Since 1996, Pennsylvania employers and Workers’ Compensation insurance carriers could seek a review of the “impairment rating” of an injured worker, in order to determine the percentage of disability, and then place a 500-week cap on the injured worker’s ongoing wage loss benefits. This “Impairment Rating Evaluation” system called for designated physicians to perform these IREs, upon request by the employer – but only when the injured worker had already received 104 weeks of wage loss benefits due to the work-related injury. Under the old system, the medical reviewer would perform an examination and review medical records, and then determine an injured worker’s “impairment rating” based on a percentage system that was set forth within the American Medical Association (“AMA”) guidelines. If it was determined that the injured worker’s impairment rating was less than 50%, the employer could automatically cap the wage loss benefits at 500 weeks.
This IRE procedure, and the percentage assignment method, came under fire from the claimant’s bar, which argued the AMA Guidelines were insufficiently exacting for measuring the level of an injured worker’s disability. Claimant’s advocates also argued that by deferring to an AMA publication for guidance on the recovery of wage loss benefits for an injured worker, the Workers’ Compensation Bureau was conferring legislative authority on a non-governmental body (the AMA). In the landmark 2017 Pennsylvania Supreme Court decision rendered in Protz v. WCAB (Derry Area School District), the IRE system was struck down. In Protz, the claimant’s attorney successfully argued that the AMA should not be relied upon for setting impairment rating guidelines or standards. Following Protz, employers could no longer rely on the IRE system to cap benefits, or seek a review of an injured worker’s impairment rating. For employers and insurance carriers statewide, this was a significant and potentially expensive ruling.
On October 24, 2018, the IRE process was revived when Gov. Wolf signed “Act 111”. Under Act 111, there are some minor differences in the application and procedure for IREs, but the basic outline of the prior procedures has been reinstated.
The new provisions now specifically require IREs to be performed under the 6th edition (second printing April 2009) of the AMA Guides to Evaluation of Permanent Impairment. Additionally, the new provisions lower the impairment threshold of total disability 50% to 35%.
With the new provisions, an employer’s insurance carrier may request an IRE exam for an injured worker that has been out of work and has received 104 weeks of wage loss benefits. If the physician – using the 6th edition of the AMA guidelines – finds the injured worker to be less than 35% disabled, then the insurance carrier can cap partial benefits at 500 weeks, or a little less than 10 years. If the physician rates an injured worker’s disability to be greater than 35%, the worker can receive full, lifetime benefits. Essentially it is a way for an insurance carrier to limit wage loss liability to a little less than ten years.
Although there is no express language in Act 111 or the Court decisions, we agree with the general consensus that any IRE performed prior to October 24, 2018 (the date Act 111 was enacted) is likely null and void, as a matter of law. We anticipate there will be legal challenges to various aspects Act 111, and are prepared to offer further analysis and practical guidance to clients on all the issues that may arise from the legislative fix to the IRE process in Pennsylvania. The full statute can be viewed here: https://www.legis.state.pa.us/cfdocs/legis/li/uconsCheck.cfm?yr=2018&sessInd=0&act=111