Permanent Impairment and the 18% Threshold – What It Means and What to Expect in the Coming Years

Permanent impairment has been in the news in recent months. With the Law Court’s decision in Bailey v. City of Lewiston (2017 ME 160), it has held that an established permanent impairment rating is not subject to revision, even in the face of changed medical circumstances. In Somers v. S.D. Warren Co. (Maine Workers’ Comp Board [WCB] App. Div. No. 17-38 [November 13, 2017]), the Appellate Division held that the WCB may not revise a previously established permanency rating in an upward manner.

With the recent focus on permanent impairment, it is worth addressing the current permanency threshold and what it means for ongoing benefits.

Permanent impairment is “any anatomic or functional abnormality or loss existing after the date of maximum medical improvement that results from the injury” (39-A M.R.S.A. § 102). Maximum medical improvement is defined as, “the date after which further recovery and further restoration of function can no longer be reasonably anticipated, based upon reasonable medical probability.”

For injuries on or after January 1, 1993, permanent impairment no longer means additional benefits for an injured worker, but it plays a significant role in determining how long partial incapacity benefits can be received (the level of permanent impairment does not come into play for total incapacity benefits, which must be paid for the duration of disability).

If permanent impairment is below the applicable threshold, injured workers may not receive partial benefits beyond 520 weeks. However, if permanent impairment exceeds the threshold, benefits may continue for the duration of disability.

The permanent impairment threshold for injuries is as follows:

• Injuries from January 1, 1993, to December 31, 1997, the threshold is 15%
• Injuries from January 1, 1991, to December 31, 2001, the threshold is 11.8%
• Injuries from January 1, 2002, to December 31, 2003, the threshold is 13.2%
• Injuries from January 1, 2004, to December 31, 2005, the threshold is 13.4%
• Injuries from January 1, 2006, to December 31, 2012, the threshold is 12%

For injuries on or after January 1, 2013, if, at 520 weeks, the partially incapacitated employee is working, earning 65% or less of his average weekly wage, and permanent impairment attributable to the injury is “in excess of 18%,” partial incapacity benefits may be required beyond 520 weeks so long as the employee continues to work and earn less than his average weekly wage. Regardless of the extent of permanent impairment or level of earnings, partial incapacity benefits may be extended beyond 520 weeks if the employee proves “extreme financial hardship due to inability to return to gainful employment.”

We are just over five years into a new permanent impairment threshold. In less than five years, those employees with injuries in early 2013 will be involved in litigation over cessation of benefits. The changes for injuries on or after January 1, 1993, will not begin to have a major impact until approximately 2022 or 2023, when the first group of employees with 2013 injuries will be involved in litigation over permanent impairment and cessation of benefits. Still, the threshold has an immediate impact when valuing cases for settlement purposes and planning for the future. Expect to see increased instances where individuals claim financial hardship, or continuing cases where employees try to allege they have 18% or more whole person permanent impairment. With this increased permanency threshold, generally only more serious injuries and/or injuries involving permanency from a psychological sequela will exceed the threshold.

Recent Appellate Division Cases: Benefits Reduction Due to Erroneous Calculations, Improper Communications with § 312 Examiner

Penalties for Reducing Benefits After Years of Improper Calculations

In Puiia v. Rumford Paper Co. (Me. WCB App. Div. No. 17-34), the Maine Workers’ Compensation Board (WCB) Appellate Division will hear oral argument in a case in which the employee sought the imposition of penalties based on the employer/insurer’s reduction of incapacity benefits. The employee had been paid 100% partial benefits pursuant to a March 2008 Decree that stated, “The employee is entitled to 100% partial benefits (limited by the statutory maximum) for the period November 28, 2006, through the present, and continuing.”

Per the above order, the Employee began paying weekly compensation of $574.08. On June 30, 2018, the Employer filed a Modification of Compensation, increasing benefits to $596.42 per week effective July 1, 2008, the date the maximum weekly benefit amount (§ 211) was adjusted. Similar increases were made on July 1 of each year through 2013. However, effective July 1, 2014, the Employer reduced weekly compensation at a rate from $655.78/week to $492.96/week. The reduction was made because the Employer had incorrectly calculated benefits by including fringe benefits (under § 102(4)(H) fringe benefits are not to be included in the benefit calculation if the resulting benefit amount exceeds 2/3 of the State Average Weekly Wage (SAWW) at the time of injury). In this case, the employee’s full compensation rate was an amount in excess of 2/3 of the SAWW. Therefore, by operation of § 102(4)(H), fringe benefits cannot be included in the weekly benefit amount. The administrative law judge (ALJ) found, “[t]he fact that Employer erroneously did so for years does not require it to continue to make the same computational error.”

