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The Month in Workers' Compensation: May 2016 At-A-Glance

Mitchell I. Golding, Esq. on 6/23/2016

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STATUTORY EMPLOYER

  • Pennsylvania Supreme Court grants employer's Petition for Allowance of Appeal to address the issue of whether a franchisor may be subject to liability as a statutory employer under Section 302(a) of the Workers' Compensation Act.

    Commonwealth Court, in the underlying decision written by Judge McGinley dated October 6, 2015, held that the franchisor, Saladworks, LLC, was not the statutory employer of the injured claimant pursuant to Section 302(a) where it's uninsured franchisee, G21 LLC d/b/a Saladworks (G21), did not perform a regular or recurrent part of the business, occupation, profession, or trade of Saladworks.

    The Commonwealth Court reasoned that Section 302(a) of the Act provides that an entity must subcontract to have work performed that is a regular or recurrent part of its business in order to be considered a statutory employer. The Court also noted that a portion of 302(a) provides:

    For purposes of this subsection, a person who contracts with another . . . (2) to have work performed of a kind which is a regular or recurrent part of the business, occupation, profession or trade of such person shall be deemed a contractor, and such other person a subcontractor. (Emphasis added.)

    Based upon its reading of 302(a) the Commonwealth Court concluded that although Saladworks and G21 were connected through its Franchise Agreement, Saladworks, LLC was not in the restaurant business or the business of selling salads. Saladworks' business was the sale of franchises to franchisees that desire to use its name and "System" and marketing expertise. Therefore the franchisee did not perform a regular or recurrent part of the business, occupation, profession, or trade of Saladworks, meaning Saladworks could not be held to be the statutory employer.

Saladworks, LLC v. WCAB (Gaudioso and Uninsured Employers Guaranty Fund), No. 971 MAL 2015 (PER CURIAM, May 3, 2016) 5/16

UNINSURED EMPLOYERS GUARANTY FUND/MEDICAL BENEFITS

  • The term "compensation" used under Article XVI of the Act is defined by Section 1601 of the Act as including both disability and medical benefits. Therefore, pursuant to 1603(b) of the Act, a claimant who fails to give notice of a claim to the UEGF within 45 days of the date it learned the employer is uninsured is not entitled to compensation and medical until the date if gives notice.

    Notwithstanding the fact of claimant's failure to give notice to the UEGF within 45 days, the clamant was not responsible to his providers for past due medicals. This is because employees injured while working for uninsured employers do not assume the costs of medical treatment provided to them prior to notice being given to the UEGF. Medical providers are prohibited from requiring injured employees to pay for work-related treatment by Section 306(f.1)(7) of the Act, which states "A provider shall not hold an employe liable for costs related to care or service rendered in connection with a compensable injury under this act."

    Medical providers, however, maintain their right to pursue a remedy outside the workers' compensation system against uninsured employers to cover the expenses incurred in the treatment of injured employees.

Commonwealth of Pennsylvania, Department of Labor and Industry, Uninsured Employers Guaranty Fund v. WCAB (Kendrick and Timberline Tree & Landscaping LLC) No. 1849 C.D. 2014 (Decision by Judge Cohn Jubelirer FILED, May 9, 2016) 5/16

IRE/WCJ

  • The Pennsylvania Supreme Court reverses the Commonwealth Court and holds that a WCJ may validly reject the uncontradicted opinion of an IRE expert chosen by the Bureau regarding the degree of impairment and the WCJ is not required to identify substantial contrary evidence in the record to support such rejection.

  • A physician's impairment rating opinions pertaining to IREs conducted under Section 306(a.2) (6) are subject to vetting through the "traditional administrative process." Therefore, it was not improper for the WCJ to reject the opinion of the physician who performed the IRE that was "an underdeveloped, out-of-specialty opinion."

  • The Commonwealth Court, upon reversing the WCJ, erred in its conclusions that a workers' compensation judge lacks the authority to reject uncontradicted testimony by an IRE physician and that, in the present case, the WCJ was required to identify substantial contrary evidence in the record to support such rejection.

    The Supreme Court stated that it disapproved of the Commonwealth Court decision, to the degree that the Commonwealth Court had fashioned, essentially, an uncontradicted medical evidence rule for IREs.

  • The employer bears the burden to establish grounds for modification based upon an IRE requested in excess of 60 days from the 104th week of total disability. Even when the medical testimony is of an IRE physician chosen by the Bureau, the WCJ is free to accept or reject employer's evidence. The fact that the Bureau (and not employers) selects IRE physicians, is insufficient to justify a judicial policymaking decision to implement a specialized approach to IREs conducted under Section 306(a.2)(6).

  • In the context of assessing an IRE opinion it is improper for the WCJ to harken back to the full range of claimant's initial work-related injuries since an IRE assesses the examinee's present condition. In this regard, medical improvements occurring between the time of the initial injury and the examination may resolve impairments.

    It is also improper to "lump" medical conditions since the AMA Guides themselves establish broad categories of impairments tied to functional sub-units of a whole person, such as the nervous system.

IA Construction Corporation v, WCAB (RHODES) No. 18 WAP 2015 (Decision by Chief Justice Saylor) 5/16

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