IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Miguel Castaneda

- Escobar, :

Petitioner :

:

v. :

: Ralph Martin Construction : (Workers’ Compensation Appeal : Board)

, : No. 961 C.D. 2020

Respondent : Submitted: February 5 , 2021

BEFORE: HONORABLE RENÉE COHN JUBELIRER , Judge

HONORABLE ANNE E. COVEY, Judge HONORABLE ELLEN CEISLER, Judge

OPINION NOT REPORTED

MEMORANDUM OPINION BY JUDGE COVEY FILED: March 25, 2021

Miguel Castaneda

- Escobar (Claimant) petitions this Court for review
of the Workers’ Compensation (WC) Appeal Board’s (Board) September 8, 2020
order affirming the Workers’ Compensation Judge’s (WCJ) decision denying and
dismissing Claimant’s Petition for Penalt ie s (Penalty Petition). Claimant presents
two issues for this Court’s review: (1) whether the Board err ed by affirming the

WCJ’s determination that Whitmoyer v. Workers’ Compensation Appeal Board
(Mountain Count r

y Meats)

, 186 A.3d 947 (Pa. 2018)

, cannot and should not be
applied retroactively to obligate Ralph Martin Construction (Employer) to reimburse

Claimant f

or the work

- related medical expenses of $62,973.73 paid by Claimant
following the settlement of Claimant’s second third

- party personal in jury case ; and
(2) whether the Board erred by affirming the WCJ’s determination that Employer2

did not violate the WC Act (Act) 1 when Employer refused to reimburse Claimant for

the work

- related medical expenses . After review, we affirm

.

Claimant sustain ed a work

- related injury on May 12, 2010

, during the

course and scope of his employment with Employer

. Following the work injury,

Claimant resolved several third

- party litigation cases. The first third

- party case

resolved for $1,000,000.00

. Claimant executed a Third

- Party Settlement Agreement
(TPSA), which was filed with the Bureau of WC (Bureau) on August 11, 2014.

Claimant received a second settlement for $5,000,000.00

. Following the second

settlement, Claimant executed a second TPSA (TPS A II), which was filed with the
Bureau on April 1, 2015. Claimant also received a third settlement in the amount of
$1,775,000.00 in December 2015. No TPSA was executed following this third

settlement.

T he proceeds of the second settlement were suffic ient to satisfy
Employer’s WC lien pursuant to Section 319 of the Act. 2 In TPSA II, the p arties
agreed, “[ t ] he balance of recovery in the amount of $3,512,390.83 shall be a credit
against future weekly benefits and medical expenses as set forth in [ TPSA II]

. ”
Reproduced Record at 12a. Following the execution of TPSA II, Employer bega n taking a credit against future weekly indemnity benefits and Claimant’s ongoing
medical expenses in accordance with the p arties ’ agreement as memorialized i n

TPSA II

. On June 19, 2018, t he Pennsylvanian Supreme Court decided
Whitmoyer , wherein the Court held that Section 319 o f the Act did not contemplate
a credit against future medical expenses for the balance of recovery. Specifically,

the Whitmoyer Court noted that Section 319 of the Act addresses periodic payments

and

, as medical expenses are not always paid at a regular i nterval, the Court

1 Act of June 2, 1915, P.L. 736, as amended , 77 P.S. §§ 1

- 1041.4, 2501

- 2710.

2 77 P.S. § 671

.3

concluded that Section 319 of the Act only applied to future indemnity benefits, not

future medical expenses. Thereafter

, Employer immediately stopped taking any
reduction against Claimant’s ongoing medical expenses. Claimant sought a
retroactive reimbursement of the amount of medical expenses previously offset

under TPSA II

. Employer did not reimburse Claimant for those medical expenses

, arguing that

, prior to Whitmoyer , Employer was acting in accordance with the

current state of the law

, as wel l as the agreement between the p arties as set forth in

TPSA II

. Employer also noted that the Whitmoyer Court did not specify that its

decision applied retroactively.

