November 17, 2006

House Bill 2738
Amendments to the Pennsylvania Workers' Compensation Act

On October 24, 2006, House Bill 2738 received a 198-0 vote by the Pennsylvania House of Representatives, with the bill having already been approved by the Senate, subject to minor revisions. Governor Rendell has signed the Bill, amending the Workers’ Compensation Act to include the following amendments.

1. Minimum Compensation Rate. The minimum compensation payable rate effective for injuries that occurred before August 31, 1993 will increase from $90.00 to $100.00 per week.
2. Resolution Hearings.  The bill establishes specific procedures to expedite hearings, and deciding approval of Compromise and Release Agreements.
3. Mediation. The bill makes changes to Bureau-administered mediation procedures.
4. Case Administration. Case management trial schedules become mandatory for compensation cases.
5. Workers’ Compensation Appeal Board. The bill sets administrative procedures and ethical requirements for the Appeal Board.
6. Judges’ Pay. The bill establishes higher pay level for workers’ compensation judges.
7. Uninsured Employers Guaranty Fund. It also establishes an Uninsured Employers Guaranty Fund.

The Amendments are briefly described below.

Minimum Compensation Rate

The compensation rate applicable to any claimant receiving minimum compensation for injuries, occurring on or before August 31, 1993, has increased from $90.00 to $100.00 per week. The increase is to be funded by the Commonwealth, by appropriation and reimbursed in advance to carriers, administrators or self-insured employers.

Resolution Hearings

House Bill 2738 establishes 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’s 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 mediations.

Case Administration

The Amendments 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 requires judges to strictly enforce their schedule, with any deviation there from 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 procedures for the Appeal Board, mandating 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 opinion writers. If the Board grants a rehearing, it is to be conducted en banc.

Judges’ Pay

A provision has been 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 amendments establish an Uninsured Employers Guaranty Fund to provide compensation benefits to claimants 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.

In the initial year, there will be an assessment of seven percent 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 Section 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 can 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.

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 newly-enacted amendments is the establishment of the Uninsured Employers Guaranty Fund, with its attendant costs on insurers and self-insured employers.

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.

Questions

Questions concerning this decision, or any questions involving casualty litigation or workers’ compensation practice and procedures, can be directed to our workers’ compensation attorneys.

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