State News : Pennsylvania

By: Jeffrey D. Snyder  Valenta v. WCAB (Abington Manor Nursing Home and Rehab and Liberty Insurance Company), 1302 C.D. 2016 – Filed December 7, 2017, Pennsylvania Commonwealth Court

            In this case of first impression, the Commonwealth Court affirmed the Decision of a Workers’ Compensation Judge which modified benefits based on an Earning Capacity Assessment.

            The work injury in question was sustained on October 2, 2010 in the nature of aggravation of a pre-existing calcific tendonitis with chronic tendopathy of the left shoulder, disc herniations at C5-6 and C6-7 with radiculopathy, a left trapezius strain, left medial scapula strain, and a left posterior shoulder strain. 

           The noted Earning Capacity Assessment identified six jobs and via the Assessment provided notice of those jobs to the claimant/attorney. The Court described the jobs in some detail, noting that per the Claimant, she attempted to apply for all six (6) positions but was not offered any of them.  The claimant took issue as well regarding the suitability of the jobs – there was expert medical and expert vocational testimony on both sides.

         The Workers’ Compensation Judge made credibility determinations that accepted the testimony of the defense medical expert as well as that of the defense vocational expert.  The Claimant appealed to the Workers’ Compensation Appeal Board, arguing that the six (6) jobs should not be considered actually open and available if the Claimant tried to apply for them and was unsuccessful in receiving a job offer.  The Appeal Board rejected that argument, pursuant toPhoenixville Hospital v. WCAB (Shoap), 81 A.3d 830 (Pa., 2013) which essentially requires that identified jobs be open and available at the time of the issuance of an Earning Capacity Assessment.  The Claimant argued on Appeal to the Commonwealth Court that the jobs were not actually open to her, the Claimant, when she applied for the jobs and therefore the Workers’ Compensation Judge should not have used the standard set-forth in Phoenixville Hospital.

            The Commonwealth Court considered this  a case of first impression regarding the rights of Claimants and Employers under §306(b) of the Act after the Pennsylvania Supreme Court’s Decision inPhoenixville Hospital.  The Claimant was argued that if she applied for a position listed on the Earning Capacity Assessment but did not get the job, the Employer had not proven earning capacity and so modification must be denied.  The Employer argued that a Claimant’s testimony that she applied unsuccessfully to the position is relevant but not dispositive, that is that the Workers’ Compensation Judge could accept evidence of the Claimant’s unsuccessful application but was not bound by such evidence to reject the earning capacity found in the Earning Capacity Assessment. 

            The Commonwealth Court noted that §306(b) of the Act does not require that the Claimant be offered a job, merely that the Employer prove the existence of meaningful employment opportunities and not a simple identification of jobs found in want ads or employment listings.  The Court viewed this matter as one of credibility, not sufficiency of the evidence.  The Court noted that one possible exception to the credibility process might be such where a job was filled before notice of it was given to a Claimant via an Earning Capacity Assessment - in that case it would not “exist”.  In other words, the jobs must be open and available at the time of the issuance of the Labor Market Survey/Earning Capacity Assessment to the Claimant/counsel: “We reject Claimant’s argument that the mere presentation of evidence of unsuccessful application to jobs listed in a LMS/EPA mandated a finding that the positions were not open and available and that she lacked any earning capacity.  Rather, as our Supreme Court stated inPhoenixville Hospital, such evidence from Claimant was ‘relevant’ but not ‘dispositive’ with regard to the earning power inquiry, 81 A.3^rd at 846.” 

            The take away from this case of  “first impression” is that the Claimant’s application and failure to secure employment relative to jobs identified in the Earning Capacity Assessment is simply one facet of multi-faceted litigation that includes broad discretion as to findings of credibility in Earning Capacity Assessment cases.

“RIPE FOR CORRUPTION”

By Kevin L. Connors, Esquire

Not our words!

It is a direct quote from the front page banner headline of the Philadelphia Inquirer on September 24, 2017, with the headline being (Inquirer Investigation/Workers’ Comp, Pharmacies’ alliance:  “Ripe for Corruption.”)

For those who did not pick up a copy of the Sunday Philadelphia Inquirer, the hyperlink can be found by googling “Ripe for Corruption.”

For anyone involved in the administration or defense of Pennsylvania workers’ compensation claims, this article is a “must read,” as it investigates the ethical boundaries surrounding Attorney ownership and investment in pharmacies prescribing medications for workers’ compensation Claimants, as the Inquire investigated pharmacies owned by Pond Lehocky, a Philadelphia law firm almost exclusively representing Claimants either receiving or seeking workers’ compensation benefits, with the firm having written referral “arrangements” with physicians prescribing medications for persons receiving or seeking workers’ compensation benefits, to utilize Pond Lehocky-owned pharmacies to fill doctor-prescribed prescriptions.

Yes, the article accurately sets forth that Pond Lehocky secured approval from the Pennsylvania State Licensing Administration, to establish the pharmacy, also having sought legal Counsel as to the ethics of pharmacy ownership, with the question left unanswered as to whether ethical boundaries limit Attorneys profiting from the medical outcomes of Clients through this type of arrangement without full disclosure to either Patient/Client, and/or Party responsible for paying.

However certain that Pond Lehocky and his Partners might be that their “arrangement” was ethically and legally sound, the “arrangement” was apparently outlined by Sam Pond, a legend unto himself, which Sam had emailed referral doctors:  “For all Patients that you may see with a workers’ compensation claim, referred to you from our office or elsewhere, we ask that you have our pharmacy, Workers First Pharmacy Services, fill these scripts.”

Apparently, Workers First Pharmacy received State approval to open its pharmacy in October of 2016, with the application submitted by Pond Lehocky indicating that no medical practitioners had a proprietary interest in the pharmacy, although, in fact, several doctors are part-owners, as evidenced by the Inquirer’s investigation into the pharmacy.

The “arrangement” has been questioned by legal and medical ethicists, on grounds that it may potentially lead to conflicts of interest, and to create a financial incentive to prescribe the costliest drugs, whether or not medically appropriate, in order to prolong workers’ compensation legal disputes, to boost legal fees and legal recoveries.

Citing to Pond Lehocky’s website, it makes a vague reference to its relationship with Workers First, noting that the firm is “partnering” with the pharmacy to help Clients get the best pharmaceutical care.

However, Clients can click right through Pond Lehocky’s website, to the pharmacies’ website, without being apprised of the law firm’s financial interest in the pharmacy and any medication scripts that it might fill.

The Inquirer article cites to numerous references of Workers First charging what some are calling “inflated” prices for medications, particularly for high-cost compounded pain cream.

Of course, Pond Lehocky takes the position that Workers First Pharmacy is an attempt to “stand up” to “diabolical people” and insurance companies, who frequently deny medications to Pond Lehocky’s Clients, in order to boost insurance company profits.

Pond’s quote is:  “You ever have an insurance claim?  You ever go up against these bastards?”

Pond Lehocky apparently denies that the email/letter that it sent to doctors, asking doctors to use Workers First for their workers’ compensation Patients, does not constitute aquid pro quo, nor does the firm believe that doctors might feel pressured to use the firm’s pharmacy, in order to continue receiving Patient referrals from Pond Lehocky, noted in theInquirer as a major pipeline for new Patients.

Conveniently, Pond says “I would be outraged--if I heard that.”

According to Workers First Board of Pharmacy application, 65% of the firm is owned by Sam Pond, and his two law Partners, Jerry Lehocky and David Stern, as well as law firm CFO, Bryan Riley.

The remaining 35% of the pharmacy is owned by six other doctors.

No less interesting is the fact that Pond Lehocky has been a strong advocate in opposition to House Bill 18, which was introduced in February of 2017 in an attempt to address the over-prescription of opioids and other painkillers, attempting to create a list of approved drugs, a set duration for treatment, and established dosage amounts for workers injured on the job.

In essence, House Bill 18 would create a pre-approved list, or “formulary” of opioids and other drugs for injured Employees requiring medical care and financial assistance for lost wages under the Workers’ Compensation Act.

With Pennsylvania ranking third in a recent 25 State study of the amount of opioids prescribed to injured workers, Bill supporters advocate that House Bill 18 is necessary to protect workers from the effects of being over-prescribed opioids, potentially resulting in other health conditions and extending recovery phases.

In response, Pond Lehocky, in advertisements that it had raised in response to House Bill 18 criticized the proposed legislation as catering to the insurance company, potentially leaving injured workers without proper treatment, as well as being a wedge between Patients and their doctors.  Pond claims that Workers First is a “mail delivery pharmacy” serving as a “counter to insurance companies warranting capricious denial of medical care to people who are recovering from injuries sustained while on the job.”

The opposition to House Bill 18 has been intensive, and no less expensive with close to $4,000,000.00 being spent by “legal professional” lobbyists, opposing the legislation.

True, more dollars were spent by “liability reform” lobbyists, although it is unclear how much of the “liability reform” dollars were spent on workers’ compensation issues.

