Opinion
No. 331 C.D. 2013
09-04-2014
City of Pittsburgh, and UPMC Benefit Management Services, Inc., Petitioners v. Workers' Compensation Appeal Board (Hughes), Respondent
BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE LEAVITT
The City of Pittsburgh (Employer) and UPMC Benefit Management Services, Inc. petition for review of an adjudication of the Workers' Compensation Appeal Board (Board) holding that Employer is not permitted to recoup an overpayment of workers' compensation benefits. For over four years, Employer paid David Hughes (Claimant) total disability workers' compensation without an offset for the disability pension Employer also paid Claimant. Employer sought to recoup the overpayment of workers' compensation by reducing Claimant's disability payment by $25 weekly until it would be repaid. The Workers' Compensation Judge (WCJ) held that Employer was permitted to recoup the overpayment. The Board denied the recoupment request because Employer did not give Claimant the official form for reporting his pension income, i.e., a Form LIBC-756, before effecting the recoupment. Nevertheless, the Board affirmed the WCJ's decision because it construed this decision to deny recoupment. We reject the Board's interpretation of the WCJ's decision. Nevertheless, we affirm the Board's order because it affirmed the WCJ.
Claimant was hired by the City of Pittsburgh as a firefighter in September 1997. On June 1, 1998, he injured his left knee when he fell through a floor while fighting a fire. At the time of the injury, Claimant earned approximately $51,000 annually. Employer, which is self-insured for workers' compensation, accepted liability and paid Claimant Heart and Lung benefits equal to his full salary.
Under what is commonly referred to as the Heart and Lung Act, Act of June 28, 1935, P.L. 477, as amended, 53 P.S. §§637-638, firemen who are temporarily unable to perform their duties because of a work injury are entitled to receive their full salary.
On May 14, 2003, Claimant elected to take a disability pension. This ended his Heart and Lung benefits and replaced them with workers' compensation benefits because his disability was of an indefinite duration. Employer issued a notice of compensation payable agreeing to pay workers' compensation wage loss benefits to Claimant in the amount of $337.92 per week, based on an average weekly wage of $506.88. As of May 15, 2003, Claimant began receiving $2,018 per month in pension benefits and $337.92 per week in workers' compensation benefits.
On September 10, 2007, Employer issued Form LIBC-761, "Notice of Workers' Compensation Benefit Offset," to Claimant, stating that as of October 1, 2007, his compensation would be reduced to $87.88 weekly because Employer was taking an offset of $250.01. Reproduced Record at 113a (R.R. ___). This offset represented the portion of Claimant's disability pension that was funded by Employer. Employer also informed Claimant that Employer had overpaid Claimant disability compensation for the period from May 15, 2003, through September 30, 2007, because the payments for those weeks did not include the offset. The overpayment totaled $57,145.14. Employer advised Claimant that $25 would be deducted from Claimant's weekly disability payment from October 1, 2007, through July 21, 2051, until Employer recovered its overpayment of $57,145.14. The offset and $25 deduction would have reduced Claimant's weekly disability payment to $62.88. However, Employer never began deducting the $25. Instead, Employer has paid Claimant $87.88 per week in workers' compensation as of October 1, 2007, and ongoing.
The regulations require an employer to provide the Form LIBC-761 to the claimant "[a]t least 20 days prior to taking the offset." 34 Pa. Code §123.4(b). Thus, the offset could not begin until October 1st.
Section 204(a) of the Workers' Compensation Act, Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §71(a), and regulations promulgated thereunder expressly authorize recoupment of compensation that was overpaid because it did not include an offset.
On January 9, 2009, Claimant filed a petition to review compensation benefit offset, alleging that Employer's offset calculation was wrong. The petition also challenged Employer's entitlement to any recoupment, asserting that the $25 weekly deduction would cause a financial hardship. Employer filed an answer denying Claimant's allegations.
The matter was assigned to a WCJ. Claimant's case was litigated alongside those of numerous other Pittsburgh firefighters who filed petitions to review compensation benefit offset. The petitions were assigned to two different WCJs who conducted joint hearings because the issues were similar. All claimants were represented by the same counsel. The WCJs then issued individual decisions for each firefighter.
Employer's evidence consisted of expert testimony establishing the amount of Claimant's pension contributed by Employer. In response, Claimant presented his own expert evidence in an effort to establish a lower offset amount.
