December 6, 2006

IRE
Update

In Schachter v. WCAB, decided by the Commonwealth Court on October 12, 2006, the Court ruled that an impairment rating evaluation, resulting in a medical opinion that a workers’ compensation Claimant had been assigned a permanency rating for the work-related disability, should not attach res judicata for purposes of precluding the employer from seeking a subsequent termination of compensation based on a medical opinion that the Claimant has fully recovered from the work injury.

Res judicata, often referred to as issue preclusion, for all who did not take their SATs in Latin, simply means “the thing has been judged.” In other words, it means that the issue currently being litigated between the parties has already been decided by another court, and that the issue cannot, therefore, be re-litigated.

In Schachter, the Commonwealth Court rejected the Claimant’s argument that an IRE establishing a 6% impairment rating precluded an employer from filing and litigating a termination petition based on the subsequent independent medical examination resulting in an opinion that the Claimant was fully recovered from the work injury.

In Schachter, the Claimant was employed as an electronics technician. In 2000, he slipped and fell at work, sustaining a right knee medial meniscus tear.

The Claimant’s injury was accepted as being work-related and compensable with the employer/insurer issuing a Notice of Compensation Payable.

In 2003, the employer/insurer filed a Notice of Change, reflecting that the Claimant’s compensation benefits were being “converted” from total to partial disability.

In 2003, the Claimant attended an impairment rating evaluation at the request of the employer/insurer, with the Claimant being assigned a 6% impairment. In reliance upon the Claimant’s whole person impairment being less than 50% under Act 57, the employer/insurer filed a Notice of Change, reflecting that the Claimant’s compensation benefits were being “converted” from total to partial disability, thereby entitling the employer/insurer to limit the payment of partial disability to the statutory cap of 500 weeks.

An IME in 2004 resulted in the IME examiner concluding that the Claimant had fully recovered from the work injury, with the employer/insurer filing a termination petition.

Subsequent to the IRE and Notice of Change, the employer referred the Claimant for an independent medical examination in 2004. That examination resulted in the IME examiner concluding that the Claimant had fully recovered from the work injury, with the employer/insurer filing a termination petition, seeking a termination of compensation as of the date of the Claimant’s IME.

Claimant sought unreasonable contest attorneys’ fees, arguing that the IRE rating precluded the employer/insurer from seeking a termination.

In support of the termination, the IME doctor testified on behalf of the employer/insurer. In opposition to the termination, the Claimant testified that he did not believe that he had fully recovered from his work injuries, with the Claimant also presenting the deposition testimony of the treating physician who had performed arthroscopic surgery on the Claimant’s injured knee in 2001. In addition, the Claimant sought unreasonable contest attorneys’ fees, arguing that the IRE rating precluded the employer/insurer from seeking a termination based on there being a prior finding of a “permanent” injury.

The workers’ compensation judge denied the termination petition, further finding that the testimony of the Claimant and that of his treating physician were more credible than the testimony of the IME physician. The workers’ compensation judge also concluded that the employer/insurer’s contest had been unreasonable, with the Claimant being awarded unreasonable contest attorneys’ fees.

The Appeal Board reversed the judge’s award of attorneys’ fees for an unreasonable contest.

An appeal was filed by the employer/insurer, with the Appeal Board affirming the denial of the termination petition. However, the Appeal Board reversed the judge’s award of attorneys’ fees for an unreasonable contest. The Board, in reversing the unreasonable contest attorney fee award, concluded that the workers’ compensation judge could have credited the testimony of the IME physician, in which case the employer/insurer should have prevailed as to the reasonableness of its contest.

The Claimant appealed the Appeal Board’s denial of unreasonable contest attorneys’ fees. In his appeal to the Commonwealth Court, the Claimant argued that the employer/insurer should have been precluded from seeking to terminate compensation benefits based on the IRE, which pre-dated the IME, resulting in the Claimant being assessed with a 6% permanent disability.

Claimant argued that the impairment rating should have acted as res judicata as to the permanency of his disability, forever precluding the employer/insurer from challenging the permanency of his injury.

