IN THE COMMONWEALTH COURT OF PENNSYLVANIA

City of Pittsburgh, and UPMC :

Benefit Management Services, Inc., :

Petitioners :

:

v. : No. 362 C.D. 2013

: Submitted: January 31, 2014

Workers’ Compensation Appeal :

Board (Burke), :

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 FILED: July 23, 2014

The City of Pittsburgh (Employer) and UPMC Benefit Management 

Services, Inc. petition for review of an adjudication of the Workers’ Compensation 

Appeal Board (Board) setting aside Employer’s recoupment of an overpayment of 

workers’ compensation benefits. For a period of approximately six and a half 

months, Employer paid Michael Burke (Claimant) total disability workers’ 

compensation without an offset for the disability pension Employer also paid 

Claimant. Employer recouped the overpayment of workers’ compensation by 

reducing Claimant’s weekly disability payment first by $75 weekly and then by 

$25 weekly until it was repaid. The Board set aside the recoupment because 

Employer did not give Claimant the official form for reporting his pension income

i.e., a Form LIBC-756, before effecting the recoupment. The Workers’ 
2

Compensation Judge (WCJ) held that Claimant waived the issue of the reporting 

form and that, in any case, Employer did not need to have Claimant report his 

pension because Employer had full knowledge of the pension that it was paying 

Claimant. However, the WCJ set aside the recoupment for a different reason, 

namely, that Employer failed to prove that the recoupment did not prejudice 

Claimant. Concluding that both the Board and the WCJ erred, we reverse.

Claimant worked for the City of Pittsburgh as a fire captain. On

March 13, 2004, he sustained injuries to his left knee, right elbow and right 

shoulder while fighting a fire. At the time of the injury, Claimant earned 

approximately $78,000 annually. Employer, which is self-insured for workers’ 

compensation, accepted liability for the injury and paid Claimant Heart and Lung 

benefits equal to his full salary after the injury.1

On January 10, 2005, 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. 

Claimant and Employer executed an Agreement for Compensation providing for 

the payment of workers’ compensation wage loss benefits in the amount of $690

per week, the maximum rate for any claimant injured in 2004. As of January 10, 

2005, Claimant began receiving approximately $3,100 per month in pension 

benefits and $690 per week in workers’ compensation benefits.

On June 24, 2005, Employer issued a Form LIBC-761, “Notice of 

Workers’ Compensation Benefit Offset,” to Claimant, stating that as of July 25, 

 

1 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.
3

2005, his compensation would be reduced to $332.57 weekly because Employer 

was taking an offset of $357.43.

2

 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 January 10, 2005, to July 25, 2005, because the payments for those 

weeks did not include the offset. The overpayment totaled $10,059.11. Employer 

advised Claimant that $100 would be deducted from Claimant’s weekly disability 

payment until the overpayment of $10,059.11 was paid back to Employer. 

The offset and $100 deduction should have reduced Claimant’s 

weekly disability payment to $232.57 from July 25, 2005, to June 25, 2007. 

However, Employer erroneously deducted only $75 per week, paying Claimant 

$257.43 per week in workers’ compensation during that time. As a result, the 

overpayment had not been recouped by June 25, 2007, as had been Employer’s 

stated intention. Upon discovering this error, Employer issued a second Form 

LIBC-761 advising Claimant that Employer would deduct $25 from Claimant’s 

weekly disability payment from June 25, 2007, through January 20, 2010, in order 

to complete the recoupment of the overpayment. Therefore, from June 25, 2007, 

through January 20, 2010, Claimant received workers’ compensation payments of 

$307.57 per week. Employer informed Claimant that it would begin paying 

$332.57 per week in workers’ compensation to Claimant as of January 21, 2010.

On December 29, 2008, Claimant filed a petition to review 

compensation benefit offset, alleging that Employer’s offset calculation was 

 

2

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 

July.
4

wrong. The petition also challenged Employer’s entitlement to any recoupment, 

asserting that the weekly deduction caused a financial hardship. Employer filed an 

answer denying Claimant’s allegations.

The matter was assigned to a WCJ.3 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 also testified about his personal finances and how they were 

affected by the offset. The record established that Claimant’s disability pension 

totals $3,100 each month, or $37,200 per year. After Employer’s offset and 

recoupment, Claimant’s weekly compensation of $332.57 totals $17,293.64 per 

year. Claimant’s yearly income from his disability pension and workers’ 

compensation is $54,493.64.

