IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Communication Test Design

, :

Petitioner :

:

v. :

: Workers’ Compensation : Appeal Board (Simpson)

, : No. 1 196 C.D. 2019

Respondent : Submitted: January 1 7 , 20 20

BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge

HONORABLE ANNE E. COVEY, Judge HONORABLE CHRISTINE FIZZANO CANNON

, Judge

OPINION BY JUDGE COVEY FILED: April 22, 2020

Communication Test Design (Employer) petitions this Court for review
of the Workers’ Compensation (WC) Appeal Board’s (Board) August 2, 2019 order
affirming the Workers’ Compensation Judge’s (WCJ) decision denying Herbert L.
Simpson’s (Claimant) Claim Petition, granting Claimant’s Reinstatement and Penalty

Petition s, and dismissing Employer’s Suspension Pet ition as moot; and reversing the
WCJ’s decision dismissing Employer’ s Termination P etition as moot and modifying
that decision to reflect a termination of Claimant’s WC benefits as of February 23,
2017. Employer presents two issues for this Court’s review : (1) whether Claimant

ha d to prove ongoing disability and entitlement to temporary total disability (TTD)
benefits to prevail on his Reinstatement and Penalty Petition s ; and (2) whether
Employer is required to pay unreasonable contest fees when Claimant i s not entitled

to TTD benefits.

O n December 5, 2016

, Claimant allegedly sustained work injuries during
the course and scope of his employment with Employer

. On December 20, 2016,
Employer issued a Medical Only Notice of Temporary Compensation Payable2

( NTCP), accepting liability for medical bills for the alleged work injury

, described as

a n eye laceration. On January 4, 2017, Employer issued an amended NTCP, under

which it began paying Claimant disability benefits. On February 7, 2017, E mployer

issued a Notice Stopping Temporary Compensation Payable ( NSTC ), indicating that
it ceased paying compensation as of January 19, 2017. Attached to the NSTC was a

Notice of Compensation Denial ( NCD ), denying that Claimant sustained a work
injury.
On February 13, 2017, Claimant filed a Claim Petition, alleging he

sustained work injuries in the nature of a concussion, post

- concussion syndrome,
right eye laceration, right shoulder sprain/strain and internal derangement of the right

shoulder on December 5, 2016. Cla imant sought TTD from the date of injury and
ongoing, reimbursement for associated medical services, litigation costs, and
unreasonable contest attorney’ s fees. On April 7, 2017, Claimant filed the

Reinstatement and Penalty Petition s , claiming that Employ er violated the
Pennsylvania Workers ’ Compensation Act (Act). 1 Specifically, Claimant asserted
that Employer failed to issue a n NSTC within five days after the last payment of
temporary compensation. Claimant request ed penalties at the rate of 50% on all past
due compensation. Claimant also sought assessment of unreasonable contest
attorney’ s fees pursuant to Section 440 of the Act , 77 P.S. § 996

. 2 Claimant further

asked for reinstatement of total disability benefits based on Employer’s misuse of

docume nts.
On April 18, 2017, Employer filed the Termination Petition averring that

Claimant fully recovered from his alleged work injuries as of February 23, 2017.
Employer also filed the Suspension Petition on May 3, 2017, asserting that Claimant
responded i n bad faith to a specific job offer

. The WCJ held hearings on March 20,

1 Act of June 2, 1915, P.L. 736, as amended

, 77 P.S. §§ 1

- 1041.4

, 2501

- 27 10

. 2 Added by Section 3 of the Act of February 8, 1972, P.L. 25.3

May 8, September 13 and November 6, 2017. On May 4, 2018, the WCJ denied
Claimant’s Claim Petition, granted Claimant’s Reinstatement and Penalty Petitions

, and dismissed Employe r’s T ermination and Suspension P etitions as moot. The WCJ

determined that Claimant’ s work injury was limited to a right eye laceration, which
did not result in disability.

