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COMMONWEALTH COURT ADDRESSES EMPLOYER’S BURDEN OF PROOF ON PETITION TO MODIFY BENEFITS BASED ON AN IRE.

See: Diehl v. W.C.A.B. (IA Construction)_____ A.2d _____ (Pa. Cmwlth. 4/22/09)

After the Commonwealth Court’s Decision in Diehl v. W.C.A.B. (AI Construction) _____ A.2d _____ (Pa. Cmwlth. 4/28/08) there has been great uncertainty as to employer’s burden of proof in a Petition for Modification based on an IRE requested outside the sixty day window. The uncertainty arose from the Commonwealth Court’s Decision which held that to modify benefits based on IRE requested outside sixty day window employer must provide proof of available work or earning power. This Decision was vacated and re-argument was granted on 6/24/08.

The facts of Diehl are not unusual. Claimant sustained a work injury to his right foot on May 24, 1999 and employer began paying Claimant total disability benefits. By May 24, 2001, Claimant had collected total disability for 104 weeks. To effect a unilateral change in Claimant’s disability status, employer had to request an IRE within a sixty day period following Claimant’s receipt of total disability benefits for 104 weeks, i.e. between 5/24/01 and 7/24/01. Gardner v. W.C.A.B. (Genesis Health Ventures), 888 A.2d 758 (Pa. 2005). In the instant case, employer requested designation of IRE physician on April 4, 2002, long after the sixty day window had passed. To further delay matters, the first IRE assignment was refused and a second assignment occurred. IRE was conducted on 11/08/02 and Dr. Michael Wolk concluded Claimant had an impairment of 28%. In January, 2003, while this area of the law was uncertain, employer attempted to affect a unilateral change in Claimant’s benefit status from total to partial on the basis of IRE report. Claimant challenged such action and employer abandoned this effort. Employer then filed a Modification Petition for the purposes of affecting a change in Claimant’s benefit status from total to partial disability but not for affecting a reduction in Claimant’s disability compensation.

The WCJ concluded that Claimant did have a level 28% impairment. However, the WCJ believed that before Claimant’s disability status could be changed from total to partial, employer was also required to prove the availability of employment suitable for Claimant, either by a labor market survey or by a referral to actual jobs Claimant was capable of performing. Because employer did not present this employment evidence, the WCJ denied employer’s request for modification. The employer appealed and the Board reversed. Further appeals ensued and the Court issued the Decisions outlined above.

In its April 22, 2009 Decision addressing re-argument on this issue, the Court now clarifies:

“An employer seeking to change a Claimant’s benefit status using results of an IRE requested outside the sixty-day window must obtain an agreement from the Claimant or an adjudication that the Claimant’s condition improved to an impairment rating less than 50%. Proof of earning power and job availability is not required.”

The Court cited the Torrey and Greenburg Treatise for the proposition that “the legislature could not possibly have imagined the employer being obliged to undertake vocational rehabilitation in this context.” The Court further noted that to require proof of the Claimant’s level of impairment and the Claimant’s earning power would render the IRE provisions meaningless. If an employer seeking to change a Claimant’s disability status by IRE also had to prove earning power, there would be no reason for the employer ever to obtain an IRE. To require proof of earning power effectively nullifies the IRE remedy.

Practice Pointer: The 4/22/09 Decision of the Commonwealth Court resurrects employer’s IRE remedy. Prior to 4/22/09, employers/insurance carriers had been wary of the IRE remedy. Many adjusters simply refused to schedule IRE’s where there was no certain relief if the sixty day window had passed. Some Judges had held petitions requesting modification based on IRE secured outside the sixty day window in abeyance waiting for the outcome of Diehl.

Employers can again take advantage of the IRE remedy of the Act even after expiration of the sixty day window. It is clear that employers are not required to prove earning power and job availability in the context of modification based on IRE.

IRE’s thus remain an effective mechanism to reduce liability for compensation. While it is recommended that you request IRE within the sixty day window, the IRE remedy can be obtained outside that time frame and there are instances when this is the best claims practice. For example, if Claimant is not at MMI within the sixty day window, deferral of IRE is recommended. Moreover, IRE is not the recommended procedure for all claims and instead IME and subsequent EPA can be more valuable remedies under certain fact patterns.