COMMONWEALTH COURT ISSUES ORDER VACATING ITS OPINION 

DIEHL V. W.C.A.B (IA CONSTRUCTION AND LIBERTY MUTUAL)
No. 1507 C.D. 2007

On June 24, 2008, Commonwealth Court issued an Order Vacating its Opinion in the case of Diehl v. W.C.A.B. (IA Construction and Liberty Mutual Insurance) No. 1507 C.D. 2007.

Since the Order has been Vacated, this means that the original Opinion in Diehl has no precedential value at this time and can not be relied upon. That the original Opinion can not be relied upon at this time, comes as a great relief to insurers.  Read more

COMMONWEALTH COURT - CASE SUMMARIES
April-May 2008

INSURER NOT ENTITLED TO EEG AS PART OF IME

In Peters Township School District v. W.C.A.B. (Anthony), 945 A.2d 805, the claimant suffered work injuries described as: concussion/right shoulder sprain; a seizure disorder; post-traumatic headaches; concussion with loss of consciousness and short term memory loss; post-concussive syndrome; and an abnormal EEG.

During an IME, the doctor asked that the claimant undergo an EEG. The claimant refused to undergo the EEG and the insurer filed a Petition to Compel a Physical Examination.

The IME doctor felt that without the EEG, he could not determine if the claimant’s seizure disorder was under control, nor did he feel he could comment on the claimant’s ability to return to work. This doctor indicated that the EEG presented essentially no risk to the claimant and was not unreasonably intrusive. (The EEG required the claimant to wear a cap connected to an electronic device the size of a “Walkman” which recorded brain waves for a period of up to 72 hours).

Meanwhile, the claimant’s treating doctor suggested that the EEG was not necessary and would be of no diagnostic yield unless it actually recorded a seizure.

The WCJ credited the claimant’s testimony as well as the testimony of the treating doctor to find that the EEG was not necessary to assess the claimant’s condition. The WCJ found that the proposed EEG did not yield a high probability of success with the test being of little benefit unless a seizure actually occurred during the test. The Appeal Board affirmed.

Commonwealth Court agreed with the insurer that an IME could include all reasonable medical procedures/tests necessary to allow for a determination of a claimant’s disability. However, the Court noted that the insurer bears the burden of demonstrating that the diagnostic test was necessary; involved no more than minimal risk; and was not unreasonably intrusive. The Court held that a WCJ must balance the goal of assessing the claimant’s injuries against the goal of protecting the claimant’s right to be free from nonconsensual contact.

The insurer argued that the WCJ placed an unreasonable burden on it to prove that the claimant would actually suffer a seizure during the EEG. The Court held that the WCJ did not force the insurer to prove that the claimant would experience seizure activity during the EEG. Instead, the Court noted that when determining whether the EEG was reasonable and/or necessary, the WCJ assessed the usefulness of the diagnostic test in evaluating the claimant’s condition. The Court then noted that the WCJ accepted the testimony of claimant’s treating doctor that the results of the test would be of little, to no, diagnostic value unless a seizure occurred. Thus, the Court felt that the WCJ adequately addressed the EEG’s usefulness in assessing the claimant’s condition and determined that it would not be useful unless the claimant suffered a seizure.

The insurer also argued that the WCJ placed an improper burden on it to prove that the EEG would be negative. While the Court agreed that a negative study might have been useful, it felt that the insurer failed to produce any evidence that the test might be beneficial if it was negative or that the IME doctor could render a final opinion based upon negative results.

Finally, the Court rejected the insurer’s argument that the claimant’s failure to undergo the testing deprived it of a complete IME. In so doing, the Court noted that the IME doctor reviewed voluminous medical records and had also reviewed prior EEG’s.

NOTICE OF ABILITY TO RETURN TO WORK
TIMELY ISSUED UNDER FACTS OF CASE

In Melmark Home v. W.C.A.B. (Rosenberg), 946 A.2d 159, the issue involved the timeliness of the insurer’s issuance of a Notice of Ability to Return to Work. The insurer filed a Modification Petition based upon a Labor Market Survey. The claimant defended on the basis that the Petition should be dismissed because the insurer did not “promptly” send a Notice of Ability to Return to Work.

