RULES AND REGULATIONS
Title 34--LABOR AND INDUSTRY
DEPARTMENT OF LABOR AND INDUSTRY
[34 PA. CODE CHS. 122, 123, 127 AND 131]
General Provisions of Act 57 of 1996
[28 Pa.B. 329] The Department of Labor and Industry (Department), Bureau of Workers' Compensation (Bureau), by this order, adopts the following amendments to clarify and provide detailed guidance for the uniform application 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 is known as the General Provisions--Part II regulations. In addition, as Act 57 abrogated the reconsideration stage of the utilization review (UR) process, the Department, by this order, deletes and amends certain portions of Chapter 127 (relating to workers' compensation medical cost containment). Specifically, the Department deletes §§ 127.501--127.515 (relating to UR--reconsideration). The Department also deletes language throughout Chapter 127 which references both the initial and reconsideration stages of UR. Additionally, the Department amends § 127.105 (relating to outpatient providers subject to the 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 The procedural code A2000 under the Medicare Fee Schedule has been repealed and replaced effective January 1, 1997; therefore, reimbursement of chiropractors is to be governed by the new procedure codes.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 amends the following sections: § 127.252 (relating to application for fee review--filing and service) to incorporate the statute of limitations imposed on providers wishing to file applications for Medical Fee Review under Act 57; § 127.452 (relating to request for UR--filing and service) to clarify the identity of the provider under review when a UR request is filed; § 127.751 (relating to employer's option to establish a list of designated health care providers); § 127.752 (relating to contents of list of designated health care providers); and § 127.755 (relating to required notice of employe rights and duties). The amendments to §§ 127.751, 127.752 and 127.755, 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 and the employe chooses to follow an alternative course of treatment. Further, as Act 57 created new provisions regarding the automatic request for supersedeas and the return-to-work suspension/modification, the Department also adds the supersedeas provisions of Chapter 131, Subchapter C (relating to formal proceedings).
Statutory Authority
These amendments are adopted under the authority provided in sections 401.1 and 435 of the act (77 P. S. §§ 710 and 991) which provide that the Department will adopt regulations which are necessary or desirable for the enforcement of the act and which are reasonably calculated to provide interested parties with notice of their rights under the act. These amendments are adopted under the additional authority of section 204(d) of the act (77 P. S. § 71(d)), which charges the Department with establishing regulations which govern the offset of workers' compensation benefits by amounts received in unemployment compensation, Social Security (old age), severance and pension benefits.
Background
On June 24, 1996, Governor Tom Ridge signed into law Act 57, which substantially amended the act. The amendments are intended to combat the rising costs of workers' compensation in this Commonwealth while protecting the right 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 to conduct earning power assessment interviews. Further, Act 57 provides for an impairment rating evaluation after an employe's receipt of 104 weeks of total disability compensation, unless otherwise agreed to by the parties. If the impairment rating is less than 50% under the ''AMA Guides to the Evaluation of Permanent Impairment,'' the employe's benefit status shifts from total to partial disability with benefits capped at 500 weeks.
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 (77 P. S. §§ 511 and 512). 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 may enter into Compromise and Release Agreements which may extinguish the employer's liability for a work-related injury. Act 57 also permits an employer and the recognized or certified exclusive representatives of its employes to collectively bargain 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 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 (77 P. S. § 511.2(f.2)) 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).
Upon the passage of Act 57, the Department commenced a major effort to promulgate comprehensive regulations which would implement Act 57. In this effort, the Department has drawn upon the expertise of both the public officials responsible for the act's administration and the private parties affected by the system. Consequently, the Department has published several documents regarding the promulgation of regulations for Act 57. As early as August of 1996, the Department published a notice at 26 Pa. B. 3979 (August 17, 1996), to which the Department received various written and verbal comments regarding the interpretation of various provisions of Act 57. Additionally, consistent with the Governor's policy in Executive Order 1996-1, the Department has sought out and consulted with stakeholders affected by the passage and implementation of Act 57. Any group which expressed interest in meeting with the Department's Act 57 regulatory committee was afforded the opportunity to do so. In addition to the stakeholders, the Department convened and 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.
After consideration of the comments made by the stakeholder groups, the Department published a statement of policy at 27 Pa. B. 1731 (April 5, 1997) 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 right 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 were given thorough consideration by the Department in drafting the proposed amendments.
