PA Supreme Court rules Impairment Rating Evaluation remedy is Unconstitutional!

Pennsylvania Supreme Court rules Impairment Rating Evaluation remedy is Unconstitutional!

Mary Ann Protz v. WCAB (Derry Area School District) (Pa. June 20, 2017)

The Supreme Court of Pennsylvania has ruled that the PA Work Comp Impairment Rating Evaluation remedy is unconstitutional, in its entirety.

Previously, the Commonwealth Court Decision approved the continuing performance of impairment rating evaluations (IRE), albeit pursuant to the Fourth Edition of the AMA Guides to the Evaluation of Impairment. (AMA Guides). That portion of the Commonwealth Court Decision has been reversed. The Commonwealth Court ruling that Section 306(a.2) violates the non-delegation doctrine of the Pennsylvania Constitution was affirmed.

In effect, there is no longer an Impairment Rating Evaluation remedy for the Employer and Insurer.

Factual and Procedural Background

The underlying facts and procedural history in the Protz case are straightforward. Protz sustained a work related injury in 2007. The school district voluntarily began paying total disability benefits. In October of 2011 Protz underwent IRE at the school district’s request. The IRE physician evaluated Protz and assigned a 10% impairment rating based upon the Sixth Edition of the AMA Guides. As her impairment rating was less than 50%, the school district filed a Modification Petition seeking to convert her status from total to partial. This Petition would limit the duration of wage loss benefits to a period of 500 weeks.

The Workers’ Compensation Judge granted the school district Modification Petition, as the whole body impairment rating was less than 50%. Protz appealed the WCJ Decision to the Workers’ Compensation Appeal Board and argued that the general assembly unconstitutionally delegated to the AMA the authority to establish criteria for evaluated permanent impairment. The Appeal Board rejected this constitutional argument and affirmed the WCJ Decision.

In the Commonwealth Court appeal, Protz again argued that Section 306(a.2) of the Act violates Article II, Section I of the Pennsylvania Constitution. The Commonwealth Court agreed. The Court held that: the General Assembly has the power to make laws, but it cannot constitutionally delegate that power to any other branch of government or to any other body. The en banc panel agreed with Protz that Section 306(a.2) requirement that physicians use the “most recent edition” of the AMA Guides violates Article II Section I. The reasoning is that the assessment of impairment is placed in the hands of “another body”. The AMA could (and did) change the Guides without consulting the PA General Assembly. In effect, Pennsylvania law would change without legislative review or action.

The Commonwealth Court declared Section 306(a.2) unconstitutional, only in so far as it proactively approved versions of the AMA Guides beyond the Fourth Edition, without legislative review. The Court preserved a portion of the IRE remedy and remanded the Protz case to the WCJ with instructions to apply the Fourth Edition of the Guides, which was the version in existence when the General Assembly enacted Section 306(a.2) in 1996.

The Supreme Court Decision

Both Employee and Employer appealed the Commonwealth Court decision.

Justice Wecht authored this plurality opinion. First, he reviewed the non-delegation issue. The school district argued that the General Assembly is free to adopt current and future standards that are published by a well recognized independent authority. Protz argued that Section 306(a.2) violates the non-delegation doctrine as it gives the AMA unfettered discretion over Pennsylvania’s impairment rating methodology.

At the heart of the non-delegation doctrine is the principle that the General Assembly cannot delegate “to any other branch of government or to any other body or authority” the power to make law. However, the Constitution does permit the General Assembly, in some instances, to assign authority in its discretion, to execute or administer a law. The Constitution imposes two fundamental limitations when the General Assembly acts in this matter. First, the General Assembly must make “the basic policy choices”. Second, the General Assembly must include “adequate standards which will guide and restrain the exercise of the delegate administrative functions”.

The Supreme Court reviewed its prior decisions regarding the non-delegation issue. The Court concluded the authority delegated to the AMA in Section 306(a.2) is even more broad and unbridled than prior statutes which were reviewed and held to have violated the non-delegation doctrine (citing West Philadelphia Achievement Charter Elementary School (Pa. 2016)).

