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July 21, 1997


Appealed From No. A94-3343. State Agency Workers' Compensation Appeal Board.

Before: Honorable Joseph T. Doyle, Judge, Honorable Dan Pellegrini, Judge, Honorable Samuel L. Rodgers, Senior Judge. Opinion BY Senior Judge Rodgers.

The opinion of the court was delivered by: Rodgers


FILED: July 21, 1997

Kathy Gentile-Reiner (Claimant) petitions for review of an order of the Workers' Compensation Appeal Board (Board) that reversed a decision of a Workers' Compensation Judge (WCJ) denying the modification petition filed by Citizens General Hospital (Employer) and ordering reimbursement to Claimant of her litigation expenses, including attorney's fees. We reverse.

Claimant has been receiving workers' compensation benefits pursuant to a notice of compensation payable issued as a result of a work-related injury that occurred on April 25, 1988. In addition to partial disability workers' compensation benefits, Claimant received disability benefits paid pursuant to a long term disability insurance policy that was part of a union/employer negotiated employee benefit program. Employer funded the disability policy, which was paid to disabled full time employees regardless of whether the disability was work-related or non-work-related. The policy provided for a basic monthly benefit and was reduced by earnings and workers' compensation benefits. In Claimant's case, the resulting disability payment was $120.00 per month.

On July 12, 1993, Employer filed a modification petition, requesting a credit for the long term disability benefits against its workers' compensation payments. Claimant filed a penalty petition requesting counsel fees.

The WCJ in part concluded that:

3. The pending problem does not involve a disability pension, but rather a general disability insurance policy, which was bargained for and therefore the Murhon case is distinguishable. Murhon v. W.C.A.B. (Kawecki Berylco), 152 Pa. Commw. 229, 618 A.2d 1178 (Pa. Commw. 1992)[petition for allowance of appeal denied, 536 Pa. 648, 639 A.2d 34 (1994)].

4. Since the insurance policy was bargained for by claimant's union and there is a policy statement by the employer that it does not affect worker's compensation, no credit or set-off is appropriate and the Peoples Gas case is also distinguishable. Peoples Natural Gas v. W.C.A.B., 65 Pa. Commw. 119, 441 A.2d 1364 (Pa. Commw. 1982).

(WCJ's Conclusions of Law, p. 6.) Therefore, the WCJ ordered no modification of Claimant's partial disability workers' compensation benefits as it concerned the disability insurance payments and also ordered that Employer must reimburse Claimant for litigation costs and counsel fees for an unreasonable contest.

Employer appealed to the Board, arguing that based on Murhon it was entitled to a credit for the long term disability payments. The Board discussed the principles set out in the Murhon opinion, *fn1 comparing those principles with the facts as they exist here. The Board related that Claimant received the long term disability benefits in lieu of compensation and in relief of her inability to work, that no benefit to which Claimant was otherwise entitled was depleted, and that Employer alone paid for the disability insurance coverage. In particular, the Board noted that the disability insurance policy provided for the deduction of workers' compensation benefits from the disability insurance benefits. The Board concluded that Murhon and Allegheny Ludlum control the outcome here and that Employer should be granted a credit. The Board also concluded that Employer had presented a reasonable contest and reversed the WCJ's award of attorney's fees.

On appeal to this Court, *fn2 Claimant presents a number of arguments concerning the setoff or credit issue and argues that the Board's decision nullified the terms of the collective bargaining agreement. Upon a review of the briefs and the record before us, we believe that the Board misunderstood the issue before it.

In its modification petition Employer is requesting reimbursement of funds paid to Claimant under the disability insurance policy beyond the setoff it was already receiving pursuant to the collective bargaining agreement and the disability insurance policy. By way of example, for the period between August 25, 1993 and September 25, 1993, Claimant's ...

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