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EMPLOYER PREVAILS ON EARNING POWER ASSESSMENT DESPITE THE FACT THAT CLAIMANT APPLIED FOR ALL JOBS IDENTIFIED AND FAILED TO SECURE EMPLOYMENT.

See:Phoenixville Hospital v. WCAB (Shoap)2 A.3d 689; Reargument denied @ ________ A.3d ________ (Pa. Cmwlth. 8/18/10).

In Phoenixville Hospital, the employer filed a Petition for Modification based on earning power assessment. Employer presented testimony of its IME physician to establish Claimant’s work capabilities and a vocational expert to establish earning power. Claimant presented testimony from his treating physician that he was not capable of work and likewise presented testimony from his own vocational witness that the jobs identified on the earning power assessment were not vocationally appropriate. (Indeed, it is the trend for Claimants to present their own vocational testimony. These witnesses generally testify that the jobs identified are not appropriate and fail to give any opinion as to whether there are appropriate jobs. In the retirement setting, the witnesses consistently testify that the Claimant’s are not vocationally capable of performing any employment.) The WCJ accepted the testimony of the employer’s medical and vocational expert. The WCJ rejected the testimony of Claimant’s medical and vocational expert. Nevertheless, the WCJ credited Claimant’s testimony that she applied to all five jobs found for her and did not receive an offer of employment. He found that Claimant had established that in good faith, she followed through on all the jobs referred to her by employer and that none of the referrals resulted in an offer of employment. The WCJ therefore denied the employer’s Modification Petition. The Board affirmed.

On appeal, the employer argued that the Judge erroneously concluded that because Claimant applied for jobs contained in the labor market survey in good faith and did not receive an offer of employment, her benefits could not be modified. The employer argued that the WCJ was erroneously applying the Kachinski standard which is not applicable. Instead, employer asserted that the matter should be adjudicated pursuant to the earning power provisions of Act 57.

Claimant argued that the employer was not entitled to Modification where she applied for work in good faith and was not offered employment. She relied on the case of South Hills Health System v. WCAB (Kiefer), 806 A.2d 962 (Pa. Cmwlth. 2002).

The court recognized that “today we are required to answer the question left open by South Hills. We are asked to determine whether a job not only exists, but is available to Claimant for the purposes of Section 306(a) of the Act when she applies for each individual job contained in a labor market survey and does not receive an offer of employment where the employer’s expert testimony is credited that the jobs were open and available at the time he identified the employment opportunities.

The court determined that employer is not precluded from obtaining a modification of benefits where, as here, Claimant pursued the jobs contained in the labor market survey weeks after they were identified as open and available by the vocational expert. The court reviewed Act 57, Kachinski and the South Hills case. The court then reviewed the five jobs identified in the earning power assessment. It was noted that the WCJ found that the five jobs were open positions that were compatible with the work restrictions placed on Claimant, vocationally suited for the Claimant and located within her geographical area. The court indicated it would not review such credibility determinations. The court noted that one of the positions, the position at Progressive Business Publications would not be considered. This is where Claimant presented, definitive, unrebutted testimony that the position continued when she pursued employment with the business. She interviewed over the phone and was not offered the job. Consistent with South Hills, the court found this job “existed” but was not “available” to Claimant.

Regarding the remaining four positions the Court highlighted the fact that Claimant pursued each of the positions a month or more after they were identified as open available by the vocational counselor. The court reiterated that the jobs must be open and available at the time the expert conducts the earning power assessment. Citing Riddle, the court explained “the jobs contained in any labor market survey are not meant to provide an exact calculation of the injured workers’ earning power. Rather they are meant to provide an approximation of her potential earnings based on her residual capacity and to set a payment schedule for partial disability benefits.” The Court reasoned that it was unrealistic to presume that all jobs identified in a labor market survey as open and available on a given date will remain open and available nearly a month or more later when a Claimant receives a report of a vocational expert and applies for the jobs contained therein. The court opined this was especially true where, as here, the jobs identified are entry level position where training is provided by the employer. Thus, inasmuch as §306(b) too is to provide an approximate value of a Claimant’s earnings based on her residual capacity, the fact that Claimant applied for the jobs identified and did not obtain an offer of employment is immaterial. The Court explained similar opportunities will become available that fit within her residual earning capacity that correspond to her "earning power."

Lastly, the court discusses the appropriate modification rate. The counselor had averaged the earnings and included the job that they disregarded. The court recognized that this would be of benefit to the Claimant and further noted that employer requested modification based on the average rate. Accordingly, the court indicated that Claimant’s benefits should be modified based on such figure.

Practice Pointer: Phoenixville Hospital continues the trend we have seen where employers prevail on litigation based on earning power assessment. Thus, earning power assessments remain a very valuable tool where Claimant is capable of performing work yet has not returned to the work force. Earning power can also be coupled with IRE to allow for modification or suspension of benefits based on the partial disability calculation. Each year, the theory of earning power is more and more accepted by the workers’ compensation community.

However, although in Phoenixville Hospital, a job offer is not required before an employer can modify benefits based on earning power, the Court’s statement that they will not consider the position at Progressive Business Publications is troubling. The Court indicated that the job existed but was not available. Apparently, it existed because Claimant interviewed for the job. It was apparently deemed not available because she did not receive an offer. The Court cited South Hills for this proposition. However, the Court did recognize that the South Hills discussion was dicta. Likewise, we will argue that the discussion in Phoenixville Hospital is dicta.