Last Friday, a deeply divided Commonwealth Court of Pennsylvania struck down as unconstitutional the requirement, codified in § 306(a.2) of the state’s Workers’ Compensation Act [77 Pa. Stat. Ann. § 511.2(7)], that physicians use the most recent edition of the American Medical Association Guides to the Evaluation of Permanent Impairment to determine an injured worker’s degree of permanent impairment [see Protz v. Workers’ Comp. Appeal Bd. (Derry Area Sch. Dist.), 2015 Pa. Commw. LEXIS 404 (Sept. 18, 2015)]. The majority found that the statutory wording amounted to an unconstitutional delegation of legislative authority, since the statute proactively approved versions of the AMA Guides beyond the Fourth Edition without legislative review.
As a result of the ruling, a decision by the state’s Workers’ Compensation Appeal Board that modified an injured worker’s benefits because her impairment, as determined utilizing the 6th Edition guidelines, was less than 50 percent was reversed and remanded. The Board was instructed to use the Fourth Edition.
In April 2007, Mary Ann Protz (Protz) sustained a work-related injury to her right knee and her employer issued a notice of temporary compensation payable. When Protz returned to work in August 2007, her benefits were suspended. In February 2008, Protz’s work injury recurred, and her benefits were reinstated by means of a supplemental agreement. Subsequently, the employer requested an impairment rating evaluation (IRE). Following an October 2011 examination, the physician provided a 10 percent impairment rating under the Sixth Edition of the American Medical Association’s (AMA) Guides to the Evaluation of Permanent Impairment (Guides). Thereafter, the employer filed a modification petition, seeking to convert Protz’s total disability benefits to partial disability benefits, thereby reducing the amount of compensation that could be paid to 500 weeks under 77 Pa. Stat. Ann. § 511.2(7).
Under § 511.2(7), a claimant is partially disabled if he or she has a total impairment rating of less than fifty percent. In no event may the payment of partial disability benefits exceed 500 weeks, regardless of any changes in status of the disability. Following a hearing, the WCJ determined that as of January 16, 2012, Protz’s impairment rating was less than 50 percent under the Sixth Edition of the Guides. Accordingly, the WCJ granted the employer’s modification petition, finding that Protz was entitled only to partial disability benefits. The Board affirmed and Protz appealed.
The majority of the appellate court observed that § 306(a.2) had been added to the Workers’ Compensation Act in 1996, at which time IREs were performed pursuant to the Fourth Edition of the AMA Guides. The majority added that Article II, Section 1 of the Pennsylvania Constitution vested legislative power in the state’s General Assembly and that only the General Assembly could make laws; it could not constitutionally delegate the power to make law to any other branch of government or to any other body or authority.
Nonetheless, the Supreme Court of Pennsylvania held that the General Assembly may “delegate authority and discretion in connection with the execution and administration of a law” to an independent agency or an executive branch agency where the General Assembly first “establish[es] primary standards and impose[s] upon others the duty to carry out the declared legislative policy in accordance with the general provisions of the enabling legislation” [Blackwell v. Commonwealth, State Ethics Commission, 523 Pa. 347, 567 A.2d 630, 637 (Pa. 1989). The majority continued that the limits on delegating such power are twofold:
- The basic policy choices must be made by the Legislature; and
- The legislation must contain adequate standards which will guide and restrain the exercise of the delegated administrative functions [see Gilligan v. Pennsylvania Horse Racing Comm’n, 492 Pa. 92, 422 A.2d 487, 489 (Pa. 1980), remanded, 60 Pa. Commw. 541, 432 A.2d 275 (Pa. Cmwlth. 1981)].
The majority observed that the challenged delegation here was not to a governmental agency, but to a private party—the AMA. The majority reiterated that while it was well-established that the General Assembly could adopt as its own standards established by specialized groups with intimate factual knowledge of the subject matter, it must make the basic policy choices or provide standards to government agencies charged with adopting regulations to implement the standards established by specialized groups.
At the time it enacted § 306(a.2), the General Assembly adopted as its own the methodology enumerated by the AMA—that is, the methodology contained in the Fourth Edition of the Guides. Since then, however, the General Assembly had not reviewed and readopted the methodology contained in subsequent editions. In fact, any form of review of subsequent editions of the AMA Guides was wholly absent, leaving unchecked discretion completely in the hands of a private entity. The majority continued:
The legislature has simply provided a private party—the AMA—with carte blanche authority to implement its own policies and standards, proactively adopting those standards, sight unseen.
The majority indicated that even if the court found that there were adequate standards allowing for a delegation to a governmental agency, § 306(a.2)(1) would still be unconstitutional because the delegation here was to a private party. While governmental agencies are supposed to act disinterestedly and only for the public good, that presumption could not be made with regard to private entities. There was no accountability to the public, either directly through the rule making process providing for public input and comment or indirectly through the appointment and confirmation power and the power of the purse. The majority summarized:
More simply, the keystone behind the prohibition against unlawful delegation is that the General Assembly, not private bodies, enacts laws which the government agencies implement in accordance with the standard given to them in the enactment.
Three judges dissented. It would appear that the Pennsylvania Supreme Court will have the last word on this issue.