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VOLUME 8 April 2005 | ||||||
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ESTABLISHING EARNING POWER IN WORKERS' COMPENSATION LAW IN LIGHT OF BOTH KACHINSKY AND THE 1996 AMENDMENTS (ACT 57) Melissa J. Bearoff, Esq. and Steven Ledva, Jr., Esq. Prior to the 1996 Amendments, Earning Power Assessments also, known as Labor Market Surveys, were acceptable means of establishing a claimant’s earning capacity. The earning power of a working claimant could be established by expert vocational testimony based on wages paid for the same work in the geographical area during relevant time frame where there is no credible evidence of the claimant’s actual earnings. Presently, under Section 306 (b)(2) of Act 57, “earning power” shall be determined by the work the employee is capable of performing and shall be based upon expert opinion evidence which includes job listings. It is no longer necessary to show specific job referrals, but general proof of available jobs. This provision was effective immediately for injuries occurring on or after June 24, 1996 Since the 1996 Amendments, case law has analyzed the substantive versus the procedural effect of Act 57 in order to determine if the law can be applied retroactively. A substantive right is implicated when the retroactive application of a statute imposes new legal burdens on a past transaction. Procedural statutes establish the method for enforcing a right but have no bearing on whether a claimant has a legal entitlement to relief. The 1996 Amendments of Act 57 have been held not to be retroactive so that the law in effect on the date of claimant’s injuries determined the method of calculating benefits. The law as amended would have changed the effective date for calculating the rate of compensation and thus the amount of compensation the claimant would receive. Therefore, according to some case law, a retroactive application is substantive and cannot be applied. On the other hand, some cases have held that the 1996 Amendment providing for mandatory vocational interviews by experts and penalties for refusal in workers’ compensation cases is procedural in nature and, therefore, properly subject to retroactive application. Another factor to consider is the effect that Section 306(b)(2) had on Kachinsky, case-law from 1987 regarding proof of work availability when seeking modification of benefits. Under the long-standing rule in Kachinsky, an employer can seek modification of compensation benefits based on either a change in physical condition or a change in earning power. In order to prevail in seeking a modification of benefits, an employer must either: (1) offer to claimant a specific job that is available, which the claimant is capable of performing; or (2) establish “earning power” through expert opinion evidence including job listings with employment agencies, agencies of the Department of Labor and Industry, and advertisements in a claimant’s usual area of employment. Section 306(b)(2) of Act 57 is nothing other than the Kachinsky standard that an employer must produce evidence of a referral to a then-open job which fits in the occupational category for which the claimant has been given medical clearance. Therefore, the Kachinsky standard is still applicable in situations where an employer seeks a modification of benefits based on an offer of a specific job with the employer. On the other hand, the plain language of Act 57 indicates that earning power is to be determined by: (1) the work an employee is capable of performing (in partial disability cases, consideration must be given to the employee’s residual productive skill, education, age and work experience) and (2) expert opinion evidence including job listings with employment agencies, agencies of the Department of Labor and Industry, and advertisements in a claimant’s usual area of employment. Ultimately, courts have held that where an employer does not offer a specific job to a claimant and seeks modification based on earning power by the use of a certified vocational expert, that expert must base a determination of earning power on positions that are actually available. |
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