Workers' Compensation in Pennsylvania is a form-driven practice, as dictated by the Pennsylvania Workers' Compensation Act. Six years ago, however, the Bureau of Workers' Compensation introduced the workers' compensation automation and integration system (WCAIS). WCAIS rolled out in phases and, beginning in 2013, increasingly required claims professionals to process claims information electronically rather than by submission of paper forms. Before WCAIS, in order to accept or deny a claim, claims professionals completed a paper form, served it and filed it with the bureau. Now, with WCAIS fully implemented and the ability to process claims via electronic data interchange (EDI) transactions, the bureau has stopped accepting many paper forms.

Specifically, as of Sept, 16, 2016, with the implementation of the EDI forms solution enhancement, the bureau stopped accepting paper filings of the notice of compensation payable (LIBC-495), notice of temporary compensation payable (LIBC-501), notice stopping temporary compensation payable (LIBC-502), and notice of denial (LIBC-496). Now, once a claims professional makes a decision regarding compensability, they input the data codes for an EDI transaction and transmit it electronically to the bureau through WCAIS. If the bureau accepts the EDI transaction, a bureau form generates. The claims professional is responsible for serving the generated form on the claimant and the EDI transaction serves as the official bureau record. These forms are the sole means for accepting and denying claims in Pennsylvania.

In order to accept a claim, a claims professional can process the codes to generate either a notice of compensation payable (NCP), or a notice of temporary compensation payable (TNCP).  Section 406.1(d)(1) of the act provides for the issuance of a notice of temporary compensation payable where the employer is uncertain of compensability or the extent of its liability. An employer may issue the form without prejudice and without an admission of liability. After 90 days, a TNCP will convert to an NCP. To modify a TNCP, an employer shall file an amended TNCP with the bureau during the 90-day temporary compensation payable period. The amended TNCP shall be clearly identified as "amended," see Bureau Regulation Section 121.7a(c).

Pursuant to Section 406.1(d)(5)(i) of the act, if the employer ceases making compensation payments pursuant to a TNCP, a notice in the form prescribed by the department shall be sent to the claimant, and a copy filed with the bureau. Such notice must advise the claimant, if the employer is ceasing payment of temporary compensation, that the payment of temporary compensation was not an admission of liability of the employer with respect to the injury and the employee must file a claim to establish the liability of the employer. The employer must send the notice to the claimant no later than five days after the last payment of compensation. The bureau regulations indicate that the proper form for this notice is the notice stopping temporary compensation (LIBC-502), accompanied by a notice of workers' compensation denial. If the employer does not file a notice under Section 406.1(d)(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 TNCP shall be converted to a NCP.

The bureau establishes and provides guidance for completing the proper coding sequences for these EDI transactions. What happens, then, when that EDI transaction guidance sequences produces a result that is inconsistent with the requirements of the act? The Workers' Compensation Appeal Board (WCAB) addressed one example of this issue in White v. Metropolitan Edison, (Workers' Compensation Appeal Board), WCAB, A17-1056 (2018). In White, the employer issued a TNCP for indemnity and medical benefits. Thereafter, the employer issued multiple amended medical only TNCPs within the 90-day period and stopped paying wage benefits. The employer did not issue a notice stopping temporary compensation or notice of workers' compensation denial. After the expiration of the 90 days, the bureau issued a notice of conversion, creating an NCP. The claimant filed claim and penalty petitions, alleging the initial TNCP, accepting indemnity benefits, rather than the subsequent medical only NTCPs was the TNCP that converted because employer never filed a notice stopping or denial.

The employer's defense was that the bureau guidelines authorized the sequence of EDI transactions and that the notice stopping and denial were not required. Therefore, there could be no violation of the act. The bureau's published guidance specifically directs that a subsequent report of injury for partial denial (SROI PD) is the code to use for denying indemnity accepted under temporary status and subsequently accepting medical only. The bureau's forms solution webinar describes SROI PD as the code used at the outset of a claim to accept medical only, or a quick and easy way to accept medical only during the temporary period. The webinar instructed claims professionals: "While in temporary status, enter SROI 04 to obtain denial with stopping notice. Then enter SROI PY for med only NCP. Or save yourself a transaction and two forms by entering the SROI PD while in temporary status and obtain the same med only NCP without the denial and stopping notice." The forms solution to form transaction guide published in June 2017 similarly states: "When a SROI PD is used while claim is in temporary status, a medical-only NCP will generate if the claim is marked 'M'—Medical and if the 'W'—without liability is updated to 'L'—with liability and no notice stopping will generate as the stopping notice is not necessary to controvert from temporary filing to medical-only acceptance (Section 121.17 d.)." It is clear that the bureau is instructing claims professionals the notice stopping is not necessary, based on its interpretation of Regulation 121.17(d).

Reliance upon the bureau's guidance and compliance with the bureau's interpretation of the regulations support the employer's position that there has been no violation of Section 406.1(d)(5)(i) of the act. The interpretation of the act by an administrative agency, here, the bureau, by means of its regulations, is entitled to great weight unless the regulation is clearly erroneous or inconsistent with the statute under which it was promulgated. See Milewski v. Commonwealth, 93 Pa.Cmwlth. 120, 500 A.2d 1261 (1985); and also, Gardner vs. Workers' Compensation Appeal Board (Genesis Health Ventures), 888 A.2d 758 (Pa. 2005).

The workers' compensation judge (WCJ) in White found that the statute and regulations, rather than the bureau guidance, controlled and held that the TNCP with wage payments had converted to an NCP. Finding the adjuster had relied on bureau guidance, he denied the penalty deeming employer's failure to issue a notice stopping and notice of denial a technical violation. The Workers' Compensation Appeal Board (WCAB) affirmed the WCJ's decision.

Although EDI transactions have been the primary means of claims processing for three years, claims acknowledged in the EDI-era are only now making their way through the appeals process. We can expect to see the WCAB, and even the higher courts, grappling with these issues more frequently in the coming months and years. While White highlights one issue with EDI transactions and the act's requirements, there are many more yet-to-be addressed, and this will not be the courts final say.

Cassi G. Martin is counsel in the Yardley office of Hill Wallack, where she is a member of the workers' compensation and intellectual property practice groups. Martin concentrates her practice on the defense of employers, self-insureds and insurance companies against workers' compensation claims. Contact her at [email protected].