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Defense Digest

A Costly Mistake

Defense Digest, Vol. 31, No. 2, June 2025

June 1, 2025

Key Points:

  • A workers’ compensation judge is not required to correct a mistakenly-issued Notice of Compensation Payable, but they may correct a mistakenly-issued Notice of Compensation Payable.
  • The court would not overturn a workers’ compensation judge’s refusal to correct a mistakenly-issued Notice of Compensation Payable.
  • The decision to correct a mistakenly-issued Bureau document is in the workers’ compensation judge’s discretion.

The Commonwealth Court of Pennsylvania recently issued an opinion finding that, although a workers’ compensation judge may correct a mistakenly-issued Notice of Compensation Payable, it is within the judge’s discretion and is not required.

In City of Philadelphia and PMA Management Corp. v. John Bell (WCAB), 2025 WL 980776 (Pa. Cmwlth. April 2, 2025), the claims handler incorrectly issued a “partial denial,” or a Medical-Only Notice of Compensation Payable (Medical-Only NCP), after the determination was made to issue a denial. After working 17 years as a firefighter for the City, the claimant was diagnosed with colon cancer. He requested that the City recognize his cancer as job-related and pay workers’ compensation benefits. After issuing the Medical-Only NCP, the employer filed a review petition, alleging it mistakenly issued the Medical-Only NCP when it intended to issue a Notice of Compensation Denial.

The employer/carrier presented an affidavit from the City’s Risk Management and Employee Disability Manager in which she noted that, after an investigation, it was recommended that PMA deny the claimant’s claim. The employer/carrier also presented an affidavit from the claims handler which noted that she had begun working for PMA on June 6, 2022, and processing workers’ compensation claims on June 27, 2022. She received the claimant’s claim on September 12, 2022. She contacted the aforementioned risk manager and was advised to issue a denial because there was no evidence of a causal relationship between the claimant’s condition and his employment as a firefighter. She understood the Claims Center’s software allowed her compensability choices of: fully accept, temporarily accept, undetermined, partially deny, and fully deny. The claims handler did not understand the Electronic Data Interchange (EDI) system’s process or the automatic generation of compensability-establishing documents through these choices. She chose to “partially deny” the claim because she believed she was agreeing to pay for only the medical appointments to any posted panel physician. She did not understand that the form generated would accept liability on the claim. She did not intend to issue a Medical-Only NCP, although that is what clicking “partially deny” generated. Emails exchanged between the claims handler and the risk manager established the intent to deny the claim. 

The workers’ compensation judge found both the adjuster and the claims handler credible and accepted that the adjuster made a mistake and did not intend to generate a Medical-Only NCP. However, the judge was not willing to set aside the Medical-Only NCP. The judge noted that EDI has been around for approximately 10 years, the adjuster should have received better training, and she should have sought advice before taking the action. The judge stated that allowing Bureau documents to be set aside when mistakes are made is not a precedent she was going to set. The judge also found this was distinguishable from cases where information has been made available prior to the completion of an investigation where the claim has already been accepted. The Workers’ Compensation Appeal Board affirmed. 

On appeal, the Commonwealth Court noted that the judge and the Board incorrectly relied on Beissel and Barna, which addressed changing a Bureau document after information was gained prior to the completion of an investigation. The court noted that this case was distinguishable because it was the insurer’s intention at the onset to deny the claim after it conducted its investigation. The issuance of the Medical-Only NCP was a mistake. The court looked at whether Section 413(a) of the Act requires a judge to set aside a mistakenly issued NCP. 

The court looked at the language in Section 413(a), which it determined was unambiguous and permissive in nature. Section 413(a) states: “a workers’ compensation judge may, at any time, review and modify or set aside a notice of compensation payable…if it be proved that such notice of compensation payable…was in any material respect incorrect.” The court analyzed whether “may” could mean “shall” in some circumstances and determined that because “may” and “shall” are both used throughout the Act, and are not used interchangeably, “may” is permissive rather than mandatory. Thus, the judge had the discretion to decide whether to set aside the mistakenly issued Medical-Only NCP, which the judge elected not to do, even after she had found it was incorrectly issued. The court would not overturn that decision.

This decision reinforces the possibility of reversing an incorrectly and mistakenly-issued Bureau document by way of a review petition. However, the decision also reinforces the judge’s discretion to make that correction. As the judge noted in this case, most judges are hesitant to change a Medical-Only NCP or an NCP to a denial even if the mistake was clearly established. Therefore, the claims handler or whomever issues the EDI transaction should take the proper precautions and exercise due diligence before issuing any Bureau document. More often than not, the judge will not correct a Bureau form. Proper training and safeguards should be exercised prior to issuing a Bureau document to avoid these issues.

