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An Assault on the IRE

On Behalf of | Jul 14, 2016 | Firm News, Workers’ Compensation

Act 57 was enacted by the Pennsylvania legislature to help reduce the cost of workers’ compensation in the Commonwealth of Pennsylvania.  Consistent with trends in many states across the country, Act 57 contained a provision at Section 306(a.2) which provided a method of evaluating a claimant’s permanent partial disability, and limiting the benefits available for wage loss to 500 weeks.  Clearly, the intention of the legislature was to limit benefits and thereby achieve the purpose of Act 57 to reduce the costs of workers’ compensation in the Commonwealth of Pennsylvania.  Section 306(a.2)(1) states:

When an employee has received total disability compensation pursuant to clause (a) for a period of one hundred four weeks, unless otherwise agreed to, the employee shall be required to submit to a medical examination which shall be requested by the insurer within 60 days upon the expiration of the one hundred four weeks to determine the degree of impairment due to the compensable injury, if any.  The degree of impairment shall be determined based upon an evaluation by a physician who is licensed in this Commonwealth, who is certified by an American Board of Medical Specialties approved Board or its osteopathic equivalent and who is active in clinical practice for at least twenty hours per week, chosen by agreement of the parties, or as designated by the department, pursuant to the most recent edition of the American Medical Association “Guides to the Evaluation of Permanent Impairment.”

The assault on this section of the statute by claimant’s bar and the courts began almost immediately.  The first attack on this section of the Act began with the Supreme Court’s decision in Gardner v. WCAB (Genesis Health Ventures) and Walmart Stores, Inc. vs. WCAB (Ryder), 888 A.2d 758 (Pa. 2005).  In that decision, the Commonwealth Court limited the availability of the automatic status change under Section 306(a.2) (from temporary total to permanent partial), even ignoring the Bureau’s interpretation of the statute in the process.  Keying on the word “shall” (as it related to employer’s request for an impairment rating evaluation), the Court determined that the automatic change of status could only be achieved if the employer requested the IRE within that very brief 60-day window.  The Court held that an employer’s failure to do so did not entirely prevent the employer from requesting an impairment rating evaluation, but did result in the employer only being able to modify benefits down to partial benefits through the use of the “traditional administrative process.”  Nothing in the language of the statute itself created that duty.  Hence, from the time Gardner was decided forward, if an employer failed to request an impairment rating evaluation within 60 days of the claimant’s receipt of 104 weeks of benefits, it could no longer change the status of benefits by simply sending out a Notice of Change in Status, but rather, had to go through the expensive process of a modification petition before a Workers’ Compensation Judge.  Clearly, if the goal of Act 57 was to reduce the cost of workers’ compensation in the Commonwealth of Pennsylvania, this interpretation did not help to achieve that purpose as the Court merely created a new layer of litigation and cost associated with changing the claimant’s status.

Following Gardner, the Commonwealth Court took a second major step toward gutting the value of 306(a.2) in its decision last year in Protz v. WCAB.  In this recent attack on the process, the Commonwealth Court has held that the use of the most recent edition of the AMA Guides to the evaluation of permanent impairment (as required under 306(a.2)) is unconstitutional.  The Court held that the legislature could not rely on serial updates of the AMA Guides to the evaluation of permanent impairment as to do so was to impermissibly delegate its legislative authority to the AMA.  While this author thinks that decision is ridiculous, by reaching this decision, the Court has effectively caused any number of otherwise valid IRE evaluations currently in process to be defunct.  Once again, this decision has done nothing but increase the cost and amount of litigation under the Act, and is completely contrary to the purpose of Act 57.  This author cannot fathom how the Commonwealth Court would expect the legislature to do anything but rely on trained medical professionals who put together the AMA Guides in order to evaluate percentages of disability.  Clearly, the ability to look at physical conditions and evaluate them for permanent impairment is well beyond the scope and the ability of any legislative body.  Reliance on the Guides across the United States is commonplace.  The effect of Protz, of course, at this time is only to now require the use of the fourth edition.  All evaluations that have been previously accomplished under the sixth edition (for which cases are still pending) will now be defunct unless the employer can go through the cost of having the evaluation updated under the fourth edition.  It should be noted that the Protz decision is currently on appeal to the Supreme Court, and if the claimants get their way, not only will the use of the most recent edition be invalid, but also the entire process of using the AMA Guides will be unconstitutional.  If that occurs, then Section 306(a.2) will be effectively eliminated.

Since the Protz decision, the Supreme Court levied yet another blow on Section 306(a.2) in its recent decision in IA Construction Corporation and Liberty Mutual Insurance Company v. WCAB (Rhodes), No. 18 WPA 2015 (decided May 25, 2016).  In the Rhodes decision, Chief Justice Saylor writing for the Court en banc determined that a Workers’ Compensation Judge is free to reject the testimony of a Bureau selected IRE physician on the basis of credibility even where that opinion as presented by the employer is uncontradicted by any medical evidence adduced by the claimant.  In the Rhodes case, the employer obtained an IRE which rated the claimant at less than 50% whole body impaired.  Because the evaluation was not requested within 60 days of claimant’s receipt of 104 weeks of benefits, the employer was forced to use the “traditional administrative process” to modify the claimant’s benefit status.  The employer filed the petition and presented the testimony of the IRE physician selected by the Bureau.  The Judge then rejected that testimony on three grounds (two of which were rejected by the Court).  Most notably, the Judge rejected the IRE physician’s expert testimony on the basis that the claimant had a closed head injury and the IRE physician was a physiatrist (as opposed to a neurologist or neuropsychologist).  The Judge was unconvinced by the doctor’s testimony essentially stating that the doctor had not done a complete enough evaluation (or was not qualified to do a complete evaluation) of the claimant’s psychological/closed head injuries.  The Supreme Court upheld the decision finding that it was a reasoned decision, and that the employer failed, therefore, to produce substantial evidence.  The Court seemed to pay little attention to the employer’s argument that selection of an IRE physician is made by the Bureau of Workers’ Compensation, and is outside the control of the employer.  While the Court noted that selection of the IRE physician was made by the Bureau, a claimant would have even less control over selection of the physician than the employer.  With this decision, the Court has now made it possible for a claimant to produce no contrary medical evidence and still prevail and defeat the employer’s attempt to modify benefits.  The Court would apparently not even review the matter using the “capricious disregard” standard normally applied where only one party produces evidence.

Clearly, the courts have significantly reduced the effectiveness and value of Section 306(a.2) through this series of decisions.  Perhaps it is time for the legislature to step in with additional detailed legislation to reverse this alarming trend coming out of the appellate courts.

For a confidential analysis of your workers’ compensation issues, or questions about TRC’s workers’ compensation practice area, please contact Harry Rosensteel, Esquire at (412) 316-8686 or [email protected].

Important NoticeThis information is intended for general guidance only, and should not be used as a substitute for specific legal advice.  For specific legal advice applicable to your situation, you should consult an attorney of your choice.  Although believed to be accurate when written, no guarantee of completeness or accuracy to your particular circumstances should be implied.  Laws, regulations, and court decisions in this area change frequently, and you should consult the attorney of your choice for up-to-date information.