State News : Pennsylvania

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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.