*Michael is a member of our Workers’ Compensation Department and works in our King of Prussia, PA office. 


 

Defense Digest, Vol. 31, No. 2, June 2025, is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2025 Marshall Dennehey. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.

Firm Highlights

Thought Leadership

New Jersey Appellate Division Affirms Recreational Immunity for County Under Landowners' Liability Act

In a recent unpublished decision in Matthew Kuzma, etc. v. Middlesex County Parks Department, et al., the New Jersey Appellate Division affirmed summary judgment in favor of Middlesex County Parks Department, holding that the county was immune from liability under New Jersey's Landowners' Liability Act (LLA), notwithstanding its failure to plead the immunity as an affirmative defense in its answer to the Complaint. The case arose from injuries sustained by fourteen-year-old plaintiff, Matthew Kuzma, while playing basketball at Spring Lake Park in South Plainfield on August 23, 2019. The plaintiff observed a crack in the basketball court before beginning to play but did not consider it dangerous. During the game, his foot became caught in the crack, causing him to fall and suffer a significant ankle injury. The plaintiff alleged that the injury resulted in ongoing physical limitations and deprived him of the opportunity to play collegiate basketball. The plaintiff filed suit alleging that the defendants negligently maintained the basketball court. Although the county did not assert LLA immunity as an affirmative defense in its answers, it later moved for summary judgment on that basis. The plaintiff opposed the motion, arguing that the county had waived the defense by failing to plead it. The county maintained that the plaintiff had received sufficient notice of its intent to rely on the LLA through discovery and therefore suffered no unfair surprise or prejudice. The trial court agreed and granted summary judgment, concluding that the county should be permitted to invoke statutory immunity notwithstanding its failure to formally plead the defense. Relying heavily on the New Jersey Supreme Court's guidance in Arias v. Cnty. of Bergen, holding a county park was subject to the immunity of the LLA, the Appellate Division affirmed, holding that the county's failure to plead LLA immunity did not preclude reliance on the defense under the circumstances presented. The court determined that the plaintiff had received adequate notice of the immunity claim through discovery and that permitting the defense furthered the public-policy objectives embodied in the LLA. In affirming dismissal, the Appellate Division acknowledged the seriousness of the plaintiff's injury and the general societal interest in maintaining parks and recreational facilities in a safe condition. However, the court emphasized that both the legislature and the New Jersey Supreme Court have expressed a clear policy choice to limit liability for public and private landowners who make recreational property available for public use. The decision reinforces the courts' continuing adherence to the Landowners' Liability Act and the principle that recreational lands and facilities should be broadly protected from liability exposure, even in cases involving significant personal injuries.

Thought Leadership

The Tolling Trap: Filing Alone Will Not Toll the Statute Without Good-Faith Service

The Eastern District of Pennsylvania recently reinforced a critical limitation on bad faith claims, holding that a timely filing alone will not preserve a cause of action absent a good-faith effort to serve the original process. The plaintiff had presented a claim for underinsured motorist benefits to his auto insurer. The insurer evaluated the claim and determined that the plaintiff’s accident-related damages did not exceed the bodily injury liability insurance limits of the at-fault driver and denied his claim. Among other claims, the plaintiff sought to present a claim for insurance bad faith under 42 Pa. C.S.A. § 8371, to which a two year statute of limitation applies. He first filed a praecipe for writ of summons before the expiration of the statute of limitation. However, the plaintiff did not attempt to serve the praecipe or writ until after the statute of limitations had expired. Additionally, the service failed as the plaintiff had mailed the original process to an incorrect address. Despite receipt of the Postal Service’s failure to deliver the original process, the plaintiff did not attempt to re-serve the writ. Two months later, the plaintiff filed a complaint and then successfully served that complaint. The insurer sought to dismiss the plaintiff’s bad faith claim as time-barred by the statute of limitations. The district court agreed. Though the plaintiff had filed a praecipe for a writ of summons prior to the expiration of the statute of limitations, the statute is only tolled if there is a good faith effort to serve that original process. In this case, the court determined that the plaintiff had failed to perform a “good faith effort to serve the original process”. Additionally, though the filing and service of a complaint can serve as alternative original process when the lawsuit is commenced by the filing of a praecipe for a writ of summons, the plaintiff filed his complaint after the statute of limitations had expired. The plaintiff’s bad faith claim was therefore determined to be barred by the statute of limitations and dismissed by the court, with prejudice. A key takeaway for the defense is not to assume that the statute of limitations has been successfully tolled by a plaintiff merely because a praecipe for a writ of summons or complaint has been filed prior to the expiration of the statute. A filed complaint or writ is only part of the equation. The defense should carefully review the docket and filings to confirm that the plaintiff also performed the requisite good faith effort to serve that original process. A thorough review of the docket may reveal that the plaintiff failed to make the good-faith service efforts necessary to toll the statute of limitations.

