January 13, 2006

IREs
Under
Gardner

With the ten year anniversary of Act 57’s enactment on June 24, 1996 fast approaching, the Pennsylvania Supreme Court’s December 28, 2005 Opinion in Gardner v. WCAB (Genesis Health Ventures), affirming the Commonwealth Court’s Decision, cited at 814 A.2d 884 (Pa. Cmwlth. 2003), continues to illustrate the rich and fertile procedural tug-of-war between claimants and employers over the Act’s practical implications.

Gardner

The Commonwealth Court’s 2003 Decision in Gardner was a landmark decision that significantly altered every practitioner’s approach to requesting and utilizing Impairment Rating Evaluations (IREs). In Gardner, the claimant had sustained a work injury in October of 1996, and after which she had received 104 weeks of temporary total disability benefits by October of 1998. In June of 2001, her employer requested that the claimant submit to an IRE. The claimant objected to the request, claiming that the request was impermissible under Act 57, as it had not been made within sixty (60) days of her receipt of 104 weeks of temporary total disability benefits.

In response, the employer filed a Petition for Physical Examination, requesting that the Workers’ Compensation Judge (WCJ) order the claimant to undergo the IRE. However, the WCJ denied that request, agreeing with the claimant that the employer/insurer had to request the IRE within 60 days of the claimant’s receipt of 104 weeks of temporary total disability benefits. That would have required the employer/insurer to have made its IRE request in December of 1998 instead of June of 2001, when the request was actually made.

Commonwealth Court held in its landmark decision that the employer/insurer must request that the claimant submit to the IRE within 60 days of the claimant’s receipt of 104 weeks of total disability benefits.

The WCJ’s Decision was then appealed by the employer/insurer, with the Appeal Board reversing the WCJ’s Decision, concluding that the Act was ambiguous as to when the IRE request had to be made, and that the Bureau regulations, interpreting Act 57, did not impose a statute of limitations on requesting the IRE, but instead established a window in which the insurer must act for the adjustment of benefits. The Board’s Decision was, of course, appealed by the claimant to the Commonwealth Court, which then held in its landmark decision that the employer/insurer must request that the claimant submit to the IRE within 60 days of the claimant’s receipt of 104 weeks of total disability benefits. The employer/insurer’s failure to request the IRE within 60 days of a claimant’s receipt of 104 weeks of temporary total disability benefits would then forever preclude the employer/insurer from being able to modify the claimant’s compensation benefits from temporary total to temporary partial disability benefits in reliance upon an IRE establishing that a claimant’s impairment rating was less than a 50% impairment rating of a whole body standard under the AMA’s Guide to Impairment Ratings.

Rider

In Rider, the IRE request was made after the claimant litigated a Claim Petition for an October 21, 1998 work injury. The Petition was granted by the WCJ in December 1999. The employer/insurer appealed. In November of 2001, the WCJ again found in favor of the claimant, awarding total disability from October 21, 1998 and continuing.

In a subsequent ruling by the Commonwealth Court in Wal-Mart Stores v. WCAB (Rider), 837 A.2d 661 (Pa. Cmwlth. 2003), involving a related issue as to the calculation of the 104-week statutory mandate for requesting the IRE, the employer/insurer requested an IRE 163 weeks after the claimant’s disability benefits began to be paid. In Rider, the IRE request was made after the claimant litigated a Claim Petition for an October 21, 1998 work injury. The Petition was granted by the WCJ in December 1999. The employer/insurer appealed that Decision, with the Appeal Board remanding the case back to the WCJ. In November of 2001, the WCJ again found in favor of the claimant, awarding total disability from October 21, 1998 and continuing. No Appeal of that Decision followed.

The claimant filed a Reinstatement Petition, alleging that the IRE request had been untimely and that the 104-week period began as of the date of injury.

On December 10, 2001, 163 weeks after the date that disability benefits had begun to be paid, the employer/insurer requested that the claimant undergo an IRE. After the claimant attended the IRE, the employer notified the claimant that his status had changed from total to partial, in reliance upon the IRE finding of a 26% impairment. In response, the claimant filed a Reinstatement Petition, alleging that the IRE request had been untimely and that the 104-week period began as of the date when benefits are paid under the decision awarding benfits, with the IRE request having been made 59 weeks beyond the statutory 104-week requirement.