When Employer did not reimburse the previously withheld medical

expenses, Claimant filed the Penalty Petition

, alleging that Employer violated the

Act when it fail ed to make the retroactive reimbursement. The WCJ held hearings

on November 6, 2018, and February 5, and April 16, 2019. On July 23, 2019, the

WCJ denied and dismis sed the Penalty Petition. Claimant appealed to the Board.
On September 8, 2020, the Board affirmed the WCJ’s decision. Claimant appealed

to this Court. 3

Claimant first argues that the Board erred by affirming the WCJ’s

determination that Whitmoyer cannot and should not be applied retroactively to
obligate Employer to reimburse Claimant for the $62,973.73 in work

- related medical
expenses Claimant paid following the settlement of Claimant’s second third

- party personal injury case . Claimant asserts th at the Whitmoyer Court unequivocally held
that the Act never authorized a credit to an employer for medical expenses as against

a personal injury third

- party recovery. Thus, Claimant contends that

, if the Act never

3 “On review[,] this Court must determine whether constitutional rights were violated, errors of law were committed, or necessary findings of fact were supported by substantial competent evidence.” Stepp v. Workers’ Comp. Appeal Bd. (FairPoint Commc’ns, Inc .) , 99 A.3d 598, 601 n.6 (Pa. Cmwlth. 2014).4

authorized the credit, then the right to take a credit did not exist when Claimant and
Employer signed TPSA II. Hence, Claimant maintains that Employer did not have
the right to take a credit for Claimant’ s second third

- party recovery against the work

related medical expenses. Accordingly, Cla imant contends that Employer should

reimburse Claimant for the credit Employer was not authorized by the Act to take

. Employer rejoins that the B oard’s decision should be affirmed because the credit

E mployer took against future medical expenses was consis tent with existing law,
was authorized by TPSA II

, and W hitmoyer does not apply retroactively.

This Court addressed the ret r oactivity of Whitmoyer in Beaver Valley
Slag , Inc. v. Marchionda ( Workers’ Compensation Appeal Board ) , ___ A.3d ____
(Pa. Cmwlth. No s

. 867, 901 C.D. 2020, filed March 10, 2021 ). Therein, this Court

held that

, because “ the status of the TPSA terms for future medical expense
subrogation was not ‘ pending on direct appeal ’ at the time Whitmoyer was decided [,]
Dana Holding [ v. Workers’ Comp ensation Appeal B oar d (Smuck) ] , 232 A.3d [629,]

647 (Pa. 2020),] . . . Dana Holding [] does not require, and this Court will not order,

that Whitmoyer be applied retroactively to the date of the TPSA’s origination. ”
Beaver Valley , slip op. at 11

.

Similarly, here, because the status of TPSA II’s terms for future medical
expense subrogation was not pending on direct appeal when Whitmoyer was decided

, Dana Holding does not require that Whitmoyer be applied retroactively to the date

of TPSA II ’s origination . Accordingly, the Board properly affirm ed the WCJ’s

determination that Whitmoyer did not retroactively obligate Employer to reimburse

Claimant for the work

- related medical expenses paid by Claimant following the

settlement of Claimant’s second third

- party personal injury case. 4

4 This Court does not however, endorse the WCJ’s conclusion that Whitmoyer established a new rule of law. Under the Dana Holding Court’s reasoning

, because Section 319 of the Act was an existing statute which the Pennsylvania Suprem e C ourt had not yet interpreted, and applying well

- settled statutory interpretation principles was for e seeable, Whitmoyer did not5 Claimant next argues that the Board erred by affirming the WCJ’s
determination that Employer did not violate the Act when Employer refused to

reimburse Claimant for the work

- related medical expenses . E mployer r ejoins that,

inter alia

, given the fact that E mployer’s actions were consistent with how future
medical expenses had been credited prior to Whitmoyer , there was and is no violation

of the Act that would have supported the imposition of a penalty.

