Opinion
No. 1799 C.D. 2014
07-09-2015
Central Susquehanna IU #16, Petitioner v. Workers' Compensation Appeal Board (Shingara), Respondent
BEFORE: HONORABLE BERNARD L. McGINLEY, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE McGINLEY
Central Susquehanna Intermediate Unit #16 (Employer) petitions for review of the September 17, 2014, Order of the Workers' Compensation Appeal Board (WCAB) which affirmed the August 24, 2012, decision of the Workers' Compensation Judge (WCJ) to award a fifty-percent penalty for all benefits due to Marcy Shingara (Claimant) under the Workers' Compensation Act (Act).
Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-1041.4; 2501-2708.
Claimant, a teacher's assistant who worked with autistic children at Employer's school, was "head-butted" in the back of the neck by an eleven-year old student on November 20, 2009, as she worked in a classroom. Claimant continued to work after the injury at the same job and rate of pay. Employer accepted Claimant's November 2009 work injury as a work-related injury for medical purposes only, listing the injury as cervical and thoracic contusion. Claimant retired from her job on September 17, 2010. Her retirement was a normal retirement; it had nothing to do with her injury.
Following her retirement, Claimant was diagnosed with aggravation of preexisting cervical degenerative disc disease and neural foraminal stenosis with radiculopathy.
Claimant underwent C4-5 and C5-6 cervical decompression and fusion surgery on December 16, 2010.
The 2010 Petitions: Claimant's Modification/Review Petition;
Employer's Termination Petition; and Claimant's Claim Petition
On September 24, 2010, Claimant filed a Modification/Review Petition seeking to expand the description of her work-related injury and payment for the surgery.
Employer filed a Termination Petition on October 12, 2010, and asserted that Claimant fully recovered from her November 2009 work-related injury as of September 10, 2010.
Claimant filed a Claim Petition on November 4, 2010, and sought wage-loss indemnity benefits. Employer issued a Notice of Compensation Denial and admitted that Claimant had suffered a work-related injury, but denied that she had any disability from that injury and that there was no medical evidence to support disability.
The WCJ held hearings on the three consolidated petitions. The WCJ issued a decision on October 18, 2011, granting Claimant's Modification/Review Petition, and denying Employer's Termination Petition. In the decision, the WCJ ruled that Claimant's work-related injury was an aggravation of a preexisting cervical degenerative disc disease and ordered Employer to pay Claimant wage-loss indemnity benefits from September 17, 2010, (the date of her resignation from Employer), until modified, suspended or terminated and to continue to pay Claimant's causally related medical expenses. Employer requested supersedeas, which was denied by Decision and Order dated November 29, 2011. Employer filed a request for reconsideration of Supersedeas which was likewise denied on January 12, 2012. On November 19, 2013, the WCAB denied Employer's appeal from the WCJ's October 18, 2011, Decision.
Employer then appealed to this Court. The Employer only challenged the award of wage-loss indemnity benefits, not the expansion of the work-related injury or the denial of its Termination Petition insofar as it related to the medical benefits. In a Memorandum Opinion filed on September 25, 2014, a panel of this Court concluded that the WCJ erred when it granted the Claim Petition because there was no competent evidence that Claimant was unable to work at her time-of-injury job when she retired. Central Susquehanna Intermediate Unit #16 v. Workers' Compensation Appeal Board (Shingara), (Pa. Cmwlth., No. 2256 C.D. 2013, filed September 25, 2014). This Court reversed the WCJ's decision insofar as it granted Claimant's Claim Petition and ordered Employer to pay Claimant workers' compensation wage-loss indemnity benefits, but affirmed the WCJ's decision which granted the expansion of the description of Claimant's injury and denied Employer's Termination Petition and Claimant's past and continued entitlement to payment of medical expenses causally related to the work-injury.
The 2011-2012 Petitions: Employer's Petitions to Modify or Suspend
Claimant's Benefits and Review Compensation Benefit Offset
During the pendency of the 2010 Petitions and prior to this Court's September 25, 2014, Memorandum Decision and Order, the following took place: On December 7, 2011, Employer filed Petitions to Modify or Suspend Claimant's Benefits and Review Compensation Benefit Offset. Employer averred that Claimant returned to work with another employer, Knoebels Amusement Park. Employer argued that it was entitled to a credit or offset for the wages that Claimant earned by working at Knoebels in 2011, and an offset for Social Security benefits. A hearing was held on January 12, 2012, on Employer's Petitions.
