WORKERS’ COMPENSATION LAW BULLETIN
JANUARY 2004A RENEWED LOOK AT LABOR MARKET SURVEYS
IN LIGHT OF
CASOV.WCAB (SCHOOL DIST. OF PHILA.)
As you have by now undoubtedly heard, in an opinion dated December 30, 2003, the Supreme Court of Pennsylvania has reversed the Commonwealth Court’s 2002 ruling, in Casov. WCAB (School District of Philadelphia), on the issue of whether the Bureau’s “pre-approval” of a vocational expert is required in order to compel a vocational interview and, by extension, whether such pre-approval is required in order for an expert to be competent to testify.
The facts of the Caso matter are uncomplicated. Pursuant to a Notice of Compensation Payable, the Claimant was receiving temporary total disability benefits for a 1998 work injury when the employer asked the Claimant to undergo a vocational interview with a certified rehabilitation counselor. Until its very recent amendment in December, 2003 (see discussion of “House Bill 88,” below), Section 306(b)(2) of the Act, as amended by Act 57, provided in pertinent part: “In order to accurately assess the earning power of the employee, the insurer may require the employee to submit to an interview by an expert approved by the Department and selected by the insurer.” Additionally, Section 314(a) provides the employer with a mechanism to compel the interview in the event of the employee’s refusal. In Caso, the Claimant refused to submit to the interview. This resulted in the employer’s filing of a petition under Section 314(a), and it is this petition that is the subject of the Commonwealth Court and Supreme Court rulings.
The majority of the Commonwealth Court agreed that the word “approved,” as it appears in Section 306(b)(2), means “pre-approved;” i.e., that the vocational expert in question must be approved by the Bureau before the employee can be required to submit to a vocational interview.
The Supreme Court of Pennsylvania disagreed, holding that if the expert in question possesses, at a minimum, the qualifications set forth in the Bureau regulations, then the expert is deemed “approved” by the Department. Thus, the Supreme Court reversed the Commonwealth Court holdingand remanded the matter to the Workers’ Compensation Judge (WCJ), thereby appearing to pave the way for the WCJ to compel the interview, which would likely be followed by a labor market survey and earning power assessment (LMS/EPA) designed to prove that the claimant has residual earning capacity.
Undoubtedly, the Supreme Court opinion represents the interpretation/clarification that was hoped for by employers and their workers’ compensation insurance carriers. That is, the decision certainly appears to put to rest the question of whether vocational experts must be pre-approved, and the speculation concerning whether the Bureau should and/or will publish a list of approved experts. Perhaps more importantly, the decision also appears to put to rest the broader and more troubling question of whether, absent Bureau pre-approval, a vocational expert can ever be qualified/competent to offer an opinion regarding a Claimant’s earning power, with or without the benefit of a vocational interview. This broader issue had been raised, although not decided, by the Commonwealth Court in several decisions subsequent to its opinion in Caso.
It must be noted that the Supreme Court’s opinion included a comment that the determination of an expert’s competency remains a function of the adjudicatory process. That is, the WCJ is authorized to consider – and potentially reject as inadequate - the qualifications of an interviewer in light of the Bureau’s regulations.
This opens the door for claimants and their counsel to argue that, notwithstanding the expert’s possession of the minimum qualifications, the ultimate determination of the expert’s competency/qualifications remains an issue to be determined by the WCJ. Thus, in the Caso matter, on remand to the WCJ, Claimant’s counsel will undoubtedly continue to attack the expert’s qualifications, and ask the WCJ to make a determination in that regard. That determination is, theoretically, appealable, and as a practical matter the Claimant will be able to continue to delay the vocational interview.
Also as a practical matter, it is rather unusual for an employer or carrier to make a decision, in any given case, that a vocational interview is a necessary antecedent to an LMS/EPA; the statute does provide that the vocational interview is an optional element in this process and, in most cases, the needed educational and vocational background information is available from the time-of-injury employer and/or from prior statement/testimony given by the Claimant. Indeed, we generally recommend that when the claimant will not voluntarily submit to an interview, the vocational expert should be asked to proceed with the LMS/EPA without an interview unless such is an impossibility. Claimant’s later contention that the LMS/EPA is defective for lack of sufficient background information is likely to be viewed by most judges with a jaundiced eye, especially if the expert is later found to be competent/qualified by the WCJ.
House Bill 88 (Act 53)
Before moving to a discussion of the state of the law governing labor market surveys, it bears mentioning that, on December 27, 2003, just three days before the Supreme Court issued its decision in Caso, Governor Rendell signed into law what had been known as House Bill 88 (now known as Act 53), which amended Section 306(b)(2) to delete the requirement of Department (Bureau) approval of vocational experts. Thus, the pertinent portion of Section 306(b)(2) now permits the insurer/employer to “require the employee to submit to an interview by a vocational expert who is selected by the insurer and who meets the minimum qualifications established by the Department through regulation . . .” For purposes of compelling a vocational interview, this would appear to obviate a judicial determination regarding the expert’s qualifications. However, some claimants’ counsel undoubtedly will nevertheless raise a factual issue as to whether the expert in question does indeed meet the minimum qualifications, thereby forcing the employer/carrier to file a Petition to Compel. Moreover, ironically, the Supreme Court’s opinion in Caso arguably muddles things by in stating that a competency determination remains a function of the adjudicatory process.
