July 6, 2009

Digest of
Appellate Decisions
June 2009

Young v. WCAB (LGB Mechanical), 2395 C.D. 2008 (Pa. Cmwlth. 2009)

Gentex Corporation and Gallagher Bassett Services v. WCAB (Morack), 214 C.D. 2009 (Pa. Cmwlth. 2009)

Department of Labor and Industry v. WCAB (Savani), 1263 C.D. 2008 (Pa. Cmwlth. 2009)

Allegheny Ludlum Corporation v. WCAB (Bascovsky), 1960 C.D. 2008 (Pa. Cmwlth. 2009)

The Boeing Company v. WCAB (Horan), 1466 C.D. 2008 (Pa. Cmwlth. 2009)

Young v. WCAB (LGB Mechanical),
2395 C.D. 2008 (Pa. Cmwlth. 2009)

Attorney’s fees paid from Claimant’s compensation were subject to Employer’s subrogation claim.

Commonwealth Court affirmed the decision of the WCJ and the Board, which determined that the percentage of benefits paid as attorney’s fees to Claimant’s former attorneys were part of Employer’s accrued lien for the purposes of subrogation. Claimant was injured in 1999 and awarded benefits in 2001. The WCJ awarded twenty percent of these benefits to Claimant’s counsel at the time. Employer filed a modification and suspension petition in 2003 that was settled and provided counsel during that action with a $10,000 fee. When Claimant obtained a third-party recovery thereafter, Employer sought subrogation. The parties disputed whether the fees paid to the former attorneys could be recovered by Employer.

The WCJ held that because the fees were payable out of Claimant’s compensation and were not attorney’s fees assessed against Employer as unreasonable contest fees, they constituted part of the Employer accrued lien subject to subrogation. The Board affirmed this decision, reasoning that Employer would not have had to pay the fees if not for the action of the third party. The Court agreed that any attorneys fees that were paid out of Claimant’s compensation were entitled to be reimbursed, since Employer was obligated to pay that sum to Claimant if he had been unrepresented. The total amount paid was due solely as a result of the third party’s negligent conduct. The Court noted Employer’s absolute right to subrogation afforded by the Act. The Board’s order also directed that Employer be reimbursed for the resulting costs. The Court did not find that the issue of costs was before it, since Employer had withdrawn its request for such costs. The Court sought to clarify the ability to reimburse such costs and held that the Act prevented the reimbursement of litigation costs that were not attorney’s fees.

Gentex Corporation and Gallagher Bassett Services v. WCAB (Morack),
214 C.D. 2009 (Pa. Cmwlth. 2009)

Claimant’s voice mail message to Employer that her absence from work due to work-related physical problems was not sufficient notice under the Act upon which benefits could be awarded.

Commonwealth Court reversed the decisions of the WCJ and the Board, which granted Claimant’s claim petition. Claimant filed her petition in 2006, alleging bilateral hand and wrist injuries that occurred over 20 months earlier. Employer denied the allegations and raised the issue of notice. Claimant had worked without problem for the company inspecting helmets until 2003, after being assigned increased duties. Claimant started to have difficulties with her hands after 2003. Claimant stopped working in January 2005, when her doctor told her to stop in order to rest her arms. Claimant advised Employer that she would be out of work, according to company policy, but she did not claim that her condition was work-related. Claimant applied for short term disability benefits in February, again indicating that her condition was not work-related. After being referred to a doctor as a result of the claim, Claimant was advised that her ailments were attributable to her employment. Claimant testified that she informed Employer in a voice mail that her problems were work-related. Claimant never returned to her job, and although cleared for light duty, no position was made available. Claimant’s doctor testified that Claimant’s pre-existing fibromyalgia was not a cause of her current complaints. Employer’s human resources benefits manager testified that she was not aware that Claimant alleged that the injuries were work-related until she received the claim petition. Employer’s doctor testified to her belief that Claimant’s problems were age-related.

The WCJ and the Board agreed to grant the petition, and found that Claimant’s voice mail message after she discovered that her injuries were work-related provided proper notice. Initially, the Court found that Employer had properly preserved the issue of the sufficiency of Claimant’s notice by raising it in the appeal application before the Board, despite the fact that this issue was not ruled on. With regard to the timeliness of Claimant’s notice, the Court found that there was an absence of testimony to show the date on which Claimant left the voice mail. Therefore, it was not entirely clear that Claimant provided notice of a work-related injury within the 120-day time period required by the Act, but giving Claimant the benefit of the reasonable inferences from her testimony, it could not be reasonably said that her notice to Employer was untimely. However, the Court did find that the message that Claimant left that her absence from work was work-related was not sufficient to give Employer proper notice as to the nature and severity of her complaints. Even the testimony credited by the WCJ was not sufficient to support a finding that Claimant provided proper notice of her injury as required. Accordingly, the order was reversed.

Department of Labor and Industry v. WCAB (Savani),
1263 C.D. 2008 (Pa. Cmwlth. 2009)

Claimant could not receive benefits for injury to arm, broken when she was walking on her break in the industrial park where Employer was located but was not on Employer’s property.

Commonwealth Court, in an originally unpublished decision, reversed the decisions of the Board and the WCJ, which granted Claimant’s claim petition. Claimant alleged that she was injured in a fall during work hours that occurred in the industrial park where Employer was located, but not on Employer’s specific property. At the time of the fall, Claimant was on paid break and was not on any mission or acting at any direction of Employer. Claimant was out of work for over two months at no loss of earnings. After she returned to work, she filed this petition. The parties agreed that the issue to be decided was whether Claimant was acting within the scope of her employment at the time of her fall.

