Legal Insights

Pennsylvania's Commonwealth Court Rules That the Use of the Fifth and Sixth Editions of the AMA Guides in Impairment Rating Evaluations is Unconstitutional

September 19, 2015
By: Karyn Dobroskey Rienzi

Note: This article also appeared on the Workers' Compensation Institute's (WCI) website on September 23, 2015. Click here to view.

In a significant decision last week affecting employers, workers’ compensation insurance carriers and third party administrators, an en banc panel of the Commonwealth Court, in a 4-3 decision, held that the use of the Fifth and Sixth Editions of the AMA Guides to the Evaluation of Permanent Impairment (Guides) in the performance of Impairment Rating Evaluations (IREs) is unconstitutional. Protz v. Workers’ Comp. Appeal Bd. (Derry Area School District), No. 1024 C.D. 2014 (Pa. Commw. Sept. 18, 2015), available here. Simply put, the Court held that only the Fourth Edition of the Guides may be used in determining the degree of a claimant’s impairment under Section 306(a.2) of the Workers’ Compensation Act, 77 P.S. § 511.2.

The following article is the first in a series by Post & Schell’s Workers’ Compensation and Appellate Departments concerning the Commonwealth Court’s decision and its impact.

BACKGROUND – IRE DETERMINATION LEGISLATION AND CASE LAW

Section 306(a.2) of the Workers’ Compensation Act, 77 P.S. § 511.2, provides that an employer, after paying 104 weeks of total disability benefits, may request that the claimant submit to an evaluation by a physician for the purposes of determining the degree of his or her impairment. If the IRE rating is equal to or greater than 50 percent, a claimant shall be presumed totally disabled. A claimant may be considered partially disabled if he or she has a total impairment rating of less than fifty percent.

If the employer requests an IRE within 60 days of the claimant’s receipt of 104 weeks of total disability benefits, and the IRE rating is less than 50 percent, then the claimant will be automatically considered partially disabled, thereby reducing the amount of compensation that can be paid to 500 weeks. The Pennsylvania Supreme Court has held that an employer may request that the claimant submit to an IRE, the results of which are not self-executing, but rather, applicable to the traditional administrative process. Gardner v. Workers’ Comp. Appeal Bd. (Genesis Health Ventures), 888 A.2d 758 (Pa. 2005). Under those circumstances, the employer may file a Modification Petition, seeking to convert the claimant’s disability status from total disability to partial disability.

Section 306(a.2) of the Act further provides that the degree of impairment shall be determined “pursuant to the most recent edition of the American Medical Association Guides to the Evaluation of Permanent Impairment..” At the time this Section of the Act was enacted in June of 1996, the Fourth Edition of the Guides was in effect. The Commonwealth Court previously held that the most recent Edition of the Guides in effect at the time of the IRE examination must be used in determining the degree of impairment. Stanish v. Workers’ Comp. Appeal Bd. (James J. Anderson Construction Co.), 11 A.3d 569 (Pa. Commw. 2010). The Fifth Edition of the AMA Guides was published on November of 2000. The Sixth Edition of the Guides was published in December of 2007.

THE COMMONWEALTH COURT’S DECISION

Protz v. Workers’ Comp. Appeal Bd. (Derry Area School District) involves a situation in which an IRE physician evaluated the claimant’s degree of impairment pursuant to the Sixth Edition of the Guides. The IRE physician found that the claimant’s whole body impairment rating was 10 percent. The employer filed a Modification Petition, seeking to change the claimant’s disability status from total disability to partial disability. The Workers’ Compensation Judge granted the employer’s Modification Petition. The claimant appealed to the Workers’ Compensation Appeal Board, arguing that Section 306(a.2) constitutes an “unconstitutional delegation of authority by the state legislature..” The Appeal Board upheld the Judge’s order.

On appeal to the Commonwealth Court, the claimant challenged the constitutionality of Section 306(a.2) of the Act as an unconstitutional delegation of legislative authority pursuant to Article II, Section 1 of the Pennsylvania Constitution. Specifically, she argued that the provision of the Act gives the American Medical Association (AMA), rather than the General Assembly, the authority to establish the criteria under which a claimant is found to be partially or totally disabled. She alleged that the current (Sixth) Edition of the Guides provides substantially different criteria than the previous versions, thereby causing some claimants who would have been found more than 50 percent impaired under the Fourth Edition to be less than 50 percent impaired under the Sixth Edition.

