No penalties when claimant fails to prove that medical bills and records provided to insurer

Claimant in Sims v. W.C.A.B. (School District of Philadelphia), No. 2165 C.D. 2006, filed a Penalty Petition arguing that insurer violated the Act by not paying her medical bills. In support of her Petition, claimant introduced a collection letter and an invoice for orthotic shoes--with the invoice including a statement that payment for the shoes had been denied as being not-work-related. Claimant also provided testimony that she had been prescribed a cream for her feet and payment for the cream had been denied.

The WCJ denied the Penalty Petition on the basis that claimant failed to prove that the bills had been submitted on the proper forms with the proper documentation. The Appeal Board affirmed the WCJ.

Commonwealth Court affirmed, concluding that claimant failed to prove a violation of the Act. The Court noted that claimant’s own evidence, mere invoices and a collection letter, proved that the bills were not submitted on the proper forms as required by the Act and Regulations. The Court’s Opinion does contain an interesting statement with respect to claimant’s evidence with the Court stating, “It is not the burden of an employer to examine a medical invoice, not submitted on the form required to be used in workers’ compensation claims and lacking even a date of work injury, and then puzzle out whether the claim might be for a work injury. “ The Court went on to state that the Act and the Regulations placed the burden on claimant to submit medical invoices on the proper form along with the records to permit the insurer to determine if the treatment is related to the work injury.

Claimant entitled to penalties when insurer fails to pay medical bills even though the insurer argues medical provider had to file an Application for Fee Review

In Hough v. W.C.A.B. (AC&T Companies), No. 2198 C.D. 2006, claimant suffered a compensable injury in 2003 and in February of 2005 claimant filed a Penalty Petition based on her averment that work-related medical bills remained unpaid.

Before the WCJ, insurer argued that the WCJ had no jurisdiction over the Penalty Petition because the provider whose bills were not paid, first had to file an Application for Fee Review alleging that the bills were not timely paid. The WCJ rejected this argument and awarded 50% penalties and attorney’s fees, concluding that when an injury has been accepted, insurer has an obligation to pay bills or face the risk of penalties.

The insurer appealed and the Appeal Board agreed with the insurer that the provider had to first file an Application for Fee Review before claimant could file a penalty petition. The Appeal Board held that the WCJ did not have jurisdiction over the underlying payment dispute because the provider never filed an Application for Fee Review.

Commonwealth Court reversed the Appeal Board and reinstated the WCJ’s award of penalties and attorney’s fees. In so doing, the Court rejected the argument that the WCJ lacked jurisdiction because no Application for Fee Review had been filed. Instead, the Court noted that the Fee Review procedures only involve the provider and the insurer, meaning that a claimant is not part of the Fee Review proceedings. The Court concluded that there is nothing in the Fee Review proceedings that affect a claimant’s rights under the Act to pursue penalties for a violation of the Act. Also, the Court held that insurer never questioned the reasonableness or necessity of the bills in question so there was an obligation to pay them or face the risk of penalties.

Application for Fee Review premature if UR request pending

In Harburg Medical Sales, Co. v. W.C.A.B. Bureau of Workers’ Compensation (Employers Mutual Casualty Co.), No. 1334 C.D. 2006, the medical supplier’s Application for Fee Review was denied by a Fee Review Hearing officer.

The facts showed that claimant was prescribed a Tempur-Pedic mattress for the work injury. Pursuant to this prescription, the supplier provided claimant with the mattress on November 18, 2004. The supplier then billed insurer for the mattress.

Meanwhile, insurer filed a UR request on January 11, 2005 seeking a review of the reasonableness and necessity of the mattress. On the UR request, insurer indicated that the bill from the supplier was received on December 28, 2004.

Before Commonwealth Court, the supplier argued that the Hearing Officer erred in dismissing the Application for Fee Review. Commonwealth Court disagreed, holding that the 30 day period that an insurer has to pay a medical bill is tolled when a timely UR request is made. While the supplier argued that the UR request was late because the bill for the mattress was provided on November 18, 2004 and the UR request was not filed until January of 2005, Commonwealth Court noted that the Hearing Officer found that the supplier failed to establish that it mailed the bill on November 18, 2004 but instead the hearing officer found that the bill was not provided to insurer until December 28, 2004. Therefore, the Court found that the UR request of January 11, 2005 was timely. Since the UR request was timely, the Court held that the Application for Fee Review was premature in that the UR proceedings were not completed when the Application was filed.

Massage Therapy not covered under the Act

In the case of Boleratz v. W.C.A.B. (Airgas, Inc.), No. 147 C.D. 2007, insurer refused to pay for massage therapy that claimant received from a massage therapist. Meanwhile, claimant argued that he was referred for massage therapy by his treating physician so it should be covered under the Act.

