June 2, 2008

Digest of
Appellate Decisions
May 2008

City of Philadelphia v. WCAB (Andrews),
1915 C.D. 2007 (Pa. Cmwlth. 2008)

Employer’s unilateral termination of benefits and its failure to present information supported the WCJ’s reinstatement of benefits, penalty and attorney’s fees.

Commonwealth Court affirmed the decisions of the Board and WCJ, which granted the reinstatement and penalty petitions filed by Claimant. Claimant injured her right knee in the course of employment in 2000. Claimant’s benefit rate was $585.50 per week. In 2002, Claimant began receiving a service-connected disability pension from Employer in the amount of $1,900.74. Employer then unilaterally stopped paying benefits. Claimant filed this reinstatement petition 18 months later, in addition to a penalty petition.

The parties stipulated that Claimant should receive benefit amounts with a full credit for the pension benefits paid and would continue to litigate the issue of what percentage of the pension was funded by Employer. At hearing, Employer presented testimony from its pension adjuster who testified that indemnity benefits were reduced by the amount of pension benefits by a credit equal to the full amount of benefits. Despite this testimony, the WCJ concluded that Employer failed to present sufficient evidence to establish that it was entitled to any offset for Claimant’s pension benefits. Benefits were reinstated, and a 50% penalty and $5,000.00 in legal fees were awarded. The Board approved this decision.

On appeal, Employer argued that the WCJ erred in reinstating benefits in light of the disability pension paid. The Court dismissed this argument and noted that such credit was allowed prior to the 1996 amendments to the Act. After this amendment, only that part of a pension that was funded by an employer directly liable for the payment of compensation to an employee could be credited. Regardless of the type of pension plan in question (defined benefit plan or defined contribution plan), testimony on an employer’s part was necessary to show how a credit should be calculated. The Act did not allow for employer to unilaterally take a credit and then place a burden on an employee to prove whether the credit was proper.

Since Claimant’s injury occurred after the enactment of the amendments, Employer was obligated to present evidence as to the extent it funded the disability pension plan. No such evidence was offered at any of the hearings. Inasmuch as Employer admitted the unilateral suspension of Claimant’s benefits, the WCJ’s penalty assessment was reasonable. Finally, the Court agreed that Employer’s contest was unreasonable in that it failed to present any evidence as to the extent it funded Claimant’s pension over the course of the seven hearings held in the matter. Accordingly, the decision was affirmed.

Pa. Department of Corrections/SCI-Greenburg v. WCAB (Zvara),
1614 C.D. 2007 (Pa. Cmwlth. 2008)

Claimant’s inability to reach available jobs by public transportation excused his failure to apply for the jobs and allowed his benefits to continue.

Commonwealth Court affirmed the decision of the WCJ and the Board, which denied Employer’s petition to reduce Claimant’s benefits due to an alleged change in his disability. Claimant sustained a neck injury on the job in 1988. Claimant was released to work in 2004. The doctor who examined and released Claimant stated that he could perform sedentary or light-duty work. Employer notified Claimant of five jobs he could perform within his restrictions over a four-month period. Claimant lived alone, did not drive and did not apply for the referred positions. Employer filed this modification petition alleging that Claimant had failed to apply for the positions in good faith. The WCJ denied the petition, holding that there was no available bus transportation to the work sites that would allow Claimant to work 40 hours per week.

On appeal to the Board, Employer argued that Claimant had not raised the lack of transportation as a reason he failed to make application. The Board held that because Claimant did not drive, the only positions available to him were those that were reasonably accessible by public transportation. Because Employer did not establish that the positions were reasonably accessible by public transportation, it did not meet its burden.

On appeal to the Court, Employer argued that the WCJ improperly substituted personal judgment as to Claimant’s ability to get to the jobs listed, and erred in finding that public transportation was the only method available. Upon review, the Court concluded that Employer was obligated to show that the jobs in question were available to Claimant. Adequate means of transportation was a part of that availability and Employer failed to meet its burden that Claimant had failed to apply for available jobs. Finally, the WCJ did not raise the transportation issue sua sponte, the interpretation was merely a common sense review of the evidence under the appropriate case law. The decisions below were therefore affirmed.

Brockway Pressed Metals and ACE USA v. WCAB (Holben),
43 C.D. 2008 (Pa. Cmwlth. 2008)

Widow was time-barred from filing fatal claim petition, where Decedent’s lymphoma was adjudged a work-related disease-as-injury under section 301(c)(1) rather than an occupational injury under 301(c)(2).

Commonwealth Court reversed the decisions of the Board and the WCJ, which granted the fatal claim petition filed by Claimant, the widow of Decedent-Employee. In a 2000 decision, it was determined that Decedent had contracted non-Hodgkins lymphoma as a result of his exposure to solvents at work, and that Decedent was injured and disabled as a result of that disease as of October 1997. Decedent died from this injury in 2005 and Claimant filed this petition. Employer filed a motion to dismiss because Claimant’s death had occurred more than 300 weeks as of the injury date.

