December 14, 2010

The Real Diehl

By Kevin L. Connors

Eleven years have passed since the Claimant, Timothy Diehl, sustained a work-related injury on May 24, 1999.

Over the 590.428 weeks and 11.35 years that the Claimant has been receiving workers’ compensation benefits, he has become ensconced in our compensation consciousness as a result of several infamous decisions examining the interplay between impairment ratings and earning power under the Pennsylvania Workers’ Compensation Act.

The Pennsylvania Supreme Court affirmed that earning power evidence need not be presented when an employer seeks to change an injured Claimant’s disability status.

Terminating all controversy and debates over that interplay, the Pennsylvania Supreme Court, in a majority opinion authored by Chief Justice Castille, issued its magnus opum on September 29, 2010, affirming the Commonwealth Court’s prior ruling, issued on April 28, 2008, that earning power evidence need not be presented when an employer seeks to change an injured Claimant’s disability status, from total to partial disability, in reliance upon an impairment rating evaluation, when the conversion from total to partial disability, triggering the 500 week limitation on a Claimant’s receipt of temporary partial disability benefits, does not change the Claimant’s compensation benefit payment rate.

The workers’ compensation judge concluded that the employer would also have to establish earning power evidence suitable for the Claimant’s physical limitations from the work injury, in order to grant employer’s Modification Petition.

As most of us practicing the administrative arts of compensation claim management are already all too well aware, this debate, over the interplay between impairment and earning power, was spawned in the wake of a quixotic decision, rendered in 2006, by a workers’ compensation judge who, when dismissing an employer-filed Modification Petition seeking to convert the Claimant’s compensation disability benefit status from temporary total to temporary partial disability benefits, had concluded that the employer had sustained his burden of proving that the Claimant’s impairment rating was 28%, in reliance upon a 2002 IRE, a rating percentage well below the statutory 50% threshold that would bar a disability conversion in reliance upon an impairment rating, but the workers’ compensation judge nevertheless concluded, apparently in the absence of any statutory or regulatory requirements, that the employer would also have to establish earning power evidence suitable for the Claimant’s physical limitations from the work injury, in order to grant employer’s Modification Petition.

Hindsight being what it is, part blind luck and part post facto backslap, the employer’s appeal of the workers’ compensation judge’s decision then became the subject of a tortured ascent through several appellate levels, before logic prevailed with the Commonwealth Court’s en banc decision in 2008, resulting in the Commonwealth Court holding that earning power evidence need not be presented when an employer seeks to convert a Claimant’s disability status from total to partial, in reliance upon a valid impairment rating evaluation demonstrating an impairment rating of less than 50%, as permitted by Section 306(a.2) of the Pennsylvania Workers’ Compensation Act.

As is also well-known about the Diehl claim, it involved the employer seeking to convert the Claimant’s disability status from total to partial, with the employer having initially made its IRE designation request outside of the statutory period for an “automatic” conversion of the Claimant’s disability status, as the Claimant had already received 104 weeks of temporary total disability benefits, with the IRE not having been requested by the employer within sixty days of the Claimant receiving 104 weeks of temporary total disability benefits.

In reliance upon the Pennsylvania Supreme Court’s ruling in Gardner v. WCAB (Genesis Health Ventures) 888 A.2d 758 (Pa. 2005), although the employer was not precluded from requesting the IRE beyond the “automatic” conversion period of 104 weeks plus 60 days, its entitlement to a disability conversion had to be perfected, under Gardner, by filing a Modification Petition, and presenting evidence as to the validity of the IRE.

Gardner, like Caso, is an illustration of the intense trench warfare that has persisted between the Claimant and defense bars over several benefit-altering provisions of Act 57.

Gardner, sharing infamy with other past-Act 57 decisions, like Caso, is now, like Diehl, an illustration of the intense trench warfare that has persisted between the Claimant and defense bars, over several benefit-altering provisions of Act 57, as Claimants seek perpetuation of inflated benefit expectations, seemingly devoid of any practical connection to either injury or disability. It is, and has been, a trench warfare littered with the casualties of increased claim expenses, higher indemnity and medical benefit dollars, and the consequent inflation of claim closure costs.

