decided: December 30, 1981.
GEORGE R. BLAKE, JR. AND ERWIN MILLER, ESQ., APPELLANTS
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF PUBLIC WELFARE, APPELLEE
Appeal from the Order of the Court of Common Pleas of Philadelphia County in case of Commonwealth of Pennsylvania, Department of Public Welfare v. George R. Blake, Jr. and Erwin Miller, Esquire, No. 4241 May Term, 1979.
Jonathan M. Stein, with him Erwin Miller, for appellants.
Joseph F. Lynch, Deputy Attorney General, for appellee.
President Judge Crumlish and Judges MacPhail and Palladino, sitting as a panel of three. Opinion by Judge MacPhail.
[ 63 Pa. Commw. Page 492]
This appeal comes to us from a denial by the Court of Common Pleas of Philadelphia County of a petition filed by George Blake (Appellant) to stay and set aside execution by the Department of Public Welfare (DPW) upon workmen's compensation benefits paid pursuant to The Pennsylvania Workmen's Compensation Act. The benefits are currently held in escrow by the Appellant's attorney, Erwin Miller, Esq., the garnishee below.
The Appellant sought public assistance in early 1976 while awaiting benefits under workmen's compensation for an injury in the course of his employment which left him unable to work. Before granting assistance, DPW required the Appellant to sign several standard Pa. 176-K agreement to pay forms containing Confession of Judgment clauses.*fn1 Upon receipt
[ 63 Pa. Commw. Page 493]
of his workmen's compensation award, Appellant refused to reimburse DPW for assistance received. DPW then filed its Complaint in Confession of Judgment with a writ of execution against the garnishee. On September 18, 1979, the Appellant filed a Petition to Open Judgment with the Philadelphia Court of Common Pleas. That petition was denied on May 23, 1980, and was not appealed. On June 12, 1980, the Appellant filed a Petition to Stay and Set Aside Execution. That petition was denied on September 19, 1980, the lower court basing its decision on the holding of our Superior Court in Wartella Page 494} v. Osick, 108 Pa. Superior Ct. 589, 165 A. 660 (1933).*fn2
The issue involved in this appeal is quite clear. May DPW bring an action to enforce repayment of public assistance from workmen's compensation benefits? The issue is one which this Court noted, but did not answer, in our recent decision of Congleton v. Department of Welfare, 48 Pa. Commonwealth Ct. 615, 409 A.2d 1382 (1980).*fn3
The lower court believed that this issue was resolved by Wartella and that that decision is still controlling on the question. Wartella, it is true, did hold that once payments were made under the workmen's compensation law they were not exempt from execution by a creditor. However, the statutes regarding execution exemption for workmen's compensation have undergone what we believe to be a fundamental change since that decision came down.
At the time of Wartella, Section 318 of the Workmen's Compensation Act*fn4 (Act) read in pertinent part: "Claims for payments due under this article shall not be assignable, and . . . shall be exempt from all claims of creditors and from levy, execution, or attachment, which exemption may not be waived." The Court in Wartella, reading this exemption strictly, 108 Pa. Superior Ct. at 519, 165 A. at 660, concluded that only payments due were exempted from
[ 63 Pa. Commw. Page 495]
the claim of creditors and that when paid, the benefits were no longer exempt.
However, Section 318 of the Act was amended in 1959 to read, in pertinent part, "Claims for payments due under this article of this act and compensation payments made by virtue thereof, shall not be assignable, and . . . shall be exempt from all claims of creditors, and from levy, execution, or attachment, which exemption may not be waived." Act of December 28, 1959, P.L. 2034 § 3 (emphasis in original). A 1978 technical revision resulted in the retention of the non-assignability portion of the statute as Section 318, with the exemption provision moving to Section 8124(c)(2) of the Judicial Code, as amended, 42 Pa. C.S. § 8124(c)(2). That Judicial Code section now reads: "The following property or other rights of the judgment debtor shall be exempt from attachment or execution on a judgment: . . . (2) claims and compensation payments under . . . The Pennsylvania Workmen's Compensation Law. . . ."*fn5
It seems undoubtedly clear to us, then, that the decision in Wartella is no longer applicable and that the Legislature has intended that such payments be exempt from execution.*fn6 Such an interpretation corresponds with our analysis in Congleton, 48 Pa. Commonwealth Ct. at 619, 409 A.2d at 1384, when we noted that Sections 318 of the Act and 8124(c)(2) of the Judicial Code provide the same kinds of exemptions
[ 63 Pa. Commw. Page 496]
in state law as were held by the Supreme Court to exist in the Social Security Act. See Philpott v. Essex County Welfare Board, 409 U.S. 413 (1973).
DPW has further argued that even if an exemption exists for compensation payments made, such an exemption should not operate against the Commonwealth. DPW argues that since an exemption statute must be strictly construed against the debtor, under authority of Fell v. Johnston, 154 Pa. Superior Ct. 470, 36 A.2d 227 (1944), and since there has been no showing that the Commonwealth was intended to be classified an ordinary creditor under the law, then the exemption statute does not bar its collection.
Again, however, the case law cited by DPW has been superseded in regards to the issue presented here. We have held several times that the position of the Commonwealth in public assistance collection cases is that of a common creditor. See Congleton, 48 Pa. Commonwealth Ct. at 621, 409 A.2d at 1385; Good v. Wohlgemuth, 15 Pa. Commonwealth Ct. 524, 327 A.2d 397 (1974). Furthermore, the concept of strict construction of exemption laws, arising as it did from the rule that statutes in derogation of the common law are to be strictly construed, Fell v. Johnston, 154 Pa. Superior Ct. at 473, 36 A.2d at 228, has been modified by more recent rules regarding the construction of statutes. 1 Pa. C.S. § 1928(a). Therefore, we do not believe the Commonwealth must be specifically mentioned in the statute for the exemption to apply against it. See Lake Meade Municipal Authority v. Peron, 12 Pa. D. & C. 3rd 181 (1979)*fn7 We thus hold
[ 63 Pa. Commw. Page 497]
that DPW may not enforce collection by legal process upon workmen's compensation benefits paid to a recipient of public assistance.
We wish to emphasize that we are not in any way altering this Court's decision in Congleton. DPW may still condition eligibility for assistance upon the signing of a document which confirms a statutory obligation to reimburse DPW for assistance. We have now only stated that legal process may not be used to collect the reimbursement out of statutorily exempt workmen's compensation funds.
The decision of the lower court shall be reversed.
And Now, this 30th day of December, 1981 the order of the Court of Common Pleas of Philadelphia County, dated September 19, 1980, is hereby reversed.