Workers’ compensation benefits in Pennsylvania consist of three types (aside from fatal claim benefits, which are not really relevant for this discussion). These are described in detail on our website. There are wage loss benefits (also known as “indemnity”), medical benefits and “specific loss” benefits. Specific loss benefits are paid for permanent loss of use of a body part and/or disfigurement claims (usually scarring, either from the injury or resultant surgery). The rate paid to an injured worker in wage loss benefits and specific loss benefits, for many years, has been calculated using the same formula. A recent decision by the Supreme Court of Pennsylvania has now overruled existing case law, changing the formula in specific loss cases.
Under Section 306(a) of the Pennsylvania Workers’ Compensation Act (Act), the rate for temporary total disability (TTD) benefits is calculated using the Average Weekly Wage (AWW) of the injured worker. The benefit rate is two-thirds of the AWW, up to the statutory maximum (which is set every year). If the benefit rate as calculated is less than half of the maximum rate, then the appropriate benefit rate is the lesser of 1) One half of the maximum rate; or, 2) 90% of the AWW. Note that the AWW and benefit rate are often miscalculated by the workers’ comp insurance carrier and should always be reviewed by an experienced workers’ compensation attorney. Under old case law, the same benefit rate paid for TTD was used for specific loss.
That all changed when the Supreme Court of Pennsylvania issued a decision in the case of Jackiw v. Soft Pretzel Franchise (Workers’’ Compensation Appeal Board). The language in the Act for specific loss benefits, in Section 306(c), says that the benefit rate for specific loss, “ . . . shall not be more than the maximum compensation payable nor less than fifty per centum of the maximum compensation payable per week for total disability as provided in subsection (a) of this section, but in no event more than the Statewide average weekly wage.” The reference there to Section 306(a) is what created the prior case law, saying the rate was the same for each type of benefit.
The Court, however, observed that the language in the Act, creating a different formula for specific loss, cannot be ignored. In the case they were deciding, the injured worker had a low AWW, so the minimum rate for specific loss (half of the maximum rate) was significantly higher than her TTD rate. The Court found that the injured worker was entitled to the higher rate, as the language in the Act must be given meaning. What reason the legislature had for creating a difference between the two (perhaps the permanency of specific loss, mulled the Court), is irrelevant to how the language must be interpreted.
It is always difficult to overturn established precedent. We give tremendous respect to the attorneys who fought for their client successfully through the appellate process (along with the great attorneys with the Pennsylvania Association For Justice [of which we are proud members], who offered an impactful amicus brief), as well as to the Court, for giving respect to the words the legislature wrote.