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Kraeuter v. Workers' Compensation Appeal Board (Ajax Enterprises, Inc.)

Commonwealth Court of Pennsylvania

December 19, 2013

Celeste Kraeuter, Petitioner
v.
Workers' Compensation Appeal Board (Ajax Enterprises, Inc.), Respondent

SUBMITTED: August 2, 2013

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge

OPINION

BONNIE BRIGANCE LEADBETTER Judge

Celeste Kraeuter (Claimant) petitions for review of the order of the Workers' Compensation Appeal Board (Board) that reversed the decision of the Workers' Compensation Judge (WCJ) granting Claimant's (1) petition to set aside the final receipt filed by Ajax Enterprises, Inc. (Employer), (2) challenge to the notification of suspension issued by Employer's insurer, the State Workers' Insurance Fund (SWIF), and (3) penalty petition. The WCJ also assessed attorney's fees against Employer for unreasonable contests to Claimant's petitions and challenge and awarded litigation costs. After careful consideration, we reverse the Board's order to the extent that it reversed the WCJ's grant of the petition to set aside the final receipt, the challenge to the suspension notification and the penalty petition and award of litigation costs. We affirm the Board's order reversing the WCJ's award of unreasonable contest attorney's fees.

Claimant sustained a work-related strain to her right shoulder on September 24, 2004 and continued to work until January 12, 2005. She thereafter received disability benefits beginning January 13, 2005 at the weekly compensation rate of $188.86 based on her average weekly wage of $209.85, pursuant to a notice of compensation payable (NCP) issued by Employer on February 11, 2005. On May 15, 2006, SWIF sent Claimant a Notification of Suspension (Form LIBC-751) pursuant to Section 413(c) of the Workers' Compensation Act (Act), Act of June 2, 1915, P.L. 736, as amended, added by Section 2 of the Act of July 1, 1978, P.L. 692, 77 P.S. § 774.2, notifying her that her disability benefits had been suspended effective May 12, 2006 due to her return to work on that day. She was advised that she must file a challenge to the notification within 20 days. On May 18, 2006, Claimant signed an Agreement to Stop Weekly Workers' Compensation Payments (Final Receipt) (Form LIBC-340), which stated that she was able to return to work without a loss of earnings on May 12 and that she had received total compensation of $1358.33 "covering a period of 69 weeks 2 days from the date [her] disability began on 1/13/2006 [sic]." Employer filed the final receipt with the Bureau of Workers' Compensation (Bureau) on June 5, 2006.

On July 26, 2011, Claimant filed a petition to set aside the final receipt, alleging that Employer and/or its insurer obtained the final receipt through fraud and/or improper action. She also filed a penalty petition, alleging that Employer fraudulently filed the final receipt and the suspension notification based on her return to work when she in fact did not return to work on May 12, 2006 and remained disabled. On August 1, 2011, she filed a challenge to the suspension notification. The WCJ consolidated these petitions and challenge and held a hearing on August 17, 2011.

Claimant testified that Employer stopped benefit payments in May 2006, that she had never seen the suspension notification until her counsel received the records from the Bureau in July 2011, and that she noticed the misspelling of her name and address in the NCP, the suspension notification and the final receipt: her last name was spelled as "Krauter, " instead of Kraeuter, and her address was spelled as "Idle Wide" Road, instead of "Idlewild" Road. Acknowledging that the signature on the final receipt was hers, she testified that she used to pick up benefit checks at Employer's office, and that she was pretty sure that Employer asked her to come in and sign it. She further testified that her doctor performed surgery on her arm and did not release her to return to work when she signed the final receipt; that she did not return to work for Employer or any other employer on May 12, 2006 or anytime thereafter; that she had not recovered from the work injury as of May 12, 2006 and was told by her family doctor to avoid physical labor and get an office job. She stated: "I can't use my arm like I use[d] to. I can't even hang up my clothes on the clothes line for a certain amount of time. My arm gets so tired and it hurts." Notes of Testimony (N.T.) at 24; Reproduced Record (R.R.) at 32a.

Employer presented the deposition testimony of Patrick Gallagher, SWIF's claims adjuster since November 2004, who handled Claimant's claim for her September 24, 2004 injury. He testified that he sent Claimant the NCP, indemnity checks and Bureau's documents at her misspelled address listed in the NCP. Claimant previously returned the documents to him after correcting her misspelled name and address, but he did not realize the misspelling until the filing of the instant petitions in July 2011. He testified that he prepared and sent Claimant the suspension notification and the final receipt in May 2006 based on his understanding from "the paperwork" that Claimant had returned to work.

Gallagher's Deposition at 14; R.R. at 19a. He closed out Claimant's claim after she returned the signed final receipt.

On cross-examination, Gallagher further testified as to the filing of the suspension notification and the final receipt:

Q. Okay. The form that gave you the understanding that Claimant had returned to work, would that be the February 2nd, 2005 Employer's Wage Statement form where there's a box checked[, ] return to a later or restricted work at the same or greater wage than the pre-injury wage? ….
A. Yes.
Q. …. The Notice of Suspension that you circulated was dated May ...

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