At 27 Pa. B. 3141 (June 28, 1997), the Department published the notice of proposed rulemaking, again inviting all interested parties to provide written comments to the Department regarding the Department's interpretation of Act 57. As a result, the Department received comments from the following groups and individuals: David H. Wilderman, Pennsylvania AFL-CIO; Gerard W. Langan, O'Malley & Langan, P.C.; John Cerilli, Buchanan Ingersoll, P.C.; Thomas C. Baumann, Abes Baumann, P.C.; Christina T. Novajosky, O'Malley & Langan, P.C.; Timothy Conboy, Caroselli Spagnolli & Beachler, LLC; Stephen J. Bosacco, M.D., Pennsylvania Orthopaedic Society; Thomas H. Malin, M.D., Chairman, Workers' Compensation Committee of the Pennsylvania Orthopaedic Society; H. Elton Blenden; Lorrie McKinley, Community Legal Services, Inc.; Mark A. Clukey, D.C., Clukey Chiropractic & Rehab.; Steven A. Bennett, American Insurance Association Law Department; John G. DiLeonardo and J. Kent Culley, Tucker Arensberg, P.C.; Victor F. Greco, M.D., President, Pennsylvania Medical Society; Lois S. Hagarty, Pepper Hamilton & Scheetz, LLP; Martha J. Hampton, Galfund Berger Lurie Brigham Jacobs Swan Jurewicz Jensen, Ltd. - as Chair of the Workers' Compensation Section Regulations Committee of the Pennsylvania Bar Association; Roy M. Love, D.C., President of the Pennsylvania Chiropractic Association; Vince Phillips, Vice President for Government Affairs for the Independent Insurance Agents of Pennsylvania; Jay Elliot Shor, Lawrence Levin and Joseph DeRita, Shor, Levin & DeRita, P.C.; Charles S. Katz, Jr., Swartz, Campbell & Detweiler; Fred H. Hait, McGraw, Hait & Deitchman; Mary Anne O'Malley, O'Malley & Langan, P.C.; Samuel R. Marshall, The Insurance Federation of Pennsylvania Inc.; Stuart W. Benson, III, Pietragallo Bosick & Gordon; Anthony J. Bilotti, Duane Morris & Heckscher LLP; Stephen J. Harlen, Swartz, Campbell & Detweiler; and Thomas E. Lucas, Jr., O'Malley & Langan, P.C. The Department also received written comments from the Independent Regulatory Review Commission (IRRC), by means of a letter dated August 27, 1997.
This notice of final rulemaking supplants and further clarifies and expands upon the previous interpretation of Act 57 provided in the notice of proposed rulemaking. In response to comments received, some changes have been made to the previously published interpretation.
Purpose
The purpose of these amendments is to implement Act 57. The amendments in sections 204; 306(a.2), (b)(2) and (3), (f.1)(1)(i) and (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, unless otherwise agreed to, in order to determine the percentage of whole body impairment; the addition of new employe reporting requirements; 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 interpretation and guidance, so that all parties have a clear understanding of their rights and obligations under the Act 57 amendments. These amendments provide the guidance needed to ensure consistent application and compliance with Act 57.
Affected Persons
Those affected by these amendments are all 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 final rulemaking. Although Act 57 required the creation of new Departmental forms for public use, significant costs are not expected. Furthermore, any costs to the regulated community associated with the implementation of these 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.
Response to Comments
The following addresses the common areas of concerns found in the comments received from the public and IRRC.
1. Offset of Benefits
Section 123.2 (relating to definitions) of the proposed rulemaking contains the definition of a ''multi-employer pension plan.'' Commentators question whether the definition excludes multiple-employer plans created by trade and employe associations. The definition of ''multi-employer pension plan'' does exclude these other plans, because typically the funds paid into plans created by trade and employe associations for any individual employe are paid by a single employer. In contrast to these plans, the multi-employer pension plans governed by § 123.10 (relating to multi-employer pension fund offsets) involve employes whose pensions are funded by contributions from more than one employer. The term ''multi-employer pension plan'' is intended to have the same meaning as found within the Employee Retirement Income Security Act of 1974 (ERISA). Any question regarding the usage of the term and its applicability to a particular plan is governed by the ERISA definition.