On February 27, 2012, Claimant filed a Penalty Petition and alleged that Employer made no wage-loss indemnity payments as awarded in the WCJ's October 18, 2011, Decision. A second hearing was held on February 28, 2012. Claimant acknowledged that she worked for two seasons at Knoebels but indicated that her job there was light duty and less strenuous than her job with Employer. Claimant testified that despite the WCJ's October 18, 2011, Decision awarding her benefits, she had not received any payments from Employer. She testified that she had no other source of income except for $289.00 in monthly Social Security benefits and a monthly annuity check for $142.00 from her retirement.
Pursuant to Section 435(d) of the Act, added by the Act of February 8, 1972, P.L. 25, as amended, 77 P.S. § 991(d), a court may impose a penalty, "not exceeding ten per centum of the amount awarded and interest accrued and payable ... [or] fifty per centum in cases of unreasonable or excessive delays," for violations of the provisions of the Act or rules and regulations.
On March 19, 2012, Employer paid Claimant her past-due wage-loss benefits. (Employer's payment of benefits to Claimant was actually due on February 12, 2012, which was thirty days from January 12, 2012, the denial of Employer's petition for reconsideration of supersedeas.)
In response to the Penalty Petition, Employer argued that its delay in paying Claimant wage-loss indemnity benefits was based, at least in part, on Claimant's clerical error in her LIBC 756 (Employee's Report of Benefits for Offsets) that she was receiving Social Security retirement benefits in the amount of $4,296.00 per month.
Employer argued that it had a reasonable explanation for the delay in payment of wage-loss indemnity benefits based upon the confusion of Claimant's admissions, her supposed monthly Social Security Old Age benefit of $4,296.00 on a per week basis ($4,296/4.34 x 50% = $494.93), completely eclipsed her Average Weekly Wage of $230.35 and/or compensation rate of $207.31. Therefore, Employer believed it had no obligation under the Act to fund any past due award of compensation or future compensation owed to Claimant. Only after it received official documents from the Social Security Administration did Employer learn that Claimant actually received $289.00 per month in Social Security Old Age benefits, not $4,296.
On August 24, 2012, the WCJ issued its Decision. It granted Employer's Modification Petition, denied Employer's Suspension and Benefit Offset Petitions and granted Claimant's Penalty Petition. With regard to Employer's Modification Petition, the WCJ found that Employer was entitled to a credit or offset for the wages that Claimant earned by working at Knoebels in 2011. The WCJ found, however, that Employer was not entitled to an offset for Social Security benefits. It found that Employer's understanding that Claimant received $4,296.00 in monthly Social Security benefits and its reliance on that figure to calculate an offset was unreasonable given that Claimant's weekly wage was only $230.35. The WCJ further concluded that Employer did not comply with the Regulations' requirement that after receipt of a report of Social Security benefits, Employer must provide notice of its intention to take an offset for Social Security benefits. Specifically, 34 Pa. Code §123.4(b) states:
At least 20 days prior to taking the offset, the insurer shall notify the employe, on Form LIBC-761, 'Notice of Workers' Compensation Benefit Offset,' that the workers' compensation benefits will be offset.
The WCJ found no evidence that Employer mailed or otherwise gave Claimant a completed LIBC-761 Form. Accordingly, the WCJ found that Employer did not provide Claimant with the required notice of its intention to take an offset for Social Security benefits.
With respect to Claimant's Penalty Petition, the WCJ found that a fifty-percent penalty was warranted because Employer was not entitled to offset the Social Security benefits from Claimant's wage-loss indemnity benefits, and Employer did not pay Claimant her wage-loss indemnity benefits until March 19, 2012. The WCJ recognized that an employer should not be liable for penalties for failure to make payment while supersedeas was pending under Snizaski v. Workers' Compensation Appeal Board (Rox Coal Co.), 847 A.2d 139 (Pa. Cmwlth. 2004). However, here, Employer was denied supersedeas by order dated January 12, 2012. Giving Employer the most liberal guidelines for payment and providing thirty days (until February 12, 2012,) to make payment after the supersedeas was denied, Employer still did not make payment to Claimant until March 19, 2012. Claimant requested attorney fees for an unreasonable contest of her Penalty Petition. The WCJ also awarded Claimant attorney fees for Employer's unreasonable contest of Claimant's Penalty Petition.
