Protz – One Year Later

The epitaph reads: “Here lies the IRE. June 23, 1996-June 20, 2017. Killed by the Supreme Court of Pennsylvania and Mary Ann Protz. Rest in Peace.”

In June 1996, the Pennsylvania Legislature made sweeping changes to the Pennsylvania Workers’ Compensation Act, including the creation of the Impairment Rating Evaluation (IRE) process, which allowed employers to require a claimant to undergo an IRE. A whole person impairment rating was determined by a physician under the American Medical Association’s Guide to the Evaluation of Permanent Impairment. The employer could then potentially change the claimant’s benefit status from total disability to partial disability—which has a 500-week maximum. In theory, the law placed a cap on wage loss benefits of 604 weeks.

Challenges to the process ensued, and the courts slowly whittled away at what was viewed as an employer-friendly provision of the Act. Time restrictions for requesting an IRE were imposed, a request for an IRE made too early was invalid, and a request for an IRE made too late meant litigation to effectuate the benefit status change.

Then, the American Medical Association (AMA) updated its Guides to the Evaluation of Permanent Impairment, and a new challenge to the IRE was raised. A constitutional challenge. Protz. The argument was that the legislature had unconstitutionally delegated legislative authority to the AMA by wording the Act that the IRE was to be performed pursuant to the “most recent edition” of the AMA Guides.

The Commonwealth Court took what is now viewed as a conservative approach and said IREs could only be performed using the Fourth Edition of the AMA Guides, which were in effect in 1996. The Supreme Court of Pennsylvania disagreed. In Protz v. WCAB (Derry Area Sch. Dist.), 161 A.3d 827 (Pa. 2017), the justices held that the entire section of the Act that created the IRE process was an unconstitutional delegation of legislative authority, and they wiped it out completely. June 20, 2017. The IRE was dead.

It has been one year since that landmark decision was handed down by the Pennsylvania Supreme Court. So, what has happened in the year since Protz became the law of the land?

A survey of decisions issued by Workers’ Compensation Judges, the Workers’ Compensation Appeal Board, and the Commonwealth Court shows that there remains uncertainty and disagreement on how to apply Protz. It appears that the status of a claim and the status of a claimant’s benefits have an impact on how the Protz decision is being applied.

There are claimants whose benefits had been modified to partial disability by an IRE and who were still collecting wage loss benefits at the time of the Protz decision. There are claimants who had already collected the full 500 weeks of partial disability benefits to which they were entitled after an IRE had modified their benefit status. There are claimants who were in the process of litigating a modification petition based upon an IRE. How are each of these categories of claimant to be treated in light of the Protz decision?

Workers’ Compensation Judges have split on the issue. We have seen decisions finding that a claimant seeking reinstatement of temporary total disability benefits due to the Protz decision are only entitled to reinstatement of temporary total disability benefits as of June 20, 2017 (the date of the Protz decision). These judges have held that any weeks of partial disability benefits that have expired after an IRE are still expired. These judges seem to feel that the IRE was valid when performed, and, if the claimant did not challenge it, the claimant should not benefit from the later change in the law.

Other Workers’ Compensation Judges, however, are taking the position that Protz completely did away with the IRE provisions of the Act as if they had never existed in the first place. Therefore, these judges are granting reinstatement of temporary total disability benefits back to the date the benefit status was changed from total to partial disability. In one case we reviewed, the claimant’s disability status had been changed in 1999 pursuant to an IRE. The claimant’s 500 weeks of partial disability expired in 2008 and his wage loss benefits were stopped. The judge in that case ordered reinstatement of temporary total disability benefits all the way back to 1999 (with the employer being able to take a credit for benefits paid between 1999-2008).

The Workers’ Compensation Appeal Board issued a series of decisions on December 19, 2017, that appear to be consistent. They have held that a claimant’s total disability benefits should only be reinstated back to June 20, 2017 (the date of the Protz decision). The Appeal Board reasoned that there had been “countless unchallenged transactions” during the 20 years that the IRE process was still valid whereby a claimant’s benefit status was legally changed pursuant to the valid law at that time. The Appeal Board felt that it would be improper to allow a claimant to reinstate temporary total disability benefits all the way back to the date of the status change. The Appeal Board held that any weeks of partial disability that had expired were deemed to remain expired, but the claimants were all entitled to reinstatement of temporary total disability benefits as of June 20, 2017.

The Commonwealth Court has cited Protz in a total of five decisions. Only three of them pertain to workers’ compensation claims (the other two cases cite Protz for its holding on unconstitutional delegation of legislative authority in other settings).