Commonwealth Court reviewed the Act and determined that because massage therapists were not licensed by the Commonwealth, the insurer had no obligation to pay for the bills. The Court reasoned that the Act only requires an insurer to pay for services provided by a “health care provider” and because massage therapists were not licensed or “authorized by the Commonwealth to provide health care services” they could not be considered health care providers.

Thus, there is no need to pay for services provided by a massage therapy even if those services were prescribed by a licensed provider or by someone authorized by the Commonwealth to provide health care services.

Decedent in course of scope of employment when killed by drunk driver while walking to work

In Allegheny Ludlum Corporation v. W.C.A.B. (Hines), No. 1022 C.D. 2006, Mr. Hines was killed when he was struck by a drunk driver while walking on a sidewalk toward the plant gate to report for his shift. Mr. Hines’s widow filed a Fatal Claim Petition arguing that the death was work-related.

The facts demonstrated that Daniel Hines arrived at work 1/2 hour before his shift and parked in the employee parking lot near gate 7 of the plant. Mr. Hines did not enter the plant at gate 7, instead he was required to clock in at gate 5. To reach gate 5, Mr. Hines had to leave the gate 7 parking lot and walk on a sidewalk owned by the employer. It was while walking to gate 7 that he was struck and killed.

The widow presented testimony from two witnesses who saw Mr. Hines park in the lot at gate 7. The widow also presented testimony from an employee of Allegheny Ludlum who stated that the employer had instructed employees in various safety meetings that they could not enter at gate 7 and walk through the plant to reach gate 5. Instead, they were instructed to walk down the steps from the parking lot of gate 7, walk along the sidewalk and then enter at gate 5. Meanwhile, the employer presented testimony from a witness that hourly employees could park in any of four parking lots adjacent to the different plant gates. The employer’s witness also stated that the employees could park on the street and it was a matter of the employee’s convenience as to how they traveled to work and where they parked. The employer’s witness did confirm that the decedent could not enter the plant at gate 7.

The WCJ determined that Mr. Hines was on the employer’s premises at the time of his death, so his death was work-related. The Appeal Board affirmed.

In front of Commonwealth Court, it was argued that decedent was not furthering the business of the employer at the time of his death. However, the Court chose not to address this argument, but instead relied upon prior case law which held that even though an employee was not actually engaged in employer’s business, an employee will be considered to have suffered a work injury if the injury occurs on the employer’s premises at a reasonable time before/after the work period. Because Mr. Hines was on the premises at the time of the accident and because the accident took place 22-25 minutes before the start of the work day, he was furthering the business interests of the employer at the time of his death.

Supreme Court rules that decedent not within course of employment at time of death

In BrookhavenBaptistChurch v. W.C.A.B. (Halvorson), No. 35 MAP 2005, the Supreme Court reversed Commonwealth Court’s determination that decedent was an employee at the time of his death.

Decedent was a member of the church, but also had agreed to cut the grass for $25 per week. The church supplied the tractor, mower and the gasoline. Decedent later became a trustee of the church, and as a trustee he performed various maintenance duties such as painting, changing light bulbs, vacuuming rugs, washing windows and cleaning restrooms. When decedent became a trustee, he continued to mow the grass.

On the date of his death, decedent left home and advised his wife that he was going to the church to cut grass. However, two witnesses testified that they saw decedent trimming the hedges. One witness, who was inside the church, heard a loud noise, saw a cloud of black smoke and observed decedent emerge from the black smoke engulfed in flames. Decedent died a month later.

Decedent’s widow filed a Fatal Claim Petition averring that decedent died as a result of injuries sustained while he was within the course and scope of his employment with the church. (She also filed a third party civil action against the church.)

The WCJ found that decedent was employed to cut the grass and trimming the bushes was “incidental and necessary” in order for decedent to perform his task of grass cutting. Thus, the Fatal Claim Petition was granted. The Appeal Board affirmed.

Before Commonwealth Court the church argued that decedent was not an employee but instead was a volunteer or an independent contractor. Commonwealth Court held that decedent was an employee of the church because he had received valuable consideration for his services. The Court also found that decedent was not a volunteer because he had received wages for cutting the grass. Finally, the Court found that decedent was not an independent contractor because the church furnished him the tools to do his work.

Before the Supreme Court, the church again argued that decedent was a volunteer at the time of his death and the church also argued that decedent was not cutting the grass when he sustained his fatal injury, but was performing the volunteer service of trimming the bushes.

In looking at the issue, the Supreme Court first determined that the church was an “employer” under the Act. The Court then tried to determine if decedent was an “employee” under the Act. The Court noted that decedent worked on a regular basis by cutting grass once per week during the growing season. The Court also noted that decedent negotiated his wages. The Court concluded that decedent was an employee.

