Atlas Railroad Construction Co., et al. v. WCAB (Casey) (Majority Opinion)

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IN THE COMMONWEALTH COURT OF PENNSYLVANIA Atlas Railroad Construction Company and Zurich American Insurance Company, Petitioners : : : : : v. : : Workers' Compensation Appeal Board : (Casey), : Respondent : BEFORE: No. 446 C.D. 2007 Argued: February 12, 2008 HONORABLE DORIS A. SMITH-RIBNER, Judge HONORABLE ROCHELLE S. FRIEDMAN, Judge HONORABLE JAMES R. KELLEY, Senior Judge OPINION NOT REPORTED MEMORANDUM OPINION BY JUDGE SMITH-RIBNER FILED: April 14, 2008 Atlas Railroad Construction Company (Employer) and its insurance carrier petition for review of the order of the Workers' Compensation Appeal Board (Board) that reversed in part the order of a Workers' Compensation Judge (WCJ) denying an Employee Challenge filed by John Casey (Claimant) pursuant to Section 413(c)(1) of the Workers' Compensation Act (Act), 77 P.S. §774.2(1),1 to Employer's December 9, 2005 suspension notification. In reversing the WCJ's order, the Board reinstated Claimant's disability benefits as of January 17, 2006 when he stopped working in his position with Employer. Employer challenges the Board's ruling that the WCJ erred in considering evidence outside the scope of that permitted by statute in deciding Claimant's Employee Challenge. 1 See Act of June 2, 1915, P.L. 736, as amended, added by Section 2 of the Act of July 1, 1978, P.L. 692. Claimant sustained a work injury on December 8, 2003 during his employment as a ballast regulator operator for Employer. He received disability benefits pursuant to a March 15, 2004 compensation agreement, which described the injury as "tear of posterior horn medial meniscus of left knee." On July 21, 2005, Employer issued a suspension notification to suspend Claimant's benefits as of July 18 when he returned to work at earnings equal to or greater than his preinjury earnings. He stopped work on July 21 and filed his Employee Challenge. See N.T., September 14, 2005 Hearing, p. 3; Reproduced Record (R.R.) at 46. On August 12, 2005, Employer filed a petition to suspend benefits as of July 21, 2005, alleging that it offered Claimant a specific job. It also requested a supersedeas. The WCJ held hearings in September and November 2005, and the deposition of Jeffrey Kann, M.D. was taken in November. On December 2, 2005, the parties entered into a supplemental agreement describing Claimant's injury as a "torn cartilage/blood clot post surg." and modifying the description to include "left deep vein thrombosis and subsequent left leg post-phlebitic syndrome." R.R. at 4 - 5. On December 9, 2005, Employer issued its second suspension notification to suspend Claimant's benefits as of December 8, 2005 based upon his return to work without loss of earnings. On December 15, 2005, Claimant filed an Employee Challenge to the December 9 suspension notification and requested a special supersedeas hearing under Section 413(c)(1) of the Act, which provides: Notwithstanding any provision of this act, an insurer may suspend the compensation during the time the employe has returned to work at his prior or increased earnings upon written notification of suspension by the insurer to the employe and the department, on a form prescribed by the department for this purpose. The notification of suspension shall include an affidavit by the insurer that compensation has been suspended because the employe has returned to work at prior or 2 increased earnings. The insurer must mail the notification of suspension to the employe and the department within seven days of the insurer suspending compensation. (1) If the employe contests the averments of the insurer's affidavit, a special supersedeas hearing before a [WCJ] may be requested by the employe indicating by a checkoff on the notification form that the suspension of benefits is being challenged and filing the notification of challenge with the department within twenty days of receipt of the notification of suspension from the insurer. The special supersedeas hearing shall be held within twenty-one days of the employe's filing of the notification of challenge.[2] At the beginning of a hearing on January 11, 2006, the WCJ stated that the hearing was on "a Suspension Petition" and asked counsel for Claimant if he was working. N.T., January 11, 2006 Hearing, p. 5; R.R. at 14. Counsel stated that Claimant returned to work on December 8, 2005 and that he filed an Employee Challenge to the December 9, 2005 suspension notification. After the WCJ was given a copy of the suspension notification, counsel stated that he was unaware of whether Employer would proceed for a suspension as of an earlier date. The parties disputed whether Claimant should be in a modification or suspension status and later agreed to submit a position letter to the WCJ. The WCJ continued the hearing for thirty days and deferred ruling on Claimant's Employee Challenge to the December 2005 suspension notification. At a hearing on February 13, 2006, the WCJ stated that the hearing was "on a Suspension Petition and Notification of Suspension Petition" and that the 2 If the claimant does not timely challenge the suspension notification, the claimant is "deemed to have admitted to the return to work and receipt of wages at prior or increased earnings[,]" and the suspension notification is "deemed to have the same binding effect as a fully executed supplemental agreement for the suspension of benefits." Section 413(c)(2), 77 P.S. §774.2(2). 