Silas v. Smith

• Decision Date: 30 July 1973
• Docket Number: Civ. A. No. 71-2965.
• Citation: 361 F. Supp. 1187
• Parties: James SILAS, on behalf of himself and all others similarly situated v. Paul J. SMITH et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

361 F. Supp. 1187

James SILAS, on behalf of himself and all others similarly situated v. Paul J. SMITH et al.

Civ. A. No. 71-2965.

United States District Court, E. D. Pennsylvania.

July 30, 1973.

Andrew S. Price, Harold I. Goodman, Bruce E. Endy, Community Legal Services, Inc., Philadelphia, Pa., for plaintiff.

Lawrence T. Hoyle, Jr., Thomas J. Oravetz, Deputy Attys. Gen., Harrisburg, Pa.; Michael Minkin, Asst. Atty. Gen., Lowell A. Reed, Jr., Henry H. Janssen, Philadelphia, Pa., for defendants.

Before JAMES HUNTER, III, Circuit Judge, and LUONGO and MASTERSON, District Judges.

OPINION

LUONGO, District Judge.

Plaintiff, James Silas, has instituted this class action suit seeking to have declared unconstitutional § 413 of the Workmen's Compensation Act of Pennsylvania. Also under attack are certain administrative practices, allegedly fostered by § 413,¹ relating to the suspension and withholding of payments to injured employees without prior notice or hearing. It is charged that this section of the Act and the administrative practices violate plaintiff's Fourteenth Amendment right to due process and constitute violations of the Civil Rights Act of 1871, 42 U.S.C. § 1983.²

The Statutory Scheme

The Pennsylvania Workmen's Compensation Act (Act), 77 P.S. § 1 et seq., provides a schedule of compensation for all employees who suffer an "injury . . . by an accident, in the course of . . . employment." 77 P.S. § 431. The Act provides for an arrangement between employer and employee, under which, in return for immunity from suit on common law fault grounds, the employer bears the cost, ultimately passed on to the consumer, of work-connected injuries regardless of fault, rather than have the cost of such injuries borne by public funds or by the employee himself. The Act further provides a system of insurance that assures the injured employee that his employer will be able to pay the statutory scheme of compensation and costs.

Neither the employer nor the employee is bound to accept the provisions of the Workmen's Compensation Act, but acceptance by both is conclusively presumed unless, at the time an employment contract is entered into, an express statement is made by either party to the other that the provisions of the Act are not intended to apply and that a copy of such written statement, accompanied by proof of service upon the other party, is filed with the Department of Labor and Industry. 77 P.S. §§ 461, 462.

Following an accident that is covered under the Act, two methods for the securing of benefits become available to a claimant. The first is a voluntary procedure by which the injured employee and his employer (or the employer's insurance carrier) enter into an Agreement for Compensation Payable. 77 P. S. § 731. This agreement must be approved by the Pennsylvania Department of Labor and Industry. 77 P.S. § 731. The alternative method for obtaining benefits, assuming failure to enter into a voluntary agreement, is by the filing of a Claim Petition with the Pennsylvania Workmen's Compensation Board. After an evidentiary hearing, the Board may award benefits to the petitioning claimant. An appeal may be taken by any party from any action of the Board on matters of law. 77 P.S. § 872.

The amount determined to be due either under an agreement by the parties or an award by the Board may be voluntarily modified or terminated by a supplemental agreement, approved by the Department of Labor and Industry, if the incapacity of an injured employee has increased, decreased or terminated. 77 P.S. § 732.

Where the parties fail to agree to the terms of a Supplemental Agreement, the Workmen's Compensation Board, upon petition and hearing, may modify or terminate the existing agreement or award. 77 P.S. § 772. The party petitioning for such a modification or termination has the burden of proving that the disability which was the subject of the prior agreement or award has changed in a manner that justifies the relief sought by the petition. 77 P.S. § 772.

Pursuant to § 413, the filing of the Petition to Terminate or Modify a Compensation Agreement or Award operates as a supersedeas which automatically suspends "the payment of compensation fixed in the agreement or by the award, in whole or to such extent as the facts alleged in the petition would, if proved, require." It is this provision, together with the practice of pre-petition termination, and the fact that an employer or insurance carrier seeking to modify or terminate the compensation payment need not notify the recipient before the filing of the petition, which form the basis of plaintiff's constitutional attack on the Pennsylvania Workmen's Compensation system.

