What You Need to Know

On June 20, 2017, the Pennsylvania Supreme Court held that the Impairment Rating Evaluation (IRE) process was unconstitutional because the General Assembly is not permitted to delegate its authority to issue impairment rating guidelines to a non-legislative body, or in the Protz case, the American Medical Association (AMA).  See Protz v. WCAB (Derry Area School District), Nos. 6 WAP 2016, 7 WAP 2017 (Pa. June 20, 2017).

What is the IRE process?

Prior to the decision, if a worker had been out of work due to a workplace injury for 104 weeks, and the worker reached a plateau of medical improvement, a so-called Maximum Medical Improvement (MMI), an IRE could be requested. If the IRE produced an impairment rating below 50%, which was common, the injury was classified as Permanent Partial and indemnity benefits were limited to a maximum of 500 weeks or about nine and one half years.  The Protz decision eliminated this framework. Now, unless the General Assembly passes new legislation, all injured workers are eligible for lifetime wage replacement benefits.

Potential Impact

As a result, employers could potentially notice an increase in their workers’ compensation premium for policies effective November 1, 2017. It is also likely that policies renewing prior to November 1^st will be issued with tentative rates and subject to later adjustment.  These anticipated rate increases only apply to Pennsylvania payroll amounts.

Action Steps

• Devise a comprehensive Return-to-Work Program to mitigate these anticipated higher costs and reduce long-term indemnity claims;
• Discuss reserve amounts with your broker and adjusters.

If you have further questions about how these changes may impact your Workers’ Compensation program, contact one of our Experts today.

Further Reading

White Paper: PCRB Seeks 6% Increase in Workers’ Comp Loss Costs in Response to Protz Decision and Resulting Elimination of Permanent Partial Benefits Cap

Please note that the information contained in this posting is designed to provide authoritative and accurate information, in regard to the subject matter covered. However, it is not provided as legal or tax advice and no representation is made as to the sufficiency for your specific company’s needs. This post should be reviewed by your legal counsel or tax consultant before use.