The September 24, 2017 article by The Philadelphia Inquirer raises very serious issues with respect to conflicts of issue, as well as the potential for abuse and overreach, while, no doubt, advocates, like Pond Lehocky, will claim that their efforts are geared towards reducing worker suffering, as opposed to prolonging the shelf life of workers’ compensation claims, and eventual recoveries predicated on the length and duration of claims remaining open.

However you might look at this issue and whatever your orientation might be, there would still seem to be an unholy alliance in “investing” in the medical outcomes of Clients.

In the final analysis, the Inquirer’s banner headline poses the essential question, being whether this “arrangement” is, in fact, “ripe for corruption?”

ConnorsO’Dell LLP

Trust us, we just get it!  It is trust well spent!

We defend Employers, Self-Insureds, Insurance Carriers, and Third Party Administrators in Workers’ Compensation matters throughout  Pennsylvania.  We have over 100 years of cumulative experience defending our clients against compensation-related liabilities, with no attorney in our firm having less than ten (10) years of specialized experience, empowering our Workers’ Compensation practice group attorneys to be more than mere claim denials, enabling us to create the factual and legal leverage to expeditiously resolve claims, in the course of limiting/reducing/extinguishing our clients’ liabilities under the Pennsylvania Workers’ Compensation Act.

Every member of our Workers’ Compensation practice group is AV rated.  Our partnership with the NWCDN magnifies the lens for which our professional expertise imperiously demands that we always be dynamic and exacting advocates for our clients, navigating the frustrating and form-intensive minefield pervasive throughout Pennsylvania Workers’ Compensation practice and procedure.

                               Hartford Insurance Group v. Kamara et. al. 976 EDA 2016 (Pa. Super., 2017)

By Jeffrey D. Snyder, Esquire

The Supreme Court of Pennsylvania has accepted allocatur of the above captioned case, which considers whether an insurance carrier can independently pursue a third-party case “on behalf of” a claimant.

The Superior Court was faced with Preliminary Objections to Hartford’s Complaint, it being argued that Hartford did not have standing to file a Complaint because the Complaint was not verified by someone with personal knowledge, because the claimant had not assigned a cause of action to Hartford, and because the claimant was not a party to the lawsuit. 

As background, the claimant Chen was standing in a parking lot of a Thrifty Car Rental location when she was struck by a rental car operated by defendant Kamara.  The Complaint against Kamara et. al. averred that Chen was in the employ of Alliance Sourcing Inc., with Hartford  paying funds in both medical and wage loss benefits to Chen under a workers’ compensation policy maintained by Alliance Sourcing Inc. 

There were two counts of negligence in the Complaint. 

Responding to the Preliminary Objections, Hartford asserted that the Supreme Court of Pennsylvania’s holding inDomtar Paper (Liberty Mutual Insurance Co. as subrogee of Lawrence v. Domtar Paper Co. e. al., No. 19 WAP 2014 (Pa., 2015) denying standing to sue was inapplicable because inDomtar the suit was brought “as subrogee of” while in this case suit was brought “on behalf of Chunli Chen”.  It was further asserted that the verification to the Complaint was proper because the Hartford employee signing it had knowledge of the facts through her work on the claim.

The trial court dismissed Hartford’s Complaint with prejudice, in reliance on its interpretation of the law asserted as applicable by the defendants, notably that the case was controlled by the Supreme Court’s Opinion inDomtar Paper and because the trial court did not consider the Complaint properly verified.  The trial court further stated that it did not grant leave to amend the verification because Hartford had failed to assert a legally cognizable cause of action against the defendants, thus granting leave to attach a sufficient verification would have been futile.

On appeal to the Superior Court, Hartford raised two issues.  First, did the trial court misapplyDomtar given that Hartford had filed suit “on behalf of” and not as “subrogee of” and, second, whether the trial court improperly characterized the verification as faulty when it was signed by a representative of Hartford with knowledge of the claim - or in the alternative whether the Court should have allowed an amended verification.

The Superior Court agreed that Domtar Paper was inapplicable because Hartford filed suit “on behalf of Chen” and was attempting to establish the liability of third party tortfeasor to Chen.  The Court, relying on prior case law, considered that either joining the employer as a party plaintiff or as a use plaintiff would operate to secure the employer’s interest in its recovery of its subrogation lien.   “We therefore hold that Section 319 is an exclusive remedy and that for an employer or its insurer to enforce its subrogation rights, it must proceed in an action brought on behalf of the injured employee in order to determine the liability of the third party to the employee.  If such liability is determined, then the employer or its insurer may recover, out of an award to the injured employee, the amount that is paid in workers’ compensation benefits”.  The Superior Court then stated: “Hartford is not attempting to ‘pursue a subrogation claim directly against a third-party tortfeasor’, is not seeking to recover only the amount that it paid to Chen in workers’ compensation benefits, and is not splitting Chen’s cause of action”.  The Court observed that Hartford had otherwise brought a single action against the third-party tortfeasors in the name of the injured employee and was trying to recover the entire amount to which Chen might be entitled.

The Superior Court also noted that because the suit was filed in Hartford’s name it was a party in the litigation and therefore its representative could verify the Complaint as a representative of “one or more of the parties filing the pleading”, remanding for further proceedings.

Ultimately, the Supreme Court of Pennsylvania, Eastern District, at No. 205 EAL 2017, granted a Petition for Allowance of Appeal, which raises three specific questions:

(a)       Can a workers’ compensation lienholder bring a third party action on behalf of the injured worker to recoup amounts paid to the injured worker from the alleged tortfeasor to the standard set inLiberty Mutual Insurance Company v. Domtar Paper Company [citation omitted]?

(b)       Did the Superior Court fail to see that the failure to attach the verification of Chunli Chen to plaintiff’s Complaint and decision to attach the verification of the insurance adjuster with knowledge of the lien, supports the argument of [Petitioners] that this lawsuit was brought without the cooperation of Chunli Chen and solely on behalf of the insurance company in an attempt to subrogate its lien in direct contradiction of the standard set inLiberty Mutual Insurance Company v. Domtar Paper Company [citation omitted]?

(c)       Is the caption, and effect of the caption, “The Hartford Insurance Group on behalf of Chunli Chen” synonymous with “Liberty Mutual Insurance Company, as subrogee of George Lawrence” as it appears inLiberty Mutual Insurance Company v. Domtar Paper Company [citation omitted]?

ConnorsO’Dell LLP

Trust us, we just get it!  It is trust well spent!

We defend Employers, Self-Insureds, Insurance Carriers, and Third Party Administrators in Workers’ Compensation matters throughout  Pennsylvania.  We have over 100 years of cumulative experience defending our clients against compensation-related liabilities, with no attorney in our firm having less than ten (10) years of specialized experience, empowering our Workers’ Compensation practice group attorneys to be more than mere claim denials, enabling us to create the factual and legal leverage to expeditiously resolve claims, in the course of limiting/reducing/extinguishing our clients’ liabilities under the Pennsylvania Workers’ Compensation Act.

 Every member of our Workers’ Compensation practice group is AV rated.  Our partnership with the NWCDN magnifies the lens for which our professional expertise imperiously demands that we always be dynamic and exacting advocates for our clients, navigating the frustrating and form-intensive minefield pervasive throughout Pennsylvania Workers’ Compensation practice and procedure.

POST-PROTZ; THE UNCONSTITUTIONAL PARADIGM

By Kevin L. Connors, Esquire

In the seemingly predictable universe of Pennsylvania Workers’ Compensation practice and procedure, June 20, 2017 would have been just like any other day with the routine reporting of allegedly work-related injuries, Insureds and Administrators initiating investigations that would invariably lead to claims Decisions that would bind their Employers to either accept, deny or continue to investigate reported injury claims, with Workers’ Compensation Judges and Attorney Practitioners throughout the Commonwealth attending compensation Hearings and depositions in the course of seeking to prove that an injury did or did not occur, was or was not disabling, warranted the awarding of or denying of a compensation claim, or, more simply, involved the respective Parties coming to agreed-upon terms in the course of resolving workers’ compensation claims under Compromise and Release Agreements, otherwise a normal day for Pennsylvania compensation stakeholders and practitioners, until the Pennsylvania Supreme Court posted its long-awaited Decision in Protz v. WCAB (Derry School District), 133 A.3d 733 (Pa. 2017) a ruling of tsunamic ramifications, eviscerating, as unconstitutional, Section 306(a.2)(1), of the Pennsylvania Workers’ Compensation Act, a Section that had allowed Employers, Insureds and Third-Party Administrators to ask injured Employees who had received 104 weeks of temporary total disability benefits to undergo an Impairment Rating Examination in reliance upon the AMA’s Guide to the Evaluation of Impairment, utilizing the Fourth Edition, which was the controlling Edition when Section 306(a.2)(1) was enacted by the Pennsylvania General Assembly in 1996.

