Court Opinion

ID: 4033397
Source: CourtListenerOpinion
Date Created: 2016-09-14 03:38:10.586473+00
Date Added: 2024-06-11T13:27:20.384741
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Consolidation Coal Company and         :
East Coast Risk Management,            :
                       Petitioners     :
                                       :
                    v.                 :   No. 1569 C.D. 2015
                                       :
Workers’ Compensation Appeal           :
Board (Albani),                        :
                      Respondent       :
                                       :
Donald R. Albani,                      :
                         Petitioner    :
                                       :
                    v.                 :   No. 1681 C.D. 2015
                                       :   Submitted: April 15, 2016
Workers’ Compensation Appeal           :
Board (Consolidation Coal Company      :
and East Coast Risk Management),       :
                        Respondents    :

BEFORE:     HONORABLE RENÉE COHN JUBELIRER, Judge
            HONORABLE MICHAEL H. WOJCIK, Judge
            HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE COHN JUBELIRER                    FILED: September 13, 2016

      Consolidation Coal Company and East Coast Risk Management (together,
Employer) petition for review of two Orders of the Workers’ Compensation
Appeal Board (Board) dated April 2, 2013 and July 29, 2015, respectively. Donald
R. Albani (Claimant) cross-petitions for review of the Board’s July 29, 2015
Order.1 The April 2, 2013 Order under review concludes that Employer may offset
Claimant’s workers’ compensation benefits to recoup overpayments made to
Claimant resulting from Employer paying part of Claimant’s pension. The Board
concluded that, under the facts, Employer must recoup overpayments from the
Supersedeas Fund instead of through offsets and remanded the matter to the WCJ
to calculate retrospective credit. The April 2, 2013 Order also reversed the WCJ
decision to deny Claimant’s Penalty Petition and remanded the matter to the WCJ
to reconsider penalties and unreasonable contest attorney’s fees in light of the
Board’s conclusions. The July 29, 2015 Order under review affirmed the WCJ’s
subsequent decision awarding a 50 percent penalty and calculating the
retrospective credit to which Employer is entitled. On appeal, Employer argues
that the Board erred by concluding that Employer may not recoup overpayments
directly from Claimant through offsets. Employer also argues that the Board erred
in affirming the WCJ’s decision to award Claimant a 50 percent penalty and
unreasonable contest attorney’s fees. In his Cross-Petition for Review, Claimant
argues that the Board erred by affirming the WCJ’s computation of penalties and
unreasonable contest attorney’s fees. For the reasons that follow, we affirm in part
and reverse in part.

   I.       BACKGROUND
        This case has a long and circuitous procedural history. Because each step in
the litigation process is relevant to our disposition, we will recount this history in

        1
         By Order of November 17, 2015, this Court consolidated the Cross-Petitions for Review
and designated Employer as the Petitioner. (R.R. at 143a.)

                                              2
detail. Claimant sustained a work-related injury on January 31, 2002 and has not
returned to work since. (WCJ Decision, Sept. 29, 2005, Findings of Fact (2005
FOF) ¶¶ 5(b)-(c), R.R. at 4a.) Claimant applied for, and was awarded, a disability
pension in February of 2003, which was made retroactive to February 1, 2002. (Id.
at ¶¶ 5(c)-(d), R.R. at 4a.)2            Claimant began receiving partial workers’
compensation benefits pursuant to a WCJ’s award dated June 8, 2004. (Board Op.,
Apr. 2, 2013, at 2 (2013 Board Op.), R.R. at 85a.) The 500 weeks of disability
benefits to which Claimant was entitled ceased on August 30, 2013. (Id. at 10,
R.R. at 93a.)      On August 9, 2004, Employer issued a Notice of Workers’
Compensation Benefits Offset, Form LIBC-761. (2005 FOF ¶ 3, R.R. at 3a.)
Therein, Employer informed Claimant that, as of August 29, 2004, it would begin
taking an offset in the amount of $139.74 per week and would suspend Claimant’s

       2
         Our previous opinion on this case described the circumstances around the pension plan
as follows:

       Employer was a contributing employer to the UMWA Health & Retirement
       Funds’ 1974 Pension Plan (Plan). Prior to working for Employer, Claimant had
       worked approximately seventeen and a half years for other employers who were
       contributors to the Plan. Claimant suffered a work-related injury while working
       for Employer on January 31, 2002. Claimant began receiving workers’
       compensation benefits at the rate of $662.00 per week. Claimant applied for a
       multi-employer defined benefit disability pension from the Plan, which was
       awarded in February 2003. At that time, the Plan paid Claimant a $17,061.44
       back payment. This sum constituted pension payments for the period between
       February 1, 2002 and the date on which the pension was awarded. After taxes,
       Claimant received $13,649.16 of the back payment. Claimant began receiving
       monthly pension payments of $1,386.37, less $200.00 for income tax and $6.00 in
       union dues, for a net total of $1,180.37. Claimant reported these benefits to
       Employer.

Consolidation Coal Co. v. Workers’ Comp. Appeal Bd. (Albani), 968 A.2d 815, 817 (Pa.
Cmwlth. 2009) (footnote omitted).

                                              3
workers’ compensation payments for 35 weeks to offset $18,485.60 in
overpayments that it paid to Claimant from February 1, 2002 through August 14,
2004. (Id.) Claimant promptly sought review of Employer’s decision by filing a
Petition for Review of Compensation Benefits Offset on August 10, 2004. (Id. at ¶
1, R.R. at 3a.) On September 29, 2004, the WCJ issued an interlocutory order
authorizing an offset of $139.74 per week moving forward. (Id. at ¶ 4, R.R. at 3a.)
However, the WCJ only allowed Employer to recoup $200 per week to recoup
payments already made instead of suspending all benefits until the overpayment
was recouped. (Id.)
        The WCJ issued his opinion on Claimant’s Petition for Review of
Compensation Benefits Offsets on September 29, 2005.           Therein, the WCJ
concluded that as of March 11, 2003, the date Claimant received notice of
Employer’s intent to take an offset, and continuing into the future, Employer was
entitled to offset 51.12% of the amount of its pension payments, or $139.74 per
week, representing the amount Employer contributed to Claimant’s pension. (WCJ
Decision, Sept. 29, 2005, Conclusions of Law (2005 COL) ¶¶ 2, 6, R.R. at 9a,
11a.)    Because Employer suspended payments for 6.3 weeks prior to the
September 29, 2004 interlocutory order and recouped $200 per week for the 52
weeks since the aforementioned interlocutory order was entered, the WCJ
determined Employer recouped more than its entitled credit and ordered Employer
to pay Claimant $2,370.29. (Id. at ¶ 6, R.R. at 11a.)
        Both parties appealed to the Board.       While the appeal was pending,
Employer sought a supersedeas, which was granted on November 8, 2005. (WCJ
Decision, Sept. 8, 2011, #2, Findings of Fact (2011 #2 FOF) ¶ 4, R.R. at 72a.)
Upon consideration of the appeal, the Board reversed on grounds that the evidence