The evidence showed that Dr. Levin issued a report on June 16, 2005 indicating that the claimant was capable of performing modified duty work and the insurer sent the claimant a Notice of Ability to Return to Work on November 29, 2005.

The WCJ dismissed the insurer’s Modification Petition relying upon Section 306 (b)(3) of the Act, which provides in relevant part, “if the insurer receives medical evidence that the claimant is able to return to work in any capacity, then the employer must provide prompt written notice, on a form prescribed by the department. . .” The WCJ agreed that the Act does not define prompt written notice, but the WCJ then defined it as, “notice issued by the insurer within 30 days of receipt of medical evidence showing that the claimant is able to return to work in any capacity”. The insurer appealed and the Appeal Board affirmed.

The Commonwealth Court reversed, noting that Section 306(b)(3) does not contain strict time limits, and the Court also noted that the Legislature choose to use the word “prompt”. The Court then looked to Webster’s for a definition of “prompt” with Webster’s defining it as “ready and quick to act as occasion demands”.

Ultimately the Court held that prompt written notice requires an insurer to give a claimant notice of the medical evidence it has received in a reasonable time after it was received so that the medical information does not become stale. The Court also indicated that an insurer has to give notice to the claimant in a reasonable time before the insurer acts upon the information. Finally, the Court suggested that the facts and timeline of each case must be reviewed to determine if the claimant has been prejudiced by the timing of the issuance of the Notice of Ability to Return to Work.

The Court concluded that whether the issuance of a Notice of Ability to Return to Work is prompt, depends not upon the number of days, but rather, upon its impact on the claimant.

AWW CALCULATED BASED ON NET PROFIT
FROM SUBCHAPTER S CORPORATION

In Mullen v. W.C.A.B. (Mullen’s Truck and Auto Repair), 945 A.2d 813, the claimant was the president and director of a Subchapter S corporation – Mullen’s Truck and Auto Repair. The claimant was injured in February of 1994 while working for Mullen’s Truck and Auto Repair and he began receiving benefits based upon an AWW of $1,846.15. (The claimant also had 2 other Subchapter S corporations, Tri-State Mobile Auto Repair and Mullen/Laughlin Radiator Repair).

After several years, the insurer challenged the claimant’s AWW. The basis of the challenge was the information from the claimant’s individual tax returns, as well as from the corporate tax returns.

The WCJ found that while the tax returns showed that the claimant paid himself a salary of $96,000.00, this seemed excessive when compared to the actual income generated by Mullen’s Truck and Auto Repair. The WCJ concluded that the AWW was $715.38. The claimant appealed and the Appeal Board remanded.

A second WCJ heard testimony from several experts including three CPA’s. The second WCJ noted that the claimant’s 1993 W-2 showed $96,000.00 in wages but also showed $66,472.00 in expenses for Mullen’s Truck and Auto Repair. The WCJ determined that the net yield to the claimant was $29,583.00. It was also noted that the claimant had a net income from Tri-State in the amount of $1,821.00. Thus, it was found that the claimant had a net income of $32,000.00 resulting in an AWW of $615.38. The claimant appealed and the Appeal Board affirmed,

Before the Commonwealth Court, the claimant argued that the WCJ and the Appeal Board should have used the wages listed on his W-2 to calculate his AWW, instead of using the net business profits.

In rejecting this argument, Commonwealth Court agreed that the claimant received $96,000.00 in wages. However, the Court also noted that because Mullen’s Truck and Auto was a Subchapter S Corporation, the losses from the business also passed to the claimant’s personal tax form. The Court held that because the claimant’s net profit from all of his businesses, after the net losses were deducted, was $31,404.00, the AWW should be calculated based upon that number and not based solely on the $96,000.00 in wages. Thus, the claimant's AWW was reduced to $615.38.

WCJ COULD AMEND NCP EVEN THOUGH ONLY
PETITION PENDING IS REQUEST FOR TERMINATION

The case of City of Philadelphia v. W.C.A.B. (Smith), 946 A.2d 130, dealt with a WCJ’s amendment to an NCP, when the only Petition pending was a Termination Petition.

