Prior to June 20, 2017, a powerful tool was available to employers and workers’ compensation carriers to cap exposure on long term workers’ compensation claims. That tool, provided by the Act 44 amendments in 1996, was called an impairment rating evaluation (IRE) and generally worked like this: once a claimant had received 104 weeks of total disability benefits and had reached maximum medical improvement, the employer could request an IRE. A doctor was assigned to perform the evaluation and was required by statute to consult the most recent version of the American Medical Association’s guidelines. If, under those guidelines, the IRE doctor determined that the claimant’s injury caused less than 50% whole body impairment, the employee’s workers’ compensation benefits could be modified from total to partial disability status, with a corresponding time limitation on future indemnity benefits. The process was helpful in resolving serious injury cases, where the employee was too disabled to work but had reached a medical plateau.
Pennsylvania workers’ compensation law places no cap on the length of time in which a claimant can receive total disability benefits. Partial disability benefits, however, are capped at 500 weeks. Thus, via the IRE process, it was possible to prevent a claimant from receiving total disability benefits indefinitely by modifying their status to a maximum of 500 weeks of partial disability benefits.
On June 20, 2017, the Pennsylvania Supreme Court changed all of this with its decision in Protz v. Workers’ Compensation Appeal Board. In that case, the Court held that the IRE process was unconstitutional because the legislature is not permitted to delegate its authority to issue impairment rating guidelines to a non-legislative body (i.e. the American Medical Association). Since the IRE provisions are legislated to be applied under the most current version of the American Medical Association guidelines (which are frequently updated), the Supreme Court struck down the IRE provisions of Pennsylvania’s Workers’ Compensation Act as an unconstitutional delegation of legislative authority.
The immediate impact of Protz on future claims is clear – unless the Pennsylvania Supreme Court reconsiders and reverses its decision, the IRE process is no longer available to employers and workers’ compensation insurance carriers. This means that it will be considerably more difficult to cap exposure on workers’ compensation claims where an employee has received 104 weeks of temporary total disability benefits and has reached maximum medical improvement. Indeed, a reversion to the use of vocational experts to establish job availability is likely, where light duty work at the time-of-injury employer is not available. For claims where the IRE process was used prior to the court’s decision in Protz, outcomes are less clear.
Employers who are litigating a modification of benefits based on an IRE would do well to withdraw the modification petition. Now that the IRE process has been deemed unconstitutional by the Pennsylvania Supreme Court, an IRE can no longer serve as a valid basis for future modification of benefits. Without a valid basis to litigate a modification petition, employers who continue to rely on an IRE in litigation are exposed to penalties and unreasonable contest fees.
Likewise, employers who are actively seeking to obtain an IRE should refrain from doing so. Again, the evaluation cannot provide a valid basis for modification of benefits, and the Bureau of Workers’ Compensation has also indicated that it will no longer assign IRE physicians in the wake of Protz.
So what about claims where benefits have been modified or a claimant’s status has been changed as the result of a past IRE where the claimant failed to appeal? Employers likely have no affirmative obligation to restore the pre-IRE, pre-modification status quo, but claimants may file petitions seeking to do just that. While Pennsylvania law typically prevents the retroactive application of judicial decisions to matters that have been fully and finally determined, it is unclear how workers’ compensation judges, the Appeal Board, and Pennsylvania Courts will approach the issue. In cases where an employer obtained a modification of benefits because of an IRE and the claimant did not appeal, the doctrine of res judicata may serve to prevent re-litigation of the case.
We will continue to monitor the status and impact of Protz; additional developments will be reported here on our blog.