The WCB found that the Employer/Insurer correctly calculated benefits in accordance with the payment order in the 2008 Decree, resulting in a reduction of her benefits effective July 1, 2014. There was therefore no legal basis for the imposition of penalties under §§ 359 or 360.

Alleged Improper Communication with § 312 Examiner

In Leclair v. Twin Rivers Paper Co., LLC (Me. WCB App. Div. No. 17-19), the issue before the Appellate Division is “[w]hether a violation of Board Rule Chapter 4 regarding communication with a § 312 examiner is sufficient to disqualify that examiner automatically or whether such disqualification is dependent on a finding of actual bias.” 

WCB Rules c. 4 § 3 provide in relevant part:

Contacts with the employee by the Board-appointed independent medical examiner will be limited to the scheduling of examinations and actual examinations. All communication between the examiner and the parties must be in writing and, except for questions which a party requests that the examiner address in the report, may only occur by agreement or with the permission of the hearing officer. Any such communication must be received by the Board and copied to all opposing parties not later than fourteen (14) days prior to any examination and must clearly and conspicuously state that the communication has been agreed to by the parties or approved by a hearing officer. Communications that comply with this subsection will be forwarded to the examiner through the Office of Medical/Rehabilitation Services. Communications received by the Board on or after the date of the examination will only be forwarded to the examiner with prior approval of a hearing officer. 

In this case, involving an alleged gradual injury to the lungs and respiratory system, the employee was evaluated by a § 312 examiner. The § 312 examiner found the upper airway sensitivity to be an occupational injury. The WCB adopted these findings. The employer/insurer objected to the admissibility of the § 312 examiner’s report because, according to the ALJ, “employee brought with him to the examination written materials which were not submitted to the [insurance medical exam] IME consistent with Board rules.” However, the ALJ also noted that at this deposition, the § 312 examiner testified that the written materials the employee brought to the § 312 exam “made no difference to his diagnosis and causation opinion.”

The decision is expected to shed light on whether the WCB Rule at issue is a zero-tolerance provision or whether actual bias must be demonstrated to disqualify a § 312 examiner. 

Remaining Issues

The Appellate Division will also take up other issues during the February session, including sufficiency of findings to support ongoing causation, refusal of suitable work, and a change in circumstances in the context of work capacity, among others. The Appellate Division is set to hold additional sessions this year in April, June, September, and December.

Appellate Division Finds Amendment to Current Maine Workers’ Compensation Act Can Toll Statute of Limitations Under the Former Act with In-House Medical Treatment

In Davis v. Boise Cascade, WCB App. Div. No. 17-41 (December 1, 2017), the Appellate Division weighed in on a case involving in-house medical treatment and tolling of the statute of limitations under the former and current Maine Workers’ Compensation Act.

The statute of limitations for injuries prior to January 1, 1993 (39 MRSA § 95), does not contain a provision tolling the time for filing claims in the event that in-house medical care was provided by an employer for a work injury. Effective January 1, 1993, as part of the enactment of the Maine Workers’ Compensation Act of 1992, a new statute of limitations was passed (39-A MRSA § 306). The new version of Title 39-A has a transition section stating that § 306 applies only to injuries on or after January 1, 1993, while dates of injury prior to that date were controlled by the analogous former Title 39. But in 2001, the Legislature amended § 306 to add a new paragraph (A) to subsection (2), tolling the statute of limitations when an injured worker received medical care from the employer’s in-house medical staff. Of note, the application provision of the 2001 amendment states that it “applies to all injuries and illnesses, regardless of when they occurred.”

The administrative law judge (ALJ) found that the 2001 amendment to § 306 applies to the 1989 and 1990 injuries and that the medical treatment provided by NewPage’s in-house medical department had tolled the statute of limitation against Boise Cascade.

The issue on appeal was whether the 2001 amendment to § 306 applies to claims governed by 39 MRSA § 95 so as to alter what constitutes a payment of benefits for those claims and, if so, whether the ALJ properly applied that amendment to this case.

