Court Opinion

ID: 3212899
Source: CourtListenerOpinion
Date Created: 2016-06-14 15:09:57.140971+00
Date Added: 2024-06-11T12:38:01.810822
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Victoria Sandy,                        :
                         Petitioner    :
                                       :
                   v.                  :   No. 1682 C.D. 2015
                                       :   Submitted: February 19, 2016
Workers’ Compensation Appeal           :
Board (Commonwealth of                 :
Pennsylvania, Department of            :
Military and Veterans Affairs and      :
Inservco Insurance Services, Inc.),    :
                         Respondents   :

BEFORE:     HONORABLE RENÉE COHN JUBELIRER, Judge
            HONORABLE ANNE E. COVEY, Judge
            HONORABLE JAMES GARDNER COLINS, Senior Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE COHN JUBELIRER                    FILED: June 14, 2016

      Victoria Sandy (Claimant) petitions for review of the August 14, 2015 Order
of the Workers’ Compensation Appeal Board (Board), affirming the Decision of
the Workers’ Compensation Judge (WCJ), which denied Claimant’s Petition to
Review Compensation Benefit Offset (Review Offset Petition). Claimant argues
that the Board erred by affirming the WCJ’s Decision because the Commonwealth
of Pennsylvania Department of Military and Veterans Affairs (Department) and its
insurance carrier, Inservco Insurance Services, Inc., (together, Employer) waived
their right to recoup an overpayment of workers’ compensation benefits. For the
reasons that follow, we affirm.
      The facts of this case are not in dispute. Claimant sustained a back injury in
the course and scope of her employment with Employer on September 17, 2009.
Pursuant to a notice of compensation payable, Claimant received compensation
benefits at a rate of $418.00 per week based on an average weekly wage of
$601.15. (Board Op. at 1, R.R. at 12; Hr’g Tr. at 18.) Claimant retired on
December 27, 2012. (SERS Letter, R.R. at 32.) On February 28, 2013, Claimant
completed and returned a Form LIBC-756 (Employee’s Report of Benefits for
Offsets), which Employer sent to her. Claimant indicated therein that she began
receiving Social Security (old age) benefits on February 15, 2013, at the rate of
$665.00 per month, and pension benefits beginning on February 20, 2013, at a net
rate of $391 per month. (R.R. at 44.)
      On September 4, 2013, Employer issued Form LIBC-761, Notice of
Workers’ Compensation Benefit Offset (Notice of Offset), stating that it was
entitled to an offset credit for 50% of the Social Security (old age) benefits
received by Claimant in the amount of $76.63 per week, from February 20, 2013
through October 4, 2013. The Notice of Offset indicated that the total offset
amount of $2,485.00 for overpayment of benefits already received would be
deducted from Claimant’s weekly workers’ compensation benefits beginning on
October 5, 2013 and continuing through November 26, 2013. During that time,
Claimant would receive $0 in workers’ compensation benefits although she would
continue to receive her other benefits. After that, beginning on November 27,
2013, Claimant would receive reduced compensation benefits at the rate of
$289.74 per week, reflecting, respectively, the $76.63 and $51.63 in offsets related
to Claimant’s receipt of Social Security (old age) and pension benefits. (R.R. at
29-30; Employer’s Br., App. A at 2, 4.)

                                          2
       Thereafter, Claimant filed the Review Offset Petition alleging that the
Employer waived its request to recover any alleged overpayment and, in the
alternative, that the proposed recovery is unreasonable.               The Review Offset
Petition was assigned to the WCJ on January 9, 2014, and a hearing was held
before the WCJ on January 30, 2014. No testimony was offered, but documents
regarding Claimant’s completion and submission of LIBC forms and the
calculation of the offset and overpayment were entered into evidence, and
discussion between the parties ensued. The parties stipulated that Employer had, at
the time of the hearing, recouped the full $2,485.00 overpayment for benefits
already received.
       Based upon the evidence presented, the WCJ denied and dismissed the
Review Offset Petition, concluding that Employer did not waive its right to recoup
the compensation offset by waiting until September 4, 2013 to issue the Notice of
Offset even though Claimant returned the Form LIBC-756 on February 28, 2013.
Claimant appealed to the Board, which affirmed. Claimant now petitions this
Court for review.1
       On appeal, Claimant argues that the Board erred in concluding that
Employer’s delay in seeking the offset did not constitute a waiver of its right to
collect the amount overpaid during the more than six-month period between
Claimant’s filing of the Form LIBC-756 and Employer’s issuing of the Notice of

       1
         “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 [whether] an error of law was
committed.” Cytemp Specialty Steel v. Workers’ Comp. Appeal Bd. (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’ Comp. Appeal Bd. (Todd), 942 A.2d 933, 936 n.3 (Pa. Cmwlth.
2008).

