PROPOSED RULEMAKING
DEPARTMENT OF LABOR AND INDUSTRY
[34 PA. CODE CHS. 123 AND 127]
General Provisions of Act 57 of 1996
[27 Pa.B. 3141] The Department of Labor and Industry (Department), Bureau of Workers' Compensation (Bureau), proposes to provide clarifications and detailed guidance for the uniform application of the provisions of the act of June 24, 1996 (P. L. 350, No. 57) (Act 57), which amended the Workers' Compensation Act (act) (77 P. S. §§ 1-- 2626). Chapter 123 (relating to general provisions--Part II) proposed to be added. In addition, because Act 57 abrogated the reconsideration stage of the utilization review (UR) process, the Department proposes to repeal and amend certain portions of Chapter 127 (relating to workers' compensation medical cost containment). Specifically, the Department proposes the deletion of §§ 127.501--127.515 (relating to UR--reconsideration). The Department also proposes to delete language throughout Chapter 127 which references both the initial and reconsideration stages of UR. Additionally, the Department proposes to amend § 127.105 (relating to outpatient providers subject to Medicare fee schedule--chiropractors) due to changes in the Medicare fee schedule relating to the reimbursement of chiropractic treatment. The procedural code A2000 under the Medicare Fee Schedule has been repealed and replaced effective January 1, 1997; therefore, reimbursement of chiropractors is to be governed by the new procedure codes. Further, the Department proposes to amend: (1) § 127. 251 (relating to Medical fee disputes--review by the Bureau) to incorporate the statute of limitations imposed on providers wishing to file applications for Medical Fee Review under Act 57; (2) § 127.452 (relating to initial requests for UR--filing and service) to clarify who the provider under review is when a UR request is filed; (3) § 127.751 (relating to employer's option to establish a list of designated health care providers); (4) § 127.752 (relating to contents of list of designated health care providers); and (5) § 127.755 (relating to required notice of employe rights and duties). The amendments to §§ 127.751, 127.752 and 127.755 are proposed so as to incorporate the amendments of Act 57 which permit the inclusion of four Coordinated Care Organizations (CCOs) on the employer's list of designated providers and which require an employe to treat with an employer-designated provider for 90 days, and which may require continued treatment for an additional 90 days when an employer-designated physician recommends invasive surgery for the employe.
Statutory Authority
These amendments are proposed under the authority provided in sections 401.1 and 435 of the act (77 P. S. §§ 710 and 991) which provide that the Department adopt regulations which are necessary or desirable for the enforcement of the act and which are reasonably calculated to provide interested parties of their rights under the act. These amendments are proposed under the additional authority of sections 204(d) and 306(f.2)(7) of the act (77 P. S. §§ 71 and 511.2(f.2)(7)), which charge the Department with establishing regulations implementing those sections which govern the offset of workers' compensation benefits by amounts received in unemployment compensation, Social Security (old age) benefits, severance and pension benefits and the certification of CCOs.
Background
On June 24, 1996, Governor Tom Ridge signed into law Act 57, which substantially amended the act. The amendments are intended to address the rising costs of workers' compensation in this Commonwealth while preserving the rights of employes to be adequately compensated for their work-related injuries. Among the amendments are provisions which allow an executive officer of a nonprofit corporation to elect not to be an employe for the purposes of workers' compensation coverage, provisions which allow the offset of workers' compensation benefits from certain amounts received from Social Security (old age), severance and pension benefits, and provisions which require that, in order for an employer's spouse or child to be deemed an employe for purposes of workers' compensation coverage, an employer of agricultural labor shall file an express written contract for hire with the Department. The amendments also call for the abrogation of the reconsideration stage of the UR process and the placement of time limitations on health care providers wishing to file applications for medical fee review. The amendments also require that an employe's earning power be determined by expert opinion, and that the Department establish the qualifications of vocational experts. Further, Act 57 provides for an impairment rating evaluation after the receipt of 104 weeks of total disability compensation. If the impairment rating is less than 50%, the employe's benefit status shifts from total to partial disability with benefits capped at 500 weeks. In addition, Act 57 establishes an automatic request for supersedeas when a petition alleging an employe's full recovery is filed accompanied by a physician's affidavit to that effect.
Act 57 added two sections to the act which address situations in which employes who have returned to work are receiving both wages and workers' compensation benefits. These sections call for the suspension or modification of benefits after notice and an affidavit are submitted which allege that the employe has returned to work. Act 57 also places new reporting requirements on employes who file for (or are receiving) compensation under section 306(a) or (b) of the act. Employes are required to regularly report amounts received from unemployment compensation, Social Security (old age), severance and pension benefits. Additionally, employes are required to report information regarding employment and self-employment, as well as any other information which is relevant in determining the entitlement to or amount of compensation. Further, insurers are permitted to submit forms to employes in order for employes to provide verification that the employes' status regarding their entitlement to receive workers' compensation benefits has not changed. Act 57 also created an informal conference procedure to expedite the workers' compensation adjudication process, and a process by which employers and employes can enter into Compromise and Release Agreements which may extinguish the employer's liability for a work-related injury. Act 57 permits an employer and the recognized or certified exclusive representatives of its employes to bargain collectively over specified issues relating to workers' compensation in order to facilitate the resolution of claims. In an effort to promote workplace safety and reduce employe injuries and employer costs, Act 57 granted a 5% premium discount to employers with Department-certified safety committees for a maximum period of 5 years. Act 57 also increased penalties as a result of unreasonable or excessive delays.
