The opinion of the court was delivered by: Judge Cohn Jubelirer
Submitted: December 5, 2008
BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge, HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE JOSEPH F. McCLOSKEY, Senior Judge.
City of Philadelphia (Employer) petitions for review of two orders of the Workers' Compensation Appeal Board (Board). Employer first petitions for review of the April 12, 2004 order of the Board, which affirmed a Workers' Compensation Judge's (WCJ) decision and order awarding Employer an offset/credit for service-connected disability pension benefits paid to Daniel Grevy (Claimant), but remanded the matter for a determination as to the amount of the offset/credit to which Employer was entitled pursuant to Section 204(a) of the Workers' Compensation Act (Act).*fn1
Employer also petitions for review of the April 22, 2008 order of the Board, which affirmed the WCJ's decision and order on remand concluding that Employer was entitled to an offset/credit of 73.149 percent of the service-connected disability pension benefits paid to Claimant. On appeal, Employer essentially argues that it is entitled to a dollar-for-dollar offset/credit for 100 percent of the pension benefits paid to Claimant because such benefits were paid to Claimant in lieu of workers' compensation. Because we agree with the Board that Employer is only entitled to take an offset/credit to the extent that it funded Claimant's service-connected disability pension benefits, and not for the entire amount of the pension benefits paid to Claimant, we affirm the Board's orders.
The relevant facts in this case are as follows. On August 2, 1999, Claimant sustained puncture wounds to his left upper back, arm, and lung as a result of being stabbed by an inmate while working as a correctional officer for Employer. Due to his injuries, Claimant was unable to return to work. Employer issued a Notice of Compensation Payable (NCP) acknowledging liability for Claimant's injuries.*fn2
Employer continued paying Claimant his regular wages in lieu of workers' compensation until February 19, 2001, when Claimant was separated from his employment due to his injuries. Following Claimant's separation from his employment, Employer began paying Claimant total disability workers' compensation benefits at the rate of $506.07 per week.
Claimant subsequently 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 indicated that Employer would be entitled to an offset/credit against any award of workers' compensation benefits for pension benefits paid.*fn3 On August 16, 2001, Employer's Board of Pensions and Retirement (Board of Pensions) awarded Claimant service-connected disability pension benefits. Claimant's pension benefits were made retroactive to the date of his separation. Claimant began receiving $2,153.07 per month (or $496.86 per week) in pension benefits, which was $9.21 less than what he was receiving per week in workers' compensation benefits. After Claimant was awarded pension benefits, Employer ceased paying workers' compensation benefits to Claimant.*fn4
On September 26, 2001, Claimant filed a Petition to Reinstate Compensation Benefits (Reinstatement Petition I) and a Petition for Penalties (Penalty Petition I). Claimant filed a second Petition to Reinstate Compensation Benefits (Reinstatement Petition II; with Claimant's Reinstatement Petition I, Reinstatement Petitions) and a second Petition for Penalties (Penalty Petition II; with Claimant's Penalty Petition I, Penalty Petitions) on November 6, 2001. In his Reinstatement Petitions and Penalty Petitions, Claimant alleged that Employer violated the Act by ceasing payment of his workers' compensation benefits without following the proper procedures. Claimant further alleged that he was entitled to reinstatement of his workers' compensation benefits, assessment of a penalty against Employer, and unreasonable contest attorney's fees. Employer filed responsive answers denying the allegations contained in Claimant's Reinstatement Petitions and Penalty Petitions. Employer also filed a Petition to Modify Compensation Benefits (Modification Petition) on December 18, 2001, seeking an offset/credit against Claimant's workers' compensation benefits for the service-connected disability pension benefits that were paid to Claimant.
Employer's Modification Petition was consolidated with Claimant's Reinstatement Petitions and Penalty Petitions, and the matter was 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, the Reinstatement Petitions, Penalty Petitions, and Modification Petition.
