In 1996, Pennsylvania enacted reforms to ease the burden on employers seeking suspension or modification of an injured employee’s benefits under the Workers’ Compensation Act. Unfortunately, Pennsylvania Commonwealth Court decisions have undermined the reforms.
In general, workers’ compensation indemnity benefits are based upon earning capacity. An injured employee’s weekly compensation is based upon the extent that his or her work injury has caused a loss of earning capacity. An employer seeking suspension or modification of a claimant’s weekly benefits must accordingly demonstrate that the claimant’s “earning power” has increased.
Prior to the 1996 reforms, the Pennsylvania Workers’ Compensation Act did not specifically provide for a method for the calculation of increased “earning power” for employers seeking a suspension or modification of an injured employee’s benefits. In Kachinski v. WCAB (Vepco), 516 Pa. 240, 532 A.2d 374 (1987), the Pennsylvania Supreme Court attempted to fill this gap. Under Kachinski and its progeny, an employer seeking suspension or modification had to establish medical clearance within a general level of employment and then provide referral of an actual job to claimant within such medical clearance. Many employers found the Kachinski guidelines unduly burdensome, and they produced an endless flood of unpredictable appellate litigation.
In 1996, Act 57 set forth specific guidelines for determining increased “earning capacity” for the purpose of modifying or suspending a claimant’s benefits. The amendments provided that “earning power” shall be determined upon the work the employee is capable of performing and shall be based upon expert opinion evidence which includes job listings in the “usual employment area.” Section 306(b)(2), as amended, eliminates the Kachinski burden of proving actual job referral where there exists no suitable light duty employment at claimant’s pre-injury place of employment.
Unfortunately, the 1996 amended “earning capacity” system of Act 57 has been hindered by recent decisions from panels of the Commonwealth Court in Caso v. WCAB (School District of Phila.) and Walker v. WCAB (Temple). In these cases, Commonwealth Court judges held that the vocational counselor performing job market surveys had to be certified and pre-approved by the Department of Labor. The Department of Labor, however, had not yet issued a list of pre-approved experts. The Court rejected the employer’s arguments that the vocational experts selected by the employer could be approved by the Worker’s Compensation judge and that the experts otherwise met the qualifications set forth by the Workers’ Compensation Bureau Regulations in 34 Pa. Code §123.201 - 123203. Under Caso and Walker, there existed no competent vocational expert opinion from which to determine increased earning power for the purpose of obtaining modification or suspension.
Some of Act 57’s amendments remain valuable tools to reduce exposure and resolve ongoing claims. Under Section 306(a.2), a claimant’s ongoing disability benefits can be capped through obtaining an Impairment Rating Evaluation from a physician appointed by the Workers’ Compensation Bureau, provided that the examining physician determines that the claimant’s impairment is less than fifty percent. Also, parties can mediate claims through an informal conference under Section 402.1(a). Finally, Section 449 of the Act allows for full and final settlement of both disability and medical claims through a Compromise and Release Agreement. These tools should be evaluated on a ease by case basis.
Hopefully, the panel rulings in Caso and Walker are not the last word. It is expected that these decisions will be corrected by remedial action by the Department of Labor to provide certification for vocational counselors. Pennsylvania employers and insurers will then – finally -- have a more effective means to reduce or eliminate their ongoing exposure of continued disability benefits. In the meantime, employers and their insurers should consult with counsel to determine the best course of action in proceeding with any pending efforts to obtain modification.