OPINION EVIDENCE IS PERMITTED IN CALCULATION OF SECTION 204(a) PENSION BENEFIT OFFSETS

 

Commonwealth of Pennsylvania/Department of Public Welfare v. WCAB (Harvey), No. 14 EAP 2009. Opinion filed April 29, 2010.

 

In this Pennsylvania Supreme Court case, the Court wrestled with the calculation of a statutory credit against workers compensation benefits for employer-funded pension benefits. Claimant had received workers’ compensation benefits since 2001 after suffering an injury while working for the Department of Public Welfare. In 2002, he began receiving disability retirement benefits administered through the State Employee’s Retirement System (“SERS”). In 2005, employer asserted an offset for these benefits in the amount of $359/week against Claimant’s weekly $440 workers’ compensation benefit. The parties disputed an actuarial assumption utilized in SERS’s calculation of the pension benefit which determined the amount of the employer’s contribution to the Plan and therefore the offset used by the workers’ compensation carrier.

 

Claimant had argued that Section 204(a) of the Workers’ Compensation Act does not permit such assumptions and instead actual dollars contributed by the Employer to the pension must be identified. If it was not possible to quantify this amount, then Claimant argued the Employer was simply without a remedy. The WCJ rejected this argument, instead finding that Employer’s expert who testified that interest assumed in calculating employer’s contribution by SERS did not favor either party was credible, particularly so in light of Claimant’s failure to present any expert evidence or testimony in support of the Petition to Review. On appeal to the Commonwealth Court, the WCJ’s order was affirmed, the court holding that the use of an actuarially “assumed rate of return” was sufficient evidence upon which to grant a credit. The Pennsylvania Supreme Court allowed the appeal on the limited basis as to whether the use of actuarially assume rate of return in Section 204(a) offset calculations is inconsistent with the statutory limitation of the credit to the employee-funded portion of a pension. 

 

On Appeal to the Supreme Court, they held that expert opinion evidence was admissible in the calculation of benefit offsets as allowed by Section 204(a), and so affirmed the WCJ’s decision. The Court noted that Claimant’s argument that Employer should be without remedy is contrary to the Act’s intent that employer-funded pension benefits “shall” be credited against workers’ compensation awards. It therefore upheld the Commonwealth Court and allowed the admission of expert opinion evidence in the calculation of these benefit offsets. 

 

Practice Tip: when there is a question concerning the amount of employer/employee contributions to a pension fund, actuarial reports or testimony will generally be required; and “opinion” testimony will be admitted to meet your burden of proof.

 

PENNSYLVANIA SUPREME COURT HOLDS THAT BECAUSE A FURLOUGH ALLOWANCE IS NOT A “SEVERANCE BENEFIT”, EMPLOYERS CANNOT TAKE A CREDIT FOR SUCH BENEFITS

 

In Kelly v. W.C.A.B. (US Airways Group, Inc.), No. 50 WAP 2008; decided April 9, 2010, the Pennsylvania Supreme Court addressed the issue of whether an employer, while paying workers’ compensation benefits to claimant, is entitled to take a credit for a furlough allowance simultaneously being received by claimant when the employer places claimant in a furlough status and claimant stops working for a period of time—but is not permanently separated from employment.

 

Employer argued that, under section 204(a) of the Pennsylvania Workers’ Compensation Act, an employer may take a credit for a “severance benefit,” and that the furlough allowance should be considered one form of a severance benefit. Claimant argued that the furlough allowance should not be considered a “severance benefit” pursuant to the Act because, in this case, after being placed on furlough, the employer still retained the ability to recall the claimant to return to work, thereby not fully and completely terminating the employment relationship.

 

The Supreme Court affirmed the opinion of the Commonwealth Court, and held that severance benefits are creditable only when a worker’s employment has been completely and permanently terminated. Thus, a furloughed employee is not completely and permanently dismissed from employment, but rather, continues to maintain an employment relationship with the employer that is merely put on hold, with the mutual intention of having claimant resume his work activities with the employer at some point in the future. The Court further reasoned that the collective bargaining agreement between the employer and the union demonstrated that the furlough allowance was an accrued benefit similar to sick leave which claimant should not be forced to exhaust when he suffers a work-related injury, as claimant would have been entitled to that benefit regardless of whether or not he had been injured.