While the Court held that decedent was an employee when he was cutting grass, the Court noted that he was not cutting grass at the time of his death. In that regard, the Court noted that the trimming of bushes and overhanging tree limbs, edging, picking up sticks, hand mowing or garden work were not included in the fee to cut grass. In other words, decedent was paid to cut grass, and nothing else.

Because decedent was not paid to trim bushes, the Court determined that he was acting as a trustee of the church when he trimmed the bushes, and not an employee. Thus, the Fatal Claim Petition was denied.

Commonwealth Court determines that a widow’s fatal claim benefits not offset by receipt of Social Security old age benefits or pension

In Frank Bryan, Inc. and Zurich North America Insurance Co. v. W.C.A.B. (Bryan, Dec’d), No. 984 C.D. 2006 and Allegheny Ludlum Corp. v. W.C.A.B. (Michael Carney, Dec’d, Pamela Carney, widow), No. 2020 C.D. 2006, both widows were receiving fatal claim benefits and in both cases the insurers sought to offset those benefits based on other monies received by the widows.

In the Frank Bryan, Inc. matter, the insurer sought an offset for Social Security old age benefits received by the widow. Meanwhile, in the Allegheny Ludlum matter, the insurer sought an offset for a pension received by the widow.

In denying the offset in both cases, Commonwealth Court ruled that the Act allows for certain offsets when benefits are being received under Section 108 of the Act, 77. P.S. §27.1 (occupational disease), Section 306 of the Act, 77 P.S. §511, §513 ( total and partial benefits) but the Act does not allow for offsets when the benefits are being received under Section 307 of the Act, 77 P.S. §§561, 581(death benefits).

Therefore, because the widows were receiving their benefits under a section of the Act that did not allow for an offset for Social Security old age benefits received or for pension benefits received, they continued to receive their full benefits without an offset.

Insurer not permitted to take credit for past Social Security old age benefits received by claimant but only entitled to offset for benefits received after claimant receives LIBC 756, Employee’s Report of Benefits for Offsets

Claimant in Maxim Crane Works v. W.C.A.B. (Solano), No. 2224 C.D. 2006, began receiving Social Security old age benefits effective January of 2003. On June 6, 2005 insurer sent claimant LIBC 756, Employee’s Report of Benefits for Offsets, and in completing this Report, claimant advised insurer that that he had been receiving old age benefits effective January of 2003 In August of 2005 insurer issued LIBC 761, Notice of Workers’ Compensation Benefit Offset, advising claimant that insurer was taking a future offset of weekly benefits based on claimant’s receipt of the old age benefits and insurer advised claimant that a credit would be taken for the 14 months of old age benefits that claimant had been receiving. Insurer informed claimant that the past benefits would be recouped by reducing claimant’s benefits to “zero” for a period of 25.75 weeks. Claimant filed a Petition for Review averring that the offset was calculated erroneously.

The WCJ allowed insurer to take an offset for the old age benefits from June 6, 2005 and thereafter because June 6, 2005 was the date that claimant received LIBC 756. The WCJ ruled that insurer was not entitled to take a credit for old age benefits received prior to June 6, 2005. The Appeal Board affirmed the WCJ.

The Court agreed with the WCJ that insurer was not entitled to take a credit for the old age benefits received by claimant prior to June 6, 2005. According to the Court Section 204 of the Act, 77 P.S. §71 and 34 Pa. Code §123.501, require an insurer to notify a claimant of the reporting requirements regarding a claimant’s receipt of benefits for which an offset may be taken. The Court also noted that these sections also required insurers to provide the forms needed to fulfill the reporting requirements.

According to the Court, because insurer chose to wait until June 6, 2005 to send LIBC 756 requesting information from claimant as to the benefits he was receiving, insurer was not entitled to a credit for the benefits claimant started receiving in January of 2003. Therefore, insurer could only take an offset for the benefits claimant received from June 6, 2005.

This case clearly demonstrates that LIBC 756 must be sent out on a regular basis remembering that the form can only be sent once every six months.

Commonwealth Court addresses employer’s burden of proof when seeking an offset where the pension benefits are being paid from a multi-employer pension plan.

In Pennsylvania State University/PMA Insurance Group v. W.C.A.B. (Hensal), No. 1448 C.D. 2005 and Department of Public Welfare/Western Center v. W.C.A.B. (Cato), No. 2521 C.D. 2005, employers sought an offset for pension benefits received by the respective claimants. In both cases, claimants were receiving pension benefits from the State Employees Retirement System (SERS) and in both cases employers sought an offset to the extent of the employers’ contributions to the pension system. Meanwhile, claimants argued that employers were not entitled to the offset because the employers could not prove with any certainty the amount that they contributed on behalf of each of claimant.