Claimant testified that his household consists of himself and his wife. 

Claimant’s household expenses include, inter alia, a mortgage, a car payment and 

utility bills. Claimant testified that he and his wife set their household budget 

based on his pre-injury firefighter earnings. They had to “budget differently” when 

Claimant’s benefits were changed to the pension plus workers’ compensation. 

Reproduced Record at 471a (R.R. ___). Claimant testified that when Employer 

took the offset and began recouping $75 per week, he had to rework the entire 

household budget. Claimant sold his car and bought an older car to reduce the car 

payment. Claimant and his wife also refinanced the mortgage twice and cut back 

 

3 Numerous other Pittsburgh firefighters filed petitions to review compensation benefit offset, 

which were assigned to two different WCJs who conducted joint hearings because the issues 

were similar. The WCJs then issued individual decisions for each firefighter.
5

on their vacations. Claimant’s wife got a higher paying job and worked overtime 

to help pay the bills. Claimant stated that the offset plus $75 weekly recoupment 

“changed our lifestyle, to this day, dramatically.” R.R. 474a. However, Claimant 

acknowledged that he still would have had to rebudget when the offset began, even 

if Employer did not recoup any overpayment. R.R. 479a. As of June 2007, 

Employer recouped $25 per week instead of $75; this recoupment was set to end 

two months after Claimant testified.

The WCJ credited Employer’s actuarial evidence on its contribution 

to Claimant’s pension. Accordingly, he upheld the amount of Employer’s offset. 

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 by not raising that issue while the record was open, Claimant 

waived this argument. 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.
6

Claimant also argued that Employer’s recoupment was invalid

because it imposed a financial hardship on him. The WCJ agreed. 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 found that Claimant was prejudiced by 

Employer’s recoupment.

4

The WCJ granted, in part, Claimant’s petition to review compensation 

benefit offset. The WCJ allowed Employer the ongoing pension offset but

disallowed Employer’s recoupment of its overpayment. Accordingly, he ordered 

Employer to reimburse Claimant the full amount of the recoupment.5

Claimant and Employer appealed to the Board.6 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 

 

4 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; therefore, this 

issue is not before us.

5

Thereafter the WCJ issued an amended order for all firefighter cases he had been assigned, 

including the instant one, clarifying that Employer was to apply the updated pension offset 

calculations it had submitted into evidence, which in some cases was different than the offset 

amounts found in the Form LIBC-761 Notice of Offset. For any case where the updated 

calculations decreased the offset amount, the WCJ ordered Employer to reimburse the claimants 

the amount they had been underpaid, with interest. The WCJ reaffirmed the prior decision and 

order in all other material respects. In this case, the WCJ did not order Employer to pay interest 

on the recoupment amount returned to Claimant.

6 Claimant did not appeal the issue of Employer’s calculation of the offset amount.
7

reporting form before taking an offset. Employer argued that the WCJ erred in 

interpreting Maxim Crane as disallowing a retrospective offset to recoup an 

overpayment of workers’ compensation benefits.

The Board affirmed the WCJ. The Board agreed that Claimant had 

waived the issue of whether Employer had to issue Claimant a Form LIBC-756 

before taking an offset. Nevertheless, the Board went on to hold that Employer’s 

tender of a Form LIBC-756 was 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 9. Employer then petitioned for 

this Court’s review.7

On appeal, Employer argues that the Board and the WCJ erred in 

concluding that Employer was not entitled to recoup the overpayment of benefits 

to Claimant. First, Employer argues that it was not required to issue Claimant a 

Form LIBC-756 in order to implement a retrospective credit to recover overpaid 

disability benefits and that, in any case, Claimant waived that issue. Second, 

Employer asserts that the WCJ erred in holding that Employer’s recoupment was 

presumed to be prejudicial and, thus, not allowed.

 

7

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).
8

This Court addressed these very issues 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) (City of 

Pittsburgh I), which involved the same employer and similar facts. There, we held 

that the Board erred in holding that Employer’s failure to provide the claimant with 

a Form LIBC-756 barred its recoupment of the overpayment when the Board itself 

found that the claimant had waived the issue of the Form LIBC-756.8

We also 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. 

Section 204 of the Workers’ Compensation Act (Act)9and regulations promulgated 

thereunder expressly authorize recoupment of compensation that was overpaid 

because it did not include an offset. Because the employer in Maxim Crane failed 

to follow those regulations, the recoupment was set aside. In obiter dicta, Maxim 

Crane also found that the recoupment was unacceptable because the employer

 

8 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. 

