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BEATRICE MARIE SEELEY v. GALETON LUMBER COMPANY AND WORKMEN'S COMPENSATION APPEAL BOARD. BEATRICE MARIE SEELEY (02/07/77)

COMMONWEALTH COURT OF PENNSYLVANIA


decided: February 7, 1977.

BEATRICE MARIE SEELEY
v.
GALETON LUMBER COMPANY AND WORKMEN'S COMPENSATION APPEAL BOARD. BEATRICE MARIE SEELEY, APPELLANT

Appeal from the Order of the Workmen's Compensation Appeal Board in case of Beatrice Marie Seeley v. Galeton Lumber Company, No. A-70467.

COUNSEL

Harold B. Fink, Jr., with him Fink and Young, for appellant.

David A. Ody, Assistant Attorney General, with him James N. Diefenderfer, for appellees.

President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by Judge Mencer.

Author: Mencer

[ 28 Pa. Commw. Page 383]

In this appeal from a decision of the Workmen's Compensation Appeal Board (Board), we are faced with the question of whether a lump-sum compromise settlement of the workmen's compensation claim of Beatrice Marie Seeley (claimant) is null and void because it violates Section 407 of The Pennsylvania Workmen's Compensation Act (Act).*fn1 Both the referee and the Board concluded as a matter of law that

[ 28 Pa. Commw. Page 384]

    the agreement was prohibited.*fn2 We are somewhat reluctantly constrained to affirm.

Section 407 of the Act provides, in relevant part:

On or after the seventh day after any injury shall have occurred, the employer or insurer and employe or his dependents may agree upon the compensation payable to the employe or his dependents under this act; but any agreement made prior to the seventh day after the injury shall have occurred, or permitting a commutation of payments contrary to the provisions of this act, or varying the amount to be paid or the period during which compensation shall be payable as provided in this act, shall be wholly null and void. (Emphasis added.)

It is clear from our reading of the statute that Section 407 establishes three separate types of agreement which are null and void: (1) those entered into before the seventh day following an injury, (2) those permitting a commutation of payments contrary to the provisions of the Act, and (3) those varying the amount to be paid or the period during which compensation shall be payable.*fn3 The presence of these conditions, either singly or in combination, renders any purported agreement null and void.

While some doubt has been expressed as to whether the appellate courts of Pennsylvania have passed directly on the issue before us,*fn4 we find ample case authority

[ 28 Pa. Commw. Page 385]

    for the interpretation adopted here. In Bair v. Susquehanna Collieries Co., 335 Pa. 266, 6 A.2d 779 (1939), an employee was prevented from enforcing a contract whereby the employer promised to employ him for life if the employee would agree to accept 75 weeks of compensation rather than the 150 weeks to which he was entitled. The Pennsylvania Supreme Court held that such an agreement violated Section 407*fn5 and denied recovery in assumpsit.

The Supreme Court, relying on Bair, supra, assumed, without deciding, in American Casualty Co. v. Kligerman, 365 Pa. 168, 74 A.2d 169 (1950), that Section 407 voided agreements permitting commutation of payments contrary to the provisions of the Act or varying the amount of benefits to be paid. Most recently, Justice Barbieri, in Temple v. Pennsylvania Department of Highways, 445 Pa. 539, 285 A.2d 137 (1971), relied on Section 407 to nullify an agreement by which an employee agreed to take sick-leave pay in lieu of benefits under the Act.

Claimant, however, urges us to read the word "or," italicized above, as if it were conjunctive rather than disjunctive. Claimant would thus construe Section 407 as invalidating only those agreements which were both entered into before the seventh day following an injury and which permitted either a commutation of payments contrary to the provisions of the Act or varied the amount to be paid or the period during which compensation is payable. This proposed reading, though plausible, would, we believe, lead to the erroneous conclusion that the legislature did not disapprove of all agreements entered into before the seventh day following the injury. We conclude that the first words of Section 407 "On or after the seventh

[ 28 Pa. Commw. Page 386]

    day after any injury shall have occurred" show a clear intent to prohibit all agreements entered into during this period. Clearly then, claimant's proposed construction cannot stand.

In the case at bar, the settlement obtained by claimant's attorney provided for a $29,000 lump-sum payment to claimant in return for a release from liability. Since there is a serious issue as to whether claimant was in the course of her employment at the time she was injured, the settlement here seems eminently fair and reasonable. Unfortunately, the agreement involves a lump-sum payment which is voided by Section 407.

Lump-sum payments under Section 317 of the Act (77 P.S. § 603) and commutation of payments under Section 316 (77 P.S. § 604) are only permitted under circumstances which do not yet exist in the case at bar. Both Sections 316 and 317 contemplate that either an agreement (Section 407) or an award (Section 410, 77 P.S. § 751) has already been made. Such agreement or award must be made in accordance with the schedules found in Section 306(a)-(d) of the Act (77 P.S. §§ 511-13). Since no award or agreement pursuant to those schedules has yet been made, the lump-sum payment contemplated here violates Section 407 as an attempt to commute payments, contrary to the Act, and to vary the amount and period of payments, as provided in the schedules.

[ 28 Pa. Commw. Page 387]

We have read with considerable interest the arguments presented on behalf of compromise settlements.*fn6 However, since the legislature has reenacted Section 407 as recently as 1972*fn7 without changes which would affect the interpretations in Bair, supra, and Temple, Page 387} supra, we must assume that those interpretations have been approved by the legislature. Accordingly, it is not the function of the courts to interpret the statute differently. Therefore, we enter our

Order

Now, this 7th day of February, 1977, the order of the Workmen's Compensation Appeal Board in the above captioned case is affirmed.

Disposition

Affirmed.


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