Confusion over when to request a timely IRE, where the compensability of the claim is initially contested and benefits are awarded to a claimant following litigation, resulted in the employer in Rider contending that the 104 week time period did not start until all litigation over the award of benefits had concluded, meaning that there was finality to the award with all appeals having been exhausted, with the claimant arguing that the time period begins to run as soon as the claimant has actually received 104 weeks of benefits. The Supreme Court agreed with the claimant and against the employer, ruling that the 104 week period runs as of the date that the claimant has "received" 104 weeks of benefits and not when litigation, including appeals over the benefits, is concluded and final. To clarify, if more than 104 weeks of benefits are being paid following an initial "award" of compensation, that initial payment of benefits would be the trigger date for the 60 day window within which to request the IRE to utilize the automatic conversion under the Act.

The WCJ concluded that Act 57 required that the employer/insurer request an IRE within 60 days of the expiration of 104 weeks.

The WCJ agreed with the claimant, concluding that Act 57 required that the employer/insurer request an IRE within 60 days of the expiration of 104 weeks. The WCJ’s Decision was affirmed by the Appeal Board, with the Commonwealth Court then reversing the WCJ, finding that the case was distinguishable from Gardner on grounds that the employer had disputed the claimant’s entitlement to benefits.

Consolidating the appeals of Gardner and Rider, the Supreme Court held that the Gardner case requires an examination of when the statute requires the insurer to make an IRE request while the Rider case involves an examination as to when the prescribed 104-week period actually begins.

Gardner

The Supreme Court held that the statutory reference to “shall” requires that the request be made within 60 days of the receipt of 104 weeks of temporary total disability benefits, and that it was not a permissive or discretionary reference.

Analyzing Section 306(a.2)(1), 77 P.S. §511.2, of Act 57, the Supreme Court held on Gardner that the statutory reference to “shall” requires that the request be made within 60 days of the receipt of 104 weeks of temporary total disability benefits, and that it was not, as argued by the employer/insurer, a permissive or discretionary reference that was modified by the Bureau’s later-promulgated regulations pertaining to IREs. The Supreme Court rendered this holding in reliance upon principles of statutory construction adopted by the General Assembly.

Seeking support for this clarification of statutory interpretation, the Supreme Court further noted that Section 306(a.2)(1) actually utilizes the term “shall” three times, suggesting, in the Supreme Court’s analysis, that the General Assembly intended to make mandatory three circumstances; the first being that the claimant “shall be required” to attend an IRE; the second being that the IRE “shall be requested” by the insurer within a specified time; and the third being that the IRE “shall be determined” by a physician according to specific criteria.

With Section 306(a.2)(1) imposing specific and mandatory obligations on all three parties in the IRE process, the Supreme Court rejected the employer/insurer’s argument that the statute was permissive, as opposed to being mandatory, an argument that the Supreme Court rejected on grounds that it would frustrate the obligations imposed by the statute.

The Supreme Court held that the term “shall” imposed mandatory obligations on all parties involved in the IRE process.

The Supreme Court further held that finding that the statute permitted the IRE request to be discretionary and not mandatory would frustrate the cost-containment objectives sought under the Act 57 reforms. Instead, the Supreme Court held that the term “shall,” as used in Section 306(a.2)(1), imposed mandatory obligations on all parties involved in the IRE process, including the claimant receiving workers’ compensation benefits, the insurer paying workers’ compensation benefits, and physicians selected to perform the IREs.

The Supreme Court further found that the Bureau’s regulations pertaining to IREs were inconsistent with statutory requirements.

Concluding that Act 57 imposed specific time restrictions on an insured’s ability to request an IRE, the Supreme Court further found that the Bureau’s regulations pertaining to IREs were inconsistent with statutory requirements. While the Supreme Court held that the statutory requirement trumped any interpretive rules promulgated by the Bureau, the Supreme Court noted that the Bureau Rules would permit an insurer to request an IRE beyond the 60-day window after 104 weeks of disability being “received,” but that IRE would not automatically reduce a claimant’s compensation benefits, as would be the case if the insurer requested the IRE within 60 days of a claimant’s receipt of 104 weeks of total disability benefits.

An IRE request made beyond 60 days of 104 weeks of disability benefits being paid would require an insurer to carry the burden of proving its entitlement to modify compensation.

Under this view, an IRE request made beyond 60 days of 104 weeks of disability benefits being paid would require an insurer to Petition to Modify compensation from total to partial with an IRE establishing an impairment less than 50%. In this situation, the insurer would carry the burden of proving its entitlement to modify compensation by petitioning the Bureau for relief in reliance upon the IRE.

