Since its adoption in 1915 and through its various amendments since that time, the Pennsylvania Workers’ Compensation system has been based on a loss of earnings. As such, the determination of compensability was premised on whether an injury resulted in disability, which is defined solely as causing a loss of earning power. However, this long held premise is being eroded by Commonwealth Court decisions and the Workers’ Compensation Bureau’s policy formulated in response to these decisions. It is a troubling trend both because the newly emerging policy fails to appreciate the historic underpinning of this Commonwealth’s workers’ compensation system and because the stakeholders in the system are still left to speculate just what the force and effect of a “medical only” NCP has on their rights and obligations and in just what circumstances it must be utilized.

The history of the cases decided demonstrates the growing rift between the Court’s extrapolations and the plain language of the Act. In 1999 the Pennsylvania Commonwealth decided Lemansky v. Workers’ Compensation Appeal Board (Hagan Ice Cream Company), which brought to the forefront the claims handling challenge presented by those cases which involve no lost wages, but do result in the payment of medical bills. In that case, the insurer, SWIF, refused to issue Bureau record paper reflecting the occurrence of an incident that did not result in disability. The insurer relied on their internal claims handling procedures to argue that their contest to the ultimate Claim Petition was reasonable. The Commonwealth Court was not persuaded by this argument; it stated, “Once the employer elects to take no action and requires the claimant to litigate the issue of compensability, it must then pay claimant’s attorney’s fees unless it can prove its contest was reasonable.” While the Workers’ Compensation Act did not and still does not require the filing of Bureau record paper in no lost time cases, the Court indicated that such an obligation was nonetheless present. Importantly, the Act and Bureau regulations do not mandate the filing of an Employer’s Report of Occupational Injury or Disease unless the incident in question results in a lost “day, shift, or turn of work.” Further, the statutory language which has been repeatedly cited as establishing a duty to document and “recognize” an event, Section 406.1(a) contains no such requirement. Section 406.1(a) directs the employer/insured to act within 21 days of notice of disability, not notice of an injury. Nonetheless, largely in response to the Court’s directive in Lemansky, employers and insurers began to recognize “med only” claims through the issuance of a Notice of Denial using Box No. 4 which admits the occurrence of an injury but no disability associated with it.

Further confusion was created when the Court began referencing a then non-existent Bureau form. Four years after the Lemansky decision, the Commonwealth Court decided Waldameer Park v. Workers’ Compensation Appeal Board (Morrison), again addressing the claims handling obligation of an insurer in light of a request for unreasonable contest attorney’s fees in the context of a Claim Petition. In that case, the Court reasoned that where an injury results in no lost wages an insurer’s obligation is to fashion and file a “medical only” NCP. However, no such document was in existence when the Court pronounced the insurer had breached this obligation in Waldameer Park.

The Workers’ Compensation Bureau, in response to the Waldameer Park ruling, developed a “medical only” NCP form and indicates it expects it to be filed. However, the Bureau has failed to promulgate regulations to delineate the effect of such a filing. It has also failed to address the inherent inconsistencies between mandating a filing which might constitute a recognition of a compensable claim where the Act does not even require that the employer file a report of occupational injury or disease which would bring that incident within the system in the first instance.

While workers’ compensation claims handlers continue to develop their own policies to address medical only claims, the Commonwealth has again addressed this issue in two recent decisions further solidifying their earlier rulings. The Court has made clear in these decisions that it expects usage of the “medical only” NCP to document and bring within the system those cases which involve no loss of earnings. It has also made clear that it will ignore the plain statutory language of Section 406.1(a) and disregard the Act’s fundamental underpinning as a “wage loss State” in order to advance their objective that each workplace incident be subject to the bureaucratic mechanism attendant to the workers’ compensation system no matter how minor that incident may be. On December 14, 2004, the Commonwealth Court decided Orenich v. Workers’ Compensation Appeal Board (Geisinger Wyoming Valley Medical Center). There, the claimant, a nurse, appealed to the Court from the Workers’ Compensation Appeal Board’s order which affirmed the Judge’s decision to grant her Claim Petition but denied a request for unreasonable contest attorney’s fees and did not assess penalties. She alleged an injury in the course of her employment while attempting to move a patient. She reported the incident, she received medical treatment which was initially paid by her employer, but did not miss any time from work. The employer filed no record paper with the Bureau recognizing the event. Several months after the incident, the employer was presented with a medical bill it did not believe was related to the work incident. It issued a Notice of Denial thereby prompting the filing of a Claim Petition. The employer answered, denying all allegations. While there is some question as to how the issue of penalties came before the Commonwealth Court, it is clear that the claimant sought unreasonable contest attorney’s fees for the employer’s failure to issue a Notice of Compensation Payable within 21 days of notice of her injury. On this issue, the Commonwealth Court reversed the Board and remanded to the Workers’ Compensation Judge for an assessment of penalties and attorney’s fees. The Court, obviously cognizant of the actual language of Section 406.1(a) that requires the filing of a Notice of Compensation Payable or Notice of Compensation Denial within 21 days of disability, because they incorporated that language in their opinion, proceeded to dismiss the distinction between an injury and disability. The word “disability” is a term of art in workers’ compensation parlance and should not have been carelessly used without analysis and a comprehensive explanation for the sudden change in meaning. The Court holds that the Workers’ Compensation Judge erred in failing to assess penalties and attorney’s fees because, “while the term disability is synonymous with loss of earning power, our holdings in Waldameer Park and Lamansky have clearly held that Section 406.1(a) includes injured employees as well.” This hardly reflects the type of consideration and analysis demanded by such a drastic policy initiative. Historically, one was not considered to have a compensable injury unless there was a disability.

