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City of Philadelphia v. Workers' Compensation Appeal Board

March 27, 2009

CITY OF PHILADELPHIA, PETITIONER
v.
WORKERS' COMPENSATION APPEAL BOARD (CALDERAZZO), RESPONDENT



The opinion of the court was delivered by: Judge Cohn Jubelirer

Submitted: October 31, 2008

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge, HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE JOSEPH F. McCLOSKEY, Senior Judge.

OPINION

City of Philadelphia (Employer) petitions for review of two orders of the Workers' Compensation Appeal Board (Board). Employer first petitions for review of the December 29, 2005 order of the Board, which: (1) reversed the Workers' Compensation Judge's (WCJ) decision and order granting Employer an offset/credit for service-connected disability pension benefits paid to Joanne Calderazzo (Claimant); (2) affirmed, in part, the WCJ's decision and order granting Claimant an award of penalties and remanded the matter for the WCJ to reconsider the amount of the penalty award; and (3) reversed the WCJ's decision and order denying Claimant's counsel unreasonable contest attorney's fees and remanded the matter for an order awarding such fees. Employer also petitions for review of the April 22, 2008 order of the Board, which affirmed the WCJ's decision and order on remand assessing penalties against Employer and awarding Claimant's counsel unreasonable contest attorney's fees. At issue in this case is: (1) whether Employer is entitled to an offset/credit against workers' compensation benefits for service-connected disability pension benefits paid to Claimant where Claimant's injury occurred prior to when the amendments to Section 204(a) of the Workers' Compensation Act (Act)*fn1 were required to be applied; (2) whether Employer is subject to penalties for suspending Claimant's workers' compensation benefits without following the proper procedures; and (3) whether Claimant's counsel is entitled to unreasonable contest attorney's fees.

I. Facts and Procedural Posture

On December 30, 1995, while working as a police officer for Employer, Claimant sustained injuries to her shoulder, neck, arm, hand, leg, and buttocks as a result of a motor vehicle accident. Claimant's injuries affected her ability to work. Employer acknowledged liability for Claimant's injuries, and Claimant received temporary total disability benefits at the rate of $497.68 per week, with 15 percent of that amount going to pay her attorney's fees.

On February 15, 1998, Claimant was separated from her employment for reasons related to her work injuries. Thereafter, Claimant applied for service-connected disability pension benefits. As part of the application process, Claimant signed a document entitled "Agreement re: Workmen's Compensation" (Pension Agreement), which discussed the interplay between workers' compensation benefits and service-connected disability pension benefits paid or payable to Claimant.*fn2 In August of 2000, Employer's Board of Pensions and Retirement (Board of Pensions) awarded Claimant service-connected disability pension benefits with regard to the same injury for which Claimant was receiving workers' compensation benefits. The Board of Pensions made Claimant's service-connected disability pension benefits retroactive to the date of her separation from her employment. Claimant receives $2,205.93 per month, or $509.06 per week, in pension benefits. After Claimant was awarded pension benefits, Employer ceased paying workers' compensation benefits to Claimant.

On September 19, 2000, Claimant filed a Reinstatement Petition and a Petition for Penalties (Penalty Petition I), alleging that Employer violated the Act by unilaterally ceasing to pay her workers' compensation benefits, and that she was entitled to a reinstatement of such benefits. On August 26, 2002, Claimant filed a second Petition for Penalties (Penalty Petition II; with Penalty Petition I, Penalty Petitions), alleging that Employer had violated the Act by failing to reimburse her for work-related prescription expenses. Employer filed responsive answers denying the allegations contained in Claimant's Reinstatement Petition and Penalty Petitions. The Reinstatement Petition and Penalty Petitions were subsequently consolidated and assigned to a WCJ for disposition.

The WCJ held several hearings at which the parties were given the opportunity to present evidence in support of, or in opposition to, Claimant's Reinstatement Petition and Penalty Petitions. Claimant introduced her own deposition testimony. Claimant testified as to her initial receipt of workers' compensation benefits and the circumstances which later led to her receipt of service-connected disability pension benefits. Employer presented the deposition testimony of James Kidwell, Deputy Director of the Board of Pensions. Mr. Kidwell testified about Claimant's service-connected disability pension benefits. Employer also introduced into evidence the Pension Agreement.