The Silas Suit

The relief which Silas seeks in this complaint is (1) a declaration of the unconstitutionality of § 413 as originally enacted;³,⁴ (2) injunction against further suspensions or terminations pursuant to § 413 as well as pre-petition terminations; (3) recovery of benefits previously so withheld; and (4) an attorney's fee. The matter has been presented to this court on final hearing, the parties having entered into extensive stipulations of facts. From the entire record we find the following facts.

James Silas sustained an injury while employed by defendant, Haverstick-Borthwick Company (H-B). On July 2, 1969, Silas and defendant, Pennsylvania Manufacturers' Association Insurance Company (PMAIC), H-B's Workmen's Compensation insurance carrier, entered into an "Agreement for Compensation for Disability or Permanent Injury." The Agreement, which was subsequently approved on November 7, 1969, by the Pennsylvania Department of Labor and Industry, provided that Silas was to be paid $60 per week, the maximum weekly payment for total disability allowable under the Pennsylvania Workmen's Compensation Act, plus medical and hospital expenses, and was "subject to modification or termination by Supplemental Agreement, Order of the Workmen's Compensation Board, or Final Receipt."

Almost two years later, on June 28, 1971, Silas was examined by a doctor employed by PMAIC. The doctor concluded that Silas was then suffering from a permanent 50% partial disability, and that he could perform work of a sedentary nature, i.e. checker, sorter, or elevator operator. The doctor informed Silas of the conclusions he had reached as a result of the examination.

Apparently as a result of that examination, on July 2, 1971, PMAIC submitted to Silas a "Supplemental Agreement for Compensation for Disability or Permanent Injury," reducing Silas' payments to $45 per week, the maximum amount provided under the Act for partial disability. Silas refused to execute the Supplemental Agreement before conferring with an attorney.

On July 9, 1971, PMAIC, without prior notice or hearing, stopped making payments to Silas, asserting that his disability was now undetermined. This procedure (referred to in this proceeding as pre-petition termination) was not authorized by any provision of Pennsylvania statutory law or regulations. A few days later, counsel for plaintiff communicated with PMAIC by telephone, advising that Silas did not agree that he was only partially disabled. He demanded that the sixty dollar payments be restored pending filing by PMAIC of a reduction petition with the Pennsylvania Workmen's Compensation Board, and that after filing, payments should continue to be made in the amount of $45 per week until the matter had been resolved by a Pennsylvania Workmen's Compensation Referee. PMAIC refused the demand and denied Silas' entitlement to reinstatement of the weekly Workmen's Compensation benefits.

On August 2, 1971, PMAIC filed a "Petition for Termination or Modification of Agreement or Award on Grounds of Changed Disability" with the Pennsylvania Workmen's Compensation Board. The Board, pursuant to statute, 77 P.S. § 775, gave Silas notice that the petition had been filed and enclosed a copy. This was plaintiff's first notice⁵ that PMAIC had filed a petition to modify or terminate. Shortly thereafter, plaintiff filed an answer to the petition, denying that he was no longer totally disabled.

On December 13, 1971, plaintiff instituted this suit as a class action.⁶ Shortly thereafter, PMAIC, asserting that it had made a mistake of fact and law, paid to plaintiff, at the rate of $45 per week, the compensation which had been withheld from July 2 to December 13, 1971. PMAIC has continued to make weekly partial disability payments of $45 to the present.

Abstention

Preliminarily, PMAIC and H-B urge this court to abstain from deciding the constitutional issue presented in this case because of "the state-federal conflicts in this situation, . . . the availability of a presumably capable state forum for all Workmen's Compensation claimants, . . . the fact that all claimants who could raise the Constitutionality of the prior Section 413 are either already parties in that forum or possess confession of judgment rights against the employers or insurance companies involved, and . . . the fact that the unamended Section 413 may be already retroactively amended out of existence depending on a decision on state law construction of statutes . . . ." Defendants' brief p. 31

We do not consider this an appropriate case for abstention. Abstention is proper only where the issue of state law or statutory interpretation is unclear, and where an interpretation of the unsettled state law by a state court may remove the taint of possible unconstitutionality. See Allegheny Airlines, Inc. v. Pennsylvania Pub. Util. Com'n, D.C., 319 F.Supp. 407 (1970), aff'd, 3 Cir., 465 F.2d 237 (1972), cert. denied, 410 U.S. 943, 93 S.Ct. 1367, 35 L.Ed.2d 609 (1973). There is no dispute but that the statute under attack in the instant case means just what it says, i. e. that the filing of a petition to terminate or modify operates as a supersedeas. As to the suggestion that by reason of a state decision, the original § 413 may be retroactively...