IRE Determination remains Valid despite subsequent expansion of Injury Description

The Impairment Rating Evaluation Remedy 
and the impact of the changing Injury Description. 

An Employer may change the workers' compensation benefit status of an injured Employee from an unlimited "total disability" status to a "partial disability" status, limited to a duration of 500 weeks. This remedy is accomplished via the request for an Impairment Rating Evaluation (IRE) pursuant to Section 306(a.2) of the Pennsylvania Workers' Compensation Act.

After an Employee has received total disability benefits for a period of 104 weeks, the Employee must submit to an IRE, when requested by the Employer. The IRE remedy is automatic if the IRE request was made within 60 days of the 104th week and the impairment rating is less than 50% according to the AMA Guides. The Employer may request an IRE, at any point beyond the 60 day window, but this remedy is not automatic and requires the filing of a petition.

What is the character or nature of the work injury changes?

The 2009 Pennsylvania Supreme Court decision in Cinram Manufacturing v. WCAB (Hill) discussed 2 types of Review Petitions. The review/correction of the description of injury, is proper where there was a mistake in the injury description since the original compensation document.
The 2nd type of review is an amendment/expansion of the injury description, to address injury which subsequently arises as a consequence of the original injury.

We previously discussed the effect of the review of the description of the work injury upon the Employer Termination petition remedy. ( See: Harrison v. WCAB (Auto Truck Transport at October 10, 2013 Blog Post).
These filings seem to be a recurring theme... Employer files a Termination petition ... Employee files a Review to expand the injury beyond the scope of the Termination medical exam.

A recent appellate decision addressed the impact of a subsequent WCJ decision to grant a review/expansion of the work injury description upon the earlier successful Employer IRE.
See: Duffey v. WCAB (Trola-Dyne Inc.) a reported decision of a panel of the Commonwealth Court of Pennsylvania authored by Judge Cohn-Jubelirer on June 26, 2015.

Factual and Procedural Background

In March of 2009 Employee sustained bilateral hand injuries as a result of handling electrical wires while repairing a machine. Employer voluntarily accepted responsibility for this injury via Notice of Compensation Payable (LIBC-495). This work injury was described as "bilateral hands, electrical burn, striping some wire".

In March of 2011 Employer requested an IRE when Employee received 104 weeks of total disability benefits. A Request for designation of a Physician to Perform an IRE (LIBC-766) was filed. The work injury was described as "bilateral hands - nerve and joint pain". An appointment was scheduled and accomplished.

Bruce E. Sicilia, MD conducted an IRE on June 2, 2011 and issued an Impairment Rating Determination Face Sheet (LIBC-767) with the accompanying report. Impairment was 6%.

On June 28, 2011, Employer issued a Notice of Change of Workers' Compensation Disability Status (LIBC-764) based upon Dr. Sicilia's report.
On July 14, 2011, Employee filed a Petition to Review Compensation Benefit Offset, alleging the IRE was invalid, without further explanation.
On December 16, 2011, Employee asserted the IRE was invalid as the description of injury was incomplete.

Employee Review Petition - Medical Evidence

• Debra A. Bell, MD, the Employee family physician, diagnosed an "adjustment disorder with depressed mood" on August 18, 2010.
• Scott M. Cherry, MD, a board-certified specialist in neurology and internal medicine (together with Dr. Bell) diagnosed post-traumatic stress disorder (PTSD). 
• Employer presented the medical expert deposition testimony of Dr. Sicilia regarding his IRE exam findings and the 6% impairment rating for Employee.  
• Timothy J. Michals, MD, a board-certified psychiatrist, forensic psychiatrist and neurologist, acknowledged the diagnosis of adjustment disorder, but opined Employee fully recovered. He disagreed with the PTSD diagnosis. 

WCJ Review Petition Decision

WCJ accepted Employee testimony and medical expert evidence in granting Employee Review Petition.

WCJ added the diagnoses of adjustment disorder with depressed mood and PTSD to the work injury description.

WCJ concluded IRE was invalid as it did not address these additional work-related injuries. Employee could not modify Employee disability status from TTD to PPD.

WCAB reversed WCJ Decision

IRE was valid as Employee never sought to amend the NCP description of work injury until December 16, 2011 petition (amendment). This was after the June 2, 2011 IRE Determination.
Dr. Sicilia determined Employee was at MMI,  he properly performed an IRE based upon the accepted injuries and the 6% impairment was not refuted. 

Commonwealth Court Affirmed WCAB

Section 306(a.2) governs the manner in which an employer may obtain a change in an employee's disability status based upon an IRE, as well as how an employee may challenge an IRE.

An employee has the right to immediately challenge the IRE and/or appeal the reduction of his/her disability status before the reduction becomes effective, during the post-IRE 60 day notice period. citing: Johnson v. WCAB (Sealy Components Group) and Barrett v. WCAB (Sunoco Inc.).

After the 60 day notice of modification period ends, the employee may challenge the IRE change of disability status, by attempting to Reinstate total disability status, via evidence that a subsequent IRE establishes an impairment rating of 50% or greater. See: Wingrove v. WCAB (Allegheny Energy).

Here, Employee was diagnosed with adjustment order with depressed mood in August 2010. Section 413(a) allows a petition for review and modification of a compensation agreement at any time. He did not seek to review and amend the description of injury until after the IRE.

Employer argued, as a practical matter, the IRE physician can only assess impairment for injuries that are accepted as work-related.

Employee argued that the prior decision at Harrison v. WCAB (Auto Truck Transport Corp) acknowledged instances where the WCJ may review and amend the description of injury in the course of IRE petition proceedings.

Employer argued acceptance of Employee's arguments would allow one to challenge a past IRE based upon injuries that were not yet determined to be work-related!

Commonwealth Court Reasoning

The purpose of an IRE is to determine the degree of impairment due to the compensable injury. The term "compensable injury" is used throughout this section . See statutory language at 306(a)(2); 77 PS 511.2(1).