Section 123.4(a) (relating to application of the offset, generally) of the proposed rulemaking provided that 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. IRRC, as well as other commentators, believe that the provision should specify that the offset is applicable ''subsequent to date of disability''--their concern apparently being that, absent the specification of ''disability,'' the offset may be viewed as accumulating during a period in which the employe is not receiving an indemnity benefit. However, the Department has determined that no change to the language is required for this section. As a general matter, the date of injury is the date which fixes the rights and duties of the parties under the act. Further, the language, as proposed, is consistent with the language in section 204(c) of the act which requires that the employe report the receipt of unemployment compensation, Social Security (old age), severance and pension benefits ''which post-date the compensable injury under the act.''
Section 123.4(b) of the proposed rulemaking provided that at least 15 days prior to taking the offset, the insurer shall notify the employe that the workers' compensation benefit will be offset. The rationale for requiring notice in this section is to ensure that employes have sufficient time in which to financially plan for any offset. Because the bulk of compensation benefits are paid biweekly, it was determined that the 15-day period provided adequate notice, allowing insurers to include the notice with a scheduled biweekly check. At the suggestion of IRRC and other commentators, the Department has determined that the notice requirement will be changed from 15 to 20 days in order to remain consistent with other notice and filing provisions of the act.
Section 123.4(d) of the proposed rulemaking required that the insurer provide a copy of Form LIBC-761, ''Notice of Workers' Compensation Benefit Offset,'' to the employe, employe's counsel, if known, and the Department. This section further provides that 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.'' IRRC and other commentators argue that the Department's use of the above-quoted language creates an irrebuttable presumption of the claimant's receipt of the form. The Department has, in the interest of clarity, revised the language of this section to reflect the statutorily prescribed procedures for serving notices and forms under section 406 of the act.
Sections 123.4(e) and 123.5(d) (relating to offset for benefits already received) of the proposed rulemaking provided that an employe may challenge an offset to the workers' compensation benefit by filing a Petition for Review with the Department. IRRC, as well as other commentators, question the lengthiness of this procedure. IRRC specifically suggested that the Department adopt an expedited hearing procedure, similar to that found in section 413(c) and (d) of Act 57, which provides the employe with the opportunity to challenge the return to work suspension/modification, by means of a ''check-off box'' on the notification form. Although the Department does not adopt IRRC's proposal, the Department does agree that the challenge of the offset should be afforded special consideration. Therefore, the Department has amended LIBC-378, the ''Petition to'' form, to include a Petition to review offset. While the regulation has not included any expedited procedures, the Department intends to implement internal operating procedures which will expedite the processing of these challenges.
Section 123.6(c) (relating to application of offset for Unemployment Compensation (UC) benefits) of the proposed rulemaking provided that an insurer ''may'' be required to repay the employe for amounts previously offset from workers' compensation benefits when an employe calculates and remits payments for amounts due in Federal, State and local taxes for the receipt of unemployment compensation benefits. IRRC, as well as other commentators, opined that the use of the permissive term ''may'' indicates that the insurer would have the option, as opposed to the duty, to reimburse the employe. In the interest of clarity, the Department has changed the term ''may'' to ''shall.'' Further, IRRC and others suggested that the Department explain the manner by which an employe should seek reimbursement from the insurer. Because parties routinely handle reimbursements to employes without the need for regulation, that is, for travel-related and medical expenses, the Department has determined that there is no need to regulate this issue.
Some commentators suggested that the Department erred in providing an offset based upon the ''net'' benefit in § 123.6 of the proposed rulemaking. These commentators suggested that the tax treatment of benefits which may be calculated toward an offset of workers' compensation benefits is irrelevant and should not be the subject of regulation. This would result, however, in granting the employer an entitlement to the offset regardless of whether the employe must later pay taxes on the sum. Although the Department disagrees with this analysis, the Department does concur in the suggestion of IRRC and others that the provision in § 123.6(c) for reimbursement where the employe has paid Federal, State and local taxes on amounts which had previously been used to calculate an offset, should be applicable to all the offset provisions. Accordingly, the Department has amended proposed § 123.4 to include subsection (f), which allows reimbursement of sums paid in taxes for unemployment compensation, Social Security (old age), severance or pension benefits if the offset was calculated on the pretax amount. In the interest of consistency, the Department has vacated the language of § 123.6(c) which references only unemployment compensation.
