By: Joseph C. Romano, Esq.
In a significant and surprising decision in Protz v. WCAB (Derry Area School District), No. 1024 C.D. 2014 (Pa.Cmwlth. 2015), the Commonwealth Court of Pennsylvania determined that the Impairment Rating Evaluation (IRE) process utilizing the Fifth and Sixth Editions of the AMA Guides to the Evaluation of Permanent Impairment is unconstitutional. The Court ultimately determined that only the Fourth Edition of the AMA Guides may be used in determining a claimant’s degree of impairment under Section 306(a.2), 77 P.S. § 511.2, of the Workers’ Compensation Act.
Section 306(a.2) governs the IRE process by which an employer may request that a claimant submit to an evaluation by a physician for the purposes of determining an individual’s degree of impairment. If it is determined that the claimant has an impairment of less than 50%, that individual will be deemed partially disabled and the receipt of wage loss benefits will be limited to 500 weeks. However, a 50% or greater determination results in a totally disabled classification without being subjected to the 500-week limit.
The IRE process requires that the claimant submit to a physician designated by the Bureau of Workers’ Compensation, or agreed upon by the parties, for the purpose of evaluating the claimant’s degree of impairment. In determining the percentage of impairment, 306(a.2) required the physician to utilize the most recent edition of the AMA Guides. At the time of the enactment of 306(a.2), the Fourth Edition was in use. Since that time, the Fifth and Sixth Editions were issued by the AMA and utilized in the IRE process without any review or approval by the General Assembly (the state Legislature).
In Protz, the constitutional challenge made by the claimant was that the use of the more recent Fifth and Sixth Editions resulted in an unconstitutional delegation of authority pursuant to Article II, Section 1 of the Pennsylvania Constitution, as it allowed the AMA, rather than the legislature, to determine the standards used for rating impairment without Constitutional safeguards. The claimant argued that the criteria under the Fifth and Sixth Editions are substantially different than the criteria used in the Fourth Edition, potentially resulting in some individuals being permanently disabled under the Fourth Edition, but not the Fifth or Sixth Editions and vice versa.
In the 4-3 majority Opinion with the Court sitting en banc, the Court held that 306(a.2) constitutes an unconstitutional delegation of legislative authority as it proactively approved versions of the AMA Guides beyond the Fourth Edition without review by the Pennsylvania General Assembly. The Court determined that the Legislature provided a private party, the AMA, with the ability to implement its own policies and standards that may result in the deprivation of an individual’s rights and/or property without legal safeguards. Ultimately, the Court held that the use of the more recent editions is improper and remanded to the Workers’ Compensation Judge to apply the Fourth Edition.
It is important to note that the Decision did not include any language applying the holding retroactively. While we expect that claimant’s attorneys will attempt to argue retroactive application, Pennsylvania law has generally held that appellate decisions only apply to pending litigation at the time of the decision, including litigation at any stage of the appeal process, and future litigation.
It is anticipated that a Petition for Allowance of Appeal will be filed with the Pennsylvania Supreme Court. If this occurs, employers, insurers and third-party administrators will be left with uncertainty while attempting to navigate the IRE process. The Supreme Court may choose to either enforce the Commonwealth Court’s Decision and enforce the use of the Fourth Edition or reverse it and allow the usage of the Sixth Edition. While it is possible that the Supreme Court could refuse to hear the appeal, we believe that they will and would anticipate a final decision within 18 to 24 months.
Moving forward, it will be necessary to assess the Protz Decision and Workers’ Compensation claims based on their own factual scenarios. However, in the meantime, there are some legal strategies that should be considered relative to specific situations in light of the Protz Decision and the potential Supreme Court appeal and ruling. They include:
1. Modifications based on IREs under the Fifth and Sixth Editions outside of the 60-day window for appeal.
Since the ruling should not be applied retroactively, prior modifications based on the more recent editions remain binding. As with any modification outside of the 60-day window, claimants may challenge the modification by obtaining an impairment rating of 50% or greater and filing a petition. Under the Protz ruling, the calculation will be made based on the Fourth, rather than Fifth and Sixth Editions. We recommend waiting until a claimant challenges the modification prior to taking any action. It may also be prudent to argue that litigation must be held in abeyance until the Supreme Court makes a determination.
2. Cases currently in litigation, before a Workers’ Compensation Judge or Appellate body, involving an IRE, including Petitions to Compel Physical Examination:
We believe that this group of cases can move forward in two different ways. Presuming Protz is appealed to the Supreme Court, the first option is that we can request the presiding adjudicator hold the litigation in abeyance until the Supreme Court denies the appeal or renders a final determination as to how we must proceed in the future.
The second option is to request that the adjudicator order the designated physician to provide an addendum report using the Fourth Edition. In this situation, all potential outcomes are covered in that we already have a report using the Fifth or Sixth Edition and an addendum using the Fourth Edition will be prepared based on Protz.
Within this category of cases, we do not believe that there is a single best strategy to follow. Rather, the distinct factual circumstances of each case will dictate which option to employ.
3. Claims in which an IRE will be requested in the future or has already been requested, but not yet performed:
Until the Supreme Court makes a determination, the Fourth Edition should be used as the default AMA Guide. In addition to the rating based on the Fourth Edition, we recommend obtaining an addendum report from the designated physician utilizing the Sixth Edition.
Since the Bureau controls the IRE process and has specific rules as to how the IRE is performed, the designated physician may be reluctant to comply with a request from the insurer to perform multiple ratings based on different Editions. If this occurs, it is our recommendation that the file should be referred to counsel to file a Petition to Compel and obtain an Order from a WCJ requiring the evaluation under the Fourth and Sixth Editions.
Ultimately, it is important to remember that the IRE process is alive and well at this time. While Protz and the potential Supreme Court appeal provide murkiness to the situation, employers, insurers and third-party administrators can continue to utilize the IRE as a part of their claims management process. With that said, as with any claim involving an IRE, careful consideration should be given to assigning the claim to counsel to determine other prudent strategies for reducing future liability or settlement of the claim.