The insurer issued an NCP acknowledging a lower back strain. Based upon an IME, the insurer filed a Termination Petition.

The insurer presented testimony from Dr. Bonner, who opined that the claimant was suffering from a work-related lumbar strain as well as pre-existing joint disease that was not related to the work injury. The insurer also presented testimony from Dr. Levin, who opined that the claimant had fully recovered from the work-related lumbar strain.

The claimant presented testimony from Dr. Avart who opined that the claimant was suffering from herniated discs at L5 and S1-S2 as well as a lumbar radiculopathy. The claimant also presented testimony from Dr. O’Brien, who opined that the claimant was suffering from herniated discs at L5-S1 as well as a lumbar radiculopathy.

The WCJ denied the Termination Petition and also found that the NCP was materially incorrect when it was issued. The WCJ amended the NCP to include post-traumatic lumbar radiculopathy and 2 herniated discs at L5-S1. The Appeal Board affirmed.

The insurer argued to Commonwealth Court that the WCJ erred in denying its Termination Petition, as its experts opined that claimant had recovered from the accepted work injury---a low back strain. The insurer also argued that the WCJ erred in expanding the NCP.

As for the expansion of the NCP, the Court noted that past case law has held that regardless of the Petition pending before a WCJ, a WCJ is empowered under the Act to amend the description of a claimant’s work injury; if it is proved that the NCP was materially incorrect when issued. The Court then noted that an NCP is materially incorrect if the accepted injury fails to include all of the injuries that the claimant suffered as a result of the work injury.

The Court concluded that the record contained sufficient evidence to support the finding that the claimant sustained herniated discs and a lumbar radiculopathy at the time of the initial work incident, so the Court opined that the WCJ did not error in expanding the NCP.

The Court then upheld the denial of the Termination Petition on the basis that the WCJ chose to believe the claimant’s evidence and the Court would not overturn those findings upon appeal.

EMPLOYER CAN NOT TAKE DOLLAR FOR DOLLAR CREDIT
FOR SERVICE CONNECTED DISABILITY PENSION BENEFITS
WITHOUT PROVING THE EXTENT TO WHICH IT FUNDED PENSION

The employer in City of Philadelphia v. W.C.A.B. (Andrews), No. 1915 C.D. 2007, unilaterally stopped paying workers’ compensation benefits once the claimant began receiving a service-connected disability pension. The claimant filed Reinstatement and Penalty Petitions which were granted by the WCJ and the Appeal Board affirmed.

Before Commonwealth Court, the employer argued that the WCJ erred in reinstating the claimant’s workers’ compensation benefits because Commonwealth Court has always held that an employer is entitled to a pension offset when an injured worker begins receiving a service-connected disability pension.

While the Court agreed that an employer might be entitled to a credit for a claimant’s’ service-connected disability, the Court held that the employer was only entitled to a credit to the extent that the employer funded the pension.

The employer countered this by arguing that the service-connected disability pension received by the claimant was designed to compensate her for the same work-related injury that was the basis for her receipt of workers’ compensation benefits and in light of this, it did not have to prove the extent to which it funded the pension in order to take a credit.

The Court disagreed with the employer, confirming that when the employer seeks to take a credit for pension benefits, it is required to prove the extent to which it funded the pension so that the proper credit can be determined.

WIDOW NOT ENTITLED TO BENEFITS AS DEATH DID
NOT OCCUR WITHIN 300 WEEKS OF DATE OF INJURY

The claimant in Brockway Pressed Metals and ACE, USA v. W.C.A.B. (Holben), No. 43 C.D. 2008, was the widow of a worker who in October of 1997 became disabled due to non-Hodgkin’s lymphoma as a result exposure to solvents at work. The decedent died from the lymphoma in April of 2005 and his widow filed the fatal claim petition in August of 2005.

The employer argued that the fatal claim petition should be dismissed because the death occurred more than 300 weeks after the injury, so it was not compensable under the language of Section 301(c)(1). Section 301(c)(1) suggests that, “wherever death is mentioned under the Act, it shall only mean death resulting from an injury occurring within 300 weeks after the injury.”