We certainly hope that you took a few deep breaths as you tried to follow the syntactical gyrations and convolutions in the above sentence/paragraph, bespeaking a tendency towards grammatical self-indulgence.

Forgiving grammatical incoherence, all of us, whether Claimant or defense-oriented are struggling to come to grips with whatProtz actually means in the day-to-day practice of Pennsylvania Workers’ Compensation procedure.

First, without belaboring a formal analysis of the Protz Decision in and of itself, it seems pretty clear on its face that IREs have suffered the outrageous slings and arrows of this misfortune, and now are simply not available to Employers, Insurers, or Administrators as a backstop against a principle inherently embedded in the Pennsylvania Workers’ Compensation Act, being that there is no statutory end point, or termination, of temporary total disability benefits, once accepted or awarded, in the absence of one of the following occurring:

• The Claimant dies, and compensation benefits terminate by operation of both death and loss;

• The Claimant voluntarily returns to work in their pre-injury capacities, and there is no continuing wage loss post-return to work, such that the Claimant’s compensation benefits are suspended;

• The Claimant returns to work in a modified-duty capacity, with some reduction in return-to-work wages, such that the Claimant’s compensation benefits are modified, and temporary partial disability benefits are paid, subject to the 500 week limitation;

• The Claimant executes a Supplemental Agreement, perfecting either a termination, suspension, or modification of the Claimant’s workers’ compensation benefits;

• The Claimant signs a Final Receipt (almost never used), under which the Claimant agrees that all compensation benefits have been paid;

• The Claimant is deported by virtue of not being able to prove legal immigration status;

• The claim is settled under a Compromise and Release Agreement, perfecting some type of compromise of the indemnity and medical compensation benefits liability associated with the claim; and,

• The Claimant’s compensation benefits are terminated, modified, or suspended by order of a workers’ compensation judge, with the employer/insurer carrying the burden of proving the entitlement to a change in the Claimant’s benefit entitlement status.

   

  So what, if anything, did IREs extend to Employers, Insurers, and Administrators in the context of managing what might otherwise be a lifetime claim of entitlement to temporary total disability benefits, fully recognizing that few practitioners, in whatever context, have been witness to a 25 year old laborer, with a maximum compensation benefit rate, receiving lifetime temporary total disability benefits for a lumbar sprain or strain, let alone even for a lumbar surgical injury as the injured Employee then never received any cost of living increases in his/her’s compensation benefit rate, which in the hypothetical of a lifetime of receiving weekly temporary total disability benefits, can reap what some might call a significant income insult, but that risk, of an injured Employee living in a lifetime compensation vacuum, is the unspoken risk that drives insurance claims Underwriters and Representatives into Shakespearian fervor, as the potential risk elongates the balance sheet of a claim reserve that is both a prayer and a curse, as well as requiring that the shared risk of never-ending benefits be captured in an underwriting pool of necessarily-increasing premiums, to prevent the entire system from buckling under the weight of ill-defined exposures.

   

  Yes, a year from now, the cost of Protz will be quantified by any number of actuarial realities.

   

  Those actuarial realties will inseminate costs that all stakeholders will bear, to account for the following:

   

• Necessarily higher underwriting premiums charged to Employers;

• Spiraling reserves as a protection from unbridled exposures; and,

• Potential loss of enthusiasm for Employers to choose the Commonwealth as a place to do business, given what most businesses, in comparison to other jurisdictions employing some form of a permanency model for compensation benefits, regard as a high risk jurisdiction, not particularly worried about whether businesses are shifting expenditures from exposures and expanded employment opportunities, to risk awareness and newly-naked exposures.

So what does any of this mean and how has Protz changed Pennsylvania Workers’ Compensation practice and procedure?

Pushing aside the robo-calls being made by Claimant firms seeking to reopen workers’ compensation claims under Reinstatement, Review, and Penalty Petitions, there are/were very few workers’ compensation claims, although no one appears to have any clear statistics, where Claimants with IREs with a less than 50% impairment actually ended up receiving a total of 604 weeks of temporary total disability benefits, as Carriers and Employers invariably settled, if not all of those claims, a very high percentage of those claims, effectively seeking what a Claimant Attorney might perceive to be a statutory discount under Section 306(a.2)(1) of the Act. 

Are there current challenges being asserted under Claimant Petitions filed in reliance uponProtz?

According to the Bureau, in the two months post-Protz, approximately 2,000 Petitions have been filed, seeking some form of statutory relief from a conversion of temporary total disability benefits to temporary partial disability benefits that was based in reliance upon an IRE that established an Impairment Rating of less than 50% of the whole person.

Presumably, these Petitions seek relief from any conversion of temporary total disability to temporary partial disability that was based upon an IRE, and one would have to presume that a Workers’ Compensation Judge will reverse those conversions, whether automatic or Petition-based, absent guidance from either the Pennsylvania Supreme Court or the Commonwealth Court, as to the retroactive application ofProtz’ edict as to the unconstitutionality of IRE legislation under Act 57, the 1996 reforms to the Pennsylvania Workers’ Compensation Act, as an unconstitutional delegation of legislative authority from the Pennsylvania General Assembly to a Third Party, herein the AMA.

As predicted, there is actually a very recent Decision from the Pennsylvania Commonwealth Court, dated August 16, 2017, inThompson v. WCAB (Exelon Corporation), which resulted in the Commonwealth Court reversing prior Decisions by the Appeal Board and the WCJ, both of which had denied Claimant’s Review Petition, and Appeal therefrom, after the WCJ had modified the Claimant’s compensation benefits in reliance upon an IRE from 2005.

In so holding, the Commonwealth Court ruled “Thus, we are compelled to reverse the Board’s affirmance of the WCJ’s modification of the Claimant’s benefits, because under the Supreme Court’s recent Decision inProtz II, Section 306(a.2)(1) is stricken and no other provision of the Act allows for modification of benefits based on an IRE.”

Relying upon the implications of Protz, and the Commonwealth Court’s interpretation thereof inThompson, there is a fairly high probability that Workers’ Compensation Judges will strike Notices of Change filed by Carriers on behalf of their Employers to convert temporary total disability to temporary partial disability in reliance upon IREs with Impairment Ratings of less than 50%, the same being true at the Appeal Board and Commonwealth Court levels, such that Pennsylvania Carriers will have to rely on more traditional investigative and procedural mechanisms, to include:

• Surveillance;

• Activity Checks;

• Verification Forms;

• IMEs;

• Docket Searches;

• Vocational Intervention; and,

• Resolution strategies that would continue to attempt to settle workers’ compensation claims at traditional settlement value models, basing the analysis on the presumption that very few are incapable of doing any work, and that a medical release to perform restricted-duty work is the necessary seed for vocational intervention, a tool that might well find greater acceptance before Workers’ Compensation Judges, knowing that IREs are no longer a viable mechanism for claim resolution.

So, with Protz eviscerating IREs, under the PWCA, what are the procedural defenses to Claimants filing Reinstatement or Review Petitions, to re-open their workers’ compensation claims, in the event that their claims were suspended/modified in reliance upon an IRE?

First, if the claim, whether subject to an IRE or not, was settled under a Compromise and Release Agreement, any attempt to re-open the claim, to seek additional workers’ compensation benefits should be subject to the following defenses:

            Compromise and Release;

• Release and Satisfaction;

• Waiver of Appeal;

• Res judicata; and,

• Collateral estoppel.

In short, claims settled under a Compromise and Release Agreement whether settling the claim in reliance upon an IRE or not, should not be vulnerable to a Claimant-filed Petition to seek additional workers’ compensation benefits, particularly with there having been Claimant testimony before a Workers’ Compensation Judge, that the Claimant understood the “full legal significance” of entering into the Compromise and Release Agreement, and, specifically requesting that the Workers’ Compensation Judge approve the Compromise and Release Agreement, after fairly extensive cross-examination by the Workers’ Compensation Judge, that the Claimant understands/understood that he/she cannot come back for additional workers’ compensation benefits based upon the finality of the Compromise and Release Agreement.

Less certain are claims where the IRE established that the Impairment Rating was less than 50%, and the Employer filed a Notice of Change, converting the Claimant’s compensation benefits from temporary total to temporary partial disability benefits, and no constitutional challenge to that conversion was ever raised by the Claimant.

Whether the constitutionality of the IRE process was challenged by the Claimant or not, it is extremely likely that Pennsylvania Workers’ Compensation Judges will find thatProtz essentially removed the IRE process from the PWCA, and that a formal Claimant challenge as to its constitutionality did not have to be filed, when benefits were being converted.

For those types of claims, there is a fairly high degree of probability, that the claims will be re-opened, with compensation benefits being reinstated.

Another type of claim will involve claims where the Employer/Insurer did not secure an automatic conversion of compensation benefits under temporary total to temporary partial disability benefits in reliance upon an IRE, but sought to convert the benefits in reliance upon a Modification Petition, with a Workers’ Compensation Judge granting the Petition, in the course of which the Claimant did not raise a constitutional challenge to the IRE process, and also did not then appeal the WCJ’s granting of the Modification Petition to the Appeal Board, such that the WCJ’s Decision became final and non-appealable.