                                         4
submitted by Employer was incompetent. (Board Op., Dec. 21, 2006 (2006 Board
Op.), R.R. at 14a-20a.) In January of 2007, Employer filed a petition for review
with this Court and a petition for rehearing with the Board. (2011 #2 FOF ¶ 6,
R.R. at 72a.) The Board then denied a Petition for Supersedeas filed by Employer
on February 6, 2007, and this Court denied a similar petition on March 14, 2007.
(Id. at ¶ 7, R.R. at 72a.) As a result of being denied a supersedeas, Employer paid
Claimant $37,090.27 on May 2, 2007, “representing the pension credit that had
been deducted pursuant to” the WCJ’s 2005 Order. (Id. at ¶ 8, R.R. at 72a.) On
March 14, 2007, the Board granted Employer’s petition for rehearing, and this
Court relinquished jurisdiction. (Id. at ¶ 6, R.R. at 72a.) The Board then affirmed
its previous order on rehearing on November 5, 2007. (Id. at ¶ 9, R.R. at 72a.)
Employer appealed to this Court.      While the appeal was pending, Employer
petitioned the Board for a supersedeas, which was denied on January 3, 2008. (Id.
at ¶¶ 10-11, R.R. at 72a)
      On appeal, we reversed, concluding that the testimony at issue was
competent. Consolidation Coal Co. v. Workers’ Comp. Appeal Bd. (Albani), 968
A.2d 815, 822 (Pa. Cmwlth. 2009). We then remanded the matter to the Board so
that it could address the remaining issues raised on appeal and, most notably,
Employer’s arguments regarding the extent and timing of the offset. Id. Claimant
petitioned the Pennsylvania Supreme Court for allowance of appeal, which was
denied on July 23, 2010. Consolidation Coal Co. v. Workers’ Comp. Appeal Bd.
(Albani), 998 A.2d 961 (Pa. 2010).
      In light of the Supreme Court’s decision to deny the petition for allowance
of appeal, Employer sent Claimant a letter on July 30, 2010, notifying Claimant
that it was immediately stopping Claimant’s workers’ compensation benefits

                                        5
pursuant to the WCJ’s September 29, 2005 Order. (2011 #2 FOF ¶ 14, R.R. at
73a.) Claimant responded by filing a Penalty Petition on August 11, 2010, alleging
that Employer unilaterally suspended benefits in violation of previous orders and
Section 413(b) of the Workers’ Compensation Act (Act).3 (Id. at ¶ 1, R.R. at 71a.)
By interlocutory order dated December 17, 2010, and amended on December 27,
2010, the WCJ ordered Employer to commence payment to Claimant of $226.85
per week in workers’ compensation benefits from December 17, 2010 through
August 30, 2013, pending resolution of the Penalty Petition. (Id. at ¶ 15, R.R. at
73a; Interlocutory Order, Dec. 27, 2010, C.R. at Item 6.)
       The Board issued an opinion and order addressing this Court’s remand order
on February 25, 2011. Therein, the Board rejected an argument by Claimant that
Employer was barred from receiving an offset prior to August 9, 2004, due to the
equitable doctrine of laches and that the offset rate was improperly calculated.
(Board Op., Feb. 25, 2011, at 5-13, R.R. at 54a-62a.) The Board remanded the
matter to the WCJ for additional findings and credibility determinations regarding
the WCJ’s determination that Employer was not entitled to retroactive credit
beginning March 11, 2003 in light of new decisional law. (Id. at 7, 10, R.R. at
59a-60a.)
       The WCJ circulated two decisions on September 8, 2011: the first regarding
the Board’s February 25, 2011 remand order; and the second regarding Claimant’s
Penalty Petition. With regard to the decision on remand, the WCJ made the
necessary findings and concluded:

       3
         Act of June 2, 1915, P.L. 736, as amended, 77 P.S. § 774.1, added by Section 3 of the
Act of February 8, 1972, P.L. 25.

                                              6
      An employer has no right to recoupment of an offset prior to the date
      it received the information that the claimant was receiving offset
      benefits. This date was on or about March 11, 2003, when
      [E]mployer’s counsel notified [C]laimant’s counsel that [E]mployer
      had received information that [C]laimant was now receiving a
      pension. Consequently, the March 11, 2003 date, is the earliest date
      such knowledge can be imputed to [E]mployer and is the date that the
      recoupment of the pension credit would commence.

(WCJ Decision, Sept. 8, 2011, #1, Conclusion of Law (2011 #1 COL) ¶ 2, R.R. at
67a (record citations omitted).) With regard to Claimant’s Penalty Petition, the
WCJ concluded, in relevant part, as follows:

      2. The no fault overpayment made to [C]laimant in this case which
      resulted from the Board’s reversal of [the WCJ’s] Decision and Order
      of September 29, 2005, the denial of Supersedeas by the Board and
      Commonwealth Court and the reversal of the Board’s Opinion and
      Order and reinstatement of the pension benefit offset by the
      Commonwealth Court is not recoverable from [C]laimant and must be
      recovered from the Supersedeas Fund []. See Septa v[]. W[orkers’]
      C[omp.] A[ppeal] B[d.] (Speca) [(Pa. Cmwlth.,] No 1359 C.D. 2008[,
      filed November 17,] 2009)[ ](not reported)[,] which cited Boeing
      Co[.] v[]. W[orkers’] C[omp.] A[ppeal] B[d.] (Horan), 977 A.2d 92
      (Pa. Cmwlth[. ] 2009).

      3. Employer’s contest to the Penalty [P]etition was reasonable and no
      penalty is assessed in this case. [E]mployer did comply with the
      Interlocutory Orders of December 17, 2010 and December 27, 2010[,]
      which were to reinstate [C]laimant’s workers’ compensation benefit at
      the rate of $226.85 per week commencing December 17, 2010. The
      [E]mployer also complied with the Act on May 2, 2007, by paying
      [C]laimant and [C]laimant’s counsel $37,090.27 once [E]mployer’s
      requested Supersedeas was denied. Finally, [E]mployer had argued
      that the Commonwealth’s [sic] Court in Horan, supra, could be
      distinguished from this case and while I have not adopted that
      argument, [E]mployer’s position is not frivolous. The Undersigned
      would also note that while the Commonwealth Court’s Decision in
      Speca, supra[,] was directly on point and that case cites Horan,
      supra[,] throughout, the Speca, [s]upra, case was not a published
      Decision.
                                        7
      4. Litigation costs are reasonable.

(WCJ Decision, Sept. 8, 2011, #2, Conclusions of Law (2011 COL) ¶¶ 2-4, R.R. at
73a-74a.) Accordingly, the WCJ ordered Employer to “reimburse [C]laimant for
any workers’ compensation benefits withheld from [C]laimant on and after July
30, 2010 representing payments made to the [C]laimant while the Supersedeas
Order issued by the Board and the Commonwealth Court were in effect.” (Order,
Sept. 8, 2011, #2, R.R. at 74a.) The WCJ then approved a 20 percent attorney fee
to be paid out of the reimbursement.            (Id.)   Following the WCJ’s decision,
Employer petitioned the Board for supersedeas, which was granted. (R.R. at 77a,
80a.) Claimant’s request for reconsideration of the supersedeas was denied. (R.R.
at 83a.)   Accordingly, Employer did not reimburse Claimant for previous
offsets recovered and continued to take an offset out of Claimant’s workers’
compensation benefits pursuant to the WCJ’s interlocutory order of
December 17, 2010, while the appeal was pending.

   A. The Board’s April 2, 2013 Order
      In its April 2, 2013 Decision and Order, the Board addressed both
September 8, 2011 WCJ orders – the order addressing Claimant’s Petition for
Review of Compensation Benefits Offsets on remand and the order addressing
Claimant’s Penalty Petition. The Board first considered Employer’s argument that
the WCJ erred by not providing Employer with pension credit beginning February
1, 2002, the effective date of Claimant’s pension. Relying on Section 123.5 of the
Workers’ Compensation Bureau’s (Bureau) regulations, 34 Pa. Code § 123.5, the
Board concluded that an employer is entitled to credit for benefits already received
by a claimant. (2013 Board Op. at 6-9, R.R. at 89a-92a.) The Board remanded the
                                            8
matter to the WCJ to calculate the amount of credit “on Claimant’s retroactive
receipt of a pension covering the period commencing February 1, 2002, and
continuing until March 11, 2003 . . . .” (Id. at 9, R.R. at 92a.)
      Next, the Board addressed Employer’s argument that the WCJ erred by
concluding that Employer may not recoup overpayments directly from Claimant
through offsets.    The Board assessed this Court’s holding in Boeing Co. v.
Workers’ Compensation Appeal Board (Horan), 977 A.2d 92, 104 (Pa. Cmwlth.
2009), and concluded that Horan requires Employer to recover any overpayment
from the Supersedeas Fund, not directly from Claimant. (Id. at 13-14, R.R. 96a-
97a.) Under the Board’s reasoning, an employer may only recover credit through
offsets when reimbursement from the Supersedeas Fund is not available. (Id. at
13, R.R. at 96a.)
      Finally, the Board considered Claimant’s argument that the WCJ erred by
denying his Penalty Petition and concluding that Employer presented a reasonable
contest.   The Board concluded that because Employer “totally suspended
compensation in an attempt to recover a retrospective overpayment of
compensation resulting from the denial of supersedeas and the court’s later reversal
of our prior order on the case merits,” Employer violated the Act, and “[c]ase law
clearly supports the imposition of a penalty under these circumstances.” (Id. at 15,
R.R. at 98a.) The Board remanded the case to the WCJ for reconsideration of
penalties and ordered that supersedeas would continue pending the WCJ’s decision
on remand. (Id. at 15, 17, R.R. at 98a, 100a.)

