Workers’ Compensation: Retroactive application of Protz to determine impairment ratings

Dana Holding Corp. v. WCAB (Smuck), 195 A.3d 635 (Pa. Cmwlth. 2018), allocatur granted May 14, 2019, appeal docket 44 MAP 2019

Former Section 306 (a.2) of the Workers’ Compensation Act provided that a claimant’s impairment rating should be determined “pursuant to the most recent edition” of the American Medical Association’s guide for impairment rating evaluations (IREs). In Protz v. Workers’ Comp. Appeal Bd. (Derry Area Sch. Dist.), 124 A.3d 406 (Pa. Cmwlth. 2015) (Protz I), the Commonwealth Court held that provision to be an unconstitutional delegation of authority, but rather than declare the entire provision unconstitutional, interpreted it to mean that the version of the guide in effect at the time the statute was enacted – the 4th edition – should be used.  On appeal, the Supreme Court agreed that the statute worked an unconstitutional delegation, but decided that the provision could not be salvaged and struck Section 306(a.2) in its entirety. Protz v. Workers’ Comp. Appeal Bd. (Derry Area Sch. Dist.), 161 A.3d 827 (Pa. 2017) (Protz II).  The issue presented in this case is whether and to what extent Appellee David Smuck, whose entitlement to continued receipt of total disability payments was being litigated while Protz was working its way through the courts, deserves retroactive application of the Protz II holding.

Smuck was injured on the job in 2000 and began receiving total disability payments.  In 2014 his employer requested an IRE and, based on the results that used the 6th edition of the Guide, filed a modification petition seeking to have Smuck’s status reclassified. Hearings ensued, but before the Workers’ Compensation Judge (WCJ) issued his decision, the Commonwealth Court decided Protz I, requiring the use of the 4th edition of the AMA guide rather than the 6th edition that had been used for the 2014 IME.  The WCJ granted the employer’s request to reopen the record, admitted a new IRE based on the 4th edition, and on that basis modified Smuck’s status to partial disability, effective back to 2014.  On appeal to the Workers’ Compensation Appeal Board, the employer requested a stay pending the Supreme Court’s resolution of the pending appeal in Protz II, which the WCAB granted.  After Protz II was decided, the WCAB reversed the WCJ and reinstated Smuck’s status of total disability as of 2014.  

The Commonwealth Court affirmed the WCAB’s application of Protz II and concluded that the Board properly applied the law in effect at the time of its appellate review where the underlying IRE was actively being litigated when that decision was issued.  As a threshold matter, the Commonwealth Court summarized the law concerning retroactive application of judicial decisions: 

As a general rule, the Pennsylvania Supreme Court has held that an appellate court should “apply the law in effect at the time of appellate review.” Passarello v. Grumbine, 87 A.3d 285, 307 (Pa. 2014); Blackwell, 589 A.2d at 1099. In other words, “a party whose case is pending on direct appeal is entitled to the benefit of changes in law which occur[] before the judgment becomes final.” Blackwell, 589 A.2d at 1099 (quotation omitted). However, the Supreme Court has cautioned against applying this general rule “rotely.” Passarello, 87 A.3d at 307. Rather, “[w]hether a judicial decision should apply retroactively is a matter of judicial discretion to be decided on a case-by-case basis.” Id.

Slip Op. at 7.

The Commonwealth Court then reviewed and rejected the employer’s arguments and found for retroactive application, explaining:

We note that Claimant’s IRE in this case…was in active litigation at the time Protz I and Protz II were decided. Thus, there had been no final adjudication here as to whether Claimant’s disability status should be modified from total to partial. We examine each case before us, and in this case, the issue of the IRE process was pending before the Board when Protz II was decided.  

For similar reasons, we reject Employer’s argument that we should apply Protz II only from its decision date [in 2017] and not the date of the IRE. Employer argues that it had a vested right and should, at a minimum, receive a credit for three years of temporary disability from the date of the IRE on June 20, 2014, to the decision in Protz II on June 20, 2017. These weeks, according to Employer, should be counted towards Claimant’s limit of 500 weeks of partial disability compensation…. Should Employer seek to use some other statutory mechanism to change Claimant’s status to partial, Employer argues it should be entitled to a credit for those weeks between the IRE and Protz II. However, this approach does not take into consideration that the IRE determination was never final. In fact, at oral argument, Employer recognized that if the IRE had been overturned on the merits, it would not have been entitled to any credit for the period of partial disability. Accordingly, the time period between the date of the IRE and the decision in Protz II should not be counted against Claimant’s 500-week period of partial disability.

Slip Op. at 10-11 (emphasis in original).

The Commonwealth Court likewise rejected the employer’s argument that the “Remedies Clause” of the Pennsylvania Constitution gave it a vested right in the law as it existed before Protz II:

Contrary to Employer’s assertions, Employer did not have a vested right. As discussed above, its Modification Petition was still being litigated. Therefore, it did not have “title, legal or equitable,” to continued reliance on the IRE provisions. [Citation omitted]. At best, it had “a mere expectation[] based upon an anticipated continuance of existing law.” [Citation omitted]. In short, Employer had no reasonable expectation that the IRE would be upheld as Claimant’s disability status was still being litigated.

Second, it is not clear to what extent, if any, the Remedies Clause, in which the due course of law protection is found, applies when a statute is declared unconstitutional. Employer cites to no cases applying the Remedies Clause to a statute that was declared unconstitutional, nor have we found one. Rather, the case law appears limited to cases in which the General Assembly has acted either to amend or repeal a statute. . . The Supreme Court stated that the purpose of the Remedies Clause is protection from legislative action and to ensure a vested right is not eliminated by subsequent legislation. [Citation omitted]. The dearth of case law applying the Remedies Clause when a statute is declared unconstitutional makes sense in that a party should not be able to claim that its constitutional right to the due course of law is being violated and that it should be able to continue to benefit from an unconstitutional law to the detriment of another party who rights were affected by the unconstitutional law. Accordingly, we are not persuaded by Employer’s Remedies Clause argument.

Slip Op. at 12-13.

The Supreme Court has granted the employer’s allocatur petition to decide:

  1. Whether the Commonwealth Court erred in applying the [Protz II] standard to the case on appeal at the time of this Court’s decision retroactive to the date of the IRE [2014] instead of as of the date the Supreme Court changed in the law[2017]?
  2. Whether the Commonwealth Court’s failure to grant the employer credit for the three year period between the date of the IRE evaluation and the date of this Court’s decision in [Protz II] unlawfully violates Employer’s constitutional right pursuant to the “Due Course of Law” provisions of the Pennsylvania Constitution Article I, Section 1I?

Allocatur grants present an excellent opportunity for your group or association to advance your legal and policy goals by filing an amicus brief. Participating as an amicus has proven to be an effective method of advising and influencing courts and often can involve far fewer resources than traditional lobbying.

If you are interested or would like more information, contact Kevin McKeon or Dennis Whitaker.