 

Practice tip:    When an issue arises as to the nature of a union benefit being received by claimant, such as a “furlough allowance,” always have counsel obtain and review the union contract defining and describing said benefit to determine if the benefit is one for which employer may take a credit.

 

 

WHEN A COMPANY VOLUNTARILY AGREES THAT IT IS NOT THE EMPLOYER FOR WORKERS’ COMPENSATION PURPOSES, THE EXCLUSIVITY OF THE WORKERS’ COMPENSATION ACT MAY NOT BE ASSERTED AS A DEFENSE IN A THIRD PARTY CIVIL SUIT.

 

Black v. Labor Ready, Inc., et al., No. 312 MDA 2009. Opinion filed April 26, 2010. 

 

This Superior Court case deals with the exclusivity provisions of the Act. Claimant had brought a workers’ compensation claim against Labor Ready, Inc. and Williamsport Steel Container Corporation. Claimant was a temporary employee of Labor Ready, Inc. who sent her to work for Williamsport Steel Container Corp where she sustained an injury. Labor Ready, Inc. filed a TNCP through their carrier. Ultimately, a Petition to Review was filed against Labor Ready alleging that her compensation rate was calculated incorrectly. A week after the Petition to Review was filed against Labor Ready, a Claim Petition was filed against Williamsport Steel Container Corp. After a hearing before the WCJ, Claimant and Williamsport Steel entered into a stipulation wherein the parties agreed that she was not their employee for workers’ compensation purposes. One year later, she filed a civil complaint, alleging negligence against Williamsport Steel, which answered the complaint, alleging that Claimant was an employee at the time she was injured and therefore the suit was barred due to the exclusivity provisions of the workers’ compensation act. Summary judgment was granted as to Williamsport Steel, dismissing them from the suit on that basis and a preliminary objection filed by Labor Ready was also granted, dismissing them from the suit on a similar basis. Claimant appealed to the Superior Court. 

 

Ultimately, the Superior Court held that because Williamsport Steel had agreed that they were not the employer for the purposes of the workers’ compensation claim, they were estopped to claim that they were the employer and claim immunity under the Workers’ Compensation Act. and the suit was barred by the exclusivity provisions of the Act. As such, the Claimant was permitted to proceed with suit against Williamsport Steel.

 

Practice Tip: On those occasions when there is a question concerning whether an individual is an “employee” or not, it is important to weigh the consequences of either accepting the claim under the WC Act or whether, instead, to run the risk of a civil suit. Once the choice is made, it will almost certainly be binding; hence a cost/benefit analysis is required in making this decision. 

 

 

 

A “BLOCK 4” DENIAL MAY BE HELD TO ACT AS A MEDICAL ACCEPTANCE OF A CLAIM

 

Forbes Road CTC v. WCAB (Consla), No. 919 C.D. 2009 and Consula v. WCAB (Forbes Road CTC), No, 920 C.D. 2009. Opinion filed May 27, 2010.

In these cases, Commonwealth Court addressed the issue of whether a Denial can function as an acceptance of a work injury for medical purposes only. Claimant sustained a work injury on February 22, 2007 while working as a teacher for Employer. Employer issued first a Notice of Compensation Denial indicating that investigation was ongoing and a corrected Notice of Denial (“block 4—injury but no disability”) was issued indicating that although an injury took place, Claimant was not disabled. 

