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May 29, 2016

Medical Provider Not Permitted to Intervene After Execution of Compromise and Release Agreement

In Peter Schatzberg, DC and Philadelphia Pain Management v. WCAB (Bemis Company, Inc.), the Pennsylvania Commonwealth Court recently denied a Penalty Petition filed by a medical provider alleging that the employer violated the Workers' Compensation Act when it failed to pay a claimant's medical bills after entering into a Compromise and Release Agreement and when it entered into a Compromise and Release Agreement with the claimant without giving the provider an opportunity to intervene.

The claimant allegedly suffered a work injury and a timely Notice of Compensation Denial (NCD) was issued.  The claimant eventually filed a claim petition, which was answered in a timely manner by the employer.  In the interim, the claimant began treating with Dr. Schatzberg, the petitioner in this matter.  Rather than litigate the case to its conclusion, the parties entered into a Compromise and Release Agreement to fully resolve the matter.

The Compromise and Release agreement described the claimant's alleged injury as an "injury to the neck, thoracic spine and lumbar spine."  The agreement stated that it was a resolution of wage loss and medical benefits and, further, that "[i]n exchange for a compromise and release of all liability, [the employer] shall agree to pay claimant $86,944 subject to a 20% attorney fee chargeable to Claimant's share.  The instant agreement covers all injury dates."  The purpose of the agreement was "to resolve this case on a full and final basis."

The claimant testified that he understood that the employer "will never have to pay any other workers' compensation benefits for the injury" and that "this agreement is a compromise and release of workers' compensation claim, and is not considered an admission of liability by employer."  The WCJ approved the agreement and issued an order memorializing as much.

Following the approval of the agreement, the petitioner filed a penalty petition.  The petition was denied and dismissed by the Workers' Compensation Judge.  This decision was affirmed by the Workers' Compensation Appeal Board and the Commonwealth Court.  The court held that the Compromise and Release Agreement was properly entered into between the parties (the claimant and the employer) and fully resolved the claimant's workers' compensation claim, including medical benefits.  The court further determined that the Compromise and Release Agreement did not require the payment of medical expenses related to the alleged injury.  The court cited the Act, which states:  "The [Compromise and Release] Agreement must be explicit with regard to payment, if any, of reasonable, necessary and related medical expenses." Section 449(b), 77P.S.§ 1000.5(b).  The court noted that nothing in the agreement required the employer to pay the claimant's medical expenses.

What It Means to You

Obviously, this case illuminates that, under the Workers' Compensation Act, the parties generally may stipulate to the terms of a Compromise and Release Agreement without the input of a third party who might be interested in the result.  This case also illustrates the importance of the language used when drafting a Compromise and Release Agreement in order to ensure that the parties are getting what they intend from the agreement.  Even if the employer and the claimant are in complete accord regarding the terms of an agreement, there is the possibility that, as was the case here, the agreement could be attacked by a third party.  Use of accurate language is necessary to fend off such an attack.


Peter Schatzberg, DC and Philadelphia Pain Management v. WCAB (Bemis Company, Inc.), No. 1914 C.D. 2015 (Pa. Cmwlth. March 30, 2016)