Act 57 amended section 306(f.2) of the act by transferring the authority for certification of CCOs from the Department of Health to the Department. Accordingly, the Department will develop procedures and issue an application form for CCO certification. CCOs currently certified by the Department of Health will continue to be certified until the new procedures for CCO certification are published in the Pennsylvania Bulletin. Section 31.2 of Act 57 provides that the regulations promulgated by the Department of Health under section 306(f.2)(7) of the act shall be deemed regulations of the Department. The Department intends to operate under the existing statement of policy published by the Department of Health in 28 Pa. Code Chapter 9, Subchapter B (relating to coordinated care organizations--statement of policy).
Since the passage of Act 57 and the publication of the Department's notice at 26 Pa. B. 3979 (August 17, 1996), the Department has received various written and verbal comments regarding the interpretation of various provisions of Act 57. Additionally, consistent with the Governor's policy, as set forth in Executive Order 1996-1, the Department has consulted with stakeholders affected by the passage and implementation of Act 57. In addition to the stakeholders, the Department considered the comments and suggestions made by members of the Pension and Independent Medical Examination (IME) Task Forces, as well as the section 450 subcommittee to the Governor's Committee on Labor-Management Partnerships, organized to lend interpretive guidance on the implementation of sections 204, 306(a.2) and 450 of the act respectively.
The Department published a statement of policy at 27 Pa.B. 1731 (April 5, 1997) in an effort to provide interpretive guidance to all parties of their rights and obligations under Act 57. The statement of policy was written in the spirit of implementing the Legislative intent of achieving the greatest cost savings in amounts paid in workers' compensation premiums, benefits payments and litigation costs, while preserving the rights of employes to be adequately compensated for their work-related injuries. The statement of policy invited all interested parties to provide written comments to the Bureau. Written comments received were considered in the promulgation of these proposed amendments.
This notice of proposed rulemaking further clarifies and expands upon the previous interpretation of Act 57 provided in the statement of policy. In response to comments received and stakeholder meetings, some changes have been made to the interpretations published on April 5, 1997. The Department intends to delete the statement of policy which appears in Chapter 122 (relating to general provisions of Act 57 of 1996--statement of policy) when the proposed addition of Chapter 123 is adopted.
Purpose
The purpose of these proposed amendments is to effectuate the provisions of Act 57. The amendments at sections 204; 306(a.2); (b)(2) and (3), (f.1)(1)(i) and (f.1)(5); 311.1; 402.1; 413(a.1), (c) and (d); and 450 were intended to curtail the escalating costs associated with work-related injuries, while preserving the right of injured workers to be adequately compensated for their work-related injuries. Generally, these cost savings are effectuated through the offset of workers' compensation benefits by amounts received by employes in unemployment compensation, Social Security (old age), severance and pension benefits; the abrogation of the reconsideration stage of the UR process and the placement of time limitations on health care providers for the filing of applications for medical fee review; the addition of an impairment rating evaluation after the employe's receipt of 104 weeks of total disability benefits in order to determine the percentage of whole body impairment; the addition of new employe reporting requirements; and the allowance of collective bargaining over certain issues relating to workers' compensation benefits and the compromise and release of claims.
Since the passage of Act 57, interested parties have expressed their desire for the expeditious promulgation of regulations to provide definitive interpretations and guidance in order that all parties have a clear understanding of their rights and obligations under the Act 57 amendments. These proposed amendments provide the guidance needed to ensure consistent application and compliance with Act 57.
Affected Persons
Those affected by these proposed amendments are private and public sector employers in this Commonwealth, workers' compensation insurance carriers, self-insured employers, health care providers and injured workers.
Fiscal Impact
There is no significant fiscal impact associated with this proposed rulemaking. Although Act 57 required the creation of new Departmental forms for public use, most of these forms were created prior to the effective date of Act 57, therefore, significant costs are not expected. Furthermore, any costs to the regulated community associated with the implementation of these proposed amendments will be offset by the expected savings of Act 57's amendments. Cost savings to the regulated community are estimated at over $225 million for the first policy year which commenced on February 1, 1997. Additionally, any costs to the Commonwealth will be offset by the savings experienced by the Commonwealth as a self-insured employer.
Summary of Proposed Rulemaking. Chapter 123
(1) Organization of Chapter 123. These proposed amendments provide detailed guidelines implementing the general provisions of Act 57 relating to workers' compensation. The chapter is divided into ten subchapters, with Subchapter A (relating to offset of unemployment compensation, Society Security (old age), severance and pension benefits) devoted to provisions relating to the offset of workers' compensation benefits by amounts received in unemployment compensation, Social Security (old age), severance and pension benefits. Subchapter B (relating to impairment ratings) details the method of obtaining an impairment rating evaluation and the method for the shift of benefit status from total to partial. Subchapter C (relating to qualifications for vocational experts approved by the Department) establishes the qualifications for vocational experts approved by the Department. Subchapter D (relating to earning power determinations) sets forth employer prerequisites to seeking a modification or suspension of benefits. Additionally, this subchapter sets forth the standard for which an employe's earning power will be determined. Subchapter E (relating to collective bargaining) provides guidance on the use of alternative dispute resolution systems in collective bargaining agreements by an employer and its organized labor force. Subchapter F (relating to employe reporting and verification requirements) sets forth employe reporting and verification requirements. Subchapter G (relating to special supersedeas) establishes the procedures for automatic requests for supersedeas and return-to-work suspensions and modifications. Subchapter H (relating to informal conferences) clarifies the representation requirements of informal conferences. Subchapter I (relating to use of optically scanned documents) governs the use of optically scanned documents and the admissibility of copies into evidence. Finally, Subchapter J (relating to unreasonable or excessive delays) sets forth the time period for which an employer's delay may be considered unreasonable or excessive in connection with the assessment of penalties.