   B. The Board’s July 29, 2015 Order
      On remand, the WCJ made the following findings of fact.

                                           9
4. [C]laimant’s disability pension commenced on February 1, 2002.
My earlier Decision and Order commenced the pension offset on
March 12, 2003. The period from February 1, 2002 until March 11,
2003 is 57 4/7 weeks and the offset is in the amount $142.68 per
week. Consequently, there would be an additional $8,214.09
pension offset credit for this period.

5. In its Decision and Order of April 2, 2013, the [Board] noted that
[E]mployer’s approach of unilaterally suspending compensation to
recoup retrospective overpayment was not authorized under the Act.
The Board noted that it was diametrically contrary to the proscriptions
of Section 413(b)[, 77 P.S. §§ 772, 774]. [E]mployer completely
suspended [C]laimant’s workers’ compensation benefit from July 11,
2010 through December 16, 2010. This represents 22 5/7 weeks of
workers’ compensation benefits and [C]laimant’s workers’
compensation benefit is $519.32 meaning that a total of $11,795.98 of
[C]laimant’s workers’ compensation benefit was unlawfully
suspended by [E]mployer. An unlawful, unilateral suspension of
workers’ compensation benefits that has occurred in this case
causes the undersigned to assess a 50% penalty on the amount of
$11,795.98 for a total of $5,897.97.

6. As noted by the [Board], no reasonable argument can be made to
suggest that [E]mployer would be entitled to a complete suspension of
[C]laimant’s workers’ compensation benefits, consequently,
[E]mployer’s contest to the Penalty Petition was unreasonable.
Claimant’s counsel has submitted a breakdown of his hourly work[;]
however, the Undersigned would note that 8.1 hours of the requested
44.4 hours represents work performed by [C]laimant’s counsel after
the [Board]’s Decision of April 2, 2013. Consequently, I find that
[C]laimant’s counsel has expended 36.3 hours on the Penalty
Petition. Claimant’s counsel has requested payment of $300 per
hour. The Undersigned would note that $200 per hour is more in
keeping with the request made by counsel in this area,
consequently, the amount of attorney fee in this case would be
36.3 hours times $200 which would equal $7,260.00. The
Undersigned would note that the [C]laimant has already paid an
attorney fee of twenty (20%) percent to [C]laimant’s counsel for the
period from July 11, 2010 through December 16, 2010 equal to
twenty (20%) percent of [C]laimant’s compensation rate of $519.32,
consequently [C]laimant has already paid $2,359.12 to his counsel for
                                  10
       this period. Therefore, from the $7,260.00 awarded to [C]laimant’s
       counsel, $2,359.12 must be deducted and the remaining amount of
       $4,900.88 paid to [C]laimant’s counsel for attorney fee. The
       Undersigned would note that this reimbursement of attorney fee to
       [C]laimant would be subject to . . . any outstanding credit still ow[ed]
       to [E]mployer in this case.

(WCJ Decision, Jan. 7, 2014, Findings of Fact (2014 FOF) ¶¶ 4-6, R.R. at 104a
(emphasis added).) In fashioning the respective recoveries, the WCJ credited the
$5,897.97 penalty assessed against Employer against Employer’s credit of
$8,214.09, leaving Employer with $2,316.12 in credit. (WCJ Decision, Jan. 7,
2014, Conclusion of Law (2014 COL) ¶ 3, R.R. at 105a.) However, the WCJ
deducted that $2,316.12 from the $2,359.12 attorney fee already paid by Claimant
to his counsel, leaving Employer with no credit and Claimant with a
reimbursement of $43.00. (Id. at ¶ 4, R.R. at 105a.) Finally, the WCJ ordered that
Employer “pay [C]laimant’s counsel $4,900.88 as attorney fee for the
unreasonable contest.” (Order, Jan. 7, 2014. R.R. at 106a.)
       Both parties appealed the WCJ’s January 7, 2014 Order to the Board, which
affirmed on July 29, 2015. Employer now petitions this Court for review of the
Board’s Orders of April 2, 2013 and July 29, 2015, and Claimant cross-petitions
for review of the Board’s July 29, 2015 Order.4 On November 4, 2015, we granted
Employer’s Application for Supersedeas Pending Petition for Review.

       4
         Our review of an order of the Board is limited to “determining whether there has been a
violation of constitutional rights, [whether] errors of law [were] committed, or [whether] a
violation of appeal board procedures [occurred], and whether necessary findings of fact are
supported by substantial evidence.” Mark v. Workers’ Comp. Appeal Bd. (McCurdy), 894 A.2d
229, 233 n.6 (Pa. Cmwlth. 2006).

                                              11
   II.      DISCUSSION
            A. EMPLOYER’S APPEAL
         Employer makes two broad arguments on appeal: first, that the Board erred
by not allowing Employer to recoup overpayment made to Claimant through
offsetting Claimant’s workers’ compensation benefits; and second, that the Board
erred in affirming the WCJ’s decision to award penalties and unreasonable contest
attorney’s fees. We shall address each issue seriatim.

               1. Supersedeas Fund Reimbursement
         Employer first argues that the Board erred when it held that Employer must
recoup overpayments from the Supersedeas Fund instead of offsetting Claimant’s
ongoing workers’ compensation benefits. Employer argues that the Board failed to
recognize the differences between Sections 204(a) of the Act, which addresses
pension offsets, and Section 443(a) of the Act, which controls the application of
the Supersedeas Fund.       Employer argues that Section 204(a) of the Act was
designed to prevent double recovery by a claimant and the regulations
implementing Section 204(a) allows employers to take an offset for benefits an
employee has already received subsequent to the date of injury by withholding
workers’ compensation benefits. Conversely, Section 443(a) of the Act, according
to Employer, addresses reimbursement from the Supersedeas Fund and does not
apply here because recovery from the Supersedeas Fund can only occur after a case
has been finalized, and that reimbursing Claimant with the approximately $54,000
in workers’ compensation benefits withheld provides Claimant with an unlawful
double recovery since he received pension payments for the same injury.

                                         12
        Since the General Assembly enacted Act 57 in 1996, employers may offset
an employee’s workers’ compensation benefits to the extent the employer funded
an employee’s pension without prior authorization from the WCJ. Section 204(a)
of the Act, 77 P.S. § 71(a).5 Section 204(a) of the Act provides, in relevant part:

        The severance benefits paid by the employer directly liable for the
        payment of compensation and the 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 made under sections 108 and 306,
        except for benefits payable under section 306(c).[6]

77 P.S. § 71(a) (emphasis added). We have said that “Section 204(a) serves the
legislative intent of reducing the cost of workers’ compensation by allowing an
employer to avoid paying duplicate benefits for the same loss of earnings” and
“implicitly recognizes that public policy bars an employer from utilizing an
employee’s own retirement funds to satisfy its workers’ compensation obligation.”
Pa. State Univ./PMA Ins. Grp. v. Workers’ Comp. Appeal Bd. (Hensal), 911 A.2d
225, 227-28 (Pa. Cmwlth. 2006).
        The Bureau’s regulations implementing the Act address the process by
which an employer may take a pension offset. Under the regulatory scheme,
“employees shall report to the insurer amounts received in . . . pension benefits on
form LIBC-567, ‘Employee’s Report of Benefits.’” 34 Pa. Code § 123.3(a). This
report must occur within 30 days of the employee’s receipt of benefits. 34 Pa.
Code § 123.3(b). After receipt of notice from an employee, the insurer or self-

        5
            Added by Section 3 of the Act of June 24, 1996, P.L. 350.
        6
            77 P.S. § 513. Section 306(c) addresses the compensation schedule for specific loss
injuries.