The WCJ rejected the employer’s argument and the fatal claim petition was granted. The Appeal Board affirmed, relying upon Pawlosky v. W.C.A.B. (Latrobe Brewing Company), 525 A.2d 1204 (1987), to find that the widow was successful in proving that the decedent had an occupational disease under Section 301(c)(2). [Section 301(c)(2) indicates in relevant part, that personal injury shall include an occupational disease as defined under Section 108 of the Act, provided that disability or death occurs within 300 weeks of the last date of employment and if the disability from the disease occurs within the 300 weeks, the subsequent death from the disease shall be compensable]. The Appeal Board held that it was disputed that in 1997 the decedent had a disability from non-Hodgkin’s lymphoma, which occurred within 300 weeks of his last date of employment, so under Section 301(c)(2) the subsequent death in 2004 was compensable even though it was not within 300 weeks of his injury date.

Commonwealth Court reversed the Appeal Board, holding that merely because a work-related disease is recognized as an injury under Section 301(c)(1) does not mean that the disease is an “occupational disease” under Section 108. The Court concluded that because the decedent’s injury did not qualify as an occupational disease under Section 108, the time limits of Section of 301(c)(1) applied--meaning that the fatal claim petition had to be denied since the death did not take place within 300 weeks of the decedent’s date of injury.

CLAIMANT’S GOOD FAITH JOB SEARCH REQUIRES
MORE THAN “SURFING THE WEB”

The issue in Pennsylvania State University/the PMA Insurance
Group v. W.C.A.B. (Hensal), No. 1942 C.D. 2007, was whether the claimant removed himself from the workforce or was actively seeking employment.

The claimant suffered a work injury in 2002 and by 2004 he applied for, and was granted, a disability pension from the employer. The employer filed a Suspension Petition averring that by retiring, the claimant removed himself from the workforce.

The employer offered testimony from a vocational expert who opined that work was available to the claimant within his restrictions. Meanwhile, the claimant testified that he was registered with Career Link, that he periodically checked Career Link’s website for jobs and that he also looked for jobs at other websites and in the newspaper. The claimant indicated that in spite of his efforts, he had not found work. However, the claimant admitted that he had no documentation to support his job search efforts.

The WCJ credited the claimant’s testimony and found that the claimant had not removed himself from the work force because he was looking for work. Thus, the Suspension Petition was denied. The Appeal Board affirmed.

Commonwealth Court reversed. The Court noted that a claimant is presumed to have left the workforce upon retirement, unless the claimant proves that he/she is looking for employment or that the work injury forced the retirement. The Court then held that Mr. Hensal was not engaged in a “good faith” job search. In so holding, the Court determined that searching the internet and the newspaper for jobs, without more, does not constitute a job search. The Court equated the claimant’s job search to mere “window shopping” and “surfing the web”.

NO OBLIGATION OF INSURER TO FILE JOINDER
PETITION WHEN CLAIMANT FILES CLAIM PETITION

In Pope & Talbot v. W.C.A.B. (Pawlowski), No. 1193 C.D. 2007, the claimant suffered an elbow injury in 1997 while working for Pope & Talbot. The injury was acknowledged and benefits were eventually suspended. Pope & Talbot sold its plant to Plainwell. While employed by Plainwell, the claimant injured his elbow in 1999 and Plainwell began paying benefits. Plainwell suspended benefits when the claimant returned to work. The claimant then injured his ribs in 1999 and Plainwell acknowledged this injury.

Plainwell filed a Termination Petition as to the rib injury. At the same time, the claimant filed a Claim Petition for an elbow injury following a surgery to the elbow in 2000. The claimant only named Pope & Talbot as a defendant in the Claim Petition.

Plainwell’s Termination Petition and the Claim Petition against Pope & Talbot were consolidated for decision.

The first WCJ issued a decision and it was appealed by both Pope & Talbot and Plainwell. The Appeal Board remanded and the second WCJ issued a decision finding Plainwell liable for payment of benefits for the elbow injury suffered by the claimant while he was employed by Plainwell. (The Termination Petition was also denied).