The Supreme Court found that the General Assembly did not favor any particular policies relative to the AMA Guides methodology for grading impairments nor did it prescribe any standards to guide and restrain the AMA’s discretion to create such a methodology. The Court speculated that the AMA could concoct a formula which would yield an impairment rating guide which could deem nearly every claimant to be at least 50% impaired or to the contrary to deem that almost no one exceeds a 50% threshold or the AMA could concoct anything in-between those two extremes.

The Supreme Court noted that the General Assembly did not include any procedural

mechanisms within the Section 306(a.2 )which the court has previously considered essential to protect against administrative arbitrariness and caprice. For example, the General Assembly did not require the AMA to hold hearings, accept public comments or explain the grounds for its methodology in a reasoned opinion, which then could be subject to judicial review.

It is noteworthy that The Supreme Court cited several medical literature articles regarding the flaws in the AMA Guides, including a group of physicians who authored a chapter in the 5^th edition Guides!

Now that the Court concluded “most recent edition language” is unconstitutional could the IRE remedy be preserved, based upon utilization of the 4^th edition, which was the Guide available at the time the 1996 amendment?

Unfortunately the answer was a resounding “NO”.

The Supreme Court determined that the Commonwealth Court erred in remanding the Protz case to the WCJ with instructions to apply the Fourth Edition of The Guides. 

The Court rejected the argument that the Fourth Edition of The Guides was in existence at the time the statute was enacted and it could have been incorporated by reference by the General Assembly.

The Supreme Court rejected this analysis as the statute did not specifically require use of the Fourth Edition of The Guides; rather the statute required the use of the “most recent edition” of the Guides.

The Supreme Court rejected the argument that striking the unconstitutional “most recent edition” language would allow the remainder of Section 306(a.2) to remain an effective remedy. 

The Court concluded that removal of the offending language renders the remainder of Section 306(a.2) incomprehensible. This Section was viewed as a paradigmatic example of a law containing valid provisions that are inseparable from void positions. The Court concluded – we must strike Section 306(a.2), in its entirety.

Recommendations for Cases with Past Impairment Rating Evaluation Determinations

1.       Situations where you must issue a supplemental agreement to recognize the modification of partial status to total disability status –

                                I.            “Open Cases- currently  pending before WCJ, WCAB, and Commonwealth Court”

                              II.            “Cases with Impairment Rating Determinations within 500 week  period”

a)      Ask claimant for a settlement demand.

b)      Make a settlement offer.

c)       Schedule an IME, to obtain a current physical capacity opinion.

d)      Retain a Vocational Expert to interview claimant, to perform a labor market survey and to prepare an Earning Power Assessment Report.

e)      Contact the Employer. Can they make a modified duty (even part-time) job offer to Employee, to commence (re-start) the 500 week clock.

f)      Determine if claimant has “retired” or withdrawn from the work force.

g)      Determine if claimant is working.

2.       In situations where you it is uncertain that benefit status must be voluntarily modified

                                I.            Claimant already paid 500 weeks of partial disability benefit status

a)      Ask claimant for a settlement demand

b)      Make a settlement offer

c)       Schedule an IME, obtain physical capacity opinion

3.       PENALTY assessment  for violation of the Act

a)      Will be available in “open” cases, if timely modification is refused.

b)      Reasonable time to modify benefit status – 21 days from request (?).

c)       “Closed” cases- possibility of penalty is less likely, as there is a legitimate argument as to entitlement of modification – at this point

4.       ATTORNEY FEE assessment for unreasonable contest

a.       Will be available in “open” cases, if timely modification is refused and litigation is required.

b.      “Closed” cases- possibility of attorney fee assessment is less likely, as there is a legitimate argument as to claimant entitlement of modification of benefit status – at this point.

This analysis may change, as appellate caselaw develops.

WHEN IN DOUBT - REVIEW YOUR FILE WITH YOUR WORKERS' COMPENSATION ATTORNEY.

 Remember, these comments are not intended to be legal advice. Each case is unique and must be discussed at length, after you hire an attorney.