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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

Commonwealth Court Reaffirms the Constitutionality of Act 111's IRE Provisions

In this case, the claimant sustained a work injury of January 6, 1994, which was acknowledged by Notice of Compensation Payable (NCP). After the claimant’s receipt of 104 weeks of temporary total disability benefits, the employer filed a Request for an Impairment Rating Examination (IRE). The IRE was performed in May 2023 and the IRE physician found that the claimant had a 5% whole person impairment, under the AMA Guides. The employer filed a Petition based on the IRE results, and the Petition was granted by the WCJ. During litigation, the claimant argued that the IRE provisions of Act 111 (Section 306(a.3) of the Act) were not applicable to her injury, since it predated June 24, 1996, the date Act 57 went into effect, and that the IRE provisions were unconstitutional. The Workers’ Compensation Judge (WCJ)) granted the Petition and the Board affirmed. On appeal to the Commonwealth Court, the claimant argued that Act 111 violated the nondelegation doctrine and that its retroactive application to the claimant’s injury was unconstitutional. The court rejected the arguments on the basis that they had already found the same arguments without merit in multiple, prior cases. The court also addressed an argument made by the claimant that Act 111 was procedurally defective under the Pennsylvania Constitution because it was only considered on two days in each House after having undergone amendments and reassignments. The court noted that the Pennsylvania Constitution requires every bill to be considered on three different days in each House. The claimant maintained that, according to the legislative history, the bill did not receive three separate days of consideration from each House when it was assigned a new bill number. The court pointed out, however, that the bill number, H.B. 1840 remained constant and was considered on three occasions by the House. Further, the court concluded that minor amendments to the bill were germane to its original subject, which was to modify the Act’s IRE process, in accordance with Protz II.

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.

Thought Leadership

WCJ Improperly Refused to Conduct C&R Hearing and Erroneously Required Settlement of All Pending Petitions

In this case, the claimant sustained injuries in the course and scope of her employment as a registered nurse. The employer acknowledged the injury by a Notice of Compensation Payable (NCP).  Subsequently, a Workers’ Compensation Judge (WCJ) expanded the description of injury. The employer then filed a Termination Petition, alleging the claimant was fully recovered from the injuries. Providers filed Utilization Review (UR) Petitions, challenging UR determinations finding their chiropractic treatment to be not reasonable and necessary. A settlement of the claim was eventually reached, and the employer filed a Petition to Seek Approval of a Compromise and Release (C&R) Agreement. The C&R outlined that the agreement fully resolved all future workers’ compensation claims except for the termination and UR Petitions. Briefs were filed and one day later, the WCJ issued an Interlocutory Order which stated if instructions were not followed regarding filing of a C&R, a settlement hearing date would not be given. The employer complied with the order, and filed the C&R. Subsequently, the WCJ notified the parties that the C&R must resolve all issues in the petitions, or would not be entertained. A settlement hearing was never held, and the WCJ then issued a decision, granting the Termination Petition and dismissing the UR Petitions. The WCJ also said that the Petition for Approval of a C&R was dismissed without prejudice, as the issues in the Termination and UR Petitions went to a decision. The claimant appealed to the Workers’ Compensation Appeal Board (Board). The Board granted the claimant’s appeal, finding that the WCJ violated the requirement of Section 449 that an expedited hearing be held when a Petition for Approval of a C&R is filed.  The Board further held that it was legally incorrect for the WCJ to insist that the C&R resolve all issues raised by the pending Petitions. The Board remanded the case to a new WCJ, and Employer appealed to the Commonwealth Court. The court affirmed the Board and held that the WCJ erred, as a matter of law, by refusing to hold an expedited hearing within 30 days, once the Petition for Approval of a C&R was filed.  The court noted that the language of Section 449(b) is mandatory, and a settlement hearing is not discretionary or dependent on a party’s separate request for a stay, or whether the record has been closed. The court further rejected Employer’s argument that the case should not be remanded to a new WCJ for a new decision on the termination and and UR Petitions, as the Board passed no judgment on whether the C&R Agreement resolved the termination and UR Petitions, and left it for the WCJ to decide in connection with the Petition for Approval of a C&R.