Protz v. Workers' Comp. Appeal Bd.

• Decision Date: 20 June 2017
• Docket Number: No. 6 WAP 2016,No. 7 WAP 2016,6 WAP 2016,7 WAP 2016
• Citation: 161 A.3d 827
• Parties: Mary Ann PROTZ, Appellant v. WORKERS' COMPENSATION APPEAL BOARD (DERRY AREA SCHOOL DISTRICT), Appellees Mary Ann Protz v. Workers' Compensation Appeal Board (Derry Area School District) Appeal of: Derry Area School District
• Court: Pennsylvania Supreme Court

161 A.3d 827

Mary Ann PROTZ, Appellant

v.WORKERS' COMPENSATION APPEAL BOARD (DERRY AREA SCHOOL DISTRICT), Appellees

Mary Ann Protz

v.Workers' Compensation Appeal Board (Derry Area School District)

Appeal of: Derry Area School District

No. 6 WAP 2016

No. 7 WAP 2016

Supreme Court of Pennsylvania.

ARGUED: November 1, 2016

DECIDED: June 20, 2017

Joshua D. Shapiro, Esq., Attorney General, Participant.

Daniel Joel Siegel, Esq., Law Offices of Daniel J. Siegel, L.L.C., for Pennsylvania Association Justice, Appellant Amicus Curiae.

Thomas C. Baumann, Esq., Sandra Weigel Kokal, Esq., Abes Baumann, P.C., for Protz, Mary Ann, Designated Appellant.

Michael D. Sherman, Esq., Chartwell Law Offices, LLP, for Pennsylvania Self-Insurers' Association, Appellee Amicus Curiae, and Greater Philadelphia Executive Claims Council, Appellee Amicus Curiae.

Amber Marie Kenger, Esq., Pennsylvania Department of Labor & Industry, Workers' Compensation Appeal Board, for Compensation Appeal Board, Designated Appellee.

Karl Stewart Myers, Esq., for The Insurance Federation of Pennsylvania, Amicus Curiae, and American Insurance Association, Amicus Curiae.

David Harold Dille, Esq., Ira L. Podheiser, Esq., Matthew Austin Meyers, Esq., Burns White, LLC, for Derry Area School District, Designated Appellee.

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

OPINION

JUSTICE WECHT

Section 306(a.2) of the Workers' Compensation Act allows employers to demand that a claimant undergo an impairment-rating evaluation (IRE), during which a physician must determine the "degree of impairment" that is due to the claimant's compensable injury. See 77 P.S. § 511.2(1). In order to make this assessment, the Act requires physicians to apply the methodology set forth in "the most recent edition" of the American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment . Id. In these consolidated appeals, we consider whether this mandate violates the constitutional requirement that all legislative power "be vested in a General Assembly, which shall consist of a Senate and a House of Representatives." PA. CONST. art. II, § 1. We hold that it does.

In 2007, Mary Ann Protz sustained a work-related knee injury

. Shortly thereafter, her employer, Derry Area School District (Derry), voluntarily began paying temporary total disability benefits. In October 2011, Protz underwent an IRE at Derry's request. The IRE physician evaluated Protz and assigned to her a 10% impairment rating based upon the Sixth Edition of the American Medical Association Guides to the Evaluation of Permanent Impairment (the Guides ).¹ Because Protz's impairment rating was less than 50%, Derry filed a modification petition seeking to convert Protz's disability status from total to partial—the effect of which would be to limit the duration that Protz could receive workers' compensation benefits.² See 77 P.S. § 511.2(2) (providing that a claimant with "a threshold impairment rating that is equal to or greater than fifty per centum" is presumed to be totally disabled); 77 P.S. § 511.2(7) (limiting partial disability payments to five hundred weeks). After holding a hearing on Derry's modification petition, a Workers' Compensation Judge (WCJ) ruled that Protz's whole-body impairment was less than 50%, and accordingly granted the petition.

Protz appealed to the Workers' Compensation Appeal Board, arguing that the General Assembly unconstitutionally delegated to the AMA the authority to establish criteria for evaluating permanent impairment. See PA. CONST. art. II, § 1 ("[T]he legislative power of this Commonwealth shall be vested in a General Assembly, which shall consist of a Senate and a House of Representatives."). The Board rejected Protz's constitutional argument and affirmed the WCJ's decision.

Protz appealed to the Commonwealth Court, where she again argued that Section 306(a.2) of the Act violates Article II, Section 1 of the Pennsylvania Constitution. The Commonwealth Court, sitting en banc , reversed the Board's decision. The en banc panel agreed with Protz that Section 306(a.2)'s requirement that physicians use "the most recent edition" of the Guides violates Article II, Section 1. Writing for the four-judge majority, Senior Judge Dan Pellegrini recited the basic principle that the General Assembly alone has the power to make laws, and it cannot constitutionally delegate that power to any other branch of government or to any other body. Protz v. W.C.A.B. (Derry Area Sch. Dist.) , 124 A.3d 406, 412 (Pa. Cmwlth. 2015).

