July 18, 2006

House Bill 2738:
Amendments to the Pennsylvania Workers' Compensation Act

On June 26, 2006, the General Assembly of Pennsylvania’s House of Representatives passed House Bill No. 2738, which adopted proposed amendments to the Pennsylvania Workers’ Compensation Act. The House Bill will be next submitted to the Pennsylvania Senate for proposed passage and execution by the Governor for enactment into law.

The proposed Amendments are briefly discussed below

Minimum Compensation Rate

The minimum compensation payable rate increases from $90.00 to $100.00 per week.

The proposed compensation rate change is applicable to any claimant receiving minimum compensation for injuries that occurred on or before August 31, 1993. The minimum compensation payable rate increases from $90.00 to $100.00 per week. This increase will be funded by the Commonwealth, by appropriation and reimbursed in advance to carriers, administrators or self-insured employers.

Resolution Hearings

House Bill 2738 proposes establishment of a “Resolution Hearing,” defined as “…a procedure established by the Office of Adjudication with the sole purpose of providing a venue to present a Compromise and Release Agreement to a Judge in an expedited fashion.”

The resolution hearing shall be held within 14 days of the issuance of a Notice of Assignment of Compromise and Release.

The resolution hearings may occur without assignment of the formal petition from the Bureau, provided the parties submit proof of the filing of a petition at the hearing. The workers’ compensation judge must render a Compromise and Release Agreement Decision within five (5) business days of the resolution hearing.

No workers’ compensation judge in any particular county may receive more than 75% of all Petitions in that county, including those for Resolution Hearings.

Mediation

The term “Mediation” is defined in the Bill as a “conference conducted by a workers’ compensation judge.” It is a “Conference” that “shall require the attendance in person of all parties,” including the claimant and employer, and respective counsel. It requires the employer representative to attend the Conference with “requisite authority to bring about settlement of the case or must have the ability to obtain said authority during the course of the mediation.”

House Bill 2738 does not require workers’ compensation judges to conduct mediation.

Case Administration

The bill requires judges to establish a “mandatory trial schedule” at the first hearing on all litigated claims.

The proposed bill will require workers’ compensation judges to establish a “mandatory trial schedule” at the first hearing on all litigated claims. The trial schedule is to include specific deadlines for the presentation of evidence and dates for future hearings. It will require the judges to strictly enforce their schedule, with any deviation therefrom requiring that “good cause” be demonstrated.

The trial schedule will include a specific date and time for a mediation conference. Mediations will be required to take place no later than 30 days prior to the date set for filing Proposed Findings of Fact and Conclusions of Law by the parties. If, “upon good cause shown,” it is apparent that mediation would be futile, the assigned judge may cancel it.

Appeal Board

The Bill adds a section outlining internal administrative procedure for the Appeal Board, requires mandatory attendance by WCAB members and their brief writers of at least eight (8) annual CLE hours in workers’ compensation, establishes a code of ethics to be followed by the Board, and provides that each member shall have at least two (2) opinion writers. If the Board grants a rehearing, it is to be conducted en banc.

Judges’ Pay

A provision is added to Section 1401(e) to establish a minimum level of compensation for workers’ compensation judges. The minimum shall be a pay range not less than that established by other statutes for Administrative Law Judges in Pennsylvania.

Uninsured Employers Guaranty Fund

The bill would establish an Uninsured Employers Guaranty Fund to provide compensation benefits to a claimant injured while working for an uninsured employer.

House Bill 2738 proposes establishment and maintenance of an Uninsured Employers Guaranty Fund to provide compensation benefits to a claimant injured while working for an uninsured employer. This Fund will be established and maintained by assessment on insurers and self-insured employers in the same manner in which the Workers’ Compensation Administration Fund was established and is maintained (initial year there was an assessment of seven percent (7%) of total compensation paid in the previous calendar year by each insurer or self-insured employer with subsequent annual adjusted assessments).

The Fund shall have the same rights, duties, responsibilities and obligations as an insurer, including § 319 subrogation, but shall not be considered an insurer and shall not be subject to penalties, unreasonable contest fees or any reporting and liability requirements or “late answer” admissions under Section 416 of the Act.

Procedurally, the Fund may investigate the claim, and make all decisions related to its administration and compensability. It permits the filing of a Claim Petition against the Fund, 21 days after notice of the claim has been given to the Fund. The Claim Petition must name both the uninsured employer and the Fund as defendants.

The Fund may investigate the employer’s uninsured status, and seek reimbursement against the uninsured employer.

It permits the Fund to investigate the employer’s uninsured status, as well as to seek reimbursement against the uninsured employer for any and all workers’ compensation benefits that the Fund assumed on behalf of the uninsured employer. It also permits the Fund to perfect statutory liens against the uninsured employer’s property. This Section does not, however, abrogate the claimant’s right to bring a direct civil action for damages at law against the uninsured employer.

Conclusion

The most far-reaching of the proposed amendments is the establishment of the Uninsured Employers Guaranty Fund and its attendant costs on insurers and self-insured employers.

The procedural amendment

The procedural amendments regarding Resolution Hearings, Mediation and Case Administration are practical measures intended to expedite the resolution of claims, as well as to codify case management issues.

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