Ding Dong Kachinski's Dead: Commonwealth Court Declines to Resuscitate

Pennsylvania - Workers' Compensation

One of the most significant areas of change targeted by the Legislature in Act 57 was the concept of "earning power." Prior to Act 57, the infamous Kachinski standard governed the employer's burden of proof when attempting to modify benefits. Under this standard, the employer was basically obliged to spoon feed open jobs to a claimant and more often than not would lose petitions if the claimant was not hired. Section 306(b)(2) of the Act (which was an integral part of Act 57) decidedly changed the employer's burden of proof by allowing an employer to obtain a modification of benefits based on evidence of earning power proven through expert testimony. Job referrals were replaced by establishing substantial gainful employment opportunities in the geographical area where the claimant works-a much more favorable standard for employers to meet.

This clear legislative mandate was followed by judicial determinations that arguably failed to fully recognize these new and much needed employers' rights. At first, the claimant bar argued that jobs listed in an earning power assessment must be "offered" to a claimant to be binding. Next, it was argued that jobs in a labor market survey must be proven "available" by intricate webs of evidence that went far beyond legislative intent. In a real way, more than ten years after the implementation of Act 57, the proverbial "earning power evaluations" were nothing more than a tool to settle cases, with no firm foothold in its true origin as a tool to modify benefits. The Kachinski standard was not dead as the tenets of its faith were still being accepted in defense to employers' petitions.

In the landmark case of Phoenixville Hospital v. W.C.A.B. (Shoap), the Pennsylvania Commonwealth Court declined to resuscitate the Kachinski standard and apply it to an earning power evaluation. This case involved an employer modification petition filed based on an established earning power of the claimant proven through a labor market survey. The claimant applied for positions listed in the labor market survey and was not hired for any of the jobs. Most of the jobs listed were already filled by the time the claimant had applied. Thus, the claimant argued that a "good faith" effort was made to apply for the jobs and, since she was not hired, the jobs were not available within the meaning of the Act. This argument was obviously resurrected from the bowels of Kachinski. In response, the court held that each individual job listed in a labor market survey is "available" to a claimant as long as the job is open at the time it is identified by the vocational expert as an employment opportunity. This is so even if a claimant applies for the job at a later time and is not hired. The court further reasoned that "the jobs contained in any labor market survey are not meant to provide an exact calculation of the injured worker's earning power... rather, they are to provide an approximation of her potential earnings." At last, the exact language used in Act 57 formulated a basis for a decision that follows legislative intent.

The immediate affect of the decision is clear- the "good faith" standard of Kachinski is inapplicable to earning power evaluation cases. The claimant bar cannot resurrect this standard any longer in an attempt to undermine employer rights. This decision gives hope to the notion that the full legislative intent of Act 57 will now control. Speaking from the side of the employer, there is nothing more profound than hope.

*Tony is a shareholder who works in our Philadelphia, Pennsylvania, office and can be reached directly at (215) 575-2745 or by email at apnatale@mdwcg.com.

Defense Digest, Vol. 16, No. 3, September 2010