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Findlay Township v. Workers' Compensation Appeal Board

May 28, 2010

FINDLAY TOWNSHIP AND INSERVCO INSURANCE SERVICES, INC., PETITIONERS
v.
WORKERS' COMPENSATION APPEAL BOARD (PHILLIS), RESPONDENT



Per curiam.

Submitted: December 11, 2009

OPINION

Inservco Insurance Services, Inc., the third party administrator for Findlay Township's workers' compensation carrier, petitions for review of an adjudication of the Workers' Compensation Appeal Board (Board). The Board affirmed the decision of the Workers' Compensation Judge (WCJ) to reinstate total disability compensation to David Phillis (Claimant) and to assess a penalty against Inservco for violating the Workers' Compensation Act.*fn1 The WCJ held that because Inservco made certain payments to Findlay Township during the time Claimant's workers' compensation benefits were suspended, Inservco thereby admitted liability for Claimant's disability compensation. Concluding that the facts, as found, do not support this conclusion, we reverse that part of the Board's adjudication that has been appealed by Employer.

Claimant was struck by a motor vehicle on February 1, 2003, while performing his duties as a police officer for Findlay Township. Inservco issued a Notice of Compensation Payable (NCP) describing Claimant's injuries as "multiple body contusions" and providing for payment of total disability benefits. Reproduced Record at 1a (R.R. ___). Claimant returned to light-duty work on March 23, 2003, but left on May 29, 2003, to undergo shoulder surgery.*fn2 Claimant returned to light-duty work with no wage loss on July 8, 2003, at which time Inservco, after filing the appropriate notice with the Bureau of Workers' Compensation, suspended Claimant's benefits. Inservo's notice of suspension is the last workers' compensation document filed with the Bureau.

On August 3, 2003, Claimant resumed his pre-injury job duties as a police officer. He continued working regular-duty until October 18, 2003, when the Township's Police Chief, Paul Wilks, sent him for psychiatric treatment with James Huha, Ph.D. because he was exhibiting signs of depression. Over the next five months, Claimant worked intermittently, depending on Dr. Huha's recommendations. During this time, Claimant used his sick and vacation leave for the days he was not able to work due to his psychological condition. When his leave expired the Township paid his salary for these missed days. Inservco did not compensate Claimant for the days he missed.*fn3 On March 26, 2004, Chief Wilks relieved Claimant of duty because of violent conduct related to his psychological condition. Because treatment did not resolve that condition, Claimant never returned to work.

After March 26, 2004, the Township continued to pay Claimant his regular salary, as it had done previously. The Township continued to pay Claimant until March 31, 2005, the effective date of a "Resignation Agreement" executed by the Township and Claimant. Under this agreement, the Township paid Claimant $9,741.23 in severance pay, and in exchange Claimant agreed to release the Township from any liability under what is commonly known as the Heart and Lung Act.*fn4 However, the Resignation Agreement provided that Claimant did not release the Township from its liability under the Workers' Compensation Act. Neither Inservco nor the workers' compensation carrier was a party to the Resignation Agreement.

Shortly before executing the Resignation Agreement, Claimant filed a petition to reinstate his workers' compensation benefits as of March 26, 2004, and a penalty petition. Claimant alleged that Inservco paid him workers' compensation benefits after March 26, 2004, but then unilaterally stopped paying in violation of the Act. Inservco filed answers, denying the allegations in both the reinstatement and penalty petitions. Claimant also filed a review petition seeking to add additional injuries to the NCP. Inservco did not oppose adding injuries to the right shoulder and left knee to the NCP; however, Inservco disputed Claimant's claim to have suffered a brain injury in the work-related automobile accident. Claimant also filed a petition to review medical treatment, seeking a determination that Dr. Huha's psychiatric treatment was related to the work injury. All petitions were heard in one proceeding before the WCJ.*fn5