It is believed that there are very few of these types of cases that have arisen since the enactment of Act 57 in 1996, and/or that claims like this have been appealed by Claimants, with ultimate resolution, in some fashion, before the Appeal Board or the Commonwealth Court.

Presumably, if the ultimate modification of the Claimant’s compensation benefits in reliance upon an IRE survived appellate challenges by the Claimant, an open question may exist as to whether that workers’ compensation claim can be re-opened, subject, of course, to any potential Statute of Limitations issues that might exist, as a defense to an attempt to reinstate or review compensation benefits.

Two cases litigated before the Commonwealth Court, in Riley v. WCAB (Commonwealth of Pennsylvania), andGillespie v. WCAB (Aker Philadelphia Ship Yard) that stand for the proposition that if an IRE has been litigated to Decision and not appealed, that the injured Worker has then waived his/her right to challenge the IRE.

In Gillespie, the Commonwealth Court held that “a declaration that provision of a Statute’s unconstitutional does not void every Decision ever made in accordance therewith; only Parties still engaged in active litigation may take advantage of this change.”  In both Riley and Gillespie, the Commonwealth Court had held that the Claimants’ challenges to the IRE Determinations were untimely pursuant to Section A306(a.2)(2)(4).

In light of Protz, will Riley and Gillespie survive as support for the waiver of a constitutional challenge, or willProtz undermine via both Decisions?

Obviously, we anticipate additional litigation to arise over the retroactive application ofProtz to claims that were otherwise resolved in prior litigation.

With this background, what do we foresee in the future in terms of any attempt to revise a permanency standard under the PWCA?

 Since the Protz Decision, it is our understanding that there are several industry organizations actively lobbying the Pennsylvania General Assembly for a statutory provision reinstating an IRE process that would survive constitutional challenges.  It is believed that the Chamber of Commerce, Insurance Federation, Pennsylvania Self-Insurers Association, and other organizations are actively working to address this issue, as the Pennsylvania Compensation Ratings Bureau is already in the process of addressing ratings increases for job classifications that will result in premium increases across the board for Employers, and will also result in reserving increases for Insurance Carriers.

While the Claimant’s bar may hail this as a long-sought clean sweep of legislation that it characterized as a statutory anathema, the unforeseen consequence of higher premiums and higher reserves for Employers will be that doing business in Pennsylvania may now be less dynamic and beneficial, such that we will continue to witness a downward trend in newly-filed workers’ compensation Petitions will continue.

Rest assured that we will continue to monitor this issue, given that stakeholders and practitioners have been relying upon IREs as a statutory hedge against open liability for temporary total disability benefits under the PWCA.

The future is inevitably fast-approaching and likely to happen without the immediate probability of IREs being in our administrative forecast.  

ConnorsO’Dell LLP

                                                                     Trust us, we just get it!  It is trust well spent!

We defend Employers, Self-Insureds, Insurance Carriers, and Third Party Administrators in Workers’ Compensation matters throughout  Pennsylvania.  We have over 100 years of cumulative experience defending our clients against compensation-related liabilities, with no attorney in our firm having less than ten (10) years of specialized experience, empowering our Workers’ Compensation practice group attorneys to be more than mere claim denials, enabling us to create the factual and legal leverage to expeditiously resolve claims, in the course of limiting/reducing/extinguishing our clients’ liabilities under the Pennsylvania Workers’ Compensation Act.

Every member of our Workers’ Compensation practice group is AV rated.  Our partnership with the NWCDN magnifies the lens for which our professional expertise imperiously demands that we always be dynamic and exacting advocates for our clients, navigating the frustrating and form-intensive minefield pervasive throughout Pennsylvania Workers’ Compensation practice and procedure. 

CONSTRUCTION WORKPLACE MISCLASSIFICATION ACT

TO BE STRICTLY CONSTRUED TO FIND INDEPENDENT CONTRACTOR STATUS

By Jeffrey D. Snyder, Esquire

In an on En Banc Opinion, the Commonwealth Court of Pennsylvania, in D&R Construction v. WCAB (Suarez) and in Department of Labor and Industry v. WCAB (Suarez),Nos. 1558 C.D. 2016, 1578 C.D. 2016, 1574 C.D. 2016, and 1575 C.D. 2016, has held that, in a construction workplace, the common law analysis of employee versus independent contractor centering on the right of control is now abrogated by the Construction Workplace Misclassification Act (CWMA) by which all the Act’s requirements must be satisfied in order for a given individual to be classified as an independent contractor. 

By way of background, in a persuasive but not binding Opinion of the Workers’ Compensation Appeal Board (Board),Cassatt v. Venue, Inc., 2015 W.L. 7422308 (WCAB, October 22, 2015), the Board held that despite the fact that there was not a written agreement between the parties, the totality of the circumstances supported independent contractor status in the construction workplace and on that basis the Board found that overall the requirements of the CWMA were satisfied.  This Cassatt Opinion was not adopted elsewhere and is strongly counter-veiled by other appellate cases of earlier and more recent vintage but still leaving doubt about the state of common law analysis in a construction workplace.

In the case of (Suarez), on October 26, 2010 the Claimant filed a Claim Petition against D&R, alleging injury during the course of employment on August 28, 2010.  D&R filed an Answer in part asserting that the Claimant was an independent contractor and not an employee of D&R.  There was then a Claim Petition against the Uninsured Employer Guaranty Fund.  The issue of independent contractor versus employee was bifurcated.

The WCJ denied the Claim Petition relative to the bifurcated issue, concluding that the Claimant was an independent contractor and not an employee of D&R on the date of injury.  The Claimant appealed to the Board.  The Board reversed the WCJ and remanded the matter for further proceedings.  In doing so, the Board concluded that the Claimant was not an independent contractor but rather an employee of D&R at the time of injury, relying on the CWMA with factors the Board considered “instructive”. 

Noting that the matter was bifurcated on the issue of independent contractor versus employee, with the litigation not yet completed on the entire case before the Workers’ Compensation Judge, D&R and the Fund asked the Board to issue a statement pursuant to §702(b) of the Judicial Code allowing for an immediate Appeal from what was in essence an Interlocutory Order on employment relationship.  That request was denied by the Board, followed by Petition for Review with the Commonwealth Court, alleging an abuse of discretion in denying the request for immediate Appeal.  The Commonwealth Court accepted the Appeal via the Petitions for Review, limiting the issues to whether the Board erred in retroactively applying the CWMA to determine whether the Claimant was an independent contractor and whether the Board erred by considering the CWMA as guidance for the application of the common law analysis to determine who qualifies as an independent contractor.

First, D&R and the Fund argued that the Board erred in retroactively applying the CWMA.  The Commonwealth Court concluded that the CWMA was not intended to be applied retroactively, this particular injury occurring before the enactment of the CWMA.

The Commonwealth Court, then dealing with the substantive application of the criteria of the CWMA held that the criteria in the CWMA must be established in order for an individual in the construction industry to be deemed an independent contractor and not an employee for purposes of Workers’ Compensation.  “The absence of a single criterion will negate the independent contractor’s status, and the individual will be deemed an employee”.  There was to be no weighing test – each criterion appearing in the CWMA must be met, different than the common law test of focusing on the right of control with consideration of the totality of the circumstances.  In other words, the criteria in the CWMA are not guidelines, they are requirements that must each be satisfied in total to find independent contractor status. 

“We conclude that the CWMA is not a clarification of the traditional test [under common law].” The Court observed that under the Workers’ Compensation Act, there was no bright line rule for determining whether a particular relationship is that of an employer-employee or owner-independent contractor.  Various consideration for that status and against it were then discussed by the Court.  “Thus, in sum, under the common law, there are no mandatory factors, but rather there is weighing of factors, with control being a primary factor.”  “In contrast, under the CWMA, unless certain criteria are met, an individual in the construction industry will be deemed to be an employee and not an independent contractor.  These criteria are mandatory, and the absence of any one criterion will negate the independent contractor status, and the individual will be deemed an employee.”  “Thus, each criterion has equal weight”.  The Court noted that under the CWMA, there are requirements for a written contract for the services, the maintenance of a business location separate from the location of the person for whom services are being performed by the individual and maintenance of liability insurance during the term of the contract of at least $50,000.00.  The CWMA was noted to exclude consideration of the failure to withhold federal or state income taxes or to pay Workers’ Compensation premiums.  “Thus, while some of the requirements set forth in the CWMA may be similar to some of the traditional factors, the CWMA does not clarify the common law, particularly given the aforementioned differences.”  In conclusion, the Court discussed the various other elements under the CWMA that must be strictly met in order to find an independent contractor relationship.  Ultimately, the Commonwealth Court reversed on the basis that the Board had intermingled the common law test with the test under the CWMA in the case where the date of injury predated the effective date of the CWMA and involving substantive change was not to be retroactive.  The Court noted that the CWMA was not meant to apply to other industries or professions and that mixing that CWMA test with the common law test would create a new (hybrid) analytical framework for independent contractor versus employee status that was not the intention of the CWMA.  “Therefore, we hold that the Construction Workplace Misclassification Act may not be used as guidance for the application of the traditional factors under the common law to determine whether an employment relationship existed.”  The Court remanded the case to the Board to consider whether the Claimant sustained his burden of proof of showing an employer-employee relationship solely under the traditional factors as set forth in the common law.

