State Service Connected Disability Supplement Available When Workers' Compensation Benefits Are Offset For Receipt of Disability Pension

Section 5704(f) of the State Employees Retirement Code provides for a supplement for a service connected disability under which the Claimant is guaranteed to receive 70% of the Claimant's Final Average Salary in pension, workers' compensation (and social security, if applicable). In W. R. Gowden v. State Employees' Retirement Board the Claimant received workers' compensation benefits and his disability pension. After the Commonwealth took an offset for the pension, the Claimant's pension and workers' compensation benefits did not equal 70% of his Final Average Salary and he applied for the supplement.

The State Employees Retirement Board denied the supplement. They reasoned this would deprive the Commonwealth of the benefit of Section 204(a) of the Workers' Compensation Act. The Board also attempted to assert they would be entitled to a credit for the supplement, setting off a cycle at the end of which the Claimant would receive no workers' compensation benefits at all, only the supplement.

The Commonwealth Court held the Commonwealth clearly gets the benefit of Section 204(a) of the Act. It is an unrelated statutory provision which binds the State Employees Retirement System to pay the supplement. Furthermore, the Commonwealth Court stated the Commonwealth's second argument is not supported in the record. Counsel for the Board stated at oral argument SERS will not seek reimbursement for the supplement from The Office of Attorney General, the Claimant's Employer.

To assure a balance between the statutes, the Commonwealth Court held the Section 204(a) offset under the Workers' Compensation Act should be calculated without regard to the supplement the Claimant is entitled to under Section 5704(f) of the State Employees' Retirement Code.