• Client Advisory: PROTZ
  • September 13, 2017
  • On June 20, 2017, the Supreme Court of Pennsylvania struck down the entire IRE procedure contained in the Workers’ Compensation Act. Protz v. W.C.A.B. (Derry Area School Dist.) declared the IRE measures unconstitutional because the legislature could not delegate to a non-legislative body the authority to promulgate impairment-ratings guidelines. While the long-term impacts of this decision remain to be seen, employers and their insurers must implement new procedures and strategies immediately.

    The IRE provision was enacted in 1996, resulting in 21 years of impairment-rating determinations that enabled employers and insurers to cap exposures in certain cases. With a single stroke of the judicial pen, the court has abolished the entire IRE process. With such a sweeping change to the law, a range of questions now present regarding the handling of past, current, and future claims.

    While Protz may be subject to further appellate review, Thomas, Thomas & Hafer LLP offers the following comments and recommendations to our clients to help resolve the uncertainty Protz created and to ensure proper compliance with the new law (assuming that Protz remains the law of the land).

    CLAIMS IN LITIGATION

    When the employer has filed a Petition to Compel an IRE:

    Employers are advised to withdraw immediately all Petitions to Compel an IRE, including any pending appeals concerning same. On June 21, 2017, the Pennsylvania Department of Labor & Industry, Bureau of Workers’ Compensation, issued a notice that, effective immediately, the Bureau would no longer designate physicians to perform Impairment Rating Evaluations. Therefore, employers moving forward with Petitions to Compel an IRE do so without authority under the law or cooperation from the Bureau. This, in turn, creates a significant risk of both penalties and attorneys’ fees being assessed to any subsequent adjudication by a WCJ. Reserve adjustments may be required to account for the increased wage loss exposure.

    When an IRE determination was recently made and modification petition litigation is now pending:

    Employers are advised to withdraw their modification petitions immediately. This too reduces the risk of penalties and fee awards. Further, employers should adjust their reserves in consideration of continued wage loss liability.

    CLAIMS NOT IN LITIGATION

    When an IRE determination was recently made and an automatic Notice of Change in Status has already been issued:

    Employers are advised to refrain from initiating any changes to a claim falling under this category. Instead, employers should be aware that wage loss benefits will continue after the 500-week mark and adjust their reserves accordingly. Further, such claims should be considered candidates for settlement, termination/suspension petitions, and modification petitions based on labor market surveys or specific job placement.

    When a claimant’s status was previously changed by automatic Notice of Change in Status and no challenge was filed within 60 days:

    No immediate action is necessary. Claimants, through their attorneys, are likely to file reinstatement or modification petitions seeking to return the claim to total disability status. While it is unclear precisely how the courts will respond to such filings, TT&H maintains the position that, pursuant to the principles espoused in Blackwell v. Com., State Ethics Com'n (Pa. 1991), retroactivity is not applicable to claims when the 60-day appeal period has expired and resulted in finality of the change in status.

    When a claim was previously resolved by Compromise & Release agreement:

    No immediate action is necessary. Pennsylvania law is clear that such agreements cannot be reopened or set aside, absent lack of full disclosure or mutual mistake of fact – neither of which are present in the Protz context. Claims settled by Compromise & Release agreements should not be affected.

    When an employer’s modification petition was granted and no appeal followed (or the appeal was since concluded):

    No immediate action is necessary. Claimants, through their attorneys, may file reinstatement or modification petitions seeking to revert the worker’s status back to total disability. Following the 20-day window for appeal, orders by a WCJ are considered final, and claimants are estopped from further litigation by the legal doctrine of res judicata, which prevents re-litigation of adjudicated cases. TT&H maintains the position that, despite this change, res judicata will render such prior adjudications final.

    FUTURE DEVELOPMENTS

    While the above recommendations reflect our current understanding of the law, these issues remain unsettled.

    Initially, it is important to note that the employer in Protz has the ability to request rehearing by the Supreme Court of Pennsylvania. However, given the nature of the case, it is doubtful that the court would grant such an application. The potential for rehearing should be resolved within the next two weeks. Further, there is a remote possibility that the employer could seek review by the United States Supreme Court. While it is unlikely that the court would hear the case (for the reason that Protz was decided solely on the basis of Pennsylvania law), it could keep the law in a state of flux approximately three months.

    Additionally, the Supreme Court of Pennsylvania now has the ability to review these questions of retroactivity – if they so choose – in a recently-filed Petition for Allowance of Appeal in Gillespie v. WCAB (Aker Philadelphia Shipyard). If granted, the court will have the opportunity to clarify many of the uncertainties currently present.

    We will continue to monitor these situations and provide updates as appropriate.