The WCJ denied Employer’s motion, reasoning that it was disability, not death that had to occur within 300 weeks of injury. There was no time limit for the occurrence of death. The Board affirmed this decision. On review, the Court noted that the initial disability determination was made under section 301(c)(1), rather than the occupational disease section, 301(c)(2). While the occupational disease section allowed for the interpretation made by the WCJ, section 301(c)(1) did not. Therefore, Employer’s argument was properly made, and the decisions of the WCJ and Board, were error. While the Court sympathized with Claimant, it was constrained to deny her petition.

The Pennsylvania State University/ The PMA Insurance Group v. WCAB (Hensal),
1942 C.D. 2007 (Pa. Cmwlth. 2008)

Claimant failed to show that he had made a good faith search for employment, entitling Employer to a suspension of benefits.

Commonwealth Court reversed the decision of the Board and the WCJ, which denied Employer’s petition to suspend Claimant’s benefits because he failed to undertake a good-faith job search. Claimant sustained a shoulder injury in 2002. Two years later, Claimant filed for a disability pension. At that time, Employer successfully filed a petition to modify, claiming that work was available to Claimant within his restrictions. When Claimant failed to return to work two years after that decision, Employer filed the instant petition to suspend benefits, claiming that Claimant had voluntarily removed himself from the workforce.

At hearing, Claimant testified that he was registered with an employment search service and that he periodically checked for employment. On cross-examination, it was revealed that most of Claimant’s employment contacts came relatively shortly before hearing. Although Claimant had retired from his job with Employer in 2002, the WCJ found that Claimant had not removed himself from the workforce because he was seeking employment. The Board affirmed this decision.

On appeal, Employer contended that the Board erred in finding that Claimant had not voluntarily removed himself from the workforce and had not made a good faith effort to find work. The Court noted that once a claimant has retired, it is assumed that he has left the workforce unless he can prove that he is seeking employment or the work-related injury forced him to retire. Since Claimant had not claimed the latter, the Court reviewed his testimony and determined, contrary to the WCJ, that Claimant had not made a good faith search for employment and failed to bear his burden by showing that he was incapable of working any job in the entire labor market or alternative employment within his restrictions. Accordingly, the petition should have been granted. Judge Friedman dissented, reasoning that the majority erred in finding that Claimant’s job search was not in good faith as a matter of law rather than a matter of fact.

Lebanon Valley Brethren Home and Workers’ Compensation Security Fund v. WCAB (Flammer),
2016 C.D. 2007 (Pa. Cmwlth. 2008)

Security Fund was not eligible to be assessed attorneys’ fees under section 440(a), since it was not an insurer as defined by section 401.

Commonwealth Court published this former memorandum opinion that had been handed down in March, affirming the decision of Board that  held that the Security Fund was liable for unpaid medical bills and benefits. It reversed the decision which made the Fund liable for attorneys’ fees.

Claimant suffered a back injury on the job in 1995. Eight years later, Employer’s insurer was found insolvent and placed into liquidation. As a result, the Fund became responsible for paying Claimant’s compensation claims. Claimant filed a penalty petition in 2005 alleging that the Fund had failed to pay her medical bills and benefits in a timely manner. The Fund responded that it was not subject to the penalty provisions of the Act.

At the hearing, Claimant presented her case and the Fund did not contest liability, only its liability for penalties. The WCJ granted the penalty petition based on the Fund’s failure to offer an explanation for its delay in payment. The WCJ also awarded penalties and attorneys’ fees for unreasonable contest.

The Board affirmed the decision with regard to the Fund’s liability for the bills and benefits, but reversed the award of penalties, noting that the Fund was not an insurer subject to the penalties provisions of the Act. The Board did affirm the award of attorneys’ fees. It was that one issue the Fund sought to have reviewed by the Court.

On review, the Court applied the reasoning of the Luvine case to the instant facts. In Luvine, the Court determined that the Fund was not subject to penalties because it was not specifically included in the definition of “insurer” in section 401. The Court determined that the legislature did not intend to include the Fund within the meaning of “insurer”, therefore it could not be penalized for violations of the Act. Although Luvine did not deal with the award of attorneys’ fees, the logic of Luvine was applicable. Therefore, the Fund was not eligible to be assessed attorneys’ fees under section 440(a) of the Act. On the merits, the Court went on to find that Claimant was still not entitled to fees because the Fund prevailed on its contest of the penalty petition. Accordingly the decision of the Board was affirmed in part and reversed in part.