A multi-employer pension plan is one to which more than one employer is required to contribute and is maintained under one or more collective bargaining agreements between one or more employee organizations and one or more employers. See 34 Pa. Code §123.2. The pension plan in both cases was “defined benefit” plain. In a defined benefit pension plan, the benefit level is established at the start of the plan and actuarial calculations determine the varying contributions necessary to fund the employee’s benefits. Under these plans, the employees are guaranteed a fixed monthly benefit. The employers contribute to the plan as do the employees. The amount that individual employers contribute to the plan is determined by a number of factors and as a result, employers do not make contributions on behalf of individual employees. Instead, the employers’ total contributions are based on a percentage of the employers’ payroll as calculated on actuarially projected contributions.

Finally, in addition to the contributions from the employers and the employees, the fund also generates investment income.

In both Hensal and Cato, the employers presented testimony from SERS’ Director of Benefits Determination and also from SERS’ actuary. The evidence showed that an employee’s post-retirement benefits are not based on past contributions by either the employee or the employer but instead is determined by the employee’s years of service, final average salary, projected investment returns and the employee’s life expectancy. It was also indicated that to determine the extent to which an employer funded the plan for any particular employee could only be determined by an actuarial formula that subtracts the amount of the employee’s contribution, plus an actuarially determined investment rate of return. When these amounts are deducted, the remainder is the actuarially determined portion of the pension benefits that the employer funded.

SERS’ actuary testified that employers contributed to the Fund for classes of employees based on the employer’s payroll. Since the contributions are based on classes of employees, the contributions are not made on behalf of individual employees. Significantly, the actuary testified that some years the employers’ contributions were 0% of their payroll but the employers were still obligated to fund newly earned benefits because employees continued to accrue additional pension rights so the employers remained obligated to fund the newly created benefits. Finally, it was the actuary’s testimony was that the employer’s contributions to the Fund in any given year are not relevant to calculating the offset because past or future employer contributions maintained the funding.

In Hensal, the WCJ rejected the employer’s evidence as being too speculative so the employer was denied the offset. Meanwhile, in Cato, the WCJ credited the employer’s evidence and granted the offset.

In both cases, Commonwealth Court noted that the question presented was whether an employer could offer an actuarial opinion of its past and future funding of a defined benefit plan to determine its offset. In answering the question in both cases, the Court rejected the arguments from the claimants that the employers’ evidence was too speculative. Instead, the Court held that an employer may sustain its burden of proof for offset purposes by using expert actuarial opinion. Because in Cato, the WCJ credited the employer’s evidence, Commonwealth Court held that the employer was entitled to an offset based on the evidence that was presented. Meanwhile, in Hensal, the Court remanded the matter to the WCJ to make credibility determinations on the employer’s evidence. The Court did concluded that the employer’s evidence, if credited, would be sufficient it meet its burden of proof of a right to an offset

Keep in mind that Hensal and Cato do not stand for the proposition that a WCJ must accept the testimony of an actuary. Instead, these cases suggest that if the employer presents evidence from an actuary and the WCJ accepts this evidence, then this evidence would be sufficient to prove that an employer is entitled to the pension offset.

Supreme Court finds that abnormal working conditions demonstrated by unwanted sexual comments from claimant’s supervisor so mental/mental injury proven

The claim petition filed by claimant in Rag (Cyprus) Emerald Resources, L.P. v. W.C.A.B. (Hopton), No. 1 WAP 2005, was granted by the WCJ and the Appeal Board affirmed. However, Commonwealth Court reversed so the Supreme Court sought to review Commonwealth Court’s Opinion.

Claimant filed a claim petition averring that his pre-existing PTSD was aggravated by abnormal working conditions. At work, claimant’s male supervisor subjected him to unwanted homosexual advances. Claimant’s medical expert opined that claimant developed PTSD in Vietnam and the incidents involving claimant’s supervisor aggravated this PTSD. The WCJ concluded that the supervisor actually made the comments to claimant and the WCJ found that these activities at work constituted abnormal work conditions. The WCJ credited the opinions of the medical experts who opined that claimant’s PTSD was aggravated by the activities at work so the claim petition was granted.

The Appeal Board affirmed the WCJ but Commonwealth Court felt that the comments from claimant’s supervisor were crude and unacceptable but the Court also felt that the comments were normal in the “rough and tumble” mining industry. Thus, the Court held that claimant was not exposed to abnormal working conditions so the Court reversed the granting of the claim petition.

The Supreme Court chided Commonwealth Court for concluding that the comments of claimant’s supervisor were normal for the mining industry, because the Supreme Court noted that the WCJ had heard this same testimony and decided that it went beyond the norm for a mine. The Supreme Court commented that the WCJ found the supervisor’s comments were evidence of a course of conduct calculated to cause severe emotional distress. Therefore, the Supreme Court held that claimant established a compensable injury due to abnormal working conditions that aggravated his pre-existing emotional problems.