Another important feature of Act 53 is its requirement that vocational experts who interview the claimant at the request of the employer/insurer “. . .shall comply with the code of professional ethics for rehabilitation counselors pertaining to the conduct of expert witnesses.” This seemingly innocuous addition is likely to be adopted by some members of the claimants’ bar as yet another weapon against the efforts employers/insurers to return injured employees to gainful employment or, failing there, to prove earning capacity via vocational expert testimony. The basis of this attack is likely to be that, under the ethical codes, the primary obligation of the rehabilitation counselor is to “the client,” who is defined in at least one version of the codes as the person receiving counseling; i.e., the claimant. Thus, it may be argued, the vocational expert is precluded from offering testimony that is adverse to the claimant’s interest. The counter to this of course is that, in the workers’ compensation setting, a counselor/client relationship is not established, particularly when there is no vocational interview. Certainly, though, it will be advisable for the vocational expert at the outset to make clear to the claimant and counsel the purpose, goals, limitations and possible outcome of the assessment.
Review of Applicable Law Pertaining to LMS/EPA process
Notwithstanding these and perhaps other technical arguments that some members of the claimants’ bar will continue to advance in opposition to Petitions to Compel Vocational Interviews, the Supreme Court’s decision in Casocertainly clears the air with regard to very important elements in the proof of a claimant’s earning capacity. And, while the labor market survey has never been, and probably never will be, the swiftest arrow in the employer’s quiver, it is an appropriate tool in many cases, especially those that cannot be settled and that involve chronic but stable injuries, and it is likely that the decision will tempt employers and carriers to avail themselves of this tool in a greater volume of cases.
This prompts us to offer to employers/carriers a cautionary note: To the extent the “Casoissue” has been resolved by the Supreme Court, the claimants’ bar will focus its attack on other ambiguitiesand/or inconsistencies found in the statute, and will aggressively attack any lack of compliance with the many requirements – both statutory and regulatory – that an employer/carrier must fulfill in order to successfully prove earning capacity via a labor market survey. Thus, the employer, carrier and/or defense counsel must be very careful in selecting a vocational expert who is both qualified and seasoned, and all participants in the LMS/EPA process must be vigilant in fulfilling the esoteric requirements for proof of earning capacity.
Notice of Ability to Return to Work (Form LIBC-757)
Section 306(b)(3) of the Act provides that if the insurer receives medical evidence indicating that the employee can return to work in any capacity, the insurer must promptly notify the employee by way of this designated form. By way of this form, the insurer (or employer) gives notice to the claimant that there has been a change in his or her condition, that the claimant has an obligation to look for available work, that proof of available employment opportunities may jeopardize the claimant’s right to benefits, and that the claimant has a right to consult with an attorney.
The Notice of Ability form is of critical importance because the failure to issue a Notice of Ability has been found to invalidate, for evidentiary purposes, a labor market survey. That is, because the statutory language requiring the issuance of a Notice of Ability is mandatory, the issuance of the Notice is a required element of the employer’s burden of proof on a Petition for Modification or Suspension based upon the results of a labor market survey. See Hoover v.WCAB (Cmwlth. Ct. 2001) and Summit Trailer Sales v. W.C.A.B. (Cmwlth. Ct. 2002). It also bears repeating that the issuance of the Notice of Ability must be prompt, in light of the Workers’ Compensation Appeal Board’s invalidation of a labor market survey wherein the Notice of Ability was not issued until many months after the medical evidence was received, by which time the survey itself was virtually complete.
Employer’s Job Offer Obligation
The second step precedent to an earning power determination via LMS/EPA is the satisfaction of employer’s statutory job offer obligation, found in Section 306(b)(2): “If the employer has a specific job vacancy the employee is capable of performing, the employer shall offer such job to the employee.” The Bureau regulations have significantly interpreted this statutory provision. Specifically, Section 123.301(b) of the Bureau regulations provides that the Notice of Ability to Return to Work triggers the job offer obligation. Thus, it is essential that the claims handler communicate, to the employer, the fact that the notice has been issued, and that the employer be educated regarding the specific requirements and scope of the job offer obligation. Otherwise, it is quite possible, for example, that the employer will fill, in violation of the Act, an available job that the claimant was capable of performing. Now that Caso has been decided in a manner favorable to employers, it is highly likely that the claimants’ bar will more carefully investigate – by deposing human resources personnel – of the availability of jobs that are suitable for the claimant. That is, claimants’ counsel will be less likely to accept at face value the vocational expert’s representation that the employer does not have a suitable position available.
