They’re Back (As if They Ever Really Went Away)
As part of the Act 57 amendments to the Pennsylvania Workers’ Compensation Act implemented in 1996, the legislature created a procedure outlined in Section 306 (a.2) called an Impairment Rating Evaluation (IRE). These provisions allowed an employer to who had paid 104 weeks of total disability benefits to a Claimant to seek an evaluation of an injured worker under the “most recent edition” of the American Medical Association (AMA) Guides to Permanent Impairment, as a way to limit the amount of time which a Claimant could receive benefits. Under the IRE provisions, Claimants who had been off work for at least 2 years, could be compelled to submit to an IRE, and if it was determined that the Claimant had a less than 50% whole person impairment rating under the AMA Guides, the Claimant’s benefits could be converted from total disability to partial disability status. The amount of the payments to the Claimant did not change under the IRE procedure, however, the Claimant was then limited to payment of 500 weeks (about 9.5 years) of benefits unless he or she could show a whole person impairment of 50% or greater during the period that benefits were payable. These provisions were fairly unpopular with both Claimants and the Claimant’s legal bar. A rating of 50% or greater under the AMA Guides was a near impossibility, and the IRE process was considered as a way to allow the private workers’ compensation insurers off the hook for truly serious long term injuries (which might still not meet the very high 50% threshold under the AMA Guides), and an attempt to shift liability for compensable work injuries to government provided benefits programs such as Social Security Disability. After decades of unsuccessful challenges, the Pennsylvania Supreme Court in 2016, in a case named Protz, found that Section 306 (a.2) of the Pennsylvania Worker’s Compensation Act, relating to IREs, was wholly unconstitutional. The Court held that since the legislature, in enacting the IRE provisions, had allowed the IREs to be performed under the “most recent edition” of the AMA Guides, it had improperly delegated the standard for performing IREs to the American Medical Association. The Court reasoned that since the legislature did not name a specific Edition of the AMA guides to be used when IREs were performed, and the evaluation standards under the AMA Guides changed every few years, it was the AMA – a private entity, not the legislature, that controlled which Claimants were entitled to receive ongoing benefits, and such delegation of power is prohibited by law.
It is not surprising that the Supreme Court’s ruling created substantial uncertainty about the status of the thousands, if not tens of thousands of IREs that had been performed between 1996 and 2016. While many Claimants argued that all IREs were invalid from the date they were performed, the Commonwealth Court issued a line of cases setting forth how the Pennsylvania Supreme Court’s ruling in Protz affected IREs that were performed before the decision in Protz was issued. In the Whitfield case, the Court essentially indicated that if the Claimant’s IRE change in disability status occurred no more than 500 weeks and three years previously, a Claimant was permitted to challenge the IRE by filing a Petition to Reinstate to total disability status and therefore stop the clock on the 500 week limitation for the receipt of benefits. If the validity of the IRE was being challenged, and that litigation was ongoing when the Decision in Protz was issued, the Commonwealth Court held that the IRE was invalid from the outset, and no portion of the 500 week limitation period had accrued. The standard set forth in Whitfield is being challenged in the Pennsylvania Supreme Court on an appeal of a related case, and it is unclear how that Court will rule in regard the viability of IREs performed before Protz was decided.
To add an additional level of uncertainty, the Pennsylvania legislature re-instituted the prior IRE provisions by passing Act 111 on October 24, 2018. The new IRE provisions are very similar to the previous provisions, with a few important changes. Act 111 specifically requires that the 6th Edition of the AMA Guides to Permanent Impairment be used to perform impairment rating evaluations, and the threshold for for making a change in disability status has been lowered from less than 50% to 35%. In an attempt to limit the effect of the Protz Decision, Act 111 also gives employers a credit for all total disability benefits paid prior to October 24, 2018, so that any Claimant who received 104 weeks of total disability before that date, or some part thereof, will be subject to an IRE once 104 weeks of total disability benefits have has been paid in total. The provisions of Act 111 also give employers a credit for all partial disability benefits paid under an IRE prior to October 24, 2018, which would appear to count toward the 500 week limitation on benefits under the IRE provisions. There are many in the Claimants’ bar who believe that the provisions granting a credit for payment before the date of the Act 111 Amendments is unconstitutional, and there will likely be some challenges to the new legislation on those grounds coming down the road.
At this point, it is not clear how the decision in Protz, the interpretation of Protz as set forth in Whitfield, and the new Act 111 Amendments will interact or what approach the Courts will ultimately take in determining what, if any, of the IREs performed prior to 2016 remain valid. This writer posits that the Act 111 Amendments preserve all prior IREs, unless a Claimant files and prevails on a Petition to change his or her status from partial disability to total disability under the Whifield standard. It could also be argued that even if the Claimant is entitled to a reinstatement to total disability status, Act 111 would allow the employer to seek to keep the Claimant in partial disability status under a prior IRE, provided that the IRE was performed using the 6th Edition of the AMA Guides, as required under Act 111, and the Claimant’s disability status is less than 35%, regardless of when the IRE was originally performed (before or after the 2016 Decision in Protz).
By: Stephen O. Spahr, Esquire