April 8, 2009

To Be,
or Not To Be
Reimbursed

With the Bureau having been progressively more aggressive in its administrative denials and challenges to employers/insurers Supersedeas Fund Reimbursement Applications, the Commonwealth Court’s February 2, 2009 Decision in Department of Labor and Industry v. Crawford and Company is an all too welcome key to unlocking the Bureau’s Supersedeas Fund vaults, filled with dollars, shrinking in value as we speak, long ago paid by/assessed against, the very employers and insurers merely seeking reimbursement of funds finally adjudicated as never having been owed in the first place.

It is an administrative anomaly of transcendental irreverence, compelling ongoing frustration and expense, in the pursuit of the Bureau’s fiscally frugal incivility.

In the Commonwealth Court’s recent Decision, the Court considered the Bureau’s appeal of the Appeal Board’s affirmance of the WCJ’s Decision, granting the Supersedeas Fund Reimbursement Application of Crawford and company, identified as the insurer in the Court’s opinion. The Bureau contended in its appeal that the Appeal Board and WCJ had erred in granting Crawford’s Supersedeas Fund Reimbursement request.

The Bureau argued that Crawford could not seek reimbursement, as it was seeking reimbursement for medical bills that were for treatment incurred prior to the date on which Crawford first filed its Application.

Specifically, the Bureau argued that the underlying orders granting and awarding Supersedeas Fund Reimbursement should be reversed and overturned, as a matter of law, as the Bureau argued that Crawford could not seek reimbursement from the Supersedeas Fund, as it was seeking reimbursement for medical bills that were for medical treatment incurred prior to the date on which Crawford first filed its Application for Supersedeas Fund Reimbursement (LIBC-662).

The factual and procedural background of the claim involved the Claimant being injured in 1995, with the decision being silent as to whether the employer/insurer filed a Bureau document, accepting the claim, and there being no specific reference in the Court’s opinion to a Notice of Compensation Payable being filed, although compensation benefits were continuously paid to the Claimant.

In any event, the next date referenced in the Court’s opinion is the reference to the Claimant requiring medical treatment on June 1, 2004. Again, the opinion is silent as to whether the employer/insurer agreed that the treatment was work-related.

On July 19, 2004, parenthetically, this undersigned’s birthday, although we will not say which one, the employer/insurer filed a Termination Petition, requesting that compensation be terminated as of March 16, 2004, with the employer/insurer requesting Supersedeas, with the employer/insurer’s petition and Supersedeas request suggesting that the Claimant’s 1995 injury had been accepted as work-related and compensable, with the Claimant receiving uninterrupted workers’ compensation benefits.

On August 30, 2004, the WCJ denied the Supersedeas request, with the employer/insurer receiving a medical bill for approximately $35,000.00, for the June 1, 2004 medical treatment, on October 11, 2004. The medical bill was paid by the employer/insurer on January 25, 2005.

On June 28, 2005, the WCJ granted the employer/insurer’s Termination Petition, with the Appeal Board affirming the termination.

The Bureau denied the employer’s application on grounds that the “treatment was rendered to the Claimant prior to the request for Supersedeas.”

In the wake of its Termination Petition being granted, with an effective termination date as of March 16, 2004, 78 days before the June 1, 2004 medical treatment was administered to the Claimant, the employer/insurer filed an Application for Supersedeas Fund Reimbursement with the Bureau. The Bureau denied the employer/insurer’s application, on grounds that the “treatment was rendered to the Claimant prior to the request for Supersedeas,” with the Bureau taking the position that the medical bills for which Supersedeas reimbursement was being sought, were not subject to the Supersedeas Fund Reimbursement provisions of the Act.

The WCJ concluded otherwise, with the WCJ granting the employer/insurer’s Supersedeas Fund Application, ruling:

“It is not the date of service that causes the compensation to be due. It is the date when the bill is properly presented. This matter was due on the date the bill was filed …. this was an obligation that arose after the petition (for Supersedeas) was filed and the Supersedeas was denied. A service date generates a potential claim but there is no duty to pay until the bill is presented.”