The Harrison decision states that the NCP establishes the description of the work injury.

Prior decisions note, it is the claimant's physical condition at the time of IRE that governs the validity of the IRE. Westmoreland Regional Hospital v. WCAB (Pickford).

Wingrove v. WCAB (Allegheny Energy) [relied upon by Employee] discussed the litigation of Review Petitions of the work-related injury description in 2009, about 4 years after the IRE. The WCJ granted one Review Petition, and amended the description of the work injury However, this expansion of the work injury did not negate the validity of the 2005 IRE. After 60 days, IRE became fixed and beyond challenge ... in the absence of an IRE demonstrating 50% or greater impairment.

The focus in determining the validity of an IRE is the state of the claimant and the compensable injury, as described in the NCP at the time the IRE is performed.  (slip opinion p 9).

The reform goals of the 1996 amendments are not advanced by allowing invalidation of an otherwise valid IRE, just because one can subsequently establish that work-related injuries exist.
"Employee's position would not improve the efficiency of the WC system...". slip opinion p 12.

Employee's position would effectively strip the Employer of the one opportunity to obtain a self-executing change in employee disability status [during the 60 day window after 104 weeks of TTD] by adding injuries to the NCP at a time after the IRE is performed.

A tactic to delay the review of the description of work injury, as a litigation strategy, does not serve the purpose of the 1996 amendments.

"... our conclusion encourages claimants to be proactive as the end of the 104 week period is approaching and determine whether any work related injuries should be added to the NCP, so they are considered, if or when an IRE is requested and performed". slip opinion p 13.


PRACTICE POINTERS:
1.   It would appear the Employers and Insurers should more vigorously argue the Legislative History and Intent of the 1996 Amendments. In the reasoning of this opinion, the Court references: 

• the purpose of the IRE remedy,
•  the reform effort of the 1996 amendments "to reduce rising Workers'Compensation costs and restore efficiency to the Workers' Compensation system"
• employee position would not improve the efficiency of the WC system,
• employee position would not reduce costs of the WC system,
• employer has only one opportunity to obtain the self-executing version of an IRE,
• delay strategies should not be encouraged.

2.   It seems like a "fairness" argument underlies this reasoning. 

3.   IMHO the IRE remedy remains the MOST effective tool to reduce future worker compensation indemnity wage loss benefit liability. 

4.   An IRE should be scheduled in every case (with a few remote exceptions).

5. As we have witnessed in past appellate challenges to successful IRE determinations: 

• be certain claimant is at MMI; 
• be certain the description of the accepted work-related injury is clear, as the NCP may be implicitly amended by a WCJ decision ... don't just read the NCP;
• do not file a premature IRE request.

Proper Calculation of Interest Payable in the PA Work Comp Award

Interest is due on all unpaid workers compensation indemnity wage loss benefits. Section 406.1 (a) of the Pennsylvania Workers Compensation Act states that "interest shall accrue on all due and unpaid compensation at the rate of ten (10) percentum per annum".

It seems that every few years a question arises as to how this interest payment is to be calculated.
Is it a "simple interest" calculation?
Is it a "compound interest" calculation?
Section 406.1(a) is silent on this point.

As we celebrate the 100th anniversary of the enactment of the Pennsylvania Workers' Compensation Act ... one might ask ...
Why is there still a question regarding such a simple (no pun intended) aspect of workers compensation law?

The "mature" members of the workers' compensation community will recall that in the past, the Bureau of Workers' Compensation would provide one with an interest calculation.
Initially this request was accomplished via a telephone call with a real person.
Later this was accomplished via visit to the Bureau website and use of the "interest calculator".
A rather simple process.

At some point it time this interest calculator was removed. Urban legend has it, that claimant attorneys complained (of course!). It was argued that the Bureau should not provide an interest calculation, as an "official" calculation, where the Act was silent on a calculation method.
The Bureau explanation was somewhat of a non-sequitur, stating the parties " should select their own interest calculation method based upon the facts of each individual workers' compensation case". 
I don't find that very helpful, do you?

NOW, we have another appellate case law precedent that determines the interest due on unpaid workers' compensation benefits is SIMPLE interest, it is not COMPOUND interest.
See the decision of a panel of the Commonwealth Court of Pennsylvania at: Tobler v WCAB (Verizon Pennsylvania, Inc.), No. 2211 C.D. 2014 authored by Judge Simpson on July 9, 2015.

Factual and Procedural Background

The Employee Penalty petition litigation was limited to the issue of the proper calculation and payment of statutory interest on reinstated indemnity wage loss benefits.

In prior litigation, the Employee established entitlement to reinstatement of total disability benefits. Initially, the WCJ decision and order directed reinstatement of indemnity wage loss benefits as of March 2, 2005.  After  appellate review this reinstatement date was revised to November 21, 2002.
[prior unreported decision is at: same case caption, filed March 30, 2011.]

In May 2012, Employer issued payment of the reinstated total disability benefits, commencing as of the November 21, 2002 date. The payment of $117,278.74, represented compensation due plus interest.

Employee filed a penalty petition, asserting entitlement to the payment of interest, calculated by a compound interest method, which would result in a total payment of $139,929.39.

WCJ & WCAB & Commonwealth Court Decisions

The penalty petition was denied by the WCJ.
There was no penalty, as simple interest was payable to Employee, not compound interest.

The Commonwealth Court referenced the authorities cited in the WCJ and WCAB opinions.
WCJ Rago cited several early decisions of the Pennsylvania Superior Court.

The 1936 Superior Court decision at Kessler v. North Side Packing Co. explained that prior to a 1927 amendment, the Pennsylvania Workers' Compensation Act did not specifically provide for interest payment on past due compensation. The 1936 Superior Court decision at Petrulo v. O'Herron Co., determined that the Commonwealth general interest statute applied, even to work comp cases before the 1927 amendment, such that claimant's were entitled to payment of simple interest at six (6) percent. [In 1972 the interest rate was raised to ten (10) percent].