                                              3
Offset. As she did before the Board, Claimant contends that this Court’s decision
in Maxim Crane Works v. Workers’ Compensation Appeal Board (Solano), 931
A.2d 816, 819-20 (Pa. Cmwlth. 2007), supports her argument that Employer’s
untimely action in taking the offset constitutes a waiver of its right to do so under
the doctrine of laches.
       An employer’s authority to offset the receipt of workers’ compensation
benefits by other benefits the employee receives is set forth in Section 204(a) of
the Workers’ Compensation Act (Act),2 which provides that:

       Fifty per centum of the benefits commonly characterized as “old age”
       benefits under the Social Security Act . . . shall also be credited
       against the amount of the payments made under sections 108 and 306,
       except for benefits payable under section 306(c): Provided, however,
       That the Social Security offset shall not apply if old age Social
       Security benefits were received prior to the compensable injury.

77 P.S. § 71(a) (internal citation omitted).3 The purpose of Section 204(a) of the
Act is to prevent a claimant from receiving a double recovery “for the same loss of
wages[,]” which thereby “reduces the cost of the workers’ compensation system.”
City of Pittsburgh v. Workers’ Comp. Appeal Bd. (Wright), 90 A.3d 801, 811 (Pa.
Cmwlth. 2014).        Pursuant to Sections 123.3 and 123.501 of the regulations
implementing the Act, 34 Pa. Code §§ 123.3, 123.501,4 employees are required to

       2
         Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-1041.4, 2501-2708.
       3
         The above portion of Section 204(a) providing for an offset for pension, severance, and
Social Security (old age) payments was added by Section 3 of the Act of June 24, 1996, P.L.
350.
       4
         Section 123.3 of the regulations provides, as follows:

       (a) Employees shall report to the insurer amounts received in unemployment
       compensation, Social Security (old age), severance and pension benefits on form
                                                                               (Continued…)
                                               4
report their receipt of Social Security (old age) benefits to the employer on a Form
LIBC-756, which must be issued by the employer to the claimant. See 34 Pa.
Code § 123.4(d).5 “Section 204(a) and the regulations expressly authorize an
employer to do a retrospective offset as needed to recover overpaid workers’
compensation benefits.” Wright, 90 A.3d at 811 (emphasis added).6

       LIBC-756, “Employee’s Report of Benefits.” This includes amounts withdrawn
       or otherwise utilized from pension benefits which are rolled over into an IRA or
       other similarly restricted account while at the same time the employee is receiving
       workers’ compensation benefits.

       (b) Form LIBC-756 shall be completed and forwarded to the insurer within 30
       days of the employee’s receipt of any of the benefits specified in subsection (a) or
       within 30 days of any change in the receipt of the benefits specified in subsection
       (a), but at least every 6 months.

34 Pa. Code § 123.3. Section 123.501 provides, as follows:

       An insurer shall notify the employe of the employe’s reporting requirements
       under sections 204 and 311.1(a) and (d) of the act (77 P.S. §§ 71 and 631.1(a) and
       (d)). In addition, the insurer shall provide the employe with the forms required to
       fulfill the employe’s reporting and verification requirements under section
       311.1(d) of the act.

34 Pa. Code § 123.501.
       5
         Section 123.4(d) of the regulations states, in relevant part:

       (d)    The insurer shall provide a copy of Form LIBC-761, to the employee, the
       employee’s counsel, if known, and the Department. The form shall be provided to
       the employee consistent with section 406 of the act (77 P. S. § 717).

34 Pa. Code § 123.4(d).
       6
         Section 123.5, entitled “Offset for benefits already received,” states as follows:

       (a)     If the insurer receives information that the employee has received benefits
       from one or more of the sources in § 123.3 (relating to employee report of
       benefits subject to offset) subsequent to the date of injury, the insurer may be
       entitled to an offset to the workers’ compensation benefit.
                                                                                   (Continued…)
                                                  5
       Claimant argues that, under the equitable principles of laches, she is entitled
to relief because she was prejudiced by Employer’s delay in processing her Form
LIBC-756 and its failure to begin deducting the overpayment until October 5,
2013, over seven months after Claimant submitted her Form LIBC-756. Claimant
asserts that this case is similar to Maxim Crane.
       In Maxim Crane, the claimant sustained a work injury in 2000, applied for
Social Security (old age) benefits in January 2003, and in April 2003, began also
receiving workers’ compensation benefits. Two years later, on June 6, 2005, the
claimant received the first Form LIBC-756 from employer, which he immediately
returned indicating his receipt of Social Security (old age) benefits. On August 3,
2005, he received a notice of workers’ compensation benefit offset informing him
that the employer was going to recoup 14 months of prior Social Security (old age)
benefits and that his weekly workers’ compensation benefits would be reduced to
$0 for 25.75 weeks. The claimant filed a petition to review benefit offset. After a
hearing, the WCJ granted the claimant’s petition and allowed the employer to

       (b) The net amount received by the employee shall be calculated consistent with
       §§ 123.6--123.11. The amount received by the employee shall be divided 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.

