Pennsylvania Court Rules Section of State Workers’ Comp Act Unconstitutional

By | July 11, 2017

The Pennsylvania Supreme Court last month found a section of the state Workers’ Compensation Act (the Act) unconstitutional in a move that challenges the way Pennsylvania has assessed workplace injuries for the past 20 years.

The decision also resulted in a victory for Mary Ann Protz, a woman involved in the matter who suffered a work-related knee injury.

Section 306(a.2) of the Workers’ Compensation Act in Pennsylvania allows employers to demand that a claimant receive an impairment-rating evaluation (IRE), in which a physician determines the degree of impairment for the claimant’s injury. In order to assess the degree of impairment, the Act requires that physicians apply the method outlined in the most recent edition of the American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment.

In its June decision, the Pennsylvania Supreme Court found this section of the Act violates the state’s constitutional requirement that all legislative power rests within the General Assembly, consisting of a Senate and a House of Representatives.

The framers of the constitution believed that the integrity of the legislative function was vital to the preservation of liberty.

This decision comes after Protz sustained a knee injury while on the job in 2007. She began receiving temporary total disability benefits from her employer, Derry Area School District (Derry). At Derry’s request, Protz underwent an IRE, and the physician assigned her a 10% impairment rating based on the Sixth Edition of the American Medical Association Guides to the Evaluation of Permanent Impairment (the Guides).

Because Protz’s impairment rating was less than 50%, Derry filed a modification petition seeking to convert Protz’s disability status from total to partial, the court document stated. This meant that the duration for which Protz could receive workers’ compensation benefits would be limited.

After holding a hearing on Derry’s modification petition, a workers’ compensation judge (WCJ) ruled that Protz’s whole-body impairment was in fact less than 50% and granted the petition. However, Protz appealed to the Workers’ Compensation Appeal Board, arguing that the General Assembly unconstitutionally delegated authority to the AMA to establish criteria for evaluating permanent impairment.

The Board rejected Protz’s argument and affirmed the WCJ’s decision, so Protz appealed to the Commonwealth Court, where she again argued that this section of the state Workers’ Compensation Act violates the Pennsylvania Constitution.

The Commonwealth Court reversed the Board’s decision and agreed with Protz’s argument. Senior Judge Dan Pellegrini stated in the decision that the General Assembly alone has the power to make laws, and it cannot constitutionally delegate that power to any other branch of government or to any other body.

The court did acknowledge that the General Assembly can delegate authority for the execution and administration of a law to an independent agency or an executive branch agency in certain circumstances. When the legislature chooses to delegate in this way, two limitations apply: the basic policy must be made by the legislature, and the legislation must contain standards to guide and restrain the exercise of delegated administrative functions.

The Commonwealth Court found that instead of following these two limitations, the General Assembly gave the AMA “carte blanche authority to implement [the AMA’s] own policies and standards.”

Those policies and standards were “automatically adopted, sight unseen,” the Supreme Court added in its June opinion.

However, even if the General Assembly had included standards guiding and restraining the AMA’s exercise of delegated authority, the Commonwealth Court found this move would still be unconstitutional because the AMA is a private organization.

Instead of striking Section 306(a.2) of the Act entirely, however, the Commonwealth Court remanded the matter to the WCJ with instructions to apply the Fourth Edition of the Guides, the version in existence when the General Assembly enacted this particular section of the Workers’ Compensation Act in 1996.

Varying Opinions

After the Commonweath Court’s decision, Derry argued it was wrong for the court to rule that the General Assembly’s prospective use of the most recent edition of the Guides violates the Pennsylvania Constitution. On the other hand, Protz argued that after finding this section of the Act unconstitutional, the Commonwealth Court was wrong to remand the case to the WCJ to apply the Fourth Edition of the Guides.

While Derry argued the General Assembly is free to adopt current and future standards that are published by a well-recognized, independent authority, Protz maintained her stance that Section 306(a.2) violates the non-delegation doctrine in Pennsylvania’s constitution because it gives the AMA discretion over Pennsylvania’s impairment-rating methodology.

Supreme Court Ruling

Indeed, the Supreme Court document said the section of the Pennsylvania Constitution stating legislative power is vested in a General Assembly, consisting of a Senate and a House of Representatives, serves to ensure authorized and politically responsible officials make all of the necessary policy decisions and seeks to protect against the arbitrary exercise of unnecessary and uncontrolled discretionary power.

“As John Locke put it, legislative power consists of the power ‘to make laws, and not to make legislators,'” Pennsylvania Supreme Court Justice David Wecht wrote in the opinion. “Indeed, the rule is essential to the American tripartite system of representative government. The framers of the constitution believed that the integrity of the legislative function was vital to the preservation of liberty.”

The Supreme Court found that without any parameters to its authority, the AMA would be free to create a formula that yields impairment ratings so nearly every claimant is deemed to be at least 50% impaired, or alternatively, draft a version of the Guides guaranteed to yield impairment ratings so that almost no one clears the 50% threshold. It found the AMA could also add new chapters to the Guides, remove existing ones, or even create distinct criteria to be applied only to claimants of a particular race, gender or nationality.

“Consider also that the AMA could revise the Guides once every ten years or once every ten weeks,” Wecht wrote in the opinion. “If the AMA chooses to publish new editions infrequently, Pennsylvania law may fail to account for recent medical advances. By contrast, excessive revisions would likely pose severe administrative headaches….as these hypotheticals illustrate, the General Assembly gave the AMA de facto, unfettered control over a formula that ultimately will determine whether a claimant’s partial-disability benefits will cease after 500 weeks.”

Another concern is that the General Assembly also delegated authority to a private entity and did not require the AMA to hold hearings, accept public comments or explain grounds for its methodology subject to judicial review, Wecht wrote in the opinion.

“One such concern is that private entities are isolated from the political process, and, as a result, are shielded from political accountability,” the opinion document stated. “Because of this, it is perhaps unsurprising that our precedents have long expressed hostility toward delegations of governmental authority to private actors.”

With this in mind, the Supreme Court affirmed the Commonwealth Court’s decision that Section 306(a.2) of the Pennsylvania Workers’ Compensation Act violates the non-delegation doctrine within the Pennsylvania Constitution. Differing from the Commonwealth Court, however, the Supreme Court ruled that this section of the Act is unconstitutional in its entirety.

“The Pennsylvania Constitution prevents the General Assembly from passing off to another branch or body de facto control over matters of policy,” the Supreme Court opinion document stated. “As we have explained, this is exactly what the General Assembly did.”

About Elizabeth Blosfield

Elizabeth Blosfield is the East region editor for Insurance Journal. She can be reached at More from Elizabeth Blosfield

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