Opinion ID: 2111600
Heading Depth: 1
Heading Rank: 3

Heading: Legality of the Set-Off

Text: Soper argues that the set-off in the St. Regis pension plan is illegal because it frustrates the purpose of the Workers' Compensation Act. He contends that the effect of the set-off is to nullify the order of the Commission because the employee gets no more than he would have if he had not gone to the Commission. The Superior Court, in rejecting this argument, stated: The purpose of such a setoff provision is to eliminate the possibility of an injured employee enjoying a double recovery from benefits financed by his employer. Such a purpose is clearly legitimate unless it contravenes the provisions . . . or purpose of the Workers' Compensation Act, Title 39 M.R.S.A. The Act does not prohibit double recovery, but neither does it expressly or by implication prohibit the avoidance of double recovery. That ruling was correct. Soper attempts to deduce a policy favorable to overlapping benefits from our decisions in Page v. General Electric Co., Me., 391 A.2d 303 (1978), and Gullifer v. Granite Paving Co., Me., 383 A.2d 47 (1978), but those cases held only that, as the statute now reads, workers' compensation benefits cannot be reduced by a set-off of unemployment payments. This does not imply a prohibition against reduction of private benefits by an agreed-on set-off of workers' compensation payments. Set-offs of workmen's compensation are common in disability pension plans. Such provisions have not been held illegal; in some cases, courts have construed ambiguous clauses to avoid double recovery. See 4 Larson, supra, § 97.51 at 18-55. The courts have not manifested disapproval of the objective of avoiding overlapping payments. Provisions for deduction of workers' compensation in pension agreements were enforced in Fultz v. Union Carbide Corp., supra , and Williams v. Insurance Co. of North America, 150 Mont. 292, 434 P.2d 395 (1967). The arguments raised by Soper were specifically rejected in Parsons v. Granite City Steel Co., 41 Ill.App.2d 396, 190 N.E.2d 644 (1963). The Supreme Court of the United States has upheld the workers' compensation set-off provision of the Social Security Act, 42 U.S.C.A. § 424a, against constitutional attack on equal-protection grounds. Richardson v. Belcher, 404 U.S. 78, 92 S.Ct. 254, 30 L.Ed.2d 231 (1971) (three justices dissenting). See also Lofty v. Richardson, supra . Another source of support for setoffs such as the one in this case can be found in the fact that they are allowed in pension plans approved by the Internal Revenue Service. Rev.Rul. 68-243, 1968-1 C.B. 157. Soper argues that the set-off violates 39 M.R.S.A. § 62, which provides that in determining the sum of an employee's benefits, payments derived from any source other than the employer shall not be considered. However, section 62 deals only with reduction of workers' compensation and has no application to the present case. Even though the pension fund was partly derived from employee contributions, the set-off did not affect any reduction in the compensation required by statute and therefore did not violate section 62.