The opinion of the court was delivered by: Bonnie Brigance Leadbetter, President Judge
SUBMITTED: December 30, 2011
BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge
HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge
OPINION BY PRESIDENT JUDGE LEADBETTER*fn1
Employer Port Authority of Allegheny County petitions for review of three June 20, 2011, orders of the Unemployment Compensation Board of Review (Board).*fn2 The Board reversed a referee's three decisions which modified regular unemployment benefits, denied emergency unemployment benefits and supplemental disability benefits and found overpayments subject to recoupment. The basis for all three of the referee's decisions was that Claimant, James G. Earhart, Jr., was receiving disability payments from Employer's Retirement and Disability Allowance Plan and did not report them when he applied for benefits.
Finding that the plan payments were deductible from Unemployment Compensation (UC) benefits, the referee reduced those benefits and, therefore, found that Claimant had failed to exhaust regular UC benefits before applying for supplemental and emergency benefits and also that he had received an overpayment subject to recoupment. Employer raises one issue on appeal: whether the Board erred in determining that payments under Employer's disability plan were not deductible under Section 404(d)(2) of the Unemployment Compensation Law,*fn3 43 P.S. § 804(d)(2). For the reasons that follow, we affirm.
In July 1993, Employer hired Claimant as a bus operator.*fn4
On April 21, 2008, he had a syncope episode that rendered him
medically unable to drive a bus. Last employed as a bus operator on
March 13, 2009, Claimant requested a disability allowance through
Employer's plan on December 8, 2009. Thereafter, Employer's doctor
reported that Claimant was disabled effective April 21, 2008, and
recommended that he be reexamined in four to five years. In January
2010, Employer approved Claimant's application for disability
benefits, effective November 1, 2009.
Employer's plan provides for a monthly payment based on an employee's average annual compensation. It requires an employee who is receiving disability benefits to report to Employer any earnings from "outside of Employer" employment or self-employment. In addition, it provides that an "employee's disability allowance may be reduced by earnings above that of a regular active employee."*fn5 Board's June 20, 2011 Decision No. B-519041, Finding of Fact No. 11. If Employer at any time finds that an employee receiving a disability allowance is no longer disabled, it will discontinue payment of benefits. If an employee is able to return to work with Employer, he or she will have accumulated seniority, but will not be credited with accumulated continuous service. Further, if an employee reaches the age of seventy while receiving a disability allowance, he or she shall be deemed to have retired on such date.
Employer first argues that Claimant's disability allowance was deductible under Section 404(d)(2) of the Law as a disability retirement pension. Section 404(d)(2)(i)-(iii) of the Law provides as follows:
(2)(i) In addition to the deductions provided for in clause (1), for any week with respect to which an individual is receiving a pension, including a governmental or other pension, retirement or retired pay, annuity or any other similar periodic payment, under a plan maintained or contributed to by a base period or chargeable employer, the weekly benefit amount payable to such individual for such week shall be reduced, but not below zero, by the pro-rated weekly amount of the pension as determined under subclause (ii).
(ii) If the pension is entirely contributed to by the employer, then one hundred per centum (100%) of the pro-rated weekly amount of the pension shall be deducted. Except as set forth in clause (4), if the pension is contributed to by the individual, in any amount, then fifty per centum (50%) of the pro-rated weekly amount of the pension shall be deducted.
(iii) No deduction shall be made under this clause by reason of the receipt of a pension if the services performed by the individual during the base period or remuneration received for such services for such employer did not affect the individual's eligibility for, or increase the amount of, such pension, retirement or retired pay, annuity or similar payment.
43 P.S. § 804(d)(2)(i)-(iii) (emphasis added). In addition, 34 Pa. Code § 65.102(b) provides that "[d]eductible pensions include a governmental or other pension, retirement or retired pay, annuity or any other similar periodic payment which is made under a plan maintained or contributed to by the claimant's base period or chargeable employer and is based on the claimant's previous work." The scope of the term "similar periodic payment," however, has been interpreted and clarified by 34 Pa. Code § 65.102(k), which provides that "[t]he Department will not deduct periodic payments which are made under severance agreements, profit sharing arrangements or disability plans administered by a union, employer, workers' compensation carrier, insurance company or the Veterans Administration, unless the payments are based on retirement and fulfill all other prerequisites specified in this chapter." In other words, for a periodic payment to be "similar" to the previously described pensions, etc., it must be, like them, based on retirement.
Employer maintains that this Court has consistently held that disability retirement pensions with plan provisions similar to the one at issue are deductible. See Tenaglia v. Unemployment Comp. Bd. of Review, 458 A.2d 331 (Pa. Cmwlth. 1983) (permanent service-connected disability pension deductible as a periodic payment based upon claimant's previous work); Matthews v. Unemployment Comp. Bd. of Review, 458 A.2d 624 (Pa. Cmwlth. 1983) (United States Postal Service disability pension deductible); and G.C. Murphy Co. v. Unemployment Comp. Bd. of Review, 319 A.2d 438 (Pa. Cmwlth. 1974) (disability retirement pension wholly funded by employer deductible as a retirement pension). However, the regulation allowing deduction only ...