Pennsylvania High Court Strikes Down Use of “Most Recent” AMA Guides

In a highly anticipated decision, Protz v. Workers’ Comp. Appeal Bd. (Derry Area Sch. Dist.), 2017 Pa. LEXIS 1401 (June 20, 2017), a split Supreme Court of Pennsylvania yesterday held that the provision, found in Section 306(a.2) of the state’s Workers’ Compensation Act [77 P.S. § 511.2(1)], requiring physicians to apply the methodology set forth in “the most recent edition” of the American Medical Association Guides to the Evaluation of Permanent Impairment (AMA Guides), violates the state’s constitutional requirement that all legislative power “be vested in a General Assembly” [Pa. Const. art. II, § 1]. The majority added that in spite of the severability clause found within the Pennsylvania Workers’ Compensation Act (“the Act”) [77 P.S. § 1022], Section 306(a.2) was “a paradigmatic example of a law containing valid provisions that are inseparable from void provisions” [2017 Pa. LEXIS 1401]. Accordingly, the majority struck Section 306(a.2), in its entirety, from the Act.

Background

Writing for the majority, Justice David N. Wecht (joined by Justices Todd, Donohue, Dougherty and Mundy) gave a cursory review of the facts. Protz sustained a work-related knee injury in 2007 and shortly thereafter her employer voluntarily began paying TTD benefits. In October 2011, Protz underwent an IRE at the employer’s request. The IRE physician evaluated Protz and assigned to her a 10% impairment rating based upon the Sixth Edition of the AMA Guides. Because Protz’s impairment rating was less than 50%, the employer filed a modification petition seeking to convert Protz’s disability status from total to partial—the effect of which would be to limit the duration that Protz could receive workers’ compensation benefits.

Protz appealed to the Workers’ Compensation Appeal Board, arguing that the General Assembly unconstitutionally delegated to the AMA the authority to establish criteria for evaluating permanent impairment. The Board rejected Protz’s constitutional argument and affirmed the WCJ’s decision.

Commonwealth Court Decision

The Commonwealth Court, sitting en banc, reversed the Board’s decision [see my earlier post on the Commonwealth Court’s decision], essentially agreeing with Protz that that Section 306(a.2)’s requirement that physicians use “the most recent edition” of the Guides violated Article II, Section 1 of the Pennsylvania Constitution.

The majority of the Commonwealth Court acknowledged that the General Assembly could delegate authority and discretion in connection with the execution and administration of a law to an independent agency or an executive branch agency where the General Assembly first established primary standards and imposed upon others the duty to carry out the declared legislative policy in accordance with the general provisions of the enabling legislation. The majority allowed, however, that with regard to the AMA Guides, the General Assembly had done neither: The Act was wholly devoid of any articulations of public policy governing the AMA and the Act lacked adequate standards to guide and restrain the AMA’s exercise of its delegated power to create a methodology for grading impairment.

The majority of the Commonwealth Court went on to explain that, even if the General Assembly had included adequate standards to guide and restrain the AMA’s exercise of delegated authority, Section 306(a.2) still would be unconstitutional because the AMA is a private organization. Rather than striking all of Section 306(a.2), or undertaking a severability analysis, the majority of the Commonwealth Court declared the law unconstitutional only insofar as it proactively approved versions of the AMA Guides beyond the Fourth Edition without review. Consistent with that narrow remedy, the court remanded the matter to the WCJ with instructions to apply the Fourth Edition of the AMA Guides, the version in existence when the General Assembly enacted Section 306(a.2) in 1996.

Appeal to the Supreme Court

The Supreme Court granted the appeal petitions filed by both parties. The employer took issue with the Commonwealth Court’s conclusion that the General Assembly’s prospective adoption of “the most recent edition” of the AMA Guides violated Article II, Section 1, whereas Protz argued that the Commonwealth Court, after finding Section 306(a.2) to be unconstitutional, erred in remanding her case to the WCJ for application of the Fourth Edition of the Guides.

Justice Wecht noted that at the heart of the non-delegation doctrine is the tenet that the General Assembly cannot delegate to any other branch of government or to any other body or authority the power to make law. While the Pennsylvania Constitution generally forbids the delegation of legislative power, it nonetheless permits the General Assembly, in some instances, to assign the authority and discretion to execute or administer a law. When the General Assembly does so, the Constitution imposes two fundamental limitations:

1. The General Assembly must make “the basic policy choices,” and
2. The legislation must include “adequate standards which will guide and restrain the exercise of the delegated administrative functions.”