Employee argued to the WCAB that interest is consider additional compensation to the worker.
Interest is not to be considered a penalty against the employer.
Employee reasoned:
Section 406.1(a) requires that interest "accrue" on all due and unpaid compensation.
Interest gained is unpaid compensation.
Therefore that compensation should also accrue interest.
Employee argued he should have been awarded compound interest from the date each weekly payment became due.
This is the "interest upon interest" argument.

WCAB reasoning was that interest has been treated different from compensation in the Act.
Section 406.1(a) does not specify "simple" or compound" interest.
The Pennsylvania Supreme Court has held that compound interest is not favored in the law.
Also, the General Interest Act, section 202 reference to the "legal rate of interest" has been construed to refer mean simple interest. Citing Carroll v. City of Philadelphia Board of Pensions & Retirement Municipal Pension Fund, 735 A.2d 141 (Pa. Cmwlth. 1999).

The Commonwealth Court reasoning rejected the arguments of Employee and the amicus curiae brief of the Pennsylvania Association for Justice. 

Employee argued interest gained on unpaid indemnity wage loss benefits must be considered unpaid compensation and therefore it should accrue interest. Employee argued that 406.1 is designed to put the parties in the position they would have occupied had benefits been paid when they were due. This requires the payment of benefits with compound interest. Base upon economic realities, compound interest is necessary to fully compensate injured workers. Citing the 1998 WCAB decision at Bernotas v PECO Energy Co.

Commonwealth Court reviewed the 1936 cases and statutory language at Section 406.1(a).
The work comp statute does not specify whether interest is simple of compound.

Significantly, the use of compound interest was determined to be permitted only where the parties provide for it in an agreement or a statute expressly authorizes it. In Powell v. County Retirement Board, 246 A.2d 110 (Pa. 1968),  the Pennsylvania Supreme Court directed the trial court to use simple rather than compound interest in calculating the amount of an award.

The Pennsylvania Supreme Court in PSEA  v. Appalachia Intermediate Unit 08,  476 A.2d 360 (Pa. 1984) determined that a labor arbitrator lacked the authority to award compound interest where there was no contractual or statutory authority for compound interest. [See also: Ralph Myers Contracting Corp. v. Department of Transportation, 436 A.2d 612 (Pa. 1981) for the proposition: absent any contractual or statutory authority providing for compound interest, a contractor was entitled to receive simple interest on the unpaid balance of an award.].

The "legal rate of interest" cases were reviewed and cited for the proposition that simple interest is soundly favored over compound interest. "...the legal rate of interest is simple and may not be compounded". Carroll, 735 A.2d at 146-47.

Consequently, in light of the longstanding judicial policy disfavoring the awarding of compound interest absent explicit statutory authority providing for it, we must conclude there is no proper authority for an award of compound interest under Section 406.1 of the Act".
 see: slip opinion at page 14.

PRACTICE POINTERS:

1.   Confirm with all of your workers' compensation insurance claims representatives that statutory interest calculations on unpaid compensation must be made with a simple interest calculation.

2.   The request for payment of compound interest is a recurring request in my litigated cases. 

NOW, we have a recent clear opinion that specifically considers and rejects claimant's arguments ... including the ubiquitous statement "the Act must be liberally construed to effectuate its humanitarian objectives".


3.   IMO the claimant request for payment of compound interest renders the Employer litigation to be "reasonable", so as to contest a valid legal issue. 

4.   IMO we will continue to see the claimant demand for the payment of compound interest, in a continued concerted effort to effectively revise this section of the Act, in the absence of amendment. 

PA Supreme Court - "Best Practice" for NARTW form

The Proper use of the Notice of Ability to Return to Work (NARTW) form (LIBC- 757) and the Employer Modification Remedy via Vocational Evidence. 

The Act 57 Amendments to the Pennsylvania Workers' Compensation Act in 1996 included a new remedy, whereby an employer could establish a post-injury earning capacity of an injured employee, via Vocational Expert evidence of a Labor Market Survey and an Earning Power Assessment.

This new remedy supplements the existing Employer Suspension/Modification remedy based upon an actual job offer to the injured worker.

This Earning Power Assessment remedy was intended as an improvement of the "job-placement-job-offer" type of evidence produced in accord with the PA Supreme Court decision at Kachinski v. WCAB (Vepco Construction Co.) 532 A.2d 374. (Pa. 1987). The Kachinski decision resulted in hundreds of decisions analyzing the details of job offers and employee responses for "good faith" and "bad faith" presentations.

The Earning Power Assessment standard did not include the requirement that a job opportunity was "offered" to employee, rather the standard was that a job must be "open and available to the employee.

 [NOTE: the PA Supreme Court decision at Phoenixville Hospital v. WCAB (Shoap) 81 A.3d 830 (Pa. 2013) made a substantial revision of this standard. This decision held an employee must receive notice of the job opportunities which form the basis for the earning power assessment and have a reasonable opportunity to apply!  Otherwise that proffered job is not "available", so as to modify benefits]

A pre-condition of the Earning Power Assessment remedy was the requirement that "prompt written notice" is provided to the employee, that he/she was able to return to work in any capacity. Section 306(b)(3) of the amended statute stated:

" if the insurer receives medical evidence that the claimant is able to return to work in any capacity, then the insurer must provide prompt written notice, on a form prescribed by the department, to the claimant, which states the following:

(i) the nature of the employee's physical condition or change of condition.
(ii) that the employee has an obligation to look for available employment.
(iii) that proof of available employment opportunities may jeopardize the employee's right to receipt of ongoing benefits.
(iv) that the employee has the right to consult with an attorney in order to obtain evidence to challenge the insurer's contentions."
Section 306(b)(3), 77 P.S. 512(3).

