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February 27, 2017

 One of the issues which Carriers/Administrators who handle municipal or state agency claims must always be concerned with is the relationship between Pennsylvania Workers’ Compensation and Heart and Lung Act benefits, and how actions in one realm can affect or bind the Employer in the other.


In the matter of Wayne Merrel v. WCAB (Commonwealth of PA Department of Corrections) No. 493 C.D. 2016, decided February 6, 2017, the Commonwealth Court concluded that a Heart and Lung Act Arbitration Decision awarding benefits did not collaterally estop the employer from denying a claim for the same injury filed under the Workers’ Compensation Act.


Claimant was corrections officer when he injured his knee while performing job duties.  He was placed on restricted duty, which was not available.  He filed a claim for Heart and Lung benefits, which the Commonwealth denied.  An arbitration hearing was held pursuant to the collective bargaining agreement between the Correction Officer’s Union and the Commonwealth.


The arbitrator granted Heart and Lung benefits, after reviewing deposition testimony from the employee, as well as reports and depositions from medical experts.  The arbitrator accepted Claimant’s testimony and the medical report of his expert in support of the award of disability benefits for time out of work due to the injury. 


Prior to the issuance of the arbitration award, Claimant also filed a Claim Petition under the Pennsylvania Workers’ Compensation Act for the same injury.  At a hearing following the arbitration decision, Claimant put into evidence to the WCJ the arbitrator’s award.  Claimant argued that the arbitrator’s award was binding on the WCJ under the Doctrine of Collateral Estoppel and rested his case.  The Employer presented the medical deposition that it had utilized in the arbitration, which had concluded Claimant did not suffer any work-related disability, or if he did, it was of a transient nature and had resolved.


The Judge denied Claimant’s argument that collateral estoppel applied, and instead, decided the Claim Petition by finding Claimant did sustain a work injury, but did not prove disability and wage loss.  The Judge awarded medical benefits, but no disability benefits.


Claimant appealed that Decision to the Workers’ Compensation Appeal Board (WCAB), and the WCAB affirmed the Judge.  Claimant then appealed to the Commonwealth Court.


The Commonwealth Court reviewed the criteria for applying collateral estoppel under Pennsylvania law.  There are five criteria for applying collateral estoppel, which are 1) the issue in the prior adjudication is identical to the one presented in the later action, 2) there is a final judgement on the merits, 3) the party against whom collateral estoppel is asserted was a party to the prior adjudication, 4) the party against whom collateral estoppel is asserted had a full and fair opportunity to litigate the issue in the prior action, and 5) the determination in the prior proceeding was essential to the judgement.  The Employer asserted that four of the five elements may have been satisfied, but they asserted the fourth requirement was not met, as they did not have a full and fair opportunity to litigate the issue of disability in the Heart and Lung arbitration, and that, therefore, the arbitration could not collaterally estop them from defending the Workers’ Compensation claim.


The Commonwealth Court reviewed whether the amount of benefits at stake, and whether the Heart and Lung Act procedures were like those provided under the Workers’ Compensation Act to determine if the Employer had a full and fair opportunity to litigate the disability issue in the arbitration.  Because Heart and Lung Act benefits are temporary as opposed to potentially lifetime benefits payable under the Workers’ Compensation Act, the amount of benefits at controversy between the two schemes is incomparable, and therefore the Arbitrator’s award cannot be used to collaterally estop Defendant from asserting a defense to the Workers’ Compensation claim the Court ruled.


Also, the Commonwealth Court found arbitration proceedings are substantially different from Workers’ Compensation proceedings, so therefore the employer did not have a full and fair ability to defend the matter.  The Commonwealth Court found that Workers’ Compensation is highly regulated, there are requirements that specific documents be filed, and that medical evidence on causation must be sufficiently definite to render it as admissible.  Unequivocal medical evidence is required, and a foundation of witness competency is required, and the expert must state his opinion is rendered within a reasonable degree of medical certainty.  In contrast, the collective bargaining agreement and arbitration process in the Heart and Lung Act for corrections officers was devoid of any standard regarding foundation of medical opinion testimony and evidence.  Furthermore, the Workers’ Compensation Act requires a reasoned Decision, which is statutorily spelled out in Section 422(a) of the Act.  The Arbitrator was not bound by well- reasoned Decision language, the standard for the Arbitrator’s ruling under the collective bargaining agreement did not have any requirement for a reasoned Decision. It did not require the arbitrator to explain his credibility determinations and provide a decision which would allow meaningful appellate review. Therefore, the Commonwealth Court held that under the language of the collective bargaining agreement, the arbitration proceeding in the Heart and Lung Act was informal compared to the Workers’ Compensation Act, and therefore the arbitration proceedings did not give the employer adequate opportunity or incentive to obtain a full and fair adjudication in the initial action, therefore collateral estoppel could not be asserted in the Workers’ Compensation matter.


This Decision is highly significant because an overriding concern of any insurance carrier or third party administrator who handles Workers’ Compensation claims from municipalities or state agencies, is the potential collateral estoppel effect on the administration of the Workers’ Compensation claim from a Heart and Lung Act proceeding.  This Decision will be make it more difficult for employees to argue that Heart and Lung Act Arbitration Decisions are binding in the Workers’ Compensation arena.  Most collective bargaining arbitrations are not held to the same standards as workers’ compensation proceedings.  Requirements for the admission of medical evidence are generally more strict in workers’ compensation matters and arbitrators are usually not held to the requirement of issuing a well – reasoned decision, as required by Section 422(a) of the Pennsylvania Workers’ Compensation Act. This makes it highly unlikely any arbitrator’s award would be binding in the Workers’ Compensation arena.  Unfortunately, however,  this ruling would also likely  preclude Employers from arguing that a denial of benefits in the Heart and Lung arena is binding in a workers’ compensation case. 


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