However, the WCJ ruled that Claimant was entitled to a reinstatement of

benefits based on the conversion of the amended NTCP to a Notice of Compensation
Payable ( NCP ) by operation of law, because Employer failed to timely file a n NSTC

and NCD

. Thus, the WCJ granted the Reinstatement Petition. The WCJ also
awarded a 10% penalty because Empl oyer violated the Act by failing to timely file

the NSTC and NCD and by unilaterally ceasing payment. The WCJ further

determined that Employer’s contest as to the Reinstatement Petition was
unreasonable and awarded $8,140.00 in unreasonable contest fees. Finally, t he WCJ

held that Claimant failed to establish any injury other than an eye laceration and

terminated Claimant’s WC benefits as of the date of d ecision. T he WCJ dismissed as

moot Employer’s Suspension and Termination Petitions

, concluding that C laimant

failed to meet his burden of establishing that his eye laceration resulted in disability
or that he had any other compensable work injuries . Claimant and Employer
appealed to the B oard.

On August 2, 2019 , t he Board affirmed the WCJ’s decision den ying

Claimant’ s Cl aim Petition, granting Claimant’ s Reinstatement and Penalty Petitions,

and dismissing Employer’s Suspension Petitions as moot ; reversed the WCJ’s

decision dismissing Employer’s Termination Petition as moot; and modified the

WCJ’s decision to reflect a termination of benefits as of February 23, 2017.
Employer appealed to this Court. 3

3 “On review[,] this Court must determine whether constitutional rights were violated, err ors of law were committed, or necessary findings of fact were supported by substantial competent4 Employer first argues that the WCJ erred by granting Claimant’s

Reinstatement and Penalty Petition s

. Claimant rejoins that

, pursuant to Section 406.1

of the Act, 77 P.S. § 717.1 (relating to prompt payment), 4 his WC benefits were
reinstated as a matter of law because Employer did not file its NSTC within five days
of the last WC payment.

Initially, the Pennsylvania Supreme Court has explained:

A claimant s eeking reinstatement of suspended benefits
must prove that his or her earning power is once again adversely affected by his or her disability, [ 5 ] and that such disability is a continuation of that which arose from his or her original claim. The claimant n eed not re

- prove that the disability resulted from a work

- related injury during his or her original employment

. Once the claimant meets this burden, the burden then shifts to the party opposing the reinstatement petition

. In order to prevail, the opposin g party must show that the claimant’s loss in earnings is not caused by the disability arising from the work

- related injury

. This burden may be met by showing that the claimant’ s loss of earnings is, in fact, caused by the claimant’ s bad faith rejection o f available work within the relevant required medical restrictions or by some circumstance barring receipt of benefits that is specifically described under provisi ons of the Act or in this Court’ s decisional law.

Bu fford v. Workers’ Comp. Appeal B d. (N. Am . Telecom) , 2 A.3d 548, 558 (Pa. 2010)
(emphasis added)

.

However, “ in certain situations [,] a claimant who seeks a reinstatement
of benefits must establish disability through the pendency of the reinstatement

evidence.” Stepp v. Workers’ Comp. Appeal Bd. (FairPoint Commc’ns, Inc.) , 99 A.3d 598, 601 n.6 (Pa. Cmwlth. 2014). “Substantial evidence has been defined as such relevant evidence as a reasonable person might accept as adequate to support a conclusion.” Id.

4 Added by Section 3 of the Act of February 8, 1972, P.L. 25.

5 “ ‘ [F]or purposes of receiving [WC] , ‘ disability ’ is a term synonymous with loss of earning power; it does not refer to physical impairment. ’ ” Lindemuth v. Workers’ Comp. Appeal Bd. (Strishock Coal Co.) , 134 A.3d 111, 123 (Pa. Cmwlth. 2016) (quoting Kmart v. Workers ’ Comp

. Appeal Bd

. (Williams)

, 771 A.2d 82, 85 (Pa. Cmwlth. 2001) ).5

petition .” Kranak v. Workers’ Comp. Appeal Bd . (U.S. Airways) (Pa. Cmwlth. No.
1265 C.D. 2013, filed March 7, 2014), 6 slip op. at 14. “ Here, Claimant never
established disability prior to the filing of the [R] einstatement [P] etition .” Id.
(emphasis added). Thus, “[i]t was Claimant’ s burden to est ablish his entitlement to a

reinstatement of benefits. ” Id.

In his Penalty/Reinstatement Petition, Claimant alleged:

[Employer] has failed to issue a [n] [NSTC] no later than five (5) days after the last payment of temporary compensation. Claimant requ ests penalties at the rate of fifty percent (50%) on all past due compensation. Claimant requests assessment of unreasonable contest attorney’ s fees pursuant to [Section] 440 of the Act. Claimant requests reinstatement of total disability benefits based on the misuse of documents

. Reproduced Record (R.R.) at 20a (emphasis added).

