Handling “medical only” claims, the industry’s vernacular for a claim involving no disability, has become increasingly troublesome since the Commonwealth Court’s March 2003 ruling in Waldameer Park v. WCAB (Morrison), 819 A.2d 164 (Pa. Commw. Ct. 2003). In that case, the Court assessed unreasonable contest fees where the employer did not accept or deny the claim through issuance of proper Bureau documentation - even though the Claimant never lost wages as a result of the injury. While handling a medical only claim will require more attention, there are still options that will comport with the apparent ruling in Waldameer.

The fact pattern of Waldameer will likely be familiar. Claimant sustained a hand injury while employed as an amusement ride operator. Immediately following the injury, one of the owners of the park took claimant for treatment. Initially, Claimant’s hand seemed to be healing. She returned to college in the fall, however, only to have her symptoms worsen. Her treatment continued during this time, including occupational therapy and consultations with a specialist. Claimant completed her college education and entered graduate school. Her symptoms persisted and expanded, and ultimately she was diagnosed with RSD (“Type 1 Complex Regional Pain Disorder”). Importantly, Claimant never lost wages due to the injury, and never made a claim for indemnity benefits when she ultimately filed a Claim Petition. The carrier, in this case, did not file any Bureau documentation, such as a Notice of Compensation Payable (“NCP”) or Notice of Workers’ Compensation Denial (“NCD”) formally accepting or denying the claim. The carrier did, however, pay for all medical bills in connection with the claim.

As indicated, Claimant filed the Claim Petition purportedly to seek acknowledgment of the claim and the payment of future medical expenses “before her rights to those future benefits became barred by the three year statute of limitations.” Id. at *4. The employer, in defense of the petition, presented medical evidence in support of the position that Claimant did not suffer from RSD. Claimant’s petition was granted, and the WCJ assessed unreasonable contest fees (“440 fees”), stating that “although Employer’s medical expert disagreed with Claimant’s diagnosis, she did not testify that the injury did not occur.” Id. at *5. The Workers’ Compensation Appeal Board affirmed the order of the WCJ. On appeal to the Commonwealth Court, the pertinent issue to be decided was whether it was error to impose Section 440 fees where Claimant presented no evidence of wage loss or unpaid medical bills, and where the Employer had reason to challenge the extent of Claimant’s disability. Id. at *6. The Commonwealth Court affirmed the Appeal Board, agreeing that 440 fees were proper.

At the heart of the argument before the Commonwealth Court was the Employer’s assertion that it was not obligated to file an NCP because Claimant suffered no wage loss as a result of the injury. The Commonwealth Court disagreed, “reading in” such a requirement in Section 406.1(a) of the Act. That Section provides for the payment of compensation within 21 days of the employer’s notice of the employee’s disability. However, the Court interpreted this provision as an affirmative duty on the employer to issue a notice of compensation payable or denial within 21 days of notice of the injury. Id. at *10-*11. Thus, the Court quoted the decision it rendered in the case of Lemansky v. WCAB (Hagan Ice Cream Co.), 738 A.2d 498 (Pa. Commw. Ct. 1999), “once an employer elects to take no action and require the claimant to litigate the issue of compensability, it must then pay Claimant’s attorney’s fees unless it can prove that its contest was reasonable.” Id. at *11.

Ultimately, the Waldameer Court ruled that 440 fees were proper based upon the following factors: 1) employer knew that Claimant sustained an injury; 2) Claimant’s medical bills were paid; 3) the Answer denied all material allegations of the Claim Petition; 4) Claimant had to litigate every aspect of her claim; 5) although Defendant presented medical evidence to contest the diagnosis, that evidence did not challenge whether an injury occurred; finally 6) employer did not issue a notice of compensation payable.

Arguably, attention should be paid to the above factors, and the Court’s holding should be construed narrowly while defending cases that are pending where Waldameer may be applied. For instance, could 440 fees be avoided if the Answer denies only disputed allegations to the claim petition? What if the defense medical witness testifies that there was no objective evidence that an injury occurred? Indeed, any evidence to rebut an injury occurred would undoubtably distinguish the case from Waldameer.

Additionally, attention should be paid to what the case holds, versus what is merely “dicta,” and unessential to the holding. The most unsettling aspect of the Waldameer decision is the Court’s recommendation that “the proper course of action would have been for Employer to issue a “medical only” notice of compensation payable.” Id. at *11. Obviously, there is no “medical only” NCP, and the Court does not elaborate on how its suggestion is to be implemented. Importantly, however, the holding of the case is not that employers must file “medical only” NCPs in cases with no wage loss. The holding is limited strictly to the question of whether 440 fees were proper given the facts of the case. Therefore, it is not recommended that employers/carriers fashion “medical only” NCPs in these types of cases if it is the desire to preserve any defenses to a potential claim. Where no such form exists, it should be assumed that a “medical only” NCP would have the full force an effect of the existing NCP. More specific recommendations are offered below for consideration on a case-by-case basis.

Waldameer is a troubling case not just because of the Court’s attempt to legislate the administration of claims, but because it represents a continued erosion of the principle that medical bills can be paid without prejudice. For instance, there is no discussion in the Waldameer case of Bellefonte Area Sch. Dist. V. WCAB (Morgan), 627 A.2d 250 (Pa. Commw. Ct. 1993), which held that the employer’s voluntary payment of medical bills is not an admission of liability. This principle allowed employers to pay medical bills without fear of accepting unlimited liability for a claim. The result of this principle was arguably positive, allowing medical bills to be paid while employees did not focus unduly on the pursuit of benefits or staying out of work for pecuniary gain. It has been generally observed, however, that the holding of Bellefonte has perhaps come into question after the Supreme Court in Schreffler v. WCAB (Kocher Coal Co.), 788 A.2d 963 (Pa. 2002) described medical benefits as “payments in lieu of compensation.” Suffice to say, reviewing the progression of these cases shows that the employer can no longer ignore the potential ramifications of paying medical bills on a claim that has not been formally recognized.