Claimant filed a claim petition seeking payment of medical bills and unreasonable contest. The WCJ issued an interlocutory order stating that Claimant’s claim was awarded and at once suspended on an interim basis. Subsequently, a Medical Only Notice of Compensation Payable was issued and an Agreement for Compensation was entered into. Ultimately, the WCJ held that the Employer did not violate the Act by issuing a qualified Notice of Compensation Denial and a medical only NCP. Claimant appealed to the WCAB who affirmed the WCJ. On appeal to the Commonwealth Court, Claimant argued that the Employer should not have been permitted to issue a NCD as a means of accepting a work injury for medical only purposes because the NCD did not describe the injury which was being accepted. In holding that a NCD is a permissible means of accepting an injury for medical purposes only, the Court reaffirmed its holding in Armstrong v. WCAB (Haines & Kibblehouse, Inc.), 931 A.2d 827 (2007), in which it had expanded on the previously allowed practice of allowing an NCD to accept an injury where the injury was previously described. This holding is consistent with the previous caselaw in Armstrong and Commonwealth Court now clearly permits the practice as a means of “accepting” an injury with no disability. 

Practice Tip: since the Courts are moving toward accepting a “Block 4 Denial” as a means of “accepting” a claim for medical only purposes, the wording on the Denial will become critical; and there will be significant issues involving whether the “acceptance” via the Notice of Denial requires a petition to terminate the claim. Other issues will be invoked as well, including, for example, the statute of limitations. Hence, extreme care is the use of this instrument will be required.

 

WHETHER SERVICE OF A NOTICE OF ABILITY TO RETURN TO WORK IS CONSIDERED TIMELY IS A QUESTION OF FACT TO BE DECIDED BY THE WORKERS’ COPMENSATION JUDGE

 

Kleinhagan v. W.C.A.B. (KNIF Flexpak Corporation), No. 2009 C.D. 2009. Opinion filed April 22, 2010.

 

Claimant suffered a lumbar strain/sprain for which he began receiving workers’ compensation benefits. Employer performed a labor market survey following an IME. Following the IME, a Notice of Ability to Return to Work was issued. Claimant and his counsel both acknowledged receipt of the Notice at the time of a vocational interview. Ultimately, the modification petition was granted as there was no medical evidence presented by the Claimant. On appeal, Claimant argued that the Notice of Ability to Return to Work was not provided promptly as required. Ultimately, the Commonwealth Court held that prompt notice was provided as Claimant acknowledged receipt of the Notice prior to the vocational interview and attempts to modify his benefits had begun. 

 

Practice Tip: the courts have been generous in terms of holdings on the issue of “timeliness” of issuance of notices of ability; however, it is clear that in order to be effective, the courts will still require that the Notice be issued prior to any commencement of vocational placement activity.

 

 

 

NOTICE IS REQUIRED WHEN AN EMPLOYEE KNOWS—OR HAS REASON TO KNOW—THE EMPLOYMENT WAS CAUSING SYMPTOMS; AND IF NOT REPORTED WITHIN 120 DAYS OF THAT TIME, THE CLAIM IS BARRED AS UNTIMELY.

 

Allegheny Ludlum Corporation v. W.C.A.B. (Holmes), No. 1623 C.D. 2009. Opinion filed April 22, 2010. [Unreported opinion]

 

Claimant commenced employment in1991 as a “stretcher leveler operator”. In that position, she was required to walk approximately three miles per day wearing metatarsal work boots which made it difficult to bend her foot. In 1994, Claimant began experiencing burning symptoms in her third and fourth toes of her left foot. Ultimately, she underwent surgery in March 1995 and received sickness and accident benefits from the employer while off work. In 1998, Claimant underwent a second surgery for a Morton’s neuroma and again received sickness and accident benefits from the employer while off work. After both surgeries, she returned to work. Her symptoms worsened again in late 2002 and early 2003. She ceased employment with Employer altogether in June 2003 and underwent surgery that same month.

 

On February 17, 2004 she first notified the employer of her alleged injury and thereafter filed a Claim Petition. Claimant presented testimony of a doctor who stated that Claimant complained of pain, which was “aggravated” by her work in 1994.   He further testified that Claimant’s condition in 2005 was related to her work. Ultimately, the Claim Petition was granted when the WCJ credited Claimant’s medical experts over the Employer’s. Further, the WCJ stated that Claimant gave timely notice of her injury because she did not have notice that the condition was connected to her work prior to the filing of the claim petition. The Workers’ Compensation Appeal Board affirmed the WCJ and the employer appealed to the Commonwealth Court. 

