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Use of Collateral Estoppel in Workers’ Compensation and Heart and Lung Litigation – An Overview

On Behalf of | Jul 7, 2017 | Firm News, Workers’ Compensation

Over the last approximate ten year period, the courts of the Commonwealth have addressed the applicability of collateral estoppel in Workers’ Compensation, Heart and Lung and other related areas.

Although there is still a good bit of room for the parties to argue their respective positions, the case decisions have started to take some shape in this area.  The analysis begins with the Supreme Court opinion in the case of Cohen vs. Workers’ Compensation Appeal Board (City of Philadelphia), 909 A.2d 1261 (Pa 2016).

The Cohen opinion was written in rather broad terms to give general guidelines of whether and how the doctrine of collateral estoppel can be used in the setting of injury litigation.  However, there were five distinct points which the Supreme Court affirmed to remain applicable in analyzing these issues:

  1. When the issue in the prior adjudication was identical to the one presented in the later action.
  2. When there was a final judgment on the merits.
  3. When the party against whom the plea is asserted was a party or in privity with a party to the prior adjudication.
  4. When the party against whom it is asserted has had a full and fair opportunity to litigate the issue in a prior action.
  5. When the determination in the prior proceeding was essential to the judgment.

When all five of these criteria are present, collateral estoppel can be asserted to foreclose re-litigation of issues of law or fact in a subsequent action.

The specific facts of the Cohen case involved a police officer who suffered injuries which were recognized through both worker’s compensation and the Heart and Lung regulations.  Benefits under both systems were later suspended when Claimant briefly returned to work, after which he filed for reinstatement of both claims.

The Heart and Lung claim was decided first and Employer prevailed, thereafter filing a Termination Petition in Workers’ Compensation and arguing collateral estoppel.

The Workers’ Compensation judge (WCJ) rejected Employer’s argument and accepted Claimant’s evidence with reinstatement of benefits.  Employer’s appeal to the Workers’ Compensation Appeal Board (WCAB) resulted in its position being accepted and relief to Claimant denied.  The Commonwealth Court affirmed.

When the case ultimately reached the Supreme Court of Pennsylvania, the Justices agreed with the Claimant’s arguments that all five criteria were not satisfied.  The question of whether a party had a full and fair opportunity to litigate the issue in question was broken down into two parts:  The amount in controversy and the procedures for litigating the issues.

The court concluded that the regulations governing the Heart and Lung proceedings were more ad hoc and less formal than the rather detail-oriented Rules of Practice and Procedure governing Workers’ Compensation matters.  The court presumably did not find the same level of procedural safeguards in the Heart and Lung proceedings as in the Workers’ Compensation matter.

The other question involving amount in controversy was pertinent as the Heart and Lung benefits were of a limited duration.  They could initially be approved for one year but extended to three years under certain circumstances.

The Workers’ Compensation benefits, on the other hand, could continue indefinitely.  They would not be terminated on the basis of permanency, as would be the case in Heart and Lung, but rather could continue indefinitely if found to be permanent.

The court provided some broad language as follows which can give guidance in future litigation:

In summary, we recognize the unique nature of the Workers’ Compensation scheme, the substantial interests of Claimants at stake, and the procedural and economic differences as compared to Regulation 32 proceedings.  Further, we are reluctant to construe a scheme affording special remuneration to injured police officers as foreclosing such officers’ access to review in the Workers’ Compensation system on the critical question of disability.  Accordingly, we find it appropriate to allow the decision concerning earnings capacity under the Workers’ Compensation Act to be made in a manner contemplated within such remedial legislation.

Based on the above quote from the Supreme Court, one could infer that subsequent cases would be deferential to the Workers’ Compensation proceeding as more carefully protecting the rights of Claimants in litigation.  However, this has not turned out to be the case in all instances.

In the case of Department of Corrections vs. Workers’ Compensation Appeal Board (Wagner-Stover), 6 A.3d 603 (Pa. Commwlth. 2010), the Commonwealth Court reached a different result where the initial payment of benefits was under Act 632 rather than the Heart and Lung Act.  Act 632, as well as Act 534, allow for payment of full salary continuation (along with other benefits) to certain classes of workers who are injured as a result of an act of an inmate.  These benefits may continue indefinitely without termination on the basis of permanency.  The method by which these benefits can be stopped is to prove full recovery.

The Claimant’s benefits were terminated in the Act 632 proceeding and the Department of Corrections then filed a Petition for Termination in the Workers’ Compensation proceedings, arguing collateral estoppel.

In performing its analysis, the court in Wagner-Stover looked at the two part requirement under the category of whether the litigants had a full and fair opportunity to address the issues.  In this particular instance, it was determined that the Act 632 benefits involved a substantially similar amount at risk or in controversy as would a Workers’ Compensation proceeding.  Benefits could be paid indefinitely.

Likewise, the procedures for attempting to obtain Act 632 benefits were found to be very similar to the Workers’ Compensation scheme.  In fact, Act 632 disputes are resolved in a formal administrative proceeding before the department in accordance with the General Rules of Administrative Practice and Procedure (1 Pa. Code Part II, §§31.1 – 35.251) which govern most other Commonwealth agencies.

Accordingly, the Commonwealth Court argued that collateral estoppel could be applied.  The Claimant was not permitted a “second bite of the apple” in the Workers’ Compensation proceeding.

In a more recent case, Merrell vs. Workers’ Compensation Appeal Board (Commwlth Pa. Dept. of Corrections), 493 CD 2016, the Commonwealth Court applied the Cohen and Wagner-Stover analysis and reached the conclusion that a prior determination in the Heart and Lung proceeding could not be used as collateral estoppel in the Workers’ Compensation matter.

Under the collective bargaining agreement (CBA) between the Department of Corrections and the Commonwealth of Pennsylvania, Heart and Lung proceedings would be heard by an arbitrator according to procedures which were once again described as ad hoc.

When the Claimant asserted the favorable Heart and Lung award in the Workers’ Compensation proceeding, the court in Merrell agreed with the employer.  The employer did not have a full and fair opportunity to litigate as the amount in controversy (potentially lifetime benefits), did not reasonably equate with Heart and Lung benefits which were limited in duration.

As to the procedural issues, the court referenced Wagner-Stover in stating that each proceeding must be sufficiently formal “to allow each litigant to develop a complete record on a disputed fact.”  Citing Wagner-Stover, 6 A.3d at 616.

Further, the Workers’ Compensation system is highly regulated with multiple procedural requirements and safeguards, most notably with respect to medical evidence.  Such evidence must be unequivocal in order to be admissible, a factor which was absent from the collective bargaining agreement.

The court then denied the Claimant’s request to successfully assert collateral estoppel as against the employer for an award of Workers’ Compensation benefits.

Considering all three cases referenced above, there would appear to be a solid foundation for arguing in future litigation that the results obtained in Act 632 claims (and perhaps also the similar Act 534 claims which apply to acts of inmates), can be asserted as collateral estoppel in a subsequent Workers’ Compensation proceeding.

Moving from Heart and Lung benefits to the Workers’ Compensation arena will likely provide a different result based on the Cohen and Merrell cases.  The procedural safeguards and amounts in controversy may be sufficiently different so as to require full litigation of the issues in the Workers’ Compensation matter.

In the unusual situation of the Worker’s Compensation case being litigated first, the question remains unaddressed as to whether collateral estoppel would apply in a subsequent Heart and Lung matter.  Based on the legal analysis outlined above, a good argument could be made in favor of the affirmative use collateral estoppel in such a situation.

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], or Margaret M. Hock, Esquire at (412) 316-8647 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.