Claimant testified about his personal finances and how they were affected by the offset. The record established that Claimant's disability pension totals $2,018 each month, or $24,216 per year. Claimant has received that amount continually since May 15, 2003. After Employer's offset, Claimant's weekly workers' compensation of $87.88 totals $4,569.76 per year. Claimant's yearly income from his disability pension and workers' compensation is $28,785.76.
Claimant testified that his household consists of himself, his wife and one child. Claimant's wife is employed as an engineer. The household expenses include, inter alia, a mortgage, insurance and utility bills. Claimant testified that, currently, the family income is "max[e]d" and there is just enough to pay the required bills with "nothing to spare." R.R. 105a-106a. Claimant testified that he cannot afford to have Employer recoup $25 a week from him because it will leave his family unable to cover their household expenses.
The WCJ credited Employer's actuarial evidence on its contribution to Claimant's pension. Accordingly, he found Employer's offset calculations to be accurate. The WCJ then addressed the other issues raised by Claimant.
Claimant argued that Employer was not entitled to any offset because it did not provide him with a Form LIBC-756, entitled "Employee's Report of Benefits for Offsets," before notifying him of its intention to take an offset. The WCJ found that Claimant waived that issue by not raising it while the record was open. In any case, the WCJ determined that Employer was not required to issue a Form LIBC-756 to Claimant before taking an offset for Claimant's pension because Employer knew about the pension and, thus, did not need Claimant's report. The WCJ reasoned:
Even if the issue had not been waived, the undersigned cannot perceive that the employer's tender of a Form 756 to a worker is a condition precedent to its later assertion of a credit. The right to a set-off is established by statute (via an Act 57 of 1996 amendment), and no condition upon taking the credit is established via that amendment. Nor do the Act 57 regulations state that tender of the form is a condition precedent.WCJ Decision, July 30, 2010, at 12; Conclusion of Law No. 5.
Claimant also argued that Employer should not be allowed to recoup the overpayment because it would impose a financial hardship on him. The WCJ disagreed. Citing Maxim Crane Works v. Workers' Compensation Appeal Board (Solano), 931 A.2d 816 (Pa. Cmwlth. 2007), the WCJ concluded that a recoupment raises a "presumption of prejudice" to the claimant that the employer must rebut before it can recover its overpayment of workers' compensation. WCJ Decision, July 30, 2010, at 12; Conclusion of Law No. 4. The WCJ rejected Claimant's testimony and found, as fact, that Claimant would not be prejudiced by Employer's recoupment of the overpayment at the rate of $25 per week.
Claimant also argued that Employer was collaterally estopped from presenting evidence on whether it had correctly calculated Claimant's offset for his disability. The WCJ held that Employer was not collaterally estopped because the prior litigation cited by Claimant had involved different firefighters and, therefore, different factual issues. The Board, likewise, rejected Claimant's collateral estoppel argument, and Claimant did not appeal it. Accordingly, this issue is not before us.
The WCJ denied Claimant's petition to review compensation benefit offset. The WCJ allowed Employer the ongoing pension offset and recoupment of its overpayment in the requested amount of $25 per week.
The WCJ stated that he was granting the petition, in part. However, the WCJ's findings of fact and conclusions of law constitute a denial of Claimant's petition.
Thereafter, the WCJ issued an amended order for all his firefighter cases where Employer's updated pension offset calculations resulted in an offset lower than that stated in the Form LIBC-761 Offset Notices. The WCJ ordered Employer to reimburse all firefighters the amount they had been underpaid, with interest. The amended order stated, in relevant part, as follows:
IT IS ORDERED, however, that, retrospective credit [i.e., recoupment] having been disallowed, [E]mployer shall reimburse [C]laimant for any credit taken for any pension benefit received before service of form LIBC-761 ("Notice of Offset").WCJ Amended Order, August 4, 2010 (emphasis in original). The amended order referenced the instant proceeding even though Employer's updated calculations did not revise the amount of Employer's offset for Claimant.
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In all other respects the prior decision and order in the case are hereby reaffirmed.
Claimant and Employer appealed to the Board. Claimant argued that the WCJ erred in holding (1) that Claimant waived the issue of Employer's failure to issue a Form LIBC-756 and (2) that Employer did not have to issue this reporting form before taking an offset. For its part, Employer challenged the language of the amended order to the extent it could be construed as disallowing recoupment from Claimant because that would be inconsistent with the WCJ's original decision and order, which specifically authorized this recoupment.
