Bill could reinstate impairment rating evaluations in Pennsylvania

A fight is brewing between those who want to prevent higher workers compensation premiums in Pennsylvania and those who want to keep impairment rating evaluations off the table after the state’s Supreme Court deemed them unconstitutional. 

H.B. 1840, sponsored by Rep. Rob Kauffman, R-Franklin, could bring impairment rating evaluations back into Pennsylvania’s workers comp system — a practice deemed unconstitutional by the state’s highest court in June — and is now working its way through the state’s House of Representatives after it was introduced Oct. 2.

“I still question whether this is constitutional,” said Thomas Baumann, partner at Abes Baumann P.C. in Pittsburgh, who represented an injured worker at the heart of the Supreme Court decision. “I don’t think they are out of the woods because of the Supreme Court decision. It’s problematic the way it stands.” 

Under that previous system, employers can request an impairment evaluation where a physician determines the degree of an injured employee’s impairment under the Pennsylvania Workers Compensation Act. The provision in the state’s workers comp act required physicians to apply the methodology from the American Medical Association Guides to the Evaluation of Permanent Impairment. That law had been in place since 1996.

In June, the Pennsylvania Supreme Court struck down the state’s impairment rating evaluation process as unconstitutional, ruling that the “General Assembly unconstitutionally delegated to the American Medical Association the authority to establish criteria for evaluating permanent impairment.” 

The death knell to the impairment evaluations was Protz v. Workers Compensation Appeal Board (Derry Area School District), where Mary Ann Protz sustained a work-related knee injury in 2007 and began receiving temporary total disability benefits from her employer. A physician assigned Ms. Protz a 10% impairment rating based on the AMA guide, after which her employer filed a petition to change her disability status from total to partial in an attempt to limit the duration of her workers comp benefits.

Ms. Protz later appealed to the Pennsylvania Workers Compensation Appeal Board, arguing that the state’s General Assembly unconstitutionally delegated to the AMA the authority to establish criteria for evaluating permanent impairment. The board rejected this argument, but the commonwealth court reversed that decision on appeal, and the Supreme Court of Pennsylvania agreed that the provision was unconstitutional.

As a result of the ruling and the uncertainty about what this would mean for other injured workers, the Pennsylvania Compensation Ratings Bureau this summer filed a loss cost increase of 6.06 % — a move that was unprecedented, according to Alex Halper, director of government affairs for the Harrisburg-based Pennsylvania Chamber of Business and Industry. 

“We think this legislation is critically important,” Mr. Halper said. “We have serious concerns with how this court decision will impact costs on employers.”

Both the Property Casualty Insurers Association of America and the American Insurance Association voiced concerns over rising costs following the ruling in June. 

Mr. Baumann said the financial concerns behind the bill pit employers against “seriously injured workers” with disabilities as a result of a workplace injury. “There’s no question money is what’s pushing it,” he said. 

The proposed law would reinstate the 104-week permanent disability marker for when an insurer can request an impairment rating evaluation and assign the latest draft of the AMA guide — the sixth edition — as the prescribed guide.

According to a draft of the bill, the process would be similar to that which is now defunct: “If such determination results in an impairment rating that meets a threshold impairment rating that is equal to or greater than fifty per centum impairment under the most recent edition of the American Medical Association ‘Guides to the Evaluation of Permanent Impairment,’ the employee shall be presumed to be totally disabled and shall continue to receive total disability compensation benefits under clause (a). If such determination results in an impairment rating less than fifty per centum impairment under the most recent edition of the American Medical Association ‘Guides to the Evaluation of Permanent Impairment,’ the employee shall then receive partial disability benefits under clause (b): Provided, however, that no reduction shall be made until sixty days' notice of modification is given.”

The bill now sits with the Labor & Industry Committee. Proponents issued memoranda supporting the measure, calling it the “Protz Workers Compensation Fix,” stating the bill is “clarifying the guidelines used for” impairment ratings evaluations. The bill’s sponsor could not be reached for comment. 

Steven R. Ryan, an attorney with Frommer D’Amico Anderson L.L.C. in Harrisburg, said the bill helps correct the problem the Supreme Court identified by choosing an actual edition of the AMA guide, but that the bill could be problematic for injured workers. 

“There’s this tension between costs and the interest of the injured workers whenever there is some sort of legislative discussion,” he said.