.  This decision pertained to reimbursement to a Claimant for CBD oil which was purchased on account of the work injury.  The Court affirmed the Commonwealth Court, which required the employer pay for the claimant’s CBD oil.  Further, the Pennsylvania Supreme Court set forth a broader interpretation of what constitutes “medicine and supplies” under Section 306(f.1)(1)(i) of the Act.  More significantly, and troubling from the defense perspective, the Court found that the cost-containment provisions of the Act apply to providers, they do not apply to the Claimant.

The Claimant in this matter is a workers’ compensation claimant’s attorney who injured his low back putting files into a bag. Instead of proceeding to incase his use of opioids, the Claimant elected to use CBD oil, which he indicated proved effective in managing his pain.  This also led to less narcotics and avoiding surgery.  There are questions from reading the decision if the recommended CBD oil was to be applied topically with the Claimant, then electing to get oral CBD oil.  The Claimant purchased this “medicine” at a natural remedy store and submitted the receipts for reimbursement which were not paid for by the Employer/Carrier on the basis that CBD oil was not a pharmaceutical drug.  The Claimant filed a penalty petition due to failure to pay for the treatment and penalties were awarded by the Workers’ Compensation Judge, who determined that CBD oil qualified as a “supply” under the Act and the Medical Cost Containment Regulations (MCCR), which require submission of a bill on a HCFA form and a corresponding medical report concerning the treatment, were not binding upon the Claimant.  These regulations also address re-pricing of medical treatment and have a provision that should a Medicare payment mechanism not exist for a particular treatment, accommodation or service, the amount of payment to be made to the healthcare provider is 80% of the usual and customary charge or the actual charge, whichever is lower. 

The Appeal Board was divided and reversed by finding that CBD oil was not a “supply” under the Act given it was not proven to be safe or effective by the FDA and because submission of a receipt did not trigger the payment obligation under the MCCR.  As previously intimated, the Commonwealth Court reinstated the Judge’s decision and found CBD oil was a medicine and supply as it was “prescribed” by the doctor’s office and managed the Claimant’s pain lessening opioid use and allowing the Claimant to avoid surgery.  The Court found there was no requirement for FDA approval of treatment under the Act and the billing requirements of the Act did not apply to the Claimant, who was not a healthcare provider. 

The Pennsylvania Supreme Court noted that the terms “medicines” and “supplies” was not defined under the Act.  It considered such words to be a singular phrase of “medicines and supplies” in undertaking its analysis.  Ultimately the Court felt this meant “any item that is part of a health care provider’s treatment plan for a work-related injury.” As for the FDA concerns, the Court indicated that such challenges are better left to be addressed via Utilization Review as to whether the treatment is reasonable and necessary.

This Decision is troubling given its potential implications moving forward.  The MCCR in Pennsylvania are now over 30 years old and it is well past time for them to be reviewed and revised so as to address changes in medicine and the current reality of medical care.  It is undeniable that the Workers’ Compensation Act requires payment for reasonable and necessary medical expenses which are causally related to the work injury.  Now, with where the Court has gone in terms of indicating that the MCCR do not apply to injured workers seeking reimbursement of “medicine and supplies”, the reasonableness and necessity portion of the Act has essentially been circumvented.  While the Court said that a Utilization Review should be pursued to address the issue of the lack of efficacy and approval by the FDA, the Defendant/Employer/Carriers have lost the opportunity to review treatment to determine if it is reasonable and necessary because the Court has said that the MCCR, which contain the provisions allowing for review of the reasonableness and necessity of treatment to not apply to the Claimant.

All that needs to happen is for a physician to not necessarily “prescribe” treatment but rather to just make a recommendation.  This can be for anything that could be a “medicine and supply”, CBD, medical marijuana, sleep aids such as beds, vitamins, hot tubs, etc. and if the Claimant then purchases the recommended “treatment” there is not a specific treatment that is subject to review (like 5 mg of Vicodin 4 x/day).  It is up to the Claimant to decide what he is to get and how much.  It is an extreme example but what would occur if a receipt was submitted for caseloads of CBD products where the volume would obviously not be able to be utilized except over years so that it was excessive so as to not be reasonable or necessary in terms of the amount.  There cannot be a utilization review filed on a Claimant and the medical provider, who does not write a specific prescription or even pick out the product or amount (where there is just a recommendation for CBD oil without more as to type, dosage, potency, frequency) as that is not something that is able to be reviewed.  

