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McKenna v. Workers' Compensation Appeal Board

August 18, 2010

PATRICK MCKENNA, PETITIONER
v.
WORKERS' COMPENSATION APPEAL BOARD (SSM INDUSTRIES, INC. AND LIBERTY MUTUAL INSURANCE CO.), RESPONDENTS



The opinion of the court was delivered by: Senior Judge Friedman

Submitted: July 16, 2010

BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE P. KEVIN BROBSON, Judge, HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge.

OPINION

Patrick McKenna (Claimant) petitions for review of the February 23, 2010, order of the Workers' Compensation Appeal Board (WCAB), which reversed the decision of a workers' compensation judge (WCJ) granting Claimant's penalty petition. We affirm.

Turner Construction Company (Turner) is a general contractor that had sub-contracted with SSM Industries, Inc. (Employer) for the performance of certain work. In connection therewith, Turner purchased workers' compensation insurance coverage for Employer's employees. (WCJ's Findings of Fact, No. 7.)

Claimant worked for Employer under Employer's sub-contract with Turner. However, on April 15, 2004, Claimant was injured on the job. Employer ultimately accepted the injury as work-related, but Employer subsequently filed a modification petition. (WCJ's Findings of Fact, Nos. 1-3.)

The parties mediated the modification petition, resolved the matter and signed a Compromise and Release (C&R) Agreement. During mediation, Claimant agreed to resign from his position with Employer. (R.R. at 88a, 90a.) Employer then requested a C&R hearing. (WCJ's Findings of Fact, Nos. 3-4.) However, counsel for Employer, after executing the C&R Agreement on behalf of Employer, spoke with a Turner representative, who directed counsel not to proceed with the C&R hearing unless Claimant agreed not to seek re-employment with Turner. (R.R. at 5a, 30a-31a.)

At the C&R hearing, counsel for Employer informed the WCJ that the C&R hearing would not go forward unless Claimant signed an agreement stating that he would resign from his employment and would not seek re-employment with Turner.*fn1 (R.R. at 5a.) Counsel stated that, if Claimant did not agree to those terms, Employer would proceed on its modification petition. Claimant refused to agree that he would not seek re-employment with Turner because such an agreement would effectively preclude Claimant from doing construction work in Philadelphia. As a result, the C&R hearing did not go forward. (WCJ's Findings of Fact, Nos. 16-18.)

Claimant filed a penalty petition,*fn2 and a hearing was scheduled on the matter for March 5, 2008. (WCJ's Findings of Fact, No. 24.) Based on the evidence presented at the hearing, the WCJ concluded that: (1) Employer violated the workers' compensation statute by refusing to proceed with the C&R hearing after executing the C&R Agreement; (2) Employer violated the statute by failing to join Turner as a party; and (3) Employer violated 34 Pa. Code §131.13(d)(1) by failing to request a continuance after deciding not to proceed with the C&R hearing.*fn3 (WCJ's Conclusions of Law, Nos. 2-4.) The WCJ granted Claimant's penalty petition and imposed a 50% penalty upon Employer for its unreasonable delay of the C&R hearing and approval of the C&R Agreement.*fn4 (WCJ's Conclusions of Law, No. 5.) The WCJ also awarded Claimant attorney fees for Employer's unreasonable contest of the penalty petition. (WCJ's Conclusions of Law, No. 7.)

Employer appealed to the WCAB, which reversed. The WCAB stated that Claimant failed to establish that Employer violated the statute. The WCAB explained that: (1) the statute does not mandate settlements or provide for penalties when negotiations break down and a settlement is not reached; (2) Claimant and Employer could not reach an agreement regarding whether, in addition to resigning from his position with Employer, Claimant could seek re-employment with Turner; and, (3) therefore, Employer withdrew its petition for approval of the C&R Agreement. The WCAB stated in a footnote:

The [WCJ] additionally found that [Employer] violated the Act by creating the need for a continuance, but failing to submit a request for continuance in accordance with the requirements of 34 Pa. Code §131.13(d)(1). The penalty award, however, was based solely on [Employer's] failure to submit an enforceable C&R Agreement for approval at the [C&R] hearing. Even where a violation of the Act is found, the imposition of a penalty is discretionary. Consequently, we reasonably read the decision as imposing no penalty for failure to properly request a continuance.

(WCAB's op. at 5-6 n.4) (citation omitted). Claimant now petitions this court for review.*fn5

Claimant first argues that the WCAB erred in concluding that Claimant failed to establish that Employer violated the statute. Claimant asserts that he proved Employer attempted to amend the executed C&R Agreement and refused to proceed with the C&R hearing at the direction of Turner, a non-party. Claimant asserts that Employer's action in ...


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