                                               13
insured employer may offset benefits so long as notice is provided to the employee
at least 20 days prior to taking the offset through Form LIBC-761,
“Notice of Workers’ Compensation Benefit Offset.” 34 Pa. Code § 123.4(b). An
“employee may challenge the offset by filing a petition to review offset with the
Department.” 34 Pa. Code § 123.4(e). Any offsets taken must be taken on a
weekly basis and shall be “offset by the net amount an employe receives in pension
benefits to the extent funded by the employer directly liable for the payment of
workers’ compensation.” 34 Pa. Code §§ 123.8(a), 123.9(a). If an insurer or self-
insured employer learns that an employee has received pension benefits subsequent
to the date of injury, the insurer may be entitled to retroactive credit. 34 Pa. Code
§ 123.5(a). An insurer or employer shall recover the credit through an employee’s
future benefits by “divid[ing] by the weekly workers’ compensation rate. The
result shall be the number of weeks, and fraction thereof, the insurer is entitled to
offset against future payments of workers’ compensation benefits.” 34 Pa. Code §
123.5(b).
      There is no dispute as to whether Employer is entitled to credit for its
payments to Claimant’s pension pursuant to Section 204(a) of the Act.            The
question raised in this appeal by Employer is whether, under the facts of this case,
Employer may unilaterally recoup overpayments made subsequent to the
initiation of litigation directly from Claimant through offsets as outlined by
Section 123.5 of the Bureau’s regulations; or whether Employer must, as the
Board concluded, recoup such overpayments from the Supersedeas Fund.

                                         14
          Section 443(b) of the Act7 created the Supersedeas Fund as “a means to
protect an insurer who makes compensation payments to a claimant who ultimately
is determined not to be entitled thereto.”                   Bureau of Workers’ Comp. v.
Workmen’s Comp. Appeal Bd. (Allstate Ins. Co.), 508 A.2d 388, 390 (Pa. Cmwlth.
1986). Section 443(a) of the Act provides the circumstances by which recovery
may be made from the Supersedeas Fund.8 We have distilled Section 443(a) of the
Act as allowing reimbursement from the Supersedeas Fund if:

          1) a supersedeas was requested; 2) the request for supersedeas was
          denied; 3) the request was made in a proceeding under Section 413[9]

          7
              Added by Section 3 of the Act of February 8, 1972, P.L. 25, as amended, 77 P.S. §
999(b).
          8
              Section 443(a) provides:

          If, in any case in which a supersedeas has been requested and denied under the
          provisions of section 413 or section 430, payments of compensation are made as a
          result thereof and upon the final outcome of the proceedings, it is determined that
          such compensation was not, in fact, payable, the insurer who has made such
          payments shall be reimbursed therefor.

77 P.S. § 999(a), added by Section 3 of the Act of February 8, 1972, P.L. 25, as amended.
        9
          77 P.S. §§ 772, 774. Section 413 of the Act provides, in relevant part

          (a) A [WCJ] designated by the department may, at any time, modify, reinstate,
          suspend, or terminate a notice of compensation payable, an original or
          supplemental agreement or an award of the department or its [WCJ], upon
          petition filed by either party with the department, upon proof that the disability of
          an injured employe has increased, decreased, recurred, or has temporarily or
          finally ceased, or that the status of any dependent has changed.
          ...
          (a.1) The filing of a petition to terminate, suspend or modify a notice of
          compensation payable or a compensation agreement or award as provided in this
          section shall automatically operate as a request for a supersedeas to suspend the
          payment of compensation fixed in the agreement or the award where the petition
          alleges that the employe has fully recovered and is accompanied by an affidavit of
                                                                                     (Continued…)
                                                  15
       or Section 430[10] of the Act; 4) payments were continued because of
       the order denying supersedeas; and 5) in the final outcome of the
       proceedings, it was determined such compensation was not, in fact,
       payable.

Mark v. Workers’ Comp. Appeal Bd. (McCurdy), 894 A.2d 229, 233 (Pa. Cmwlth.
2006) (en banc) (footnotes omitted). In order to recover from the Supersedeas
Fund, an employer must apply for reimbursement to the “[D]epartment [of Labor
and Industry (Department)] on forms prescribed by the [D]epartment and furnished
by the insurer.” 77 P.S. § 999(a). If the Supersedeas Fund denies liability, the
matter is referred to a WCJ for hearing. Id.
       “It has been a workers’ compensation axiom . . . that where there is an
overpayment of compensation, relief must be obtained not from the injured

       a physician on a form prescribed by the department to that effect, which is based
       upon an examination made within twenty-one days of the filing of the petition.
       ...
       (a.2) In any other case, a petition to terminate, suspend or modify a compensation
       agreement or other payment arrangement or award as provided in this section
       shall not automatically operate as a supersedeas but may be designated as a
       request for a supersedeas, which may then be granted at the discretion of the
       [WCJ] hearing the case.

Id.
       10
          77 P.S. § 991, added by Section 3 of the Act of February 8, 1972, P.L. 25. Section 430
of the Act provides:

       (a) The lien of any judgment entered upon any award shall not be divested by any
       appeal.
       (b) Any insurer or employer who terminates, decreases or refuses to make any
       payment provided for in the decision without filing a petition and being granted a
       supersedeas shall be subject to a penalty as provided in section 435, except in the
       case of payments terminated as provided in section 434.

Id.

                                               16
employee, but from the Supersedeas Fund.” David B. Torrey & Andrew E.
Greenberg, Workers’ Compensation in Law and Practice § 13:247 (2008). In
Murphy v. Workmen’s Compensation Appeal Board (Ames Department Store),
605 A.2d 1297, 1300 (Pa. Cmwlth. 1992), this Court held that “when there is an
overpayment of compensation, relief must be obtained against the [S]upersedeas
[F]und.” Id. (emphasis added) (internal quotation marks omitted). In establishing
the Supersedeas Fund, “[t]he legislature recognized that recoupment from the
claimant was impractical and would undermine the benevolent purposes of the
Act.” Allstate Insur. Co., 508 A.2d at 390. Of course, recoupment from the
Supersedeas Fund can only occur for the periods in which the five
requirements of Section 443(a) are satisfied.
      Here, the Board held that Employer must recover from the Supersedeas
Fund by relying on our decision in Horan. The facts in Horan are as follows. A
claimant sustained a work injury and was placed on light duty status until he was
laid off almost 11 months later. Horan, 977 A.2d at 94. The employer denied
liability and the claimant filed a claim petition after being laid off seeking
temporary total disability benefits from the date of his lay off moving forward. Id.
At a hearing, the claimant testified that after being laid off, he received $419.00 per
week in unemployment compensation and 19 weeks of severance pay. Id. The
WCJ issued a decision granting the claim petition, but did not address whether
employer could offset workers’ compensation benefits due to the claimant’s
unemployment benefits and severance pay. Id. at 94-95. On appeal to the Board,
the employer argued that it was entitled to credit through an offset and requested a
supersedeas. Id. at 95. The Board denied supersedeas, which resulted in the
employer paying the claimant his full workers’ compensation benefits. Id. The

