Fried, Kane, Walters, Zuschlag and Grochmal 625 Stanwix Street, Suite 1404
Pittsburgh, PA 15222
Phone 412-261-4774
Fax 412-261-1225

EARNING POWER ASSSESSMENT MUST BE CONDUCTED IN AREA WHERE INJURY OCCURRED IF CLAIMANT RESIDES OUT OF STATE.

See:Riddle v. Workers’ Compensation Appeal Board (Allegheny City Electric, Inc.).981 A.2d 1288 (Pa. 10/22/09).

In Riddle, the WCJ had granted modification based on earning power assessment. This was affirmed by the WCAB and the Commonwealth Court. The most egregious aspect of this decision is the fact that the Commonwealth Court opinion states that Claimant counsel requested that the earning power assessment be conducted out of state near Claimant’s residence and Claimant testified that he was willing to work out of state near his residence. The Supreme Court does not mention these facts and does not list whether employer argued that these facts estopped Claimant from challenging earning power assessment location or waived this issue.

Instead, the employer in Riddle argued that although it was required under the statute to conduct an EPA in the area of injury, its evidence of earning power could also include job availability in other areas. The court rejected the employer’s broad interpretation of §306(b)(2). The court quoted long established legal precedent that the phrase "shall" is mandatory. The court explained the statute clearly and patently states that for an out of state resident the "usual employment area" for purposes of developing an EPA is defined as the area "where the injury occurred".

Defendant also argued that §306(b) has internal conflicts and unreasonable applications if read strictly. Defendant averred that the statutory requirement to perform EPA in the area “where the injury occurred” conflicts with the statutory requirement to identify work in the EPA that appellant is “capable of performing.” The employer cited case law predating the current version of §306(b) which the court states has no application to the current statute.

In addressing this final argument, the court characterized its Kachinski case as filling the gap in the pre Act 57 Workers’ Compensation Act which did not delineate standards seeking modification or suspension of benefits. The employer had argued that post Kachincki case law determining that a job was not available under Kachinski if it required a lengthy commute, required it to establish earning power near claimant’s residence. The Supreme Court flatly rejected such argument stating that the employer misinterpreted the statute. The court explained that the Act 57 amendments to §306(b)(2) do not require that the employer to provide the injured employee with a job or specified attribute such as geographic location for the job. “Rather the sole purpose of §306(b) is to describe the payment schedule for partial disability and provide a formula for calculating an injured employee’s benefits. The statute defines how earning power is calculated for different categories of claimants, including out of state claimants.”

Confusion has arisen from the court’s footnote addressing this argument wherein it states that the legislature by adopting the earning power provisions lowered the Kachinski burden of proof by allowing an employer to obtain modification or suspension of benefits on evidence of earning power proved through expert testimony rather than providing evidence that the Claimant had obtained employment. “In this sense, the legislature replaced the court’s Kachinski approach. TheKachinskitest continues to apply exclusively only in cases where the injury took place before June 24, 1996 like the case cited by the concurrence, Lewis v. WCAB, 919 A.2d 922 (Pa. 2007).” The Court further states “we do not hold here that an employer who meets the Kachinski test would not meet the §306(b) test. Indeed, under certain circumstances, the employer may be able to meet both tests.”

This footnote has caused consternation and confusion where some attorneys and vocational counselors fear that Kachinski job referrals are no longer permitted in Act 57 cases. This argument gains credence by the concurring opinion wherein Justice Sailor joined the majority except for its indication that the 1996 amendments to §306(b) of the Workers’ Compensation Act “replaced” the court’s approach under Kachinski. The concurring opinion found such assertion to be confusing since the court has continued to apply and refine Kachinski.

The Court also cited Torrey & Greenberg Law & Practice §12.89 (2008):

Practice pointer: Where a claimant moves out of state, earning power assessment must be conducted in the usual employment area where the injury occurred.

Although a strong argument can be made that the Riddle case does not establish that Kachinsk is improper in Act 57 cases, it may be wise to avoid Kachinski style referrals when conducting an earning power assessment until this matter is further clarified.