The employee worked at the Rumford paper mill from 1981 to 2014. During this time, the mill changed ownership from Boise Cascade to NewPage Corporation; Sedgwick acted as workers’ compensation claims manager for both. The employee sustained two work injuries while Boise Cascade owned the mill—in 1989 and 1990. He received partial incapacity benefits until July 22, 2004, when he began earning more than his pre-injury average weekly wage. The last payment of benefits that relates to the 1989 and 1990 injuries was made on July 22, 2004.

While weekly incapacity benefits had stopped, the employee’s neck continued to be symptomatic. He went to the mill’s medical department for neck-related treatment, including a visit on December 4, 2007. The employee’s low back condition continued to bother him. He periodically sought treatment for that condition at the mill’s medical department, including on April 30, 2009.

In 2010, after NewPage took over the mill, the employee sustained two more injuries: a March 3, 2010, right hand injury, and an August 11, 2010 low back aggravation. The employee also communicated his low back problems to Sedgwick, NewPage’s claims administrator. His discussion included mention of the August 2010 incident and a “1990ish” injury. Sedgwick paid the employee medical benefits but recorded its payments as relating to the August 2010 injury, not the 1990 injury.

In August and September 2014, the employee filed petitions seeking incapacity from Boise Cascade and NewPage for his four injuries and payment of medical bills. NewPage filed a Petition for Apportionment seeking contribution against Boise Cascade regarding the 1990 low back injury. Boise Cascade filed a Petition Seeking to Establish a Date of Maximum Medical Improvement on the 1989 and 1990 injuries and asserted statute of limitations defense on both of those injuries.

The Appellate Division found the ALJ’s interpretation of the amendment adding paragraph 306(2)(A) as applying to all injuries regardless of when they occurred was a reasonable construction and involved no misconception of applicable law.

The Appellate Division also rejected the employer’s argument that the ALJ’s interpretation is an unconstitutional retroactive application of § 306(2)(A). The Appellate Division found that, unlike amendments that shorten an existing statute of limitations, those that extend it are not “retroactive” if they: (1) do not change the legal consequences of acts or events that precede the effective date of amendment, and (2) the claims have not yet been barred by the previous statute of limitations. See Dobson v. Quinn Freight Lines, 4 16 A. 2d 814 (Me. 1980). Here, findings § 306(2)(A) extends the limitations period in 95, which does not change the legal consequences of acts that precede the effective date of an amendment, only those after it. In this case, the employee’s receipt of in-house medical treatment after July 22, 2004, took place after the 2001 amendment. Up to that time, the statute of limitations on the 1989 and 1990 injuries had not expired. Moreover, even if the amendment to § 95 were retroactive legislation, it would only be unconstitutional if “its implementation impairs vested rights or imposes liabilities that would result from conducted predating the legislation.” Merrill v. Eastland Woolen Mills, Inc., 430 A.2d 557 (Me. 1981). A retroactive extension of Title 39’s limitation period would not impair a vested right because “[n]o one has a vested right in the running of a statute of limitations until the prescribed time has completely run and barred the action.” Dobson, 415 A.2d at 816.

Judge Hirtle dissented, finding that the 2001 amendments to § 306 do not apply to the 1989 and 1990 injuries, and would accordingly find the claim for the 1989 injury barred by the statute of limitations. Judge Hirtle points out that the scope of Title 39-A, including 306, is found in sec A-10 of the Workers’ Compensation Act of 1993. Section A-10 provides, “[s]o as not to alter benefits for injuries incurred before January 1, 1993[,]” 306 does not apply to injuries prior to January 1, 1993, and the “applicable provisions of former Title 39 apply in place of Title 39-A” for injuries that occurred prior to January 1, 1993. According to Judge Hirtle, to interpret the 2001 amendments to 306 as altering the statute of limitations in 95 is inconsistent with the plain language of section A-10. Judge Hirtle finds the majority’s interpretation transforms the 2011 amendment of 306 into an amendment of 95, even though the Legislature expressly stated that those two sections have a separate and distinct application.

This case provides an interesting example of certain narrow circumstances where provisions of the new Act (Title 39-A) apply to pre-1993 dates of injury. Despite the fact that the transition section of Title 39-A provides that § 306 only applies to injuries on or after January 1, 1993, the Appellate Division apparently chose to give more weight to the 2001 amendment (§ 306(2)(A)), which provides that § 306 “applies to all injuries and illnesses, regardless of when they occurred.”