Sections 123.5(b), 123.6(e) and 123.11(c) (relating to application of offset for severance benefits) of the proposed rulemaking contain formulas for determining offset amounts on future payments of workers' compensation when an employe receives a lump-sum award in unemployment compensation, Social Security (old age) and severance benefits. IRRC, the Pennsylvania Trial Lawyers' Association and the Workers' Compensation Section Regulations Committee of the Pennsylvania Bar Association have challenged the formulas contained in the proposed regulations. These commentators assume that, if a Social Security (old age), severance or unemployment compensation benefit is received on a weekly basis and the amount of the weekly offset exceeds the amount of the weekly indemnity benefit, the difference is not subject to the offset. They deduce, therefore, that if the unemployment compensation, Social Security (old age), severance and pension offset results in a lump-sum payment, the proposed regulation, which provided that the offset amount be divided by the weekly compensation rate, permited insurers to receive a greater offset than would have occurred if the same benefit were received on a weekly basis. This interpretation of the offset provisions of Act 57 is without support in the language of the act. The Department, therefore, consistent with Act 57, interprets section 204(a) of the act to mean that any offset calculated on a weekly basis in excess of the weekly workers' compensation rate shall accumulate as a credit toward the future payment of workers' compensation benefits. Therefore, the calculation for all offsets, whether achieved on a weekly basis or in a lump sum, will yield an offset equal to the amount which is eligible to be calculated as an offset.
Finally, there appears to be some confusion over certain terms utilized in §§ 123.3--123.11 which were not specifically defined. The Department has determined that no definitions are necessary, as 1 Pa.C.S. § 1903 (relating to words and phrases) provides that nontechnical words shall be construed according to their common usage.
2. Impairment Ratings
Section 123.102(b) (relating to IRE requests) of the proposed rulemaking allowed an impairment rating evaluation (IRE) to be performed prior to the expiration of 104 weeks of total disability when agreed to by the parties. IRRC, as well as several other commentators, expressed the belief that no statutory authority exists for this position. However, the Department, in drafting this regulation, finds support in the express language of section 306(a.2)(1) of the act, which provides ''when an employe has received total disability compensation pursuant to clause (a) for a period of one hundred four weeks, unless otherwise agreed to, the employe shall be required to submit to a medical examination which shall be requested by the insurer within sixty days upon the expiration of the one hundred four weeks to determine the degree of impairment due to the compensable injury, if any.'' (emphasis added) The text of the statute does not contain any restrictions with regard to whether an employe may have the IRE performed prior to the expiration of the 104 weeks, if the parties so agree. Accordingly, the Department has made no change to this section.
IRRC, as well as several other commentators, expressed concern regarding § 123.102(a) of the proposed regulations which permits an insurer to request an impairment rating 60 days prior to the expiration of the employe's receipt of 104 weeks of total disability benefits. The confusion regarding this provision has led the Department to amend the final regulation to reflect that the request for the performance of the IRE may not occur prior to the expiration of the employe's receipt of 104 weeks of total disability benefits, unless otherwise agreed to by the parties.
Section 123.102(h) of the proposed rulemaking provided that an employe's failure to attend the IRE under this section may result in a suspension of the employe's right to benefits consistent with section 314 of the act (77 P. S. § 651). IRRC expressed the opinion that this section allows an insurer to unilaterally suspend benefits if the employe fails to attend the IRE. IRRC further suggested that the regulation should be clarified to point out that the benefits may only be suspended in ''accordance with the procedures'' of section 314 of the act. It is the Department's position that the language as written does, in fact, require the insurer to act in accordance with the provisions of section 314 of the act. However, the Department has determined that the addition of the term ''provisions'' would add clarity to the language of the section.
Section 123.104(a) (relating to initial IRE; designation of physician by Department) of the proposed rulemaking provides that when parties are unable to reach agreement on a physician to perform an impairment rating evaluation, the parties may request that the Department appoint such a physician. IRRC, as well as other commentators, asked that the Department clarify this provision so that either party may request that the Department designate a physician. The Department, however, declines to embrace this position, instead stating in § 123.104 that only the insurer may request that the Department designate the IRE physician and that the Department's duty to designate an IRE physician pertains only to the initial IRE. Additionally, the Department has revised § 123.104 to clarify that the parties are not required to attempt to reach agreement on who should be the evaluating physician prior to requesting designation by the Department.
