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COMMONWEALTH PENNSYLVANIA v. COMMONWEALTH PENNSYLVANIA (03/30/79)

COMMONWEALTH COURT OF PENNSYLVANIA


decided: March 30, 1979.

COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF LABOR AND INDUSTRY, PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, WORKMEN'S COMPENSATION APPEAL BOARD, ROADWAY EXPRESS, INC. AND DONALD P. HARVEY, RESPONDENTS

Appeal from the Order of the Workmen's Compensation Appeal Board in case of Donald P. Harvey v. Roadway Express, Inc. and Commonwealth of Pennsylvania, No. A-72985.

COUNSEL

Sandra S. Christianson, Assistant Attorney General, for petitioner.

Michael I. Levin, with him Cleckner & Fearen, for respondents.

Judges Rogers, DiSalle and MacPhail, sitting as a panel of three. Opinion by Judge DiSalle.

Author: Disalle

[ 41 Pa. Commw. Page 457]

The Department of Labor and Industry (Department) appeals the order of the Workmen's Compensation Appeal Board (Board) which affirmed a referee's determination that Roadway Express, Inc. (Roadway), did not violate The Pennsylvania Workmen's Compensation Act (Act), Act of June 2, 1915, P.L. 736, as amended, 77 P.S. § 1 et seq., when it unilaterally withheld workmen's compensation benefits due Donald Harvey (Claimant). The Department contends that the Board erred as a matter of law in failing to conclude that Roadway violated Section 413(b) of the Act, added by Section 3 of the Act of February 8, 1972, P.L. 25, as amended, 77 P.S. § 774.1,*fn1 and in failing to assess some penalty pursuant to Section 435(d)(i) of the Act, added by Section 3 of the Act of February 8, 1972, P.L. 25, as amended, 77 P.S. § 991(d)(i).*fn2

[ 41 Pa. Commw. Page 458]

The factual background of the case is largely undisputed. Claimant was injured while in Roadway's employ and began receiving compensation therefor. Sometime thereafter, Roadway withheld or suspended payments to Claimant without first having filed a final receipt, termination petition, supplemental agreement, or any other petition or agreement contemplated by Section 413(b).*fn3 After several weeks, Roadway voluntarily resumed payments and made a lump sum back payment to Claimant of all benefits withheld.

In finding that Roadway did not violate the Act, the referee and the Board believed that Roadway's suspension of benefits was unintentional and that at all times Roadway acted in good faith. The fact that Roadway acted voluntarily to resume payments without any administrative action being necessary contributed to their belief that Roadway made an honest mistake which it quickly corrected when it perceived its error. The referee, with the Board affirming, found that no violation had occurred and simply assessed the normal interest rate for compensation due and unpaid as provided by Section 406.1 of the Act, added by Section 3 of the Act of February 8, 1972, P.L. 25, as amended, 77 P.S. § 717.1.

Our review of the matter convinces us that since Roadway failed to comply with the specific requisites of Section 413(b), it thereby became subject to the

[ 41 Pa. Commw. Page 459]

    penalty provisions of Section 435. Section 413(b) simply says that an insurer (Roadway is self-insured) who suspends compensation payments without taking the prescribed action "shall be subject to penalty." It is admitted that Roadway, for whatever reason, did not take the prescribed action. The Board erred, therefore, in failing to find a violation of the Act.

We hasten to add, however, that once a violation of Section 413(b) is found, the question of whether a penalty is to be imposed is strictly discretionary. Having carefully considered this matter, we are convinced that the very reasons which prompted the referee and the Board to find no violation of the Act in the first instance, support their conclusion that Roadway should not be subject to penalty. The referee and the Board believed that Roadway made an honest mistake which it voluntarily and in good faith expeditiously rectified when its error became known. Ample evidence supports this belief. On the basis of this record, we see no legitimate purpose to be served by imposing a penalty on Roadway. We believe therefore, that while the Board erred as a matter of law in failing to find that Roadway did not comply with the Act when it suspended benefits, the Board did not act unreasonably in refusing to impose a penalty.

Order

And Now, this 30th day of March, 1979, that part of the order of the Workmen's Compensation Appeal Board dated October 19, 1977, affirming a referee's determination that Roadway Express, Inc., did not violate The Pennsylvania Workmen's Compensation Act is hereby reversed. That part of the same order which affirmed a referee's determination that Roadway Express, Inc., is not subject to penalties pursuant to The Pennsylvania Workmen's Compensation Act is hereby affirmed.

Disposition

Reversed in part and affirmed in part.


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