The form prescribed by the Department is the LIBC-757, Notice of Ability to Return to Work. (NARTW).      
 *      *      *      *      *      *      *      *      *      *      *      *  

When must the Employer/Insurer issue this LIBC form to the Employee?
Under what circumstances?

School District of Philadelphia v WCAB (Hilton), No. 34 EAP 2014, a decision of the Supreme Court of Pennsylvania authored by Justice Baer on May 26, 2015 addressed several scenarios where this LIBC form is required and resolved the dispute as to when this form is NOT required.

Factual and Procedural Background

Employee was a school teacher at Pastorius Elementary from November 2008 to March 2009. These 2nd graders engaged in "significant misbehavior, including using profanity and engaging in physical violence". Employee suffered dizziness, tension headaches, heart palpitations and nausea.

Her PCP (Dr. Wilfreta Baugh) informed Employer that employee would not be returning to work due to the overly stressful environment. A few weeks later, Employer medical examiner (Dr. James Lamprakos) concluded she would return to work. Employee returned for just 4 days.

Importantly, the Employer issued a Notice of Workers' Compensation Denial, LIBC-496 form on May 29, 2009.

In June 2009 Employer assigned Employee to teach in the fall semester at a different school, Jaye Cooke School. Employee toured the school and found it to be the opposite of Pastorius, it was very quiet and instructors were able to teach effectively.

At the time of this job offer, Employee had not filed a claim petition. 

Employee did not return to work at Jaye Cooke in September 2009.
October 2009, Employee filed a Claim Petition, alleging a disability stress related work injury.

Claim Petition Litigation

Employee testified she was 70 years old. She recounted her stress-related conditions. She acknowledged the Employer assigned her to Jay Cooke in June 2009 and her observations of that quiet school environment. She believed she could not return to work as she continued to seek medical care.

Employee medical witness testified the stressful work environment exacerbated Employee's pre-existing medical conditions. However she testified Employee was capable of teaching in a less stressful environment.

Employer medical witness testified Employee was able to work, without restriction. He did not related her symptom to the work environment.

WCJ Decision

WCJ found Employee suffered a work-related injury in March 2009, in the nature of exacerbated lupus and a vocal cord injury. This injury totally disabled her from working in the stressful assignment.

However, Employee medical evidence did not establish a general disability from all teaching.
WCJ credited Employee's own testimony that the Jaye Cooke School position was made available to her and she found this to be a quiet school with excellent teaching.
On this basis, her benefits were suspended as of September 2009 !

WCAB affirmed the award BUT reversed as to Suspension of Benefits.
Suspension was reversed as Employer did not provide Employee with a NARTW form.
The Appeal Board believed the employer's obligation to issue a NARTW form was mandatory.

Commonwealth Court affirmed award BUT reinstated WCJ Suspension of benefits.
Court held NARTW form was not required. Employee medical evidence only established disability until September 30, 2009. As the Jaye Cooke job remained available, that fact  supported a suspension of benefits.

Pennsylvania Supreme Court Decision

The Supreme Court agreed with Commonwealth Court.
Under these circumstances - where the Claimant was not receiving work comp benefits, the Employer was not required to issue the NARTW form.
Employer's offer of alternative employment was made before the injured employee filed a claim petition thus, at the time of the job offer, she had not proven any entitlement to workers' compensation benefits. Accordingly, Employer had no duty to provide the NARTW form pursuant to Section 306(b)(3).

Reasoning:

The plain language of Section 306(b)(3) reflects the focus is upon the Employer receipt of medical evidence of a change in the nature of Employee's physical condition and the Employer's duty to apprise Employee of that evidence.

This language supports the determination that Section 306(b)(3) presumes that:

•  the work-related injury has caused a disability,
• the employee is receiving ongoing benefits for that compensable injury,
• the employer seeks to use medical evidence to reduce benefits payable.

The Supreme Court agreed with Employer argument that it would be illogical to require an employer to issue an LIBC notice before employer has conceded a work injury occurred or before employee has proven entitlement to any benefits. (slip opinion p. 19).

The legislative history of Section 306(b)(3) reflects the LIBC notice form was intended in the context of the employer's attempt to suspend (or modify) benefits payable after a compensable injury, it was not meant to impose a requirement upon employers, in all circumstances where alternative employment is offered.

This fact distinguishes this case from situations cited by Employee which suggest the LIBC notice is required in a "Claim Setting" ie, during litigation of the initial claim petition. 

The Supreme Court reviewed the Hoover and Allegis Group cases cited by Employee for the obligation to issue the NARTW form during claim petition litigation.

In Allegis Group that employer issued a Notice of Temporary Compensation Payable NTCP for an alleged work injury. The Employer made a job offer before the NTCP was revoked.This fact distinguishes this case from the present matter. Allegis Group was precluded from prevailing in a suspension petition based upon that job offer, as the NARTW notice was required.

In Hoover that employer denied liability for the alleged work injury. A light duty position was offered during the litigation of a claim petition, but before an adjudication of liability. The Commonwealth Court denied modification of benefits as employer did not issue the NARTW form.

The Supreme Court did not distinguish the Hoover decision, rather the Court declined to adopt the Hoover's court application of Section 306(b)(3), where the employer has not accepted liability for a claim and employee has not yet proven his/her entitlement to work comp benefits. (slip opinion p 21).

PRACTICE POINTERS:

1.    The NARTW form is required where liability for a work injury is admitted via Compensation Agreement or adjudicated by decision.
This includes the temporary acceptance of liability via a Notice of Temporary Compensation Payable LIBC-501. 

2.    The NATRW form is not required during Claim Petition litigation (this is a new twist).

3.    The NARTW form should be issued when each medical report is received, which reflects a change in the physical restrictions or capabilities of the injured worker.

4.     At least one decision states that subsequent  NARTW forms are not required when there are slight modifications of the workers restrictions. Ashman v. WCAB (Help Mates Inc.) 989 A.2d 57 (Pa. Cmwlth. 2010).  