In Thompson v. WCAB (Exelon Corp.), 168 A.3d 408 (Pa. Commw. Ct. 2017), the court had to decide what effect Protz had on a claimant whose benefits had been modified by a Workers’ Compensation Judge based upon an IRE. The matter was pending on appeal when Protz was decided. The Commonwealth Court held that the Supreme Court’s decision in Protz effectively struck the entirety of Section 306(a.2) from the Workers’ Compensation Act, and, therefore, the claimant’s benefits could not be modified based upon an IRE.

A different scenario arose in Gillespie v. WCAB (Aker Phila. Shipyard), 179 A.3d 451 (Pa. 2018). In that case, the claimant had filed a challenge to the modification of his benefits based upon an IRE that was performed eight years after the modification was effectuated. The claimant had challenged the change in benefit status based upon the Commonwealth Court’s Protz decision (124 A.3d 406 (Pa. Commw. Ct. 2015)), which had held that IREs could only be performed under the Fourth Edition of the AMA Guides. The Workers’ Compensation Judge granted his reinstatement petition, but the Appeal Board reversed and found the reinstatement petition to have been untimely filed. The Commonwealth Court actually affirmed the decision of the Appeal Board that held that the claimant’s reinstatement petition was filed untimely in its decision issued on May 17, 2017 (about a month prior to the Supreme Court’s decision in Protz). Gillespie v. WCAB, 167 A.3d 308 (Pa. Commw. Ct. 2017). The Supreme Court issued a per curium order on January 18, 2018, in which they vacated the Commonwealth Court’s opinion and remanded the matter to the Commonwealth Court to determine whether their decision in Protz applied retroactively, “thereby rendering Petitioner’s IRE void ab initio.” Therefore, it certainly seems that the Supreme Court feels that any IRE is completely void based upon their decision in Protz.

Finally, in Bradosky v. WCAB (Omnova Solutions, Inc.), 2018 Pa. Commw. Ct. Unpub. LEXIS 80 (Pa. Commw. Ct. Feb. 2, 2018), the claimant had challenged the constitutionality of IREs throughout litigation of the employer’s modification petition based upon an IRE. The Workers’ Compensation Judge had modified benefits, and the Appeal Board affirmed. The Commonwealth Court held that, based upon the Supreme Court’s decision in Protz, they were “compelled” to reverse the modification of the claimant’s benefits based upon an IRE. The court again noted that Section 306(a.2) was stricken in its entirety from the Act.

So, despite the fact that some Workers’ Compensation Judges and the Appeal Board seem to be taking the position that a claimant’s benefits can only be reinstated back to June 20, 2017, the Commonwealth Court is clearly taking the position that benefits cannot be modified at all based upon an IRE. In Thompson and Bradosky, the claimants were in the process of litigating whether their benefits should be modified based upon the IRE. The court clearly held that Protz controlled and that the claimants’ benefits in those circumstances could not be modified based upon an IRE. Therefore, if you have a claimant who is still litigating or appealing the change in benefit status based upon an IRE, the courts seem to agree that a claimant’s benefits must be reinstated to temporary total disability benefits back to the date the change in status was effectuated.

The more concerning case is Gillespie. The Commonwealth Court initially found the claimant’s challenge to the modification of his benefits eight years after the fact to be untimely. This would imply that they were unwilling to retroactively apply Protz. However, the Supreme Court vacated the Commonwealth’s decision and remanded for specific consideration of the retroactivity question. Hence, Gillespie is clearly the case to watch going forward. If the Commonwealth Court retroactively applies Protz to any claim where benefits were modified based upon an IRE and orders reinstatement of temporary total disability benefits back to the date of the change in status, then the IRE is indeed utterly and completely dead.

There is legislation pending—Senate Bill 963 and House Bill 1840—that would reinstate the IRE process in Pennsylvania and dictate the use of the Sixth Edition of the AMA Guides to the Evaluation of Permanent Impairment. The House Bill was referred to the Department of Labor & Industry for review in October 2017. The Senate Bill had first consideration in the Senate on January 23, 2018. It is awaiting second and third consideration with possible amendments to be made.

It’s a year after Protz, and we still have a lot of uncertainty. Whether IREs will ever be brought back to life in Pennsylvania remains to be seen. For now, however, it appears that any modification made to a claimant’s benefit status based upon an IRE is likely to be found void and temporary total disability benefits will likely be reinstated either back to the date of the status change or back to at least June 20, 2017.

*Judd is a shareholder in our Allentown, Pennsylvania office. He can be reached at 484.895.2307 or ajwoytek@mdwcg.com.

_{Defense Digest, Vol. 24, No. 2, June 2018. Defense Digest is prepared by Marshall Dennehey Warner Coleman & Goggin 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. © 2018 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.}