Unbridled Authority Given to AMA

Justice Wecht added that by any objective measure, the authority delegated to the AMA in Section 306(a.2) was quite broad; the General Assembly did not favor any particular policies relative to the AMA Guides’ methodology for grading impairments, nor did it prescribe any standards to guide and restrain the AMA’s discretion to create such a methodology. The justice continued:

Without any parameters cabining its authority, the AMA would be free to: (1) concoct a formula that yields impairment ratings which are so inflated that virtually every claimant would be deemed to be at least 50% impaired; or (2) draft a version of the Guides guaranteed to yield impartment ratings so miniscule that almost no one who undergoes an IRE clears the 50% threshold; or (3) do anything in between those two extremes. The AMA could add new chapters to the Guides, or it could remove existing ones. It could even create distinct criteria to be applied only to claimants of a particular race, gender, or nationality [footnote material omitted].
Consider also that the AMA could revise the Guides once every ten years or once every ten weeks. If the AMA chooses to publish new editions infrequently, Pennsylvania law may fail to account for recent medical advances. By contrast, excessive revisions would likely pose severe administrative headaches, inasmuch as the Guides automatically have the force and effect of law once published. As these hypotheticals illustrate, the General Assembly gave the AMA de facto, unfettered control over a formula that ultimately will determine whether a claimant’s partial-disability benefits will cease after 500 weeks.
[2017 Pa. LEXIS 1401].

Equally problematic, said the justice, was the fact that the General Assembly had not included any of the procedural mechanisms—e.g., public hearings, allowance of public comments— that the Court had considered essential to protect against administrative arbitrariness and caprice. Unlike elected officials, the AMA physicians who author the Guides are, of course, not public employees who may be subject to discipline or removal.

Hostility Toward Private Actors

Justice Wecht noted that the Court’s precedents had long expressed hostility toward delegations of governmental authority to private actors, such as the AMA. The justice stopped short of the position taken by the majority of the Commonwealth Court, however. There might be circumstances in which a delegation to a private organization or group might be proper. According to the justice, deciding that question was unnecessary, “Section 306(a.2) could not withstand constitutional scrutiny even if the AMA were a governmental body” [2017 Pa. LEXIS 1401].

Can “Most Recent Edition” Language Be Severed from the Act?

Justice Wecht continued that it was important to clarify that the non-delegation doctrine does not prevent the General Assembly from adopting as its own a particular set of standards which already are in existence at the time of adoption. The doctrine does prohibit the General Assembly from incorporating, sight unseen, subsequent modifications to such standards without also providing adequate criteria to guide and restrain the exercise of the delegated authority.

With regard to the use of the AMA Guides, the General Assembly did not incorporate the guides as they existed at the time Section 306(a.2) was enacted. If that is what had been met, it could easily have said so. In fact, in other sections of the Act, the General Assembly explicitly stated that the Fourth Edition of the Guides should govern. The majority said it must construe the “most recent edition” requirement to mean the most recent edition in force at the time of the IRE, a state of affairs that, for the reasons the majority had stated, violates the non-delegation doctrine.

The “most recent edition” language of Section 306(a.2) could not be severed from the Act without making the section incomprehensible. Unlike the Commonwealth Court, the majority of the Supreme Court held that Section 306(a.2) is unconstitutional in its entirety.

Concurring Opinion

Chief Justice Saylor concurred, briefly indicating that he supported the “core legal analysis” contained in the majority opinion. His differences, he indicated, were “more a matter of approach than substance.”

Justice Max Baer dissented, noting that Section 306(a.2) did not delegate legislative authority to the AMA. Rather, the challenged statutory provision delegated preliminary determinations of claimant impairment ratings to board-certified physicians licensed in the Commonwealth who are active in clinical practice. The statute directs these physicians to utilize the most recent edition of the AMA Guides in connection with their initial impairment determination. According to the justice, there is no constitutional infirmity in this approach as it merely evinces the General Assembly’s policy determination to adopt the most up-to-date medical advances as the methodology to be utilized by physicians when evaluating whether to classify a claimant as totally or partially disabled. Stated differently, said Justice Baer, requiring the use of the most recent AMA Guides was not delegating the authority to make law; it was simply declaring the applicable standard by which physicians should conduct impairment rating evaluations.