                                          17
Board eventually affirmed the WCJ, but modified the WCJ decision by allowing
the employer to offset for the unemployment compensation and severance benefits
received by the claimant.           Id.    The employer then filed an application for
Supersedeas Fund reimbursement for $29,861.47, which was challenged by the
Bureau.        Id.    The WCJ granted the application for Supersedeas Fund
reimbursement, but the Board reversed. Id. at 95-96. Relying on our decision in
City of Wilkes-Barre v. Workers’ Compensation Appeal Board (Spaide), 868 A.2d
620 (Pa. Cmwlth. 2004), which held that Section 204(a) of the Act provides for a
specific remedy in cases where the claimant is receiving both pension benefits
funded by the employer and workers’ compensation benefits, the Board held that
the employer is not entitled to reimbursement from the Supersedeas Fund. Horan,
977 A.2d at 96, 100.
      On appeal to this Court, we concluded that Spaide was not controlling and
that the employer was entitled to reimbursement from the Supersedeas Fund. We
stated:

      Spaide involved a request for supersedeas pursuant to Section 413.
      Unlike in Spaide,[the e]mployer here is asserting that it filed a request
      for supersedeas in a proceeding under Section 430 of the Act, and not
      Section 413. In Spaide . . . , this Court considered the issues of
      whether petitions filed pursuant to Section 306(f.1)(8)[11] and Section
      204(a) of the Act could be equated with petitions to suspend, modify,

      11
           77 P.S. § 531(8). Section 306(f.1)(8) provides:

      If the employe shall refuse reasonable services of health care providers, surgical,
      medical and hospital services, treatment, medicines and supplies, he shall forfeit
      all rights to compensation for any injury or increase in his incapacity shown to
      have resulted from such refusal.

Id.

                                                18
      or terminate benefits filed pursuant to Section 413 of the Act. Here,
      however, [the e]mployer sought supersedeas under the provisions of
      Section 430 and it is, therefore, irrelevant that the offsets/credits
      sought by [the e]mployer are derived from Section 204(a), and not
      Section 413. Section 430 of the Act allows an employer or insurer to
      request a supersedeas to suspend its obligation to pay workers’
      compensation benefits to a claimant pursuant to an order of a WCJ or
      the Board while that order is being appealed to the Board or this
      Court. Mark, 894 A.2d at 234–35. This is precisely what [the
      e]mployer did in this case. [The e]mployer requested a supersedeas in
      connection with its appeal of the WCJ’s initial decision and order
      granting [the c]laimant’s Claim Petition. The purpose behind [the
      e]mployer requesting a supersedeas was to suspend [the e]mployer’s
      recently established liability to pay [the c]laimant workers’
      compensation benefits pending the outcome of the appeal that it filed
      with the Board. Therefore, we conclude that [the e]mployer’s request
      for supersedeas was filed in a proceeding under Section 430.

Id. at 100-01. We further distinguished Spaide by noting that unlike Spaide, the
employer in Horan “contested Claimant’s injury from the beginning and, thus,
there were no benefits being paid from which Employer could take automatic
offsets/credits pursuant to the Bureau’s regulations.” Id. at 101. Further, if the
employer acted on its own by decreasing claimant’s workers’ compensation
benefits in light of an order requiring it to pay such, it would have been subject to
penalties. Id. Finally, we reasoned that the case was different than Spaide because
unlike Spaide, “there [was] no threat of a double recovery for [the e]mployer in
this case. In fact, without receiving any reimbursement from the Supersedeas
Fund, [the e]mployer will not recover any amount of the offsets/credits to which it
is entitled.” Id. at 102. Accordingly, this Court held that Employer met the
requirements for Supersedeas Fund recovery and reversed the Board’s order.
      Employer contends that Horan does not control this case because in Horan,
the employer could not unilaterally take an offset because there were no benefits
being paid at the time. Employer further argues that, unlike in Horan, under the
                                         19
Board’s approach Claimant will receive a double recovery in excess of $54,000.00,
which undermines the intent of the Act.
          Horan established the principle that an employer may recover from the
Supersedeas Fund under Section 430 of the Act for overpayments made to a
claimant pursuant to Section 204(a) of the Act. This Court applied the holding in
Horan in SEPTA v. Workers’ Compensation Appeal Board (Speca) (Pa Cmwlth.,
No. 1359 C.D. 2008, filed November 17, 2009) (Speca II).12 In Speca II, the
claimant was receiving both disability benefits and an employer sponsored pension
via a voluntary retirement package. Speca II, slip. op. at 1-2. The WCJ granted
the claimant disability benefits but refused to allow the employer to take a pension
offset.        Id. at 2.   The Board affirmed and denied the employer’s request for
supersedeas, resulting in the employer paying the claimant a lump sum for past
benefits due and continued benefit payments. Id. We reversed the Board’s order,
holding that an offset was appropriate under Section 204(a) of the Act. SEPTA v.
Workers’ Comp. Appeal Bd. (Speca), 822 A.2d 114, 120 (Pa. Cmwlth. 2003)
(Speca I).         Following a remand to determine the amount of offset, the WCJ
determined that the employer was entitled to $210,878.29 in credit. Speca II, slip.
op. at 2. The employer subsequently filed an application for Supersedeas Fund
reimbursement. Id. The WCJ granted the application, but the Board reversed,
holding that Supersedeas Fund reimbursement was not available because the
overpayment was made pursuant to Section 204(a) of the Act. Id. We initially
affirmed, but granted reconsideration based on the recently issued opinion in

          12
           Pursuant to Section 414 of this Court’s Internal Operating Procedures, an unreported
panel decision issued by this Court after January 15, 2008 may be cited “for its persuasive value,
but not as binding precedent.” 210 Pa. Code § 69.414.

                                               20
Horan. In our opinion on reconsideration, this Court held that Horan was directly
controlling and that because the employer satisfied the requirements of Section 443
of the Act, it was entitled to reimbursement from the Supersedeas Fund. Id. at 8.
      Unlike in Horan and Speca II, where the employers paid the claimants the
full amount of their workers’ compensation benefits while also contributing to a
pension, Employer here originally paid Claimant the entire amount offset in a lump
sum, but subsequently recommenced offsets of Claimant’s workers’ compensation
benefits pursuant to WCJ orders of December 17, 2010 and December 27, 2010.13
Later orders of the WCJ and the Board suspending offsets were stayed when
supersedeas was granted by the Board and this Court, resulting in Employer
recouping $54,605.67 in overpayment. (Employer’s Remand Exhibit A.) As such,
Employer does not meet the fourth and fifth requirements of Section 443 of the Act
– that “the payments were continued because of the order denying supersedeas;
and . . . in the final outcome of the proceedings, it was determined such
compensation was not, in fact, payable.” Mark, 894 A.2d at 233.
      Supersedeas Fund recovery is intended to protect employers or insurers that
make compensation payments that are later, by virtue of administrative or judicial
action, determined not to be required. Allstate Ins. Co., 508 A.2d at 390. It is not
meant to be used by claimants as a tool to obtain double recovery. Because
Employer has already recouped the majority of the payments to which Claimant is
not entitled, and affirming the Board’s order would result in double recovery,
Supersedeas Fund recovery is not available. Accordingly, Employer was entitled

      13
         Employer first began to take an offset by suspending Claimant’s benefits after the
Supreme Court denied Claimant’s petition for allowance of appeal on the basis of the WCJ’s
September 29, 2005 Order. This will be discussed below. Subsequent offsets were taken by
Employer pursuant to the WCJ’s interlocutory order on December 17, 2010.

