on other than a monthly basis (excluding benefits payable as a lump sum except to the extent that it is a commutation of, or a substitute for, periodic payments), the reduction under this section shall be made at such time or times and in such amounts as the Secretary finds will approximate as nearly as practicable the reductions prescribed by subsection (a)." There is no provision in the Social Security Act imposing the obligation upon a beneficiary to apply for workmen's compensation as a condition for receiving Social Security benefits.
The Pennsylvania Workmen's Compensation Act is the exclusive remedy for employees in actions against the employer for injury or death arising in the course of employment. (77 P.S. § 481). Under the Act, compensation is given for total disability, 77 P.S. § 511; partial disability, 77 P.S. § 512; and disability from permanent injuries, 77 P.S. § 513. The amount of payment for each category is based on a percentage of the wages for a specified time period. The compensation is payable in periodic installments, 77 P.S. § 601, but it may be commuted to a lump sum payment, provided that certain conditions set forth in 77 P.S. § 604 are met.
The Plaintiff contended before the ALJ that his Social Security disability insurance benefits should not be reduced because the Workmen's Compensation benefit was not a payment for disability, but rather was payment for the loss of the forearm; and because the periodic Workmen's Compensation benefit was commuted to a lump sum payment made on April 13, 1983. The ALJ rejected the contention that the payment was for the loss of the forearm rather than a disability payment, finding that the particular definitions contained in the Pennsylvania Workmen's Compensation Act were not incorporated into the Social Security Act, which provides, instead, that any periodic benefit based on a workers total or partial disability, temporary or permanent, paid under a workmen's compensation law, will cause Social Security disability benefits to be offset. The ALJ found that section 306(c) of the Pennsylvania Workmen's Compensation Act, 77 P.S. § 513, used the term "disabled", and payments made under that section of the Pennsylvania act have all the characteristics enumerated in section 224(a), 42 U.S.C. § 424a, of the Social Security Act.
Additionally, the ALJ concluded that the fact that Carnevali's periodic payment was commuted to a lump sum award did not exempt the disability insurance benefits from the offset provision contained in section 224(a) of the Social Security Act, 42 U.S.C. § 424a(a). The ALJ read section 224(b) of the Social Security Act, and the applicable Social Security Regulations, as requiring the lump sum award to be pro rated on a monthly basis to calculate the offset to be applied to the disability benefits from the date of the lump sum award in April, 1983. The mere fact that a lump sum award was given did not exempt the Plaintiff's benefits from the offset provision of the Social Security Act.
The Plaintiff argues on this appeal that the Pennsylvania Workmen's Compensation Act deals differently with specific loss benefits from permanent injuries under section 306(c), 77 P.S. § 513, than it does for disability benefits under section 306(a), 77 P.S. § 511, and for partial disability under section 306(b), 77 P.S. § 512. This difference is significant, according to the Plaintiff, because the benefits under section 306(c), 77 P.S. § 513, vest as the property of the claimant from the time of the award, are payable whether or not the claimant is working, and remain payable even when the claimant dies from other causes. Plaintiff argues that an award such as the one made here for the loss of a forearm, is therefore not a "disability" award which is subject to the offset provisions of the Social Security Act.
With respect to the lump sum payment, Plaintiff argues that the commutation of benefits under section 306(c), 77 P.S. § 513, has a different character than commuted partial disability benefits under section 306(b), 77 P.S. § 512. The commutation of section 306(c) benefits, says Plaintiff, is actually a lump sum payment of the claimant's own money, dating back to the time of the award. In contrast, commuted benefits for partial disability do not accrue in advance, because partial disability is a temporary situation, depending upon the availability of light work and its changing pay scale, and the changing physical condition of the claimant.
The constitutionality of section 224, the offset provision of the Social Security Act, has been upheld by the Supreme Court of the United States in Richardson v. Belcher, 404 U.S. 78, 92 S. Ct. 254, 30 L. Ed. 2d 231 (1971). The Supreme Court noted that Congress examined the problem of duplication of disability benefits in 1965, and passed section 224 in response to that concern:
In 35 of the 50 States, a typical worker injured in the course of his employment and eligible for both state and federal benefits received compensation for his disability in excess of his take-home pay prior to the disability. . . . It was strongly urged that this situation reduced the incentive of the worker to return to the job, and impeded the rehabilitative efforts of the state programs. Furthermore, it was anticipated that a perpetuation of the duplication in benefits might lead to the erosion of the workmen's compensation programs. The legislative response was § 224, which, by limiting total state and federal benefits to 80% of the employee's average earnings prior to the disability, reduced the duplication inherent in the programs and at the same time allowed a supplement to workmen's compensation where the state payments were inadequate.
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