3 last hearing "was placed in awaiting information status" because Claimant was working at that time. N.T., February 13, 2006 Hearing, p. 3; R.R. at 25. Claimant testified that his condition worsened after he returned to work on December 8, 2005. He further testified that although his family physician, Joseph N. DiCroce, M.D., took him off work on January 10, 2006 he continued to work until January 16; that he stopped work on January 17 because he experienced a lot of pain and could hardly move his swollen leg; and that he gave Employer Dr. DiCroce's January 10, 2006 slip. Employer submitted Claimant's timecards and pay records. The WCJ was asked to rule on Claimant's Employee Challenge to the December 2005 suspension notification. The WCJ noted that Dr. Kann, who evaluated Claimant in March 2005 at Employer's request, found that Claimant still suffered from the work injury and its sequelae but that he was able to return to modified work with restrictions of lifting no more than twenty-five pounds and occasional climbing of steps. The WCJ found that Claimant returned to a modified-duty job on December 8, 2005 and worked until January 16, 2006, working twelve and one-half hours on several days, and that on January 18, 2006 Employer offered the same position at another job, which Claimant did not accept. The WCJ determined: [B]ased on the evidence submitted to date, ¦ the Supersedeas initiated by the December 9, [2005], Notification of Suspension should not be set aside. Dr. DiCroce's slip does not include any findings noted by him during his January 10, 2006, examination. [Claimant] continued to work long days for almost one week after receiving the slip. He was not performing any laboring tasks. WCJ's Decision, Finding of Fact No. 11 (emphasis in original). On appeal of the WCJ's decision, the Board relied on U.S. Airways v. 4 Workers' Compensation Appeal Board (Rumbaugh), 578 Pa. 456, 854 A.2d 411 (2004), in which the Court considered the scope of a special supersedeas hearing held on an employee challenge to a suspension notification. From the clear and unambiguous language in Section 413(c) of the Act, the Court concluded that the legislature intended for a special supersedeas hearing to involve only the claimant's challenge to the suspension notification. The only relevant issues at such a hearing are "whether: (1) the claimant has indeed returned to work without a wage loss as the insurer has averred; (2) [the claimant] returned as of the date the insurer issued the notice of suspension and started suspending [his or] her benefits; and (3) [the claimant] is still currently working without a wage loss." Id. at 471, 854 A.2d at 420. The employer has the burden of proving these elements. Id. The Court further observed in U.S. Airways: [W]here an employer has suspended a claimant's benefits pursuant to a section 413(c) notice of suspension and the claimant subsequently stops working and files a challenge to the employer's notice, the employer must file a section 413(a) [77 P.S. §§771 - 773] petition for suspension with a request for a supersedeas to protect its right to continue to suspend the claimant's benefits after the time the claimant stopped working. The employer may present such a petition to the claimant and the [WCJ] prior to or at the supersedeas hearing on the claimant's challenge petition, and if the judge finds that the claimant would not be prejudiced by the introduction of evidence on the matter, the judge may permit the employer to present evidence on its request for a supersedeas at the hearing. Id. at 473, 854 A.2d at 422 (emphasis added). The Board stated that Employer did not file a suspension petition setting forth additional reasons outside Section 413(c) for suspending Claimant's benefits at or prior to the special supersedeas hearing held on his Employee Challenge, that the July 2005 suspension notification was 5 not a suspension petition and that the WCJ erred in considering evidence outside the scope permitted by Section 413(c). The Board then reversed in part the WCJ's denial of the Employee Challenge to the December 2005 suspension notification and reinstated Claimant's benefits as of January 17, 2006 when he stopped work. Employer argues that the Board erred in concluding that Employer did not file a suspension petition to assert its right to continue the suspension imposed under the December 2005 suspension notification and in concluding that the WCJ erred in considering evidence outside the scope of Claimant's Employee Challenge to the notification. In support, Employer relies upon the suspension petition and supersedeas request that it filed in August 2005 following the July 2005 suspension notification and Claimant's Employee Challenge to that notice. Employer contends that it presented testimony at the November 2005 hearing to rebut Claimant's testimony at the September 2005 hearing and that his submission of medical evidence shows that he was not disadvantaged in litigating the Employee Challenge and Employer's supersedeas request at the same time. Claimant counters that Employer's August 2005 suspension petition "does not have the effect of sanitizing" the consideration of the issues outside the scope of his challenge to the December 2005 suspension notification. Claimant's Brief, p. 4.3 Section 413(c) of the Act was amended in 1996 "to streamline procedures" by authorizing an employer to unilaterally suspend benefits based on a mere averment that a claimant returned to work without a loss of earnings; a subsequent hearing is required only when the claimant files an employee challenge 3 The Court's review is limited to determining whether constitutional rights were violated, an error of law was committed, a Board practice or procedure was not followed or the findings of fact are not supported by substantial evidence in the record. Clear Channel Broadcasting v. Workers' Compensation Appeal Board (Perry), 938 A.2d 1150 (Pa. Cmwlth. 