New Exposure for Workers’ Compensation Carriers and Employers

By
John C. Swartz Jr.

By John C. Swartz, Jr., Esq.*

Key Points:

  • Impairment Rating Evaluation allows an employer/carrier to limit liability to 500 weeks of workers’ compensation indemnity benefits once the claimant has received 104 weeks of temporary total disability benefits.
  • The Commonwealth Court in Protz v. WCAB found that cases based on use of anything but the Fourth Edition of the AMA Guidelines were unconstitutional because those were the AMA guidelines in use at the time the statute was passed.
  • Impairment Rating Evaluations based on the AMA Guidelines, other than the Fourth Edition, can now be found unconstitutional.

 

 

The Pennsylvania Workers’ Compensation Act allows employers and insurance carriers to limit exposure by requesting an Impairment Rating Evaluation (IRE) once a claimant has received 104 weeks of disability benefits. The IRE is conducted by a medical physician, and if it is determined that the claimant is 50% or less disabled, benefits can be converted from total disability to partial disability. The claimant may then receive 500 weeks of her full disability benefits. The disability benefits then terminate completely. See § 306(a.2) of the Act.

In Protz v. WCAB (Derry Area School District), 124 A.3d 406 (Pa.Cmwlth. 2015), the claimant incurred an injury in April of 2007. The employer obtained an IRE, which found the claimant 10% impaired under the Sixth Edition of the AMA (American Medical Association) Guidelines. Based on the IRE, the employer filed a modification petition in April 2012, seeking to convert the claimant’s total disability benefits to partial disability benefits, thereby reducing the amount of compensation to 500 weeks. The Workers’ Compensation Judge granted the employer’s petition, finding the claimant less than 50% impaired under the Sixth Edition Guidelines.

The claimant appealed to the Workers’ Compensation Appeal Board, arguing that § 306(a.2) was unconstitutional because the IRE was based on the wrong AMA Guidelines. The IRE physician had used the most recent AMA Guidelines, the Sixth Edition. The claimant argued that the Guidelines in effect at the time the legislation was enacted, i.e. the Fourth Edition of the AMA Guidelines, should have been used since those are the guidelines the General Assembly adopted. It was the claimant’s contention that by using the recent AMA Guidelines, the AMA, not the legislature, was given authority over deciding a claimant’s impairment.

The Commonwealth Court agreed with the claimant and reversed the judge’s decision. The court ruled that the IRE was invalid since it was not based on the Fourth Edition of the AMA Guidelines. The court remanded the case back to the judge to allow a decision to be made based on the Fourth Edition of the AMA Guidelines.

Under the facts in Protz, it will most likely not make a difference since the claimant was found only 10% impaired. However, there will be a question as to when the conversion begins. Will it return to the original IRE or pick up with the judge’s new decision?

In other cases, use of the Sixth Edition may make a difference as to whether a claimant is less than 50% disabled because the AMA Guidelines have undergone two revisions, and the Sixth Edition provides very different standards than the Fourth Edition. Thus, a claimant may be found greater than 50% disabled under the Fourth Edition, but not the Sixth Edition.

IREs performed using the most recent AMA Guidelines—not the Fourth edition—have been attacked by the claimant’s bar. Petitions to review or reinstate benefits have been filed. Exposure has been re-opened for employers based upon the Protz case. Benefits could be reinstated to temporary total disability, even if the claimant’s benefits have converted to partial disability based on an IRE. This makes the Commonwealth Court’s decision in Protz troubling. An employer/carrier cannot rely on any limited exposure in a case that has been converted to partial disability based on an IRE using a newer edition of the AMA Guidelines.

In terms of litigation, the defense bar has been defending these cases on the basis that the 60-day appeal period to challenge the IRE and conversion to partial disability has expired. In some cases, the IRE was performed over five years ago, and there has been no challenge since the Protz case was decided. If the IRE is more recent, this is not as problematic because the IRE can be rectified without much lapse in the time period the benefits have been converted. The more troubling cases are those where the claimant’s benefits have been converted to partial disability for several years or more. The exposure has already been calculated and funded. Obtaining a new IRE is not a good financial option to limit exposure.

The defense bar has contended the Protz case should not support a retroactive application of unconstitutionality. Protz does not indicate that it should be applied retroactively. Fortunately, the Pennsylvania Supreme Court has decided to hear the defendant’s appeal. The Supreme Court could do a number of things. It could completely overturn the decision in Protz, limit the decision, clarify it or affirm it. We will, of course, be monitoring the Pennsylvania Supreme Court for its decision and will update our clients.

*John is special counsel in our Harrisburg, Pennsylvania office. He can be reached at 717.651.3532 or jcswartz@mdwcg.com.

 

Defense Digest, Vol. 22, No. 2, June 2016

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