Dana Holding Corp. v. Workers' Comp. Appeal Bd., No. 44 MAP 2019

• Citation: 232 A.3d 629
• Decision Date: 16 June 2020
• Docket Number: No. 44 MAP 2019
• Parties: DANA HOLDING CORPORATION, Appellant v. WORKERS' COMPENSATION APPEAL BOARD (Smuck), Appellees
• Court: United States State Supreme Court of Pennsylvania

232 A.3d 629

DANA HOLDING CORPORATION, Appellant

v.WORKERS' COMPENSATION APPEAL BOARD (Smuck), Appellees

No. 44 MAP 2019

Supreme Court of Pennsylvania.

Argued: November 19, 2019

Decided: June 16, 2020

OPINION

CHIEF JUSTICE SAYLOR

In Protz v. Workers' Compensation Appeal Board (Derry Area School District) , 639 Pa. 645, 161 A.3d 827 (2017), this Court recently ruled that a statutory regime per which the duration of workers' compensation benefits could be curtailed was invalid, since integral terms of the enactment yielded an unconstitutional delegation of legislative power. The present case concerns the retroactive application of this holding to a scenario in which the pertinent constitutional challenge to the statute was advanced during the course of direct appellate review.

In 1996, in response to the rising costs of the workers' compensation liability scheme in Pennsylvania, the General Assembly promulgated an impairment rating scheme, reposed in Section 306(a.2) of the Workers' Compensation Act,¹ 77 P.S. § 511.2. See I.A. Constr. Corp. v. WCAB (Rhodes) , 635 Pa. 551, 553, 139 A.3d 154, 155 (2016). Under the statute, insurers were required to request an impairment rating evaluation -- or an "IRE" -- after a workers' compensation claimant had received total disability benefits for a period of 104 weeks. See 77 P.S. § 511.2(1) (repealed). "Impairment," in this setting, connoted an anatomic or functional abnormality or loss resulting from a compensable injury that was reasonably presumed to be permanent, see id. § 511.2(8)(i), as distinguished from "disability," which more directly concerns the loss of earnings capacity.²

When a claimant received an impairment rating of less than 50 percent, the designation of his disability was converted from total to partial, thereby limiting the insurer's otherwise continuing liability to benefits payable throughout a maximum, closed-ended period of 500 weeks. See 77 P.S. § 511.2(7). Accordingly,

one main purport of the statute [was] that a claimant whose condition may continue to meet the conventional definition of total "disability" -- a concept centered on overall earnings capacity encompassing both physical capacity and job availability -- may nevertheless be limited in the time frame during which he or she may receive workers' compensation benefits.

I.A. Constr. , 635 Pa. at 554, 139 A.3d at 155 ; see also Diehl , 607 Pa. at 280, 5 A.3d at 246 (explaining that an employer/insurer was not required to produce evidence of earning power or job availability to support conversion of a disability designation from total to partial under Section 306(a.2), based on an effective impairment rating of less than 50 percent). See generally DAVID B. TORREY & ANDREW E. GREENBERG , 6 WEST'S PA. PRACTICE SERIES, WORKERS' COMPENSATION: LAW AND PRACTICE § 6:41 (3d ed. 2008) ("[T]he 500 weeks provides a horizon with regard to the claimant's entitlement and the employer's liability.").

Significantly, under Section 306(a.2), impairment ratings were to be determined "pursuant to the most recent edition of the American Medical Association ‘Guides to the Evaluation of Permanent Impairment,’ " 77 P.S. § 511.2(1) (emphasis added), hereinafter referred to as the "Guides." However, in Protz , this Court ruled that this prescription entailed an unconstitutional delegation of lawmaking authority from the Legislature to the American Medical Association. See Protz , 639 Pa. at 663, 161 A.3d at 838 (relying upon the mandate of Article II, Section 1 of the Pennsylvania Constitution that "[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 Court explained that reliance on that private association's normative judgments was impermissible, at least insofar as the Legislature had not provided any standards by which impairment ratings should be assessed or procedural mechanisms to ensure fairness in the determination whether a claimant's disability benefits should cease after 500 weeks. See id. at 659-60, 161 A.3d at 835-36. Given that this unconstitutional delegation could not be rationally severed from the balance of the statute, Section 306(a.2) was ultimately deemed to be invalid in its entirety. See id. at 667-68, 161 A.3d at 841.

In 2000, Appellee David Smuck ("Claimant") suffered a work-related back injury, for which he received total disability benefits since 2003. Appellant Dana Holding Corporation ("Employer") requested an IRE pursuant to the then-extant impairment rating regime embodied in Section 306(a.2). In June 2014, Claimant submitted to the IRE and was assigned a whole-body impairment rating of 11 percent, based on the Sixth Edition of the Guides, which was the most recent version. Employer then filed a modification petition seeking to convert Claimant's disability status from total to partial, thus limiting the term of Claimant's disability benefits. See 77 P.S. §§ 511.2(5) & (7). In response, Claimant filed a review petition challenging the modification on the basis that he hadn't reached maximum medical improvement, and the matter was presented to a workers' compensation judge (the "WCJ").