Affirming the WCJ’s decision, the Appeal Board ruled that “as the obligation for payment of the medical bill, and the payment thereof, occurred after the request for Supersedeas was made and denied, it was not error for the WCJ to grant insurer’s Application for Supersedeas Fund Reimbursement.

Seeking protection of its hardly-earned Supersedeas dollars, the Bureau appealed to the Commonwealth Court, arguing that Supersedeas Fund Reimbursement requests can never be granted or ordered for any compensation benefits, either owed or paid, before Supersedeas is both requested and denied.

Contending that the medical services that resulted in the medical bill for which the employer/insurer was seeking Supersedeas reimbursement occurred prior to the employer/insurer’s Supersedeas request being perfected, let alone denied, resulting in compensation benefits being paid for medical treatment later found to post-date the effective date of termination of compensation benefits based upon a final adjudication of the Claimant fully recovering from the work injury, the Bureau argued that the Commonwealth Court’s rulings in Stonebraker, 641 A.2d 655 (Pa. Cmwlth. 1994), later superseded by Section 413(a.1)-(a.2) of the amended Act, and Hooper, 746 A.2d 1175 (Pa. Cmwlth. 2000), supported its argument that Supersedeas reimbursements can only be granted for employer/insurer compensation payments made following the denial of Supersedeas, and not for any period of disability or medical treatment preceding the Supersedeas request being perfected and denied.

Arguing that employer and insurers would be encouraged to withhold compensation payments to follow the denial of Supersedeas, to shamefully insure the ability to seek reimbursement, the Bureau insisted that Crawford’s payment post-denial of Supersedeas for treatment rendered before Supersedeas was requested, negated the employer/insurer’s right to seek reimbursement from the Fund.

The Commonwealth Court took a hard look at reimbursement application law before the Supersedeas Fund.

Relying upon Mark, 894 A.2d 229 (Pa. Cmwlth. 2006), the Commonwealth Court took a hard look at reimbursement application law before the Supersedeas Fund, citing the Mark principle that reimbursement from the Fund “may be had for all payments actually made after Supersedeas denial, including payment of benefits awarded retroactively for earlier periods of disability”.

Mark involved years of litigation over a Claim Petition, with the Claimant first being granted ongoing compensation benefits by the WCJ, and the Claimant later having been found to have fully recovered from the work injury, with the employer/insurer seeking Supersedeas reimbursement for all compensation benefit payments made subsequent to its initial request for Supersedeas being denied in the course of appealing the WCJ’s first decision, granting the Claimant ongoing compensation benefits, to the Appeal Board, with the Board denying that Supersedeas request.

In the course of ruling on the employer/insurer’s appeal, the Board reversed the WCJ’s findings and conclusions that the Claimant had ongoing disability, resulting in a remand back to the WCJ level, with a second WCJ concluding that the Claimant had fully recovered from the work injury almost 2 years prior to the first WCJ’s decision awarding ongoing compensation, and before the employer/insurer had filed for, requested, and been denied Supersedeas.

In Mark, the Commonwealth Court noted that there are two Supersedeas Fund Reimbursement provisions under the Act, citing to Sections 413 and 430 of the Act.

Section 413 is, of course, well-known to empower the granting of Supersedeas in the context of employer-filed petitions for termination, suspension, and modification. Such Supersedeas requests are directed to WCJ’s, and are routinely denied, for the benefit of compensation neophytes.

Section 430 Supersedeas requests are made to the Appeal Board, or to the Commonwealth Court, seeking the suspension of liability for making compensation payments under a decision by a WCJ or by the Appeal Board.