 

Commonwealth Court, however, reversed, holding that an individual in Claimant’s position knew, or had reason to know, that the steel boot aggravated her foot in 1994 which was well outside the notice period in the Act. Therefore, her claim was not timely and was dismissed.

 

[Note: As this is an unreported opinion, it may not be relied upon as law but it is instructive on the issue of notice.]

 

Practice Tip: when evaluating “repetitive trauma” cases, always secure the old medical records and take a statement from the claimant directed to “when” she knew or should have known that her problem was related to the work, and when she commenced treatment for the condition.

 

 

 

 

 

CLAIMANT’S RECEIPT OF NON-EMPLOYER-FUNDED UNION PENSION BENEFITS HAS SAME EFFECT AS EMPLOYER-FUNDED PENSION BENEFITS OF ESTABLISHING “VOLUNTARY REMOVAL FROM WORKFORCE”

 

In Duferco Farrell v. W.C.A.B (Zuhosky), 989 A.2d 63 (2010), after the claimant sustained a work-related left knee injury, he subsequently returned to modified duty work, and Employer suspended benefits. Thereafter, he stopped working in order to undergo a total knee replacement surgery. However, prior to undergoing surgery, claimant told Employer that he would like to retire. After the surgery, Defendant did not reinstate benefits on the grounds that claimant had voluntarily removed himself from the labor market workforce by accepting a union pension and Social Security retirement benefits, thereby entitling Employer to keep benefits suspended. Thereafter, claimant filed a reinstatement petition which was granted by the WCJ, and affirmed by the WCAB. Employer then appealed.

 

Before the Commonwealth Court, Employer argued that pursuant to prior case law, when a claimant accepts a “pension”, a presumption arises that claimant has left the workforce, so that claimant is required to rebut that presumption by establishing that he is either actively seeking employment, or that the work-related injury forced him to retire, as held in Pennsylvania State University v. W.C.A.B. (Hensal), 948 A.2d 907 (2008). Employer further argued that claimant had accepted a union pension, thereby activating the presumption, which claimant did not rebut.

 

Commonwealth Court was presented with an issue of first impression, namely, whether the same presumption that claimant has voluntarily removed himself from the workforce will apply when claimant accepts a union pension, as opposed to a pension which comes from the Employer after claimant has applied for retirement from his employer. Prior to this decision, the PA Supreme Court had held that when a claimant accepts a pension from his Employer, and has taken Social Security retirement benefits, an Employer will not be required to show that the claimant has no intention of continuing to work. Septa v. W.C.A.B. (Henderson), 543 Pa. 74, 669 A.2d 911 (Pa. 1995).

 

Here, the court agreed with employer that, based on Hensal, the receipt of a “pension”—regardless of whether it came from the employer directly or from a union—raised the same presumption that the claimant had voluntarily left the work force. It held that it would be overly burdensome for an employer to prove that a claimant has no intention of continuing to work where the claimant has advised the employer that he would like to retire; has taken Social Security retirement benefits; and has taken a union pension. Conversely, it would not be overly burdensome for a claimant to have to prove that he intends to continue working under these circumstances, and that claimant need only show that he is applying for jobs within his physical restrictions.

 

Practice tip:    It is important to regularly send claimants the Employer’s Report of Benefits (LIBC 756) which asks about claimant’s receipt of pension benefits to determine whether claimant is receiving pension benefits—regardless of source—which the Employer might not be aware of, which can have the same effect of establishing that claimant has voluntarily removed himself from the workforce in order to suspend benefits.

