The Supreme Court of Pennsylvania issued a Decision on June 20, 2017, which affected how impairment rating examinations are performed in the Commonwealth of Pennsylvania.  The Protz v. W.C.A.B. (Derry Area School District) case invalidates the current impairment rating examination legislation in the Commonwealth of Pennsylvania and finds it unconstitutional. The Court’s Decision has struck down all impairment ratings in the Commonwealth of Pennsylvania as if they never existed.

Prior to the Decision in Protz, the employer had the capacity to request an impairment rating examination of a Claimant.  This examination would occur at the expiration of the employee’s receipt of 104 weeks of total disability benefits. After the 104 weeks passed, there is a 60 day period during which the impairment rating examination could be scheduled. If the determination was properly requested under §123.102, an impairment rating examination physician could be scheduled to perform a physical examination on the Claimant.  If the evaluation resulted in an impairment rating of less than 50%, the employee’s receipt of benefits would change from total to partial disability in character. Under the Pennsylvania Worker’s Compensation Act, a Claimant may only receive partial disability for 500 weeks. Thus, before the Protz Decision, an impairment rating of less than 50% resulted in the limitation of the Claimant’s benefits to 500 weeks of partial disability.  As a practical matter, this meant that the Claimant could receive about ten years of partial disability benefits after which his benefits would be terminated.

The Protz Decision revolved around what edition of the American Medical Association Guides to the Evaluation of Permanent Impairment were used in the determination of the 50% rating. The American Medical Association (AMA) publishes a book called the Guides to the Evaluation of Permanent Impairment. This guide is revisited by the AMA periodically, and new versions are promulgated and published. These new versions often change how the 50% disability is calculated. For instance, one of the changes made over the years was to the evaluation of how pain was characterized. Pain was originally viewed as an individual percentage to be added to the total impairment percentage. However, it was at some point changed so that it was combined with a disability percentage of another condition and was not accounted for separately.

As stated under the Pennsylvania Worker’s Compensation Act, in order to make the assessment as to the total percentage of disability, the Act required physicians to apply the methods set forth in what the Act referred to as “the most recent edition” of the American Medical Association Guides to the Evaluation of Permanent Impairment. In Protz, the Claimant argued before Worker’s Compensation Judge that the legislature unconstitutionally delegated to the American Medical Association, the authority to establish the criterion for evaluating permanent impairment. What this meant was that every time the AMA changed the way the impairment was calculated, this had the effect of creating/changing the law.  The AMA is not a legislative body and therefore, the Claimant argued the law unconstitutionally gave legislative authority to the AMA.

The Workers Compensation Judge ruled for the employer and granted the petition, changing the character of Claimant’s benefits from total to partial in nature. The matter was appealed to the Commonwealth Court. The Commonwealth Court agreed with the Claimant and held that the legislature alone has the power to make laws and cannot constitutionally delegate that power to other branches of the government or to any other body including the American Medical Association. The Court indicated that the Act was devoid of any articulation of public policy governing the AMA and the Act lacked any standard and guide to restrain the AMA’s exercise of delegated power to create methods for grading impairment. The Court stated that the AMA is not a governing body and that the legislature was not allowed to delegate to the AMA the right to change the way impairment was calculated.

The matter was appealed to the Supreme Court of Pennsylvania with the Claimant alleging that the law violated the non-delegation of power doctrine embodied in the Constitution because it gave the AMA unfettered discretion over Pennsylvania’s impairment rating methodology. The question before the Court was whether the legislators had delegated legislative power in a way that provided adequate standards to guide and restrain the exercise of the AMA’s administrative functions. The Court found that the authority delegated to the AMA under the Act was very broad and unrestrained. The Court indicated that there was no actual legislative oversight over the AMA and that the AMA had complete discretion to change anything that it wanted to about how the level of impairment was calculated.  Thus, the Court explained that the law was unconstitutional.   

The Court also indicated that the holding should not be read as a complete endorsement or rejection of the Commonwealth Court’s view that the delegation of authority to a private actor is per sé unconstitutional. Thus, the Court struck from the Act the entirety of §306(a.2) because it could not separate this language from the rest of the impairment rating provision of the Act.  

As a practical matter, the Court has struck down all impairment ratings in the Commonwealth of Pennsylvania. It is as if they never existed. What that means for employers is that all IRE determinations, whether they are litigated or not, are invalid and subject to immediate reinstatement on petition. The only matters which may have a defense to such a determination are those where there was a stipulation between the parties which actually limited or changed the character of benefits; but even in that situation, an argument could be made that would invalidate the stipulation by filing a petition and proving there was a change in condition. 

Bret Goldstein is a Chair of Reger Rizzo & Darnall’s Employment Practices Group. For questions or additional information, please contact Mr. Goldstein at 215.495.6528 or via email at bgoldstein@regerlaw.com.