Yes, without question, there have been some pyrrhic victories, like Gardner, Caso, and now Diehl, all of which have added authoritative clarity to what were otherwise seemingly knee-jerk and hypertechnical challenges, although the costs of litigating the seemingly intuitive issues has, without question, been pursued at incalculable costs for employers and their insurers.

Turning back to Diehl, the Supreme Court, in affirming the Commonwealth Court’s 2008 decision, holding that earning power evidence need not be presented when an employer petitions to modify a Claimant’s disability status in reliance upon an impairment rating evaluation, agreed to review the Commonwealth Court’s ruling, to determine whether the Commonwealth Court had erred in ruling that earning power evidence was not necessary when a modification was sought in reliance upon an impairment rating evaluation, as well as to determine whether the Commonwealth Court’s Diehl decision was in conflict with the Supreme Court’s Gardner ruling, in which the Supreme Court had sustained the employer’s right to seek a modification of a Claimant’s disability status in reliance upon an impairment rating evaluation, subject to the employer needing to petition to modify the disability status, if the IRE was secured outside the statutory period of “automatic” conversion, being the 104 weeks plus 60 days post-receipt of temporary total disability benefits.

The Claimant, as appellant, argued that the Commonwealth Court’s Diehl ruling subverted Section 306(b) of the Act, under which earning power evidence is necessary to support an employer’s attempt to change a Claimant’s disability status.

For the Supreme Court, the Claimant, as appellant, argued that the Commonwealth Court’s Diehl ruling subverted Section 306(b) of the Act, under which earning power evidence is necessary to support an employer’s attempt, be it petition, to change a Claimant’s disability status, as well as being in conflict with Section 306(a.2), under which the Act prohibits a change in compensation benefits absent an agreement or adjudication, to include a cessation of a Claimant’s entitlement to temporary total disability benefits.

Appealing the Commonwealth Court’s Diehl ruling, the Claimant argued, to the Supreme Court, that an entitlement to partial disability benefits under Section 306 (b) must be evaluated using one of three methodologies, including: (1) an actual return to work at wages less than pre-injury wages; (2) presentment of earning power evidence satisfying Kachinski, or, (3) presentment of earning power evidence in reliance upon a labor market survey.

In effect, the Claimant in Diehl argued, in his final apocalyptic appeal, that the cessation of total disability can only be proven through an adjudication or agreement grounded upon proof of earning power, or through a timely IRE evidencing an impairment rating of less than 50%, a statutory interpretation that the Supreme Court thankfully found to be, well, completely unfounded, under any possible statutory interpretation, or under any decisional authority.

The Supreme Court concluded that requiring earning power evidence to accompany statutorily-conclusive IRE evidence would effectively render the IRE provisions of the Act as meaningless.

Moreover, the Supreme Court, in the course of debunking the Claimant’s appellate arguments, concluded that requiring earning power evidence to accompany statutorily-conclusive IRE evidence would effectively render the IRE provisions of the Act as meaningless, as the Supreme Court instead agreed with the Commonwealth Court and the employer’s appellate arguments, that is, that there are two alternative methods for effectuating a change in disability status, one being a change predicated on earning power evidence, and the second being a disability conversion predicated on impairment rating evidence.

No less true, the employer effectively argued that the IRE process is very distinct from other statutory remedies provided by the Act, as well as there being no clear statutory equivalence, under the Act, between the constructs of “impairment” and “disability” as “impairment” is presumably a permanent anatomic change, whereas “disability”, has no comparable forevermore predicate under the Act.

To not allow an employer to seek an untimely IRE-based conversion absent evidence of earning power, via an employer-filed Modification Petition, would effectively nullify the employer’s traditional right, via the “traditional administrative process”, and would, if played to its inevitably illogical conclusion, be an absolute negation of the administrative advocacy inherent in the petition process, characterized under Gardner as the “traditional administrative process.”