                                            21
to recoup these overpayments through offsets pursuant to Section 204(a) of the Act
and the associated Bureau regulations.
       However, the $8,214.09 in overpayments made between February 1, 2002
and March 11, 2003 must be recovered from the Supersedeas Fund. These funds
were originally recouped by Employer, but repaid to Claimant in a lump sum on
May 2, 2007. The December 17, 2010 and December 27, 2010 interlocutory
orders of the WCJ that authorized offsets did not include offsets for overpayments
made between February 1, 2002 and March 11, 2003, because the WCJ originally
held that Employer was not entitled to recoup overpayments made prior to March
11, 2003. It was not until January 8, 2014, that the WCJ concluded that Employer
was entitled to a credit for this period, and that order has been stayed pending our
resolution. Because these payments meet all the requirements of Section 443 of
the Act, pursuant to Horan, Employer must recover these funds from the
Supersedeas Fund, and not directly from Claimant.

            2. Penalties and Attorney’s Fees
       Next, Employer argues that the Board erred by remanding the case for
consideration of penalties and subsequently approving the penalties imposed by the
WCJ.    Employer contends that penalties are not warranted because it never
suspended or terminated Claimant’s benefits, but instead took the offsets
retroactively as was authorized by the WCJ’s September 29, 2005 Decision.
According to Employer, it paid to Claimant $139.74 in weekly workers’
compensation benefits after supersedeas was denied on January 3, 2008, and it was
entitled to recoup these payments by virtue of this Court’s reinstatement of the
WCJ’s September 29, 2005 Order. Relatedly, Employer contends that the WCJ, in

                                         22
his September 8, 2011 opinion, addressed penalties and unreasonable contest fees
and concluded that the contest was reasonable and that no penalties would be
assessed. It is Employer’s contention that the Board acted outside the bounds of
the law when it remanded the matter to the WCJ because the WCJ’s September 8,
2011 decision was a proper exercise of discretion and supported by substantial
evidence.

               a. Penalties for Violating the Act
         At issue first is the Board’s decision to reverse the WCJ’s September 2011
decision to not impose penalties based on its conclusion that the WCJ abused his
discretion by not imposing penalties on Employer for unilaterally suspending
Claimant’s benefits between July 30, 2010 and December 16, 2010 without
following the procedures required by the Act.                   Section 413(b) of the Act14
provides:

         Any insurer who suspends, terminates or decreases payments of
         compensation without submitting an agreement or supplemental
         agreement therefor as provided in section 408[15], or a final receipt as

         14
              Added by Section 3 of the Act of February 8, 1972, P.L. 25, as amended, 77 P.S. §
774.1.
         15
              77 P.S. § 732. Section 408 of the Act provides:

         All notices of compensation payable and agreements for compensation may be
         modified, suspended, reinstated, or terminated at any time by an agreement or
         supplemental agreement as the case may be with notice to the department, if the
         incapacity of an injured employe has increased, decreased, recurred, or
         temporarily or finally terminated, or if the status of any dependent has changed.

Id.

                                                  23
       provided in section 434[16], or without filing a petition and either
       alleging that the employe has returned to work at his prior or
       increased earnings or where the petition alleges that the employe has
       fully recovered and is accompanied by an affidavit of a physician on a
       form prescribed by the department to that effect which is based upon
       an examination made within twenty-one days of the filing of the
       petition or having requested and been granted a supersedeas as
       provided in this section, shall be subject to penalty as provided in
       section 435.

77 P.S. § 774.1.
       Section 435(d)(i) of the Act17 provides:

       (d) The department, the board, or any court which may hear any
       proceedings brought under this act shall have the power to impose
       penalties as provided herein for violations of the provisions of this act
       or such rules and regulations or rules of procedure:
             (i) Employers and insurers may be penalized a sum not
             exceeding ten per centum of the amount awarded and interest

       16
         Added by Section 6 of the Act of June 26, 1919, P.L. 642, as amended, 77 P.S. § 1001.
Section 434 of the Act provides:

       A final receipt, given by an employe or dependent entitled to compensation under
       a compensation agreement notice or award, shall be prima facie evidence of the
       termination of the employer’s liability to pay compensation under such agreement
       notice or award: Provided, however, That a referee designated by the department
       may, at any time within two years from the date to which payments have been
       made, set aside a final receipt, upon petition filed with the department, or on the
       department’s own motion, if it be shown that all disability due to the injury in fact
       had not terminated. Where, however, a person is receiving benefits pursuant to the
       act of June 28, 1935 (P.L. 477, No. 193), referred to as the Heart and Lung Act,
       the two-year period within which a referee may set aside a final receipt upon
       petition filed with the department, or upon the department’s own motion, shall not
       begin to run until the expiration of the receipt of benefits pursuant to the Heart
       and Lung Act.

Id.
       17
             Added by Section 3 of the Act of February 8, 1972, P.L. 25, as amended, 77 P.S. §
991(d)(i).

                                               24
            accrued and payable: Provided, however, That such penalty
            may be increased to fifty per centum in cases of unreasonable
            or excessive delays. Such penalty shall be payable to the same
            persons to whom the compensation is payable.

77 P.S. § 991(d)(i). The imposition and amount of a penalty to be imposed is left
to the sound discretion of the WCJ and may only be overturned on appeal for abuse
of discretion. City of Phila. v. Workers’ Comp. Appeal Bd. (Calderazzo), 968
A.2d 841, 850 (Pa. Cmwlth. 2009).
      As a primary matter, Employer’s argument that it did not violate the Act
because it was authorized to stop all payments of workers’ compensation to
Claimant by the WCJ’s September 29, 2005 order after the Supreme Court denied
Claimant’s petition for allowance of appeal is not correct. Prior to the September
29, 2005 order, Employer suspended Claimant’s workers’ compensation payments,
and the WCJ issued an interlocutory order on September 29, 2004, requiring
Employer to commence workers’ compensation payments minus a $200 per week
deduction to recoup any overpayment and minus a credit of $139.74 per week to
offset current pension payments. (2005 FOF ¶ 4, R.R. at 3a.) By the time the WCJ
addressed the issue a year later, Employer had already recouped the entire
overpayment; and in fact, Employer recouped more than what was owed and the
WCJ ordered Employer to refund the balance of $2,370.29 to Claimant. (2005
COL ¶ 6, R.R. at 11a.) While the WCJ’s 2005 decision allows Employer to take a
credit for future pension payments in the form of offsets from March 11, 2003
forward, the WCJ’s decision does not permit Employer to suspend benefits to
recoup overpayment since the matter was settled.
      Further, even if Employer is correct that it did not violate the Act by
recouping overpayment made since March 11, 2003 through offsets taken directly

                                       25
from Claimant, Employer may still be subject to sanctions because “violations of
the Act with respect to nonpayment of compensation exist independently of the
merits of the case.” Winkelmann v. Workmen’s Comp. Appeal Bd. (Estate of
O’Neill), 646 A.2d 58, 60 (Pa. Cmwlth. 1994). In Calderazzo, we addressed a
situation where an employer ceased paying a claimant workers’ compensation
benefits because the employer thought suspending benefits was an appropriate
means to take a pension offset under the law. Calderazzo, 968 A.2d at 851. The
employer argued that it did not violate the Act because the claimant received all
the money she was entitled to through the pension. Id. at 850. While we agreed
that the employer was entitled to take an offset, we held that penalties were
appropriate because the employer unilaterally suspended the claimant’s benefits
through offsetting the entire amount of benefit payments without following the
proper procedures for suspending benefits. Id. at 851. Calderazzo is directly
controlling here. We agree with the Board that the WCJ abused its discretion by
not imposing penalties for nonpayment of benefits because after the Supreme
Court denied Claimant’s petition for allowance of appeal in 2007, “[Employer]
should have filed a new Notice of Offset form, consistent with Sections 123.4 and
123.5 of the [Bureau’s] regulations, thereby affording Claimant 20 days’ notice
and an opportunity to file a petition to review to challenge the adjusted offset,
before undertaking a wholesale suspension of benefits by letter.” (Board Op., Apr.
2, 2013, at 15, R.R. at 98a.) Accordingly, we affirm the Board’s Order of April 2,
2013 insofar as it remands the matter to the WCJ to address penalties and
unreasonable contest attorney’s fees.