In the context of medical marijuana, it is the Claimant who picks everything.  They get approved for a card and then they pick out the amount, the form (vape, leaf, etc), the strain (potency), etc. the If the Claimant cannot be subject to a Utilization Review by a peer of the same medical specialty (as would we have Claimant’s then reviewing other Claimant), then the reasonableness and necessity of treatment cannot be reviewed and the Defendant/Employer/Carrier is now in a position where they may be required to pay for treatment, contrary to the Act, which is not reasonable and necessary.  The Court makes blanket statements about treatment needing to be paid for that is reasonable and necessary and that if there is a challenge a Utilization Review can be filed; however, it apparently does not know this is how the Act works in connection with the Medical Cost Containment Regulations.  The practical reality is, in this newly created situation of reimbursements to the Claimant, this is not something that works so that now there is no mechanism to address whether “treatment” to be reimbursed is reasonable and necessary and it cannot be re-priced.  If the Claimant gets something recommended by a doctor and submits a receipt, it apparently is now to be reimbursed or the Employer/Carrier may be subject to penalties even if the treatment is not reasonable and necessary because that cannot now apparently be addressed.    

The Commonwealth Court recently addressed the use of CBD oil in Schmidt v. Schmidt, Kirifides & Rassias, P.C., _ A.2d _ (Pa. Cmwlth. 2023).  There the claimant’s treatment for a back injury treatment was mostly pain management, for which he was prescribed various medications, and CBD oil.  The CBD oil was prescribed to avoid the use of increased narcotics.  The employer refused payment on the basis that CBD oil is not a pharmaceutical drug.  Consequently, the claimant filed a Penalty Petition.  The Workers’ Compensation Judge granted the Penalty Petition, concluding that the CBD oil was a medical supply under the Act, and was reasonable and necessary.  While the Judge ordered payment, she did not assess a penalty.

On appeal, the Workers’ Compensation Appeal Board reversed the decision and order of the WCJ.  The Board concluded that CBD oil could not be a reasonable and necessary medical treatment when the FDA has issued several warning letters to firms marketing CBD products for violating federal law.  The WCAB also reasoned that the claimant did not submit the required medical reports and forms to trigger the employer’s reimbursement obligations.  The claimant appealed to the Commonwealth Court.

As was the case in the medical marijuana decisions of Fegley and Appel, dealing with the issue of whether medical marijuana is payable as treatment for a work injury, the Commonwealth Court reversed the decision of the Board.  This decision, as did the medical marijuana reimbursement cases, reflected a lack of understanding by the Court regarding application of the Medical Cost Containment Regulations in Pennsyvlania.  If there is no submission of medical bills with reports, the time frame to issue payment under the Medical Cost Containment Regulations never starts to run.  In fact, in this matter, the claimant’s medical provider appears to have “prescribed” topical treatment and the Claimant, on his own volition, elected to change what was “prescribed” or recommended to be ingestible CBD oil.  Thus, the treatment that was subject to reimbursement may not have actually had been “prescribed” by the medical provider.

If all that is required is a “recommendation” by the medical provider for medical marijuana or a CBD product or any other potential treatment modality, do we no longer need to have specific prescription provided for this to be treatment for which a insurer/employer/carrier is required to issue payment for reimbursement?  Why are reimbursements to be treated differently than payment of a medical bill under the Act and Regulations?  A medical provider does not simply indicate in a note that he is prescribing or recommending “narcotics” or pain medication and the Claimant is then allowed to determine the type, dosage, and frequency of what pain medication they feel works best.  The narcotic medication is actually being prescribed by a physician in terms of type, amount, dosage and frequency. 

This may now not necessarily be the case in Pennsylvania with recent reimbursement cases being handed down by the Commonwealth Court.  The Court either did not consider this issue or lost sight of what actually happens when there is a prescription provided by a medical provider.  The Claimant now apparently simply gets “prescribed” medical marijuana or a CBD product and then has carte blanche to determine what he or she wants so as to obtain this “treatment” without any actual further guidance from his or her medical provider.

With narcotics or any other actual prescription, a Utilization Review can find it to be reasonable and necessary but at a lower dosage or frequency than what was actually prescribed by the treating physician if the matter is referred to utilization review.  With reimbursement cases, there will not be ongoing bills submitted along with office notes from the prescribing physician so as to trigger the time period to file for utilization review.   If the submission of the invoice by the Claimant is what triggers the need to file Utilization Review, it is the Claimant who is picking the strain and amount of medical marijuana or the type and amount of CBD product such that the Claimant may potentially be the “provider” subject to review since they are actually determining what is being purchased and used as “medical treatment” based upon a recommendation as opposed to an actual prescription.  If so, there is no reviewer of the same specialty, as is required to be the peer conducing Utilization Review, given the Claimant is not an actual medical provider such that a proper Utilization Review may not be able to be properly performed.  A Utilization Review of the “prescribing” doctor would not be able to comment on what is actually being prescribed if there is no actual prescription in terms of type, amount, dosage, frequency, which is what is present on a normal prescription should it be subject to utilization review.

