Section 406.1 (c) of the Pennsylvania Workers’ Compensation Act specifies that where the right to compensation is being controverted, the Notice of Compensation Denial form specifying the grounds on which the right to compensation is being disputed, must be filed within 21 days. The language of the statute and the regulations pursuant thereto (Section 121.13) provide that the filing must occur no later than 21 days after notice or knowledge to the employer of the employee’s disability or death. However, the Commonwealth Court has interpreted this language to mandate the filing within 21 days of notice of the occurrence of the injury (see Waldameer Park, Inc. v. WCAB). The revised Notice of Compensation Denial now requires the employer/insurer to provide the date on which it received notice so that the 21 days can be calculated. However, the form continues to include the “date of disability” option as a trigger date for filing the form. If the form is not filed until 21 days after disability (loss of earnings) commences the employer is left vulnerable to penalties under the Waldameer Park, Inc. line of cases. The optional language in the revised form, however, arguably endorses the choice to file within 21 days of either the injury or the commencement of disability. While we continue to recommend filing within 21 days of notice of the injury, in those instances where the filing is not made until disability begins, we may be able to argue that a penalty is not appropriate given the specific language of the statute, the regulation and now, importantly, the revised Notice of Compensation Denial form.

The other change to the form appears to be in response to the increasing prevalence to use the Notice of Compensation Denial as a substitute for the “medical only” Notice of Compensation Payable. That is, the employer will acknowledge the occurrence of an incident, but deny compensable disability, the “box number four” denial. By now requiring the employer to delineate the affected body part, the type of injury, and a description of the event it is “denying” the claimant is put on notice as to what the employer knows and what medical bills possibly will or possibly will not be paid. This change is bound to be fodder for further claims for penalties and unreasonable contest attorney’s fees should the claimant file a claim for formal recognition of the injury. If the employer is able to specify the exact circumstances under which the claimed injury occurred and had prompt notice of the incident, this may translate into an award of penalties for the claimant.

On March 28, 2007 the Commonwealth Court decided the case Jordan v. WCAB (Phila. Newspapers, Inc.). There, the employer had issued a Temporary Notice of Compensation Payable describing an injury to the claimant’s head, neck and low back. Within the statutory time frame a Notice Stopping the TNCP along with a Notice of Compensation Denial was filed. On the Denial form the employer stated under box 6, “there was compensable lost time from 5/22/03 until a return to work on 7/11/03.” The claimant engaged counsel, a Claim Petition and Penalty Petition were filed, and a request was made for unreasonable contest attorney’s fees. The claimant’s Petition for Penalties contended that the employer violated the Workers’ Compensation Act in failing to issue a Notice of Compensation Payable where it knew that the claimant had sustained a compensable injury and its Notice of Compensation Denial had admitted as much. The WC Judge granted the Claim Petition in part, awarded a 50 percent penalty and awarded a reduced unreasonable contest attorney’s fee. Both parties appealed to the WCAB which affirmed the limited award on the Claim Petition but reduced the penalty to 20 percent. The Board did not address the unreasonable contest attorney’s fee issue.

Both parties appealed the Board’s ruling to the Commonwealth Court. There, the employer argued that it had not violated the Act as it had complied with the statutory requirements to revoke its Temporary Notice of Compensation Payable. The employer relied on Gereyes v. WCAB which held that where the employer complied with the time frames and procedures set forth in Section 406.1 to revoke its Temporary Notice of Compensation Payable no penalty for use of the temporary notice is warranted. The employer asserted that the Act does not “delineate a proper right or wrong reason for revoking a TNCP.” Claimant took the position that the employer violated Section 406.1 when it issued a Denial despite the fact that it knew it was liable for a work related injury. Claimant argued that the employer should have issued an NCP and paid the claimant while it attempted to move him off of benefits.

The Commonwealth Court sided with the claimant on the penalty issue. It was not persuaded that because there was no disability, in this case because claimant’s salary was continued, that the employer was free to deny the claim and force the filing of a Claim Petition. The Court seem to focus, in distinguishing this case from Gereyes’, that the employer accepted the injury through the language on its Notice of Compensation Denial.

By penalizing the employer for revoking its Temporary Notice of Compensation Payable and requiring it to issue a Notice of Compensation Payable merely because it did not dispute the occurrence of the incident which gave rise to the claim, the Court fails to fully account for the statutory language which permits the employer to use the TNCP where the extent of its liability is uncertain. It is hoped that a Petition for Allowance of Appeal will be pursued and the Pennsylvania Supreme Court accepts this case. In the meantime, however, aggressive claims handling through the use of the TNCP and the Notice of Compensation Denial is more challenging. The Gereyes case remains law, but, the Court has signaled a willingness to look to what the employer knew and when it knew it in determining whether its forms filing violated the Act. We can expect increasing scrutiny with respect to the use of Notice of Compensation Denial and the TNCP where the employer is not disputing the occurrence of an incident, but seeks to limit the extent of its liability. Is it vital that the language used on your Notice of Compensation Denial forms be precise so that it cannot be argued that you have “accepted” a claim by “denying” it. We would also encourage the use of disclaiming language on the Notice of Compensation Denial to make it evident that you do not intend to recognize liability for a compensable injury. In those instances where medical bills are being paid we would suggest indicating that payment of medical bills is done without an admission of liability and that the employer retains all rights to defend a claim for a compensable injury.

We welcome you inquiries and thoughts concerning the claims handling challenges presented by both the recent case law and the revised form of the Notice of Compensation Denial.

Jane Lombard | Chuck Katz | Steve Harlen | Paul Pauciulo
Sharon McGrail-Szabo | Sheilah Tone | Debra Matherne | Thomas Ollason