Appellate Division to Revisit (for a Second Time) the Issue of Refusal of Suitable Work in St. Louis V. Acadia Hospital

In St. Louis v. Acadia Hospital Corp., WCB No. 10002460 (April 14, 2017), the Maine Workers’ Compensation Board issued a decision dated March 4, 2015, finding the Employee had not refused an offer of suitable work and awarded partial incapacity benefits reduced by an imputed earning capacity of $300.00/week. The Employer appealed to the Appellate Division. A decision issued January 12, 2017, St. Louis v. Acadia Hospital Corp., App. Div. 17-3 (January 12, 2017), ordered that the case be remanded for a more complete analysis of whether the Employee unreasonably refused a bona fide offer of reasonable employment within the meaning of 39-A M.R.S.A. § 214(1)(A). 

The Employee worked as a certified nursing assistant (CNA) at Acadia Hospital. She was injured January 29, 2010. On account of this injury, the Employee experiences post-concussive headaches and an anxiety disorder with features of post-traumatic stress disorder. Because of her symptoms, she stopped working for the Employer August 6, 2013. She began a work search in February 2014 and found a part-time cashier position beginning February 10, 2014. The Employer sent the Employee a job offer on February 6, 2014, offering full-time work as a telephone operator and receptionist with a provision that the Employee would not be working in a patient care area or asked to be involved in restraining patients. This position paid approximately $12.00 per hour, while her position as a cashier paid $8.00 per hour. The Employee declined the offer because she had already accepted a new job as a cashier. The Employee testified that she was also concerned that, despite assurances, she still may have contact with patients through incidental activities like eating lunch. The Employer presented testimony from a human resources representative that the position offered was in a secured area inaccessible to patients and that the Employee was not required to take breaks or eat meals in areas with patients.

The Employee saw Drs. Carlyle Voss and Karyn Woelflein for independent medical examinations (39-A M.R.S.A. § 312). Dr. Voss found she, “could manage the basic duties of [a telephone] operator” and “could do similar work in another setting where there is low risk for being assaulted[,]” but “would be at significant risk to have symptoms escalate which could cause impairment that would preclude any type of work if she returned to work at Acadia or in another setting where there is increased risk for assaults.” Dr. Woelflein stated, “it would be imprudent for [her] to return to work at Acadia.”

The Employee argued that her refusal of the job offer was reasonable because she had already found work within her restrictions at a new employer and that the offered position was beyond her medical limitations. The Employer argued that the offer was reasonable as it was made only a few days after she began working for a new employer, paid higher, and was within her medical limitations. The Employer argued that § 214(1)(A) barred an award of partial incapacity benefits.

On the issue of refusal of suitable work, the Employer bears the burden of persuasion. In general, if an injured worker “receives a bona fide offer of reasonable employment” and the employee “refuses that employment without good and reasonable cause,” that employee is barred from receiving incapacity benefits under the Workers' Compensation Act “during the period of the refusal.” 39-A M.R.S.A. § 214(1)(A). The term, “reasonable employment” means “any work that is within the employee's capacity to perform that poses no clear and proximate threat to the employee's health and safety and that is within a reasonable distance from that employee's residence.” 39-A M.R.S.A. § 214(5).

When applying § 214, an administrative law judge (ALJ) “is required to undertake a two-part analysis, reviewing both the employer's actions in making the job offer and the employee's actions in declining that offer.” Thompson v. Claw Island Foods, Inc., 1998 ME 101, ¶ 7. When evaluating an employee's decision to decline a job offer, an ALJ must determine first whether the offer was a “bona fide offer of reasonable employment.” Id. The factors to consider include “whether the work falls within the employee's work capacity, whether it poses a threat to the employee's health and safety, and whether it is within a reasonable distance of the employee's residence.” Id. ¶ 8. Second, an ALJ must determine whether the employee refused that offer without “good and reasonable cause.” Id. ¶ 16. The reasonableness of the refusal is a broad inquiry; an ALJ “must consider all facts relevant to the employee's decision to decline the job offer.” Id. The Law Court has provided some guidance to this inquiry with a five factor test that is “not intended to be exhaustive or conclusive” but “represent[s] a sound general framework for decision making when the employee has refused an offer of reasonable employment:” (1) the timing of the offer, (2) if the employee has moved, the reasons for moving, (3) the diligence of the employee in trying to return to work, (4) whether the employee has actually returned to work with some other employer and, (5) whether the effort, risk, sacrifice or expense is such that a reasonable person would not accept the offer. Id. at ¶¶ 18, 19. 

