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November 17, 1997


Appealed From No. A95-2534. State Agency, Workers' Compensation Appeal Board.

Before: Honorable Dan Pellegrini, Judge, Honorable James R. Kelley, Judge, Honorable Charles P. Mirarchi, Jr., Senior Judge. Opinion BY Judge Pellegrini.

The opinion of the court was delivered by: Pellegrini


FILED: November 17, 1997

C.D.G., Inc. (Employer) appeals from an order of the Workers' Compensation Appeal Board (Board) affirming the decision of the Workers' Compensation Judge (WCJ) denying Employer's Utilization Review Petition and ordering Employer to pay the medical bills of Dennis McAllister (Claimant) to Dr. Corey Ruth, M.D.

On July 21, 1990, Claimant fell from a ladder in the course of his employment and suffered injuries to his neck and back. Workers' compensation benefits were paid pursuant to a notice of compensation payable. As a result of this injury, Claimant was receiving physical therapy consisting of moist heat, electrical stimulation, therapeutic exercises and hot packs during two or three treatment sessions a week with Dr. Ruth. On January 19, 1993, Employer filed a petition to review the medical treatment he was receiving from Dr. Ruth alleging that Claimant had reached the maximum benefits from those treatments and any therapy provided after November 3, 1992, was unreasonable and unnecessary. The petition was assigned to WCJ Marc Weinberg for resolution.

At the hearing, Employer presented the testimony of Dr. Henry Sherk, who opined that he was unable to find any objective evidence to corroborate Claimant's subjective complaints of pain and that Claimant had no residual difficulties related to his work injury. He further testified that Claimant had reached maximum medical improvement and that Claimant's ongoing treatment was neither reasonable nor necessary. Claimant testified that after November 1992, the physical therapy provided him with little overall relief from the pain, but Dr. Ruth testified that Claimant was not capable of returning to work due to the pain and treatment was reasonable and necessary.

While the petition to review was pending in front of WCJ Weinberg, the 1993 Amendments to the Workers' Compensation Act (Act) *fn1 commonly known as "Act 44" *fn2 went into effect. Act 44 provided a new way for employers to challenge the reasonableness of medical treatment. Act 44 set up the Utilization Review process whereby employers request that a Utilization Review Organization (URO) determine whether the treatment rendered by a health care provider is reasonable and necessary. If such a determination is not acceptable to the provider, insurer, employer or employee, then any party has the right to file a request for reconsideration. If any party disagrees with the determination upon reconsideration, then a petition for review may be filed and the case assigned to a WCJ. Section 306 (f.1)(6), 77 P.S. § 531(6). See Florence v. Workers' Compensation Appeal Board (McGinnis), 691 A.2d 984 (Pa. Commw. 1997).

While WCJ Weinberg's decision was still pending on the original petition for review, Employer filed a Utilization Review request under Act 44 contending that the physical therapy treatments rendered by Dr. Ruth were unreasonable and unnecessary for the period after August 31, 1993. Both the initial and reconsideration URO determinations found that the treatment rendered was neither reasonable nor necessary. Claimant then filed a petition to review the Utilization Review, which was assigned to WCJ Christina Tarantelli for determination. Prior to any action on this petition, WCJ Weinberg, finding Dr. Ruth neither credible nor persuasive, held that Claimant's treatments were unreasonable and unnecessary as of November 2, 1992. No appeal was taken from this decision.

In its Utilization Review appeal, Employer then asserted that WCJ Weinberg's decision made collateral estoppel applicable, requiring her to find that Dr. Ruth's treatment was unreasonable or unnecessary. WCJ Tarantelli stated that WCJ Weinberg's decision was not preclusive because Sections 306 (f.1)(5) and (6)(i), 77 P.S. §§ 531(f.1)(5),(6)(i), of the Act provide that a party is free to seek prospective, concurrent or retrospective review of any treatment occurring after its effective date making WCJ Weinberg's decision only controlling until a party next sought review under the URO process.

As to the manner that she was going to decide the case, WCJ Tarantelli informed the parties that it was her policy to decide Utilization Reviews based solely on medical reports without considering additional deposition testimony. She instructed the parties to submit only one report in support of their respective positions to which neither party objected. Employer submitted a report from Dr. Shirk consistent with the testimony he gave before WCJ Weinberg. Dr. Ruth provided a report that was consistent with his diagnosis that he provided before WCJ Weinberg, but rather than the two or three times a week treatment he found reasonable there, he stated that Claimant would need a physical therapist three or four times a year. After reviewing these reports, WCJ Tarantelli found that the treatment rendered by Dr. Ruth for the periods in question was reasonable and necessary and ordered Employer to pay Claimant's medical bills. Employer appealed to the Board.

Before the Board, Employer argued that Claimant was precluded by the doctrine of collateral estoppel from relitigating the reasonableness and necessity of Dr. Ruth's treatment. It also argued that WCJ Tarantelli's method of hearing the appeal just on medical reports denied Employer of a de novo hearing. Holding that collateral estoppel did not apply and that any objection to deciding the case on medical reports had been waived, the Board affirmed. Employer then filed this appeal. *fn3

Employer contends that WCJ Tarantelli and the Board erred by not giving WCJ Weinberg's report preclusive effect because a party is not free to seek review of medical bills unless the party can show that a claimant's medical condition has changed from when the prior decision was issued. It reasons that what was decided before WCJ Weinberg was whether Claimant's condition warranted any treatment and, unless it is shown that his medical condition had changed, WCJ Weinberg's decision is preclusive as to the same treatment no matter when it occurs or the frequency which it is given.

Collateral estoppel or "issue preclusion" is "designed to prevent relitigation of issues which have once been decided and have remained substantially static, factually and legally." Keystone Water Co. v. Pennsylvania Public Utility Commission, 81 Pa. Commw. 312, 474 A.2d 368, 373 (Pa. Commw. 1984). It forecloses relitigation in a later action of an issue of fact or law which was actually litigated and which was necessary to the original judgment. For collateral estoppel to apply, it must be shown that (1) the issue decided in the prior case is identical to the one presented in the later case; (2) there was a final judgment on the merits; (3) the party against whom the doctrine is asserted was a party or in privity *fn4 with a party in the prior case and had a full and fair opportunity to litigate ...

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