What little rationale the Court has provided is actually inconsistent with other case law and regulations, when reviewed in context. The Commonwealth Court attempted to justify their position that all injuries must be recognized within the Bureau system regardless of a loss of earnings within 21 days of the incident by stating that the issuance of a “medical only” NCP will then permit the filing of a Utilization Review; it will then fix the burden of proof on the employer to terminate its liability for payment of medical expenses; and it will avoid forcing an employee to hire counsel to protect the claim within the three year statute of limitations. Of course, knowledgeable participants in this system realize that these justifications are poorly reasoned and reflect an incomplete understanding of the Act, its regulations, and decisional authority. The Medical Cost Containment regulations specifically permit filing of an Utilization Review in a medical only case under Section 127.405, therefore, a “medical only” NCP is not necessary to access the Utilization Review process. The Courts have long held that an employer is permitted to pay medical bills without admission of liability (See, Bellefonte Area School District v. Workers’ Compensation Appeal Board (Morgan) therefore the employer does not assume a burden of proof merely by paying medical expenses. This already burdened system will become further burdened if employers are required to file petitions to terminate liability to stop payment of medical bills in cases where that payment should have been without prejudice in the first instance. Finally, the Court’s rationale that claimants will be protected from having to hire counsel when approaching the three years statute of limitations disregards the Pennsylvania Supreme Court’s decision in Scheffler v. Workers’ Compensation Appeal Board (Kocher Coal, Inc.), which holds the three years statute of limitations can be tolled by payment of medical bills. Thus, claimants need not be unduly concerned that unless a claim is filed within three years of the injury date the statute will preclude proceeding.

The Court’s latest ruling only reiterates the new principle that “disability” is no longer synonymous with wage loss. Six days after their ruling in Orenich, the Court decided Brutico v. Workers’ Compensation Appeal Board (US Airways, Inc.). The outcome was different, but the Court’s dicta, again, clearly advances their agenda that all incidents/injuries must be acknowledged within 21 days of notice of the occurrence notwithstanding the fact that no disability has occurred. In Brutico, an airline employee sustained an injury when she slipped off a loading dock. She reported the incident promptly and treated with panel doctors without missing time from work. Several months later, she presented medical bills reflecting an expanded symptom complex and different diagnoses then were imposed by the panel doctors. Employer issued a Notice of Denial. A Claim Petition was filed, through which claimant sought penalties and unreasonable contest attorney’s fees. The Workers’ Compensation Judge denied the Claim Petition finding that the employer’s medical expert was more credible than the claimant’s. The Judge also denied the request for penalties reasoning that the employer had not violated Section 406.1(a) when it issued a Notice of Denial beyond 21 days from the injury because it is only required to issue a notice within 21 days of disability. The Board affirmed. The claimant appealed to the Commonwealth Court where the holding was ultimately affirmed, however, the Court used the circumstances to make plain their position that an employer has an obligation to issue an NCD or NCP with in 21 days of notice of an injury, notwithstanding the fact that there is no disability. In this case, because the employer was successful in defeating the claim, there was no basis on which to assess a penalty against them.

The Court does not seem to appreciate that its recent decisions and the Workers’ Compensation Bureau’s response to them (actual creation of a “medical only” NCP) constitute a fundamental shift in the conceptual foundation of the Pennsylvania workers’ compensation system. It is extraordinarily troubling that the Court has embarked on such a course with no discussion or apparent recognition of the historic underpinning of our compensation system as a wage loss State. There is a glaring disconnect between the language of the Act, regulations and historical cases with the apparent new implication that an incident without wage loss is a compensable event.
It is further troubling that in creating this policy the Bureau and the Courts failed to offer the employer further guidance or recourse in its new onerous administration and investigative duties. For instance, there is no suggestion of a temporary “medical only” NCP. It would appear that if the employer has 90 days to pay without prejudice on a wage loss case, it should similarly be able to do so where only medical expenses are at issue. However, none of their decisions or responsive forms reflect that the Legislature has afforded the employers an additional investigative period with the option of the temporary NCP.

There remain many more questions than answers from claims handlers on this issue. It is hoped that the appropriate case will reach the Pennsylvania Supreme Court such that a determination can be rendered with a full appreciation of the historic basis and Legislative intent of this system. In the meantime, compliance with current case law in order to avoid penalties and unreasonable contest attorney’s fees would appear to require, at a minimum, issuance of a Notice of Denial within 21 days of notice of an injury, reflecting the report of the injury, utilizing either Box No. 1 or Box No. 4 on the form. The Court has not yet the shifted the burden to the employer or found an employer admits compensability through the filing of a Notice of Denial. It would seem that this offers the best chance, at this point, to retain all defenses and hold the claimant to the burden of proof on all elements in a Claim Petition setting. We certainly welcome your inquiries and input on this issue

Jane A. Lombard, Esquire
Philadelphia, PA