2007). 6 to a suspension notification and requests a hearing. See Hinkle v. Workers' Compensation Appeal Board (General Elec. Co.), 808 A.2d 1036, 1040 (Pa. Cmwlth. 2002). The employer does not have "an automatic right to open up a section 413(c) special supersedeas hearing to issues concerning whether it may suspend a claimant's benefits for reasons outside of the one permitted by section 413(c)." U.S. Airways, 578 Pa. at 471 - 472, 854 A.2d at 421. The Act requires "a distinct set of procedures for an insurer to follow where it wishes to suspend a claimant's benefits for reasons other than because the claimant has returned to work without a loss of earning power." U.S. Airways, 578 Pa. at 472, 854 A.2d at 421. Filing a petition to terminate, suspend or modify a notice of compensation payable or a compensation agreement or award "shall automatically operate as a request for a supersedeas to suspend the payment of compensation ¦ where the petition alleges that the employe has fully recovered and is accompanied by an affidavit of a physician ¦." Section 413(a.1), 77 P.S. §774(1). In any other case, such a petition "shall not automatically operate as a supersedeas but may be designated as a request for a supersedeas, which may then be granted at the discretion of the [WCJ] hearing the case." Section 413(a.2), 77 P.S. §774(2). The supersedeas request may be approved "if proof of a change in medical status, or proof of any other fact which would serve to modify or terminate payment of compensation is submitted with the petition." Id. The employer must await a decision on the supersedeas request to suspend benefits. U.S. Airways. In U.S. Airways the employer filed a suspension notification based on the claimant's return to work. The claimant thereafter stopped working and filed an employee challenge to the notice. The employer filed a petition under Section 413(a) of the Act, alleging that the claimant was fully capable of returning to her 7 position, and it also requested a supersedeas pursuant to Section 413(a.2). The Court concluded that the WCJ did not err in considering the claimant's challenge and the employer's supersedeas request in a single proceeding because the claimant voluntarily presented medical evidence at the supersedeas hearing to establish her continuing entitlement to benefits and could not claim prejudice or otherwise assert denial of due process when the WCJ permitted the employer to present medical evidence in rebuttal and in support of its supersedeas request. Unlike in U.S. Airways, Employer did not file a suspension petition and request for supersedeas in conjunction with its issuance of the December 2005 suspension notification. Instead, Employer relies upon its suspension petition and supersedeas request previously filed in August 2005. The WCJ stated, however, that the July 2005 suspension notification had been "closed." N.T., January 11, 2006 Hearing, p. 12; R.R. at 21. Employer therefore could not simply "renew [its] supersedeas request" from August 2005 to assert a right to continue the suspension of Claimant's benefits. N.T., February 13, 2006 Hearing, p. 17; R.R. at 39. Inasmuch as Employer failed to file a new suspension petition and supersedeas request after issuing the December 2005 suspension notification, only Claimant's Employee Challenge was before the WCJ. In ruling on the challenge, the WCJ considered the following evidence presented at hearings on Employer's August 2005 suspension petition and supersedeas request: testimony of Employer's lay witnesses offered at the November 4, 2005 hearing; Dr. Kann's report and functional capabilities form dated March 17, 2005; the job description of a modified position prepared by Associate Rehabilitation's case manager in June 2005; and Dr. DiCroce's slips dated July 5 and September 6, 2005. Decision, Findings of Fact No. 4. 8 WCJ's The evidence offered to support Employer's August 2005 suspension petition was outside the scope of evidence that the WCJ was allowed to consider in a special supersedeas hearing on Claimant's Employee Challenge to the December 2005 suspension notification, i.e., whether he returned to work on December 8, 2005 without a loss of earnings and was still working. The WCJ improperly relied upon evidence that was irrelevant to the proceedings to deny Claimant's Employee Challenge to the December 2005 suspension notification. Employer does not deny that Claimant stopped work on January 17, 2006. It therefore failed to establish entitlement to continue a suspension of Claimant's benefits after January 17, 2006. Because the Board did not err in decision, the Court accordingly affirms. DORIS A. SMITH-RIBNER, Judge 9 IN THE COMMONWEALTH COURT OF PENNSYLVANIA Atlas Railroad Construction Company and Zurich American Insurance Company, Petitioners : : : : : v. : : Workers' Compensation Appeal Board : (Casey), : Respondent : No. 446 C.D. 2007 ORDER AND NOW, this 14th day of April, 2008, the Court affirms the order of the Workers' Compensation Appeal Board. DORIS A. SMITH-RIBNER, Judge

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