Section 123.105(a) (relating to impairment rating determination) of the proposed rulemaking provided that the IRE physician, chosen by the parties or designated by the Department, must render an impairment rating determination after conducting an IRE, unless the evaluating physician indicates on the ''Impairment Rating Determination Face Sheet'' that the impairment of the employe is not subject to being rated under the most recent edition of the ''AMA Guides to the Evaluation of Permanent Impairment.'' IRRC, as well as others, expressed concern that the proposed regulation did not specify the outcome if the physician does not assign an impairment rating percentage. IRRC specifically suggested that the Department regulate the outcome in such cases.
The Department has determined, however, that no regulation is required because the language of Act 57 expressly controls the outcome if an IRE physician does not assign a percentage rating. Section 306(a.2) of the act describes the outcome if an IRE determination results either in an impairment rating equal to or greater than 50%, or in an impairment rating less than 50%. It is, therefore, axiomatic that if no rating is assigned, the outcomes described in section 306(a.2) of the act are inapplicable.
3. Qualification of Vocational Experts
Several commentators, as well as IRRC, noted that the organizations listed for certification of vocational evaluators in the proposed rulemaking are incorrectly named. Accordingly, the Department has amended the regulations to properly identify the certification organizations for vocational evaluators. Commentators also expressed concerns that the qualifications are unnecessarily broad and inadequate to insure the proper qualifications for vocational evaluators. However, the Department maintains that the regulation, as proposed, will promote professionalism within the vocational evaluation field, while at the same time ensuring affordability and accessibility of vocational evaluators to employes and employers alike. As in any other instance of adjudication, all credibility determinations remain the province of the workers' compensation judge.
IRRC noted that the phrase ''direct supervision,'' as used in § 123.202 (relating to qualifications), is confusing and suggests that, in the interest of clarity, the Department define the phrase. However, the Department has determined that this term may be interpreted according to its common usage and, therefore, further definition of the phrase is not needed.
4. Verification Form and Reporting Requirement
Section 123.501 (relating to reporting requirement) of the proposed rulemaking provided that the insurer provide the employe with the forms required to fulfill the employe's reporting and verification requirements. IRRC, as well as others, expressed their belief that proposed use of the term ''shall'' exceeded the statutory authority of section 311.1(d) of the act (77 P. S. § 631.1(d)), which states that the insurer ''may'' submit a verification form to the employe. However, the commentators' reading of the regulation does not incorporate the employe's duty to return the form sent by the insurer and the serious consequences for the employe's failure to do so. The regulation, as proposed, preserved the insurer's option to send the verification form to the employe while ensuring that, if the insurer intends to exercise the right to suspend an employe's workers' compensation benefits for failure to return the form, the insurer must first have provided the form to the claimant.
Section 123.502 (relating to verification) of the proposed rulemaking contained provisions for verification of an employe's employment status and change in physical condition. IRRC, as well as other commentators, raised several concerns with this section. The initial concern is with regard to the manner in which an insurer's burden of proof with respect to sending the form to the claimant is to be met. As with § 123.4(d), the Department has amended this section to provide that the verification form, if mailed, may be served on the employe in accordance with section 406 of the act.
Section 123.502(d)(1) of the proposed rulemaking provided that Form LIBC-762, ''Notice of Suspension for Failure to Return LIBC-760'' indicate that the employe failed to return the form within the statutorily prescribed time period. IRRC recommended that, in the interest of clarity and providing notice to the employe, the statutorily prescribed time period be included in the ''Notice of Suspension for Failure to Return LIBC-760.'' Accordingly, § 123.502(d)(1) and the corresponding form have been amended to include language that the employe must return Form LIBC-760, ''Employee Verification of Employment, Self-Employment, or Change in Physical Condition,'' within the ''30-day statutorily prescribed time period.''
Section 123.502(d)(2) of the proposed rulemaking, which stated that the workers' compensation benefit shall be reinstated by the insurer within 15 days of receipt of the completed verification form, raised some concern with IRRC, as well as other commentators. Specifically, the commentators assumed that the language extended the insurer's suspension for a period of 15 days beyond the date the form was returned. The Department's inclusion of the 15-day period in which to reinstate benefits was for the sole purpose of providing a reasonable period in which an employer may process the reinstatement of benefits, beginning from the date the employe returned the form. However, the Department has, in the interest of clarity, deleted the 15-day requirement of this section.