                                        26
         b. 50 Percent Penalty
      Employer next argues that the Board erred in its July 29, 2015 Order by
affirming the WCJ’s imposition of a 50 percent penalty when the WCJ did not
make any finding of fact that Employer caused an unreasonable or excessive delay.
Employer contends that it did not cause an unreasonable or excessive delay as it
immediately complied with the WCJ’s interlocutory order of December 17, 2010
by reinstating benefits in the amount of $226.85 per week and that its contest was
reasonable.
      Section 435(d)(i) of the Act provides for a penalty not exceeding 10 percent
of the amount awarded and interest. 77 P.S. § 991(d)(i). The penalty may be
increased to 50 percent only if the WCJ concludes that the case involved
unreasonable or excessive delays. Id. Absent an abuse of discretion, this Court
will not overturn a WCJ’s assessment of a 50 percent penalty. City of Phila. v.
Workers’ Comp. Appeal Bd. (Sherlock), 934 A.2d 156, 161 (Pa. Cmwlth. 2007).
“An abuse of discretion is not merely an error of judgment but occurs when the law
is misapplied in reaching a conclusion.” Id. The WCJ here found that Employer
suspended Claimant’s workers’ compensation benefits illegally for 22 5/7 weeks,
and the length of Employer’s unlawful action led the WCJ to impose a 50 percent
penalty. (2014 FOF ¶ 5, R.R. at 104a.) While the WCJ never used the words
“unreasonable or excessive” in describing Employer’s delay in payment, we see no
abuse of discretion in the WCJ’s decision to impose a 50 percent penalty.

         c. Attorney’s Fees
      Finally, Employer argues that the Board erred in approving the WCJ’s
assessment of attorney’s fees for Employer’s contest of Claimant’s Penalty

                                        27
Petition. Under Section 440(a) of the Act,18 claimants who successfully litigate a
contested case are entitled to an award of reasonable attorney’s fees unless an
employer presents a “reasonable basis for the contest.” 77 P.S. § 996(a). The
purpose of Section 440(a) is “to deter unreasonable contests by employers and to
insure that a successful claimant receives compensation undiminished by necessary
costs of litigation.” Papernik v. Workmen’s Comp. Appeal Bd., 399 A.2d 1205,
1207 (Pa. Cmwlth. 1979). The question of whether a contest is reasonable within
the meaning of Section 440(a) is a question of law subject to our de novo review.
Lindemuth v. Workers’ Comp. Appeal Bd. (Strishock Coal Co.), 134 A.3d 111,
127-28 (Pa. Cmwlth. 2016). In some cases we suggest that “where there is a
violation of the Act there cannot be a reasonable contest and an award of attorney
fees is proper.” Zuback v. Workers’ Comp. Appeal Bd. (Paradise Valley Enter.
Lumber Co.), 892 A.2d 41, 47 (Pa. Cmwlth. 2006). However, we reject that there
is a per se rule that an employer can never present a reasonable contest when it is
ultimately concluded that it violated the Act. In Bates v. Workers’ Compensation

      18
         Added by Section 3 of the Act of February 8, 1972, P.L. 25, as amended, 77 P.S. §
996(a). Section 440(a) provides:

      In any contested case where the insurer has contested liability in whole or in part,
      including contested cases involving petitions to terminate, reinstate, increase,
      reduce or otherwise modify compensation awards, agreements or other payment
      arrangements or to set aside final receipts, the employe or his dependent, as the
      case may be, in whose favor the matter at issue has been finally determined in
      whole or in part shall be awarded, in addition to the award for compensation, a
      reasonable sum for costs incurred for attorney’s fee, witnesses, necessary medical
      examination, and the value of unreimbursed lost time to attend the proceedings:
      Provided, That cost for attorney fees may be excluded when a reasonable basis for
      the contest has been established by the employer or the insurer.

Id.

                                              28
Appeal Board (Titan Construction Staffing, LLC), 878 A.2d 160, 164-65 (Pa.
Cmwlth. 2005), we stated:

      Each case must be decided on its own facts in order to determine
      whether an employer’s contest of a petition asserting a violation of the
      Act is reasonable. Otherwise, the language in Section 440(a) of the
      Act that, “attorney fees may be excluded when a reasonable basis for
      the contest has been established by the employer” would be nullified
      with respect to all penalty petitions. If we adopted the rule [that any
      time a claimant shows a violation of the Act a contest is
      unreasonable], an employer . . . would always be deprived of the
      opportunity to explain its actions and contest the amount of the
      penalty sought. We conclude that this is not the law.

Id. at 165. Instead, of adopting a per se rule, we “look to the totality of the
circumstances surrounding the contest” to determine “whether the contest was
prompted to resolve a genuinely disputed issue or merely to harass the claimant.”
Pa. State Univ. v. Workers’ Comp. Appeal Bd. (Sox), 83 A.3d 1081, 1089 (Pa.
Cmwlth. 2013).
      In Calderazzo the claimant sought attorney’s fees for the employer’s contest
of both his reinstatement petition and penalty petition. We held that although the
claimant was not entitled to attorney’s fees related to the employer’s challenge to
the claimant’s reinstatement petition alleging that the employer illegally took a
pension offset because the offset was appropriate, the claimant was entitled to
attorney’s fees with regard to the employer’s contest of the claimant’s penalty
petition because the employer did not reasonably contest that it violated the Act by
unilaterally suspending benefits without following the correct procedures.
Calderazzo, 968 A.2d at 852. We conclude that Calderazzo is binding precedent

                                        29
here and affirm the WCJ’s decision to award Claimant an attorney fee of $7,260.
(2014 COL ¶ 4.)

         B. CLAIMANT’S APPEAL
      In his Cross-Petition for Review, Claimant challenges the Board’s
affirmance of various conclusions made by the WCJ in his January 7, 2014 Order
assessing the amount of penalties and attorney’s fees. Claimant first argues that
the Board erred in affirming the WCJ’s decision to impose a penalty on only the
benefits owed between July 10, 2010 and December 16, 2010, instead of the entire
period Employer took an offset during pendency of the appeal. According to
Claimant, Employer violated the Act not only by completely suspending benefits
in the later part of 2010, but also by taking an offset to recoup previous
overpayment when the recoupment should have come from the Supersedeas Fund.
      Our disposition on Employer’s appeal disposes of Claimant’s first argument.
Because we conclude above that Employer did not violate the Act by taking an
offset pursuant to the WCJ’s interlocutory orders of December 17, 2010 and
December 27, 2010, no penalty is warranted for any offsets withheld after
December 16, 2010. Accordingly, the WCJ’s decision to not impose penalties on
the funds offset by Employer during any period other than between July 10, 2010
and December 16, 2010, was not an abuse of discretion.
      Next, Claimant argues that the WCJ erred by deducting the penalty assessed
from the Employer’s credit for overpayments made between February 1, 2002
through March 11, 2003.     Claimant contends that penalties are not workers’
compensation benefits and serve a different purpose, namely to assure compliance

                                       30
with the Act. According to Claimant, deducting penalties from the overpayment is
contrary to the humanitarian purposes of the Act.
      In response to Claimant’s argument above, the Board held:

      Instantly, [Employer] was assessed a penalty in the amount of
      $5,897.97 and also was awarded a pension offset credit of $8,214.09.
      The Judge credited the amount [Employer] owed in its penalty against
      the amount it was to receive from Claimant in terms of the pension
      offset credit.     In addition, the Judge credited $2,316.12 in
      unreasonable contest attorney’s fees to fully satisfy the entire pension
      offset credit Claimant owed [Employer]. While there is nothing in the
      Act that authorizes such a crediting of awards to each party, past
      precedent has allowed the use of equitable principles in workers’
      compensation cases under limited circumstances. See Fahringer,
      McCarty & Grey, Inc. v. W[orkmen’s] C[omp]. A[ppeal] B[d].
      (Green), 529 A.2d 56[, 59] (Pa. Cmwlth. 1987) (citing to equitable
      principles the court allowed a recoupment of overpaid benefits from
      the claimant’s future benefits). Thus, we determine that the Judge
      under these limited circumstances appropriately used his equitable
      power to offset the awards and make each party whole.

