Pennsylvania Supreme Court Declares IRE Provision of the Workers’ Compensation Act Unconstitutional

On June 20, 2017, the Pennsylvania Supreme Court found Section 306(a.2) of the Workers’ Compensation Act to be unconstitutional. The decision in Protz v. Workers’ Compensation Appeal Bd. (Derry Area School District) means that indemnity benefits are no longer subject to a cap.

In the majority opinion authored by Justice Wecht, the court determined that the General Assembly’s delegation of authority to the American Medical Association (AMA), a private entity, was unconstitutional. The General Assembly must not only make “basic policy choices,” but it must also include “adequate standards which will guide and restrain the exercise of the delegated administrative functions.” As to impairment rating evaluations (IREs), the court noted that the General Assembly neither favored any policies relative to the AMA Guides to the Evaluation of Permanent Impairment methodology for rating impairments nor prescribed any standards to guide and retrain the AMA’s discretion to create such a methodology. Although the opinion notes various possible problematic outcomes if the AMA is unchecked, the court also notes that there is no reason to suspect that the AMA has exercised its authority in an arbitrary or unreasonable manner.

Justice Baer, in a dissenting opinion, felt that the challenged provision requiring the use of the most recent Guides is simply declaring the applicable standard by which physicians should conduct IREs and not a delegation of legislative power from the General Assembly to the AMA. Justice Baer raised concerns that the majority’s decision will have consequences as it would apply to various other statutes that rely on the most current standards and definitions promulgated by entities other than the legislature itself.

Based upon this ruling, any scheduled impairment rating evaluations should be canceled. Any pending litigation on an IRE Determination should be withdrawn. It is expected that any prior indemnity status changes based upon a prior IRE determination will now have Petitions filed to vacate the IRE change which limited indemnity benefits to the 500 week period.

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