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Judith Caputo v. Workers' Compensation Appeal Board (Commonwealth of Pennsylvania

January 5, 2012

JUDITH CAPUTO, PETITIONER
v.
WORKERS' COMPENSATION APPEAL BOARD (COMMONWEALTH OF PENNSYLVANIA), RESPONDENT



The opinion of the court was delivered by: Mary Hannah Leavitt, Judge

Argued: September 14, 2011

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge HONORABLE BERNARD L. McGINLEY, Judge HONORABLE RENEE COHN JUBELIRER, Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE JOHNNY J. BUTLER, Judge*fn1

OPINION

BY JUDGE LEAVITT

Judith Caputo (Claimant) petitions for review of an adjudication of the Workers' Compensation Appeal Board, which affirmed the decision of the Workers' Compensation Judge (WCJ) to deny her offset review petition. On appeal, Claimant argues that the Board erred. She contends that the offset provision in Section 204(a) of the Workers' Compensation Act (Act)*fn2 that reduced her compensation disability by a portion of her "old age" Social Security retirement benefits violates the Equal Protection Clause of Article I, Section 1 of the Pennsylvania Constitution.*fn3 Finding no merit to Claimant's constitutional challenge, we affirm.

Claimant worked for the Commonwealth's Department of Military and Veterans Affairs (Employer) at the Hollidaysburg Veterans Home. In 2002, she sustained a work-related injury and was awarded total disability benefits in the amount of $452.85 per week. In August 2006, Claimant's income from disability compensation was augmented by her Social Security retirement benefits in the amount of $862 per month. One month later she began receiving a pension benefit of $405.47 per month from the State Employes Retirement System (SERS).

On December 5, 2006, Employer filed a Notice of Workers' Compensation Benefit Offset advising Claimant that it was taking a credit toward her disability compensation. The credit was equal to 50% of her Social Security benefit, or $99.31 per week, and $74.56 per week for her SERS pension benefit. Employer further advised Claimant that it was suspending payment of her disability benefit until March 14, 2007, in order to recoup its overpayment of $2,955.79 in disability compensation. Finally, Employer advised Claimant that when her disability compensation resumed after March 14, she would receive a benefit in the amount of $278.98 per week, which represented the difference between her weekly disability compensation of $452.85 and Employer's combined offset of $173.87 per week.

Claimant filed an Offset Review Petition alleging that Employer was not entitled to an offset credit of $173.87 per week. Claimant argued that Employer had to prove its entitlement to a credit before taking one, and that Employer could not suspend her benefits during the period of recoupment. The matter was assigned to a WCJ, and a hearing was held. On August 18, 2008, the WCJ circulated a decision and order granting in part and denying in part Claimant's review petition. Relevant to the present appeal, the WCJ concluded that Employer was entitled to deduct $99.31 per week from Claimant's disability benefit, which equaled 50% of her Social Security retirement benefit.*fn4 Claimant appealed to the Board, asserting, inter alia, that the offset for Social Security retirement benefits permitted by Section 204(a) of the Act is unconstitutional. The Board affirmed the WCJ's decision without addressing the constitutional issue. Claimant now petitions for this Court's review.*fn5

On appeal,*fn6 Claimant argues that the offset provision in Section 204(a) for Social Security retirement benefits violates the Equal Protection Clause of Article I, Section 1 of the Pennsylvania Constitution. Claimant urges this Court to follow the reasoning of the Utah Supreme Court in Merrill v. Utah Labor Commission, 223 P.3d 1089 (Utah 2009), which held that a similar offset provision in Utah's Workers' Compensation Act was unconstitutional under the equal protection provision of the Utah Constitution. Employer counters that this Utah precedent has little or no instructive value given our Supreme Court's holding in Kramer v. Workers' Compensation Appeal Board (Rite Aid Corp.), 584 Pa. 309, 883 A.2d 518 (2005). In Kramer the Supreme Court rejected an equal protection challenge to an offset in Section 204(a) for an employer-provided severance benefit, and Employer argues that this analysis applies with equal force to the statutory offset for Social Security and pension benefits.

We begin with the standard for deciding an equal protection challenge. Article I, Section 1 of the Pennsylvania Constitution provides:

All men are born equally free and independent, and have certain inherent and indefeasible rights, among which are those of enjoying and defending life and liberty, of acquiring, possessing and protecting property and reputation, and of pursuing their own happiness.

PA. CONST. art. I, §1. Our Supreme Court has summarized the basic principles governing equal protection review as follows:

The essence of the constitutional principle of equal protection under the law is that like persons in like circumstances will be treated similarly. However ... [t]he right to equal protection under the law does not absolutely prohibit the Commonwealth from classifying individuals for the purpose of receiving different treatment and does not require equal treatment of people having different needs. The prohibition against treating people differently under the law does not preclude the Commonwealth from resorting to legislative classifications provided that those classifications are reasonable rather than arbitrary and bear a relationship to the object of the legislation.

Kramer, 584 Pa. at 332-33, 883 A.2d at 532 (quoting Curtis v. Kline, 542 Pa. 249, 254-55, 666 A.2d 265, ...


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