IRRC and other commentators express concern with regard to the provision of § 123.502(f) which provided that employes forfeit the right to payment of indemnity benefits during periods of noncompliance with the verification reporting requirements. IRRC and others, contend that the forfeiture of benefits in this context is contrary to Act 57 and its Legislative intent. In particular, IRRC suggested that the Legislature's use of the term ''suspension'' should be interpreted as a ''temporary postponement of benefits.'' It should be noted that a ''temporary postponement of benefits'' is a concept foreign to the Pennsylvania workers' compensation system; in contrast, the term ''suspension'' has an established meaning within the practice of workers' compensation case law and within other sections of the act, that is, sections 314 and 413(c) and (d) of the act, which confirm that the term ''suspension'' as used in this section has no other interpretation except that the employe has permanently forfeited the right to compensation. Accordingly, no change has been made to this section.
5. Disposition of Automatic Request for Supersedeas
Section 123.601(c), as proposed, stated that a workers' compensation judge shall approve the request for supersedeas if prima facie evidence of a change in the medical status or of any other fact which would serve to modify or terminate the payment of compensation is submitted at the hearing. This provision is found in section 413(a.1) of Act 57. As pointed out by IRRC and several commentators, section 413(a.1) of Act 57 further provides ''unless the employe establishes, by a preponderance of the evidence a likelihood of prevailing on the merits of his defense.'' The commentators have indicated and the Department concurs, that the language of the regulation should reflect the language of Act 57 which establishes the employe's opportunity to rebut the prima facie evidence presented by the insurer. Accordingly, the Department incorporates this additional language in the final-form rulemaking.
It should be noted that Subchapter G of the proposed rulemaking in §§ 123.601--123.603 provided for the procedures surrounding the disposition of the automatic request for supersedeas under section 413(a.1) of the act (77 P. S. § 774.2) and the disposition of the employe's request for special supersedeas hearing in connection with the return to work suspension/modification of section 413(c) and (d) of the act (77 P. S. §§ 774.2 and 774.3). After further review of these sections and of comments received, the Department has determined that the procedures for the disposition of these supersedeas requests are more appropriately addressed under the Special Rules of Administrative Practice and Procedure Before Referees contained in Chapter 131. Therefore, Subchapter G of the rulemaking is now codified under Chapter 131 in §§ 131.49--131.51. As a result, the remaining sections of the rulemaking, that is, informal conferences and optical scanning, have been renumbered under Subchapters G and H respectively.
6. Informal Conferences
Section 123.701 of the proposed rulemaking stated that a corporation may be represented by an agent or other representative of the corporation other than an attorney, at an informal conference. Commentators have asserted that the language provided for the unauthorized practice of law. IRRC recommended that the language be amended to mirror the language of Act 57. In the alternative, IRRC recommends that the section be deleted in its entirety. The Department has determined that § 123.701, as written, clarifies that the informal conference is not an adversarial proceeding and that participation is optional. As such, the representation of a corporation by an attorney at the informal conference is neither required by law nor is representation the unauthorized practice of law. Furthermore, the codification of existing law in this regard promotes the use of this section. The Department maintains that the language, as proposed, fulfills the intent of this section; however, in the interest of clarity the Department has amended this section to more precisely reflect the provisions of section 402.1 of Act 57.
7. Unreasonable or Excessive Delay
Section 123.901 of the proposed rulemaking stated that a delay of 10 or more days shall be presumed to be an unreasonable or excessive delay. IRRC and others expressed concern that the creation of such a ''presumption'' would require judges to find that an unreasonable or excessive delay had occurred after the expiration of 10 days. Although the Department provided the 10-day period as a means to lend uniformity to determinations of unreasonable or excessive delay, by establishing an expectation for the time in which an insurer may accomplish the administrative steps to fulfill duties under the act, the commentators expressed unanimous opposition to this provision. The Department has decided that § 123.901 should be deleted. As in the past, a finding of unreasonable and excessive delay is within the discretion of the workers' compensation judge.
