In Stepp v. Workers’ Compensation Appeal Board (No. 2270 C.D. 2013, filed September 10, 2014), the Commonwealth Court decided whether an employer may take an offset against a claimant’s workers’ compensation benefits under Section 204 (a) of the Pennsylvania Workers’ Compensation Act for pension benefits funded by its wholly-owned subsidiary. Unfortunately, the answer is yes.
Pension Offset – PA Workers Compensation Law Update
Claimant began working for Marianna Scenery Hill Telephone Company in January 1973. In 2000, FairPoint acquired Marianna. Claimant continued to be an employee of Marianna, but the human resources department for all employees of all FairPoint subsidiaries was managed by FairPoint. It appeared that all employees in the FairPoint “family of subsidiaries” were covered by the same workers’ compensation plan or policy.
Claimant argued that the Workers’ Compensation Appeal Board and Judge erred in granting FairPoint an offset for Claimant’s pension under Section 204 (a) of the Act because Marianna funded the pension plan. Claimant argues that FairPoint is not entitled to an offset for a pension plan funded by a different, but still existing, corporation.
In 1996, the legislature, in an effort to combat rising workers’ compensation costs, amended 204 (a) of the Act to allow employers an offset against workers’ compensation benefits for social security, severance, and pension benefits simultaneously received by an employee. Note that the Court reminded us that the party seeking to change the status quo in a workers’ compensation case bears the burden of proof. Here, it’s the employer’s burden.
The Findings of Workers’ Compensation Judge
Claimant did not challenge the factual finding of the WCJ (Workers’ Compensation Judge- at the initial level) that Marianna funded 95.71% of Claimant’s pension. Instead, Claimant asserted that the Board erred because FairPoint, not Marianna, is “directly liable” for the payment of his workers comp benefits. As such, the argument is that only Marianna, no FairPoint, is entitled to the Section 204 (a) offset.
The Court pointed to Section 1929 of the Business Corporation Law of 1998 to highlight that when corporations merge, the surviving corporation succeeds to both the rights and liabilities of the constituent corporation. While this wasn’t a merger governed by Section 1929, the principles have direct application pursuant to prior case law. (LTV Steel Co., 754 A.2d 666).
As a practitioner of PA workers compensation laws who represents injured workers, I want to disagree with this case. However, and unfortunately, I believe the Court decided it correctly.
For more information about Pennsylvania Workers Comp or the PA workers compensation laws, call or email Certified Pennsylvania Workers Compensation attorney, Michael Cardamone of The Cardamone Law Firm, LLC 7 days a week at (267) 651-7945.
In this Supreme Court of Pennsylvania Decision, the Court held that the Employer bore the burden to prove that the loss of earning power of its employee, David Cruz, was due to his lack of United States citizenship or other legal work authorization in order to obtain a Suspension of his workers’ compensation disability benefits.
The Court also held that Claimant’s invocation of his 5th Amendment right against self-incrimination when questioned at the workers’ compensation hearing before the Work Comp Judge did NOT constitute substantial evidence of his alleged lack of legal authorization to be employed in the United States.
The 23 page Decision by the Pennsylvania Supreme Court was well organized and reached the right result. Per previous case law, the burden of an injured worker to prove eligibility for benefits is two-fold, 1) he or she was injured in the course and scope of employment, and 2) the injury resulted in a loss of earning power. Thus, a claimant’s eligibility to lawfully work in the US is not a relevant factor. Once an injury is established as work-related, to suspend benefits, it is the Employer’s burden of proof to show the factors necessary for a Suspension of benefits. In this regard, it’s the Employer’s burden to prove, through competent evidence, that claimant’s loss of earning power is due to her employment eligibility status under federal law.
If you have questions about Pennsylvania Work Comp Law, call or email Attorney Cardamone 7 days a week at (267) 651-7945 or myphillyworkerscomp@gmail.com
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As you can see, the Pennsylvania Workers’ Compensation Law is extensive and complex. If you have any questions, please contact me for a free consultation.(267) 651-7945 or Michael@cardamonelaw.com 7 Days a week! I represent injured workers across Pennsylvania.