This Court has explained:

Section 435(d)(i) of the Act allows for a penalty of up to 50 [%] of the compensation due to be assessed if an employer violates the Act or its regulations. [ See ] 77 P.S. § 991(d)(i). [ 5 ] In penalty peti tion proceedings, the claimant ‘ bears the burden of proving a violation of the Act occurred ’ and, if met, the burden ‘ shifts to the employer to prove it did not violate the Act. ’ Dixon v. Workers ’ Comp. Appeal Bd. (Medrad, Inc.) , 134 A.3d 518, 525 (Pa. Cmwlth. 2016) (quoting Gumm v. Wo rkers ’ Comp. Appeal Bd. (Steel) , 942 A.2d 222, 232 (Pa. Cmwlth. 2008) ). ‘ When a violation of the Act occurs, it is within the discretion of the WCJ to impose penalties. ’ Jordan v. Workers ’ Comp. Appeal Bd. (Phila. Newspapers, Inc.) , 921 A.2d 27, 41 (Pa. Cmwlth. 2007).

Kurpiewski v. Workers’ Comp. Appeal Bd. (Caretti, Inc.) , 202 A.3d 870, 888 (Pa.
Cmwlth. 2019).

Here, the Board opined:

Whitmoyer does not apply fully retroactively [sic] in this current matter; therefore, [Employer] did not violate the Act by failing to reimburse Claimant. Additionally, [Employer] followed the state of the law prior to

establish a new rule. Thus, this Court’s holding that Whitmoyer is not retroactive is not based on fin ding that Whitmoyer established a new rule of law , just as the Dana Holding Court’s ruling that Protz v. Workers’ Compensation Appeal Board (Derry Area School District ), 161 A.3d 827 (Pa. 2017)

, was not retroactive was not based on such a finding. See Chrzan v. Workers’ Comp. Appeal
B d. (Allied Corp.) , 805 A.2d 42, 47 n.10 (Pa. Cmwlth. 2002) (“ We may affirm the order of a lower tribunal on other grounds where such other grounds to affirm exist .”)

.

5 Added by Section 3 of the Act of February 8, 1972, P.L. 25.6 Whitmoyer and took credits in compliance with the terms of [TPSA II] , which was in effect at that time. Thus, [Employer] did not violate the Act prior to the issuance of Whitmoyer or after Whitmoyer was decided. [ 6 ] As Claimant failed to establish that [Employer] violated the Act, Claimant is n ot entitled to a penalty award.

Bd. Op. at 11. This Court discerns no error in the Board’s reasoning.

Prior to Whitmoyer , this Court interpreted Section 319 of the Act as
permitting employers to take a credit against medical expenses. See Zacour v.

Worke rs’ Comp. Appeal Bd. (Mark Ann Indus

. ) , 824 A.2d 336 (Pa. Cmwlth. 2003).
“Here, E mployer did not violate the Act by following this Court ’ s construction of

the Act as set forth in [ Zacour ]. ” L ife Q uest Nursing Ctr

. v. Workers’ Comp. Appeal

Bd

. (Tisdale) , 190 A.3d 811, 818 (Pa. Cmwlth. 2018) . Accordingly, the Board
properly affirm ed the WCJ’s determination that Employer did not violate the Act
when Employer did not reimburse Claimant for the $62,973.73 in work

- relat ed
medical expenses.

For all of the above reasons, the Board’s order is affirmed.

___________________________ ______ ANNE E. COVEY, Judge

6 Concerning whether Employer violated the Act after Whitmoyer was decided

, “[f] ollowing the Whitmoyer [d] ecision, [Employer] immediately stopped taking any reduction against Claimant’s ongoing medical expenses. ” WCJ Dec. at 3, Finding of Fact 11. Thus, the issue of whether and/or when Whitmoyer required Employer to stop taking reductions against Claimant’s ongoing medical expenses was not before the WCJ, the Board or this Court.IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Miguel Castaneda

- Escobar, :

Petitioner :

:

v. :

: Ralph Martin Construction : (Workers’ Compensation Appeal : Board), : No. 961 C.D. 2020

Respondent :

O R D E R

AND NOW, this 25 th day of March , 20 2 1

, the Workers’ Compensation
Appeal Board’s September 8, 2020 order is affirmed.

___________________________ ______ ANNE E. COVEY, Judge