Posted On: January 24, 2013 by Glenn Neiman

Bad Faith Causes Denial of Reinstatement to Total Disability Benefits

When an injured worker in Pennsylvania goes back to modified duty work, and then loses that job through no fault of his own, typically the injured worker is entitled to a reinstatement of benefits, back to total disability benefits. Of course, as always, there are exceptions to the rule. One of the exceptions is when an injured worker’s benefits are modified by a finding of “bad faith.”

We saw this issue addressed by the Commonwealth Court of Pennsylvania in Napierski v. Workers’ Compensation Appeal Board (Scobell Company, Inc.). Here, the injured worker, a plumber, hurt his leg. The injury was accepted as compensable by the workers’ comp insurance carrier and total disability benefits were started.

To avoid continued payment of workers’ compensation benefits, the workers’ comp insurance carrier then lowered itself to the use of “funded employment,” a disgraceful, yet perfectly legal, tactic. The employer paid a company (Expediter) to have another company (IDI) hire the injured worker, with the original employer paying the salary (if it sounds a little fishy, well . . . that’s because it is).

The injured worker started modified duty work for IDI in October, 2004. The IDI offices moved in March 2005, and, then again, in August 2005, both times for heating malfunctions and mouse infestations. Upon finding mouse feces in the paperwork which had been shipped from one IDI location to the next, the injured worker decided they were “playing games” with him and he quit on the spot.

Employer filed a Petition to Modify the compensation benefits, saying the job was available to the injured worker and he refused it. A Workers’ Compensation Judge (WCJ) agreed and granted the Petition to Modify, finding that the injured worker “refused in bad faith” to work there. This finding was affirmed by the Workers’ Compensation Appeal Board (WCAB) and the Commonwealth Court of Pennsylvania.

After this litigation ended, the injured worker asked his employer to fund the job again, and let him try it again. The employer refused. Since the job was no longer available to him, the injured worker then filed a Petition for Reinstatement. The WCJ denied the Petition. Because the benefits were modified for a “bad faith” refusal to work, the burden of proof became higher. The injured worker now had to prove that he was no longer physically capable of performing that modified duty job. Since the injured worker did not meet that burden of proof, the Petition to Reinstate was denied. This was affirmed by the WCAB.

Upon further appeal, the Commonwealth Court of Pennsylvania affirmed. The Court agreed with the standard as related by the WCJ. Discussion regarding whether the “funded employment” position was temporary or permanent was cut short, as the Court found this was a matter for the Modification Petition which was previously litigated. Once the benefits were modified due to bad faith, the showing that a job was available to the injured worker was no longer necessary. The only issue left was the standard for reinstatement in this situation. As the Court stated:

Claimant refused, in bad faith, to work at a job he was capable of performing. In order to have his benefits reinstated, he was required to prove that his physical condition had worsened so that he could not do the job provided to him at IDI. He did not do so.”