Further still, Waldameer does not reconcile the holding in Schreffler. The point is made repeatedly throughout Waldameer is that Claimant was forced to litigate in order to preserve her right to future benefits before the expiration of the 3-year statute of limitations. However, under Schreffler, the Supreme Court held that the 3-year statute of limitations can be tolled if Claimant is able to show that the medical payments made on his or her behalf were in lieu of compensation. Therefore, under the facts of Waldameer, Claimant was not constrained to a three year period, assuming the presumption that the medical bills were work-related was left unrebutted. To this end, it is asserted that the reasoning of Waldameer was internally flawed.

With regard to case law comparison, a final comment should be made regarding the Waldameer Court’s undue reliance on Lemansky. While the Court clearly appeared to rely on Lemansky as justification that employer’s contest was unreasonable, a close review of the holding will show this reliance to be misplaced. Lemansky held, “an insurance carrier’s internal claims management policy does not constitute a reasonable basis to contest a Claimant’s right to a suspension of benefits where there is no dispute as to the compensability of the work injury.” Lemansky, at 503. It is important to note that there were no disputes at issue in Lemansky other than the question of whether the carrier’s internal policy of not issuing documentation in medicals-only claims was proper. In Waldameer, by contrast, there was a legitimate and medically supported dispute as to whether Claimant suffered from RSD as a result of the work injury. It appears, therefore, that the holding of Lemansky was unnecessarily broadened beyond its usefulness. It would be unfortunate if the Court’s “reforms” result instead in the increased denial of claims by employers who do not want to be trapped in the event of future litigation.

In the meantime, how should the “medical only” claim be handled in light of the Waldameer ruling? There are options, each with ramifications of which Employers should be cognizant. Importantly, given Waldameer’s potential impact, counsel should be consulted to determine on a case-by-case basis the optimal way to administer a medical-only claim.

ALTERNATIVES IN ADMINISTERING THE “MEDICAL ONLY CLAIM”

Option 1 - File an NCD - Deny the Claim fully within 21 days of the incident.

This option will fully preserve all defenses for litigation, as long as box #1 is checked, indicating that the employee did not suffer a work injury. While this option may satisfy the strictures of Waldameer, it may not totally eradicate the possibility of 440 fees if Claimant pursues a Claim Petition. That is, there may, in fact, be aspects of the claim where the employer cannot show a reasonable contest exists. Moreover, an NCD may alarm an employee and prompt litigation even when the only issue is medical bills. This result may be prevented, in some cases, by issuing a form letter to the employee along with the NCD. This letter would explain:

while an NCD is being filed for “administrative purposes,” that payment of medical bills for the incident of [date] will be paid by [carrier/employer] without prejudice. Payment of medical bills will not constitute an admission of liability by [carrier/employer]. However, [employer/carrier] will make best efforts to pay for reasonable, necessary and causally related medical bills for the incident of [date] in accordance with Workers’ Compensation Act guidelines. If there are any questions or concerns about medical benefits, please contact [name/number] for assistance.

Such a letter may effectively explain the carrier’s position with regard to the “medical only” claim. Whether or not a boom in litigation will result is yet to be seen.

Option 2 - File an NCD utilizing box #6, “other good cause”

Again, if the NCD is filed within 21 days of the date of the incident, it appears that Waldameer will be satisfied. Checking box #6 would be a direct response to the impracticable suggestion by the Waldameer Court that “the proper course of action would have been for Employer to issue a “medical only” notice of compensation payable.” Where such a form simply does not exist, it is unclear what the court meant by this suggestion. One response is to check box #6 on the NCD, and state the following: “This is a Waldameer “medical only notice.” Your medical bills will be paid for the incident of [date] without prejudice in accordance with Act 44 guidelines. The carrier reserves the right to assert any and all defenses.”

If the matter is brought to litigation, then the employer can determine what defenses it will raise. The purpose in wording the notice in this way is twofold: 1) it is a direct response to Waldameer. The employer should be entitled to interpret this case favorably where a “medical only” NCP does not exist, and where there was no further instruction by the Court as to how to implement its suggestion; 2) it is an attempt to minimize the potential that 440 fees will be imposed, should the employee eventually bring a claim. Part of the reason why the Waldameer Court imposed fees was that there was no contest as to whether the injury occurred. Through the box #6 vehicle, however, defenses are only “preserved,” in the event litigation should occur. In other words, the position is akin to the positions employers took before Waldameer in medical only claims - none at all. If a claim petition is filed, the matter should be scrutinized to determine what aspects are legitimately in dispute. As to the issuance of the form itself, it should be asserted that the “Waldameer Medical Only Notice,” is not tantamount to an outright denial, but is its own animal. It should further be asserted that the employer should not be assessed counsel fees for not issuing a non-existent form, i.e., the “medical only NCP.”

In conclusion, Waldameer has created confusion rather than clarified the law. Where, before, employers could safely limit liability while voluntarily providing medical benefits, that position can result in exposure to reasonable contest fees. The above options are, therefore, offered as guidance in administering the “medical only” claim, in the event that Waldameer is not overturned. In addition to the above two options, there are still other methods by which a medical only clam may be acknowledged in varying degrees. The Bureau forms may be tailored further for unique cases. Therefore, counsel should be consulted at the outset of a medical only claim so that the initial claim administration has the most beneficial impact on future handling.