August 18, 2006

The Check
Is in the
Mail

The Pennsylvania Supreme Court’s recent opinion in Romaine v. WCAB, decided on June 22, 2006, analyzes a critical fact dispositive to raising a Statute of Limitations defense to a Claimant seeking reinstatement of compensation following a Judge-ordered termination of compensation.

Romaine involved a Claimant who received workers’ compensation benefits for a work-related lumbar strain that occurred in 1990. A Termination Petition, seeking a termination as of August 6, 1991, was granted by the WCJ on December 16, 1994.

The Claimant appealed the WCJ’s termination, with the Appeal Board affirming that Decision. No appeal was taken by the Claimant to the Commonwealth Court’s affirmance of the Board’s Decision.

On December 16, 1997, the Claimant mailed a Reinstatement Petition to the Bureau. It was received by the Bureau on December 18, 1997. A timely Answer was filed by the Employer.

The Claimant’s Petition was then heard by Judge Alan Gilbert, who, in denying the Claimant’s Reinstatement Petition, concluded that the Petition had not been timely filed under Section 413 of the Act. Judge Gilbert concluded that the Claimant’s Petition was filed more than three years after the date on which the last compensation payment check had been issued to the Claimant.

The critical issue in Romaine became what was the controlling date for purposes of tolling that Statute of Limitations.

In determining that the Claimant’s Petition was time-barred under the Statute of Limitations, Judge Gilbert held that Section 413(a) states in pertinent part: “a Workers’ Compensation Judge designated by the Department, may, at any time, modify, reinstate, suspend, or terminate a Notice of Compensation Payable or an original Supplemental Agreement or an award of the Department of Workers’ Compensation Judge upon Petition filed by either party with the Department, upon proof that the disability of an injured employee has increased, decreased, or recurred, or has temporarily or finally ceased … Provided That except in the case of eye injuries, no Notice of Compensation Payable, Agreement, or Award shall be reviewed, or modified, or reinstated, unless a Petition is filed with the Department within three years after the date of the most recent payment of compensation made prior to the filing of such Petition”. From this ruling, the critical issue in Romaine became what was the controlling date for purposes of tolling the Statute of Limitations for reinstatement purposes.

The Supreme Court held that a check constitutes conditional payment until it is either paid or dishonored, and that the controlling date was the date on which the last check was received.

First discussed by the Supreme Court was Pennsylvania’s law of negotiable instruments, with the Supreme Court holding that a check constitutes conditional payment until it is either paid or dishonored, and that the controlling date, for its Statute of Limitations analysis in Romaine, was the date on which the Claimant received her last compensation payment check. The Supreme Court held that “the date of payment for purposes of the obligation or the running of a Statute of Limitations becomes the date the check was delivered to the payee and not the date the check was deposited or cashed or the date that the funds were transferred by the bank from which it was drawn.”

Twenty-four states are in agreement with the transactional rule adopted by the Supreme Court.

Analyzing rulings in sister states, the Supreme Court noted that 24 states are in agreement with the transactional rule adopted by the Supreme Court, being that the date on which the check is delivered to the Claimant is the controlling date for purposes of the tolling of the statute of limitations. Some states considered the payment date to be the date the check was mailed, with some states finding the payment date to be the date the check was cashed.

Likewise referring to Pennsylvania’s Uniform Commercial Code, the Court concluded that “a check is a ‘draft… payable on demand and drawn on a bank’ ”, Citation 13 Pa. C.S. §3104(f)(1).

In simplest terms, the Supreme Court concluded that the date that controlled for purposes of tolling the Statute of Limitations was the date that the Claimant received her last payment of compensation benefits. No evidence as to that date was ever presented to the WCJ by the Claimant, although the Claimant, through counsel, had suggested that the Claimant had received her last compensation payment check on December 19, 1994, more than three years prior to the Claimant filing her Reinstatement Petition.

Concluding that the Claimant had failed to present sufficient evidence to establish that a Reinstatement Petition was filed within the applicable statutory time limitations, the Supreme Court held that the Claimant’s failure to present evidence on that critical issue was fatal to her Petition.

The Supreme Court's decision begs the question as to how, in subsequent litigation, proof of that issue can be objectively established without reference to a Claimant’s self-serving and claim-preserving testimony.

Noting that there are five operative dates in the life of a check, being the date the check is cut, the date it is mailed, the date it is received, the date it is cashed or deposited, and the date upon which it is honored or dishonored, the Supreme Court has now held under Romaine that the only date of importance in the life of a check, for purposes of the statute of limitations under Section 413(a) of the Act, is the date upon which the compensation check is received by the Claimant, begging the question as to how, in subsequent litigation, proof of that issue can be objectively established without reference to a Claimant’s self-serving and claim-preserving testimony.

Likewise, how can an Employer disprove a Claimant’s self-serving testimony as to the date of receipt of a final compensation check, especially when years have passed and no documentation, other than the Employer’s payment log, the check itself, and documents confirming negotiation of the check, can be produced?

There is no discussion in Romaine as to whether the Claimant would have been able to present substantial competent evidence to prove a worsening in her physical condition such that she might have otherwise been entitled to a reinstatement of compensation.

Romaine dealt exclusively with the Statute of Limitations issue, and the Claimant’s failure to present any evidence to establish the date that she received her last compensation check. There is no discussion in Romaine as to whether the Claimant would have been able to present substantial competent evidence to prove a worsening in her physical condition such that she might have otherwise been entitled to a reinstatement of compensation.

Presumably, Judge Gilbert bifurcated litigation of the issues under Claimant’s Reinstatement Petition, allowing the parties to argue and brief the Statute of Limitations defense prior to the parties proceeding with substantiative evidence as to the Claimant’s alleged recurrence of her disability.

Concurring opinions by Justices Cappy, Eakin, and Saylor agreed with the majority opinion of Justice Sandra Newman that the payment of a compensation check occurs upon receipt by the payee, but the concurring Justices took issue with Justice Newman’s allocation of the burden of proof regarding satisfaction of the Statute of Limitations under Section 413 of the Act, with the concurring Justices concluding that the Statute of Limitations merely extinguished a remedy rather than a right, as opposed to Justice Newman who had asserted that the Statute of Limitations “operates as a bar to the right as well as the remedy”.

Practical Tips

Although Romaine is favorable to employers, it is nevertheless an administratively burdensome decision.

Although Romaine is a decision favorable to Employers in that it affirms the substance and ramification of the Statute of Limitations under Section 413(a) of the Act after any change in the Claimant’s compensation status, it is nevertheless an administratively burdensome decision in that it offers no insight into what evidence, if any, the Claimant would have had to present in order to sustain her burden of proof as to proving the date on which she received her last payment of compensation. With Claimant presenting no evidence on that issue, it remains unclear as to what evidence the Court would have found dispositive for purposes of proving that point.

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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