Opinion ID: 2365114
Heading Depth: 2
Heading Rank: 1

Heading: The Employee's Appeal

Text: [¶ 7] Daley contends that it was error for the hearing officer to permit the employer to take an offset for severance pay pursuant to 39-A M.R.S.A. § 221. Section 221 provides, in pertinent part: § 221. Coordination of benefits 1. Application. This section applies when either weekly or lump sum payments are made to an employee as a result of liability pursuant to section 212 or 213 with respect to the same time period for which the employee is also receiving or has received payments for: . . . . B. Payments under a self-insurance plan, a wage continuation plan or a disability insurance policy provided by the employer .... . . . . 3. Coordination of benefits. Benefit payments subject to this section must be reduced in accordance with the following provisions. A. The employer's obligation to pay or cause to be paid weekly benefits other than benefits under section 212, subsection 2 or 3 is reduced by the following amounts: . . . . (2) The after-tax amount of the payments received or being received under a self-insurance plan or a wage continuation plan or under a disability insurance policy provided by the same employer from whom benefits under section 212 or 213 are received if the employee did not contribute directly to the plan or to the payment of premiums regarding the disability insurance policy. 39-A M.R.S.A. §§ 221(1)(B), (3)(A)(2) (2001). [¶ 8] Daley relies primarily on two cases, Gendreau v. Tri-Community Recycling, 1998 ME 19, ¶¶ 7-8, 705 A.2d 1106, 1108, and Goff v. Central Maine Power, 1998 ME 269, ¶ 8, 721 A.2d 182, 185, in support of his argument. The issue in Gendreau was whether the hearing officer erred in permitting the employer to offset sick leave benefits against workers' compensation benefits pursuant to an oral employment contract. Gendreau, 1998 ME 19, ¶ 3, 705 A.2d at 1106-07. In Gendreau, we concluded that sick leave benefits were a wage continuation plan pursuant to section 221: The plain language of section 221 of the Maine statute provides a credit to employers for payments made pursuant to a wage continuation plan. The language led the Board to reasonably conclude that a wage continuation plan is a plan that is intended to replace an employee's wages during a period of disability. [Tri-Community's] plan did exactly that. Decisions of the Board interpreting the Workers' Compensation Act are entitled to deference unless the statute plainly compels a contrary result. Jordan v. Sears, Roebuck & Co., 651 A.2d 358, 360 (Me.1994). Moreover, the Board's construction of the statute to allow [Tri-Community] to offset the sick leave payments paid to Gendreau is consistent with the policy of the Act prohibiting double-recoveries and the stacking of benefits. See e.g., id. at 360-61 (One of the purposes of former 39 M.R.S.A. § 62-B, predecessor statute to section 221, to prevent double-dipping); Berry v. H.R. Beal & Sons, 649 A.2d 1101, 1103 (Me.1994) (One of the purposes of section 62-B, to prevent the stacking of benefits). The fact that Gendreau's sick leave benefits in this case were not available to new employees, were exhaustible, and could be used in situations of nonwork-related illness, does not remove the essential purpose and character of the benefits as wage replacement during Gendreau's period of work-related incapacity. There was no evidence to suggest that Gendreau's sick leave plan could be used, or cashed out, for any purpose other than as a wage replacement during periods of disability. We affirm the Board's conclusion that [Tri-Community's] sick leave plan constitutes a wage continuation plan within the meaning of section 221 and that [Tri-Community] is entitled to the offset. Id. ¶¶ 7-8, 705 A.2d at 1108 (footnote omitted). [¶ 9] Pursuant to Gendreau, therefore, the test for determining whether employer-paid benefits are a wage continuation plan is whether the essential purpose and character of the benefits [are for] wage replacement during [a] period of work-related incapacity. Id. [¶ 10] In Goff, 1998 ME 269, ¶ 8, 721 A.2d at 185, we addressed the issue of severance payments in the context of former 39 M.R.S.A. § 62-B (1989), repealed and replaced by P.L.1991, ch. 885, §§ A-7, A-8 (codified at 39-A M.R.S.A. § 221). Finding no express statutory language in the former statute authorizing an offset for severance pay, we vacated the hearing officer's decision permitting the employer to take such an offset. Goff, 1998 ME 269, ¶ 8, 721 A.2d at 185. Although former section 62-B, like current section 221, provided an offset for a wage continuation plan, 39 M.R.S.A. §§ 62-B(2)(B), (3)(A)(1), (3)(A)(2) (1989), repealed and replaced by P.L. 1991, ch. 885, §§ A-7, A-8, we expressly declined to address whether the severance package at issue in Goff would be considered a wage continuation plan pursuant to section 221. Goff, 1998 ME 269, ¶ 8 n. 3, 721 A.2d at 185 n. 3. [¶ 11] The determination whether what the parties designate as severance pay is a wage continuation plan for purposes of section 221 must be made on a case-by-case basis. As the party seeking the benefit of the section 221 offset, and as the party with the superior access to information concerning the nature of its benefit program, Spinnaker bore the burden to show that the severance pay in this case was a wage continuation plan for purposes of section 221. See, e.g., Fernald v. Dexter Shoe Co., 670 A.2d 1382, 1385 (Me. 1996) (holding that employer bears burden to show variability of earnings to establish average weekly wage); Nichols v. Cantara & Sons, 659 A.2d 258, 262-63 (Me.1995) (holding that employee bears burden to prove that no portion of third-party settlement is allocable to spouse's loss of consortium on employer's petition for a set-off against third-party recovery); Ibbitson v. Sheridan Corp., 422 A.2d 1005, 1011 (Me.1980) (holding that employee bears burden of production concerning work unavailability on employer's petition for review once employer shows that totally incapacitated employee has regained some physical capacity). [¶ 12] As Daley contends, the hearing officer made no findings, nor is there any evidence in the record, concerning the nature or purpose of the severance payments. As a general matter, severance pay is commonly understood as payment in exchange for an employee's agreement to terminate employment. [3] In order to determine whether severance payments are intended as wage replacement or for some other purpose, the hearing officer must have sufficient information to make explicit findings concerning the nature and purpose of those payments. The mere fact that payments are characterized by the parties as severance pay is insufficient, as a matter of law, to determine whether the payments are a wage continuation plan. [¶ 13] Accordingly, we conclude that the employer failed to meet its burden of proof in the present case to establish that the essential purpose and character of the severance payments at issue here were for wage replacement during Daley's period of work-related incapacity. See Gendreau, 1998 ME 19, ¶¶ 7-8, 705 A.2d at 1108. On remand, the award must be redetermined without an offset for the severance pay received by Daley.