Reporting, Recordkeeping and Paperwork Requirements
A number of forms were necessary to implement and interpret Act 57 and to implement the provisions of this final-form rulemaking. Some of these forms were created under the explicit instructions of Act 57, while others were designed to effectively implement Act 57, from a practical, administrative standpoint. The following is a list of new forms and a short explanation of their origin:
1. Form LIBC-756, ''Employee's Report of Benefits,'' and Form LIBC-750, ''Employee Report of Wages (Other Than Workers' Compensation Benefits Received),'' were created under section 204(d) of the act, which requires that the Department prepare forms necessary to enforce the requirements of that section. Form LIBC-756 is to be used when the employe is required to report the receipt of benefits subject to section 204(c) of the act and Form LIBC-750 is to be used when the employe is required to report wages under sections 204(c) and 311.1 of the act. These forms are required by the express language of section 204 of the act.
2. Form LIBC-761, ''Notice of Workers' Compensation Benefit Offset,'' was also created under section 204(d) of the act. This form is to be used by the insurer when notifying an employe that the employe's benefits are to be offset under section 204 of the act.
3. Form LIBC-766, ''Request for Designation of a Physician to Perform an Impairment Rating Evaluation,'' was created to meet the requirement under section 306(a.2)(1) of the act that the Department designate physicians to perform IREs.
4. Form LIBC-767, ''Impairment Rating Determination Face Sheet,'' was created to provide a standardized format for physicians to record specific information obtained under section 306(a.2)(1) and (2) of the act.
5. Form LIBC-765, ''Impairment Rating Evaluation Appointment,'' was created to provide a standardized format for notifying an employe of a forthcoming IRE under section 306(a.2)(1) of the act and to notify the employe of the employe's rights or duties thereunder.
6. Form LIBC-764, ''Notice of Change of Workers' Compensation Disability Status,'' was created to ensure that proper notice is given to the employe, under section 306(a.2)(2) of the act, that the status of the employe's disability has changed.
7. Form LIBC-757, ''Notice of Ability to Return to Work,'' was created under section 306(b)(3) of the act and was designed to notify the employe that the insurer believes that the employe is capable of returning to work. This form is required by the express language of section 306(b)(3) of the act.
8. Form LIBC-760, ''Employee Verification of Employment, Self-employment or Change in Physical Condition,'' was created to provide a means for the insurer to obtain the information contemplated by section 311.1(d) of the act. This form is required by the express language of section 311.1(d) of the act.
9. Form LIBC-762, ''Notice of Suspension for Failure to Return Form LIBC-760,'' was created to notify the employe that the employe's benefits have been suspended because of the employe's failure to return Form LIBC-760 under section 311.1 of the act. Additionally, this form notifies the employe of the employe's rights and remedies regarding the suspension of benefits under section 311.1 of the act.
10. Form LIBC-763, ''Notice of Reinstatement of Workers' Compensation Benefits,'' was created to notify the employe that the employe's benefits have been reinstated after the insurer has received Form LIBC-760, under section 311.1 of the act.
11. Form LIBC-753, ''Notice of Request for an Informal Conference,'' and Form LIBC-754, ''Informal Conference Agreement Form,'' were designed to implement the informal conference procedures of section 402.1 of the act. Form LIBC-753 was created to standardize and simplify requests for informal conferences before workers' compensation judges or hearing officers. Form LIBC-754 was created to provide a mechanism for the parties to record matters which were agreed upon at the informal conference and to provide a standardized mechanism for the Departmental recordkeeping of these agreements.
12. Form LIBC-751, ''Notification of Suspension or Modification Pursuant to §§ 413(C)&(D) of the Workers' Compensation Act,'' was designed to provide notice to the employe, under section 413(c) and (d) of the act, that the employe's benefits have been suspended or modified because the employe has returned to work. This form is required by the express language of section 413(c) and (d) of the act.
13. Form LIBC-755, ''Compromise and Release Agreement by Stipulation Pursuant to Section 449 of the Workers' Compensation Act,'' was created to provide a means to record all information necessary for a valid compromise and release under section 449 of the act. This form was required by the express language of section 449 of the act.
