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SUPREME 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) 5 A.3d 230 (Pa. 9/29/10)

After the Commonwealth Court’s Decision in Diehl v. W.C.A.B. (AI Construction) 5 A.3d 230 (Pa. 4/29/10) there was 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.

Following reargument, the Commonwealth Court changed its position and affirmed the decision of the WCAB concluding that employer did not have to establish job availability of earning power in order to accomplish a change in claimant’s disability status. Diehl v. WCAB (IA Construction and Liberty Mutual Insurance, 972 A.2d 100 (Pa. Commw. 2009).

The Supreme Court granted review to determine whether the Commonwealth Court erred in concluding that appellee did not need to present evidence of job availability or earning power in order to change appellant’s status from total to partial and whether the court’s decision conflicts with Gardner. The court initially reviewed the reasoning of the WCJ and Commonwealth Court. Claimant argued that Section 306(b)(2) regarding earning power has no time limit but §306(a.2) regarding IRE’s has a strict sixty-day window so that otherwise this provision is not valid. The court quoted the language of the Act in both sections highlighting that they were two separate provisions and concepts. The court explained that the definition of impairment does not contemplate or encompass earning power so that logic dictates the evidence required to establish impairment would be different from that required to establish earning power.

Given the clear guidance from the General Assembly, the Supreme Court concluded that the means by which an employer can establish that a claimant’s disability has changed from total disability to partial disability is through an IRE, regardless of whether the IRE is requested within the sixty-day window. If the IRE is requested within the sixty-day period and the claimant’s impairment rating is less than fifty (50%) percent, then the change in disability status is automatic. If, however, the employer requests the IRE outside the sixty-day window and claims that the claimant’s impairment rating is less than fifty (50%) percent, the IRE merely serves as evidence that the employer may use at a hearing before a WCJ on the employer’s modification petition to establish that the claimant’s disability status should be changed from total to partial.

The court explained that in a petition for modification based on IRE, the IRE becomes an item of evidence just as would the results of any medical examination the claimant submitted to at the request of his employer. It is entitled to no more or less weight than the results of any other examination. The physician who performed the IRE is subject to cross-examination, and the WCJ must make appropriate credibility findings related to the IRE and the performing physician. The claimant, obviously, may introduce his own evidence regarding the degree of impairment to rebut the IRE findings.

Practice Pointer: Since the Commonwealth Court’s second Diehl decision in 2009, employers had been proceeding with petitions for modification based on IRE’s secured outside the sixty-day window. However, we anxiously awaited the Supreme Court’s decision where the claimant’s bar had been challenging such petitions resulting in added litigation. The Supreme Court’s Decision now clarifies that 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.

When an IRE is obtained outside the sixty-day window, the employer will need to convince the WCJ as to the percentage of impairment. However, Claimant’s own treating physicians often do not dispute the same. Instead, we often see technical challenges alleging claimant is not at MMI, or that all conditions related to the work injury were not considered. Accordingly, a careful review of the compensable work injury and MMI status should be made prior to securing IRE. You should then advise the IRE physician accordingly.