ConnorsO’Dell LLP

                                                                     Trust us, we just get it!  It is trust well spent!

We defend Employers, Self-Insureds, Insurance Carriers, and Third Party Administrators in Workers’ Compensation matters throughout  Pennsylvania.  We have over 100 years of cumulative experience defending our clients against compensation-related liabilities, with no attorney in our firm having less than ten (10) years of specialized experience, empowering our Workers’ Compensation practice group attorneys to be more than mere claim denials, enabling us to create the factual and legal leverage to expeditiously resolve claims, in the course of limiting/reducing/extinguishing our clients’ liabilities under the Pennsylvania Workers’ Compensation Act.

Every member of our Workers’ Compensation practice group is AV rated.  Our partnership with the NWCDN magnifies the lens for which our professional expertise imperiously demands that we always be dynamic and exacting advocates for our clients, navigating the frustrating and form-intensive minefield pervasive throughout Pennsylvania Workers’ Compensation practice and procedure.

PROTZ ENTOMBS IREs IN PENNSYLVANIA

By Kevin L. Connors, Esquire

Ever have one of those days where you just wonder, why bother?

Today might be one of those days.

In a Homer Simpsonesque Decision, the Pennsylvania Supreme Court in Protz v. WCAB (Derry Area School District), decided on June 20, 2017, recently eviscerated the IRE (Impairment Rating Examination) provisions of Act 57, enacted in 1996, embodying the legal standard by which almost all Pennsylvania Workers’ Compensation claims have been administered and adjudicated since Act 57 became law on June 24, 1996.

Yes, your general knowledge of IREs is correct, that is that Act 57, under Section 306 (a.2) empowered insurance companies, after an injured Employee/Claimant had received 104 weeks of temporary total disability benefits, to request that the injured Employee/Claimant undergo an Impairment Rating Examination, applying standards adopted by the American Medical Association inGuides to the Evaluation of Permanent Impairment, for purposes determining whether the injured Employee/Claimant had an Impairment Rating of the work-related injury, applying a whole person standard, of less than 50%, which, if so, would then allow the insurance company to convert the injured Employee/Claimant’s temporary total disability benefits into temporary partial disability benefits, which, under Section 306 (b) of the Act, were then only payable for 500 weeks, not inclusive of the 104 weeks already paid, such that an injured Employee/Claimant with an IRE rating of less than 50% would, statutorily, still be entitled to receive 104 weeks of temporary total disability benefits, followed by 500 weeks of temporary partial disability benefits, without reduction of the weekly compensation benefit being paid, absent evidence of “earning power” which, if proved, could reduce the weekly compensation benefit being paid based upon a continuing wage loss to be calculated by incorporating the “earning power” of the temporary partial disability benefit rate that might continue to be owed to the injured Employee/Claimant.

Awaking on June 20, 2017, after having recently attended the Department of Labor Industries’ Bureau of Workers’ Compensation Conference in Hershey, Pennsylvania, on June 12, 2017 and June 13, 2017, I was not intellectually prepared for the massive headache that would be created by the Pennsylvania Supreme Court ruling in Protz that Section 306 (a.2) of the Act, the provision dealing with IREs, was unconstitutional, effectively eviscerating a procedure that has been utilized by Insurance Carriers, Third-Party Administrators, and Employers since 1996.

The first question, what does this mean for all workers’ compensation stakeholders?

Well, if you are an injured Employee/Claimant, or an Attorney representing one, you are likely toasting the Pennsylvania Supreme Court’s June 20, 2017 ruling inProtz v. WCAB (Derry Area School District).

However, if you are an Insurance Carrier, Third-Party Administrator, or Employer, you are scratching your head and going “WTF?,” wondering how a Statutory Provision that was more effective in facilitating settlements and reducing reserves than actually changing an injured Employee/Claimant’s compensation benefit rate, and that had been used without constitutional challenges, before Protz filed her initial challenge to her IRE Determination in 2011, as all IREs performed under Section 306 (a.2) of Act 57 are now null and void, having no legal consequence or validation under the Pennsylvania Workers’ Compensation Act on the Supreme Court’s June 20, 2017 Decision inProtz.

 At this juncture, under Protz, IREs simply now have no validity under the Pennsylvania Workers’ Compensation Act, and their utilization, absent legislative action by the Pennsylvania General Assembly, is now an administrative and litigation black hole.

If you are feeling like you forgot to get dressed today, you are not alone.

Yes, true, there will also be an economic impact as the litigation mechanism for modifying compensation benefits will revert back to requiring proof that an injured Employee/Claimant has sufficiently recovered from a work injury to be able to return to available work, being actually available or available under a “earning power” analysis in the form of a Labor Market Survey, potentially not only extending the shelf life of workers’ compensation claims, but also potentially driving Claimant’s settlement values for Compromises and Releases even higher.

Moreover, Protz’ evisceration of IREs potentially will set in motion a chain of Reinstatement Petitions being filed for injured Employees/Claimants whose compensation benefits had been modified to temporary partial disability benefits under, what was then regarded as statutorily legal, IREs, after which the injured Employee/Claimant had exhausted the 104 weeks of temporary total disability benefits, paid before the IRE was requested, as well as the 500 weeks of temporary partial disability benefits, paid at the temporary total disability benefit rate, after the IRE evidencing an impairment of less than 50% was secured, and the injured Employee/Claimant’s compensation benefits were modified/reduced.

Query:  What will the effect of Protz be upon claims subject to IREs of a less than 50% Impairment Rating, where 604 weeks of compensation benefits have been paid, and the injured Employee/Claimant files to reinstate his/her workers’ compensation benefits as temporary total disability benefits, alleging that the administrative process used to suspend their weekly compensation benefits at 604 weeks has now been ruled unconstitutional, such that the injured Employee/Claimant now claims that there is no administrative or adjudicated form or Decision that bars them from seeking to reinstate their compensation benefits to temporary total disability benefits.

First, if the issue of the IRE rating was litigated, and a Workers’ Compensation Judge modified the injured Employee/Claimant’s workers’ compensation benefits from temporary total to temporary partial disability benefits in reliance upon an IRE rating with a less than 50% Impairment Rating, and the injured Employee/Claimant did not file an Appeal, it is our impression that the injured Employee/Claimant has waived the right to seek to re-open their workers’ compensation claim, in order to strike/remove the suspension of their workers’ compensation benefits, as they have not properly preserved that issue under the Pennsylvania Workers’ Compensation Act, and the Bureau’s regulations.

The same answer would be given if an injured Employee/Claimant had stipulated to the conversion of temporary total disability benefits to temporary partial disability benefits in reliance upon an IRE with a less than 50% Impairment Rating, particularly true, since the Stipulation would then have been adopted by a Workers’ Compensation Judge in a Bureau-circulated Decision, presumably never appealed.

Again, that would bring finality to the constitutional issue, and could be argued as a waiver of Section 306 (a.2) being challenged on constitutionality grounds.

Potentially more problematic, although there are probably much fewer claims like this, would be claims where the IRE was a basis for filing a Notice of Change, converting temporary total disability benefits to temporary partial disability benefits, with no Petition challenging the change ever being filed or litigated by the injured Employee/Claimant.  The concern with those claims would beProtz’ evisceration of the Statutory Provision empowering the change of benefits from temporary total disability to temporary partial disability, potentially opening the “what if” door which, as we all well know, has pretty squeaky hinges, greased with the sweat of humanitarianism.

No question, Protz is a life-altering Decision by the Pennsylvania Supreme Court, for anyone involved with Pennsylvania workers’ compensation claims.

Like you, we are less concerned with how the Supreme Court arrived at its ruling, than we are with the consequences of this Decision, which we will all now be dealing with its holding through retirement.

In answer to the obvious question as to why an issue this important, with the potential risks associated therewith was not settled by the parties prior to its eventual resolution by the Pennsylvania Supreme Court, one can only assume, based upon the involvement of the Pennsylvania Association of Justice (PA Trial Lawyers Bar), which has been salivating at the constitutional challenge to IREs since 1996, that the claim might have been over-valued for settlement, in an attempt to defeat claim resolution prior to Supreme Court determination.

This is not the time to point fingers.

We can hear war drums beating in the offices of Claimant Attorneys statewide; time to circle the legislative wagons and seek amendment of the Workers’ Compensation Act to insure a cap in compensation benefits.