       (c) The insurer shall notify the employee, the employee’s counsel, if known, and
       the Department of the offset as specified in § 123.4(b) (relating to application of
       the offset generally).

       (d) The employee may challenge the offset by filing a petition to review offset
       with the Department.

34 Pa. Code § 123.5 (emphasis added).

                                               6
recoup only benefits overpaid from June 6, 2005, the date that the claimant
received the Form LIBC-756, and not prior to that date. The Board affirmed.
      This Court affirmed the Board’s decision relying upon the Department’s
regulation which states as follows:

      An insurer shall notify the employe of the employe’s reporting
      requirements under sections 204 and 311.1(a) and (d) of the act (77
      P.S. §§ 71 and 631.1(a) and (d)). In addition, the insurer shall provide
      the employe with the forms required to fulfill the employe’s reporting
      and verification requirements under section 311.1(d) of the act.

34 Pa. Code § 123.501 (emphasis added).         The employer did not notify the
claimant of the reporting requirements or provide the form until it issued Form
LIBC-756 on June 6, 2005, two years after the claimant had begun receiving the
benefits.   The employer had not fulfilled its duty under this section of the
regulations to notify the claimant of the duty to disclose, and, therefore, the
recoupment of any overpayments made to the claimant prior to that date was not
allowed.
      In addition to the employer’s violation of the procedures in the regulation,
the Court also found that the Board did not err in applying the doctrine of laches.
In doing so, we stated that “[i]f [the e]mployer w[as] permitted to recoup the
offsettable benefits prior to June 6, 2005, hardship and prejudice to [the c]laimant
can be presumed as [the c]laimant’s weekly workers’ compensation benefits would
be reduced to [$0] for a period of 25.75 weeks.” Maxim Crane, 931 A.2d at 820.
We have subsequently examined the contours of the application of equitable
principles announced in Maxim Crane. In Wright, the claimant argued, and the
WCJ agreed, that there was a presumption of prejudice whenever an employer
seeks to recoup an overpayment of offsettable benefits. In disagreeing with this

                                         7
construction, we described the important policy objective of Section 204(a), which
is to reduce the costs of the workers’ compensation system “by eliminating double
payment for the same loss of wages.           To that end, Section 204(a) and the
regulations expressly authorize an employer to do a retrospective offset as needed
to recover overpaid workers’ compensation benefits.” Wright, 90 A.3d at 811. In
that case, as in this case, the claimant “received benefits to which [s]he was not
entitled and thereby reaped a double recovery, which is precisely what Section
204(a) was intended to prevent. It is true that the terms of a proposed recoupment
may be modified where it would cause a financial hardship.” Id. at 812. However,
that was not the reason for the decision in Maxim Crane, which was “decided on
legal grounds, i.e., that the employer had failed to notify the claimant of his duty to
report offset[t]able benefits to the employer.” Id. (emphasis omitted). Thus, we
found the Court’s statement regarding a presumption of hardship in Maxim Crane
to be “obiter dicta” and based on its particular facts. Id. (emphasis omitted).
      We also discussed Maxim Crane in Muir v. Workers’ Compensation Appeal
Board (Visteon Systems LLC), 5 A.3d 847 (Pa. Cmwlth. 2010), another case
which examined the offset provisions.         In Muir, the claimant completed and
returned a Form LIBC-756 on August 8, 2005, indicating that she was not
receiving any offsettable benefits. Two years later, on June 26, 2007, the claimant
returned a Form LIBC-756 indicating that she began receiving Social Security (old
age) benefits on October 28, 2006. The employer issued a notice of benefit offset
on July 31, 2007, advising the claimant of its plan to recoup the overpaid
compensation by paying her $0 in workers’ compensation benefits for six months.
This Court, as did the Board in that case, found that the facts differed from Maxim
Crane because, unlike in Maxim Crane, in Muir, the employer did provide the

                                          8
claimant with a Form LIBC-756 at a time when the claimant was not receiving any
offsettable benefits. The issue arose because the claimant did not receive another
Form LIBC-756 from the employer for two years. The regulation requiring the
claimant to report benefits subject to offset provides that:

      Form LIBC-756 shall be completed and forwarded to the insurer
      within 30 days of the employee’s receipt of any of the benefits
      specified in subsection (a) or within 30 days of any change in the
      receipt of the benefits specified in subsection (a), but at least every 6
      months.