Failure to provide twenty days' notice of benefit offset is a violation of Bureau Regulations Section 123.4, 34 Pa. Code §123.4, and will support a penalty award. City of Philadelphia v. Workers' Compensation Appeal Board (Andrews), 948 A.2d 221 (Pa. Cmwlth. 2008).
Employer appealed the WCJ's August 24, 2012, Decision to the Board. On September 17, 2014, the Board affirmed the WCJ. As stated, this Court entered its Memorandum Order eight days later on September 25, 2014, which vacated the WCJ's award of wage-loss indemnity benefits.
Argument
On appeal from the WCAB's September 17, 2014, Order Employer argues that this Court's order in Central Susquehanna Intermediate Unit #16 v. Workers' Compensation Appeal Board (Shingara), (Pa. Cmwlth., No. 2256 C.D. 2013, filed September 25, 2014), which reversed Claimant's receipt of wage-loss indemnity benefits has rendered Claimant's underlying Penalty Petition moot. Employer contends that it was assessed a penalty of fifty-percent of all wage-loss indemnity benefits due to Claimant from September 17, 2010, through March 2012. After the issuance of that order, and the WCAB's affirmation, this Court denied the appeal of the underlying Claim Petition, and reversed the WCAB's decision with instructions to remand to the WCJ to vacate the award. Employer contends that there is now no means of determining the amount of penalties because there is no longer an award upon which that determination may be made.
This Court's scope of review is limited to determining whether constitutional rights were violated, whether an error of law was committed, and whether findings of fact made by the WCJ are sufficient to support the Decision and Order. Vinglinsky v. Workmen's Compensation Appeal Board (Penn Installation), 589 A.2d 291 (Pa. Cmwlth. 1991).
Contrary to Employer's argument, penalties may be awarded for failure to pay in accordance with a later-reversed award based on and as a percentage of that award, even where the claimant is not entitled to the underlying benefits. Gartner v. Workers' Compensation Appeal Board (Kmart Corp.), 796 A.2d 1056, 1059 (Pa. Cmwlth. 2002). Absent a supersedeas, failure to comply with an order awarding benefits is a violation of the Act, and the fact that an order is ultimately reversed does not excuse the employer from complying with the order while it is in effect. Penalties will be upheld in that situation. Moore v. Workmen's Compensation Appeal Board (Reading Paperboard Corp.), 676 A.2d 690, 694-95 (Pa. Cmwlth. 1996); Winkelmann v. Workmen's Compensation Appeal Board (Estate of O'Neill), 646 A.2d 58, 60 (Pa. Cmwlth. 1994). The fact that an employer subsequently prevails on its appeal does not excuse earlier violations of the Act. Cunningham v. Workmen's Compensation Appeal Board (Inglis House), 627 A.2d 218 (Pa. Cmwlth. 1993).
The purpose of Section 435(d) of the Act, 77 P.S. § 991(d), (imposition of penalties) is to "give the department needed powers and mechanisms to require employers to make reasonably prompt payment of compensation." Cunningham, 627 A.2d at 223. Violations of the Act with respect to nonpayment of compensation exist independently of the merits of the case, and penalty proceedings may be brought before the workers' compensation authorities while the merits of the case are pending before this Court. Cunningham, 627 A.2d at 221. To hold otherwise would create an unnecessary financial hardship on the claimant. Id. See also M.D.S. Laboratories v. Workmen's Compensation Appeal Board (Munchinski), 558 A.2d 148 (Pa. Cmwlth. 1989) (violations of the Act with respect to prompt payment of compensation exist independently of the merits).
In Gartner, Kathleen Gartner had been injured while employed by Kmart. She sought partial disability benefits for lost overtime. The WCJ awarded benefits and found that Kmart violated the Act by failing to admit or deny liability. The WCJ awarded penalties. On appeal the Board reversed the grant of benefits because Claimant failed to provide any medical evidence on causation. The Board also reversed the grant of penalties "since the penalty awards were based on the benefits awarded." Gartner, 796 A.2d 1056. On appeal, this Court reversed the Board's reversal of the penalty even though the benefit award was ultimately reversed. This Court found that because the WCJ had granted the claim petition, there was an initial award from which penalties could be calculated.