Pope & Talbot v. WCAB (Pawlowski),
1193 C.D. 2007 (Pa. Cmwlth. 2008)

Former Employer could not be held liable for payment of benefits arising from 1997 injury, where evidence showed a subsequent injury under a new employer was cause of disability and the only reason the second Employer was not held liable was that it had not been joined to the action.

Commonwealth Court reversed the decision of the Board, which held Petitioner liable for the injury suffered by Claimant while working for Employer. Claimant injured his elbow in 1997 and received benefits for three months until he returned to work. Claimant sustained a second injury to the same elbow in 1999. In the interim, Petitioner had sold its business to Employer. Employer assumed liability for the second injury and began paying benefits. When Claimant returned to work, the supplemental agreement between Employer and Claimant described the second injury as a recurrence of the 1997 injury. Claimant fell shortly after his return to work, injuring his ribs, and did not return to work.

Employer filed a termination petition the next year, alleging that Claimant had fully recovered. Claimant responded with a claim petition, requesting full benefits as of the date in 2000 that surgery was performed on his elbow, which he claimed had been aggravated in his most recent fall. Claimant named only Petitioner in this petition. Both petitions were consolidated.

The WCJ granted the termination petition, finding Claimant fully recovered from the rib injury. The WCJ also found that Claimant was still disabled by the 1997 and 1999 elbow injuries.

Petitioner and Employer both appealed. Ultimately, the matter was remanded for the WCJ to determine whether the current condition was attributable to the 1997 or 1999 injury. The WCJ determined that the 1999 injury controlled, and Employer was liable. The Board again reversed, finding that Employer could not be held liable because it was not a named defendant to the claim petition. The Board imposed liability upon Petitioner, holding that it was obligated to join Employer to the action.

On appeal to the Court, Petitioner argued that it was not obligated to join Employer because the 1999 injury was found to be a new injury, not a reoccurrence of the 1997 injury. After briefs were filed with the Court, Petitioner filed for bankruptcy and requested the Court to stay this matter. Initially, the Court denied the stay because payment of benefits was exempt from automatic stay under Chapter 11, and were further guaranteed by statutory funds.

On the merits, the Court distinguished an earlier decision that estopped an employer from denying liability where it had failed to take reasonable steps to contest that liability. Petitioner vigorously denied its liability for the current injury and successfully proved that it was the reoccurrence of the 1999 elbow injury that caused the current disability. The Court found that it was not Petitioner’s duty to join Employer as a party, but that Claimant was so obligated. While Petitioner could have joined Employer, such joinder was permissive, not mandatory. The finding that Claimant’s injury was a new injury foreclosed the imposition of liability on Petitioner; Petitioner was not required to join Employer in order to pursue its defense.

With regard to Employer, the Court noted that it had fully participated in the hearings and had previously acknowledged responsibility for the 1999 injury. To the extent that Employer argued that the WCJ had precluded it from presenting medical evidence, those objections had not been preserved on appeal. Since the decision of the WCJ with regard to Claimant’s injury was support by substantial evidence, the holding finding Petitioner liable was reversed and the decision to hold Employer was reinstated. Judge Smith-Ribner concurred in the result.

WAWA v. WCAB (Seltzer),
2292 C.D. 2007, (Pa. Cmwlth. 2008)

WCJ’s finding that mail notice to Claimant’s residence in Virginia took seven days over the course of the Thanksgiving holiday was reasonable in the absence of direct proof to the contrary.

Commonwealth Court affirmed the decision of the WCJ and the Board, which granted Claimant’s challenge to a notification of modification (NOM) issued by Employer pursuant to section 413(d) of the Act. Claimant suffered an on-the-job back injury in 1992 and was awarded benefits in 2001. In 2004, Claimant returned to work for Employer earning less than his pre-injury wage. That same day, Employer issued a NOM alleging that Claimant was only entitled to partial benefits. Claimant did not return to work after his first day due to back pain. Twenty-eight days after the NOM was issued, Claimant filed a challenge with the Department of Labor and Industry. Employer filed a petition to modify benefits, alleging Claimant was capable of light duty. The WCJ rejected this contention and granted Claimant’s challenge.

On appeal, Employer argued that Claimant had filed an untimely challenge, and the NOM became a supplemental agreement by operation of law. The matter was remanded to the WCJ regarding the timeliness of the challenge. Since the remand order was silent as to the need for further hearing, the record remained closed and only oral argument was presented. The WCJ determined that Claimant had received the NOM seven days after it was issued, therefore the challenge was timely. The Board affirmed this finding.

On appeal, Employer contended that the finding was not supported by the evidence. Upon review of the record, the Court found that the WCJ had made reasonable suppositions regarding mailing, since the NOM was mailed over the Thanksgiving holiday to Claimant’s home address, which was in Virginia. In the absence of direct proof having been offered by either party, the WCJ’s conclusions were reasonable. Accordingly, the decision was affirmed.

