PA Commonwealth Court changes Impairment Rating Evaluations in Workers Compensation

CommCtThe Pennsylvania Commonwealth Court invalidated Section 306 (a.2)1 of the Workers Compensation Act, as amended, finding the language to be an unlawful delegation of power to a private entity.  Let’s first take a look at the language of Section 306 (a/.2)1.

(a.2)
(1) When an employe has received total disability compensation pursuant to clause (a) for a period of one hundred four weeks, unless otherwise agreed to, the employe shall be required to submit to a medical examination which shall be requested by the insurer within sixty days upon the expiration of the one hundred four weeks to determine the degree of impairment due to the compensable injury, if any. The degree of impairment shall be determined based upon an evaluation by a physician who is licensed in this Commonwealth, who is certified by an American Board of Medical Specialties approved board or its osteopathic equivalent and who is active in clinical practice for at least twenty hours per week, chosen by agreement of the parties, or as designated by the department, pursuant to the most recent edition of the American Medical Association “Guides to the Evaluation of Permanent Impairment.”

The language in dispute is bold and italicized in the above statutory section.

By way of background, once a Claimant has reached at least 104 weeks of total disability, an Impairment Rating Evaluation can take place by request from the Employer/Insurance Carrier.  Should the IRE physician find the ‘whole body impairment’ to be less than 50%, which in most cases it will be under 50%, then disability benefits may be automatically converted or by way of Petition to Modify Benefits, from total disability benefits to partial disability benefits.  It is important to note that this does not affect the actual rate of compensation, but caps the number of weeks benefits are payable to 500 weeks, which is about 9.6 years.

The legal question in this case, Protz v. WCAB (Derry Area School District),  No. 1024 C.D. 2014 (Pa. Cmwlth 2015).  revolved around the edition of the American Medical Association Guidelines used by the IRE physicians.   As you can see above, the Legislature placed language in the Act that stated the “most recent‘ edition should be utilized for the IRE.  Claimant’s attorney in this case argued that at the time the Legislature passed the Act, the 4th Edition of the Guidelines was the latest version, and that any new Edition thereafter was an unlawful delegation to ta private entity, namely, the American Medical Association.

The Commonwealth Court agreed. The Court said;

In this case, the General Assembly adopted as its own the methodology enumerated by the AMA at the time it enacted Section 306(a.2)—
that is, the methodology contained in the Fourth Edition of the Guides. The General Assembly has not reviewed and re-adopted the methodology contained in subsequent editions. Moreover, unlike in Pennsylvania Builders Association, where the General Assembly provided for review of the new codes by the Department of Labor and Industry, in this case, any form of review of subsequent editions of the AMA Guides is wholly absent, leaving unchecked discretion completely in the hands of a private entity.  (Id. at 17)

The Court is essentially stating that the Legislature provided absolutely no administrative means to have each new edition’s standards reviewed by the PA Department of Labor & Industry, or for that matter, any state government agency.  Furthermore, the Court specifically explained why a ‘carte blanche’ or ‘unchecked discretion” to a private entity is not permissible.

Even then if we had found that there are adequate standards allowing for a delegation to a governmental agency, Section 306(a.2)(1) would still be unconstitutional because the delegation here was to a private party. Unlike governmental agencies which are supposed to act disinterestedly and only for the public good, that presumption cannot be made with regard to private entities. There is no accountability to the public, either directly through the rulemaking process providing for public input and comment or indirectly through the appointment and confirmation power and the power of the purse.15  More simply, the keystone behind the prohibition against unlawful delegation is that the General Assembly, not private bodies, enacts laws which the government agencies implement in accordance with the standard given to them in the enactment.16 (Id. at 18)

IRE evaluation must now go back to the 4th AMA Guidelines until such time the Court further addresses the issue ot the Legislature amends the Act to provide for oversight.