The court acknowledged that, despite this seemingly broad prohibition, "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 establishes primary standards and imposes upon others the duty to carry out the declared legislative policy in accordance with the general provisions of the enabling legislation." Id. at 413 (citing Blackwell v. Commonwealth, State Ethics Commission , 523 Pa. 347, 567 A.2d 630, 637 (1989) ). The court explained that, when the legislature chooses to so delegate, two critical limitations apply: first, "the basic policy choices must be made by the [l]egislature;" and second, "the legislation must contain adequate standards which will guide and restrain the exercise of the delegated administrative functions." Id. (citing Gilligan v. Pa. Horse Racing Commission , 492 Pa. 92, 422 A.2d 487, 489 (1980) ).

Applying this test, the Commonwealth Court concluded that "the Act is wholly devoid of any articulations of public policy governing the AMA," and that the Act lacks "adequate standards to guide and restrain the AMA's exercise" of its delegated power to create a methodology for grading impairment. Id. at 415. Instead, the court remarked, the General Assembly bestowed upon the AMA "carte blanche authority to implement [the AMA's] own policies and standards," which are then automatically adopted, sight unseen. Id. at 416.

The court went on to explain that, even if the General Assembly had included "adequate standards" to "guide and restrain" the AMA's exercise of delegated authority, Section 306(a.2) still would be unconstitutional because the AMA is a private organization. Along these lines, the court noted that:

Unlike governmental agencies which are supposed to act disinterestedly and only for the public good, that presumption cannot be made with regard to private entities. There is no accountability to the public, either directly through the rulemaking process providing for public input and comment or indirectly through the appointment and confirmation power and the power of the purse. 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.

Id.

Rather than striking all of Section 306(a.2), or undertaking a severability analysis, the Commonwealth Court declared the law unconstitutional only "insofar as it proactively approved versions of the AMA Guides beyond the Fourth Edition without review." Id. Consistent with that narrow remedy, the court remanded the instant matter to the WCJ with instructions to apply the Fourth Edition of the Guides , the version in existence when the General Assembly enacted Section 306(a.2) in 1996.

Judges Anne Covey and Robert Simpson each authored dissenting opinions. In Judge Simpson's view, Section 306(a.2) withstands constitutional scrutiny in light of the fact that "the General Assembly delegated initial impairment ratings to an independent, Pennsylvania–licensed, board-certified, clinically-active physician," not to the AMA itself. Id. at 417 (Simpson, J., dissenting). Judge Simpson also maintained that, because it would be impractical to expect the legislature to establish and constantly revise a set of standards for evaluating physical impairment, "the General Assembly may rely on the medical expertise of the AMA, a well-recognized independent authority, in expressing current, best-practice medical knowledge." Id. at 420. Finally, Judge Simpson observed that "other states have adopted and judicially upheld similar workers' compensation provisions requiring the use of the most recent edition of the AMA Guides in evaluating impairment in workers' compensation cases." Id. at 419 (citing Madrid v. St. Joseph Hosp. , 122 N.M. 524, 928 P.2d 250 (1996) (rejecting a non-delegation challenge involving the New Mexico legislature's adoption of "the most recent edition" of the Guides )). Judge Covey joined Judge Simpson's dissent and authored a separate dissent addressing the majority's alternative holding that all delegations to private entities are unconstitutional.

Both parties filed petitions for allowance of appeal with this Court, which we granted. Derry takes issue with the Commonwealth Court's conclusion that the General Assembly's prospective adoption of "the most recent edition" of the Guides violates Article II, Section 1, whereas Protz argues that the Commonwealth Court, after finding Section 306(a.2) to be unconstitutional, erred in remanding her case to the WCJ for application of the Fourth Edition of the Guides .

We begin with the non-delegation issue, as to which our standard of review is de novo and our scope of review plenary. City of Phila. v. Fraternal Order of Police Lodge No. 5 (Breary) , 604 Pa. 267, 985 A.2d 1259, 1269 n.13 (2009). Because the parties' arguments largely reflect the views expressed in the majority and dissenting opinions below, we need not recite them at length. In short, Derry argues that the General Assembly is free to adopt current and future standards that are published by "a well-recognized independent authority." Brief for Derry at 28 (quoting Protz , 124 A.3d at 420 (Simpson, J., dissenting)). Protz, on the other hand, maintains that Section 306(a.2) violates...