(2) Subchapter A. Offset of workers' compensation benefits
Prior to Act 57, section 204 of the act provided for the offset of workers' compensation benefits by amounts an employe received in unemployment compensation. Act 57 amended section 204 of the act by providing additional offsets for Social Security (old age), severance and pension benefits. While the offset for unemployment compensation benefits applies to all work-related injuries, the offset for Social Security (old age), severance and pension benefits applies only to claims for injuries which are suffered on or after June 24, 1996.
Section 204 of the act requires employes to regularly report the receipt of unemployment compensation, Social Security (old age), severance and pension benefits received subsequent to the date of injury. The report shall be made on Form LIBC-756A, ''Employee's Report of Benefits (Unemployment Compensation, Social Security (old age), Severance and Pension Benefits) for Offsets.''
Consistent with the Department's statement of policy in § 122.3 (relating to employe report of benefits subject to offset) the proposed amendments interpret the term ''regularly'' to mean within 30 days of any change in the receipt of the benefits mentioned above, but in any event no less than every 6 months. The proposed amendments provide that the offset shall apply only to wage-loss benefits (as opposed to medical benefits, specific loss or survivor benefits), and that the wage-loss benefits shall be offset by the net amount received by the employe. The net amount is the amount of any unemployment compensation, Social Security (old age), pension or severance benefits received by the employe after the required deductions for local, State and Federal taxes and amounts deducted under the Federal Insurance Contributions Act (FICA) (26 U.S.C.A. §§ 3101--3126).
Unemployment compensation benefits received by an employe are not initially subject to the required deductions for taxes. Accordingly, the net amount of unemployment compensation is determined when employes who have received unemployment compensation benefits file the required tax forms at the end of the tax year. Therefore, insurers who have offset workers' compensation benefits by amounts received in unemployment compensation benefits may be required to reimburse the employe for the amount offset which is attributable to the employe's tax liability. Employes who are required to pay taxes on amounts received in unemployment compensation benefits may notify the insurer of these payments in writing. Insurers are not required to repay an employe until the employe provides this notification.
The proposed amendments provide that after receipt of the completed Form LIBC-756A, an insurer may calculate and achieve the offset of benefits received by the employe from any of the sources enumerated in section 204 of the act. Consistent with the Department's statement of policy in § 122.4 (relating to application of the offset, generally) the proposed amendments provide for a self-executing offset after notification. The insurer shall notify the employe and the employe's counsel, if known, and the Department on Form LIBC-761, ''Notice of Workers' Compensation Benefit Offset,'' that the workers' compensation benefits will be offset. The notice shall be provided to the employe at least 15 days prior to the offset of workers' compensation benefits. This notice shall indicate the amount and type of the offset; how the offset was calculated, with supporting documentation; when the offset commences; and the amount of any recoupment, if applicable. Supporting documentation may include, but is not limited to, any information supplied by employes to insurers by Forms LIBC-756A, ''Employee's Report of Benefits (Unemployment Compensation, Social Security (Old Age), Severance and Pension Benefits) for Offsets;'' LIBC-750, ''Employee Report of Wages (other than Workers' Compensation Benefits Received)''; LIBC-760, ''Employee Verification of Employment, Self-employment or Change in Physical Condition.''
The employe may challenge the offset by filing a petition for review with the Department. It is the insurer's burden to demonstrate that the notice of worker's compensation benefit offset was received by the employe. The insurer's burden is met if it provides evidence that the notice was mailed to the employe, at the employe's last known address, by first-class mail.
Consistent with the Department's statement of policy in § 122.5 (relating to credit for benefits already received), these proposed amendments provide that in the event the insurer receives information that the employe is receiving or has already received unemployment compensation, Social Security (old age), severance or pension benefits prior to receiving Form LIBC-756A, the insurer shall be entitled to recoup the offset for amounts already received by the employe in a lump-sum manner. This recoupment results in an offset against future payments of workers' compensation benefits until the offset amount has been fully recouped.
Subchapter A provides the manner in which an offset of workers' compensation from amounts received in unemployment compensation, Social Security (old age), severance and pension benefits shall be achieved. These proposed amendments provide the specific methods of calculating the offset dependent upon the type of benefit received by the employe. The offset to workers' compensation benefits shall apply only for amounts an employe receives which are attributable to the same time period in which an employe also receives workers' compensation benefits. The offset is not applicable to any benefit to which an employe may be entitled or eligible, but is not receiving.
The Department created a Pension Task Force to aid in the promulgation of proposed amendments to effectuate the provisions relating to the offset of workers' compensation benefits by amounts received in pension benefits. Consistent with the Department's statement of policy in § 122.8 (relating to Offset of pension benefits, generally), these proposed amendments interpret the term ''pension benefits'' as benefits received from defined-benefit plans and defined-contribution plans. Further, the definition of pension benefits is to be construed consistently with Title 1 of ERISA. The offset is applicable only to the extent the pension benefit is funded by the employer directly liable for the payment of workers' compensation benefits.