ConnorsO’Dell LLP

Trust us, we just get it!  It is trust well spent!

We defend Employers, Self-Insureds, Insurance Carriers, and Third Party Administrators in Workers’ Compensation matters throughout  Pennsylvania.  We have over 100 years of cumulative experience defending our clients against compensation-related liabilities, with no attorney in our firm having less than ten (10) years of specialized experience, empowering our Workers’ Compensation practice group attorneys to be more than mere claim denials, enabling us to create the factual and legal leverage to expeditiously resolve claims, in the course of limiting/reducing/extinguishing our clients’ liabilities under the Pennsylvania Workers’ Compensation Act.

Every member of our Workers’ Compensation practice group is AV rated.  Our partnership with the NWCDN magnifies the lens for which our professional expertise imperiously demands that we always be dynamic and exacting advocates for our clients, navigating the frustrating and form-intensive minefield pervasive throughout Pennsylvania Workers’ Compensation practice and procedure.

ANNOUNCEMENT

By Kevin L. Connors, Esquire

It is with both congratulations and regrets that we announce that Kate O’Dell, a Partner in our firm, and Co-Chair of our Workers’ Compensation Practice Group, has elected to trade the outrageous slings and arrows of compensation claims for the tranquility and joyous personal redemption of semi-retirement, as Kate transitions from being a founding Partner to assuming the role “of Counsel” with our firm, allowing Kate to re-assign workers’ compensation cases that she was handling for our firm, and defending for our Clients, to other firm Partners in our Workers’ Compensation Practice Group, while Kate has graciously agreed to serve as “of Counsel” to the firm, as coverage needs and her personal schedule might dictate.

Having had the honor and privilege of being Kate’s Partner for 17 years, there is no question but that I will personally feel the deep sense of loss without her delicious wisdom and wit being available on a daily basis in our office.

Her intelligence and integrity to detail will also be sorely missed.

She has been, and remains, a dear friend, both to me, and to our firm.

Throughout her storied career with our firm, she has attained national and regional honors for her knowledge and professionalism in the defense of workers’ compensation claims.

Honoring her years of service to our firm, we will continue to strive, as a firm, to achieve and maintain the high idea and professionalism that Kate exhibited every day since her 1985 graduation from Law School.

ConnorsO’Dell LLP

Trust us, we just get it!  It is trust well spent!

We defend Employers, Self-Insureds, Insurance Carriers, and Third Party Administrators in Workers’ Compensation matters throughout  Pennsylvania.  We have over 100 years of cumulative experience defending our clients against compensation-related liabilities, with no attorney in our firm having less than ten (10) years of specialized experience, empowering our Workers’ Compensation practice group attorneys to be more than mere claim denials, enabling us to create the factual and legal leverage to expeditiously resolve claims, in the course of limiting/reducing/extinguishing our clients’ liabilities under the Pennsylvania Workers’ Compensation Act.

Every member of our Workers’ Compensation practice group is AV rated.  Our partnership with the NWCDN magnifies the lens for which our professional expertise imperiously demands that we always be dynamic and exacting advocates for our clients, navigating the frustrating and form-intensive minefield pervasive throughout Pennsylvania Workers’ Compensation practice and procedure.

TO MISCLASSIFY OR NOT TO?

By Jeffrey D. Snyder, Esquire

The Commonwealth Court’s Decision in Department of Labor and Industry, Uninsured Employers Guaranty Fund v. WCAB(Lin and Eastern Taste), decided on February 17, 2017, involved a questionable case at first impression, as to whether an individual who was remodeling a restaurant, was considered to be a misclassified independent contractor under the Construction Workplace Misclassification Act (Act 72) (CWMA), or was as alleged by the Claimant, an Employee of a restaurant that was undergoing remodeling.

The Commonwealth Court ultimately affirmed the initial Decision of the Workers’ Compensation Judge that the Claimant was not an Employee when injured, and that the CWMA did not apply to the facts of the case, as the Claimant was not working in the “construction industry”, as that term is not accurately defined under the CWMA.

A few facts always help.

The Claimant was injured while he was remodeling the Eastern Taste restaurant, which had yet to open for business.

Following his injury, he filed a Claim Petition against Eastern Taste, as well as later filing a Claim Petition against the Uninsured Employer Guaranty Fund (Fund).

Initially, before the Workers’ Compensation Judge, the Judge bifurcated the employment issue from the medical issues.

Following the bifurcation, the Claimant testified, with testimony being presented by the restaurant Owner, as well as another individual who was also working on remodeling the restaurant.

Based upon the fact testimony heard by the Workers’ Compensation Judge, the Judge found that certain facts were undisputed, to include:

• The restaurant was, just a restaurant, and was not in the construction business or industry;

• The Claimant had been hired to do remodeling, before the restaurant was even opened;

   

• The most experienced person on the job, in terms of construction experience, was the Claimant;

   

• The restaurant Owner’s husband, presuming the restaurant to be owned by a woman, had been in charge of what needed to be done in the course of the remodeling being undertaken;

   

• The Claimant was paid on a per diem basis, as were three other individuals also involved in the remodeling; and,

   

• The Claimant used his own tools, and his own van, with the restaurant Owner’s husband also having his own tools and materials.

   

Based upon the witness testimony that the WCJ heard, the WCJ determined that:

• The Claimant was not an Employee of the restaurant;

• The Claimant’s work was not in the regular course of the restaurant’s business;

   

• The Claimant’s employment was casual in nature;

   

• That the Claimant failed to sustain his burden of proving that he was an Employee of the restaurant; and,

   

• That the Claimant was not considered to be an Employee under the CWMA, as the WCJ reasoned that the CWMA did not apply to the restaurant, as it was not in the construction industry.

   

Based upon the above conclusions, the WCJ denied the Claimant’s Claim Petitions, both against the restaurant, as well as against the Fund.

The Claimant appealed to the Appeal Board, which then issued an Opinion concluding that the Claimant was an Employee of the restaurant, and that the Claimant’s employment was not casual in nature.

Reversing the WCJ’s Decision, the Appeal Board remanded the case back to the WCJ for Findings and Conclusions that would support an Award of compensation.

In a not so subtle genuflection to the remand, the WCJ granted the Claimant’s Claim Petition, resulting in benefits being awarded to the Claimant.

The Fund then appealed to the Appeal Board, requesting that the Board’s Opinion be made final, for purpose of appealing to the Commonwealth Court.  So holding, the case ascended to the Commonwealth Court under the Fund’s Appeal.

Before the Commonwealth Court, the Fund argued that the Board had engaged in impermissible fact-finding, an argument that resonated with the Commonwealth Court, which rebuked the Appeal Board’s conclusion that all of the Claimant’s construction experience had been in the role of an Employee, and that the Claimant had not been engaged in his own construction business, notwithstanding that, before the Workers’ Compensation Judge, there had been no evidence that the Claimant had established a business in which he held a proprietary interest.

Finding that the WCJ’s Findings and Conclusions that the Claimant was hired to do remodeling was supported by substantial evidence, the Commonwealth Court held that those Findings and Conclusions were binding on the Board and that the Board had erred by disregarding the Judge’s findings, thereby substituting its own findings that the Claimant was not hired to do anything specific from which it then inferred, erroneously, that the Claimant was working as a general laborer.

Following that the Board exceeded its authority by making its own findings, beyond those made by the WCJ, the Commonwealth Court did hold that the Board had engaged in impermissible fact-finding, relying on its own facts, to support its conclusion that the Claimant was an Employee, an erroneous conclusion in the opinion of the Commonwealth Court.

Concluding that the WCJ’s original findings were supported by substantial competent evidence and reasonable inferences deduced from substantial evidence, the Commonwealth Court held that the determination as to the existence of an Employer/Employee relationship is a question of law, and that the Court’s scope of review was plenary and the standard review isde novo.

Holding that Section 104 of the WC Act defines an Employee to be “synonymous with servant, and includes all natural persons who perform services for another for a valuable consideration, exclusive of… persons whose employment is casual in character and not in the regular course of the business of the Employer…” the Court noted that there is nobright line rule for determining whether a particular relationship is that of an Employer/Employee or Owner/Independent Contractor, although the Supreme Court inUniversal Am-Cam, Ltd. v. WCAB (Minteer), 762 A.2d 382 (Pa. 2000) had established several factors that have to be considered when making such a determination:

• Control of manner of work is to be done;

• Responsibility of result only;

   

• Terms of agreement between the Parties;

   

• The nature of the work or occupation;

   

• Skilled required for performance;

   

• Whether one is engaged in a distinct occupation of business;

   

• Which Party supplied the tools;

   

• Whether payment is by the time or by the job; and,

   

• Whether work is part of the regular business of the Employer, and also the right to terminate the employment at any time.

   

The controlling takeaway from those factors is that “control over the work to be completed in the manner in which it is to be performed are the primary factors in determining Employee status,” and “…it is the existence of the right to control that is significant, irrespective of whether the control is actually exercised.”