5.    My recommendation is to issue a NARTW form when there is a change:

      (a) in the classification of work release (sedentary, light, medium, heavy)

      (b) in a specific activity which is directly relevant to the job offer.
           

Average Weekly Wage Calculation can alter the Employer's Remedies

The Importance of the AWW Calculation in Workers' Compensation Cases.

There are several basic elements in a workers' compensation case.
The Average Weekly Wage (AWW) is a significant element in every case.
The calculation of the AWW determines the Employee benefit rate for Total Disability, Partial Disability and Specific Loss.

This AWW figure remains significant throughout the disability claim.
Calculation of the AWW is addressed at Section 309 of the Act, 77 P.S. 582.
There are 7 subsections, each describing different alternatives.
The Bureau of Workers' Compensation LIBC-494C form reflects 8 difference calculation methods.

Since the enactment of the PA Workers' Compensation Act in 1915 (that's one hundred years ago), one might presume that all of the AWW issues have been addressed and settled ... not quite.

AWW issues continue to vex Employees and Employers alike.
In litigated cases, we see a gravitation to the principles of "economic reality" and my personal favorite ..advancing the humanitarian purposes of the Act.

We can easily handle the AWW calculation for salaried employees and hourly employees...
but those other types of compensation... they still provide fodder for our disputes.

Anderson v WCAB (F.O. Transport and UEGF), No. 181 CD 2104, is a published decision of a panel of the Commonwealth Court of Pennsylvania, authored by Judge Leadbetter on March 10, 2015. This decision addresses issues related to AWW calculation and demonstrates the significant of the AWW calculation, through out the life of the case.

Factual and Procedural Background

Employee filed a claim petition for an ankle and foot injury sustained on December 27, 2007, in his employment as a truck driver. Two claim petitions were filed, one against employer and one against the Uninsured Employer Guarantee Fund.
At the time of hire in November 2007 Employer told him he would be paid 30% of the Employer's charges for a load to be delivered.
It was estimated Employee would earn $1,100 to $1,200 per week.
Employee would receive an additional $100 for each run to pay "lumpers", a person paid to unload a truck.
Employee' 1st run was December 20, 2007. Employee unloaded the truck himself and kept the $100 lumper fee.
Employee's 2nd run was December 21, 2007. He paid the lumpers the $100 fee.

Employee's 3rd run was December 27, 2007. The run was from Philadelphia to Springfield, on to Hatfield Massachusetts. At Hatfield Employee unloaded his truck, as he alleged he did not have money to pay the lumpers. He injured his right leg while unloading.

Employer testified that, at the time of hire,  he told Employee he could have 5-6 runs per week and earn about $900 to $1,000.
Employer purchased an insurance policy for his drivers, which paid Employee disability benefits.(credit?)

WCJ Decision

Employee was "an employee", not an independent contractor.

Employee Medical witness Pekkar Mooar, MD was credible, that Employee sustained a bimalleolar fracture of the ankle and was unable to return to work as a truck driver.

Employer medical expert, Paul Horenstein, MD was not found credible regarding his opinion claimant was able to return to work as a truck driver as of the January 21, 2009 IME.

The AWW of Employee was calculated by the WCJ, using an alternative method, payments of $270 x 3 runs equals $810, divided by 2 weeks of employment equals a $405.00 AWW.

Employee WCAB Appeal

WCAB affirmed WCJ calculation of AWW...
 but remanded to determine if the "lumper fees" should be included in the Employer AWW.
WCAB remanded on issue of a credit to Employer for Employer funded disability benefits paid to Employee.

WCJ decision made Employer and UEGF "jointly liable" to pay work comp benefits to Employee. WCAB amended WCJ order to make Employer primarily responsible and Fund secondarily responsible.

***
During Appeal, Fund filed a Petition to Modify/Suspend Employee benefits as of January 13, 2011, alleging Employee had an earning power equal to, or greater than his AWW.

WCJ on Remand

Awarded Employer a credit for insurance policy payments to Employee.

Determined "lumper fees" should not be included in Employee's AWW.

WCJ on Fund's Modify/Suspend Petition

WCJ found Fund's medical expert Dr. Horenstein and vocational expert Christopher Terranova to be credible.

Dr. Horenstein released Employee to full-time medium duty work as the ankle fracture had healed with slightly decreased range of motion.

Christopher Terranova conducted a labor market survey, he located 10 open and available full-time positions within Employee's physical capabilities. The earning capacity ranged from $360 to $440.
Employee's past criminal record would not impact his ability to obtain employment.

WCJ found Employee's post-injury earning capacity was $440 per week. On this basis he suspended Employee wage loss benefits as of the January 13, 2011 labor market survey. (Suspension was based upon the $405 AWW figure).

WCAB affirmed the WCJ decision.

Employee Appeal - Round 2 - Commonwealth Court

1.  AWW calculation.

Employee argued his AWW should be $810.
This was the total amount he earned before his work injury.
(... earned over the course of several weeks!)

Alternative Employee AWW argument.
AWW should be $900 to $1,200 based upon Employee testimony and/or testimony of Employer, as to the amount of his expected earnings.

Employee also argued the "lumper fees' should be included in his AWW figure.

Commonwealth Court reviewed the shortcomings of Section 309(d.2) of the Act, which addresses the situation where an individual has worked less than one period of 13 calendar weeks.

          " the hourly wage rate multiplied by the number of hours the employee was expected to work  per week under the terms of employment".

Here, this Employee did not have a fixed hourly rate. The number of hours expected per week could not be determined, as he was paid per trip.

"Where the Act does not address a method of calculating the AWW for a particular situation, the AWW is calculated using an alternative method which will advance the overall  humanitarian purpose of the Act" . citing Hannaberry v. WCAB (Snyder) 834 A.2d 524, 533 (Pa. 2003).

The AWW should reasonably reflect the economic reality of a claimant's recent pre-injury earning experience, with some benefit of the doubt to be afforded to the claimant in the assessment. citing Triangle Building Center v WCAB (Linch) 746 A..2d 1108, 1112 (Pa. 2000).