Regardless of how one feels about the benefits of medical marijuana and CBD oil, there is an established body of law and procedures to deal with these very issues of prescription medication and recommended medical treatment. However, years established procedures are now being short-circuited by the Court in allowing for unregulated “prescriptions” and treatment in the form of medical marijuana and CBD products for which the employer is responsible.  This same issue could later be applied to other “treatment” modalities for which reimbursement is sought.  This could be recommendations for a “firm bed”, “soaking tub” or “transportation device” or other such “treatment” where the Claimant has carte blanch to interpret as they see fit and then seek reimbursement for what is “prescribed.”

Do any and all recommendations of a medical provider that result in the Claimant purchasing a something arguably related to treatment of a work injury now need to be reimbursed in Pennsylvania given the recent Court holdings concerning reimbursement or should payment for all medical treatment still be subject to the terms and provisions of the Act and corresponding Regulations before payment need be made for such “treatment”? The recent holdings are problematic as they allow for circumvention of the Act and Regulations and if they continue to be followed by the Court, can allow for potential abuses and deny Employers and Carriers the rights afforded under the Act and Regulations before payment is required to be remitted for treatment of a work-related injury.  The Pennsylvania Supreme Court has granted allowance of appeal in the Schmidt matter such that hopefully these issues can be further reviewed and properly addressed by the Court. 

Bradley R. Andreen, Esq.

Rulis & Bochicchio LLC 

In Fegley, as Ex'x of the Est. of Paul Sheetz, v. Firestone Tire & Rubber (WCAB), _ A.3d _ (Pa. Cmwlth. 2023) and Edward Appel v. GWC Warranty Corp. (WCAB), _ A.3d _ (Pa. Cmwlth. 2023), the Commonwealth Court held that workers’ compensation insurers must reimburse injured workers for medical marijuana where it has been determined that such treatment is related to the work injury and is reasonable and necessary.  The Court reversed the denial of the claimant’s penalty petition in spite of the employer’s objections that the Pennsylvania Medical Marijuana Act prohibited an insurer from covering the expenses for medical marijuana treatment and that marijuana is still an illegal, controlled substance under federal law.

As for the actual language of Section 2102 of the Medical Marijuana Act (MMA), the Court ruled that coverage is different and distinct from reimbursement and while the plain language of Section 2102 of the MMA states that insurers cannot be required to provide coverage for medical marijuana, there is no statutory language which prohibits insurers from reimbursing claimants who lawfully use medical marijuana to treat an accepted work injury when such treatment is medically reasonable and necessary.  So, carriers may not have to cover medical marijuana, but there is no language prohibiting them from reimbursing for medical marijuana.

As to the issue of the potential violation of federal law, the Court noted that Section 2013 of the MMA says that nothing in the MMA shall require an employer to commit any act that would put the employer or any person acting on its behalf (workers’ compensation carriers) in violation of federal law.  Under the Federal Drug Act, it is unlawful to “manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance.”  Despite this plain language of the statute, the Commonwealth Court reasoned that reimbursing an injured worker his out-of-pocket expenses for medical marijuana does not require a workers’ compensation carrier to do any of these prohibited activities. Apparently, the long-stated legal maxim of “One cannot do indirectly what one cannot do directly” did not bother the court.

While the Court has split hairs relative to the issue of “coverage” versus “reimbursement” so as to provide a potential pathway for the payment of medical marijuana, these decisions did not address a multitude of other issues that do not appear to have been raised in the litigation and which still need to be addressed.  Many employers and carriers, especially those public entities and health carriers that obtain federal funding may be cautious to even reimburse medical marijuana given it may lead to them facing issues with receiving federal funding.  When Ohio enacted its medical marijuana statute, it required university studies to be conducted but faced reluctance in Universities wanting to get involved with studying medical marijuana for fear it may lead to issues with their receiving federal funding. 