Rider

The Supreme Court held that the 104 weeks within which the employer/insurer must request an IRE is triggered by the claimant having “received” 104 weeks of total disability benefits.

Turning back to the Rider appeal, the Supreme Court reversed the Commonwealth Court and held that the 104 weeks within which the employer/insurer must request an IRE is triggered by the claimant having “received” 104 weeks of total disability benefits. The “receipt” of 104 weeks of compensation triggers the employer/insurer’s 60-day countdown for action in order to secure the benefit of the “self-executing” conversion from total to partial disability benefits with a favorable IRE establishing an impairment of less than 50%.

In Rider, the employer/insurer had contended that the 104-week period did not start until the litigation had ended, with the claimant contending that the 104-week period ended as of the claimant having “received” 104 weeks of total disability benefits. However, the Supreme Court held that “the procedure for obtaining an automatic reduction in benefits under Section 511.2 (1) begins once the employee has received, that is, acquired or comes into possession of 104 weeks of total disability benefits.”

The “acquisition” or “receipt” of 104 weeks of disability benefits is the operative trigger for the 60 day countdown.

Applying Rider, an employer/insurer must request an IRE within 60 days of a claimant’s 104 weeks of disability being “received.” The “acquisition” or “receipt” of 104 weeks of disability benefits is the operative trigger for the 60 day countdown for requesting an IRE for the automatic conversion to apply.

Practical Tips

The practical implications of the consolidated appeals in Gardner and Rider clarify the time restrictions imposed upon employer/insurers when requesting IRE’s under Act 57.

An employer/insurer must request an IRE within 60 days of a claimant receiving 104 weeks of total disability benefits if the employer/insurer seeks the automatic relief.

Under Gardner, an employer/insurer must request an IRE within 60 days of a claimant receiving 104 weeks of total disability benefits if the employer/insurer seeks the automatic relief permitted by conversion of temporary total to temporary partial disability benefits with an IRE establishing an impairment rating of less than 50%. If an employer/insurer does not request an IRE within 60 days of 104 weeks of total disability benefits, the employer/insurer can still request an IRE, in reliance upon the Bureau regulations, but that request is then subject to the employer/insurer having to litigate conversion of the claimant’s compensation benefits from total to partial disability. The issue thus becomes susceptible to the vagaries of litigation, with the employer/insurer carrying the burden of proving through substantial competent evidence that the IRE entitles the employer/insurer to a conversion of disability from total to partial. The obvious negative inherent in a litigated conversion petition (Modification Petition) based on an IRE is that it will ultimately require a WCJ to decide the merits of granting conversions for the employer/insurers, with claimants expected to present contrary impairment evidence.

The importance of establishing a claim diary of 104 weeks cannot be overstated.

In light of Gardner, the importance of establishing a claim diary of 104 weeks cannot be overstated. Also note that requesting an IRE within the time requirements set forth in the statute need not necessarily mean that the IRE has to be coordinated and scheduled within that 60-day timeframe, as there may be situations in which the employer/insurer wants to perfect its rights for the IRE, but wants to hold off on actually coordinating and scheduling it in order to pursue other administrative mechanisms to reduce compensation liability. These mechanisms might include an independent medical examination with either a medical opinion of a full recovery, or a medical opinion that the claimant sufficiently recovered from the work injury to be capable of returning to some level of available work for modification or suspension purposes.

In Rider, the employer/insurer would have been entitled to request an IRE within 104 weeks of the claimant being awarded compensation benefits under the WCJ’s Decision.

Under Rider, the Supreme Court has also clarified that 104 weeks of total disability benefits has to be calculated in order to determine when the employer/insurer is entitled to request the IRE in any claim involving the claimant having litigated his right to receive workers’ compensation benefits. Applying Rider, the Supreme Court has directed that the IRE must be requested within 104 weeks of the claimant “receiving” total disability benefits. In Rider, the employer/insurer would have been entitled to request an IRE within 104 weeks of the claimant being awarded compensation benefits under the WCJ’s Decision. Beyond that 104 week period, the employer/insurer could still request an IRE, but again, such a request would not result in an automatic conversion from total to partial disability benefits.

Questions concerning this very important decision by the Pennsylvania Supreme Court should be directed to our workers’ compensation practice group.

(Back to top)