As a controlling precedent the Commonwealth Court cited its earlier decision in Burkhart Refractory Installation v. WCAB (Christ), 896 A.2d 9 (Pa. Cmwlth. 2006.

In Burkhart, the worker did not have an expected number of work hours.He earned wages in only 12 weeks during his 16 week employment. Calculating this claimant's AWW according to Section 309(d.2) would not reflect the economic reality of his pre-injury earnings.

The WCAB calculated his AWW by excluding the 4 weeks without earnings and divided his gross wages by 12 weeks in which he actually earned wages.
The Court found this approach accurately captured the economic reality and advanced the humanitarian purpose of the Act.

Here, the WCJ calculation is inconsistent with Burkhart. 
Employee earned no wages is his first week of "employment", as the Employer did not have work available to him. Inclusion of that week, would not reflect the economic reality.

Therefore the Court calculated the AWW of this Employee to be his earnings during his 2nd week of employment, or $810.

2. AWW inclusion/exclusion of lumper fees. 

The Court would not disturb the credibility determination of the WCJ regarding the exclusion of the lumper fees from the AWW calculation. Employer testified that Employee was not supposed to unload trucks and keep the lumper fees. If he needed more money to pay lumpers, Employer would have provided it.

3. WCJ Suspension Order

The Court would not disturb the WCJ findings of fact, accepting Employer's medical expert and vocational expert as credible evidence of Employee's post-injury earning capacity.

The Employee argument that Employer medical evidence was equivocal on the issue of work-relationship of degenerative arthritis was rejected. This medical witness did not deny a causal relation of the ankle arthritis and work injury, rather he opined Employee was not fully recovered, but Employee could perform the positions in the labor market survey.
The Court would not disturb the WCJ credibility determination of the vocational expert testimony regarding the appropriateness of specific jobs or the impact of remote criminal convictions.

Suspension of benefits was reversed, based upon the "new" AWW figure.
The case was remanded for the WCJ to modify benefits based upon the evidence.

Practice Pointers:

1.   Do not be reluctant to ask for advice regarding the correct calculation of the AWW figure. 
You are not alone. This can be confusing. There can be legal  arguments which seem conflicting. It behooves you to get it right the first time ... as this AWW figure will control the benefit payments through out the claim.

Yes, you may file a Petition  for Review and "correct" any calculation error. BUT if it is a unilateral mistake, you may face an argument that you can not recover any difference in benefit amounts. 

2.   In my experience, certain employers may pay their employees from different accounts due to the different nature of the compensation, such as a salary account, a business expense account,  a bonus account or a commissions account. 

3.   Tell the employer that you need figures and documents for all types of compensation paid to the injured employee, during the 52 weeks preceding the date of injury. 

Get the annual W-2, 1099 or Year-to-date figures. Do the figures add up?

4.   Do the Employee compensation records raise a question as to Employee vs Independent Contractor status? 

5.   Do the Employee compensation records address an issue of compensibility or "Scope" of employment? Was the Employee paid for travel time, or paid for attendance time?

6.   At times, a careful review of the compensation records may answer questions ... or raise additional questions. Get the records and review.

PA Supreme Court says: NO Direct Action for Subrogation Recovery

The Pennsylvania Workers Compensation Act provides a right of recovery where a compensable work injury is caused by a third party tortfeasor. The Employer is "subrogated" to the right of the employee against the third party tortfeasor, to the extent of benefits paid under the Act.
(See: Section 319).

The question arises: Can an Employer directly sue the third party tortfeasor?
The Pennsylvania Supreme Court provides an answer to this question at:
Liberty Mutual Insurance Company, as subrogee of George Lawrence v. Domtar Paper Co. et.al.,
No. 19 WAP 2014 decided April 27, 2015.

The Supreme Court reaffirmed the right of action against a third party tortfeasor remains in the injured employee and the Employer/Workers Compensation Insurer's right of subrogation under Section 319 must be achieved through a single action, brought in the name of the injured employee OR joined by the injured employee.

The Dreaded Late Claim Petition Answer - and a successful Defense

A Late Answer to a Claim Petition requires special attention and Employer Rebuttal Evidence.

"Yellow Freight" is the term use to describe the effect of a late answer by an Employer to a claim petition filing. It is a reference to a Commonwealth Court decision reported at Yellow Freight System, Inc. v. WCAB (Madara) 423 A.2d 1125 (Pa. Cmwlth. 1981).

The general rule is that when an Employer fails to file an answer within twenty (20) days after any claim petition has been served, without adequate excuse, every well-pleaded factual allegation in the claim petition is admitted as true and the employer is barred from presenting any affirmative defenses and is barred from challenging the factual allegations in the claim petition.  See: Section 416, 77 P.S. 821 and Chik-Fil-A v. WCAB (Mollick) 792 A.2d 678 (Pa. Cmwlth. 2002).

If the employer's answer is found untimely, the employer may challenge only the legal sufficiency of the claimant's claim, elements of the claim that are not well pleaded and facts, such as continuing disability for time periods after the date the answer was due.

Q.   What should an Employer, an Insurer and Defense Attorney do when confronted with the "late answer" problem?
A.   Carefully examine the facts.

Washington v. WCAB (National Freight Industries, Inc.), No. 1070 C.D. 2014, is a reported decision of a panel of the Commonwealth Court of Pennsylvania, authored by Senior Judge Colins on March 4, 2015, which addressed the "Yellow Freight" issue and the successful rebuttal by Employer.

Procedural and Factual Background

The underlying facts of this claim petition are somewhat out of the ordinary.
Employee was a truck driver. In February 2009, he was involved in a non-work-related motor vehicle accident with his personal vehicle.He missed 7 days of work and returnee to full duty work. After his accident, he experienced pain in his shoulders, arms and hands, which worsened over time.