Parenthetically, readers should note that Justice Wecht dealt with this issue in the majority opinion, noting Judge Simpson’s dissent in the Commonwealth Court’s earlier decision. As to the employer’s argument that the General Assembly restrained the AMA’s authority by mandating that that all IREs be performed by a Pennsylvania-licensed, clinically active physician, Justice Wecht indicated the majority of the Supreme Court failed to see how this did anything to prevent the AMA from acting arbitrarily. That is to say that since the degree of impairment must be determined based upon an evaluation by a physician pursuant to the “most recent edition” of the AMA Guides, the evaluating physician, who is constrained by law to follow the Guides, has no power to limit the AMA’s delegated authority.

Comment: Other States Use Similar “Most Recent Edition” Language in Their Own Acts

While the Protz decision, of course, has no precedential value in other states, the argument put forth by Justice Wecht could, nevertheless, be persuasive in any future non-delegation litigation in other states using similar “most recent edition” language. Such states include, at least, the following:

• Alaska [Alaska Stat. § 23.30.190]: While the Alaska provision does not specify the use of the “most recent edition” of the AMA Guides, it requires—without specifying the edition—the use of the AMA Guides and provides further that when a new edition is published, the Board must hold a public meeting within 90 days of the publication “to select the date on which the new edition will be used [Alaska Stat. § 23.30.190(d)].
• Arizona [Ariz. Admin. Code § R20–5–113B]: Physicians should rate impairment according to the most recent edition of the AMA Guides.
• Illinois [820 ILCS 305/8.1a]: For impairment, the “most current edition” of the AMA Guides must be utilized. The Guides are not the only factor, however, to be considered in Illinois.
• Louisiana [La. Rev. Stat. Ann. § 23:1221]: No benefits shall be awarded or payable unless the percentage of the anatomical loss of use or amputation …, is as established in “the most recent edition” of AMA Guides.
• New Mexico [NM Stat. Ann. § 52–1–24]: Requires use of the “most recent edition” of the AMA Guides. As noted in the dissent opinion in Protz, the Supreme Court of New Mexico, in Madrid v. St. Joseph Hospital, 1996- NMSC 064, 122 N.M. 524, 928 P.2d 250, 256 (1996), found no unlawful delegation, recognizing that “many jurisdictions have articulated compelling rationales for allowing adoption of a private organization’s standards into a statutory scheme without finding a delegation of legislative authority … even when the standards are subject to periodic revision by the private entity.” Id. In particular, the New Mexico Supreme Court explained that “[i]t is impractical to expect our Legislature to establish standards for evaluating physical impairment in workers’ compensation claims.” Id. at 258–59. Noting a possible lack of legislative resources to adopt independent medical impairment standards, the court surmised that the legislature chose to utilize objective standards established by the AMA, which is a highly respected and impartial entity that possesses the expertise for such a task. Id. at 259. The New Mexico High Court stated, “[prohibiting the Legislature from adopting the standards developed by experts within a rapidly changing medical specialty would obstruct the Workers’ Compensation Administration’s efforts to provide accurate evaluations of impairment.” Id. Recognizing that new scientific developments relevant to impairment evaluation demand modification, the court concluded that “[periodic revisions of the standard will not transform an otherwise constitutional and non-delegatory statutory provision into an unconstitutional delegation of legislative power.” Id.
• Oklahoma [85A Okl. Stat. § 45(c)]: A physician’s opinion of the nature and extent of permanent partial disability to parts of the body other than scheduled members must be based solely on criteria established by the “current edition” of the AMA Guides.
• Wyoming [Wyo. Stat. § 27–14–405]: An injured employee’s impairment shall be rated by a licensed physician using the “most recent edition” of the AMA Guides.

Will those in other states who are displeased with the 6th edition take up the gauntlet and use the arguments put forth by Justice Wecht to their advantage? It remains to be seen. Personally, I find the justice’s arguments quite compelling. If the AMA decides to “freeze” the Guides in place out of a concern that their use has become controversial in some states in recent years, should physicians making impairment decisions be so frozen in time as well? Alternatively, if the AMA determines to revise the Guides much more frequently, should the states noted above move along in lockstep? Setting policies and standards is hard work; many legislators would prefer to kick the can toward some other group who can make the decision. The Pennsylvania Supreme Court has signaled that the state legislature may not give just give up its proxy to others.