Procedural complexities ensued in light of the Commonwealth Court's intervening decision in Protz . See Protz v. WCAB (Derry Area Sch. Dist.) , 124 A.3d 406 (Pa. Cmwlth. 2015), aff'd in part and rev'd in part , 639 Pa. 645, 668, 161 A.3d 827 (2017). Ultimately, the WCJ credited Employer's position on modification, thus yielding a change in disability status from total to partial, effective as of June 2014. See Smuck v. Dana Holding Corp. , DSP-7357035-1, slip op. at 10 (DLI, Lancaster Field Office Nov. 1, 2016).

Claimant appealed to the Workers' Compensation Appeal Board (the "WCAB" or the "Board"), and the proceedings before the Board were stayed at Employer's behest pending this Court's decision in Protz . Upon the issuance of that opinion, the Board reversed the WCJ's order, since the judge had relied upon Section 306(a.2)'s procedures, which this Court had found to be invalid. Accordingly, Claimant's total disability status was reinstated as of the date of the disputed IRE. See Smuck v. Dana Holding Corp. , No. A16-1266, slip op. at 3-4 (WCAB Nov. 28, 2017).

An appeal was lodged by Employer in the Commonwealth Court, which affirmed, holding that Protz applies at least to all cases in which the underlying IRE was actively being litigated when the decision was issued. See Dana Holding Corp. v. WCAB (Smuck) , 195 A.3d 635, 643 (Pa. Cmwlth. 2018). Responding to Employer's position that the WCAB should not have applied Protz retroactively, the intermediate court first referenced the general rule that appellate courts apply the law in effect at the time of appellate review. See id. at 641 (citing Passarello v. Grumbine , 624 Pa. 564, 601, 87 A.3d 285, 307 (2014), and Blackwell v. SEC , 527 Pa. 172, 182, 589 A.2d 1094, 1099 (1991) ). The court cautioned, however, that this approach should not be applied rotely and explained that, ultimately, "[w]hether a judicial decision should apply retroactively is a matter of judicial discretion to be decided on a case-by-case basis." Id. (quoting Passarello , 624 Pa. at 601, 87 A.3d at 307 ).

Notably, this Court has specified that a threshold inquiry in retroactivity analysis is whether or not a new rule of law has been announced. See, e.g. , Cleveland v. Johns-Manville Corp. , 547 Pa. 402, 413, 690 A.2d 1146, 1152 (1997). Here, the Commonwealth Court appears to have assumed that Protz announced a new rule, presumably because both parties to the appeal agreed as such. See Brief for Petitioner in Dana Holding Corp. v. WCAB (Smuck) , 1869 C.D. 2017 (Pa. Cmwlth.), at 25; Brief for Respondent in Dana Holding , 1869 C.D. 2017, at 4.

The Commonwealth Court next related that the governing retroactivity analysis -- upon discernment of a new rule -- requires consideration of whether:

(1) the purpose to be served by the new rule, (2) the extent of the reliance on the old rule, and (3) the effect on the administration of justice by the retroactive application of the new rule.

Dana Holding , 195 A.3d at 641 (quoting Blackwell , 527 Pa. at 183, 589 A.2d at 1099, which relied for this proposition on Desist v. U.S. , 394 U.S. 244, 249, 89 S. Ct. 1030, 1033, 22 L.Ed.2d 248 (1969), overruled for purposes of new federal rules in Griffith v. Kentucky , 479 U.S. 314, 322, 107 S. Ct. 708, 712, 93 L.Ed.2d 649 (1987), and Stovall v. Denno , 388 U.S. 293, 297, 87 S. Ct. 1967, 1970, 18 L.Ed.2d 1199 (1967) (same)).³ In terms of purpose, the court noted the parties' agreement that the object of Protz was to vindicate the requirements of the Pennsylvania Constitution. See Dana Holding , 195 A.3d at 641.

Regarding the second factor -- reliance -- the Commonwealth Court related that it was cognizant of Employer's argument that hundreds of thousands of claims had been managed by the business and insurance industries under Section 306(a.2); many of these were considered to be final and closed; and the company had forewent the opportunity to pursue other, more traditional avenues to challenge Claimant's disability status. Nevertheless, the intermediate court found these concerns to be unpersuasive, emphasizing instead that, in Claimant's case, the determination of his disability status was still being actively litigated when the Protz decisions were handed down. See id. Additionally, the court opined that the risk of choosing the IRE mechanism over traditional avenues for modification was properly allocated to Employer. See id. at 642. In this respect, the court stressed the Act's remedial nature. See id. (citing Reifsnyder v. WCAB (Dana Corp.) , 584 Pa. 341, 348, 883 A.2d 537, 541 (2005) ).

In terms of the third factor, the impact upon the administration of justice, the Commonwealth Court again deflected Employer's arguments concerning negative consequences flowing from a full retroactive effect --...