The WCJ and Board relied on the personal comfort doctrine in granting the claim. Employer argued before the Court that Claimant was not attending to the personal needs of the type generally recognized as falling under the personal comfort doctrine. Claimant argued that the liberal construction to be given provisions of the Act and the lack of evidence showing she abandoned her employment supported the decisions below. The Court disagreed and found the facts to be more like the Pesta case, where Claimant had been killed while putting articles in his car on a break from work, rather than the personal comfort doctrine cases. Claimant’s injury did not occur during a small temporary departure from work to tend to her personal comforts or convenience, nor did it occur during an inconsequential departure from work. Claimant’s injury occurred while walking on a street off Employer’s premises like the employee in Pesta who was found not to be acting in the course of employment at the time of injury. The Court therefore reversed the Board.

Allegheny Ludlum Corporation v. WCAB (Bascovsky),
1960 C.D. 2008 (Pa. Cmwlth. 2009)

Employer was entitled to complete offset based on Claimant’s pension benefit, since Employer proved that it provided the sole funding for the pension trust that paid the benefit, despite the fact that a previous Employer would provide funding in the future.

Commonwealth Court reversed the decision of the Board, and reinstated the WCJ’s decision to deny Claimant’s petition to review his benefit offset. Claimant had filed the petition due to Employer’s recalculation of his benefits when he began receiving his pension. At the time Claimant began receiving the benefits, he also received a lump sum payment. Claimant alleged that he was told that the payment represented vacation pay. The opinion detailed the composition of the pension fund over the various changes in ownership of the company. Employer’s vice president testified that Employer did not use any money that accrued from previous employers to pay Claimant’s pension benefits, and that the lump sum payment was paid from the pension trust prior to the payment of the monthly annuity.

The WCJ credited this testimony. The WCJ also determined that Employer’s company officer, who Claimant alleged had told employees that the lump sum payment was vacation benefits, had no knowledge of workers’ compensation law and should not have given an opinion on the effect of the benefits on Claimant’s compensation. Since the funds were paid from the pension trust, the WCJ found that offset of the lump sum payment was proper. Additionally, the WCJ held that the monthly pension payment currently received by Claimant was fully funded by Employer, thus entitling it to a complete offset against Claimant’s benefits.

The Board reversed, finding that Employer did not present sufficient evidence to prove that Employer was the only entity that funded Claimant’s monthly pension benefits. The general testimony of the officers who testified at the hearing was not enough to support a finding of Employer’s pension funding. On review, the Court detailed the difference between a defined benefit pension plan and the defined contribution plan used in this case.

The Court noted the testimony of Employer’s vice president which clarified that, while Claimant might be entitled in the future to a pension payment funded partially by one of the previous owners, his current pension benefits were being paid from a plan solely funded by Employer. The Court also highlighted testimony where Claimant acknowledged this fact. The fact that the WCJ found Employer’s witnesses credible could not be overturned, since the determinations were supported by the evidence in the record. Accordingly, the Board’s decision was reversed and Claimant’s petition was dismissed.

The Boeing Company v. WCAB (Horan),
1466 C.D. 2008 (Pa. Cmwlth. 2009)

Employer was entitled to Supersedeas Fund reimbursement when the WCJ did not allow an offset for severance pay and unemployment compensation when first determining Claimant’s benefits, and Employer later prevailed in its claim for offset.

Commonwealth Court reversed the Board’s decision, which reversed the WCJ’s order granting Employer’s petition for supersedeas reimbursement. Claimant had sustained a back injury in 2004 and was put on light duty status. Claimant continued to work on light duty for several months at the same rate of pay until he was laid off. Claimant filed a claim petition, seeking acknowledgment of his work injury and payment of temporary total disability benefits. At the hearing, Claimant testified to receiving unemployment compensation and 19 weeks of severance pay. Employer argued that it should receive an offset for both of these payments.

The WCJ ordered the payment of benefits, interest and attorney’s fees without acknowledging the request for offset. Employer appealed and filed a petition for supersedeas at the same time. The petition was granted with regard to the attorney’s fees, but was denied with regard to the offset issues. On the merits, Employer prevailed, and the Board ordered a modification of the WCJ’s order, which allowed for an offset. Employer then filed this application for supersedeas reimbursement, which was granted by the WCJ after hearing.

The Board reversed this decision and Employer filed an appeal. Employer contended that its remedies were limited by the Act, inasmuch as Employer could not resort to self-help without violating the Act, and Claimant had already returned to work, so that reimbursement could not be had by making regular deductions from Claimant’s future benefits. The Bureau of Workers’ Compensation argued that case law did not allow for supersedeas reimbursement for any credit that was derived from section 204(a) of the Act.

In granting the appeal, the Court distinguished this case from earlier cases that had denied reimbursement because the requests had not been made under section 413. The Court noted that this case had been brought under section 430, which allowed an employer to request supersedeas to suspend an obligation to pay while an order is under appeal. Employer took these exact steps. Employer was correct in pointing out that self-help was not available during the course of litigation, and that it had properly followed the Act in all it actions.

Finally, the Court agreed that there was no other method by which Employer could recoup the overpayment, since Claimant had returned to work. Accordingly, the Board was reversed. Judge Pellegrini dissented and reasoned that the offset requested by Employer was not “compensation” as described in section 443 of the Act.

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