In promulgating these pension offset provisions, the Department attempted to achieve the most favorable result in terms of effectuating the projected savings of this section, while at the same time preserving pension funds which are intended for an employe's retirement. Therefore, these proposed amendments provide that workers' compensation benefits may not be offset by pension benefits which are rolled over into an Individual Retirement Account (IRA) or other similarly restricted account, provided that the employe does not utilize or otherwise withdraw funds from the account while at the same time receiving workers' compensation benefits from the liable employer. However, the Department determined that when the employe receives the pension in the form of a lump-sum payout and is utilizing the pension benefit, the pension offset shall be calculated based upon the actuarial equivalent of the lump sum with respect to the annuity options (qualified joint and survivor annuity or life annuity) available at the time of the employe's receipt. Therefore, the monthly amount the employe would have received from an annuity, had the employe chosen to accept the pension in the form of an annuity, shall be used to calculate the weekly offset amount. The annuity options available at the time of receipt are those options, based upon interest and mortality, which were generally available for purchase by the employe at the time the employe received the pension.
If the employe receives a pension from a multi-employer funded pension plan, the offset shall be calculated based on the proportion of the liable employer's contribution to the pension fund. Contributions from other employers in the multi-employer funded pension plan shall not be included in the offset. Therefore, the ''extent funded by the liable employer'' shall be obtained by calculating that portion of the annuity which was actually contributed by the employer at the time of the employe's receipt of the pension benefits.
Severance benefits, which are received subsequent to the work-related injury, shall be offset to the extent funded by the employer directly liable for the payment of compensation. Consistent with the Department's statement of policy in § 122.2 (relating to definitions), these proposed amendments define severance benefits as any benefit which is taxable to the employe and which is paid as a result of the employe's separation from employment. Severance benefits include benefits received in the form of tangible property; however, the term may not include earned income, such as payments based on an employe's unused vacation or sick leave.
(3) Subchapter B. Impairment Ratings
Section 306 of the act was amended by Act 57 to provide for an impairment rating evaluation (IRE) to determine the percentage of whole body impairment due to the compensable injury at the expiration of an employe's receipt of 104 weeks of total disability compensation. The impairment rating is a mechanism for adjusting the status of workers' compensation benefits between total and partial. As established by the Department's statement of policy in § 122.102 (relating to Impairment rating evaluation requests), and in § 123.102 (relating to impairment rating evaluation requests), an insurer may request an IRE within 60 days of the employe's receipt of 104 weeks of total disability benefits. These proposed amendments interpret this section to allow an insurer to request an evaluation beginning 60 days prior to the expiration of the 104 weeks and continuing up to 60 days after the expiration of the employe's receipt of 104 weeks of total disability benefits. If the evaluation is requested and performed during this time period, the adjustment of disability status shall relate back to the expiration of the employe's receipt of 104 weeks of total disability benefits. In cases where the evaluation takes place more than 60 days past the expiration of 104 weeks, the adjustment of disability status shall be effective as of the date of the evaluation or as determined by the evaluating physician. Absent agreement between the parties, the IRE may not be performed prior to the expiration of the employe's receipt of 104 weeks of total disability benefits.
Consistent with the Department's statement of policy in § 122.103 (relating to physicians), these proposed amendments provide that the physician performing the IRE shall be a physician licensed in this Commonwealth who is certified by an American Board of Medical Specialties-approved board or its osteopathic equivalent and who is active in clinical practice at least 20 hours per week. These proposed amendments interpret the phrase ''active in clinical practice'' to mean the act of providing preventive care and the evaluation, treatment and management of the medical conditions of patients on an ongoing basis. The Department reserves the right to establish additional requirements for physicians appointed by the Department for purposes of conducting IREs. The Department has established through these proposed amendments a process and time frame for the appointment of physicians to perform IREs. Where the parties are unable to reach agreement on a physician to perform the evaluation, the insurer may request appointment of a physician by the Department. This request shall be made on a form prescribed by the Department. Within 20 days of receipt of an appointment request, the Department will provide the parties with the name and address of the physician appointed to perform the IRE. The insurer is responsible for scheduling the date and time of the evaluation. The Department has established through the statement of policy and these proposed amendments a process whereby the physician performing IREs shall indicate the impairment rating of the employe on an ''Impairment Rating Determination Face Sheet'' (face sheet). Physicians are to attach the ''Report of Medical Evaluation'' as utilized by the ''AMA Guides to the Evaluation of Permanent Impairment'' to the face sheet and provide the completed Face Sheet and report to the insurer, employe, employe's counsel, if known, and the Department within 30 days of the date of the IRE.
These proposed amendments interpret section 306(a.2) of Act 57 as self-executing after notice to the employe. Therefore, after receipt of the face sheet, if appropriate, an insurer may adjust the employe's benefit status by providing written notice to the employe, employe's counsel, if known, and the Department, on a form prescribed by the Department, that: (1) the evaluation has resulted in an impairment rating of less than 50%; (2) 60 days from the date of the notice the employe's benefit status shall be adjusted from total to partial; (3) the adjustment of benefit status does not change the amount of the weekly workers' compensation benefit; (4) the employe may appeal an adjustment of benefit status by filing a Petition for Review with the Department; and (5) an employe may only receive partial disability benefits for a maximum of 500 weeks.
If an IRE is performed within 60 days of the expiration of the employe's receipt of 104 weeks of total disability benefits, the adjustment of benefit status from total to partial shall relate back to the date of the expiration of 104 weeks of total disability benefits. If the IRE is performed more than 60 days after the expiration of the employe's receipt of 104 weeks of total disability benefits, the adjustment of benefits from total to partial shall be effective as of the date of the evaluation or as determined by the evaluating physician.
Under section 306(a.2)(2) of the act, no reduction shall be made until 60 days notice of modification is given. Therefore, although an adjustment of the benefit status may relate back to the expiration of 104 weeks of total disability benefits, the insurer is required to provide the employe with 60 days notice prior to effectuating the retroactive benefit status adjustment.