Simply put, the Claimant argued that the impairment rating should have acted as res judicata as to the permanency of his disability, forever precluding the employer/insurer from challenging the permanency of his injury, with any post-IRE challenge filed by the employer/insurer being per se unreasonable. Claimant argued that the Notice of Change filed by the employer/insurer should have constituted a judicial admission that the Claimant’s condition was irreversible, and not subject to statutory challenge.

The Schachter Court’s review of the judicious body of res judicata workers’ compensation decisions included the Pennsylvania Supreme Court’s decision in Hebden v. WCAB, 632 A.2d 1302 (Pa. 1993), in which the Supreme Court had held that an employer would not be permitted to re-litigate, in subsequent petitions, a medical diagnosis that had formed the basis of a Claimant’s original compensation award. In so holding, the Hebden Supreme Court had held:

“We do not lose sight of the fact that the Workers’ Compensation Act and Section 413 (77 P.S. § 772) expressly provides that an award may be terminated based upon changes in the employee’s disability. But that raises the logical question of whether an employee’s disability is changeable in a given case. If it is, an employee’s condition may be re-examined at a later time to see if he is still disabled or not. If it is not, an attempt to re-examine the employee’s condition is merely a disguised attempt to re-litigate what has already been settled. We think that the latter is what occurred here.”

Id., 632 A.2d @ 1304.

Commonwealth Court held that Hebden established that res judicata “only precludes a challenge to a Claimant’s current disability status if the Claimant’s permanent disability is clearly irreversible.”

Applying the Hebden res judicata principle to the Claimant’s appeal in Schachter, the Commonwealth Court held that Hebden established that res judicata “only precludes a challenge to a Claimant’s current disability status if the Claimant’s permanent disability is clearly irreversible.” Referring to the definition of “impairment” in Act 57, wherein the legislature had defined that term as “an anatomic or functional abnormality or loss that results from the compensable injury and is reasonably presumed to be permanent.” The Schachter Court held that there was no evidence of record proving that the Claimant’s right knee injury constituted an irreversible condition.

The adoption of the Claimant’s argument in Schachter, assuming arguendo that it had any validity, would mean that any impairment rating greater than 0% would forever preclude an employer/insurer from attempting to modify or terminate compensation benefits in reliance upon any medical examination post-IRE.

Commonwealth Court rejected the Claimant’s claims for attorneys’ fees, holding that the doctrine of res judicata would not bar an employer from challenging the Claimant’s post-IRE disability status.

Holding that the Claimant’s res judicata argument should not have precluded the workers’ compensation judge, or any appellate court, from considering whether the Claimant’s injury constituted a “reversible” condition, the Commonwealth Court further rejected the Claimant’s claims for unreasonable contest attorneys’ fees, holding that the doctrine of res judicata would not bar an employer/insurer from challenging the Claimant’s post-IRE disability status.

Practical Tips

This decision is very favorable to employers, insurers, and third-party administrators.

Obviously, this decision is very favorable to employers, insurers, and third-party administrators, as it does not preclude employers from utilizing the limited arsenal available under the Pennsylvania Workers’ Compensation Act for purposes of challenging both permanency and disability, concepts that are fluid and reversible from the employer’s perspective, and are static and inflexible from the Claimant’s perspective.

The Schachter decision is also in line with medical science, if not with the overriding artifice of compensationitis.

While it is difficult to quibble with the judge’s decision to deny the termination petition, there is greater confusion with why the workers’ compensation judge would have awarded unreasonable contest attorneys’ fees, as the employer presented the deposition testimony of a board-certified orthopedic surgeon, whose opinion was that the Claimant, obviously not Pro Bowl bound, had fully recovered from an injury which was limited to a torn medial meniscus, and which simply required an arthroscopic surgery.

Meanwhile, the Claimant testified that he was so incapacitated, three years post-surgery, that he would have to crawl upstairs, and that he actually suffered “excruciating pain” at least twice a week, necessarily precluding — and this being the real issue of preclusion in the case — the Claimant from returning to work as an electronics technician.

Questions

Questions concerning this decision and like issues involving workers’ compensation litigation practice and procedure, can be directed to our workers’ compensation department attorneys.

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