The Appeal Board reversed as to the Claim Petition, holding that Plainwell could not be liable for benefits under the Claim Petition since Plainwell was not named as a defendant in the Petition. The Appeal Board then held that Pope & Talbot was responsible for payment of benefits, even though the WCJ had found that the injury had occurred while the claimant was employed by Plainwell. The Appeal Board determined that it was Pope & Talbot’s obligation to file a Joinder Petition to join Plainwell and since it did not, Pope & Talbot was liable.

Commonwealth Court reversed, holding that Pope & Talbot was under no obligation to file a Joinder Petition. This was the Court’s holding as it determined that because the claimant had filed a Claim Petition, it was his obligation to prove all aspects of his Petition--including the obligation to file Petitions against both defendants.

The Court then noted that because the WCJ found that the claimant suffered a new injury in 2000, Plainwell was responsible for the payment of benefits—not Pope & Talbot.

Plainwell then argued that it could not be held liable for the injury since it was not named as a defendant in the Claim Petition. The Court rejected this argument, noting that Plainwell was a party to the consolidated proceedings and participated in all aspects of the proceedings. Thus, Plainwell was ultimately held liable for payment of benefits following the 2000 elbow surgery.

EMPLOYEE CHALLENGE TO NOTIFICATION OF
SUSPENSION TIMELY FILED

The insurer in WAWA v. W.C.A.B. (Seltzer), No. 2292 C.D. 2007, filed a Notification of Modification (NOM) on November 22, 2004 based on the claimant’s return to work. The facts of the case demonstrated that the claimant worked on November 22, 2004 but did not return to work thereafter, due to pain.

On December 20, 2004 the claimant filed a Challenge to the NOM. The WCJ granted the Challenge and the claimant’s benefits were reinstated.

The insurer appealed, arguing that the Challenge was not timely filed as it was not filed within 20 days of the claimant’s receipt of the NOM as required by Section 413(d)(2). The Appeal Board remanded for further findings.

In the second decision, the WCJ found that the claimant received the NOM on November 29, 2004, so the Challenge was timely filed. The Appeal Board affirmed.

The insurer argued to Commonwealth Court that the finding that the claimant received the NOM on November 29, 2004 was not supported by the evidence. Commonwealth Court disagreed. The Court made note of the WCJ’s findings that the insurer failed to actually prove that the NOM was mailed on November 22, 2004 as the insurer failed to produce evidence as to how the NOM was actually mailed on the 22^nd and the insurer even failed to produce evidence as to its general mailing procedures. The Court also noted the WCJ’s finding that Thanksgiving was on November 25, 2004 and that the NOM was mailed to the claimant to his home in Virginia.

Thus, the Court held that there was substantial evidence to support the WCJ’s finding that the claimant did not receive the NOM until November 29, 2004.

SUBROGATION ALLOWED FROM CLAIMANT’S
THIRD PARTY RECOVERY EVEN THOUGH CLAIMANT
ALLEGED BAD FAITH ON BEHALF OF EMPLOYER
AND WORKERS’ COMPENSATION INSURER

In Stout v. W.C.A.B. (Pennsbury Excavating, Inc.), No. 1969 C.D. 2007, the claimant received workers’ compensation benefits from Pennsbury Excavating and Selective Way Insurance for a work injury.

The claimant filed a third party action against several defendants, including an action against the manufacturer of the machine that the claimant alleged caused his injuries and an action against the owner of that machine. It turns out that the owner of the machine, Morrisville Supply, had the same vice president as Pennsbury. However, Morrisville Supply was a separate corporation from Pennsbury. During the lawsuit, Morrisville argued that it was the claimant’s statutory employer under the Workers’ Compensation Act so it could not be sued in a civil action.

The claimant settled a portion of the third party case and received a jury verdict against Morrisville in the amount of $3,221,188.87.

The claimant then filed a second lawsuit, arguing that Pennsbury, Selective Way and Morrisville Supply conspired during the original third party action by allowing Morrisville Supply, a “sham corporation”, to argue that it was the claimant’s statutory employer. It does not appear that this second lawsuit was pursued.