Since the WCJ had originally found that the relationship between the Claimant and the restaurant was similar to that of the relationship between a Property Owner and Painters, Plumbers, Electricians, Carpenters, and other remodelers, it was reasonable for the Workers’ Compensation Judge to conclude that the restaurant Owner’s husband did not control the manner in which work was being completed and performed by the Claimant, as the restaurant Owner’s husband did not reserve control over the means of performing the contract, merely reserving control as to the result of the remodel.

The Commonwealth Court also considered that the Claimant had been hired to perform remodeling, with no expectation of working in the restaurant after the remodeling.

Keeping in mind that the Claimant bore the burden of proving an Employer/Employee relationship, and that all evidence has to be viewed in the light most favorable to the prevailing Party, the Commonwealth Court, in an Opinion authored by Judge Hearthway, held that the WCJ’s conclusion that the Claimant was not an Employee was reasonable, and that it could not, therefore, be construed to be in error as a matter of law.

Not finished, the Commonwealth Court also held, this being the issue of first impression, that the CWMA concerns the construction industry, effecting the determinations of whether someone is an independent contractor versus an Employee under the WC Act.  Having already determined that the Claimant was not an Employee of the restaurant, the Commonwealth Court noted that an individual who performed services in the construction industry for remuneration will be deemed to be an independent contractor for purposes of workers’ compensation, with the converse being, that if a worker falls within the purview of the CWMA, and does not meet the requirements to be considered to be an independent contractor, then that individual is deemed to be an Employee for purpose of workers’ compensation.

Finding that the CWMA was not applicable, as the Workers’ Compensation Judge had concluded, the Commonwealth Court held that the restaurant was in the restaurant business and not in the construction business, and that the CWMA did not, therefore, apply to the facts of this case.

The dispositive question for determining whether one falls within the purview of the CWMA is whether the individual performed services for remuneration “in the construction industry,” a question that the Commonwealth Court held was one of first impression.  Although the CWMA defines the term “construction,” it does not define the term “industry,” requiring the Commonwealth Court to construe that term according to its common and approved usage in accordance with the Statutory Construction Act of 1972, with “industry” being commonly defined as “skilled employment involving skill” and “a department or branch of a craft, art, business or manufacturer.”

Further noting that the CWMA was intended to limit those who would be deemed to be independent contractors, as opposed to Employees, it was intended to address concerns that Employers were, shockingly, misclassifying workers as independent contractors, rather than Employees, in order to avoid the payment of unemployment taxes, workers’ compensation premiums, and payroll.

The Court also noted that to apply the CWMA to any remodeling project would have the effect of potentially turning every individual that took on a remodeling project into becoming an Employer “in the construction industry,” significantly expanding the scope of what the Commonwealth Court interpreted the purpose of the CWMA to be.

The Takeaway

This one is kind of a head-scratcher, as there are many Workers’ Compensation Judges who probably would have found the Claimant to be an Employee, simply to plug the hole in the dyke with insurance, whether against the restaurant or, alternatively, against the Fund.

Presumably, the restaurant had workers’ compensation insurance for its operations as a restaurant, employing restaurant workers in whatever capacities it would have required to continue operations as a restaurant.

Here, the restaurant was not actually open, and was not in operation, and was not, therefore, actually acting as a restaurant, although it would have done so after the remodeling project was complete.

Left unanswered by the Court’s Decision is the status of the Claimant, and the three other individuals who are doing the remodeling work, as there is no reference in the Opinion that they were working for a company, or a business, nor is it entirely clear how those individuals became associated with the remodeling project.

There is also no reference in the Opinion to any discussion, at any of the levels that this case ascended through, from a WCJ through Appeal Board to the Commonwealth Court, as to whether there was a contract in place for the work that was being performed for the remodeling project, as contracts usually require evidence of insurance, if even limited to general liability insurance for any work being performed by the remodelers, including the Claimant.

Post-injury, everyone scrambled for cover.

Better to make sure that contracts are in place, and that insurance is incorporated into the contracts, for the protection of all involved, both in terms of general liability insurance and workers’ compensation insurance.

ConnorsO’Dell LLP

Trust us, we just get it!  It is trust well spent!

We defend Employers, Self-Insureds, Insurance Carriers, and Third Party Administrators in Workers’ Compensation matters throughout  Pennsylvania.  We have over 100 years of cumulative experience defending our clients against compensation-related liabilities, with no attorney in our firm having less than ten (10) years of specialized experience, empowering our Workers’ Compensation practice group attorneys to be more than mere claim denials, enabling us to create the factual and legal leverage to expeditiously resolve claims, in the course of limiting/reducing/extinguishing our clients’ liabilities under the Pennsylvania Workers’ Compensation Act.

Every member of our Workers’ Compensation practice group is AV rated.  Our partnership with the NWCDN magnifies the lens for which our professional expertise imperiously demands that we always be dynamic and exacting advocates for our clients, navigating the frustrating and form-intensive minefield pervasive throughout Pennsylvania Workers’ Compensation practice and procedure.

UNSEASONAL EMPLOYMENT IN PENNSYLVANIA

By

Jeffrey D. Snyder

A recent Pennsylvania Commonwealth Court Decision in Tojio Orchards, LLC v. WCAB (Gaffney), revolved around seasonal employment, as well as addressing an issue of the Claimant’s entitlement to a healing period, in connection with a specific loss claim.

The Claimant had sustained a specific loss of his left eye on October 8, 2013, as a result of his eye contacting a tree limb, while he was driving a tractor.

The employer then issued a Notice of Temporary Compensation Payable (NTCP), and filed a corrected Statement of Wages (SOW).  The SOW indicated an average weekly wage of only $35.10, resulting in the compensation rate of $31.59 per week being determined.

Subsequently, the TNCP was revoked, with the appropriate stoppage notice, and a “Medical Only” Notice of Compensation Payable being issued, immediately followed by the filing of a Claim Petition, seeking specific loss benefits for the loss of vision in the left eye.

Before the workers’ compensation judge, the petition proceedings were bifurcated, first addressing the issue of employment status and average weekly wage, to be followed by an adjudication of the medical issues.

The testimony presented to the workers’ compensation judge was that the Claimant was a friend of a principal of the employer.  The Claimant and principal had gone to school together, the Claimant had then worked for the employer as an apple picker 30 years before.  He was then hired for the apple harvesting season, driving a tractor, and moving bins for apple pickers as they lolligagged from tree to tree.

He was paid $9.00 per hour, with his normal working hours being between 7:00 a.m. and 5:00 p.m., 5 days a week, and he was never promised any extension of employment beyond the apple picking season, ending coincidentally when all the apples were picked.

Previously receiving Social Security Retirement Benefits, as the Claimant had retired about 6 years prior, the retirement benefits were stopped when he began working for the employer, although he then began to receive the retirement benefits after he was injured.

Interestingly enough, or maybe not, the employer had another employee who worked as a tractor driver for the employer year round.

The record then noted that the apple season lasts from September until November, and that the workers never work in the rain.  A year round tractor driver position, held by another employee, involved spraying, taking care of the farm, computer duties, and during the harvesting season, hauling apples out of the orchard.

Concluding that the Claimant was engaged in exclusively seasonal employment, the workers’ compensation judge granted the Claim Petition, awarding benefits for seasonal employment, and then awarding specific loss benefits for the loss of vision in the eye, with the specific loss benefits being awarded for 275 weeks, which at $31.59 per week, resulted in an award of $8,687.25.

The Claimant then asked the workers’ compensation judge to enter an Interlocutory Order, in order that the decision could be appealed.

The claim was then appealed to the Appeal Board, with the Claimant arguing that he was not a seasonal worker.  The Appeal Board believed that the workers’ compensation judge had imposed too narrow a construction on the Claimant’s employment, and that the judge should have focused on the nature of the work, not the period of time during which the Claimant was working for the employer, citing toFroehly v. TM Harten Company, 139 A.2d 727 (Pa. 1927) (post Andrew Jackson).

The Appeal Board characterized the Claimant’s employment as being that of “itinerant agricultural labor”, observing that employment, although short term, is not necessarily synonymous with seasonal occupation.

Another issue before the Appeal Board was the calculation of the Claimant’s average weekly wage, as the Claimant argued that he had worked less than 13 weeks, and did not have fixed weekly wages, with the Claimant alleging that he was working 50 hours a week, at $9.00 per hour, with the Claimant asserting that his average weekly wage should be $450.00.

The argument made by the Claimant over the calculation of his average weekly wage was rejected by the Appeal Board, determining that the Claimant’s gross earnings over the weeks worked, limited to 5 weeks, only totaled $1,755.00, yielding an average weekly wage of $351.00, and a compensation benefit rate of $315.90.

The Appeal Board also concluded that the Claimant was entitled to a 10 week healing period for a specific loss, modifying the judge’s specific loss award from 275 weeks to 285 weeks.

