eNotes: Workers’ Compensation – June 2024 – Pennsylvania

SIGNIFICANT CASE SUMMARIES

Pennsylvania Case Summaries

700 Pharmacy v. State Workers’ Insurance Fund (SWIF)
Commonwealth Court of Pennsylvania
No. 560 C.D. 2023
No. 561 C.D. 2023
No. 562 C.D. 2023
No. 563 C.D. 2023
No. 564 C.D. 2023
Decided: May 16, 2024

Background

In a significant case involving illegal self-referrals, TT&H attorney Christopher Scott represented the State Workers’ Insurance Fund (SWIF) in a dispute against 700 Pharmacy. (Fee reviews regarding 5 different Claimants were at issue). The case centered around the application of the anti-referral provision of the Workers’ Compensation Act, specifically whether this provision extended to pharmacies. The pharmacy argued that the anti-referral provision did not apply to them because the term “pharmacy” was not explicitly mentioned in the Act.

The core issue was whether the prescriptions at the center of the fee review applications were properly denied due to being products of a prohibited self-referral under Section 306(f.1)(3)(iii) of the Act. 700 Pharmacy contended that the anti-referral provision should not apply to pharmacies or pharmaceuticals, as these were not specifically enumerated in the statute. The Commonwealth Court, however, rejected this argument, interpreting “goods or services” within the provision to include medications. The Court found that the anti-referral provision was designed to cover a broad spectrum of medical goods and services, including pharmaceuticals.

Mr. Scott successfully argued that the principles of statutory interpretation supported a broad reading of the term “goods or services” in the anti-referral provision, encompassing medications. He highlighted that the General Assembly intended the provision to broadly prevent cost inflation and self-dealing within the healthcare sector. The Court concurred, referencing the Department of Labor and Industry’s regulations that align with the federal Stark Amendments, which prohibit self-referral arrangements involving outpatient prescription drugs. These regulations further underscored the legislative intent to prevent conflicts of interest in medical referrals.

Holding

The Commonwealth Court affirmed the decision of the Bureau of Workers’ Compensation Fee Review Hearing Office (with WCJ Torrey acting as a Med Fee Hearing officer), which denied the fee review applications. The Court concluded that the prescriptions were the result of prohibited self-referrals due to the financial interest of the prescribing physician in the pharmacy. Therefore, the prescriptions violated the anti-referral provision of the Workers’ Compensation Act.

Takeaway

This ruling has far-reaching implications, reinforcing that the anti-referral provisions of the Workers’ Compensation Act apply broadly to all medical goods and services, including pharmaceuticals. It underscores the importance of statutory interpretation and legislative intent in ensuring that anti-referral laws effectively prevent cost inflation and self-dealing in healthcare. Employers and insurers should be vigilant in reviewing claims to ensure compliance with these provisions.

Questions about this case can be directed to Christopher Scott at (717) 237-7111 or cscott@tthlaw.com.

Pisarz v. Montour LLC (WCAB)
No. 551 C.D. 2023
Commonwealth Court of Pennsylvania
Decided: May 16, 2024

The Court found that the Workers’ Compensation Judge and Workers’ Compensation Appeal Board erred in not considering Claimant’s evidence and arguments in determining whether Employer met its initial burden of showing that Claimant voluntarily retired.

Background

The Claimant sustained a work injury, and later started working for a different employer. The Claimant started receiving Social Security Disability benefits, which converted to old-age benefits when he turned 66 years old. Two years after the work injury, the Claimant filed a federal employment discrimination action against his subsequent employer. The parties eventually reached a verbal settlement, which included a provision that the Claimant would be deemed to have voluntarily retired. The Claimant refused to sign the settlement, but the District Court enforced the settlement. Later, the Employer from the workers’ compensation action filed a Suspension Petition based on voluntary retirement. The WCJ granted the Suspension Petition, and the Claimant appealed.

Holding

The Commonwealth Court remanded the matter. In reviewing the elements of collateral estoppel/res judicata, the Court agreed with the Claimant that whether the Claimant gave express authority to his attorney to settle the federal discrimination action in which the Claimant’s retirement/resignation was a term, is not identical to whether the Claimant voluntarily retired and left the workforce for workers’ compensation purposes. The issue in this case, whether the Claimant voluntarily retired for workers’ compensation purposes, concerned the Claimant’s private desires and intent, at least to the extent that they should be considered by the WCJ in context with the other evidence presented. Therefore, the Board and WCJ erred in not considering the Claimant’s evidence and arguments in determining whether Employer met its initial burden of showing that the Claimant voluntarily retired. Because the WCJ did not consider all of the evidence presented, the Board’s Order was vacated and remanded back to the WCJ for a new decision.

Takeaway

In Workers’ Compensation matters, all evidence should be considered in the context of the totality of the circumstances. Even if a settlement agreement in a third-party action which requires a claimant to retire/resign, cannot necessarily be taken at face value as the claimant’s testimony and own statements must be considered by the Workers’ Compensation Judge before a decision to suspend compensation benefits can be made.

Questions about this case can be directed to Taryn M. Vender at (570)-825-4794 or tvender@tthlaw.com.

Erie Insurance v. David Heater (WCAB)
Commonwealth Court of Pennsylvania
No. 148 C.D. 2023
Decided May 29, 2024

When Claimant is a sole proprietor, notice must be given to the Insurer.

Background

The Claimant/Employer was a sole proprietorship performing roof repairs. On September 28, 2015, Claimant was injured. On September 6, 2018, the Claimant filed a Claim Petition alleging that he had been injured in the course and scope of his employment. The workers’ compensation judge (WCJ) granted the Claim Petition, finding that the Claimant had given timely notice to the Insurer within the requisite 120 days as required by Section 311 of the Workers’ Compensation Act. The WCJ reasoned that because the Claimant is his own employer, notice of the injury was instantaneous. The Insurer appealed to the Workers’ Compensation Appeal Board, alleging that the Claimant should have been required to give notice to the Insurer within 120 days of the injury and that notice of the injury on himself as the Employer was insufficient for purposes of Section 311. The Board affirmed the WCJ’s decision. The Insurer then appealed to the Commonwealth Court

Holding

In addressing the issue of whether an injured self-employed employee must provide notice of a work injury within 120 days of the injury, the Commonwealth Court reversed the Board’s decision. In doing so, the Court concluded that because there was not a separate “corporate entity” between the Claimant and the Employer, notice had to be provided to the Insurer to meet the requirements of Section 311. Notice by the Claimant to the Insurer in these circumstances allows the Insurer, rather than the Claimant/Employer who has an obvious interest in the outcome of such investigation, to control the investigation of an alleged work injury sustained by a Claimant/Employer that may otherwise be delayed to the detriment of the Insurer. Otherwise, sole proprietorship claimants can, in essence, control the investigation by delaying notice on the insurer until the last possible moment, sometimes years after the injury, as the Claimant did here, thereby defeating the purpose of Section 311.

Takeaway

With this case on the books, a bright-line notice rule has been established. When a claimant is both the injured employee and the sole proprietor/employer, the claimant must notify the insurer of the work-related injury to meet the requirements of Section 311. This, in turn, allows the insurer to conduct a prompt and thorough investigation into the claimed injury.

Questions about this case can be directed to A. Catherine McLaughlin at (412) 926-1421 or cmclaughlin@tthlaw.com.