At any time during the receipt of the 500 weeks of partial disability benefits, an employe may appeal the adjustment of benefit status to a Workers' Compensation judge by filing a petition for review with the Department. The employe shall produce a physician's determination that the employe's impairment rating is equal to or greater than 50% under the ''AMA Guides to the Evaluation of Permanent Impairment.'' The physician chosen by the employe to perform the impairment rating shall be licensed in this Commonwealth and Board-certified by an American Board of Medical Specialty or its osteopathic equivalent and be active in clinical practice for at least 20 hours per week.
(4) Subchapter C. Qualifications for Vocational Experts Approved by the Department
Subchapter C focuses on the amendment to section 306(b)(2) of the act which provides that insurers may require an employe to submit to an interview by an expert approved by the Department and selected by the insurer. These proposed amendments interpret the term ''expert'' to mean a vocational evaluator who will conduct earning power assessment interviews. To ensure the level of expertise and professionalism required to conduct earning power assessment interviews, the Department has established, through these proposed amendments, minimum qualifications an individual must meet in order to be considered as an expert approved by the Department. These qualifications ensure access to vocational evaluators without increasing costs to insurers and employes seeking earning power assessments.
(5) Subchapter D. Earning Power Determinations
Subchapter D effectuates the amendments to section 306(b)(2) and (b)(3) of the act. The Department, through these proposed amendments, interprets section 306(b)(3) of the act to require that notice be provided to the employe and the employe's counsel, if known, regardless of whether the insurer intends to seek a modification or suspension of the employe's benefits. If the insurer intends to seek a modification or suspension of the employe's benefits, the notice must be provided to the employe prior to or contemporaneous with the filing of a petition for modification or suspension.
Section 306(b)(2) of the act provides that if a specific job vacancy exists with the liable employer that the employe is capable of performing, the employer must offer that job to the employe. The Department interprets this section as a threshold requirement prior to seeking a modification or suspension of benefits based on earning power. These proposed amendments provide that this threshold requirement may be satisfied if the employer avers on the petition for modification or suspension and provides evidence at a hearing that: (1) the employe was notified of a job vacancy and failed to respond; (2) a specific job vacancy was offered to the employe, which the employe refused; (3) the employer offered a modified job to the employe, which the employe refused; or (4) no job vacancy exists within the usual employment area.
The Department has determined that the employer's obligation to offer a job that the employe is capable of performing arises when the insurer notifies the employe that the employe is able to return to work and provides the notice as required under section 306(b)(3) of the act. The liable employer's obligation continues for a period of 30 days from the date of the notice or until the insurer files a petition for modification or suspension, whichever is longer.
To provide further clarification of the employer's obligation under section 306(b)(2) of the act, § 123.302 (relating to employer job offer obligation) of these proposed amendments provides that while the obligation to offer a specific job continues for a minimum of 30 days, employers are not required to hold a job open for the employe for 30 days. Job offers are to be made consistent with the employer's usual business practice. Accordingly, if the employer's business practice mandates that a job be held open for 5 days after the making of an offer, the employer is required to utilize this same practice when offering a job to an injured employe. If a specific job vacancy, which the employe is capable of performing, becomes available during the 30-day period, the employer is under an obligation to offer the job to the employe. In cases where more than one job which the employe is capable of performing becomes available, the employer maintains the right to select which job will be offered to the employe. If the employe fails to respond to the offer or refuses the offer, the employer's obligation has been met. Furthermore, the provisions of a collective bargaining agreement which govern the manner in which job offers are made shall control for purposes of offering a specific job vacancy to the employe under section 306(b)(2) of the act. Further, a job may not be considered vacant if the employer is precluded from offering the job to a particular employe because a collective bargaining agreement limits the type of position that the employe may hold.
Where the employer avers that no job vacancy exists, the employe may rebut the employer's averment by demonstrating facts which may include, but are not limited to, the following: (1) the employer is or was actively recruiting for a specific job vacancy that the employe is capable of performing; or (2) the employer has posted or announced the existence of a specific job vacancy, that the employe is capable of performing, which the employer intends to fill. In all situations the employe must meet or exceed the requirements of the position. In addition, the existence of specific jobs as averred by the employe is only relevant during the period in which the employer had a duty to offer a specific job.
(6) Subchapter E. Collective Bargaining
Act 57 amended the act to permit any employer and the recognized or certified and exclusive representative of its employes to establish, through collective bargaining, certain binding obligations and procedures for the resolution of claims relating to workers' compensation. Act 57 encourages utilization of this enabling language and the Department's Office of Labor-Management Cooperation is available to provide assistance to interested parties.
It is envisioned that this section will provide flexibility between management and labor organizations to resolve workers' compensation claims in an expeditious manner, while preserving the benefits and protections of the act.
Collective bargaining agreements may provide an alternative dispute resolution (ADR) system which may include, but is not limited to, arbitration, mediation and conciliation for the resolution of claims for work-related injuries.
Standard forms utilized by the Department and filing requirements of the act remain in effect for parties participating in an ADR system under section 450 of the act (77 P. S. § 1000.6). Forms submitted to the Department shall indicate that the parties involved are participating in an ADR system.
All determinations made under an ADR system established under section 450 of the act shall be binding and enforceable. Appeals from determinations rendered under an ADR system are limited to those made under the conditions specified by 42 Pa.C.S. § 7314 (relating to vacating award by court).
Collective bargaining agreements may provide that in the event of the termination or expiration of the agreement, the parties shall be subject to the terms and conditions of the expired agreement until a new collective bargaining agreement becomes effective. In that instance, ADR systems in place at the time the agreement expires shall continue to be the exclusive system for the resolution of the workers' compensation claims.