Successfully, the employer presented several other compelling arguments to the Supreme Court, in the course of seeking affirmance of the Commonwealth Court’s 2008 Diehl decision. Specifically, the employer pointed to other statutory provisions, allowing employers, who, for whatever reason, might have missed statutory time-imposed filing requirements, for relief from compensation liabilities, to be able to petition for the same relief, so long as supported by substantial competent evidence accepted by a workers’ compensation judge in a Bureau-circulated decision. Consider, in that context, the employer-issued Notifications, for either suspension or modification, which, if not issued within the Act-required time period, do not preclude the employer from seeking the same relief via petition.

Another example would involve Special Supersedeas requests, which if not filed within 20 days of the employer’s receipt of a physician’s Affidavit of Full Recovery, need not limit the employer’s right to seek Supersedeas, the right to which was seemingly intended to be “automatic”, if the employer presented prima facia evidence to the workers’ compensation judge at the Special Supersedeas hearing, with none of us being able to recount a single granting of Special Supersedeas in 14+ years of that provision being the employer’s statutory right.

The Supreme Court rightly concluded that the statute was clear and free from any ambiguity.

Interpreting the issue before it as one of pure and simple statutory construction, the Supreme Court, rightly concluded that the statute was clear and free from any ambiguity, such that the Court interpreted Section 306 (a.2)(5) to allow for two possible outcomes, as to an adjudication or agreement as to a change in a Claimant’s total disability status, with one methodology being predicated on an adjudication or agreement that total disability has ceased, and, alternatively, a second methodology being that a Claimant’s impairment rating, if less than 50% of a whole man standard, and that both are statutorily correct construct of the General Assembly’s statutory intent.

And so holding, the Diehl Supreme Court ruled:

“Thus, consistent with Gardner, an employer who requests an IRE outside the 60-day window and seeks to reduce a Claimant’s disability status based upon the IRE must do so through an adjudication or agreement.”

In so holding, the Diehl Court next turned to the burden of proof that the employer must satisfy, when seeking an adjudication, of its entitlement to convert the Claimant’s disability status from total to partial disability in reliance upon an IRE.

Touching first on the archetypal constructs of impairment and disability not being interchangeable terms, the Diehl Court considered the fact that the definition of impairment does not contemplate nor encompass earning power, necessarily requiring, if logic is our guide, that the evidence necessary to prove or establish impairment must, by definition, be different from that which is necessary to prove “disability” through earning power.

Since the IRE evaluation process itself considers only impairment, and not disability or the incapacity to work, the legislator specifically left intact the amount of compensation that would be payable, in the event of any IRE-based conversion of the Claimant’s compensation benefit entitlement, from that of total to partial disability.

If the IRE is requested within the 60-day window, following the 104 weeks of temporary total disability benefit payments, the “conversion” is “automatic”, whereas if the IRE is not requested within that 60-day window, the “conversion” can only then occur through an adjudication or agreement, which requirements typically involve the employer petitioning to modify compensation benefits, in the course of which the deposition testimony of the IRE physician is presented, is subject to cross-examination, and must, for adjudicatory purposes, be determined to be both competent and credible by the petition-deciding workers’ compensation judge.

Balance has again restored to the IRE process.

And, yes, balance has again restored to the IRE process, through the clear and unambiguous language of the Act, and the IRE-empowering Gardner and Diehl decisions.

In practical terms, the Supreme Court’s Diehl Decision merely validates what all of us believe to be true, not only as to the statutory entitlement, but also as to the necessary adjudicatory process for conversions predicated on untimely IREs.

DuffyConnors

As the Pennsylvania representative of the National Workers’ Compensation Defense Network, we encourage you to contact our workers’ compensation defense attorneys to discuss the significance of this decision, its potential impact on your workers’ compensation defense practice, as well as to offer any other feedback or insight that you might wish to share with us, concerning your experience in handling workers’ compensation claims; our workers’ compensation defense attorneys remain always available to answer any questions that you might have about workers’ compensation practice and procedure, as well as to provide you with our own professional experiences have been in defending thousands of workers’ compensation claims.

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