Among other things, the ALJ found the position offered pays significantly higher than the work the Employee found on her own, but would have required her to abandon the cashier's position shortly after committing to it. Further, the ALJ found significant the medical opinions of Dr. Voss and Dr. Woelflein, which bear on her ability to return to work for the Employer. The ALJ found the Employer had not met its burden to prove that the Employee refused the offered job without good and reasonable cause. The Board granted the Employee’s Petitions for Award, in part, with an ongoing award of partial incapacity benefits reduced by an imputed earning capacity of $300.00/week. The matter is on appeal once again before the Appellate Division. 

Refusal of suitable work has generated a lot of decisions from the Appellate Division to date. This is due to the very fact-specific nature of these cases, particularly when it comes to the multifactor tests used in assessing a refusal defense. In this case, the binding medical evidence and the fact that the employee had already secured work before the offer was made were significant factors for the ALJ.

WCB Limits Requirement for Notice of Rights Leading up to Cessation of Partial Incapacity Benefits after 520 Weeks

For injuries on or after January 1, 2013, partial compensation is calculated using 2/3 of the difference between the employee’s average weekly wage and post-injury earnings subject to the maximum rates. An employee’s benefits are capped after receiving 520 weeks of partial compensation benefits. This cap may be extended in cases involving extreme financial hardship or as outlined below. 

For injuries on or after January 1, 2013, employees whose permanent impairment exceeds 18% may qualify for an extension of the 520 week cap. Entitlement to benefits is determined based upon the facts as they exist at the expiration of 520 weeks of benefits, and requires that: (1) the employee must be working and the employee’s earnings (as measured by average weekly earnings over the most recent 26 week period) are 65% or less than the employee’s pre-injury average weekly wage; and (2) the employee’s actual earnings are commensurate with the employee’s earning capacity, including consideration of the employee’s physical and psychological work capacity as determined by a §312 Independent Medical Examiner, and (3) the employee has earnings from employment for a period of not less than 12 months within a 24 month period prior to the expiration of the 520 week durational cap. Additionally, once an employee’s post-injury earnings (as measured by the most recent 26 week period) exceed the pre-injury average weekly wage, the employee’s entitlement to partial incapacity benefits terminates permanently. 

Pursuant to the Board’s rules, an employer can discontinue partial incapacity benefits at the expiration of 520-weeks of payment of such benefits but, according to the a Workers’ Compensation Board rule, only if notice is first given to the employee 21-days in advance of the upcoming date of discontinuance and of the employee’s 30-day right to request a hardship extension. The rule states:

1. Prior to cessation of benefits pursuant to 39-A M.R.S.A. § 213(1), the employer must notify the employee that the employee’s lost time benefits are due to expire. The notice must be sent at least 21 days in advance of the expiration date, and must include the date the lost time benefits are due to expire and the following paragraph:

If you are experiencing extreme financial hardship due to inability to return to gainful employment, you may be eligible for an extension of your weekly benefits. To request such an extension, you must file a Petition for Extension of Benefits within 30 calendar days of the date that benefits expire, or, in cases where the expiration date is contested, within 30 calendar days of a final decree as to the expiration date.

Failure to send the required notice will automatically extend the employee’s entitlement to lost time benefits for the period that the notice was not sent. 

Notice shall be considered “sent” if it is mailed to the last address to which a compensation check was sent.

WCB Rule c. 2, §5

In Lorraine Somers v. S.D. Warren Co., Me. WCB No.: 00017178 (Feb. 28, 2017) Judge Elwin found that the above rule applies only if the employer files a 21-day Certificate of Discontinuance. It does not apply when a Petition for Review is filed when the decision is issued after the 520-week limit has expired because the future “date of discontinuance” is unknown at that point. Judge Elwin held that applying the rule when a Petition for Review is filed would be illogical because the date benefits are “due to expire” depends on when the Board issues a decision. The decision was appealed. The Appellate Division will decide the matter on the briefs or, if requested and the case fits the criteria, after oral argument.

As an aside, a Certificate of Discontinuance can only be filed when benefits are being paid voluntary, without prejudice (i.e. payment is not being made pursuant to an “accepted” Memorandum of Payment, Record of Mediation or Decree). In all other cases, a Petition for Review must be filed to discontinue benefits.