(7) Subchapter F. Employe Reporting and Verification Requirements
Act 57 creates new reporting requirements for employes who file for, or are receiving, workers' compensation benefits. The reporting requirements are intended not only to facilitate the management of claims, but also to reduce fraud within the workers' compensation system. The insurer shall notify the employe, at the time of the work injury or upon commencing payment of compensation, of the duty to report under this section, and shall provide the employe with the necessary forms.
Under section 311.1(a) of the act (77 P. S. § 631.1), employes who file for, or are receiving, compensation shall report information to the insurer which is relevant to determining the entitlement to, or the amount of, compensation. The information includes, but is not limited to, information regarding employment, including voluntary employment, self-employment, wages earned, and the receipt of any benefits referred to in section 204 of the act. The employe is obligated to report this information on form LIBC-750, ''Employee Report of Wages (other than Workers' Compensation Benefits Received)'' within 30 days of commencing employment or self-employment.
Under section 311.1(d) of the act, insurers may submit form LIBC-760, ''Employee Verification of Employment, Self-employment or Change in Physical Condition'' to an employe and the employe's counsel, if known, to verify that the employe's status regarding the entitlement to receive compensation has not changed. The form requires that the employe supply all information which is relevant to determining the amount of, or entitlement to, compensation. The employe shall complete and return the verification form to the insurer within 30 days of its receipt. The employe's failure to return the form in the specified time period may result in a suspension of the employe's workers' compensation wage-loss benefits, under section 311.1(g) of the act. It is the insurer's burden to establish that the employe has received the verification form. The insurer's burden is met if it provides evidence that the form was mailed to the employe's last known address, by first-class mail.
The Department has interpreted the provisions of section 311.1(d) of the act to be self-executing upon notification by the insurer. The insurer shall suspend payments of compensation by providing written notice to the employe and the employe's counsel, if known, on Form LIBC-762, ''Notice of Suspension for Failure to Return Form LIBC-760 (Employee Verification of Employment, Self-employment or Change in Physical Condition),'' that the workers' compensation benefits have been suspended as a result of the employe's failure to return the verification form within the statutory time period. The notice shall further inform the employe that the workers' compensation benefits shall be reinstated within 15 days of the insurer's receipt of the verification form. In addition, the notice shall inform the employe of the right to challenge the suspension of benefits by filing a petition for review with the Department. Employes are not entitled to payments of compensation during the period of noncompliance with this section. Failure to comply with section 311.1(d) of the act may subject the employe to prosecution under Article XI of the act relating to fraud. In addition, failure to reinstate compensation within 15 days of receiving the form may subject the insurer to penalties under section 435 of the act (77 P. S. § 991).
Upon receipt of the completed verification form, the insurer shall reinstate benefits for which the employe is eligible. The insurer shall submit Form LIBC-763, ''Notice of Reinstatement of Workers' Compensation Benefit,'' to the employe, employe's counsel, if known, and the Department, indicating the date of receipt of the verification form and the date of reinstatement of workers' compensation benefits. A failure to do so may result in the imposition of penalties under section 435 of the act.
(8) Subchapter G. Automatic Request for Supersedeas and Return to Work
Act 57 amended section 413 of the act by adding subsection (a.1) and (d) and amending subsection (c) (77 P. S. §§ 771(a.1), 774.2 and 774.3). Subsection (a.1) provides for an automatic request for supersedeas when a petition alleging full recovery is filed, accompanied by a physician's affidavit to that effect. The physician's affidavit alleging full recovery must have been completed in connection with an examination which occurred within 21 days of the filing of the petition.
These proposed amendments provide in § 123.601 (relating to disposition of automatic request for special supersedeas) that if a Workers' Compensation judge fails to conduct a special supersedeas hearing within 21 days of assignment of the request or fails to issue a written order within 7 days of the hearing, the supersedeas request shall be deemed denied.
Section 413(c) and (d) of the act (77 P. S. §§ 774.2 and 774.3) allows an insurer to suspend or modify compensation upon the employe's return to work. If the employe is receiving wages greater than or equal to the pre-injury wage, the insurer is entitled to suspend the payment of wage-loss benefits. If the employe has returned to work at wages less than the pre-injury wage, the insurer is entitled to a modification of the wage-loss benefits. Sections 413(c) and (d) of the act are self-executing upon the filing of the required forms and affidavit by the insurer. These subsections require the insurer to notify the employe and the employe's counsel, if known, and the Department, by Forms LIBC-751, ''Notification of Suspension or Modification under §§ 413(c) & (d)'' and LIBC-752, ''Insurer's Affidavit Pursuant to Section 413(c) & (d),'' within 7 days of suspending or modifying benefits. In cases where the insurer has previously modified or suspended the employe's benefits under section 413(c) or (d) of the act, to effectuate the subsequent modification or suspension of the workers' compensation benefits, the insurer must file additional forms under this section indicating the change in the employe's wages and the corresponding change in the workers' compensation benefits. These proposed amendments provide in § 123.603 (relating to employe request for special supersedeas hearing) that the insurer's right to modify or suspend the employe's workers' compensation benefits may not continue when the employe has requested a special supersedeas hearing and the Workers' Compensation judge fails to hold a special supersedeas hearing within 21 days or fails to issue a written order within 14 days of the hearing approving the modification or suspension of the employe's benefits.