Stout v. WCAB (Pennsbury Excavating, Inc.),
1969 C.D. 2007 (Pa. Cmwlth. 2008)

WCJ did not err in awarding Employer subrogation, despite pending bad faith civil action filed by Claimant against Employer, since that action had not been proven and Employer’s right to subrogation was nearly absolute.

Commonwealth Court affirmed the decisions of the WCJ and the Board, which granted Employer’s review petition, which sought subrogation under section 319 against Claimant’s third party tort recovery. Claimant was injured in 1997, when he was struck in the head and suffered a concussion. Claimant filed civil actions against several parties after the injury. One of the defendants, the supplier of a machine in question, had no employees, but acquired workers from Employer. Employer and Supplier had the same person as vice president. Claimant reached a settlement with two of the defendants and a jury verdict against Supplier, despite the defense that it was immune from suit. Claimant’s total recovery was over three million dollars.

Claimant then filed a second civil suit, alleging abuse of process and civil conspiracy during the handling of the first action on the part of Insurer, Employer and Supplier. Claimant contended that the various defendants conspired to improperly enable Supplier, a sham corporation, to raise the immunity defense in the first action. At the time of this decision, there was no indication as to whether the action had moved beyond the pleadings. Employer filed the instant petition for subrogation of the half million paid in benefits and medical expenses. The WCJ found that Claimant presented no factual evidence to dispute either his receipt of benefits or his civil recovery, and granted the petition. The WCJ awarded Employer $269,545.00 in a lump sum and an ongoing credit against the balance of the money.

On appeal, Claimant argued that the WCJ failed to make findings concerning the evidence presented regarding the abuse of process claim and Claimant’s allegations of bad faith. The Board affirmed the decision, ruling that Claimant had presented no evidence that Employer had subverted his third party recovery. Claimant had only introduced the pleadings of the second action and requested that decision on Employer’s petition be stayed until that action was resolved.

On appeal, the Court noted that subrogation was a significant and established right. Instantly, Claimant received compensation payments from Insurer and a third party recovery in an action to which neither Employer nor Insurer was a party. As such, Employer was entitled to an absolute right of subrogation to the third party recovery. Although Employer’s name varied in documents throughout the workers’ compensation action, the references to Insurer never changed. Claimant received all his benefits from Insurer, which entitled Insurer to subrogation under the Act. Further, there was no basis for the WCJ to delay decision, since a common pleas court had no jurisdiction to determine the subrogation rights in a workers’ compensation action.

Finally, the Court rejected Claimant’s argument that the WCJ’s decision was a reasoned one, since the decision contained findings necessary to resolve the issues raised by the evidence and relevant to the decision. The undisputed facts in the matter were sufficient to support Employer’s statutory right to subrogation. Accordingly, the decision was affirmed.

Watson v. WCAB (Special People in Northeast and Eagle Trust Management),
1924 C.D. 2007 (Pa. Cmwlth. 2008)

Claimant was not entitled to litigation costs when she won no benefit greater than what Employer had already agreed to pay.

Commonwealth Court affirmed the decision of the Board that affirmed, in part, the WCJ’s decision to award Claimant medical benefits and litigation costs, and to deny her indemnity benefits and litigation costs. Claimant was injured by falling chairs in a store while taking a client of Employer’s, for whom Claimant had been hired to care, on a shopping trip. Claimant filed a claim petition three days later. Employer agreed to pay medical expenses, but denied the Claimant had been disabled. Claimant presented the testimony of a doctor specializing in pain management to show that she still suffered headaches and neck strain due to the injury. Employer’s medical experts all testified that Claimant was fully recovered from her injury.

While the WCJ accepted the testimony of Claimant’s expert as credible as to the fact that she suffered the injury, the WCJ found that the testimony that Claimant had not fully recovered was not believable. The WCJ awarded medical benefits and litigation costs of over $3,000.00. Both parties appealed, and the Board affirmed the decision in full, except with regard to the litigation costs. The Board reasoned that because employer acknowledged the injury and the medical costs, Claimant was in the same position she would have been in had she not filed her petition three days after injury.

Initially, the Court accepted the findings below that Claimant had fully recovered from her injury, since weighing the experts’ testimony was properly within the province of the WCJ. Based on the accepted testimony, Claimant failed to prove a work injury lasting more than seven days. Further, the WCJ properly awarded medical benefits for a closed period since Claimant failed to establish the ongoing nature of her injury. Finally, despite the award of medical benefits, Claimant failed to prevail on any disputed issue before the WCJ, and gained no financial benefit beyond what Employer had already agreed to pay. Therefore, the Board’s order reversing the award of litigation costs was properly entered.

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