(Board Op., July 29, 2015, at 8, R.R. at 121a.)
      In Fahringer, we said:

      The doctrine of unjust enrichment is an equitable one; the Board,
      however, does not have its roots in equity. While we do not believe
      that this fact precludes the Board from employing certain equitable
      principles, its use of such principles must be restricted in light of
      its statutory constraints.

Fahringer, 529 A.2d at 59 (emphasis added). Thus, we must assess the provisions
of the Act to determine whether the approach adopted by the Board is appropriate.
      The purpose of Section 204(a) of the Act is to “reduc[e] the cost of workers’
compensation by allowing an employer to avoid paying duplicate benefits for the
same loss of earnings. Hensal, 911 A.2d at 227-28. Conversely, the purpose of
                                         31
Section 435(d)(i) of the Act is to provide the workers’ compensation authorities
“with the powers and mechanisms needed to enforce the Act and to require
employers to make reasonably prompt payment of compensation.”                Graphic
Packaging, Inc. v. Workers’ Comp. Appeal Bd. (Zink), 929 A.2d 695, 699 (Pa.
Cmwlth. 2007) (emphasis omitted). Thus, the two provisions serve very different
purposes and a claimant may receive penalties notwithstanding the ultimate
decision in the case.
      In Palmer v. Workers’ Compensation Appeal Board (City of Philadelphia),
850 A.2d 72, 75 (Pa. Cmwlth. 2004), a WCJ awarded a claimant penalties pursuant
to Section 435(d)(i) of the Act when, like here, the employer suspended benefits
without following the proper procedure. The Board reversed and held that the
employer should not be subject to penalties because it suspended benefits pursuant
to a pension agreement, and the claimant was not entitled to the benefits withheld.
Id. at 75-76. On appeal to this Court, the employer argued that Board was correct
and that penalties cannot be awarded unless the claimant suffers economic harm.
Id. at 76. We disagreed and reinstated the WCJ’s order. We reasoned that harm is
not a prerequisite for penalties, and that penalties are imposed to give the Board the
power to ensure compliance with the Act. Id. at 78. Thus, Palmer establishes that
the issues of penalties for suspending benefits must be seen as distinct and separate
from any award of compensation. Pursuant to these principles, we conclude that
the WCJ abused his authority by utilizing equitable principles to deduct the
$5,897.97 in penalties awarded to Claimant from the $8,214.09 compensation
credit owed to Employer.       We similarly conclude that the WCJ abused his
discretion by deducting $2,359.12 in attorney fees previously withheld from
Claimant for the period from July 11, 2010 to December 16, 2010, from the

                                         32
penalty imposed.        Penalties serve a different purpose than compensation or
attorney fees and must be treated as separate.
      Finally, Claimant contends that the WCJ erred by reducing Claimant’s
counsel’s hourly rate from $300 to $200, as the $300 rate was supported by
substantial evidence.
      Section 440(b) of the Act provides, in relevant part:

      If counsel fees are awarded and assessed against the insurer or
      employer, then the workers’ compensation judge must make a finding
      as to the amount and the length of time for which such counsel fee is
      payable based upon the complexity of the factual and legal issues
      involved, the skill required, the duration of the proceedings and the
      time and effort required and actually expended.

77 P.S. § 996(b). Our Supreme Court has interpreted this provision as requiring
the WCJ to “base the award upon the record.” Ramich v. Workers’ Comp. Appeal
Bd. (Schatz Elec., Inc.), 770 A.2d 318, 323 (Pa. 2001). “As long as the amount
and difficulty of the work performed by Claimant’s attorney is reasonably related
to the fee awarded, we will not disturb the WCJ’s award.” City of Phila. v.
Workers’ Comp. Appeal Bd. (Andrews), 948 A.2d 221, 231 (Pa. Cmwlth. 2008)
(emphasis in original).
      Here, counsel submitted an itemized breakdown of the hours worked and set
a $300 hourly rate. (Claimant’s Remand Ex. 1.) Based on a review of the amount
and level of difficulty of the work reported on the itemized list, the WCJ concluded
that $200 an hour was “more in keeping with the request made by counsel in this
area” and awarded $7,260.00 in unreasonable contest attorney’s fees. (2014 FOF ¶
6, R.R. at 104a.) As the WCJ considered the itemized list, the only evidence
presented on this issue, we have no reason to dispute that the WCJ’s assessment is

                                         33
reasonably related to the amount and difficulty of the work, and affirm the Board
on this point.19

   III.     CONCLUSION
       In sum, with regard to the Board’s April 2, 2013 Decision: 1) we reverse the
Board’s conclusion that Employer must reimburse Claimant for benefits taken as
offsets and recoup the overpayment made after March 11, 2003, from the
Supersedeas Fund; 2) we affirm the Board’s conclusion that Employer’s
recoupment of the overpayment of $8,214.09 made between February 1, 2002 and
March 11, 2003, must be recovered from the Supersedeas Fund; and 3) we affirm
the Order insofar as it remanded the matter to the WCJ to assess penalties and
unreasonable contest attorney’s fees.
       With regard to the Board’s July 29, 2015 Order: 1) we affirm the Board’s
conclusion that the WCJ did not err by reducing Claimant’s counsel’s rate to $200
per hour; 2) we affirm the Board’s conclusion that the WCJ did not err in assessing
a 50 percent penalty instead of a 10 percent penalty for unilaterally suspending
Claimant’s workers’ compensation benefits; and 3) we reverse the Board’s
conclusion that the WCJ acted within its equitable powers to deduct penalties and
unreasonable contest attorney’s fees awarded to Claimant from the credit owed to
Employer.
       This case has lasted over a decade, with numerous remands to the WCJ and
the Board. Because we can make the required adjustments to the WCJ’s earlier

       19
          We need not address Claimant’s argument that the Board misstated the amount
Employer repaid to Claimant as $54,605.67 instead of $37,090.27 because this alleged error has
no impact on the substantive issues in this case.

                                             34
calculations necessitated by our order, we will do so. Employer may recoup its
credit of $8,213.09 as a result of pension payments made to Claimant from
February 1, 2002 through March 11, 2003, from the Supersedeas Fund upon a
separate petition. Employer shall pay to Claimant $5,897.97, representing a 50
percent penalty on the $11,795.98 unlawfully suspended between July 11, 2010
through December 16, 2010.        Employer shall pay to Claimant $7,260.00 in
unreasonable contest attorney’s fees related to the Penalty Petition.

                                          ________________________________
                                          RENÉE COHN JUBELIRER, Judge

                                         35
        IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Consolidation Coal Company and            :
East Coast Risk Management,               :
                       Petitioners        :
                                          :
                    v.                    :   No. 1569 C.D. 2015
                                          :
Workers’ Compensation Appeal              :
Board (Albani),                           :
                      Respondent          :
                                          :
Donald R. Albani,                         :
                           Petitioner     :
                                          :
                    v.                    :   No. 1681 C.D. 2015
                                          :
Workers’ Compensation Appeal              :
Board (Consolidation Coal Company         :
and East Coast Risk Management),          :
                        Respondents       :

                                        ORDER

      NOW, September 13, 2016, the April 2, 2013 and July 29, 2015 Orders of
the Workers’ Compensation Appeal Board, entered in the above-captioned matter,
are affirmed in part and reversed in part consistent with the foregoing opinion.
Consolidation Coal Company and East Coast Risk Management shall pay to
Donald R. Albani a penalty of $5,897.97 and to counsel $7,260.00 in unreasonable
contest attorney’s fees.

                                          ________________________________
                                          RENÉE COHN JUBELIRER, Judge