Appeal from the Order of the Workmen's Compensation Appeal Board in case of James Lennon v. Taylor Lock Company and Pennsylvania Manufacturers' Association Insurance Company, No. A-73792.
Sandra S. Christianson, Assistant Attorney General, for petitioner.
Susan J. Poll, with her, John F. McElvenny, for respondents.
Judges Blatt, Craig and MacPhail, sitting as a panel of three. Opinion by Judge Craig. This decision was reached prior to the death of President Judge Bowman. Judge DiSalle did not participate in the decision in this case.
[ 49 Pa. Commw. Page 405]
The Department of Labor and Industry (department) appeals from an opinion and order of the Workmen's Compensation Appeal Board (board), reversing the referee's determination that Pennsylvania Manufacturers' Association Insurance Company (insurer) violated Section 412 of The Pennsylvania Workmen's Compensation Act (Act), 77 P.S. § 791,*fn1 which requires departmental approval before compensation benefit payments may be commuted.
On appeal, the department alleges that the board erred as a matter of law in failing to conclude that insurer violated Section 412 of the Act and failing to assess a penalty pursuant to Section 435(d)(i) of the Act, 77 P.S. § 991(d)(i).*fn2
The factual background of this case is undisputed. On July 14, 1976 a referee awarded claimant, James Lennon, specific loss compensation benefits of $104.63 per week for 355 weeks. On September 20, 1976, without authorization by the department, insurer paid claimant a commuted amount of $23,183.02 for 222-4/7 weeks of compensation, without deducting any commutation discount. Insurer reported the payment to the Bureau of Employment Security, at which point the department filed a rule to show cause under Section 435(b) of the Act, 77 P.S. § 991(b).
After hearing, the referee concluded that insurer was "unintentionally guilty of a violation of Section 435 of the Act by paying claimant the commuted value of his compensation benefits without prior authorization
[ 49 Pa. Commw. Page 406]
from the referee or the appeal board." The referee assessed a penalty against insurer for its "unintentional violation" in the amount of 10% of the commuted amount.
On appeal, the board specifically overruled the referee's finding and conclusion that insurer's action, in making a commuted payment without ...