Sunset Date
No sunset date is necessary for these amendments. These amendments will be continuously monitored, since the Department regularly receives and decides petitions to which these amendments apply in proceedings conducted by workers' compensation judges. Issues regarding the regulations' effectiveness, clarity or impartiality will undoubtedly be raised before the Department in these proceedings. If needed, corrections can be initiated based on information obtained in these proceedings.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on June 28, 1997, the Department submitted a copy of the notice of proposed rulemaking, published at 27 Pa.B. 3141 to IRRC and the Chairpersons of the House Labor Relations Committee and the Senate Committee on Labor and Industry for review and comment. IRRC and the Committees were provided with copies of the comments received during the public comment period, as well as other documents when requested.
In preparing these final-form regulations, the Department has considered all comments received from IRRC, stakeholders and the public.
These final-form regulations were deemed approved by the House and Senate Committees on November 18, 1997. IRRC met on November 20, 1997, and approved the amendments in accordance with section 5(c) of the Regulatory Review Act.
Contact Person
The contact person is Richard A. Himler, Director, Bureau of Workers' Compensation, Department of Labor and Industry, (717) 783-5421, 1171 South Cameron Street, Room 324, Harrisburg, PA 17104.
Findings
The Department finds that:
(1) Public notice of intention to amend the administrative regulations amended by this order has been given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations thereunder, 1 Pa. Code §§ 7.1 and 7.2.
(2) The amendment of the regulations of the Department in the manner provided in this order is necessary and appropriate for the administration and enforcement of the authorizing statute.
Order
The Department, acting under the authorizing statutes, orders that:
(a) The regulations of the Department, 34 Pa. Code, are amended by deleting §§ 122.1--122.11, 122.101--122.104, 122.201, 122.202, 122.301--122.303, 122.401, 122.501 and 122.502, 127.501--127.515, adding §§ 123.1--123.11, 123.101--123.105, 123.201--123.203, 123.301, 123.302, 123.401--123.404, 123.501, 123.502, 123.601, 123.701 and 131.49--131.51; and by amending §§ 127.105, 127.208, 127.252, 127.401, 127.404, 127.405, 127.451--127.457, 127.465, 127.466, 127.476, 127.477, 127.479, 127.551--127.553, 127.555, 127.556, 127.751, 127.752, 127.755 to read as set forth in Annex A.
(Editor's Note: Section 31.2 of Act 57 of 1996 (77 P. S. § 531.1 note) requires that the Legislative Reference Bureau transfer 28 Pa. Code §§ 9.201--9.227 to 34 Pa. Code §§ 122.601--122.627. The transfer will occur in the March 1998 Pennsylvania Code Reporter (MTS 280).)
(b) The Secretary shall submit this order and Annex A to the Office of General Counsel and Office of Attorney General for approval as to form and legality as required by law.
(c) The Secretary shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(d) This order shall take effect upon publication in the Pennsylvania Bulletin.
JOHNNY J. BUTLER,
Secretary(Editor's Note: The addition of §§ 123.203, 123.402--123.404 and 131.49--131.51 was not included in the proposal at 27 Pa.B. 3141 (June 28, 1997). The amendment of §§ 127.465 and 127.476 was not included in the proposal at 27 Pa.B. 3141. The proposal to add §§ 123.602, 123.603, 123.801 and 123.901, included in the proposed rulemaking at 27 Pa.B. 3141, has been withdrawn by the Department.)
(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 27 Pa.B. 6385 (December 6, 1997).)
Fiscal Note: Fiscal Note 12-50 remains valid for the final adoption of the subject regulations.
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. INFORMAL CONFERENCES H. USE OF OPTICALLY SCANNED DOCUMENTS
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. Multiemployer pension fund offsets. 123.11. Application of offset for severance benefits. § 123.1. Purpose.
This subchapter interprets the provisions of the act which authorize 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. Offsets shall be dollar-for-dollar and calculated as set forth in §§ 123.4--123.11. Offsets in excess of the weekly workers' compensation rate shall accumulate as a credit toward the future payment of workers' compensation benefits.
§ 123.2. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
ADR--Alternative Dispute Resolution.
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 if the funds had 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.
CBA--Collective Bargaining Agreements.
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--An individual retirement account as that term is utilized in 26 U.S.C.A. §§ 219 and 408(a).
IRE--Impairment Rating Evaluation.
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 benefit--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--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, ''Employee's Report of Benefits.'' This includes amounts withdrawn or otherwise utilized from pension benefits which are 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 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 at least every 6 months.
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