 

 

 

“YELLOW FREIGHT” ADMISSIONS: WHEN EMPLOYER FILES AN UNTIMELY ANSWER, AND CLAIMANT FAILS TO RAISE THIS ISSUE PRIOR TO CLOSURE OF THE RECORD, COURT MAY STILL CONSIDER ASSIGNMENT NOTICE, PLEADINGS, AND THEIR TRANSMITTAL LETTERS TO DETERMINE WHETHER THERE IS A JUSTIFIABLE BASIS FOR CLAIMANT’S FAILURE TO TIMELY RAISE THE ISSUE

 

In Black v. W.C.A.B. (City of Philadelphia-Prison System), [Unreported], No. 1749 C.D. 2009, claimant filed a Claim Petition, and the employer filed a late Answer. Claimant did not raise the issue of the untimely Answer until after the record had been closed, and a briefing schedule had been issued by the WCJ. The WCJ ruled that claimant had waived any argument pursuant to the Yellow Freight doctrine regarding employer’s late Answer, since a claimant must properly object to the late filing of an Answer by raising such an issue prior to closure of the record. Smith v. W.C.A.B. (Dep’t of Labor and Industry), 632 A.2d 1033 (Pa. Cmwlth. 1993). See also, Williams v. W.C.A.B. (Realty Serv. Co.), 646 A.2d 633 (Pa. Cmwlth. 1994). The Appeal Board affirmed, and claimant appealed. Claimant argued that the transmittal letter accompanying employer’s Answer had been back-dated thereby prejudicing claimant into believing that the employer’s Answer had been timely filed.

 

The Commonwealth Court initially found that claimant had never timely offered into evidence the employer’s Answer, the employer’s accompanying transmittal letter, nor the Notice of Assignment, which were needed to prove any alleged prejudice. The Court indicated that, as previously held, petitions and answers are not evidence until formally offered and admitted into the record. Sanders v. W.C.A.B. (Marriott Corp.), 756 A.2d 129 (Pa. Cmwlth. 2000). See also, Miller v. W.C.A.B. (Community Hosp. of Lancaster), 737 A.2d 830 (Pa. Cmwlth. 1999). However, it added that an exception exists in circumstances when the court finds that an employer has, in fact, filed an untimely Answer.

 

In this case, despite the fact that the Commonwealth Court did find that the employer had filed an untimely Answer, it held that claimant had not demonstrated a justifiable basis for failing to properly raise the issue of employer’s late Answer prior to closure of the record, as required by Smith and Williams. Thus, the court affirmed the opinion of the Appeal Board finding that claimant had waived any claim to relief under the Yellow Freight doctrine.

 

Practice Tip: just because an answer to a claim petition is filed “late” does not always mean that the ship is sunk! There may still be life in the defense if claimant fails to timely raise the “Yellow Freight” issue and allows the WCJ to hear evidence.

 

 

 

IT IS UP TO THE FACT FINDER TO INFER FROM THE EVIDENCE AS A WHOLE WHETHER A CLAIMANT’S INTOXICATION CAUSED HIS INJURY, AND NO MAGIC WORDS ARE REQUIRED IN THE MEDICAL EVIDENCE

and

A NOTICE STOPPING TEMPORARY COMPENSATION PAYABLE MUST BE SENT OR FILED NO LATER THAN FIVE (5) DAYS FROM THE LAST DAY IN THE PAYMENT CYCLE FOR WHICH PAYMENT IS LAST ISSUED, AND NOT FROM THE ACTUAL DAY THAT THE PAYMENT WAS MADE

 

In Lindstrom v. W.C.A.B. (Braun), No. 1815 C.D. 2009, No. 1970 C.D. 2009; decided April 13, 2010, claimant, an ironworker, was severely injured when he fell from a girder and landed on his head. Employer issued a Denial based on their investigation which revealed that claimant was under the influence of an excessive amount of alcohol at the time of the injury. The WCJ ruled that employer had successfully proven its intoxication defense, and denied benefits. The Appeal Board subsequently reversed, in part, the Decision of the WCJ, on the basis that employer had failed to establish that intoxication was the cause in fact of the claimant’s injuries. Employer appealed.

 

Commonwealth Court reversed the Appeal Board, determining that there were no “magic words” required on the part of employer to establish the defense of intoxication, even though the employer asserting the affirmative defense of intoxication must establish “that intoxication was the cause in fact of an injury.” Mahon v. W.C.A.B., 835 A.2d 420 (2003). Rather, it is up to the fact finder to infer from the evidence, as a whole, whether a claimant’s intoxication caused his injury. Consequently, because the expert report presented by the employer included the conclusions that the claimant’s severe impairments were caused by his enormous alcohol intake, and that this caused the accident, the Court held that employer had proven the defense of intoxication.

