With all the world focusing on the COViD-19 pandemic, the Pennsylvania Commonwealth Court recently decided the matter of Communication Test Design v. Workers' Compensation Appeal Board (Simpson), 196 C.D. 2019 (April 20), which probably went unnoticed by most, but which represents a troubling development in defining the circumstances under which a notice of temporary compensation payable (NTCP) converts to an NCP. When an NTCP is filed, it often means the injured worker will receive 89 days of workers' compensation benefits along with a subsequent denial for any number of reasons—mostly manufactured. Tragically, the NTCP is filed almost exclusively these days, thwarting the original intent of the amendments to the Workers' Compensation Act, which created the vehicle that was to enable a claimant to get paid, at least temporarily, for a truly questionable claim. Now, almost invariably, claims with no apparent defense are subject to the NTCP to enable the claims adjuster to have undue control over a situation for no legitimate reason other than risk management.

It is against this backdrop that the importance of the conversion of the NTCP has grown. While often referenced, it bears reading Section 406.1 of the act, which deals with the circumstances under which an NTCP converts. The section 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. (2)(ii) the payment of temporary compensation entitles the claimant to a maximum of ninety (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.

Based on the universal and undisputed reading of this section of the act, an NTCP becomes permanent and converts to an NCP if the employer makes no effort to revoke it within the allotted 90-day period. Upon conversion in this manner, the bureau usually, automatically issues a notice documenting the conversion, even of the notice itself has no legal significance. Of note is the fact that under subsection (6) of section 401.1, if a notice stopping temporary compensation (NSTC) and denial notice (NCD) are actually filed, but after the 90-day period, the conversion still takes place. An untimely notice is the same as no notice at all. Occasionally, a conversion can take place, even if the bureau does not issue a conversion notice, since the dates written on the form (entered into the EDI transaction) by the adjuster could be inaccurate.

What has also seemingly been universally acknowledged, but never actually defined by the appellate courts, is the so-called "five-day rule." Until the Simpson case from two weeks ago was decided, most practitioners and the Commonwealth Court had presumed an NTCP converted also when there was a violation of the five-day rule. In short, Section 406.1, subsection (5)(i) of the act clearly requires the employer to file an NSTC no later than five days after the "last payment of compensation." However, the legal remedy for violating the rule is a bit unclear from the plain reading of the act.

Returning to subsection (6) of 406.1 of the act, it is clear that if a "notice under paragraph (5)" (an NSTC) is not sent within 90 days, the NTCP shall be converted to an NCP. It is equally clear that the act provides that "in no event shall this notice be sent or filed later than five days after the last payment." Therefore, if the NSTC is filed beyond five days from the last payment, it is a legally nullity and it essentially should be considered "not filed." So, if one defies a "notice under paragraph five" as a timely filed NSTC, there can be no remedy other than conversion.  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.

Until Simpson, there were only three cases that addressed the NTCP and the five-day rule, albeit for different reasons. These are Barrett v. Workers' Compensation Appeal Board (Vision Quest National), 989 A.2d 396 (Pa. Commw. 2010), Thomas Lindstrom v. Workers' Compensation Appeal Board (Braun), 992, A.2d 961 (Pa. Commw. 2010) and Jones v. Workers' Compensation Appeal Board (Villanova University), 164 A.3d 542 (Pa. Commw. 2017). Ostensibly, consistent with the analysis above, each of the three cases presupposes that conversion of the NTCP to an NCP for a violation of the five-day rule is the appropriate remedy. However, none of them explicitly hold that. While one would think that this suggests the statue is clearer than it appears and does not warrant a holding, the Simpson court disagrees.

In a footnote of all places, Simpson addresses the assumption made in all three cases above, as articulated in Jones. Footnote eight reads: The Jones court found the  NSTC was filed within five days of the last payment; thus, whether the NTCP converted to an NCP by operation of law was not an issue before  the court, and therefore, "not essential to the decision." See Program Administrative Services v. Dauphin County General Authority, 874 A.2d 722, 729 (Pa. Cmwlth. 2005), aff'd, 928 A.2d 1013 (Pa. 2007) (quoting City of Lower Burrell v. City of Lower Burrell Wage and Policy Commission, 795 A.2d 432, 437 n.7 (Pa. Cmwlth.  2002)). Accordingly,  any mention  of  the conversion by operation of law is merely "judicial dictum which is not binding authority."

Basically, the Commonwealth Court ignores its repeated assumption, outlined in three different cases, that conversion of the NTCP is the appropriate remedy for violating the five-day rule. Barrett dealt with what constitutes a "payment" under the act for purposes of the five-day rule whereas Lindstrom and Jones both sought to define whether "payment" spoke to the date of the check or the last day of the pay period in question as it relates to the five-day rule.  However, all three cases assume the conversion without even defense opposition to the notion.

The Commonwealth Court's misapprehension of the plain meaning of the act in Simpson is demonstrated by its final analysis. The court states:

Moreover, Section 406.1(d)(5)(ii) of the act expressly states that if the employer files an NSTC, "the payment of temporary compensation [is] 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." See 77 P.S. Section 717.1(d)(5)(ii).

With this statement, the court inadvertently makes the claimant's point. It would certainly be true that if the employer filed a timely NSTC, the claimant would have to file a claim petition. However, failing to file an NSTC within five days of the last payment of compensation does not create this obligation for the claimant since in "no event" can an NSTC be so filed! The NTCP converts! The claimant's practitioner can only hope that Simpson will be subject to Supreme Court review to define the correct remedy for violation of the five-day rule once and for all.

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.