On February 13, 2011 (2 years later!) Employee stopped working due to his pain.
In the civil action arising from the non-work motor vehicle accident, Employee alleged he was no longer able to work, as a result of injuries from that accident.

On October 31, 2011, Employee filed a work comp claim petition, seeking total disability as of February 14, 2011 and payment of medical expenses.The alleged work injury was an aggravation of his neck, shoulders, arms, hands and bilateral carpal tunnel syndrome as a result of the repetitive motion, lifting and driving in his work duties with Employer.

The Claim petition listed Employer's address as "72 West Park Avenue, Vineland, NJ".
On November 3, 2011, the Bureau mailed the claim petition (and notice of assignment) to Employer at that address.
Employer's correct address is 71 West Park Avenue, Vineland NJ!

Employer answer was filed 43 days after the Bureau claim petition assignment.

• There was no evidence in the record as to when or how the Employer received the claim petition of notice of its filing.

WCJ Hearing

At the WCJ hearing on September 20, 2012, Employee testified and trial deposition testimony of Employee and 2 medical witnesses was received.

At the close of this hearing the issue arose as to the Employer's ability to dispute the factual allegations of the claim, under Yellow Freight. 

• No motion by Employee to bar Employer appears in the record.
• Employee asserted (on appeal) he raised this issue at an earlier hearing and this issue was not resolved.
• The Bureau mailed the claim petition to Employer on November 3, 2011 and it was not returned by the postal authorities.
• the parties stipulated that the address to which the claim petition was mailed was not Employer's address and was off by one number.
• Employee did not introduce any evidence as to what is located at 72 West Park Avenue.
• the WCJ gave the parties 60 days to brief the Yellow Freight issue ... but no briefs from either party appears in the record, nor was there any further evidence.

WCJ Decision

Claim Petition Denied.
Employee and Employee medical witness were found credible as to the symptoms and injuries as a result of the non-work-related motor vehicle accident.
They were found not credible that Employee's work duties contributed to his injuries.
Employer's medical witness was found credible that Employee's condition was caused solely by he non-work accident.
The WCJ did not discuss or rule upon Employee's contention that Employer's answer was filed late.

Employee Appeal

Employer's late answer was the sole basis for Employee's appeal.
WCAB affirmed WCJ.
Employee failed to show Employer's answer was late as it was not mailed to the correct address.
Remand request to submit additional evidence regarding the address was denied.

Commonwealth Court Appeal and Decision

Court rejected Employee argument that WCJ erred in permitting Employer to contest the injury was work-related, as Employer answer was filed late.

• Contrary to the Employee's contentions,  Employee did not show that the Employer's answer was untimely!
• the 20 day period to file an answer begins to run when the Bureau serves the claim petition on the Employer.
• this records showed that the Bureau mailed the claim petition on November 3, 2011, BUT it was undisputed that the address used by the Bureau was not Employer's correct address. 

The Court discussed the common law origin of the "mail box rule". 

This rule indicates, proof of mailing raises a presumption that the mailed item was received only if it is shown that the item was mailed to the party's correct address. 

This rule is included in the PA Workers' Compensation Act. Section 406, 77 P.S. 717 states:

"any notice or copy shall be deemed served on the date when mailed, properly stamped and addresses, and shall be presumed to have reached the party to be served; but any party may show by competent evidence that any notice or copy was not received, or that there was an unusual or unreasonable delay in its transmission through the mails". 

Under the Workers' Compensation Act, ONLY a mailing to a party's CORRECT ADDRESS constitutes service on the date of mailing. 

HERE, The claim petition was mailed to an incorrect address.
Section 416 does not bar Employer from contesting the claim petition absent other proof that the claim petition was received more than 20 days before the answer was filed.

Employee did not prove the Employer answer was filed more than 20 days after Employer actually received the claim petition. Remember, Employee did not submit any evidence on this point.
The WCJ correctly ruled on this issue and properly decided the claim petition, based on the merits of the evidence submitted.

Employee argued the address error should have been disregarded, as the 72 Park Avenue address is a property owned by Vineland Construction, a company that is allegedly an affiliate of this Employer.

ALSO Employee argued, a different letter sent to Employer at the 72 Park Avenue address - after the Employer filed its answer - WAS received by this Employer.

The Court rejected these two arguments.

• These arguments were raised for the first time on appeal to the WCAB.
• The WCAB has broad discretion to grant or deny a rehearing to permit introduction of previously available evidence. 
• The WCAB is not required to permit a party to produce additional evidence to attempt to cure a failure to satisfy his burden of proof before the WCJ.
• Service of a document on an address owned by an affiliate of a corporation does not constitute service upon the corporation. 
• The mere fact that one piece of mail sent to an erroneous address was successfully received does not support the inference that all mail sent to the erroneous address was promptly received by that party. 

PRACTICE POINTERS:

1. When confronted with a "late answer" issue, carefully review the documents, the dates and the correctness of information reflected on the Claim Petition and on the Bureau Notice of Assignment. 

There was a recurring issue in the early days (months) of the WCAIS program regarding accuracy. 

Addresses of many attorneys, employers and insurers were incorrectly stated.

Check this basic information.

2. In this case there was an issue of whether employee raised and preserved the late answer issue with the WCJ. The Court noted the WCJ directed the parties to submit briefs on this issue.

When a late answer issue is raised, advise the WCJ and Employee counsel of the available Employer evidence and testimony to be submitted on this point. 

Many WCJ's will not allow the presentation of any evidence to controvert the allegations of the claim petition, until the Employer clears this threshold. 

3. If a late answer has occurred, remember you may still controvert issues in the time frame after the date that the Employer answer was due. 

4. Examine the Claim Petition. 

Is each paragraph of the Claim petition- well pleaded?

Did Employee counsel complete each paragraph?

Pay particular attention to Paragraph 14.

   Does the section for total disability include dates?

   Does the section reflect any dates for partial disability?

   Is payment of medical expenses demanded?