Thought Leadership

Florida Supreme Court Rules Florida Statute §627.70152 Does not Apply Retroactively

In a decision that resolves years of appellate uncertainty and confirms that insurers and insureds alike can rely on the legal framework in place when a policy is issued, the Supreme Court of Florida last week found that Florida Statute §627.70152, which involves an insured’s requirement to provide an insurer with pre-suit notice before filing a suit, cannot be applied retroactively. In Universal Property & Casualty Insurance Company v. Hughes, the Court was presented with the issue of whether the statutory pre-suit notice requirement applied retroactively and whether it would apply to a breach of contract of an insurance policy that was issued before the statute went into effect. Before the Court was an appeal from a homeowner, Ms. Hughes, who sued her insurance carrier, Universal Property & Casualty Insurance Company (Universal) for breach of contract under an insurance policy that was in effect from April 24, 2019 through April 24, 2020. During the policy period, Ms. Hughes suffered a loss and, on May 29, 2019, made a claim for water damage. The carrier investigated the loss and issued payment; Ms. Hughes disputed the payment, finding the amount insufficient for repairs. On July 1, 2021, Florida Statute §627.70152 went into effect, which required insureds to provide notice of intent to initiate litigation against the carrier prior to filing a lawsuit; if an insured filed the lawsuit without complying with §627.70152, a court must dismiss the case without prejudice. On August 4, 2021, Ms. Hughes filed her lawsuit against Universal for breach of contract. Universal moved to dismiss based on her failure to comply with §627.70152. Ms. Hughes contended the notice requirement could not be applied retroactively. The trial court disagreed and dismissed the lawsuit without prejudice, and Ms. Hughes appealed. During the appeal, the Fourth District Court of Appeal, in Cole v. Universal Property & Casualty, 363 So. 3d 1089 (Fla. 4th DCA 2023), ruled that Florida Statute §627.70152 did apply retroactively to policies issued before the effective date of §627.70152. However, the Sixth District Court agreed with Ms. Hughes and overturned the trial court’s ruling, finding the statute could not retroactively apply to policies issued prior to the statute effective date. Thereafter, the other district courts weighed in, with the Third District Court agreeing with the Fourth District Court, and the First, Second and Fifth District Courts agreeing with the Sixth District Court. In resolving the conflict amongst the district courts, the Supreme Court advised “as a general rule, ‘the statute in effect at the time an insurance contract is executed governs substantive issues arising in connection with that contract.’ Hassen v. State Farm Mut. Auto. Ins. Co., 674 So. 2d 106, 108 (Fla. 1996). The Court applied the two-step test when deciding whether a statute has retroactive application: “First, the Court must ascertain whether the Legislature intended for the statute to apply retroactively. Second, if such an intent is clearly expressed, the Court must determine whether retroactive application would violate any constitutional principles.” Menendez v. Progressive Exp. Ins. Co., 35 So. 3d 873, 877 (Fla. 2010). In analyzing the Legislature’s intent, the Court must determine whether the Legislature has manifested a clear command for retroactivity in the statutory text.  In review of the statutory text, the Court found nothing in the language of the statute to indicate that the phrase “all suits” was serving another purpose of expanding its reach to suits based on policies that both predate and postdate the enactment of the statute. Buis v. Universal Prop. & Cas. Ins. Co., 394 So. 3d 738, 741 (Fla. 2d DCA 2024). Further, the Court noted the statute has an effective date, which has long been considered to be evidence against retroactive application of a statute. The Court concluded that, on its face, no provision of §627.70152 speaks to application of the statute to insurance policies issued before the statute’s effective date and therefore, the Legislature did not clearly command retroactivity of the statute to include insurance policies issued prior to the enactment of the statute. The Court briefly reviewed Universal’s argument that the presuit notice requirement was procedural, not substantive, and therefore should be applied retroactively; however, the Court agreed with the Sixth District Court’s finding that, in its entirety, §627.70152 transformed an insured’s ability to sue an insurance company under a property insurance policy and an insurer’s obligations to respond to and pay insurance claims, thus making the requirement a substantive change. The Court thereby upheld the decision of the Sixth District and disapproved the decision of the Fourth District in Cole.