Following the hearings, the WCJ issued a decision and order. The WCJ accepted Mr. Kidwell's testimony as credible and rejected Claimant's testimony to the extent that it conflicted with Mr. Kidwell's testimony. The WCJ concluded that Employer was entitled to an offset/credit of Claimant's workers' compensation benefits against her service-connected disability pension benefits pursuant to the Pension Agreement. (WCJ Decision, Conclusions of Law (COL) ¶ 3, December 24, 2003.) The WCJ also concluded that Claimant was not entitled to a reinstatement of her workers' compensation benefits because she had agreed to a suspension of such benefits in the Pension Agreement. (COL ¶¶ 5-6.) The WCJ further concluded that Employer violated the Act by failing to file the Pension Agreement with the Bureau of Workers' Compensation (Bureau), and as a result, the WCJ assessed Employer a penalty of 20 percent of Claimant's workers' compensation benefits for the period from February 18, 1998 to March 27, 1998. (COL ¶ 7.) Finally, the WCJ concluded that it was reasonable for Employer to contest Claimant's Reinstatement Petition and Penalty Petitions. (COL ¶ 8.) Accordingly, the WCJ denied Claimant's Reinstatement Petition, but granted, in part, her Penalty Petitions.

Claimant and Employer both appealed the WCJ's decision and order to the Board. The Board issued an opinion and order on December 29, 2005, in which it concluded that the WCJ did not err in determining that Employer had violated the Act and was subject to penalties. (Board Op. at 5.) However, the Board concluded that the WCJ did err in determining that Claimant had agreed to a suspension of her workers' compensation benefits by signing the Pension Agreement. (Board Op. at 5.) For this reason, the Board further concluded that the WCJ had improperly based the penalty award on Employer's actions in failing to file the Pension Agreement with the Bureau and had not considered that Employer violated the Act by failing to enter into a supplemental agreement or obtain an appropriate order to suspend Claimant's benefits. (Board Op. at 5-6.) Thus, the Board affirmed, in part, the WCJ's decision and order granting, in part, Claimant's Penalty Petitions, but remanded the matter for the WCJ to reconsider the amount of the penalty award. (Board Op. at 5-6.) Moreover, the Board concluded that the WCJ erred in granting Employer an offset/credit and in failing to reinstate Claimant's workers' compensation benefits. (Board Op at 10-11.) In this regard, the Board determined that the service-connected disability pension benefits paid to Claimant were payments in lieu of workers' compensation. (Board Op. at 11.) However, the Board determined that Employer failed to meet its burden of presenting evidence to establish the extent that it funded the pension plan. (Board Op. at 11.) The Board noted that, while "Mr. Kidwell testified at first that the pension plan was 100% funded by [Employer], [he] later acknowledged on cross examination that the pension plan receives state funding," which means that the pension plan was not fully funded by Employer. (Board Op. at 11-12.) The Board, thus, determined that "[b]ecause [Employer] did not establish the extent to which it may be entitled to an offset against Claimant's workers' compensation benefits, Claimant's right to continuing workers' compensation benefits remains unchanged." (Board Op. at 12.) Therefore, the Board reversed the WCJ's decision and order denying Claimant's Reinstatement Petition. Additionally, the Board concluded that the WCJ erred in determining that Employer's contest was reasonable. (Board Op. at 13.) Consequently, the Board also remanded the matter for the WCJ to award unreasonable contest attorney's fees.

Employer subsequently filed a Petition for Review of the Board's opinion and order with this Court. By order dated February 13, 2006, this Court quashed Employer's Petition for Review, concluding that the Board's order was interlocutory and not immediately appealable. City of Philadelphia v. Workers' Compensation Appeal Board (Calderazzo) (No. 176 C.D. 2006, filed February 13, 2006).

A remand hearing was held before a WCJ on January 4, 2007. On June 29, 2007, the WCJ issued a decision and order on remand. The WCJ assessed against Employer a 35 percent penalty on wage loss benefits due in the period from February 18, 1998 through March 27, 1998. (WCJ Decision, Conclusions of Law (COL) ¶ 2, June 29, 2007.) The WCJ also awarded unreasonable contest attorney's fees to Claimant's counsel in the amount of $2,922.50. (COL ¶ 3.) Employer appealed the WCJ's decision and order on remand to the Board, which affirmed by order dated April 22, 2008. Employer now petitions this Court for review of the Board's December 29, 2005 and April 22, 2008 orders.*fn3

II. Discussion

Before this Court, Employer argues that: (1) the Board erred in denying it an offset/credit for the service-connected disability pension benefits paid to Claimant; (2) the WCJ and the Board erred in assessing penalties against Employer; and (3) the WCJ and the Board erred in ...


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