Wednesday, August 22, 2007

Commonwealth Court Holds WCJ May Not Decide Termination Petition After Full C&R

In Bureau of Workers' Compensation v. WCAB (US Food Service) the Commonwealth Court held the Employer could not get a post C&R decision on a pending termination petition and proceed to request supersedeas reimbursement.

The Court distinguished the present case from the Optimax case, holding a C&R is a final resolution of a case unlike the stipulation the parties entered into in Optimax. The Court also distinguished the present case from those in which the parties specifically reserved issues in their C&R agreements. However, the Court finalized its reasoning in a way that suggests all post C&R action of the WCJ is invalid, whether the parties reserve rights or not.

The Bureau's argument focused on the fifth element of proof for supersedeas reimbursement, that "in the final outcome of the proceedings it is determined that such compensation was not, in fact, payable." The Court held: "The hallmark of a compromise and release is finality. As we said in Stroehmann, 'we believe that the legislature intended that a C&R should be on equal footing with civil settlements, which are based on a public policy that encourages settlements and stresses finality.' 768 A.2d at 1196. Thus, the C&R, as the final agreement between the parties, was the 'final outcome of the proceedings' under Section 443 of the Act." The Court held it was therefore error for the WCJ to decide the termination petition in this case.

The Court's opinion is difficult to assimilate. The purpose of the "final outcome of the proceedings" language is to provide that an application for supersedeas reimbursement may not be made while an appeal is pending. There is no "final outcome of the proceedings" until the appeal period expires without an appeal having been filed.

In this case, twelve days after the C&R decision, the WCJ issued a decision granting termination. Because this was within the appeal period, it was prior to the "final outcome of the proceedings." Optimax should still control. Without knowing whether either party would appeal the decision on the C&R, the WCJ issued a decision on evidence prior to and independent of the stipulation underlying the C&R (as reasoned by the WCJ who granted the Petition for Supersedeas Reimbursement).

The obvious steps for the practitioner are to only enter into a C&R of future liability, to reserve the right to a decision on prior evidence independent of the stipulation underlying the Compromise and Release, and, if treatment is minimal, consider leaving the medical open for a limited period of time that will exceed the time frame for the WCJ's Order on the pending termination petition.

Saturday, August 18, 2007

Supreme Court Grants Appeal on Whether Penalties Can Be Assessed In Workers' Compensation Security Fund Case

In Constructo Temps and Workers' Compensation Security Fund v. WCAB (Tennant), the Commonwealth Court held the Workers' Compensation Security Fund and the Employer are not responsible for penalties according to the provisions of the Act. The Supreme Court has granted the Claimant's petition for allowance of appeal. The Claimant framed the issues as:

(1) Whether an order prohibiting the assessment of penalties against the
Workers’ Compensation Security Fund for its failure to pay reasonable
and necessary medical expenses incurred by the claimant violated the
humanitarian purposes of the Workers’ Compensation Act?

(2) Whether an employer may be assessed a penalty for its failure to pay
reasonable and necessary medical expenses incurred by the claimant
where the penalties imposed resulted from the conduct of the
Workers’ Compensation Security Fund?

Commonwealth Court Holds Employer May Take Section 204 Offset Only After Receipt of LIBC-756

In Maxim Crane Works v. WCAB (Solano) the Claimant was injured on October 10, 2000 and was terminated by the Employer in December of 2000. In January of 2003, the Claimant applied for social security old age benefits. An agreement for compensation was entered into on April 4, 2003, and a supplemental agreement was entered into on September 12, 2003.

34 Pa. Code §123.501provides:
An insurer shall notify the employe of the employe's
reporting requirements under sections 204 and 311.1(a)
and (d) of the act (77 P.S. §§ 71 and 631.1(a) and (d)). In
addition, the insurer shall provide the employe with the
forms required to fulfill the employe's reporting and
verification requirements under section 311.1(d) of the act.

It was on June 6,2005 when the Employer first sent Form LIBC-756 to the Claimant. The Claimant reported his social security old age benefit. The Employer issued a Notice of Benefit Offset on August 3,2005 providing for a future credit and recoupment of a credit accrued during the past 14 months.

The Claimant challenged the recoupment of a past credit by filing a petition to review benefit offset. The WCJ denied recoupment prior to June 6,2005. The Board and Court affirmed.

The Court stated the Employer has no right to an offset until it complies with 34 Pa. Code §123.501. "While Claimant does owe a duty to report receipt of old age Social Security benefits, the regulations place the initial duty upon the employer or insurer to notify the employee of the reporting requirements and provide the employee with the proper forms." In addition, 34 Pa. Code §123.5(a) provides the Employer may take an offset only after receipt of LIBC-756

Employers are now limited to a section 204 credit only into the future and after receipt of LIBC-756, unless the Employer shows the Claimant provided inaccurate information on a prior LIBC-756. Taking an offset without receiving a LIBC-756 and/or taking recoupment of an accrued offset will subject the Employer to an assessment of penalties.