Claimant did not appeal the issue of Employer's calculation of the offset amount.
The Board construed the WCJ's amended order as allowing an ongoing offset but denying a recoupment and on that basis affirmed the WCJ. Noting that Claimant's counsel made a reference to the Maxim Crane case during a hearing before the WCJ, the Board reasoned that Claimant raised the issue of whether Employer had to issue Claimant a Form LIBC-756 before taking an offset. Further, the Board held that Employer's tender of a Form LIBC-756 is a condition precedent to recoupment of an overpayment of benefits in every case. Because Employer did not satisfy that condition, the Board held that "the appropriate course of action in this case is to allow [Employer] an ongoing offset based on Claimant's receipt of pension benefits after the issuance of the [Form LIBC-761] Offset Notice while disallowing any retrospective credit." Board Adjudication at 8. Employer then petitioned for this Court's review.
This Court's review of an order of the Board is limited to determining whether the necessary findings of fact are supported by substantial evidence, whether Board procedures were violated, whether constitutional rights were violated or an error of law was committed. Cytemp Specialty Steel v. Workers' Compensation Appeal Board (Crisman), 39 A.3d 1028, 1033 n.6 (Pa. Cmwlth. 2012). When reviewing questions of law, our review is plenary. Land O'Lakes, Inc. v. Workers' Compensation Appeal Board (Todd), 942 A.2d 933, 936 n.3 (Pa. Cmwlth. 2008).
On appeal, Employer argues that the Board erred in concluding that Employer is not entitled to recoup its overpayment of benefits to Claimant. First, Employer asserts that the Board erred in concluding that Claimant did not waive the issue of whether Employer was required to provide Claimant with a Form LIBC-756 in order to implement a retrospective credit to recover overpaid disability benefits. Employer further contends that even if the issue were raised, issuance of a Form LIBC-756 is not a condition precedent to implementing a retrospective credit. Second, Employer argues that the Board erred because it ignored the WCJ's specific finding of fact that Claimant will not be prejudiced by Employer's recoupment of the overpayment and his conclusion that Claimant's testimony to the contrary was not credible.
In its first issue, Employer argues that the Board erred in concluding that Claimant did not waive the issue of whether Employer's failure to provide Claimant with a Form LIBC-756 barred its recoupment of the overpayment. We agree.
As noted, Claimant's case was litigated alongside those of numerous other Pittsburgh firefighters who filed petitions to review compensation benefit offset. All claimants were represented by the same counsel and there were joint hearings because the issues were similar. In all of the other firefighter cases that were appealed to this Court, the Board agreed with the WCJs that the claimants had waived the issue of the Form LIBC-756. See, e.g., City of Pittsburgh and UPMC Benefit Management Services, Inc. v. Workers' Compensation Appeal Board (Wright), 90 A.3d 801 (Pa. Cmwlth. 2014); City of Pittsburgh and UPMC Benefit Management Services, Inc. v. Workers' Compensation Appeal Board (Erfort), (Pa. Cmwlth., No. 360 C.D. 2013, filed June 19, 2014).
For a time, these cases were consolidated on appeal to this Court. Thus, this Court has reviewed the WCJs' decisions for all of these cases.
Unlike every other case, here the Board found that Claimant did preserve the issue of the Form LIBC-756. The Board based this finding on the following discussion, which occurred on the record:
[Employer's Counsel]: I believe that among the issues we would [be] seeking to elicit testimony from [Claimant] would be - I believe under the case law there is an indication that there is a presumption of prejudice, but that doesn't necessarily mean that the presumption cannot be rebutted. Therefore, some of the testimony we are seeking to rebut that presumption which arises under the current state of the case law.Notes of Testimony, April 30, 2009, at 9-10.
WCJ: Educate me; presumption of prejudice by having to pay back four years?
[Claimant's Counsel]: Four and a half years of back benefits basically. I think you are referring to the Maxim Crane Works case?
[Employer's Counsel]: That's correct.
The notes of testimony were not included in the reproduced record.