The WCJ determined :
Because the last day that compensation was paid was January 19, 2017, the [NSTC] had to be filed by January 24, 2017. The [NSTC] was not filed until Febru ary 7, 2017. Thus, the [ NTC P ] accepting Claimant’ s injury as a laceration to his eye with disability effective December 5, 2016 converted to a [ n ] [ NCP ] by operation of law

. WCJ Dec. at 4, Finding of Fact ( FOF) 12 (emphasis added)

.

First, although the N STC stated that “payment of compensation . . .
[was] being stop p ed as of 01

- 19

- 2017 [ ,]” there was no testimony as to what period
that payment covered, see Thomas Lindstrom Co., Inc. v. Workers ’ Comp

. Appeal Bd

. (Braun) , 992 A.2d 961 (Pa. Cmwlth. 2010) , nor is the date of the last pay ment

6 Pursuant to Section 414(a) of the Commonwealth Court Internal Operating Procedures, unreported opinions of a panel of the Commonwealth Court, if issued after January 15, 2008, may be cited for persuasive value , but not as binding precedent. 210 Pa. Code § 69.414(a).6

identified in the record, s ee Jones v. Workers’ Comp. Appeal Bd. (Villanova Univ

. )

, 164 A. 3d 542 (Pa. Cmwlth. 2017) ; thus

, there is no evidence upon which the WCJ

could base his determination that the NSTC was not filed wit hin five days of the last

payment

. “ No penalty may be imposed

. . . absent proof of a violation of the Act or its regulations, and a violation of the Act must appear in the record in order for a
penalty to be appropriate. ” Dow v. Workers’ Comp. Appeal Bd . ( Household Fin

. Co.) , 768 A.2d 1221, 1226 (Pa. Cmwlth. 2001) (emphasis added; citation omitted).
Because substantial evidence does not support the WCJ’s conclusion that Employer
violated the Act by failing to fil e the NSTC within five days of the last p ayment, the
WCJ erred by granting the Penalty Petition

.

Second, and more importantly, Section 406.1 of the Act does not

sanction conversion of an NTCP to an NCP for failure to file an NSTC within five
days of stopping payment

. R ather, Section 406.1(d)(5 ) of the Act mandates:

(i) If the employer ceases making payments pursuant to a [n] [NTCP] , a notice in the form prescribed by the [D] epartment [of Labor and Industry (Department)] shall be sent to the claimant and a copy filed with the [D] epartment, but in no event shall this notice be sent or filed later than five (5) days after the last payment.

(ii) This notice shall advise the claimant, that if the employer is ceasing payment of temporary compensation, that the payment of temporary compensation was not an admission of liability of the employer with respect to the injury subject to the [NTCP] , and the employe must file a claim to establish the liability of the employer.

(iii) If the employer ceases making payments pursuant to

a [n] [NTCP] , after complying with this clause, the employer and employe retain all the rights, defenses and obligations with regard to the claim subject to the [NTCP] , and the payment of temporary compensation may not be used to support a claim for compensation.7 (iv) Payment of tempor ary compensation shall be considered compensation for purposes of tolling the statute of limitations under [S] ection 315 [of the Act 7 ]

.

77 P.S. § 717.1 (d) (5). There is no remedy stated therein for failure to comply with

Section 406.1 (d) (5)(i) of the Act

. There is a remedy, however, for failure to file a n NSTC within 90 days of the filing of an NTCP. Section 406.1 (d) (6) of the Act
requires: “ If the employer does not file a [ n ] [ NSTC ] under paragraph (5) within the
ninety

- day period during which temporary c ompensation is paid or payable , the
employer shall be deemed to have admitted liability and the [ NT C P ] shall be

converted to a [ n ] [ NCP ]

. ” 77 P.S. § 717.1 (d) ( 6 ) (emphasis added)

.

Here, the NTCP was issued on December 20, 2016

, and Employer filed

its NSTC on February 7, 2017 . Because the NSTC was filed within 90 days of the

NTCP, the NTCP could not convert to a n NCP by operation of law. Thus , the WCJ

and the Board erred by conclud ing otherwise.