9 Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §71. The portion of Section 204(a) 

providing for an offset for pension payments was added by the Act of June 24, 1996, P.L. 350, 

No. 57. Section 204(a) states, in relevant part, as follows:

[T]he benefits from a pension plan to the extent funded by the employer directly 

liable for the payment of compensation which are received by an employe shall 

also be credited against the amount of the award [of workers’ compensation 

benefits] made under sections 108 and 306, except for benefits payable under 

section 306(c).

77 P.S. §71(a).
9

sought to recover two years of overpayments by reducing the claimant’s weekly 

compensation to $0 for six months.10

Finally, in City of Pittsburgh I, we addressed Muir v. Workers’ 

Compensation Appeal Board (Visteon Systems LLC), 5 A.3d 847 (Pa. Cmwlth. 

2010). Muir established that the regulations require the employer to give a 

claimant notice at least once every six months of his duty to report offsetable 

benefits to the employer. The employer does this by issuing the claimant a Form 

LIBC-756. In this way, a recoupment should not need to cover an overpayment 

made over a period of time longer than six months. City of Pittsburgh I also 

confirmed that in keeping with the Act’s humanitarian purposes, a WCJ may 

structure a recoupment in a way that minimizes its impact on the claimant.

Here, Claimant was overpaid for approximately six and a half months. 

However, Claimant did not identify any hardship specifically attributable to the 

recoupment or its structure.11 He stated only that the offset coupled with the 

recoupment caused him to rework the household budget. Notably, he 

acknowledged that the offset alone would have caused the need to rebudget. From 

July 2005 to June 2007, Employer recouped $75 a week from Claimant when it 

intended to recoup $100 a week. Accordingly, Employer did not complete the 

 

10 Maxim Crane was decided on legal grounds, i.e., that the employer had failed to comply with 

the regulation at 34 Pa. Code §123.501 which squarely places the burden on the employer to 

notify the claimant of his duty to report offsetable benefits to the employer. Maxim Crane went 

on to explain that where an employer waits two years to satisfy this notice obligation, there will 

be a presumption that recoupment will cause a hardship. This was obiter dicta because the case 

was decided on the employer’s failure to follow 34 Pa. Code §123.501.

11 Even so, this case is nothing like Maxim Crane’s dicta where the claimant would have 

received $0 for six months. Here, Claimant received $257.43 in weekly compensation during the 

initial two-year period when Employer recouped $75 a week, and he received $307.57 in weekly 

compensation during the following two-and-a-half years when Employer recouped $25 a week.
10

recoupment by June 2007 as originally stated. Employer recouped the remainder 

of the overpayment by deducting $25 a week from Claimant’s compensation 

checks from June 2007 to January 2010.12 Claimant filed his review offset petition 

challenging the recoupment in December 2008 and testified in support of his 

petition in November 2009, two months before the recoupment ended. In short, by 

the time Claimant filed his review offset petition, Employer had nearly completed 

the recoupment, and by the time the WCJ issued a decision, the recoupment had 

been completed for over six months. Under those circumstances, the issue of 

whether the recoupment resulted in any financial hardship or could have been 

structured differently is moot.

Our holding in City of Pittsburgh I is dispositive. Accordingly, we 

reverse the Board’s adjudication to the extent it disallowed recoupment of the 

overpayment and affirm it in all other respects.

 ______________________________

 MARY HANNAH LEAVITT, Judge

 

12 Employer voluntarily decreased the weekly recoupment amount to $25 in June 2007. As this 

Court noted in City of Pittsburgh I, Employer, by structuring the recoupment in this way, risked 

not recouping the entire overpayment, because Claimant could have stopped receiving workers’ 

compensation benefits in the meantime.
IN THE COMMONWEALTH COURT OF PENNSYLVANIA

City of Pittsburgh, and UPMC :

Benefit Management Services, Inc., :

Petitioners :

:

v. : No. 362 C.D. 2013

:

Workers’ Compensation Appeal :

Board (Burke), :

Respondent :

O R D E R

AND NOW, this 23rd day of July, 2014, the order of the Workers’ 

Compensation Appeal Board dated February 22, 2013, in the above captioned 

matter is hereby REVERSED inasmuch as it disallowed recoupment of overpaid 

benefits and AFFIRMED in all other respects.

 ______________________________

 MARY HANNAH LEAVITT, Judge