The Pennsylvania Supreme Court Declares the IRE Provisions of the Pennsylvania Workers’ Compensation Statute Unconstitutional

/ 21.Jun, 2017


Re: Protz v. Worker’s Compensation Appeal Board (Derry Area School District)

June 20, 2017

The Pennsylvania Supreme Court has declared the IRE provisions of the Pennsylvania Workers’ Compensation statute unconstitutional and has stricken Section 306 (a .2) from the statute. There is now no ability to change an employee’s status from temporary total to temporary partial and thereby limit exposure on the basis of an impairment rating evaluation conducted under the AMA Guidelines. This ruling will significantly impact claims handling and efforts to proceed under the now unconstitutional IRE provisions should be immediately curtailed.

It was nearly 21 years ago that the Pennsylvania Legislature enacted Act 57 to further control workers’ compensation costs. Included was Section 306 (a .2) which permitted, after claimant received 104 weeks of temporary total disability benefits, the ability to request an impairment rating which was to be performed using “the most recent edition” of the AMA Guidelines. If the whole body impairment secondary to the work related injury was less than 50 percent the claimant’s status was changed to partial such that wage loss benefits were limited to 500 weeks. The Pennsylvania Supreme Court now holds that the requirement that the evaluation of impairment be performed pursuant to the “most recent edition” of the AMA Guides violates Article II, Section I of the Pennsylvania Constitution. More specifically, it violates the non-delegation clause. The Court reasons that the General Assembly empowered the AMA with the ability to craft the standards governing disability. There were no restraints or parameters on the AMA’s prospective ability to “make the laws” that control who would be more than 50 percent impaired and who would be less than 50 percent impaired. The Supreme Court’s ruling, authored by Justice Wecht and joined by Justices Todd, Donohue, Dougherty, Mundy affirmed the Pennsylvania Commonwealth Court’s decision that the use of the “most recent edition” of the Guides’ provision in the statute was unconstitutional; but the Supreme Court majority goes further. The Commonwealth Court held that since the Fourth Edition was in effect when the statute was enacted in 1996, the Fourth Edition could continue to be used. The high court, however, finding no reference to the Fourth Edition in Section 306 (a .2) ruled that the “most recent edition” language cannot be severed from the provision and allow the IRE provision to retain its integrity. Accordingly, the entirety of Section 306 (a .2) has been excised from the Workers’ Compensation Act.

Going forward we imagine the General Assembly will be tasked to draft an amendment to the Workers’ Compensation statute that will pass constitutional muster. They can do this either by designating a specific edition of the Guides or building in further safeguards. Whether in the current political climate any such legislation will be signed into law remains to be seen. In the interim, however, we will anticipate Petitions to Review and Reinstate partial disability benefits to total disability benefits on a multitude of cases both those where the partial disability benefits have expired, where partial disability benefits are currently being paid, and certainly those cases which are currently in litigation where the Protz issue is in play are now effectively governed by this decision such that modification is not appropriate. In those cases where 500 weeks of partial disability benefits have already been paid and there is no litigation pending to reinstate those benefits we will maintain that the ruling does not have retroactive applicability such that benefits can be resumed. Similarly, in those cases where a modification of benefits has been judicially determined and that decision is final we would suggest that there is no retroactive applicability and any attempt to reinstate or review that decision is barred by the doctrine of res judicata. Those cases, however, where the claimant is currently receiving partial disability benefits pursuant to a Notice of Status Change are vulnerable and the possibility certainly exists that we will need to resume total disability status and, as indicated, those cases where we are actively pursuing a Modification Petition based on a Fourth Edition, Fifth Edition or a Sixth Edition rating we must assume that they will be governed by this ruling such that partial disability benefits on this basis are not available. Your inventory of cases where this decision will have an adverse impact should be reviewed. We still have the ability to impact exposure based on a labor market survey/earning power assessment and of course, cases will need to be evaluated for proper reserves and overall settlement analysis.

We welcome the opportunity to discuss the impact of this ruling on your cases please do not hesitate to contact a member of our workers’ compensation department with your questions.

Swartz Campbell LLC Workers Compensation Department