The notice of temporary compensation payable (NTCP) and its use has always been the topic of much debate since its inception. While the document was originally created to enable an employer to contest truly questionable claims, it has become almost the only document ever issued at the beginning of a case, thereby allowing the employer to retain control of the claim for 90 days, even in cases where liability is not in question in any way. Until the legislature addresses what many consider to be blatant abuse of the system and the NTCP, it is important to consider under what circumstances an NTCP converts into a permanent claim. While beyond the scope of this article, the workers' compensation automation and integration system (WCAIS) has dramatically added much drama to the NTCP conversion scenario since it is often difficult for adjusters to issue the appropriate documents, and the mail is no longer a component in the equation.

By way of background, Section 406.1 of the Workers' Compensation Act provides in pertinent part:

“The employer and insurer shall promptly investigate each injury reported or known to the employer and shall proceed promptly to commence the payment of compensation due either pursuant to an agreement upon the compensation payable or a notice of compensation payable as provided in Section 407 or pursuant to a notice of temporary compensation payable as set forth in subsection (d). … In any instance where an employer is uncertain whether a claim is compensable under this act or is uncertain of the extent of its liability under this act, the employer may initiate compensation payments without prejudice and without admitting liability pursuant to a notice of temporary compensation payable as prescribed by the department.”

The payment of temporary compensation entitles the claimant to a maximum of 90 days of compensation; payments of temporary compensation may continue until such time as the employer decides to controvert the claim.

If the employer ceases making payments pursuant to a notice of temporary compensation payable, a notice in the form prescribed by the department shall be sent to the claimant and a copy filed with the department, but in no event shall this notice be sent or filed later than five days after the last payment.

If the employer does not file a notice under paragraph 5 within the 90-day period during which temporary compensation is paid or payable, the employer shall be deemed to have admitted liability and the notice of temporary compensation payable shall be converted to a notice of compensation payable.

Of course, the easiest way for an NTCP to become permanent is if the employer makes no effort to revoke it within the allotted 90-day period. The NTCP then converts to an NCP and the Workers' Compensation Bureau automatically issues a notice to that effect, although the notice itself is of no legal import. Related to the first means of conversion is when, under subsection (6) of Section 401.1, a notice stopping temporary compensation (NSTC) and denial notice (NCD) are actually filed, but beyond the 90 days allotted for proper revocation. Given that the notice of conversion, which is supposed to be automatically generated by the bureau, is not always issued when an untimely NSTC is issued, it is important to do the math in each case where an NSTC has been issued. One often finds that a conversion took place which is not readily recognized by the bureau. In this instance a penalty petition is warranted, to enforce the conversion.

Finally, as noted above, there is the “five-day rule,” which most practitioners and the Commonwealth Court presume warrants a conversion of an NTCP, but often requires at least a hearing or two, along with a legal brief to enforce, since many defense counsel do not agree that conversion is the remedy for violating the five-day rule. Section 406.1, subsection (5)(i) clearly requires the employer to file an NSTC no later than five days after the last payment. However, a legal remedy for a violation is not specifically mentioned. Is it conversion of the NTCP, or merely a penalty?

In an effort to determine the legal remedy, one should turn to the statue itself, and the three cases that deal with the NTCP, albeit for different reasons. As mentioned above, subsection (6) of 406.1 provides that if a “notice under paragraph (5)” (an NSTC) is not sent within 90 days, the NTCP shall be converted to a notice of compensation payable (NCP). Subsection (6) does not provide an alternative filing date to the five-day period in subsection (5)(i), but only indicates that if the five-day filing requirement is not met, the NTCP will convert to an NCP. In other words, since a “notice under paragraph (5)” cannot be filed later than five days after the last payment, one would think the untimely notice would be considered a legal nullity and deemed not filed at all if it is attempted to be filed beyond the five-day period.

There are only three cases which even tangentially address the issue: Barrett v. Workers' Compensation Appeal Board (Vision Quest National), 989 A.2d 396 (Pa. Commw. 2010), Lindstrom v. Workers' Compensation Appeal Board (Braun), 992, A.2d 961 (Pa. Commw. 2010), and Jones v. Workers' Compensation Appeal Board (Villanova Univeristy), 164 A.3d 542 (Pa. Commw. 2017). Each case considers conversion of the NTCP to an NCP for a violation of the five-day rule to be the appropriate remedy, although none explicitly states as much, suggesting the statute is quite clear.

While Barrett actually deals with what constitutes a “payment” in the instance where the employer stops payment on its initial check prior to its receipt by the claimant, the case presupposes that had the check been valid, a conversion would have been appropriate. The employer relied on the notion that Section 406.1(d)(5)(i) and 406.1(d)(6) were not even applicable due to the stop payment, asserting that it never “legally” issued any payment to the claimant which would trigger the conversion provisions. The employer argued that the stop payment nullified the check and, therefore, could not be considered a “payment” under the act. While the court agreed with the employer that the NTCP had not automatically converted to an NCP, it was due to the notion that the act's five-day deadline for issuing the NSTC did not even apply due to the “lack of a payment” stemming from the cancelled check. The employer did not even suggest that the five-day rule did not warrant a conversion.

Likewise, in Lidstrom, the Commonwealth Court operates under the assumption that conversion of an NTCP is the correct remedy for violating the five-day rule when it states: “Claimant filed a cross-appeal in this matter in which he argues that the board committed an error of law by holding that the relevant date for determining the timeliness of a notice for termination of temporary benefits under Section 406.1 of the act is the last day of the payment cycle … because employer filed the NSTCP less than five days after the last payment period ended, the board was correct in holding Employer did not violate Section 406.1 and the NTCP did not convert to an NCP.”

While the NTCP in that case did not convert, it was because the payment was made four days after the last day of the pay period and the Commonwealth Court was emphasizing the board's holding that the last date of the payment cycle, and not the last day of the pay period, was controlling. That the NTCP would have converted had the five-day rule been violated was implicit.

In the Jones case, the Commonwealth Court was equally clear that conversion was the appropriate remedy but sought to clarify that the conversion is to take place within five days of the check date (not the pay period as in Lindstrom), and sought to distinguish Lindstrom as fact specific since payment in Lindstrom was issued prior to the close of the payment period, thus employer pre-paid the compensation. The Jones court discusses Section 406.1 and states the time is calculated from when compensation is paid, not when the last payment period ends. Specifically, the court notes that the payment is due within 21 days of issuing an agreement, and must be made in accordance with the act, therefore as long as the defendant is making the payments in accordance with the act, the five days will run from the date of the last payment, not the end of the payment period. Again, there was no dispute that a conversion of the NTCP was the appropriate remedy.

The claimant's practitioner would do well to examine every case with a NSTC and an NCD to see whether an automatic conversion exists. In particular one must determine whether the five-day rule has been violated. Until the Commonwealth Court says otherwise, violation of that rule warrants a conversion of the NTCP, which must be pursued judicially given that no notice from the bureau will be generated. Each possible conversion of an NTCP represents an opportunity to avoid a year-and-a-half of litigation of a contested claim.

Christian Petrucci, of the Law Offices of Christian Petrucci, concentrates his practice in the areas of workers' compensation and Social Security disability. He also counsels injured workers in matters involving employment discrimination and unemployment compensation benefits.