Case Law Update

May 30, 2014

City of Pittsburgh v. WCAB(Wright), __ A.3d __ (Pa. Cmwlth., No. 329 C.D. 2013, filed May 1, 2014). 

In Wright, the claimant began receiving both pension benefits and workers’ compensation benefits in late June 2005. On August 5, 2005, the Employer issued a Notice of Workers’ Compensation Benefit Offset (Offset Notice), stating that as of August 8, 2005, the claimant’s compensation rate would be reduced due to an offset, representing the portion of claimant’s disability pension that was funded by the employer. The Employer also informed claimant that because of an overpayment from May 30, 2005 to August 8, 2005, $100.00 would be deducted from claimant’s weekly disability payment, until the overpayment was recouped. The claimant filed a review petition to challenge the employer’s offset calculation, as well as the employer’s entitlement to any recoupment, asserting that the $100 deduction had caused a financial hardship.

The WCJ found the employer’s calculations to be accurate. The WCJ also found that the claimant had waived the issue of whether the employer’s failure to issue an LIBC-756 form barred the employer from taking any offset, because it had not been raised while the record was open. However, the WCJ went on to find that the employer was not required to issue an LIBC-756 before taking the pension offset, since the employer knew about the pension and thus, did not need the claimant’s report. Citing to the Maxim Crane case, the WCJ went on to disallow the employer’s recoupment and ordered the employer to reimburse the full amount of the recoupment. Both the claimant and the employer appealed

The Board affirmed the WCJ. The Board agreed that the claimant had waived the issue of the employer’s entitlement to an offset or whether the employer had to issue an LIBC-756, before taking an offset. However, the Board found that the issuance of an LIBC-756 was a condition precedent to recoup an overpayment of benefits, in every case. Since the employer did not issue an LIBC-756, the Board found that the appropriate course of action was to allow an offset based on the claimant’s receipt of pension benefits only after the issuance of the Offset Notice, while disallowing any retrospective credit. The employer appealed.

The Commonwealth Court found that the Board erred in basing its decision on the employer’s failure to send an LIBC-756 form, since the issue had been waived.

The Court also found that the WCJ erred in finding that an employer must overcome a presumption of prejudice when it wishes to recoup an overpayment of offsetable benefits, even where the period of overpayment is less than six months. In reaching this finding, the Court looked to Maxim Crane and found that it was decided on the employer’s failure to inform the claimant of his duty to report offsetable benefits. The Court noted that the presumption of prejudice discussed in Maxim Crane, created because the employer in that case had waited two years to satisfy the notice obligation, was merely dicta.

The Court also looked to the Muir case, which minimizes any hardship by requiring employers to notify a claimant of his reporting requirements, via the issuance of an LIBC-756, every six months. The six month notice requirement, in turn, limits any period of overpayment to six months or less, thereby eliminating a WCJ’s need to inquire into hardship. However, the Court recognized a WCJ’s ability to structure recoupment in a way that minimizes its impact on the claimant, in keeping with the humanitarian spirit of the Act.       

Since the overpayment was not in excess of six months, and the employer’s recoupment of $100/week was permissible, the Court reversed the Board’s adjudication which disallowed the recoupment of the overpayment.

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