Legal Insights

PA Supreme Court Declares IREs Unconstitutional

June 20, 2017
By: Karyn Dobroskey Rienzi

In a significant decision affecting employers, workers’ compensation insurance carriers, and third party administrators, on June 20, 2017, the Pennsylvania Supreme Court declared that Section 306(a.2) of the Workers’ Compensation Act constitutes an unconstitutional delegation of legislative power to the AMA and struck the 21-year-old provision from the Act. As a result of the Supreme Court’s decision, the Impairment Rating Evaluation (IRE) process has been eliminated from Pennsylvania workers’ compensation law.  A copy of the Majority Opinion in Protz v. WCAB (Derry Area School District) is available here.

The Supreme Court’s decision will immediately affect all cases in which claimants underwent IRE determinations. The Court has not explicitly stated whether its decision is retroactive. At this time, we recommend that Employers/Insurers take the position that the decision applies only to cases involving IREs that are currently in litigation. Claimants, however, are likely to argue that Protz voids every IRE determination performed since Section 306(a.2) was enacted. Although each claim must be reviewed on a case-by-case basis, Post & Schell’s workers’ compensation and appellate attorneys have set forth, below, our perspective on handling these claims in light of the Supreme Court’s decision.  

Cases Involving IREs that are Currently in Litigation

• Claims in which the Employer/Insurer has filed a Petition to Compel an IRE
  Counsel for Employers/Insurers should immediately withdraw any such petitions, as claimants will no longer be attending Impairment Rating Evaluations.  Similarly, if any appeals are pending concerning an order compelling a claimant’s appearance at an IRE examination, those appeals should be withdrawn.
   
• Claims in which an IRE determination recently has been made and an automatic Notice of Change in Status has been issued 
  In these cases, the change in status will no longer be effective. Employers/Insurers will need to re-evaluate their reserves because wage loss benefits will no longer terminate 500 weeks after the change in status. These claims also should be evaluated in order to determine whether a settlement can be reached or if a termination petition or a suspension or modification petition (based upon a job offer or Labor Market Survey) would be appropriate.
   
• Claims in which an IRE determination recently has been made and modification petition litigation is pending at any stage
  For cases in which a claimant recently has attended an IRE evaluation and where litigation is pending before a Workers’ Compensation Judge, Workers’ Compensation Appeal Board, the Commonwealth Court or the Supreme Court concerning such a modification petition, counsel for the Employer/Insurer should withdraw the petition or appeal.  In addition, the Employer/Insurer may need to re-evaluate reserves for such claims. 

Cases Involving IREs that are Not Currently in Litigation   

The Supreme Court has not explicitly stated whether its decision is retroactive. Claimants’ attorneys will likely argue that the decision should apply retroactively so that all changes in status made pursuant to IRE determinations are null and void. Claimants’ attorneys will also likely argue that for any claims in which wage loss benefits stopped after 500 weeks of disability benefits were paid following a change in status, those claims (1) should be re-opened and (2) that past due and ongoing benefits should be paid to those claimants. 

Pennsylvania courts generally adhere to the principle that a party whose case is pending at any stage of litigation, including a direct appeal, at the time of the new appellate decision is entitled to the benefit of changes in the law.  Commonwealth v. Brown, 431 A.2d 905, 906-07 (Pa. 1981); see also Blackwell v. State Ethics Comm’n, 589 A.2d 1094, 1099 (Pa. 1991) (holding that the court’s determination that Section 4(4) of the Sunset Act is unconstitutional is to be applied retroactively to the parties before the court and to all cases pending at the time of that decision in which the issue of the constitutionality of that Section was timely raised and preserved). 

Employers/Insurers may argue, similarly, that Protz applies only to cases in litigation at the time the Supreme Court issued its decision in which the issue was raised and preserved. In the event that Workers’ Compensation Judges, the Board and/or the appellate courts eventually rule that Protz applies retroactively, there will be significant exposure for claims from the past 20 years for which wage loss benefits were no longer paid based upon Section 306(a.2) of the Act.

The issue of whether the Protz decision applies retroactively will most likely arise in the following scenarios:

• Claims in which a claimant’s status was previously changed via an automatic Notice of Change in Status and no challenge was filed within 60 days
  Claimants’ attorneys may file reinstatement or modification petitions requesting that their clients’ status be returned to total disability and that their total disability benefits be reinstated (if they were stopped) in situations in which Notices of Change in Status were issued and where the 60-day time period for challenging the Notice expired. In these situations, Employers/Insurers can argue, as discussed above, that the Supreme Court’s ruling does not apply retroactively. 
   
• Claims in which a claimant’s status was previously changed via agreement
  Again, claimants’ attorneys may file reinstatement or modification petitions, or petitions to set aside a compromise & release agreement, requesting that their clients’ status be returned to total disability and that their total disability benefits be reinstated (if they were stopped) in cases where the parties reached a settlement after the claimant’s disability status changed due to an IRE determination. In such cases, Employers/Insurers can argue that this allegation has been waived, that Protz does not apply, and that the matter cannot be re-opened. 
   
• Claims in which a claimant’s status was previously changed via a Workers’ Compensation Judge’s decision and order granting a Modification Petition that was not appealed or where the appeal has concluded
  Finally, claimants’ attorneys may file reinstatement or modification petitions requesting that their client’s status be returned to total disability and that their total disability benefits be reinstated (if they were stopped) in situations in which Workers’ Compensation Judges have granted a modification petition and changed a claimant’s status from total disability to partial disability and where the claimant has not pursued an appeal or where the parties litigated the appeal and the appeal was decided in the Employer/Insurer’s favor. In these situations, Employers/Insurers can argue that this issue has been waived where no appeal has been filed, that Protz does not apply, and that the matter cannot be re-opened. 
   

Post & Schell’s Workers’ Compensation and Appellate Departments will continue to provide updates concerning any new case law involving the application of Protz as well as any action by the Legislature following the Supreme Court’s decision.

If you have questions about a specific claim, please contact any of the following Post & Schell Workers’ Compensation Attorneys:

• Workers’ Compensation Department Chair, Jonathan C. Ascher at (412) 577-2982 or JAscher@PostSchell.com; 
• Stephen S. Bloomburg in our Pittsburgh Office at (412) 577-2985 or SBloomburg@PostSchell.com; 
• Patrick R. Byrne in our Allentown Office at (610) 774-0326 or PByrne@PostSchell.com;
• Patrick T. Cusick in our Lancaster Office at (717) 391-4418 or PCusick@PostSchell.com; or
• Patrice A. Toland in our Philadelphia Office at (215) 587-1093 or PToland@PostSchell.com.    
   

Disclaimer: This post does not offer specific legal advice, nor does it create an attorney-client relationship. You should not reach any legal conclusions based on the information contained in this post without first seeking the advice of counsel.