In support of their decisions, t he WCJ and the Board relied upon Jones

. However, J

ones is distinguishable from the instant case in that here, there is no record
evidence as to the last payment date and therefore it is unknown whether the last
payment was made within five days thereof

. Further , the Jones Court exp ressly
stated: “The only issue on appeal is what is the event from which the NSTC has to be
sent or filed within no later than [five] days as set forth in Section 406.1(d)(5)(i) of
the Act, 77 P.S. § 717.1(d)(5)(i).” J ones , 164 A.3d at 544

- 45. The Court held:

“Because [the Act] provides that ‘compensation shall be paid not later than the

twenty

- first day’ after an agreement, NCP or NTCP, under Section 406.1(a), time is
calculated from when compensation must be paid, no t the last period for which
compensation is payable ended.” Jones , 164 A.3d at 545. The issue before the Jones

Court is not the same issue herein nor did the Jones Court hold that if the NSTC was

7 77 P.S. § 602

.8

not sent within five days of the last benefit payment the NTCP would convert to an
NCP by operation of law. 8 Accordingly, Jones is inapposite and the WCJ and the
Board erred in relying thereon.

Moreover, Section 406.1 (d) (5)(ii) of the Act expressly states that if the
employe r files an NSTC

, “ the payment of temporary compensation [ is ] not an
admission of liability of the employer with respect to the injury ,” and “ the employe
must file a claim to establish the liability of the employer

. ” 77 P.S. §

717.1 (d) ( 5 ) (ii) (emphasis add ed). Accordingly, Claimant herein filed a Claim

Petition on February 13, 2017

, which the WCJ denied. B ecause “ Claimant never
established disability prior to the filing of the [R]einstatement [P]etition [,] ” “[i]t was

Claimant’s burden to establish his en titlement to a reinstatement of benefits .”

Kranak , slip op. at 14

. T he WCJ concluded : “ Claimant has failed to sustain his
burden of proving that he sustained anything other than a laceration above his eye in

the incident of December 5, 2016. Thus, Claim an t’ s Claim Petition for all other
injuries and disability is denied

. ” WCJ Dec. at 14, Conclusion of L aw (COL) 3
(emphasis added); see also COL 4 (“ Claimant did not suffer any additional injuries or
any disability as a result of his alleged work injury. ”) . Because Claimant did not

prove his entitlement to a reinstatement of benefits , the WCJ erred by granting h is

Reinstatement Petition.

Employer next argues that it is not required to pay unreasonable contest

fees because Claimant is not entitled to TTD b enefits

. Specifically, Employer

contends its contest was not intended to harass C laimant but

, rather, to determine

8 In addition, t he 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 th erefore, “not essential to the decisi on.” Program Admin. Servs. Inc. v. Dauphin Cty. Gen. Auth. , 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 & Policy Comm. , 795 A.2d 432, 437 n.7 (Pa. Cmwlth. 2002)). Acco rdingly, any mention of the conversion by operation of law is merely

“ [j] udicial dictum [which] is not binding authority.” Program Admin. Servs. Inc. , 874 A.2d at 729

.9

whether Claimant was ever disabled as a result of the accepted work injury. Claimant
rejoins that he is entitled to unreasonable contest fe es pursuant to Section 440 of the
Act because Employer continued to litigate the matter after the NTCP converted to a n

NCP as a matter of law.

Section 440 (a) of the Act provides:

In any contested case where the insurer has contested liability in whole or in part, including contested cases involving petitions to terminate, reinstate , increase, reduce or otherwise modify compensation awards, agreements or other payment arrangements or to set aside final receipts, the employe or his dependent, as the case may be, in whose favor the matter at issue has been finally determined in whole or in part shall be awarded , in addition to the award for compensation, a reasonable sum for costs incu rred for attorney’ s fee

. . . : Provided, That cost for attorney fees may be excluded when a reasonable basis for the contest has been established by the employer or the insurer

.