The foregoing exchange reveals that Claimant's counsel mentioned Maxim Crane in response to Employer's counsel. However, this exchange makes no mention of Form LIBC-756 or any requirement that Employer must issue that form before taking an offset. As in all other firefighter cases litigated simultaneously with Claimant's case, Maxim Crane involved the issue of prejudice caused by recoupment, not the issue of whether Employer had given Claimant a Form LIBC-756. Simply, Maxim Crane was irrelevant to the question of whether Employer had to issue a Form LIBC-756 to Claimant. The Board erred in concluding otherwise. Therefore, the Board's holding that Claimant did not waive the issue of Form LIBC-756 cannot stand.
Because we find the issue waived, we need not address the WCJ's holding that Employer did not have to issue Claimant a Form LIBC-756 before it did its offset because Employer did not need Claimant to report an event of which Employer had full knowledge, i.e., the amount of Claimant's disability pension.
In its next issue, Employer argues that the Board erred in treating the WCJ's amended order as disallowing recoupment in this case. The Board ignored the WCJ's finding that Claimant is able to pay back the overpayment at the rate of $25 per week and will not be prejudiced. Employer asserts that given this finding, any language in the amended order suggesting that Employer is not entitled to recoup the overpayment of benefits was an inadvertent error on the part of the WCJ.
In the July 30, 2010, decision and order, the WCJ construed Maxim Crane to mean that an employer must always overcome a "presumption of prejudice" when it seeks to recoup an overpayment of compensation. The WCJ held that Employer successfully rebutted that presumption in the instant case and found that Claimant would not be prejudiced by Employer's recoupment of $25 per week. In doing so, the WCJ rejected as not credible Claimant's testimony that the recoupment would cause him financial hardship. Claimant never appealed this portion of the WCJ's decision.
In the related case of City of Pittsburgh and UPMC Benefit Management Services, Inc. v. Workers' Compensation Appeal Board (Wright), 90 A.3d 801 (Pa. Cmwlth. 2014), which involved the same employer and similar issues, we held that the WCJ erred in construing Maxim Crane to mean there is always a "presumption of prejudice" that an employer must overcome in order to recoup an overpayment of compensation, no matter how implemented. Given the WCJ's determination in this case that Employer overcame that presumption, the WCJ's application of a presumption of prejudice here was harmless error.
In his amended order, the WCJ specified that the order applied to all similar firefighter cases he had been assigned. In all of those cases save this one, the WCJ had disallowed recoupment for the stated reason that it would cause prejudice. In all cases save this one, Employer had started the recoupment and in many cases had completed it. In that context, the WCJ's language "retrospective credit having been disallowed, [E]mployer shall reimburse [C]laimant for any credit taken for any pension benefit received before service of form LIBC-761," applies to other firefighter cases, but not Claimant.
To begin, there was nothing for Employer to "reimburse" to Claimant because Employer had not yet started to recoup the overpayment. More importantly, the WCJ's amended order in no way disturbed the findings and conclusions of the WCJ's original decision and order. To the contrary, the amended order expressly reaffirmed the prior decision and order in "all other respects." It appears that the inclusion of the above-quoted boiler plate language in Claimant's order was inadvertent because the WCJ had found in his prior decision that Claimant would not be prejudiced by recoupment. Simply, the amended order did not reverse the original order of the WCJ, which specifically authorized Employer to recoup its overpayment of compensation to Claimant.
In sum, the Board erred in concluding that Claimant did not waive the issue of the Form LIBC-756. Thus, the Board's rationale for denying recoupment is erroneous and cannot stand. Although the Board affirmed the WCJ's amended order, it did so because it misconstrued one phrase therein. Given the WCJ's undisturbed findings and conclusions that Employer is entitled to recoup $25 per week because it will not prejudice Claimant, we hold that the WCJ did, in fact, allow recoupment in this particular case and the amended order did not change that outcome.
Accordingly, the order of the Board, which affirmed the order of the WCJ, is affirmed.
This Court is permitted to affirm the order of the Board on different grounds, if the order is correct. MV Transportation v. Workers' Compensation Appeal Board (Harrington), 990 A.2d 118, 122 n.7 (Pa. Cmwlth. 2010). --------
/s/_________
MARY HANNAH LEAVITT, Judge ORDER
AND NOW, this 4th day of September, 2014, the order of the Workers' Compensation Appeal Board dated February 8, 2013, in the above captioned matter is hereby AFFIRMED.
/s/_________
MARY HANNAH LEAVITT, Judge