Defense Digest, Vol. 31, No. 2, June 2025

A Costly Mistake

By
Michael R. Duffy

Key Points:

  • A workers’ compensation judge is not required to correct a mistakenly-issued Notice of Compensation Payable, but they may correct a mistakenly-issued Notice of Compensation Payable.
  • The court would not overturn a workers’ compensation judge’s refusal to correct a mistakenly-issued Notice of Compensation Payable.
  • The decision to correct a mistakenly-issued Bureau document is in the workers’ compensation judge’s discretion.

The Commonwealth Court of Pennsylvania recently issued an opinion finding that, although a workers’ compensation judge may correct a mistakenly-issued Notice of Compensation Payable, it is within the judge’s discretion and is not required.

In City of Philadelphia and PMA Management Corp. v. John Bell (WCAB), 2025 WL 980776 (Pa. Cmwlth. April 2, 2025), the claims handler incorrectly issued a “partial denial,” or a Medical-Only Notice of Compensation Payable (Medical-Only NCP), after the determination was made to issue a denial. After working 17 years as a firefighter for the City, the claimant was diagnosed with colon cancer. He requested that the City recognize his cancer as job-related and pay workers’ compensation benefits. After issuing the Medical-Only NCP, the employer filed a review petition, alleging it mistakenly issued the Medical-Only NCP when it intended to issue a Notice of Compensation Denial.

The employer/carrier presented an affidavit from the City’s Risk Management and Employee Disability Manager in which she noted that, after an investigation, it was recommended that PMA deny the claimant’s claim. The employer/carrier also presented an affidavit from the claims handler which noted that she had begun working for PMA on June 6, 2022, and processing workers’ compensation claims on June 27, 2022. She received the claimant’s claim on September 12, 2022. She contacted the aforementioned risk manager and was advised to issue a denial because there was no evidence of a causal relationship between the claimant’s condition and his employment as a firefighter. She understood the Claims Center’s software allowed her compensability choices of: fully accept, temporarily accept, undetermined, partially deny, and fully deny. The claims handler did not understand the Electronic Data Interchange (EDI) system’s process or the automatic generation of compensability-establishing documents through these choices. She chose to “partially deny” the claim because she believed she was agreeing to pay for only the medical appointments to any posted panel physician. She did not understand that the form generated would accept liability on the claim. She did not intend to issue a Medical-Only NCP, although that is what clicking “partially deny” generated. Emails exchanged between the claims handler and the risk manager established the intent to deny the claim. 

The workers’ compensation judge found both the adjuster and the claims handler credible and accepted that the adjuster made a mistake and did not intend to generate a Medical-Only NCP. However, the judge was not willing to set aside the Medical-Only NCP. The judge noted that EDI has been around for approximately 10 years, the adjuster should have received better training, and she should have sought advice before taking the action. The judge stated that allowing Bureau documents to be set aside when mistakes are made is not a precedent she was going to set. The judge also found this was distinguishable from cases where information has been made available prior to the completion of an investigation where the claim has already been accepted. The Workers’ Compensation Appeal Board affirmed. 

On appeal, the Commonwealth Court noted that the judge and the Board incorrectly relied on Beissel and Barna, which addressed changing a Bureau document after information was gained prior to the completion of an investigation. The court noted that this case was distinguishable because it was the insurer’s intention at the onset to deny the claim after it conducted its investigation. The issuance of the Medical-Only NCP was a mistake. The court looked at whether Section 413(a) of the Act requires a judge to set aside a mistakenly issued NCP. 

The court looked at the language in Section 413(a), which it determined was unambiguous and permissive in nature. Section 413(a) states: “a workers’ compensation judge may, at any time, review and modify or set aside a notice of compensation payable…if it be proved that such notice of compensation payable…was in any material respect incorrect.” The court analyzed whether “may” could mean “shall” in some circumstances and determined that because “may” and “shall” are both used throughout the Act, and are not used interchangeably, “may” is permissive rather than mandatory. Thus, the judge had the discretion to decide whether to set aside the mistakenly issued Medical-Only NCP, which the judge elected not to do, even after she had found it was incorrectly issued. The court would not overturn that decision.

This decision reinforces the possibility of reversing an incorrectly and mistakenly-issued Bureau document by way of a review petition. However, the decision also reinforces the judge’s discretion to make that correction. As the judge noted in this case, most judges are hesitant to change a Medical-Only NCP or an NCP to a denial even if the mistake was clearly established. Therefore, the claims handler or whomever issues the EDI transaction should take the proper precautions and exercise due diligence before issuing any Bureau document. More often than not, the judge will not correct a Bureau form. Proper training and safeguards should be exercised prior to issuing a Bureau document to avoid these issues.

*Michael is a member of our Workers’ Compensation Department and works in our King of Prussia, PA office. 

 

Defense Digest, Vol. 31, No. 2, June 2025, is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2025 Marshall Dennehey. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.