The employer argued that the Commonwealth Court had already determined that Section 306(a.2) does not constitute an unlawful delegation of legislative authority in both Stanish v. Workers’ Comp. Appeal Bd. (James J. Anderson Construction Co.), 11 A.3d 569 (Pa. Commw. 2010) and Wingrove v. Workers’ Comp. Appeal Bd. (Allegheny Energy), 83 A.3d 270 (Pa. Commw. 2014), appeal denied, 94 A.3d 1011 (Pa. 2014). The Commonwealth Court noted, however, that neither party in Stanish challenged Section 306(a.2) as an unconstitutional delegation of legislative power under Article II, Section 1 of the Pennsylvania Constitution and that the Court had determined that the claimant in Wingrove failed to develop his constitutional argument.

In a majority Opinion authored by President Judge Dan Pellegrini, the Court held that Section 306(a.2) constitutes an unconstitutional delegation of authority by the state legislature in violation of Article II, Section I of the Pennsylvania Constitution. Specifically, the Court held that Section 306(a.2) is unconstitutional insofar as it proactively approved versions of the Guides beyond the Fourth Edition without review by the General Assembly. In reaching its decision, the Court found that Section 306(a.2) fails to provide any standards to guide the AMA’s determination regarding the methods to be used in grading impairments, by which physicians and Workers’ Compensation Judges are bound. In addition, the Court noted that Section 306(a.2) does not contain a mechanism requiring government review of any subsequent versions of the Guides beyond the Fourth, which was in effect at the time the General Assembly enacted Section 306(a.2). It did not review or re-adopt the methodology contained in the Fifth or Sixth Edition of the Guides. Instead, the Court found that the “legislature has simply provided a private party – the AMA – with carte blanche authority to implement its own policies and standards, proactively adopting those standards, sight unseen.”

As a result, the Court held that Section 306(a.2) of the Act is unconstitutional to the extent it proactively approved versions of the Guides beyond the Fourth Edition without review. The Court therefore vacated the Appeal Board’s decision with respect to the Modification Petition and ordered that the matter be remanded to the Workers’ Compensation Judge “to apply the Fourth Edition of the AMA Guides in adjudicating the same.”

Judge Robert Simpson authored a dissenting opinion, which was joined by Judges Bonnie Brigance Leadbetter and Anne E. Covey. Judge Simpson disagreed with the majority’s determination that Section 306(a.2) violates the Pennsylvania Constitution’s prohibition against the unlawful delegation of legislative power. He noted that the General Assembly delegated initial impairment ratings to an independent physician and that the AMA does not participate in impairment ratings. Moreover, in situations such as the present case, involving a Modification Petition, the impairment rating “becomes just an item of evidence” in the proceedings. It is the Workers’ Compensation Judge who makes the ultimate determination as to the claimant’s disability status after the issue is fully litigated by the parties.

Judge Covey issued a separate dissenting opinion, in which she indicated that the majority’s decision directly contradicts established decisions of the Pennsylvania Supreme Court and the Commonwealth Court, which have permitted the General Assembly to enact legislation that incorporates standards developed by private parties.

FURTHER APPELLATE ACTION BY THE SUPREME COURT

We expect that the employer will file a Petition for Allowance of Appeal with the Pennsylvania Supreme Court. The Supreme Court is not required to hear the appeal; however, it is likely that the Court will decide to hear the appeal, as the Commonwealth Court’s decision involves a constitutional issue that will affect numerous workers’ compensation cases. If the Supreme Court decides to hear the appeal, it may take up to two years for the Court to issue a decision.

We cannot predict, with certainty, how the Supreme Court may rule, as three of the seven seats on the Court are up for election in 2015. Potential outcomes include (1) an affirmance of the Commonwealth Court’s decision holding that the Fourth Edition of the Guides must be used in the IRE process, and (2) a reversal of the Court’s decision, in which case IRE physicians would once again use the most recent Edition of the Guides in performing IRE assessments.

RECOMMENDATIONS FOR HANDLING CLAIMS AND LITIGATION

The Commonwealth Court’s decision will immediately affect all pending cases involving IRE determinations made under the Fifth and Sixth Editions of the Guides. In addition, the Court’s decision may affect cases in which claimants’ benefit status have already been changed based upon IRE determinations made under the Fifth and Sixth Editions of the Guides.  

Claimants’ attorneys will likely argue that the Commonwealth Court’s decision should apply retroactively, so that all changes in status made pursuant to an IRE determination issued under the Fifth or Sixth Editions of the Guides are null and void. The Commonwealth Court, however, did not expressly void all prior IRE determinations or rule that its decision applied retroactively. In Pennsylvania, we 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). We would argue, similarly, that Protz applies only to cases in litigation (and, of course, cases going forward until the Supreme Court issues a decision) at the time the Court issued its decision in which the issue was raised and preserved.