Under a Section 430 Supersedeas request, retroactive compensation benefits can be suspended when there is “no previously established compensation liability or where liability is reinstated or enlarged …. these benefits accrue during the course of litigation and not from a unilateral cessation of payments under a previously-established liability”.

Citing to Section 443 of the Act, the Mark Court held that its focus, in ruling on the Supersedeas issue before it, was on the “payments made” rather than “on periods of disability”. Since Section 443 makes no reference to either disability or liability, and is statutorily only predicated on “payments of compensation made as a result of a denied Supersedeas request”, the Mark Court had held that neither Section 443, nor the Act, contained any specific prohibition against the Fund’s reimbursement of retroactive compensation benefits, for benefits paid before Supersedeas is either requested or denied.

The Commonwealth Court held that where compensation benefits accrue during litigation, the Supersedeas Fund is liable for the reimbursement of retroactive benefits paid after Supersedeas is denied.

Relying as well on Consolidated Freightways, 876 A.2d 1069 (Pa. Cmwlth. 2005), involving a Supersedeas request under Section 430 of the Act, the Commonwealth Court held that where compensation benefits accrue during a litigation process, the Supersedeas Fund is liable for the reimbursement of retroactive benefits paid after Supersedeas is denied, even though the benefits, in Consolidated Freightways, were attributable to a period of disability prior to Supersedeas being requested.

Finding that the arguments made by the Bureau in Consolidated Freightways, were “circular”, the Commonwealth Court rejected the Bureau’s argument that neither Mark nor Consolidated Freightways governed the facts or procedural background on Crawford’s request for Supersedeas Fund Reimbursement, with the Commonwealth Court, in an opinion authored by Judge Jubelirer, ruling that Mark was controlling, notwithstanding minor factual differences, a key one being that Crawford had held the requisite medical evidence to have filed for termination and to have requested the Supersedeas in question, before the Claimant underwent the medical treatment and incurred the medical bills, that eventually became the subject of the litigation over Crawford’s request for Supersedeas Fund reimbursement.

Dispelling the Bureau’s argument that Crawford involved Section 413 of the Act, as opposed to Sections 430 or 443, the Court held, in a ruling of substance over form, that there was “no plain language prohibiting reimbursement of retroactive benefits”, as the Mark Court convincingly had ruled in its opinion, relying upon Section 443 of the Act.

In summary, the Commonwealth Court has ruled that “it does not matter that the date of service of the medical expenses in question preceded the request for Supersedeas – what matters is that the treatment in question was later determined to be ineligible for payment, and the bill for that treatment was submitted to and paid for by the insurer after Supersedeas was requested and denied”.

A dissenting opinion was issued by Judge Pellegrini, with the dissent concluding that Supersedeas reimbursements are only “allowed for payments of compensation that were made because the Supersedeas request was denied”, with the dissent concluding that the payments for which reimbursement was sought in Crawford, would have had to have been paid, whether Supersedeas was granted or denied.

In the dissent’s opinion, the only fact of relevance is that Supersedeas was requested after the medical treatment, resulting in the medical bills being incurred, with the dissent contending that the Act does not permit the reimbursement of retroactive compensation benefits, payable for any period, or reason, prior to the employer/insurer’s Supersedeas request.

Where does Crawford leave us, in terms of successfully seeking reimbursement from the Supersedeas Fund?

Crawford should empower employers to aggressively prosecute reimbursement requests.

Well, it should empower employers and insurers with both the confidence and legal authority to aggressively prosecute reimbursement requests before the Supersedeas Fund.

Should reimbursements increase, it will likely also result in an increase in employer/insurer assessments by the Fund, hedging against future reimbursements.

It should result in a more responsive and responsible review and adjudication by the Supersedeas Fund of reimbursement requests.

And it will, absent reversal by the Supreme Court, effectuate more favorable reimbursement results before the Supersedeas Fund.

Questions concerning this Decision or its impact should be directed to our workers’ compensation attorneys, and/or to the undersigned.

— Kevin Connors