77 P.S. § 996 (a) (emphasis added).

Here, the WCJ determined:

47. This [WCJ] ha s carefully considered Claimant’ s request for unreasonable contest attorne y’ s fees. In reviewing this, this [WCJ] does not consider the various defenses to the [c] laim proposed by Employer. The statute is clear that the [NSTC] must be filed not later than five days after compensation is stopped. Employer offers no defense to the late issuance of the [NSTC] and thus there is no defense for its failure to reinstate Claimant’ s total disability benefits. This [ WCJ ] finds that Employer’ s contest to the [ Reinstatement Petition ] was unreasonable

. 48. Based on Employer’ s unreasonable contest, this [WCJ] awards Claimant’ s attorney his Quantum Meruit attorney fee in the amount of $8,140.00. Said fee shall be paid directly to Claimant’ s attorney.

49. Based on Claimant’ s success with regard to the [ Reinstatement Petition ] and the Penalty Petition ,10 Employer shall pay Claimant’ s attorney his litigation costs in the amount of $5,939.43. Said costs sha ll be paid directly to Claimant’ s attorney.

50. This [WCJ] approves the fee agreement between Claimant and his counsel but does not award a fe e because Counsel’ s fee is covered by the unreasonable contest fees and no disability b enefits are awarded in Claimant’ s Claim Petition.

WCJ Dec. at 14, FOFs 47

- 50 (emphasis added).

At the outset, Claimant did not file separate Reinstatement and Penalty

P etition s . Claimant filed a combined Reinstatement and Penalty Petition , therein
alleging that Claimant was entitled to reinstatement because Employer failed to
timely file its NSTC. The law is well settled that “a claimant who files a penalty
petition be ars the burden of proving a violation of the Act occurred. If the claimant
meets his or her initial burden of proving a violation, the burden then shifts to the
employer to prove it did not violate the Act.” Bauman n v. Workers ’ Comp. Appeal
Bd. ( Kellogg C o .) , 147 A.3d 1283, 1293 (Pa. Cmwlth. 2016) (quoting Gumm v.

Workers ’ Comp. Appeal Bd. (Steel) , 942 A.2d 222, 232 (Pa. Cmwlth. 2008) (citation
omitted) )

. As discussed above, Claimant d i d not present any evidence that
Employer violated the Act. Thus, the burden did not shift to Employer to prove it did

not violate the Act. Further, because Claimant never established a disability prior to
the filing of the Reinstatement Petition , he had the burden to establish his entitlement

to a reinstatement of benefit s

. Kranak

. Employer not only contested the
Reinstatement Petition, it prevailed in proving that Claimant did not suffer a
disability. Accordingly, the WCJ erred by awarding unreasonable contest fees. 9

9 Employer also requests this Court to reverse the WCJ’s decision dismiss ing its Suspen sion Petition as moot. G iven the disposition of the above issues, this Court holds Employer’s Suspension Petition is now moot.11 For all of the above reasons, the Board’s order is affirmed in part and
reversed in part. The portion of the Board’s order affirming the WCJ’s decision
granting Claimant ’s Reinstatement and Penalty Petitions is reversed; and the portion

of the Board’s order reversing the WCJ’s decision dismissing Employer ’s

Termination Petition as moot is reversed . T he portion of the Board’s order affirming

the WCJ’s decision deny ing Claimant’s Claim Petition is affirmed; and the portion of

the Board’s order dismissing Employer’s Suspension Petition as moot is affirmed.

___________________________ ANNE E. COVEY, JudgeIN THE COMMONWEALTH COURT OF PENNSYLVANIA

Communication Test Design, :

Petitioner :

:

v. :

: Workers’ Compensation : Appeal Board (Simpson), : No. 1196 C.D. 2019

Respondent :

O R D E R

AND NOW, this 22 nd day of April , 20 20

, the Workers’ Compensation
Appeal Board’s (Board) August 2, 2019 order is affirmed in part and reversed in part.

The portion of the Board’s order affirming the Workers’ Compensation

Ju dge’s (WCJ’s) decision granting Herbert L. Simpson’s (Claimant) Reinstatement
and Penalty Petitions is REVERSED. T he portion of the Board’s order reversing the
WCJ’s decision dismissing Communication Test Design ’s (Employer) Termination

Petition as moot i s REVERSED

.

T he portion of the Board’s order affirming the WCJ’s decision deny ing

Claimant’s Claim Petition is AFFIRMED

. T he portion of the Board’s order
dismissing Employer’s Suspension Petition as moot is AFFIRMED.

___________________________ ANNE E. COVEY, Judge