Last week, Gov. Tom Wolf signed into law Act 111 of 2018 which sought to address the concerns of the Pennsylvania Supreme Court in Protz v. Workers’ Compensation Appeal Board (Derry Area School District), which had invalidated the section of the Workers’ Compensation Act pertaining to Impairment Rating Evaluations as unconstitutional. By way of background, in 2015, the Commonwealth Court held in its version of Protz that Section 306(a.2) of the act amounted to an unconstitutional delegation of legislative authority to the American Medical Association, a private entity. The legislature had crafted the act to rely on “the most recent edition” of “The American Medial Association Guides to the Evaluation of Permanent Impairments” (the AMA Guides) in performing IREs, which left it up to the AMA to define Pennsylvania law at its whim.
The Pennsylvania Supreme Court, for its part, did not specifically endorse the Commonwealth Court’s rationale that delegation of authority to a private entity is per se unconstitutional. However, unlike the Commonwealth Court which sought to rehabilitate the IRE provisions of the act with a remand and some ambiguous instructions, the Supreme Court found the entirety of Section 306(a.2) to be unconstitutional and void ab initio.
The aftermath of Protz has been messy. The practice was left to figure out whether the Supreme Court’s holding in Protz could be applied retroactively, as the court punted on this issue. The Supreme Court even took the unusual step of remanding a subsequent, unreported case, Gillespie v. Workers’ Compensation Appeal Board (Aker Philadelphia Shipyard), to the Commonwealth Court to determine whether the Supreme Court’s own decision in Protz applies retroactively. It was suggested in this space at that time that perhaps the Supreme Court was simply hoping for an intervening legislative fix that would obviate the need to decide the issue. Has that moment arrived?
On its face, Act 111 of 2018 attempts to address the offending “most recent edition” language from the original IRE legislation with enacting Section 306 (a.3)(1) by simply providing that the sixth edition of the AMA Guides should be used in determining a whole body impairment. While that prevents the AMA from constantly changing the standards of disability into the future, that was only one concern of the courts. The Commonwealth Court’s original problem with the IRE provisions as written was that the legislature had bestowed on the AMA “carte blanche authority to implement [the AMA’s] own policies and standards.” It is difficult to see how that concern has been allayed. Instead of seeking to define disability on its own, the legislature once again appeals to a private entity to define disability for it, which, arguably, remains an unconstitutional delegation of its authority. While the egregiousness of that delegation was more obvious when the operative edition of the AMA Guides was constantly subject to change, the delegation persists. Parenthetically, at the time the original IRE provisions were enacted, the fourth edition of the AMA Guides was in effect. The fact that the legislature is now appealing to the sixth edition is problematic for injured workers in and of itself since the changes from the fourth to the sixth edition have generally resulted in lower percentages of whole body impairment. Equally important, a disabling psychiatric condition, which often precluded a valid IRE under the fourth edition entirely, is subject to review under the sixth edition.
In an effort to placate opponents of the bill, amendments to the legislation, which found their way into the final version, lower the “whole person impairment” threshold for converting the status of a claimant’s benefits from total to partial in nature to 35 percent. As in the original legislation, which was largely mimicked, the amount of compensation paid would remain the same, notwithstanding the change in disability status. While this change might sound significant on its face given that it was almost impossible to ever achieve a whole person impairment in excess of the previous marker of 50 percent, the number of injured workers who achieve even a thirty-five percent impairment rating are few and far between. This provision will not impact the practice as a whole in any meaningful way.
Of course, the elephant in the room remains what happens to partial disability weeks previously accrued under the old IRE scheme. While Act 111 states “an insurer shall be given credit for weeks of partial disability compensation paid prior to the effective date of this paragraph,” the meaning of that phrase is highly ambiguous. On the one hand, since the prior IRE framework was voided ab initio, the new language cannot possible be referring to partial disability weeks accrued under that section of the act which, for all intents and purposes, never existed. On the other hand, the Commonwealth Court has been busy issuing decisions which seek to apply Protz in various different ways, and they may suggest to the contrary. The most relevant decision is Whitfield v. Workers’ Compensation Appeal Board (Tenet Health Systems Hahnemann), which arguably concluded that a claimant retains all of the accrued partial disability weeks, since it placed the burden on the claimant in that case to petition and prove a reinstatement to total disability benefits following the partial disability status improperly induced by an invalid IRE. Ominously, this case was decided before Act 111 was enacted. It is difficult to envision the Commonwealth Court not concluding the credit language from the new amendment applies to the partial disability weeks previously accrued under the unconstitutional statue. However, the Supreme Court will have the final say, as always. It is reasonable to think they are willing to deal with the consequences of Section 306 (a.2) being void ab initio since they did state at the end of the decision that it was invalidating the IRE “without consideration of the exigencies that arise or ‘how trying our economic or social conditions become.’” Either way, this issue will be vigorously pursued going forward. Act 111 has settled nothing.
Finally, Act 111 directs the Pennsylvania Compensation Rating Bureau to calculate the savings purportedly achieved from reinstating the IRE and immediately use it to provide a rate reduction. Following Protz, a significant rise in the cost of workers’ compensation insurance was predicted. In August, the PCRB proposed a 6.06 percent increase in the loss cost which the rating bureau indicated it would withdraw if the Legislature passed a bill negating the Protz decision. Since for six years in a row prior to this year there had been significant rate cuts in workers’ compensation insurance, with no reduction in benefits, resulting in nearly $800 million in savings to the business community, this legislation at least returns the sky to its customary, elevated position. Hopefully there will be a pregnant pause in further draconian measures to “reform” a system that does not need it.
Christian Petrucci, of the Law Offices of Christian Petrucci, concentrates his practice in the areas of workers’ compensation and Social Security disability. He also counsels injured workers in matters involving employment discrimination and unemployment compensation benefits.