(9) Subchapter H. Informal Conferences
Act 57 amended the act by adding section 402.1 (77 P. S. § 711.1) which provides a mechanism for informal conferences. Act 57 intended that informal conferences would expedite the workers' compensation adjudication process by allowing parties the opportunity to meet informally and discuss issues involved in an ongoing case. An informal conference shall only be held when both parties agree to the conference. Section 402.1(b)(iii) of the act provides that each party may be represented, but the employer may only be represented by an attorney at the informal conference if the employe is also represented by an attorney. The Department, through these proposed amendments, construes this section to permit the representation of a corporation in the informal conference by an agent or representative of the corporation other than an attorney. However, when the case is transferred to a Workers' Compensation judge for an adjudication, the corporation shall be represented by an attorney.
(10) Subchapter I. Use of Optically Scanned documents
In conjunction with Act 57, the Bureau has implemented a Statewide Comprehensive Information Management Systems (CIMS) Project which is a five phase plan for installation of the Bureau's state-of-the-art computer system for administration of the act. Subchapter I permits the Bureau's use of optically scanned documents and permits these documents to be admissible as evidence. The purpose of this section is optimize the Bureau's use of optically scanned documents where practical and cost efficient, while preserving the integrity of records.
(11) Subchapter J. Penalty for Unreasonable and Excessive Delay
Act 57 amended section 435(d)(3) of the act by increasing the penalty to employers for violations of the act accompanied by unreasonable or excessive delay. This change provides incentive for employers and insurers to comply with the act. This section sets forth the time period for which an employer's delay in complying with the act may be deemed unreasonable or excessive.
Summary of Proposed Rulemaking for Chapter 127
Act 57 amended section 306(f.1) of the act by: (1) extending the time period when an injured employe must treat with an employer-designated health care provider; (2) establishing a procedure when the employe is informed of the necessity of invasive surgery; (3) creating a statute of limitations for the filing of applications for Medical Fee Review; (4) eliminating the reconsideration stage of the UR process; and (5) establishing that in cases where a request for UR is filed for physical therapy or occupational therapy, the review will be performed by a reviewer licensed in this Commonwealth in the same profession and having the same specialty as the provider of the treatment under review, regardless of the specialty of the provider who prescribed the treatment.
Organization
This summary is organized consistent with the order these topics are covered by the Medical Cost Containment regulations. Therefore, the proposed amendments will be addressed in the following order.
Subchapter B. Medical Fees and Fee Review
The Department proposes an amendment to § 127.208(e) (relating to time for payment of medical bills) to delete the language which references both the initial and reconsideration stages of UR. The Department further proposes the amendment of the regulations in this subchapter relating to review of medical fee disputes to provide for the statute of limitations placed on providers by Act 57 for those who wish to file applications for fee review.
Subchapter C. Medical Treatment Review
The Department proposes the amendment of this subchapter to delete any language which references the initial or reconsideration stage of UR. Due to the elimination of the reconsideration stage, the initial request for UR is the only UR available, prior to a de novo hearing before a workers' compensation judge. Therefore, the initial language is extraneous and does not reflect the nature of the UR process as it exists after the passage of Act 57. The Department proposes the deletion of §§ 127.505--127.515. However, the Department maintains the right to collect outstanding amounts owing due to the previous reconsideration of a utilization review determination.
Subchapter D. Employer List of Designated Providers
The Department proposes the amendment of Subchapter D to incorporate Act 57's amendment to the time period for which an employe is required to treat with an employer-designated health care provider and which establishes the procedure the employe is required to follow when a designated provider prescribes invasive surgery for the employe.
Effective Date
These proposed amendments will be effective immediately upon publication.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on June 18, 1997, the Department submitted a copy of these proposed amendments to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Labor Relations Committee and the Senate Committee on Labor and Industry (Standing Committees). In addition to submitting the proposed amendments, the Department has provided IRRC and the standing Committees with a copy of a detailed Regulatory Analysis Form prepared by the Department in compliance with Executive Order 1996-1, Regulatory Review and Promulgation. A copy of this material is available to the public upon request.
If the standing Committees have objections to any portion of the proposed amendments, they will notify the Department within 20 days of the close of the public comment period. If IRRC has objections to any portion of the proposed amendments, it will notify the Department within 30 days of the close of the public comment period. The notifications shall specify the regulatory review criteria which have not been met by that portion of the proposed amendments. The Regulatory Review Act specifies detailed procedures for review by the Department, the General Assembly and the Governor, of objections raised prior to final publication of the final-form regulations.
Public Comment and Contact Person
For further information regarding this proposed rulemaking, interested parties may contact Richard A. Himler, Director, Bureau of Workers' Compensation, P. O. Box 3466, Harrisburg, PA 17105. Interested persons are invited to submit written comments to Richard A. Himler, Director, at the address listed above, within 30 days following publication in the Pennsylvania Bulletin. Written comments received by the Department may be made available to the public.
JOHNNY J. BUTLER,
SecretaryFiscal Note: 12-50. No fiscal impact; (8) recommends adoption. There will be undeterminable costs to the Department of Labor and Industry association with these amendments. These costs will be offset by expected savings to the Commonwealth as a self-insured employer.
Annex A
TITLE 34. LABOR AND INDUSTRY
PART VIII. BUREAU OF WORKERS' COMPENSATION
CHAPTER 123. GENERAL PROVISIONS--PART II Subch.