Shockingly, the employer appealed to the Pennsylvania Commonwealth Court.  In response, the Claimant filed a Designation of Additional Issues on Appeal, again challenging the calculation of his average weekly wage.

Citing to Section 309(e) of the Pennsylvania Workers’ Compensation Act, the Commonwealth Court noted that occupations that are exclusively seasonal, meaning they cannot be carried on throughout the year, should result in an average weekly wage that would be 1/50^th of the total wages which the Claimant or employee earned from all occupations during the 12 months immediately preceding the injury, and, if, for some reason, that calculation was deemed to be unfair, the calculation could be adjusted.

Noting that the Pennsylvania Workers’ Compensation Act does not specifically define what constitutes an “exclusively seasonal occupation”, the Court noted that the Pennsylvania Supreme Court had held inFroehly that “seasonal occupations logically are those vocations which cannot, from their very nature, be continuous or carried on throughout the year but only during fixed portions of it.”

As further noted by the Pennsylvania Supreme Court in Froehly, “a labor occupations possible of performance and being carried on at any time of the year, or through the entire 12 months, is certainly not seasonal.”

In Froehly, the Claimant had been working as a dishwasher for an amusement park that was only open during the summer, from June to September.  The amusement park argued that the Claimant was a seasonal employee, because the park was only open for a few months, with that argument being rejected by the Supreme Court, which found that dishwashing is not a seasonal occupation, even though the employer park was only open for a few months of the year.

An exception to the Froehly rule, involving amateur sports, occurred when the Claimant, while playing for the Arena Football League, inRoss v. WCAB, 702 A.2 1099 (Pa. Cmwlth. 1997), was injured while playing as a football player under a contract.  The AFL argued that the employee should be considered a seasonal employee, an argument that the Appeal Board endorsed.  The Claimant argued, however, that he was not a seasonal employee, because although the employer (AFL) had a set season, the Claimant could still play football for other teams in other leagues at other times, although the Commonwealth Court disagreed, holding that the Claimant’s employment contract, in Ross, prohibited the Claimant from engaging in off-season play.

In Gaffney, the case under discussion, the Commonwealth Court agreed with the Appeal Board that the Claimant was engaged in “itinerant agricultural labor”, when he was injured, but that his position as a temporary tractor driver for the apple harvest was not seasonal employment under Section 309(e) of the Act.

This holding was supported, in the Commonwealth Court’s opinion, by the fact that the Claimant did not have a contract precluding him from performing services throughout the year for another employer.

As for the Claimant’s average weekly wage, the Court held that the Claimant’s average weekly wage of $351.00, resulting from $1,755.00 being divided by 5 weeks, and further resulting in a disability rate of $315.90 representing “economic reality” with that finding being upheld before the Commonwealth Court.

Lastly, the healing period issue was addressed, with the Commonwealth Court holding that a specific loss award entitles a Claimant to a rebuttal presumption that the specific loss entitles the injured worker to a healing period.

Decided by the Commonwealth Court on March 13, 2017, the Gaffney holding is seasonally appropriate, given that the harvest season is only a few months away.

Take Aways

The obvious take away is that seasonal employment is an extremely limited holding, which will, underFroehly, be limited to occupations that by their very nature are fixed to certain seasons, and are not carried on throughout the year.  Conversely, any job that can be performed at any time of the year, will likely not be deemed to be seasonal under the Froehly holding.

ConnorsO’Dell LLP

Trust us, we just get it!  It is trust well spent!

We defend Employers, Self-Insureds, Insurance Carriers, and Third Party Administrators in Workers’ Compensation matters throughout  Pennsylvania.  We have over 100 years of cumulative experience defending our clients against compensation-related liabilities, with no attorney in our firm having less than ten (10) years of specialized experience, empowering our Workers’ Compensation practice group attorneys to be more than mere claim denials, enabling us to create the factual and legal leverage to expeditiously resolve claims, in the course of limiting/reducing/extinguishing our clients’ liabilities under the Pennsylvania Workers’ Compensation Act.

Every member of our Workers’ Compensation practice group is AV rated.  Our partnership with the NWCDN magnifies the lens for which our professional expertise imperiously demands that we always be dynamic and exacting advocates for our clients, navigating the frustrating and form-intensive minefield pervasive throughout Pennsylvania Workers’ Compensation practice and procedure.

A DOUBLE-EDGED SWORD

By Jeffrey D. Snyder, Esquire

A recent, Court ruling in County of Allegheny v. WCAB (Parker), recently decided in 2016, held that attorneys’ fees that are awarded on the basis of unreasonable contest are considered to be litigation costs, that must be reimbursed by a Claimant Attorney, if the unreasonable contest of attorneys’ fees were paid pursuant to a denial of Supersedeas, on a prior Appeal, where the Employer ultimately prevailed that is contests of the Claimant’s claims and Petitions were reasonable.

Factually, this case involved the 80 year old Claimant sustaining a work-related shoulder injury in 1993.  In 2007, the Claimant’s compensation benefits were suspended, as a result of the granting of a Suspension Petition.

Appealed to the Workers’ Compensation Appeal Board, the underlying WCJ’s Decision was reversed, and remanded for an assessment of Counsel fees on the basis that the Appeal Board believed that the Employer’s contest was unreasonable, and that the Claimant was entitled to an award of unreasonable contest of attorneys’ fees under Section 440 of the Act.

The Board, in its infinite wisdom, believed it was bound by a prior 2004 Decision that had denied a Suspension of the Claimant’s compensation benefits.

On the remand, the WCJ did award Counsel fees on the basis of unreasonable contest, with the finding of an unreasonable contest then affirmed by the Appeal Board, although, it actually changed the amount of the unreasonable contest, increasing in favor of the Claimant and against the Employer.

Undaunted, the Employer appealed to the Commonwealth Court, with the Commonwealth Court concluding that the Appeal Board had been mistaken in relying on collateral estoppel, and that it further committed a legal error in awarding counsel fees on the basis of an unreasonable contest, given that the Employer had ultimately prevailed, with the Commonwealth Court sustaining the suspension of compensation benefits in deciding the underlying issues on Appeal.

Applying for Supersedeas Fund reimbursement, as the unreasonable contest attorneys’ fees had been assessed in the amount of $14,750.00, the Supersedeas Fund denied the reimbursement request, on grounds that the Act only allows it to reimburse for medical and wage loss benefits, not for litigation costs.

The Commonwealth Court then explained that to allow a situation where unreasonable contest attorneys’ fees are paid following the denial of Supersedeas on an Appeal, and the Claimant does not prevail with respect to the underlying case and issues, would constitute an unjust enrichment to Claimant’s Counsel, regardless of any intent to distribute the funds to the Claimant.

As a recommendation, the Commonwealth Court suggested that there be an agreement to stay an Appeal in similar circumstances, so that fund disbursements are not issued prior to the issues being ultimately decided.

The Commonwealth Court further noted that the procedure for seeking reimbursement is to file a Petition for Refund, filing the same with the Bureau for assignment to a Workers’ Compensation Judge.  This mechanism appears to extend to all litigation costs that include unreasonable contest of attorneys’ fees, where the issue is ultimately decided in favor of the Employer, that the Employer’s contest in the underlying claim was reasonable, and should not have been subject to an unreasonable contest attorney fee Award.

Finally, in County of Allegheny, the Commonwealth Court remanded the case for the Petition for Refund to be granted, in the amount of $14,750.00 in unreasonable contest attorneys’ fees that the Employer had paid to Counsel, ultimately requiring Counsel to reimburse the Employer for the same fees.

By way of a takeaway, this is an obviously favorable Decision for Employers and Insurers, although, in practice, it has been our experience that unreasonable contest attorneys’ fees, on Appeal, usually result in Supersedeas being granted, meaning that the Employer or Insurer does not become obligated for paying the unreasonable contest attorneys’ fees during the pendency of an Appeal of factual and legal issues decided in a Decision by a Workers’ Compensation Judge or by the Appeal Board.

ConnorsO’Dell LLP

Trust us, we just get it!  It is trust well spent!

We defend Employers, Self-Insureds, Insurance Carriers, and Third Party Administrators in Workers’ Compensation matters throughout  Pennsylvania.  We have over 100 years of cumulative experience defending our clients against compensation-related liabilities, with no attorney in our firm having less than ten (10) years of specialized experience, empowering our Workers’ Compensation practice group attorneys to be more than mere claim denials, enabling us to create the factual and legal leverage to expeditiously resolve claims, in the course of limiting/reducing/extinguishing our clients’ liabilities under the Pennsylvania Workers’ Compensation Act.

Every member of our Workers’ Compensation practice group is AV rated.  Our partnership with the NWCDN magnifies the lens for which our professional expertise imperiously demands that we always be dynamic and exacting advocates for our clients, navigating the frustrating and form-intensive minefield pervasive throughout Pennsylvania Workers’ Compensation practice and procedure.