In defense of the reinstatement and penalty petitions, Inservco presented the deposition testimony of Karl Vogle, its senior claims examiner responsible for Claimant's workers' compensation claim. Vogle testified that in accordance with Inservco's Notification of Suspension, Claimant's benefits were suspended as of July 8, 2003. Vogle explained that on January 14, 2004, Chief Wilks informed him that Dr. Huha believed Claimant's mental problems stemmed from a possible head injury. Vogle issued a Notice of Compensation Denial on January 23, 2004, but he continued to investigate, sending Claimant for an independent medical examination (IME). On March 2, 2004, the IME physician informed Vogle that he believed Claimant was suffering from depression caused by the work incident. Accordingly, Inservco paid some of Claimant's medical expenses for this treatment.*fn6 However, in July 2004, the IME doctor reversed himself, opining that Claimant's depression was not work-related. Inservco never rescinded its January 23, 2004 Notice of Compensation Denial, even though it paid for some of Claimant's treatment for depression.

Vogle explained that when an employee is paid Heart and Lung benefits, Inservco sends checks to the municipal employer as reimbursement.*fn7 Vogle sent three checks to the Township as reimbursement for Claimant's purported Heart and Lung benefits: the first check was in the amount of $14,367.86, covering the period October 17, 2003, through March 14, 2004; the second check was in the amount of $1,287.08, covering the period March 15, 2004, through March 28, 2004; and the third check was in the amount of $22,371.43, covering the period March 29, 2004, through November 14, 2004. These checks were issued on May 28, 2004, and on November 19, 2004. Vogle also clarified that Inservco had nothing to do with the Township's decision to pay Claimant after he was dismissed or to call the salary payment Heart and Lung benefits.

Vogle acknowledged that the three Inservco checks came out of the "indemnity bucket" in the company's computer system. R.R. 231a-232a. However, Claimant did not ask for reinstatement prior to their issuance, and Inservco did not file a document with the Bureau to revoke its July 8, 2003, suspension. Vogle got permission from Penn Prime, the workers' compensation carrier, to reimburse the Township for its payments through November 14, 2004, because of pressure from the Township. On November 15, 2004, however, Vogle issued a second Notice of Compensation Denial. Inservco ceased further reimbursement as of November 14, 2004.

Inservco presented testimony from Chief Wilks, who acknowledged that when Claimant returned to his regular job following his injury, his work performance was completely normal, and he believed Claimant had fully recovered. However, things changed in October 2003 when Claimant became the subject of an internal investigation for his alleged violation of the Department's rules of conduct. At the same time, Claimant was experiencing marital and financial difficulties. Claimant repeatedly told Chief Wilks that "everything is such a mess." R.R. 114a-115a. Claimant displayed signs of depression and became unable to function at work.*fn8

As a result, on October 18, 2003, Chief Wilks relieved Claimant of duty and sent him to Dr. Huha for psychological evaluation in conjunction with the Township's wellness program. This program was established for the purpose of treating an employee's personal problems. While being treated by Dr. Huha, Claimant made several attempts to return to work. On March 14, 2004, Claimant returned to work half days. However, on March 26, 2004, Claimant fought with a co-worker; punched a hole in the wall; and began hurling accusations at the Chief. This "out of control" behavior caused the Chief to relieve Claimant of duty for the final time. R.R. 133a.

After speaking with the Township Solicitor, Chief Wilks decided to continue to pay Claimant his full salary, because he did not want to run afoul of any laws or violate Claimant's civil rights. Chief Wilks advised Vogle on March 2, 2004, that Dr. Huha believed Claimant's psychological problems were work-related. Chief Wilks stated that he and Vogle had reached an understanding that Inservco would pay for treatment related to Claimant's depression. However, Chief Wilks acknowledged that Vogle never committed to have Inservco resume payment of disability benefits.

In early November 2004, Chief Wilks became aware that Inservco had stopped reimbursing the Township, and he responded by threatening to sue. Inservco temporarily resumed the ...


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