In support of his Reinstatement Petitions and Penalty Petitions, Claimant testified on his own behalf. Claimant testified regarding his injury, his receipt of workers' compensation benefits, and his later receipt of service-connected disability pension benefits. (WCJ Hr'g Tr. at 6-13, Feb. 14, 2002.)
In support of its Modification Petition, and in opposition to Claimant's Reinstatement Petitions and Penalty Petitions, Employer presented the testimony of James Kidwell, Acting Executive Director of the Board of Pensions. Mr. Kidwell testified that Claimant, who is a member of Pension Plan J, was required to contribute 3.75 percent of his social security covered wages, or 6 percent of his wages if he earned more than what was covered by social security, to Employer's pension fund during the course of his employment. (WCJ Hr'g Tr. at 32, Apr. 18, 2002.) Mr. Kidwell explained that Claimant's eligibility for service-connected disability pension benefits is not dependent on his years of service and that the amount of benefits that Claimant is receiving is equivalent to 70 percent of his final compensation (i.e., "[his] rate of pay at separation or [his] last full one year of payment"). (WCJ Hr'g Tr. at 34.) Mr. Kidwell also explained that an individual who has been awarded a service-connected disability pension has the option of withdrawing his contributions or leaving them in Employer's pension fund to provide survivorship benefits. (WCJ Hr'g Tr. at 35-36.) According to Mr. Kidwell, Claimant elected to leave his contributions, which totaled $24,782.92, in Employer's pension fund to provide survivorship benefits for his wife. (WCJ Hr'g Tr. at 36-38, 49.) Mr. Kidwell further testified that Employer is the majority contributor to the pension fund and that the exact amount of Employer's contributions fluctuates from year to year. (WCJ Hr'g Tr. at 56-58.) Mr. Kidwell explained that Employer's funding of the pension fund is governed by the Municipal Pension Plan Funding Standard and Recovery Act (Act 205).*fn5 (WCJ Hr'g Tr. at 57.) Mr. Kidwell also explained that, pursuant to Act 205, Employer must contribute a minimum amount each year based on an actuarial evaluation and that it has been Employer's practice to contribute more than the minimum amount required under Act 205. (WCJ Hr'g Tr. at 59.) In addition to Mr. Kidwell's testimony, Employer also introduced into evidence the Pension Agreement and a document outlining the contributions to Employer's pension fund for the fiscal year ending June 30, 2000.
On July 31, 2003, the WCJ issued a decision and order in which he concluded that Employer's payment of service-connected disability pension benefits to Claimant was in lieu of workers' compensation and that Employer was entitled to a dollar-for-dollar offset/credit against workers' compensation for the pension benefits paid to Claimant. (WCJ Decision, Conclusions of Law (COL) ¶ 3, July 31, 2003.) The WCJ also concluded that Employer violated the Act by ceasing payment of Claimant's workers' compensation benefits without obtaining or filing a supplemental agreement, final receipt, notice, or order from the Bureau of Workers' Compensation and, thus, awarded a penalty of $5,000.00. (COL ¶ 2.) The WCJ further concluded that Employer's contest was unreasonable in part and, thus, awarded attorney's fees to Claimant's counsel in the amount of $500.00. (COL ¶ 5.) Accordingly, the WCJ dismissed Claimant's Reinstatement Petitions, granted Claimant's Penalty Petitions, and granted Employer's Modification Petition.
Claimant appealed the WCJ's decision and order to the Board, arguing that the WCJ erred in concluding that Employer was entitled to a dollar-for-dollar offset/credit for 100 percent of the pension benefits paid to Claimant when Section 204(a) of the Act only permits an employer to take an offset/credit for pension benefits to the extent that the employer funded such benefits. On April 12, 2004, the Board, agreeing with Claimant, issued an opinion and order that affirmed the WCJ's grant of Employer's Modification Petition due to Employer's entitlement to an offset/credit, but remanded the ...