The opinion of the court was delivered by: Judge Friedman
Argued: November 12, 2008
BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge, HONORABLE BERNARD L. McGINLEY, Judge, HONORABLE DORIS A. SMITH-RIBNER, Judge, HONORABLE DAN PELLEGRINI, Judge, HONORABLE ROCHELLE S. FRIEDMAN, Judge,*fn1 HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE MARY HANNAH LEAVITT, Judge.
Philadelphia Gas Works (PGW) petitions for review of the January 25, 2008, order of the Workers' Compensation Appeal Board (WCAB) affirming the decision of a workers' compensation judge (WCJ) to grant the Petition to Review Compensation Benefits Offset (Review Offset Petition) filed by John Amodei (Claimant). We also affirm.
The facts of this case are not in dispute. Pursuant to an Agreement of Compensation, Claimant has been receiving workers' compensation benefits for a March 26, 1997, work-related injury at the rate of $542.00 per week. (R.R. at 1a-2a.)
Claimant retired from PGW and began receiving pension benefits; PGW fully funds the pension plan in question. (WCJ's Findings of Fact, No. 4.)
On January 29, 2001, pursuant to section 204(a) of the Workers' Compensation Act (Act),*fn2 PGW issued a Notice of Compensation Benefit Offset (NCBO), notifying Claimant that PGW would be taking a weekly offset against Claimant's workers' compensation benefits in the amount of $264.10, representing the net amount of pension benefits received by Claimant. (WCJ's Findings of Fact, Nos. 1, 5; R.R. at 19a-20a.) On April 27, 2006, PGW issued a second NCBO, setting forth a weekly offset of $334.83, based upon the gross amount of Claimant's pension benefits.*fn3 (WCJ's Findings of Fact, No. 2; R.R. at 21a-22a.)
On May 15, 2006, Claimant filed his Review Offset Petition challenging PGW's second NCBO and alleging that PGW was entitled to a credit only for the net amount of pension benefits received by Claimant. (WCJ's Findings of Fact, No. 3; R.R. at 1a-3a.) PGW filed a timely answer and maintained that its gross pension offset accorded with section 204(a) of the Act and Steinmetz v. Workers' Compensation Appeal Board (Cooper Power Systems), 858 A.2d 182 (Pa. Cmwlth. 2004). (R.R. at 4a-5a.) The matter was assigned to a WCJ, who determined that PGW properly calculated the offset in its first NCBO by utilizing the net amount of Claimant's pension benefits. (WCJ's Findings of Fact, No. 5; WCJ's Conclusions of Law, No. 2.) Accordingly, the WCJ granted Claimant's Review Offset Petition, set aside PGW's April 27, 2006, NCBO and reinstated the January 29, 2001, NCBO. (R.R. at 29a.)
PGW appealed to the WCAB, which affirmed in a decision and order dated January 25, 2008. (R.R. at 32a-37a.) In doing so, the WCAB relied on the regulations promulgated by the Bureau of Workers' Compensation (Bureau) to implement section 204(a) of the Act.*fn4 Specifically, the WCAB based its decision on the regulation at 34 Pa. Code §123.8(a), which directs that workers' compensation benefits "shall be offset by the net amount an employe receives in pension benefits." (Emphasis added.)
On appeal to this court,*fn5 PGW argues that the WCAB was required to follow controlling precedent in Steinmetz and Ferrero v. Workers' Compensation Appeal Board (CH & D Enterprises), 706 A.2d 1278 (Pa. Cmwlth. 1998), appeal dismissed, 556 Pa. 97, 726 A.2d 1058 (1999), both of which held that an employer's offsets under section 204(a) of the Act are to be based on the gross amount of benefits received by the claimant. PGW contends that the WCAB's contrary decision, based on the regulation at 34 Pa. Code §123.8(a), was inconsistent with section 204(a) of the Act in that it inserted words into the statute that the legislature failed to supply as an indication of its intent. We disagree.
In relevant part, section 204(a) of the Act provides as follows:
[I]f the employe receives unemployment compensation benefits, such amount or amounts so received shall be credited as against the amount of the [workers' compensation] award made.. Fifty per centum of the benefits commonly characterized as "old age" benefits under the Social Security Act shall also be credited against the amount of the [workers' compensation] payments made.. The severance benefits paid by the employer directly liable for the payment of compensation and the benefits from a pension plan to the extent funded by the employer directly liable for the payment of compensation which are received by an employe shall also be credited against the amount of the [workers' compensation] award..
77 P.S. § 71(a) (emphasis added, citation omitted).
The statutory language permitting an employer to offset workers' compensation paid to an employee by the amount of pension benefits the employee "received" does not specify whether the credits allowed are to be calculated on the gross or net amount received by the employee. However, pursuant to legislative directive, this information is supplied by regulation.*fn6 With respect to pension benefits, the regulation provides as follows:
Workers' compensation benefits otherwise payable shall be offset by the net amount an employe receives in pension benefits to the extent funded by the employer directly ...