Meanwhile, Pennsbury and Selective Way filed a Review Petition asserting a subrogation claim against the money received by the claimant during the original third party action.

The WCJ granted the Review Petition, awarding Pennsbury and Selective Way a lump sum for the past workers’ compensation benefits they had paid and the WCJ granted an ongoing credit against the balance of the money received. The Appeal Board affirmed.

Before Commonwealth Court, the claimant argued that Pennsbury and Selective Way were not entitled to subrogation since they acted in deliberate bad faith to subvert his third party claim. The claimant also argued that the WCJ acted prematurely in allowing for subrogation, because his second lawsuit was still pending.

The Court rejected these arguments, finding that it was undisputed that Pennsbury and Selective Way paid workers’ compensation benefits and the Court found that the Workers’ Compensation Act is clear that there is an “absolute” right to subrogation by Selective Way. Thus, subrogation was allowed even in face of the claimant’s argument that Pennsbury and Selective engaged in “bad faith” during his third party lawsuit.

NO LITIGATION COSTS TO CLAIMANT WHO
FILED CLAIM PETITION 3 DAYS AFTER THE
INJURY AND WHEN THE INSURER ACKNOWLEDGED
AN INJURY IN ITS ANSWER

The claimant in Watson v. W.C.A.B. (Special People in Northeast and Eagle Trust Management), No. 1924 C.D. 2007, filed a Claim Petition 3 days after an injury. In its Answer to the Claim Petition, the insurer admitted that the claimant had suffered a work-related contusion to her head and the insurer agreed to pay necessary and reasonable medical expenses for the injury.

The Claim Petition was granted with the WCJ finding that the claimant suffered a work injury, without any disability. The WCJ ordered the payment of medical benefits for a closed period of time as the WCJ also found that the claimant had recovered from her injuries. Finally, the WCJ ordered the insurer to pay $3,001.65 in litigation costs.

The Appeal Board affirmed the WCJ in all respects, except for the award of litigation costs. In so doing, the Appeal Board noted that in the Answer, the insurer acknowledged an injury and also admitted liability for the payment of medical expenses. Under the circumstances, the Appeal Board held that an award of litigation costs was not appropriate since the claimant would have been in the same position had she not so “expeditiously” filed her Claim Petition.

Commonwealth Court affirmed the Appeal Board, holding that Section 440(a) allows for an award of litigation costs to a claimant in whose favor the matter has been finally determined. According to the Court, because the insurer’s Answer acknowledged that the claimant had suffered an injury and also acknowledged an ongoing obligation to pay medical benefits, the claimant did not prevail on any disputed matter before the WCJ. In other words, the Court felt that the WCJ awarded no financial benefit to the claimant other than the medical expenses that the insurer had already agreed to pay. Thus, no litigation costs were awarded.

WORK NOT AVAILABLE TO CLAIMANT
WHO DID NOT DRIVE

The insurer in PA Department of Corrections/SCI-Greensburg v. W.C.A.B. (Zvara), No. 1614 C.D. 2007, received medical evidence that the claimant was capable of performing modified duty. The claimant was then notified of 5 jobs for which he had been cleared. The claimant applied for none of the jobs and the insurer filed a Modification Petition.

The WCJ denied the Modification Petition on the basis that the insurer had failed to prove that the positions were available to the claimant since the claimant did not drive and the insurer failed to prove that public transportation was compatible with the hours of any of the positions or that the prospective employers were willing to modify the claimant’s hours to coincide with the bus schedules. The Appeal Board affirmed.

Commonwealth Court likewise affirmed. The Court agreed with the WCJ that the insurer failed to show that the claimant had transportation to/from the jobs. The Court looked to the evidence accepted by the WCJ and concluded that the bus schedule, introduced by the insurer, proved that the existing bus service would not allow the claimant to fulfill the required hours for some of the positions and that the insurer failed to prove that one of the positions was even accessible by public transportation. Lastly, the Court looked to the WCJ’s finding that one of the positions would have required the claimant to cross a 4-lane highway that did not have a crosswalk.

Ultimately, the Court concluded that the insurer failed to prove that any of the positions were available to the claimant due to his transportation issues.