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Riley v. Workers' Compensation Appeal Board

March 17, 2010


The opinion of the court was delivered by: Jim Flaherty, Senior Judge


AND NOW, this 17th day of June, 2010, it is ORDERED that the above-captioned opinion filed March 17, 2010, shall be designated OPINION rather than MEMORANDUM OPINION, and it shall be reported.

Submitted: December 4, 2009



Susan Riley (Claimant) petitions for review from an order of the Worker' Compensation Appeal Board (Board) that affirmed in part and reversed in part the decision of a Workers' Compensation Judge (WCJ) granting in part a Petition to Review Benefit Offset (Review Petition) filed by Claimant. We affirm.

Claimant sustained an injury in the course and scope of her employment on August 7, 2000. Employer accepted her injuries in a Notice of Compensation Payable that set forth an average weekly wage (AWW) of $489.20 with a corresponding total disability rate of $326.13. In July of 2002, Employer filed a Notice of Workers' Compensation Benefit Offset announcing it intended to offset Claimant's indemnity benefits by $266.61 per week based on Claimant's receipt of monthly pension benefits totaling $1,157.06.*fn1 Claimant subsequently filed her Review Petition asserting the Employer was improperly offsetting her workers' compensation benefits.

Employer presented the testimony of Linda Miller, director of the benefits determination division of the State Employees Retirement System. Ms. Miller testified that Claimant elected to take disability retirement and that under that plan she receives $1,618.21 per month. She stated that Employer's contributions to Claimant's pension constitute $1,157.06 per month.

On January 13, 2004, the WCJ denied Claimant's Review Petition finding Employer was entitled to offset Claimant's indemnity benefits in light of her receipt of a pension pursuant to Section 204(a) of the Pennsylvania Workers' Compensation Act (WCA), Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §71(a).*fn2 The WCJ acknowledged an argument raised by Claimant that Employer should be barred by "collateral estoppel" from taking an offset based on her contention that she was misled by Employer's agent to believe that she could receive her disability retirement pension and continue receiving workers' compensation benefits simultaneously. Reproduced Record (R.R.), p. 16a. He rejected this argument, however, for reasons immaterial to this instant appeal. The WCJ further rejected an argument by Claimant that because her workers' compensation benefits are paid to her by Compservices and not Employer, Employer is not directly liable for payment of benefits and not entitled to an offest.

The WCJ, in Conclusion of Law No. 4 of his 2004 Decision, stated "Claimant has not challenged the calculation of the offset. As a result, the figures calculated by Ms. Miller are accepted." R.R. at 16a. The WCJ, in that same conclusion of law, rejected Claimant's argument that the pension she receives is not the type contemplated by Section 204(a) of the WCA because it is temporary in nature. Claimant appealed.*fn3

The Board, in a 2004 opinion, affirmed the WCJ's determination in part. It remanded, however, for more specific findings as to whether Employer was directly liable for indemnity payments in light of its contractual agreement with Compservices. The Board further instructed the WCJ to consider whether Claimant was lulled into taking her disability pension based on purported statements made to her that her workers' compensation benefits would be unaffected. In so doing, it was careful to note that Claimant's argument was one of equitable estoppel, not collateral estoppel. In rendering its opinion, the Board acknowledged an argument made by Claimant that if it found Employer was entitled to an offset, that offset should be pro-rated in accordance with the effective date of Act 57.*fn4

It found Claimant waived this argument, however, by raising it for the first time on appeal.

Subsequent to the Board's 2004 Order, but prior to the WCJ having an opportunity to act on remand, this Court issued Pennsylvania State University v. Workers' Compensation Appeal Board (Hensal), 911 A.2d 225 (Pa. Cmwlth. 2006) and Department of Public Welfare/Western Ctr. v. Workers' Compensation Appeal Board (Cato), 911 A.2d 241 (Pa. Cmwlth. 2006). These cases both hold that actuarial testimony of past and future funding of a defined benefit pension plan is legally sufficient to prove the basis of an offset.*fn5 In Hensal, we stated "[b]ecause an appreciation of the funding of defined benefit pension plans requires knowledge beyond that possessed by laypersons, it is a subject particularly amenable to testimony by experts. This approach is consistent with common sense and with testimony that the extent to which an employer funded a particular employee's defined benefit pension can only be determined by an actuarial formula." Hensal, 911 A.2d at 232.

In light of these cases, Employer was permitted to present the testimony of an actuary, Brent Mowery.*fn6 He performed actuarial calculations utilizing an assumed rate of return of 8.5 percent. Mr. Mowery ultimately agreed with Ms. Miller's calculations that Employer ...

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