August 17, 2017
Once a Pennsylvania workers’ compensation claimant qualifies for wage benefits, that claimant is generally entitled to continue receiving these wage benefits until her or his right to wage benefits ends or is modified either by (1) agreement of the parties (usually in the form of a settlement) (2) a Decision from a Workers’ Compensation Judge, or (3) operation of law (such as the death of the claimant).
Until recently, there was another method by which a Pennsylvania employer could seek to cap wage benefits to otherwise payable to an injured worker. Pursuant to Section 302(a) of the Pennsylvania Workers’ Compensation Act (WCA), an employer could seek a medical opinion that the claimant’s work-related injuries left the claimant with less than a fifty percent (50%) full body impairment pursuant to impairment guidelines established by the American Medical Association (AMA). In practical terms, anything less than a catastrophic work injury results in a finding of a less than 50% full body impairment. Once this finding was made, the employer could take steps seeking to cap the injured worker’s wage benefits to five hundred (500) weeks from the date of the medical examination in question. Effectively, Section 302(a) provided Pennsylvania employers with a valuable tool to cap their wage liability to injured workers.
On June 20, 2017, the Pennsylvania Supreme Court decided the case of Protz v. Workers’ Compensation Appeal Board (Derry Area School District). In Protz, the Court declared that the impairment rating (IRE) provisions of the WCA are unconstitutional as drafted. The ruling represents a significant loss in the Pennsylvania insurer and employer’s ability to reduce workers’ compensation exposure.
Technically, the Protz Court held that section 302(a) of the Act represented an unconstitutional delegation of legislative authority. Section 302(a) was promulgated as part of the sweeping cost cutting amendments to the WCA, know as Act 57 of 1996. The law, as drafted, provided that employers and insurers were permitted to demand that a Claimant undergo an impairment rating evaluation by a physician using “the most recent edition” of the AMA Guides to the Evaluation of Permanent Impairment. 77 P.S. Sec. 511.2(1). The IRE also provided objective justification for establishing settlement values and thereby facilitated settlement of more claims by Compromise and Release.
In declaring the provisions unconstitutional, the Court reasoned that, in drafting the IRE provisions, the legislature failed to insert adequate standards to “guide and restrain the exercise of delegated administrative functions”. Protz. In other words, the Act, as drafted, gave the AMA the unbridled authority to create a new standard each time the AMA guides were revised. The most recent edition is now the 6th Edition. The Court was careful to emphasize that the ruling was not intended to disparage the AMA, but instead to analyze the constitutional parameters of delegating legislative authority.
The immediate impact of Protz, on particular cases in litigation, or at various duration of the claim, will depend on how the ruling is applied. It is likely to be applied in either a partially retrospective, or a purely retrospective manner. As a result, matters which are final will not likely be reopened. These matters include those finalized by unappealed final adjudication and order, including Compromise and Release, or those Claims extinguished by the statute of repose. Matters which are not yet final, will likely find the partial disability characterization returned to total disability, and the claim will not be mitigated by the IRE provisions.
There is potential grey area in application of Protz. Each circumstance, or category of circumstances, must be evaluated separately. In spite of the grey, one thing is certain: Pennsylvania employers and insurers have lost a major claims mitigation tool.
If you have any questions, please contact Linay L. Haubert at 215-345-8888 or via email at lhaubert@highswartz.com.
The information above is general: we recommend that you consult an attorney regarding your specific circumstances. The content of this information is not meant to be considered as legal advice or a substitute for legal representation.