As for the other issues not addressed by the decisions, the payment for or reimbursement of medical marijuana is problematic in that such reimbursement would totally circumvent the Medical Cost Containment Regulations.  First, there obviously is no re-pricing mechanism for the payment of marijuana.  Thus, this may fall under the 80% provision for reimbursement.  However, the bigger issue is whether this is actually medical treatment.  There must be a medical provider who certifies that the Claimant meets the requirement of the Medical Marijuana Act to be certified to obtain a Medical Marijuana card to obtain the treatment.  However, there is no actual medical provider who actually prescribes any medical marijuana product, such as form, strain and amount.  When a medical provider prescribes narcotics for a patient, they provide the specific medication, dosage, frequency, and amount.  With medical marijuana, once the claimant is certified, they can go to a dispensary and essentially work with a salesperson to determine what form (leaf, vape, etc.), strain, amount, etc. to obtain.  There also is no re-pricing mechanism given medical marijuana is not payable under Medicare.  Thus, the reimbursement is most likely under the provision that provides for payment at 80% of the usual and customary charge for treatment provided for in 34 Pa. Code § 127.102.  However, there most likely are not sufficient reporting data available for carriers to determine what is the “usual and customary” charge such that the payment would be at 80% of the actual charge.  If the dispensary inflates the amount they are charging for the produce they are distributing, that may me carriers are paying more than they should for this “treatment.” 

Further, there is no medical provider upon which a Utilization Review can be filed.  If filed upon the certifying physician, the issue would be whether it was reasonable and necessary treatment for the Claimant to be certified for medical marijuana.  There is no peer that can conduct a review when the “medical provider” is a salesperson or a medical marijuana “pharmacist.”  Thus, the Employer/Carrier is denied the ability to conduct a Utilization Review.  These are issues that are going to eventually need to be addressed in litigation.  Until they are, there are going to be arguments against whether medical marijuana is to be reimbursed other than simply that the MMA does not require insurance “coverage” for payment of the same.

Bradley R. Andreen, Esq.

Rulis & Bochicchio, LLC

VNA of St. Luke’s Home/Hospice, Inc., v. Ortiz (WCAB) A.3d. No. 1312 and 1362 C.D. 2022 (Pa Cmwlth. 7/23/2024)

Holding- Under Section 413(a) of the Pennsylvania Workers Compensation Act, an employer who initially agrees to a Stipulation of Facts can set aside the Stipulation if it is shown that the Claimant/employee falsely provided information material to the Stipulation. Claimant, Elizabeth Ortiz was an administrative assistant who initially claimed a November 2017 work injury in the form of a left shoulder strain alleging that she fell while attempting to sit on a chair and injured her shoulder. In May of 2018, the Employer issued a notice of temporary compensation payable (NTCP) accepting a left shoulder strain. In June 2019, the Claimant filed a claim petition seeking to expand the work injury to a left shoulder rotator cuff tear and biceps tendon injury. In September 2019, the parties entered into a Stipulation of Fact, approved by the trial judge, for additional injuries, specifically a full thickness tear and a biceps tenodesis of the left shoulder. While Claimant was being paid total disability benefits in October 2020 and January 2021 the employer filed two Modification petitions asserting that Claimant had failed to respond to modified-duty job offers that would have paid her wages less than her average weekly wage. In the course of litigating the Modification petitions, newly discovered medical records disclosed to the Employer revealed that a left shoulder rotator cuff tear and biceps tendon injury pre-existed the November 2017 work accident. The Employer sought to set-aside the Stipulation of Facts accepting the expanded injury description based on the newly uncovered medical records. The WCJ had found that the Claimant repeatedly under oath falsely denied having suffered and being treated for the stipulated before the work accident. The Judge ruled that, inter alia, Employer’s request to set aside the September 2019 stipulation of facts was denied for lack of sufficient competent evidence. The Employer appealed to the WCAB, but the Board affirmed the WCJ’s refusal to set aside the stipulation. The Board treated the matter as a legal issue, as one of waiver, determining that there was no indication that the Employer lacked the opportunity to fully investigate the challenged finding before entering into the stipulation and that it failed to act properly in seeking relief. The Employer appealed to the Commonwealth Court who noted that this case boils down to how much an employer is expected to do by way of investigation and within what timeframe when a claimant misrepresents her condition and/or existence of prior injuries. The Court in an opinion written by Judge Leadbetter noted “turning to the extent to which Employer should have conducted a more rigorous investigation before entering the stipulation, it bears repeating that Claimant time and again misled Employer, her own surgeon, and the workers compensation tribunal as to pre-existing left shoulder issues. It was noted that the Employer was not seeking to set aside its original acceptance of the work injury (left shoulder strain). It was disingenuous for the Claimant to attempt to shift blame for her repeated misrepresentations when such false statements had the practical effect of complicating the proceedings. The Court reversed the Board in deciding that the stipulation could be set aside based on the false statements by the employee.

Paul C. Cipriano Jr., Esquire

Rulis & Bochicchio, LLC