Also important to a determination of whether the employer has satisfied its job offer obligation is the Commonwealth Court’s decision in South Hills Health System v. WCAB (Cmwlth. Ct. 2002). In South Hills, after a Notice of Ability to Return to Work was issued to the claimant, the employer periodically provided the claimant with preferential bidding rights on job postings of available positions. In doing so, the employer’s human resources manager was unaware of the nature of the claimant’s injury and of the resulting work restrictions, and none of the jobs in question were ever specifically offered to the claimant. Thus, the employer failed in two respects to satisfy its job offer obligation. First, none of the available positions were actually offered, as required under Section 306(b)(2) and, second, even had the positions been offered, there was a lack of compliance with the Kachinski criteria which, under Hoover v. WCAB(Cmwlth. Ct. 2001) now apply to the statutorily required job offer.
It is also very important to understand that the employer’s job offer obligation must be satisfied “prior to [the employer’s] seeking a modification or suspension of benefits based on earning power.” And, under Section 123.301(b), the job offer obligation continues “for 30 days or until the filing of a Petition for Modification or Suspension, whichever is longer.” This means, incidentally, that the job offer obligation continues during the development of a labor market survey and until a Petition for Modification or Suspension is filed. The job offer obligation may be satisfied by claimant’s refusal or failure to respond to an appropriate (i.e., Kachinski-compliant) job offer, the claimant’s refusal of a modified duty job, or the employer’s demonstration that it has no suitable vacant job for the Claimant. Note, again, that Claimant is permitted to investigate and rebut the “no vacancy” representation.
The Labor Market Survey
Once the employer satisfies its statutory job offer obligation, it may seek to modify or suspend the claimant’s wage loss benefits based upon evidence of earning power, as demonstrated by the results of a labor market survey. The essential components of a labor market survey are set forth in the Section 306(b)(2):
“Earning power” shall be determined by the work the employee is capable of performing and shall be based upon expert opinion evidence which includes job listings with agencies of the Department, private job placement agencies and advertisements in the usual employment area . . .
In the South Hills case, the Commonwealth Court held that the surveyed jobs that form the basis of the earning power assessment must be shown not only to exist, but to be “open and available to a claimant.” In other words, an otherwise suitable position that is not, at the time of the assessment, vacant and available to the claimant cannot be considered in an assessment of claimant’s earning capacity. Note that the Act does not require, and the appellate courts have not yet required, that Claimant actually be offered or even notified of the availability of positions utilized in the assessment. That is, the Kachinski standard has not yet been applied to the LMS/EPA.
However, it is expected that more claimants’ counsel will challenge labor market surveys which do not utilize, as specified in Section 306(b)(2), “job listings with agencies of the Department, private job placement agencies and advertisements in the usual employment area.” The viability of such an attack is supported by language found in the South Hills opinion. Moreover, we know of at least one claimant’s counsel who will argue that labor market surveys are an impossibility given that “job listings with agencies of the Department” do not exist; i.e., that state agencies do not publish job listings. This potential argument, while not persuasive to the author, is mentioned simply as an illustration that, in light of the Supreme Court’s decision in Caso, the claimant’s bar will attack all aspects of the LMS/EPA with renewed vigor.
Although, as noted above, satisfaction of the Kachinski criteria is not required to demonstrate earning capacity where the work injury follows the effective date (1996) of Act 57, we recommend that consideration be given to a hybrid vocational workup that includes not only a “pure” LMS/EPA but also a limited Kachinski workup. For example, consideration should be given to providing the claimant with detailed notification of a selection of surveyed jobs that might appear especially appropriate for the claimant. This, at least theoretically, gives the claimant a better opportunity of actually finding employment, an outcome that of course benefits both claimant and employer. This also diffuses the accusation that the employer and/or vocational expert are engaged in a “cloak-and-dagger” enterprise, an accusation leveled by the WCJ in Allied Products and Services v. WCAB(Cmwlth. Ct. 2003). Critics of the “hybrid”workup point to the opportunity for claimant to sabotage the job lead, and to the potential for creating, in WCJ’s, an appetite for more evidence than is required by law. Note also that at least one claimant’s counsel has taken the position that the mandatory (“shall”) language found in Section 306(b)(2) means that the only method of establishing post-injury earning capacity for Act 57 injuries is the LMS/EPA.
Summary and Conclusions
We believe that the best method to prove post-injury earning capacity remains the employer’s accommodation of claimant’s work restrictions, pursuant to a well-structured lightduty program that is administered in good faith. Of course, many employers, because of their size, industry, union restrictions, etc., cannot develop a viable light duty program. For those employers and for those who otherwise cannot offer restricted duty jobs even on a limited basis, the LMS/EPA remains a viable option, especially where the parties have been unable to settle the claim via Compromise and Release Agreement. When LMS/EPA is undertaken, very careful attention must be given to the statutory, regulatory and appellate requirements/criteria, and the assessment must be performed and presented in good faith; a thoughtful and well-executed vocational workup increases not only the prospects for claimant’s actual return to work, but also the prospects for successful litigation when claimant does not.