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A "Super" Victory for Employers

December 1, 2011

Pennsylvania – Workers' Compensation

Key Points:

  • Court finds that the date medical bills are paid is not the date of service that controls for Supersedeas Fund reimbursement.
  • Insurers should provide proof of payment date and service date for each medical payment made.
  • Bundling payments may lead to problems in recovering Supersedeas monies.

 

On July 19, 2011, the Pennsylvania Supreme Court issued a decision ordering the Workers' Compensation Supersedeas Fund to reimburse employers and insurers for medical benefits paid where the date of the medical service occurred prior to the date supersedeas was requested. In the case of Department of Labor and Industry, Bureau of Workers' Compensation v. WCAB (Crawford & Co.), 965 A.2d 332 (Pa Supreme Court, July 19. 2011), the Court held that the determinative date for Supersedeas Fund reimbursement is the date when medical bills are paid by the employer or insurer, not the date that the medical treatment was rendered.

During the filing of a defense petition, an employer almost always requests supersedeas. The first hearing generally serves as the supersedeas hearing. The judges generally accept evidence and can deny the request or grant a temporary order of partial or total suspension of benefits. If the request is denied, but the final decision of the judge is that compensation was not payable, the employer/insurer may submit an application to the Supersedeas Fund requesting reimbursement for "overpayments" made following the initial denial.

The Pennsylvania Workers' Compensation Act, section 443(a), 77 P.S. section 999, provides the criteria by which reimbursement from the supersedeas fund is to be sought. The parties seeking reimbursement must establish that:

a)  A request for supersedeas was made in a proceeding under Section 413 or Section 430;

b)  The request was denied;

c)  The payment of compensation continued due to the denial of supersedeas; and

d)  A determination was made in the final outcome that the compensation was not, in fact, payable.

During the fiscal year of 2008/2009, the Pennsylvania Bureau of Workers' Compensation assessed insurers/employers $18,054,158. These assessments serve as the account for the Supersedeas "Fund." In 2008/2009, the Bureau processed 516 claims and distributed payments of more than $12.5 million.

The pertinent facts of the Crawford & Company case are that the claimant had suffered a work injury on July 21, 1995, and he received benefits pursuant to a Notice of Compensation Payable with the nature of injury acknowledged as tendonitis of the right shoulder. On March 16, 2004, the claimant attended an independent medical examination. On June 1, 2004, the claimant underwent surgery related to the work injury. The surgical bill was $35,405.45.

As a result of the opinions rendered by the medical examiner, on July 19, 2004, the employer filed a petition for termination. At the time the petition was filed, supersedeas was requested and ultimately denied.

The surgical bill from June 2004 was not submitted to the insurer until October of 2004. Payment was made in January 2005. The employer's petition was ultimately granted in June 2005, and benefits were terminated.

The insurer filed an application for Supersedeas Fund reimbursement with the Bureau. The application was assigned to a judge after the Bureau challenged the request, and the Bureau argued that the claimant's surgery had occurred before the supersedeas request was made, such that the insurer was not entitled to reimbursement. The judge awarded reimbursement, and both the Workers' Compensation Appeal Board and the Commonwealth Court affirmed the judge's initial ruling.

The Pennsylvania Supreme Court granted the appeal to consider the issue of whether the Supersedeas Fund may deny reimbursement of medical treatment rendered before an insurer requested supersedeas when the Pennsylvania Workers' Compensation Act only permits reimbursement of amounts paid as a result of a denial of supersedeas. Ultimately, the Court stated that, since the bill was not received by the employer until after its request for supersedeas had been made and denied, it was not determinative that the actual bill was for treatment incurred prior to the request for supersedeas. If supersedeas had been granted, payment would not have been made. Since supersedeas was not granted, the bill was paid. Thus, the Court felt it was determinative that the payment resulted from the denial.

This case is an important decision for employers and allows for additional monies to be recouped from the Supersedeas Fund. It is imperative that insurers be mindful of the fact that upon a favorable decision on a termination/suspension/modification petition, the right to recoup funds from the Commonwealth is generally triggered. The application process requires proof of medical or indemnity payments. Particularly in light of Crawford & Co., the date of payment should be readily available and visible as part of the evidentiary packet. Moreover, where possible, each date of service should show a separate payment date. This will ensure success in all endeavors to recoup overpayments from the supersedeas fund.

*Lori is a shareholder and works in our Philadelphia, Pennsylvania, office. She can be reached at 215.575.2734 or lostrauss@mdwcg.com.

Defense Digest, Vol. 17, No. 4, December 2011

Affiliated Attorney

Lori O. Strauss
Shareholder
(215) 575-2734
lostrauss@mdwcg.com

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