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The Pennsylvania Supreme Court Decides the Protz Case

by | Aug 15, 2017 | Employment Law, Farrell, Michael A, Industry News

By Michael A. Farrell

Worker's Compensation

On June 20, 2017, the Pennsylvania Supreme Court handed down its decision in Protz v. WCAB (Derry Area School District). The Protz decision rendered unconstitutional, Section 306(a)(2) of the Pennsylvania Workers’ Compensation Act, eliminating the use of an impairment rating evaluation in order to change the disability status of an injured worker from total to partial thereby limiting the injured worker to 500 weeks of benefits. At the heart of the Court’s decision, the Supreme Court recognized that the integrity of the legislative function is vital to the preservation of liberty. While the General Assembly, under some circumstances, is permitted to delegate the authority and discretion to execute or administer laws, it found that 306(a)(2) of the Workers’ Compensation Act lacked any of the procedural safeguards that the Court considers essential to protect the authority and discretion of legislative decision-making.

Once finding that the offending language of Section 306(a)(2) did not pass constitutional muster, the Court determined that without Section (a)(2) the remainder of that Section of the Act would be rendered incomprehensible. Accordingly, it struck down that Section of the Act, in its entirety.

In the wake of that decision lies the unanswered question of what effect does the Court’s holding have on cases that have affected an injured worker’s disability status through the use of the impairment rating evaluation and what clarification and/or guidance can we expect from the courts and/or the legislature? Also, what effect will the holding in Protz have on the administration of future workers’ compensation claims?

In its decision, the Pennsylvania Supreme Court did not specifically state that its holding was to be applied retroactively, although that would appear to be the logical application of the holding. Nevertheless, there is precedent for the argument that in any case in which the issue in question has not been properly preserved at every stage of the proceding, that issue is deemed waived. Using that argument as applied to all cases in which an injured worker’s disability status has been changed from total to partial through the use of the impairment rating evaluation, unless the constitutionality issue had been preserved at all stages of adjudication, the courts may well determine that the constitutionality issue is waived and that the injured worker does not have the opportunity to have his or her disability status reverted to total disability. Additionally, the courts can consider the effect that a retroactive application would have on the Workers’ Compensation Adjudication System in determining whether or not the holding of the Court is to be applied retroactively.

Another obvious effect that the Court’s holding in Protz will have on the administration of workers’ compensation claims is that employers can no longer utilize the tool of an impairment rating evaluation to limit the exposure presented by a workers’ compensation claim. Accordingly, it is likely that other traditional tools for the administration and limitation of the exposure presented by workers’ compensation claims will have to be utilized, such as earning power assessments followed by labor market surveys and the filing and litigation of modification and suspension petitions. A more immediate effect of the Protz holding is that reserves placed on workers’ compensation claims will have to be adjusted upward to account for the likely extended period of time that claims will have to be paid while the process of having a vocational evaluation performed followed by a labor market survey and the litigation of the appropriate petition is proceeding. Accordingly, I would expect to see an uptick in the use of vocational experts to perform earning power assessments and labor market surveys to attempt to control the ongoing exposure presented by workers’ compensation claims.

Finally, with respect to the workers’ compensation claims that have been resolved through settlement, I fully expect that the resolution of those claims will remain undisturbed by the Protz decision. The case law is well settled that compromise and release agreement can only be set aside for fraud, misrepresentation, concealment or mutual mistake of fact. The settlement was a bargained for transaction by the parties, both of whom understood the terms and effects of the settlement.

Having said all the above, all workers’ compensation practitioners are looking towards the courts and/or legislature for guidance on the application and effect of the Protz decision on the future administration and litigation of workers’ compensation cases.