   Is there a request for counsel fees, to be paid by employer?

Employer awarded Attorney Fees and Costs payable by Employee!

Extraordinary award of Attorney Fees and Costs in appeal - payable to Employer by Employee and Employee Counsel.

The general rule is that reasonable Attorney Fees are awarded to Employee and payable by Employer, where the Employee succeeds in litigation ... unless the Employer meets its burden to establish sufficient facts to prove a reasonable basis exists for the contest of the petition.
See: Section 440; 77 P.S. 996.

Where there is a reasonable contest of a petition, Section 422 allows the Workers' Compensation Judge to approve a reasonable attorney fee - up to 20% - to be deducted from the Employee indemnity wage loss benefits.

What about the unreasonable contest of a petition by Employee?

There are occasions where the filing and litigation of a petition by an Employee are similar to the circumstances which have resulted in an award of attorney fees and costs against an Employer.
... what's good for the goose, is good for the gander?
Not in PA work Comp practice.

Past appellate decisions interpreted Rule 2744 of the PA Rules of Appellate Procedure to preclude the award of attorney fees and costs to an Employer, even where the Employee pursued what was considered a frivolous appeal.

In an extraordinary set of circumstances, the Commonwealth Court issued a per curiam opinion which sua sponte imposed the sanctions of attorney fees and costs incurred by Employer to defend a frivolous appeal pursued by Employee.
See: Smith v. WCAB (Consolidated Freightways Inc.), No. 606 CD 2014, filed March 9, 2015.

Factual and Procedural Background

As noted above, this case reported an extraordinary set of circumstances.
The extent and duration of litigation are unlike the typical workers' compensation proceeding. Yet this case remains a point of discussion for several reasons, as reviewed below.

In May 1996 Employee filed a Claim petition alleging disability as a result of his brief exposure to a chemical in the course of his work duties as a truck driver.
In October 1997 Employee filed a Review petition alleging entitlement to medical expense payments.
WCJ decision denied both petitions.
WCAB affirmed the WCJ denials.
There were no further appeals.

Subsequently Employee filed "additional petitions" which were described as an effort to re-litigate the same alleged injury. The PA Supreme Court and US Supreme Court declined Employee requests for further review.

The instant petitions were a Petition to Review Medical Treatment and a Penalty petition.
This constituted the 5th time Employee was before the Commonwealth Court for the same injury claim.

The 4th time Employee was before the Commonwealth Court resulted in an unpublished December 2011 Memorandum decision.
This decision affirmed the WCAB dismissal of 6 Review Petitions, on the basis that they were barred by res judicata and collateral estoppel effect of the decision in the 1996 and 1997 petitions.

In the 2011 decision the Commonwealth Court noted the Employee appeal was frivolous and conduct of Employee and his Attorney was "obdurate and vexatious".
... over a period of 15 years Employee filed approximately 15 petitions, all based upon the same incident...
... at least 5 hearings have been held by 4 different WCJs...
... Employee was before the Commonwealth Court 4 times,
...the PA Supreme Court 4 times,
... the US Supreme Court 2 times,

AFTER that 2011 Commonwealth Court decision ... 
Employee and his Attorney filed 2 more petitions in December 2012, raising the same issues.
The WCJ granted Employer's motion to dismiss these petitions. The WCAB affirmed.

So, in this 5th Commonwealth Court appeal, the court concluded (once again) the Employee petitions were barred by the legal doctrines of res judicata and collateral estoppel.

The behavior of Employee and his counsel was described as "precisely the type of obdurate and vexatious conduct which PA RAP 2744 was designed to prevent". 

The 2015 Court looked back to its 2011 review of the caselaw.  The 2011 court referenced the PA Supreme Court decision in Phillips v. WCAB (Century Steel), 721 A.2d 1091 (Pa. 1999).
In Phillips, attorney fees were not awarded to Employer.  
An award of attorney fees to an Employer was said to thwart the declared intent of the Act, which is to give claimants the opportunity to receive attorneys fees in the event of an unreasonable contest by the opposing party.

But the Phillips court specifically distinguished their ruling from a decision where costs were awarded.

In Patel v. WCAB (Saquoit Fibers Company) 520 A.2d 525 (Pa. Cmwlth. 1987) costs were awarded to Employer, payable by Employee pursuant to PA RAP 2744.
The Patel court added, an award of attorney fees to Employer would have been appropriate, had a request been filed.

The Patel procedural history reflected the filing of (only) 3 separate claim petitions with 3 separate appeals to the Commonwealth Court.

2015 Commonwealth Court Decision

In the instant appeal, the Commonwealth Court in Smith asserted that the PA Supreme Court decision in Phillips, which preserved the Patel ruling would support their award of costs and attorney fees incurred by Employer to defend this frivolous appeal.

The Court took the rare affirmative step to award costs and attorney fees, in the absence of a request by Employer. As mentioned in footnote 5, the Court explained,  Employer could not reasonably have been expected to request fees, in light of the prior appellate decisions.

PRACTICE POINTERS:

1. What to take away from this unique case...

This award of attorney fees and costs pertained only to the frivolous appeal. There was no award of attorney fees and costs for the time and expense incurred in the underlying litigation. 

2. There is an Employee remedy to receive an award of attorney fees and costs in the litigation of any petition before a Worker's compensation Judge. The statutory language at Section 440 (a) specifically mentions "the employee or dependents" as the party who is entitled to reasonable costs and attorney fees, where the case is decided in their favor. 

This language does not bestow the same right upon Employer.
In my experience, no workers compensation judge will interpret this unambiguous language to provide the Employer with any similar remedy. In fact, on the rare occasion when I have asserted a right to reimbursement of costs, I've been told that my argument may rise to the level of an unreasonable contest and allow Employee to receive an attorney fee award!

3. In appellate matters, this case may provide a stronger argument for an Employer award of attorney fees and costs. However, I believe this type of award will remain the exception, rather than a more common ruling.