34 Pa. Code § 123.3(b) (emphasis added). The Court agreed with the Board’s
interpretation of this regulation as requiring the employer to provide to the
claimant a Form LIBC-756 every six months to enable the claimant to report
benefits as required by the regulation. The Court also agreed with the Board’s
reasoning that this would “prevent a claimant from being subjected to large
retrospective offsets if several years passed since he last received a form from an
employer . . . .” Muir, 5 A.3d at 853 (emphasis added). We subsequently stated
that “[i]mplicitly, Muir established that a recoupment of an overpayment that
occurred over six months or less eliminates the need of the WCJ to inquire into
hardship.”   Wright, 90 A.3d at 812 (footnote omitted).        That is, because the
regulation contemplates that the Form LIBC-756 will be submitted to an employer
at least every six months, there is a necessary presumption that a retrospective
offset resulting from the disclosure of benefits on such form may also span a
timeframe of at least six months, although the actual recoupment will take longer

                                           9
because the employer cannot begin its recoupment until at least 20 days after the
issuance of the Notice of Offset.7
       In the instant matter, Claimant asserts that Employer’s delay in collecting
the overpayment is like the employer’s delay in notifying the claimant of his duty
to report the receipt of offsettable benefits and sending the Form LIBC-756 in
Maxim Crane; it is prejudicial, constitutes a waiver, and thus, bars Employer’s
recoupment of the offset based upon the doctrine of laches. However, we agree
with the Board that the facts in Maxim Crane are distinguishable from the instant
matter. In Maxim Crane, the employer did not notify the claimant of his reporting
requirements until nearly two years after the claimant began to receive both
workers’ compensation benefits and his Social Security (old age) benefits. The
Court did not hold that the employer was precluded from ever taking an offset, but
only that the employer could not take an offset for payments made prior to the date
the claimant in that case received the Form LIBC-756. In this case, Employer did
timely send to Claimant the Form LIBC-756, and Claimant timely completed and
returned the form to Employer. Because Employer complied with the regulation, it
was authorized to take the offset, including retrospectively, if necessary, pursuant
to Wright. Thus, Maxim Crane is inapplicable here.
       Moreover, Employer here issued the Notice of Offset approximately six
months after Claimant completed the Form LIBC-756, advising her that the offset

       7
           Section 123.4(b) of the regulations provides, as follows:

       (b)     At least 20 days prior to taking the offset, the insurer shall notify the
       employee, on Form LIBC-761, “Notice of Workers’ Compensation Benefit
       Offset,” that the workers’ compensation benefits will be offset.

34 Pa. Code § 123.4(b).

                                                 10
would be taken one month thereafter. This timeframe, by itself, is reasonably
within the time parameters established in the regulations.
       Finally, we note that there was no evidence of hardship presented here, and
the recoupment had already been completed prior to the WCJ’s hearing. Although
Claimant argues in her brief that Employer’s collection of the overpayment “came
at the most inopportune of times i.e. the holiday season” and that “Employer had
zero regard for [her] situation and the overpayment that it caused because of its
failure to properly process the LIBC forms which had been timely returned[,]” this
is not evidence of hardship. (Claimant’s Br. at 11.) With regard to hardship, we
cautioned in Wright that “[h]ardship is a difficult inquiry because the
circumstances of each claimant will be different. Further, it is difficult to square
the notion of ‘hardship’ to the situation where a person is required to return monies
to which he is not entitled. The manner of repayment may create a hardship, and a
WCJ has discretion to fashion an appropriate repayment schedule.” Wright, 90
A.3d at 812 n.11. But see Gelvin v. Workers’ Comp. Appeal Bd. (Pa. State
Police), 120 A.3d 473, 478 (Pa. Cmwlth. 2015) (hardship analysis was not required
although recoupment resulted in nearly a year without benefits where “a large
retrospective offset . . . was not related to any lack of diligence on [e]mployer’s
part.”).
       Accordingly, we conclude that the Board did not err in denying the Review
Offset Petition, and we affirm the Board’s Order.

                                         ________________________________
                                         RENÉE COHN JUBELIRER, Judge

Senior Judge Colins dissents.
                                         11
       IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Victoria Sandy,                        :
                        Petitioner     :
                                       :
            v.                         :   No. 1682 C.D. 2015
                                       :
Workers’ Compensation Appeal           :
Board (Commonwealth of                 :
Pennsylvania, Department of            :
Military and Veterans Affairs and      :
Inservco Insurance Services, Inc.),    :
                         Respondents   :

                                     ORDER

      NOW, June 14, 2016, the Order of the Workers’ Compensation Appeal
Board, entered in the above-captioned matter, is AFFIRMED.

                                       ________________________________
                                       RENÉE COHN JUBELIRER, Judge