Workers’ Comp Insurance Carrier Must Reinstate Benefits If No Challenge Hearing Within 21 Days; Disfigurement Benefits Only Payable When Total Disability Truly Ends

Once an injured worker in Pennsylvania begins to receive workers’ compensation benefits, an insurance carrier can only stop making those payments under certain circumstances.  If the benefits are being paid under a Notice of Temporary Compensation Payable (NTCP), then the insurance carrier can simply withdraw the NTCP, issue a Notice of Denial (NCD) and stop paying unilaterally [As opposed to a Notice of Compensation Payable (NCP), which cannot be withdrawn].  However, in most other circumstances, approval must be obtained either from the injured worker (typically by the execution of a “Supplemental Agreement”) or from a Workers’ Compensation Judge (WCJ).

As with many rules, there are exceptions.  If the injured worker returns to work, the workers’ compensation insurance carrier can file a Notification of Modification (if partial disability payments will continue) or a Notification of Suspension (if payments will stop totally).  The injured worker has a chance to “challenge” either of these documents if he or she disagrees with the return to work (or the amount of wages in the return to work).  If either of these documents is not challenged within the given time period, the document is treated as if the injured worker signed in agreement.

This challenge process was one of the issues in a recent decision from the Commonwealth of Pennsylvania in Dixon v. Workers’ Compensation Appeal Board (Medrad, Inc.).  The matter began when the employee suffered a neck injury, which was accepted as a cervical sprain (interesting enough, the description of injury was not expanded, yet disfigurement benefits were awarded for scarring from cervical surgery [a procedure one would not have for a mere “sprain]).

Here, the workers’ compensation insurance carrier began paying benefits (though the injury started with an NTCP, the document converted to a regular NCP).  At some point, as noted above, 30 weeks of disfigurement benefits were awarded for Claimant’s cervical surgical scar (disfigurement benefits are paid after total disability benefits stop).  Eventually, the insurance carrier filed a Notification of Suspension.  A Challenge was filed by the injured worker in a timely fashion.  In accordance with the Pennsylvania Workers’ Compensation Act, the insurance carrier stopped making payments after the  Notification of Suspension was filed.  A Petition for Suspension was filed by the insurance carrier after the Challenge was filed.

The injured worker then filed two Petitions for Penalties.  The first was for the failure to start paying the disfigurement benefits, since the total disability benefits had stopped.  The second was for the failure to reinstate total disability benefits since the hearing for the Challenge was not scheduled with 21 days.

After hearing the evidence, the WCJ granted the Petition for Suspension and denied both Petitions for Penalties.  This was affirmed by the Workers’ Compensation Appeal Board (WCAB).  Appeal was then sought to the Commonwealth Court of Pennsylvania.

The Court dismissed the first argument raised by the injured worker, that the Petition for Suspension should not have been granted.  Seeing this as nothing more than contesting the credibility determinations rendered by the WCJ, the Court moved through this quickly.

The next issue was the first Petition for Penalties.  Did the insurance carrier violate the Pennsylvania Workers’ Compensation Act by not paying the disfigurement award once they stopped paying the total disability?  The Court said no.  Since this was just a temporary suspension, under a challenge situation, the payments didn’t “end” for these purposes until the WCJ granted the Petition for Suspension.  Therefore, the Court found the first Petition for Penalties was properly denied.

The last argument raised by the injured worker pertained to the second Petition for Penalties, and with this one, the Court agreed and found the WCJ erred in the dismissal of the Petition.  The Pennsylvania Workers’ Compensation Act specifically states that a hearing on the Challenge must be held within 21 days of the injured worker’s filing of the Challenge.  And, if it is not?  The Act addresses this exact situation:

“(f) If the [WCJ] fails to hold a hearing within 21 days or fails to issue a written order approving the suspension or modification of benefits within 14 days of the hearing, the insurer shall reinstate the employee’s [WC] benefits at the weekly rate the employee received prior to the insurer’s suspension or modification of benefits under [S]ections 413(c) or 413(d) of the [A]ct. 34 Pa. Code § 131.50a (emphasis added).”

Since more than 21 days passed, and the workers’ compensation insurance carrier failed to reinstate the workers’ comp benefits, the carrier did, in fact, violate the Act.  However, under the Act, imposition of penalties is discretionary with a WCJ, as is the amount of the penalty.  Therefore, the Court could not simply reverse, but had to remand (send the case) back to the WCJ “to determine whether to assess a penalty, and if so, the amount thereof.”