A. OFFSET OF UNEMPLOYMENT COMPENSATION, SOCIAL SECURITY (OLD AGE), SEVERANCE AND PENSION BENEFITS B. IMPAIRMENT RATINGS C. QUALIFICATIONS FOR VOCATIONAL EXPERTS APPROVED BY THE DEPARTMENT D. EARNING POWER DETERMINATIONS E. COLLECTIVE BARGAINING F. EMPLOYE REPORTING AND VERIFICATION REQUIREMENTS G. SPECIAL SUPERSEDEAS H. INFORMAL CONFERENCES I. USE OF OPTICALLY SCANNED DOCUMENTS J. UNREASONABLE OR EXCESSIVE DELAYS
Subchapter A. OFFSET OF UNEMPLOYMENT COMPENSATION, SOCIAL SECURITY (OLD AGE), SEVERANCE AND PENSION BENEFITS Sec.
123.1. Purpose. 123.2. Definitions. 123.3. Employe report of benefits subject to offset. 123.4. Application of the offset, generally. 123.5. Offset for benefits already received. 123.6. Application of offset for unemployment compensation (UC) benefits. 123.7. Application of offset for Social Security (old age) benefits. 123.8. Offset for pension benefits, generally. 123.9. Application of offset for pension benefits. 123.10. Multi-employer pension fund offsets. 123.11. Application of offset for severance benefits. § 123.1. Purpose.
This subchapter interprets the provisions of the act which require the offset of workers' compensation benefits by amounts received in unemployment compensation, Social Security (old age), severance and pension benefits, subsequent to the work-related injury.
§ 123.2. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
Act--The Workers' Compensation Act (77 P. S. §§ 1--2626).
Actuarial equivalent--The value of lump-sum pension payout in terms of a monthly benefit had the funds been used to purchase an annuity (either qualified joint and survivor or life annuity) available on the market, considering interest and mortality, at the time of the employe's receipt of the lump-sum benefit.
Defined-benefit plan--A pension plan in which the benefit level is established at the commencement of the plan and actuarial calculations determine the varying contributions necessary to fund the benefit at an employe's retirement.
Defined-contribution plan--A pension plan which provides for an individual account for each participant and for benefits based solely upon the amount of accumulated contributions and earnings in the participant's account. At the time of retirement the accumulated contributions and earnings determine the amount of the participant's benefit either in the form of a lump-sum distribution or annuity.
IRA--Individual retirement account as that term is utilized in 26 U.S.C.A. §§ 219 and 408(a).
Multi-employer pension plan--A plan to which more than one employer is required to contribute and is maintained under one or more collective bargaining agreements between one or more employe organizations and more than one employer.
Net--The amount of unemployment compensation, Social Security (old age), severance or pension benefits received by the employe after required deductions for local, State and Federal taxes and amounts deducted under the Federal Insurance Contributions Act (FICA) (26 U.S.C.A. §§ 3101--3126).
Pension--A plan or fund established or maintained by an employer, an employe organization, or both, which provides retirement income, in the form of retirement or disability benefits to employes or which results in deferral of income by employes extending to termination of employment and beyond.
Severance benefits--A benefit which is taxable to the employe and paid as a result of the employe's separation from employment by the employer liable for the payment of workers' compensation, including benefits in the form of tangible property. The term does not include payments received by the employe based on unused vacation or sick leave or otherwise earned income.
Social Security (old age)--Benefits received by an employe under the Social Security Act (42 U.S.C.A. §§ 301--1397(e)) (relating to Social Security Retirement Income).
§ 123.3. Employe report of benefits subject to offset.
(a) Employes shall report to the insurer amounts received in unemployment compensation, Social Security (old age), severance and pension benefits on Form LIBC-756(A). This includes amounts withdrawn or utilized from pension funds which were rolled over into an IRA or other similarly restricted account while at the same time the employe is receiving workers' compensation benefits.
(b) Form LIBC-756(A) shall be completed and forwarded to the insurer within 30 days of the employe's receipt of any of the benefits specified in subsection (a) or within 30 days of any change in the receipt of the benefits specified in subsection (a), but in any event no less than every 6 months.
§ 123.4. Application of the offset, generally.
(a) After receipt of Form LIBC-756(A), the insurer may offset workers' compensation benefits by amounts received by the employe from any of the sources in § 123.3 (relating to employe report of benefits subject to offset). The offset of workers' compensation benefits shall only apply with respect to amounts of unemployment compensation, Social Security (old age), severance and pension benefits received subsequent to the work-related injury.
(1) The offset shall apply only to wage-loss benefits (as opposed to medical benefits, specific loss or survivor benefits).
(2) The offset for amounts received in Social Security (old age), severance and pension benefits shall only apply to individuals with claims for injuries suffered on or after June 24, 1996.
(3) The offset for amounts received in unemployment compensation benefits applies to all claims regardless of the date of injury.
(b) At least 15 days prior to taking the offset, the insurer shall notify the employe, on Form LIBC-761, ''Notice of Workers' Compensation Benefit Offset,'' that the workers' compensation benefits will be offset. The notice shall indicate:
(1) The amount of the offset.
(2) The type of offset (that is--unemployment compensation, Social Security (old age), severance or pension).
(3) How the offset was calculated, with supporting documentation, which may include information provided by the employe.
(4) When the offset commences.
(5) The amount of any recoupment, if applicable.
(c) Whenever the insurer's entitlement to the offset changes, the insurer shall notify the employe of the change at least 15 days prior to the adjustment on the form specified in subsection (b).
(d) The insurer shall provide a copy of the form, specified in subsections (b) and (c), to the employe, the employe's counsel, if known, and the Department. It is the insurer's burden to establish that the employe has received a copy of the form specified in subsections (b) and (c). The insurer's burden is met if it provides evidence that the form was mailed to the employe, at the employe's last known address, by first-class mail.
(e) The employe may challenge the offset by filing a petition for review with the Department.
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