Like the Employer here, Kmart relied on Wyche v. Workers' Compensation Appeal Board (Pimco), 706 A.2d 1297 (Pa. Cmwlth. 1998). The Gartner Court distinguished Wyche noting that in Wyche, the WCJ did not grant the claim petition, "and so there was no initial award from which penalties could be calculated." Gartner, 796 A.2d at 1059. --------
In this controversy, Employer violated the Act because it did not provide Claimant with the required notice of its intention to take an offset for Social Security benefits in violation of 34 Pa.Code §123.4 and it did not pay Claimant her wage-loss indemnity benefits awarded until March 19, 2012, when they were due on February 12, 2012. As in Gartner, there was an initial award of benefits, and even though that award was ultimately reversed by this Court, there still remained a basis for the WCJ to calculate the Section 435(d) penalty. Penalties will be upheld when there is a violation of the Act and the WCJ had a legitimate basis for calculating them.
Employer relies on Jaskiewicz v. Workers' Compensation Appeal Board (James D. Morrisey, Inc.), 651 A.2d 623 (Pa. Cmwlth. 1994) and Wyche. Those cases, however, are distinguishable because there were no initial awards against which the WCJs could gauge penalties.
In Jaskiewicz, the employee had requested a penalty based on the employer's unilateral decision to stop payment of the employee's disability benefits which were paid pursuant to a Notice of Compensation Payable. The employer filed, inter alia, a termination petition and alleged that the employee's work-related injury ceased. The WCJ granted the employer's termination petition and denied the penalty petition finding that it was moot because the employee was not awarded any compensation under the Act. This Court found that the WCJ did not abuse its discretion in finding that the employee, who was not granted benefits, was further not entitled to a penalty.
As noted, under Section 435(d) of the Act, 77 P.S. § 991(d), a court may impose a penalty, "not exceeding ten per centum of the amount awarded and interest accrued and payable ... [or] fifty per centum in cases of unreasonable or excessive delays," for violations of the provisions of the Act or rules and regulations. (Emphasis added.) In Jaskiewicz, this Court interpreted the phrase "of the amount awarded" to mean that a WCJ may only award penalties if benefits are awarded:
The referee concluded that the Act, as written, only allows penalties if the Claimant is awarded any compensation. We agree that the words 'of the amount awarded' indicate the legislature's intention to award penalties only when a claimant is awarded benefits. The penalty is based upon the amount awarded which was zero here. Thus, any other interpretation of this section of the Act would lead to arbitrary results, as referees would be left to award penalties based upon unknown numbers.Jaskiewicz, 651 A.2d at 626.
In Jaskiewicz, the WCJ did not grant the claim petition so there was no initial award from which the WCJ could calculate penalties. This Court declined to interpret the Act to allow a WCJ to grant an arbitrary penalty based on a nonexistent award.
In Wyche, this Court reversed a WCJ's award of penalties where the WCJ and WCAB determined that Dwayne Wyche (Wyche) was not entitled to basic workers' compensation benefits. This Court held that a penalty imposed by a WCJ without a basic award of benefits is inappropriate. Wyche, 706 A.2d at 1301. There, the WCJ disposed of the substantive issues in favor of Wyche's employer, but nevertheless awarded Wyche a penalty in the amount of $5,000 because his employer, the Department of Revenue, did not file either a Report of Occupational Injury or Disease or a Notice of Denial as required by the Act. On appeal, this Court reversed and explained that the WCJ's award of penalties to a claimant who had no entitlement to any benefits whatsoever under the Act was evidence of the arbitrary result warned of in Jaskiewicz.
Here, unlike in Jaskiewicz and Wyche, the WCJ granted the claim petition and awarded Claimant benefits, so there was a legitimate basis upon which the WCJ calculated the penalty. Because Claimant's claim petitions were granted and benefits were awarded, penalties could be assessed even though the award was ultimately reversed on appeal. The award of penalties was not moot. There was no question Employer violated the Act. Again, as this Court has repeatedly held, penalties do not depend on the merits; rather, they are based on the violation of the Act. Cunningham.
The Order of the WCAB is affirmed.
/s/_________
BERNARD L. McGINLEY, Judge ORDER
AND NOW, this 9th day of July, 2015, the Order of the Workers' Compensation Appeal Board in the above-captioned matter is hereby AFFIRMED.
/s/_________
BERNARD L. McGINLEY, Judge