The workers’ compensation system in Pennsylvania has been stable for about 20 years but it has lately undergone some shocks.
One of the biggest came last year when the Pennsylvania Supreme Court struck down a cost-saving measure known as an impairment rating evaluation, which capped benefits for injured workers.
The system also is grappling with the opioid crisis and the introduction of medical marijuana.
In 2017, the Pennsylvania Supreme Court ruling struck down the use of impairment rating evaluations, or IREs.
The IRE, instituted in 1996, is a process that allowed employers to cap benefits to injured workers.
Under the IRE process, employers could shift employees from total disability to partial disability if an independent doctor assessed their disability at less than 50 percent total body impairment. Pennsylvania caps partial disability payments at 500 weeks, while total disability payments have no cap.
In the absence of IREs, employers are seeing rising costs for workers’ compensation coverage, with the Pennsylvania Chamber of Business and Industry estimating the impact at potentially $300 million a year in additional costs for employers.
“The court decision created a less stable, more unpredictable system that has been detrimental to the [workers’ compensation] system,” said Alex Halper, director of government affairs for the chamber.
For both the claimant and the employer, the IRE provided some predictability and some structure in how doctors determine an injured worker’s impairment.
Its loss prompted the Pennsylvania Compensation Rating Bureau to preemptively increase workers’ compensation rates last year, he added.
“We are estimating that employers will pay hundreds of millions in additional insurance premiums every year if legislation is not passed to address it,” Halper said. “So whether employers realize it or not, they are paying more for workers’ comp coverage.”
A bill to restore the use of IREs has passed both the House and Senate. As of Oct. 18, the measure, House Bill 1840, awaits Gov. Tom Wolf’s signature. The legislation would repeal the subsection invalidated by the court and clarify the guidelines used in IREs.
Others have said IREs are unnecessary.
A lot of lawyers who represented injured workers did not like the process and saw it as a tool used to get to a settlement, said Matt Wilson, partner of Martin Law LLC in Philadelphia. He represents workers.
“There are so many other ways to reduce or stop a comp benefit without the IREs,” Wilson said. With unemployment so low, and so many people working, coupled with rising wages, there is added incentive for employees to avoid staying on workers’ comp, according to Wilson.
That is because state law freezes a worker’s rate of compensation from the date of the injury, and the rate never goes up, Wilson said.
The other tool used to move employees from total to partial disability is called an earning power assessment, said Barbara Hollenbach, an attorney with Norris McLaughlin of Allentown who represents employers in workers’ compensation cases.
“The earning power assessment route requires the use of vocational as well as medical experts and always requires litigation before a workers’ compensation judge,” Hollenbach said.
In an earning power assessment, the employer must prove that the employee is capable of working in some capacity and that there is work available in the local economy for that employee within whatever restrictions the employee may have, she said.
The benefits of the IRE method is that it is a simpler, less expensive, less time-consuming and more certain method of changing someone’s status compared to the earning power assessment method, she said.
That’s not the only factor putting significant pressures on employers and workers’ comp cases.
The increase in opioid use and abuse has created another source of concern for employers managing their workers’ comp claims. Employers also face a question on whether medical marijuana should be covered under workers’ comp.
Worker’s compensation costs are affected by injured workers abusing opioids.
Lawmakers approved legislation this year, Senate Bill 936, that would have implemented a prescription drug formulary for workers’ compensation cases, but Gov. Wolf vetoed it, Halper said.
“We are continuing in a really terrible situation,” Halper said.
The bill would have created a system that pre-approves medication that falls within mainstream prescriptions, he added. Drug formularies, or lists, are standard in private health care and public programs such as Medicare and the Children’s Health Insurance Program and would be established and regularly updated by doctors and medical professionals. According to a description of the bill, the formulary would organize medication and dosage amounts as either “pre-approved” or “requires authorization” based on Federal Drug Administration approval status and evidence of effectiveness. Other states have implemented this legislation and it was very effective, Halper said.
“It could have helped Pennsylvania by combatting the opioid crisis and helped employers by addressing other instances of over-prescribing and abuse in the workers’ compensation system,” Halper said.
Wilson said he thinks the pendulum has swung the other way, leading to greater awareness of the need for being conservative in prescribing opioids.
“I certainly support my clients finding alternatives to opioid addiction,” Wilson said, citing medical marijuana as one of those alternatives.
However, when Pennsylvania approved the use of medical marijuana law, the law included a provision stating insurance carriers were not required to cover its use in worker’s compensation cases, Halper said.
But as the public gains more experience with medical marijuana and the government observes the impact, it’s possible in that there could be policy changes down the road, Halper said.