Every claim should be assessed on a case-by-case basis. We have set forth, below, our general recommendations for handling IRE cases and petitions that we expect claimants’ counsel will file in light of the Commonwealth Court’s decision. In all of the situations discussed below, settlement should be considered in light of the uncertainty involving these IRE issues, which may not be resolved for several years.

Claims in which a claimant has not yet attended an IRE evaluation

• For cases in which a claimant has not yet attended an IRE evaluation, we recommend that the employer/insurer/TPA ask the IRE physician to evaluate the claimant and issue a determination based upon both the Fourth and Sixth Edition of the Guides. This approach will protect the employer/insurer/TPA whether the Supreme Court affirms or reverses the Commonwealth Court’s decision.

Claims in which an IRE determination recently has been made and an automatic Notice of Change in Status has been issued (and the 60-day period for challenging the Notice has not yet expired) or litigation is pending

• For cases in which a claimant recently has attended an IRE evaluation, and either an automatic Notice of Change in Status has been issued (and the 60-day period for challenging the Notice has not yet expired) or where litigation is pending before a Workers’ Compensation Judge, Workers’ Compensation Appeal Board, the Commonwealth Court or the Supreme Court concerning a Modification Petition, we recommend requesting an immediate stay of the litigation pending a decision by the Pennsylvania Supreme Court in the Protz matter (assuming that a Petition for Allowance of Appeal is filed).
• In addition, we recommend that the employer/insurer/TPA ask the original IRE physician if he/she will issue an addendum report setting forth a determination of the level of impairment based upon his/her prior examination pursuant to the Fourth Edition of the Guides. If the IRE physicians are unable or unwilling to do so, then consideration should be given to scheduling a new IRE examination so that new ratings can be issued under the Fourth and Sixth Editions of the Guides.
• In addition, the employer/insurer/TPA may need to re-evaluate reserves for such claims. We are happy to discuss individual cases to assess reserve values.  

Claims in which a claimant’s status was previously changed via an automatic Notice of Change in Status and no challenge has been filed within 60 days

• Claimants’ attorneys may file Reinstatement or Modification Petitions requesting that their client’s status be returned to total disability in situations in which Notices of Change in Status have already been issued and where the 60-day time period for challenging the Notice has expired. In these situations, we would argue, as discussed above, that the Commonwealth Court’s ruling does not apply retroactively.
• In the event that a Workers’ Compensation Judge entertains such a Petition, the employer/insurer’s counsel should request a stay of any litigation pending a decision by the Pennsylvania Supreme Court in the Protz matter. If the Workers’ Compensation Judge allows litigation to proceed, consideration may also be given to obtaining an IRE rating under the Fourth Edition of the Guides (by an addendum issued by the original IRE physician) or obtaining a new IRE rating under the Fourth and Sixth Editions of the Guides.  

Claims in which a claimant’s status was previously changed via agreement

• Claimants’ attorneys may file Reinstatement or Modification Petitions requesting that their client’s status be returned to total disability in situations in which the parties have reached a settlement concerning the claimant’s disability status. In such cases, we would argue that the argument has been waived, that Protz does not apply, and that the matter cannot be re-opened.
• In the event that a Workers’ Compensation Judge entertains such a Petition, we would request a stay of any litigation pending a decision by the Pennsylvania Supreme Court in the Protz matter. If the Workers’ Compensation Judge allows litigation to proceed, consideration may also be given to obtaining an IRE rating under the Fourth Edition of the Guides (by an addendum issued by the original IRE physician) or obtaining a new IRE rating under the Fourth and Sixth Editions of the Guides.  

Claims in which a claimant’s status was previously changed via a Workers’ Compensation Judge’s decision and order granting a Modification Petition

• Claimants’ attorneys may file Reinstatement or Modification Petitions requesting that their client’s status be returned to total disability in situations in which Workers’ Compensation Judges have granted a Modification Petition and changed a claimant’s status from total disability to partial disability. In these situations, we would argue that the argument has been waived where no appeal has been filed, that Protz does not apply, and that the matter cannot be re-opened.
• In the event that a Workers’ Compensation Judge entertains such a Petition, the employer/insurer’s counsel should request a stay of any litigation pending a decision by the Pennsylvania Supreme Court in the Protz matter. If the Workers’ Compensation Judge allows litigation to proceed, consideration may also be given to obtaining an IRE rating under the Fourth Edition of the Guides (by an addendum issued by the original IRE physician) or obtaining a new IRE rating under the Fourth and Sixth Editions of the Guides.  

The attorneys of Post & Schell’s Workers' Compensation Department welcome any questions, concerns and discussions regarding the Commonwealth Court’s decision and its impact on workers’ compensation claims.    

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