 

The Court also interpreted Section 406.1 of the Act which mandates that, in order for a notice stopping payment to be timely, it must be sent or filed no later than five (5) days after the last payment.” The Court held that “the last payment” did not refer to the specific date that payment was last issued, but rather, the last date in the payment cycle to which that payment corresponded. Thus, if employer issues an indemnity payment check on the first day of a two week cycle, the Notice Stopping Temporary Compensation Payable would need to be issued within five days of the last day in that two week payment cycle, and not from the date that payment was actually issued.

 

Practice tips:  Although little used, the intoxication defense is a valuable tool, and can be raised even though a TNCP has been issued. Using the TNCP to allow time to investigate the defense is appropriate.

 

When issuing a Notice Stopping TNCP, rather than relying on the “check date” to calculate the five (5) days within which you must issue the Notice, always review the payment history which identifies the last date in the two week payment cycle for which claimant was last paid, to calculate that five (5) day deadline. Failure to properly calculate the “5 day period” will almost certainly result in conversion of the TNCP.

 

 

 

DURING THE UTILIZATION REVIEW PROCESS, A PROVIDER UNDER REVIEW IS REQUIRED TO SUPPLY THE REQUESTED MEDICAL RECORDS IN A USEABLE FORMAT OR MODE WHICH ALLOWS THE UTILIZATION REVIEW ORGANIZATION TO ACCESS THE RECORDS AND ENGAGE IN THE REVIEW PROCESS

 

In Jimmie Shaw v. W.C.A.B. (Melgrath Gasket Co.), No. 1871 C.D. 2009; decided on April 21, 2010, an employer filed a Utilization Review Request regarding review of prescription medications being prescribed to the claimant. Thereafter, the Utilization Review Organization (URO) received from the provider under review a CD-ROM containing medical records. However, the URO could not access the files on the CD-ROM because it required a password for the records to be viewed and the provider under review had not provided the password. As a result, the URO telephoned the provider and left a message advising it that the CD-ROM could not be accessed and that the provider under review would have one additional day to provide paper medical records to the URO. After the URO failed to receive any written or oral communications from the provider under review, the URO issued a Utilization Review Determination holding that the treatment under review was unreasonable and unnecessary pursuant to 34 Pa. Code § 127.464 because the provider under review failed to supply the requested medical records. Consequently, claimant filed a Petition to Review Utilization Review.

 

The WCJ granted claimant’s petition and reversed the UR Determination. The WCJ found that the provider under review had, in fact, mailed the CD containing claimant’s medical records prior to the deadline, and that the URO received the CD prior to the deadline. The WCJ then ruled that the provider under review had acted reasonably and consistent with his obligations to protect the privacy of Claimant’s medical records by password-protecting the contents of the CD-ROM. The WCJ further ruled that the URO’s conduct had been unreasonable because, upon receipt of the CD, it should have requested the password or sough further assistance in order to review the records.

 

Commonwealth Court noted that it was being presented with a case of first impression regarding the form of media that may be utilized in the submission of medical records to the URO. Nevertheless, the Court did not find any error in the provider’s decision to submit medical records to the URO on a CD-ROM. Rather, it disagreed that the provider had reasonably complied with the URO’s request for records when it submitted those records on a password-protected CD, but withheld the password required to access those records. While the Court acknowledged that claimant was correct in asserting that 34 Pa. Code § 127.464 does not specifically address the format in which medical records must be supplied to a URO upon request, nevertheless it was implicit in that regulation that the provider supply the medical records in a useable format or mode that allows the URO to engage in the review process.

 

Practice Tip: Providers may not evade appropriate URO evaluations by submitting “unusable” data to the reviewer. The same argument can be made when a provider submits bills with “records” on password protected CDs—rendering the bills “incomplete” for purposes of payment.